The following table illustrates how the segmental assets and liabilities reconcile to the overall total assets and liabilities reported in the balance sheet:
The following table includes other information to show how certain costs are allocated between the segments of the Group:
(2021: \u00a37.8m) is included in respect of IMI Critical Engineering and \u00a3nil (2021: \u00a3nil) is included in respect of IMI Hydronic Engineering.
(2021: \u00a312.3m), \u00a39.6m in respect of IMI Critical Engineering (2021: \u00a38.5m) and \u00a37.0m in respect of IMI Hydronic Engineering (2021: \u00a36.9m).
The following table shows a geographical analysis of how the Group\u2019s revenue is derived by destination: Revenuebygeography(2022) Revenuebygeography(2021) Middle East & Africa Middle East & Africa 5% 5% Asia Pacific Asia Pacific 22% 22% Europe Europe 43% 45% Americas Americas 30% 28% The following table shows a geographical analysis of the location of the Group\u2019s intangible assets, property, plant and equipment and right of use assets: 2022 2021**** \u00a3m \u00a3m UK 180.1 78.4 Germany 306.8 202.4 Rest of Europe 307.4 278.6 USA 521.3 483.4 Asia Pacific 64.5 57.7 Rest of World 30.3 26.8 Total 1,410.4 1,127.3 **** Prior year comparatives have been reclassified to match the geographical allocation for Group revenue. The Group's revenue streams are disaggregated in the table below: 2022 2021 Revenue Revenue Sector \u00a3m \u00a3m IMI Precision Engineering Industrial Automation 459 413 Life Sciences 152 91 Process Control 152 119 Precision Fluid OEM 304 210 Commercial Vehicle 186 180 Rail 37 33 Transportation 223 213 Total IMI Precision Engineering 986 836 IMI Critical Engineering Power 153 144 Refining & Petrochemical 118 105 Oil & Gas 57 45 Nuclear 46 57 Marine 14 11 Other 23 17 Aftermarket 411 379 Refining & Petrochemical 100 108 Oil & Gas 69 77 Power 61 66 Marine 26 22 Nuclear 6 3 Other 40 36 New Construction 302 312 Total IMI Critical Engineering 713 691 IMI Hydronic Engineering* TA 151 144 Heimeier 124 121 Pneumatex 66 61 Other 9 13 Total IMI Hydronic Engineering 350 339 Total revenue 2,049 1,866 Sale of goods 1,977 1,806 Sale of services 72 60 Total revenue 2,049 1,866 * Prior period IMI Hydronic Engineering results have been restated to reflect a \u00a315m reclassification between TA and Heimeier. 4. Segmental information (continued) 5. Net operating costs Operating costs by function The following table shows how much of the operating costs disclosed in the income statement relate to selling and distribution costs and administrative expenses: 2022 \u00a3m 2021 \u00a3m Selling and distribution costs* (207.2) (187.3) Administrative expenses* (367.1) (356.3) (574.3) (543.6) * \u00a345.8m included in selling and distribution costs in prior period has been reclassified to administrative expenses to better reflect the underlying transactions. Employee information The average number of people employed by the Group during the year was: 2022 2021 IMI Precision Engineering 6,001 5,740 IMI Critical Engineering 3,106 3,117 IMI Hydronic Engineering 1,942 1,969 Corporate 80 90 Total Group 11,129 10,916 The aggregate employment cost charged to operating profit for the year was: 2022 \u00a3m 2021 \u00a3m Wages and salaries 505.9 491.9 Share-based payments 11.7 12.0 Social security costs 76.7 80.3 Pension costs** 8.3 9.5 Total 602.6 593.7 ** There are no special pension events included in 2022 pension costs (2021: \u00a3nil, see Note 3). The aggregate gains made by directors on the exercise of share options was \u00a32.6m (2021: \u00a31.6m). The remuneration, as defined in the Companies Act 2006 Schedule 5, for the executive directors comprises fixed and annual variable pay as set out in the table on page 128 of the Remuneration Report. For details of the non-executive directors\u2019 remuneration please refer to page 138 of the Remuneration Report. Research and development expenditure The cost of research and development expenditure charged directly to the income statement was \u00a370.3m (2021: \u00a349.7m). Included within this is amortisation of capitalised intangible development costs which amounted to \u00a38.2m (2021: \u00a37.1m) and across the Group a further \u00a35.9m (2021: \u00a34.6m) was capitalised in the year. Exchange on operating activities net of hedging arrangements The transactional foreign exchange gains in the Group were \u00a33.2m (2021: gains of \u00a35.1m). Audit fees The Group engages its auditor, Deloitte, to perform other assurance assignments in addition to their statutory audit duties where their expertise, experience and knowledge of the Group should enable them to perform these assignments more efficiently than other similar service providers. The Group\u2019s policy on such assignments is set out in the Audit Committee Report on page 118. Fees earned by Deloitte and its associates during the year are set out below: 2022 \u00a3m 2021 \u00a3m Fees earned by the Company\u2019s auditor for the audit of the Company\u2019s Annual Accounts 0.2 0.2 The audit of the Company\u2019s subsidiaries, pursuant to legislation 2.9 2.5 Other assurance services 0.1 0.1 Total 3.2 2.8 Operating profit is stated after charging/(crediting): 2022 2021 \u00a3m \u00a3m Net foreign exchange gains included in operating profit (3.2) (5.1) Research and development expense 70.3 49.7 Amortisation of intangible assets 48.0 31.2 Impairment of intangible assets treated as adjusting items 0.2 - Impairment of intangible assets 0.5 0.1 Depreciation of owned property, plant and equipment 41.9 40.0 (Reversal of impairment)/impairment of owned property, plant and equipment treated as adjusting items (2.3) 4.6 (Reversal of impairment)/impairment of owned property, plant and equipment (0.6) 0.8 Depreciation of right of use assets 32.3 28.3 Cost of inventories recognised as an expense 1,112.1 1,004.6 Loss/(profit) on disposal of property, plant and equipment 1.7 (1.3) The Group operates a number of equity and equity-related compensation benefits to reward its employees. The estimated cost of awarding these share options is charged to the income statement over the period that the Group benefits from the employees\u2019 services. This cost is then added back to retained earnings, to reflect that there is no overall impact on the Group\u2019s balance sheet until the shares are issued to the employees when the options are exercised. The individual share option schemes, the number of options outstanding under each of them, the estimated cost of these options recognised in the income statement and the assumptions used in arriving at this estimated cost are described below. Accounting policy The fair value of the employee services received in exchange for the grant of the options is recognised as an expense each year. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. The fair value of the options is determined based on the Monte Carlo and Black-Scholes option-pricing models. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the income statement. For newly issued shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Outstanding share options At 31 December 2022, options to purchase ordinary shares had been granted to, but not yet exercised by, participants of IMI share option schemes as follows: Date of Number grant of shares Price Dates from which exercisable IMI Sharesave Scheme 21.04.17 1,516 1106.00p 01.08.20 or 01.08.22 04.04.18 11,335 1012.68p 01.08.21 or 01.08.23 04.04.19 33,303 884.16p 01.08.22 or 01.08.24 02.04.20 56,579 904.66p 01.08.23 or 01.08.25 02.04.21 68,400 1166.58p 01.08.24 or 01.08.26 31.03.22 97,876 1260.00p 01.08.25 or 01.08.27 269,009 Purchase Plans 15.08.22 83,380 1155.78p 15.08.24 83,380 IMI Incentive Plan 07.05.15 754 - 07.05.17 or 07.05.18 09.03.16 4,735 - 09.03.18 or 09.03.19 09.03.17 8,160 - 09.03.19 or 09.03.20 12.03.18 7,850 - 12.03.20 or 12.03.21 18.03.19 76,907 - 18.03.21 or 18.03.22 16.03.20 1,114,366 - 16.03.23 22.03.21 781,063 - 22.03.24 18.03.22 883,186 - 09.03.25 2,877,021 IMI Share Option Plan 12.03.13 76,300 1322.70p 12.03.16 22.10.13 9,000 1518.33p 22.10.16 11.03.14 82,000 1467.00p 11.03.17 167,300 Total 3,396,710 Schemes under which options are outstanding The options in the adjacent table relate to the following share-based payment schemes: IMI Sharesave Scheme (\u2018SAYE\u2019) This scheme is open to the majority of the Group\u2019s UK employees, including the executive directors, and allows the grant of options to all participants at a discount of up to 20% below the market price. Such schemes are not subject to performance conditions and offer tax incentives to encourage employees to use their own money to purchase IMI shares. SAYE options may be exercised within six months of the date they first become exercisable. Global Employee Share Purchase Plans (\u2018GESPP\u2019) These plans were introduced in 2011 for the US and Germany. The German and US GESPP\u2019s offer the opportunity to buy shares in IMI at a fixed price at a future date. The German GESPP mirrors the UK Sharesave Scheme, with a minimum/ maximum savings limit per month and contract duration of three to five years. The US GESPP also operates in a similar way to the UK Sharesave Scheme, with a minimum/maximum savings limit per month, but the contract duration is for a fixed period of two years and different taxation conditions apply for the exercise period. No further awards are intended to be granted under the German GESPP. IMI Share Option Plan (\u2018SOP\u2019) Share option awards were made from 2009 to selected senior managers and certain other employees under the SOP. These awards are not subject to performance conditions, but are subject to a three year vesting period. The purpose of the SOP is to give selected IMI employees (who are not executive directors of the Company) the opportunity to share the benefits of share price growth and to increase their IMI shareholding. Other share-based payment arrangements The Group also operates the following employee share plans: Share Incentive Plan (\u2018SIP\u2019) The SIP is open to the majority of the Group\u2019s UK employees, including the executive directors. This scheme covers two separate opportunities for employees to share in IMI\u2019s success as follows: \u2022 Partnership shares \u2013 allows employees to invest up to the statutory maximum from pre-tax pay, which is used to buy IMI shares. \u2022 Free shares \u2013 allows a grant of shares to employees each year, up to the statutory maximum. Shares acquired or awarded under the SIP are not subject to performance conditions and offer tax incentives to encourage employees to build up their shareholdings with the Company. The IMI Incentive Plan (\u2018IIP\u2019) In light of the expiry in 2015 of both the PSP and SMP, the IIP was introduced to act as the Company\u2019s sole senior executive long-term incentive plan. The IIP acts as an umbrella plan which allows the Company to grant different types of awards to different employee groups in an efficient way. The IIP is to be used annually to grant \u2018Performance Share Awards\u2019 in respect of ordinary shares to the executive directors and other members of senior management subject to performance conditions. The IIP will also be used annually to grant \u2018Bonus Share Awards\u2019 below board level. The IIP also gives the Company the ability to grant \u2018Restricted Stock Unit Awards\u2019 and \u2018Share Options\u2019. It is currently intended that Restricted Stock Unit Awards and share options will only be granted in response to specific business requirements. Options granted during the year Number of Weighted options average Normal granted option exercisable (thousand) price date SAYE 2019 200 884p 2022-2025 2020 68 905p 2023-2026 2021 75 1167p 2024-2027 2022 103 1260p 2025-2028 GESPP 2019 33 903p 2021 2020 43 956p 2022 2021 - - 2023 2022 85 1156p 2024 IIP 2019 845 - 2021-2022 2020 1,466 - 2022-2023 2021 891 - 2023-2024 2022 929 - 2024-2025 6. Share-based payments (continued) Movement in outstanding options in the year Options granted at Options not granted at nil cost 1 nil cost 2 Total Number of Weighted Number of Number of options Range of average options options (thousand) option prices option price (thousand) (thousand Outstanding at 1 January 2021 966 845-1518p 1098p 3,048 4,014 Exercisable at 1 January 2021 586 971-1518p 1216p 167 753 Granted 75 1167p 1167p 978 1,053 Exercised 395 845-1467p 1085p 500 895 Lapsed 108 845-1467p 1101p 461 569 Outstanding at 31 December 2021 538 845-1518p 1116p 3,065 3,603 Exercisable at 31 December 2021 222 845-1518p 1325p 272 494 Granted 188 1156-1260p 1213p 1,033 1,221 Exercised 142 845-1467p 947p 533 675 Lapsed 65 845-1467p 1025p 306 371 Outstanding at 31 December 2022 519 884-1518p 1209p 3,255 3,774 Exercisable at 31 December 2022 180 884-1518p 1197p 477 657 1 Options not granted at nil cost include options granted under the following schemes: IMI Sharesave Scheme, Global Employee Share Purchase Plans and IMI Share Option Plan. 2 Options granted at nil cost are those granted under the Performance Share Plan, Share Matching Plan and IMI Incentive Plan. Share-based payment charge for the year The total expense recognised for the year arising from share-based payments was \u00a311.7m (2021: \u00a312.0m) which comprises a charge of \u00a315.5m (2021: \u00a315.3m) for the year offset by a credit of \u00a33.8m (2021: \u00a33.3m) in respect of lapses. \u00a32.7m (2021: \u00a32.5m) of the total charge and \u00a30.5m (2021: \u00a30.7m) of the total credit is in respect of options granted to directors. Share-based payment valuation methodology The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted, based on Black-Scholes and Monte Carlo option pricing models. The assumptions used for grants in 2022 included a dividend yield of 2.0% (2021: 1.7%), expected share price volatility of 32% (2021: 25%), a weighted average expected life of 3.5 years (2021: 3.5 years) and a weighted average interest rate of 1.75% (2021: 0.1%). The expected volatility is wholly based on the historical volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. Other share-based payment disclosures The weighted average remaining contractual life for the share options outstanding as at 31 December 2022 is 4.8 years (2021: 7.1 years) and the weighted average fair value of share options granted in the year at their grant date was \u00a313.01 (2021: \u00a312.18). The weighted average share price at the date of exercise of share options exercised during the year was \u00a314.71 (2021: \u00a314.84). 2022 2021 Key million million Weighted average number of shares for the purpose of basic earnings per share A 258.3 266.9 Dilutive effect of employee share options 1.2 1.1 Weighted average number of shares for the purpose of diluted earnings per share B 259.5 268.0 Key \u00a3m \u00a3m Statutory profit for the year C 226.3 196.3 Total adjusting items charges included in profit before tax 60.7 62.4 Total adjusting items credits included in taxation (14.6) (13.1) Earnings for adjusted EPS D 272.4 245.6 Key 2022 2021 Statutory EPS measures Statutory basic EPS C/A 87.6p 73.5p Statutory diluted EPS C/B 87.2p 73.2p Adjusted EPS measures Adjusted basic EPS D/A 105.5p 92.0p Adjusted diluted EPS D/B 105.0p 91.6p Earnings per share (\u2018EPS\u2019) is the amount of post-tax profit attributable to each share (excluding those held in the Employee Benefit Trust or by the Company). Basic EPS measures are calculated as the Group profit for the year attributable to equity shareholders divided by the weighted average number of shares in issue during the year. Diluted EPS takes into account the dilutive effect of all outstanding share options priced below the market price, in arriving at the number of shares used in its calculation. Both of these measures are also presented on an adjusted basis to assist the reader of the financial statements and provide insight into the performance of the Group. The note below demonstrates how this calculation has been performed. 7. Earnings per ordinary share Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 2022 2021 Financial Financial Interest instruments Total Interest instruments Total Recognised in the income statement \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Interest income on bank deposits 4.6 4.6 2.4 2.4 Financial income 4.6 - 4.6 2.4 - 2.4 Interest expense on interest-bearing loans and borrowings (21.0) (21.0) (11.7) (11.7) Interest expense on leases (2.8) (2.8) (2.8) (2.8) Financial expense (23.8) - (23.8) (14.5) - (14.5) Recognised in other comprehensive income Gains on instruments measured at fair value through profit or loss: Other economic hedges* 4.9 4.9 5.2 5.2 Net financial income relating to defined benefit pension schemes 1.5 1.5 1.0 1.0 Net financial (expense)/income (17.7) 4.9 (12.8) (11.1) 5.2 (5.9) *Gains and losses on financial instruments measured at fair value through profit or loss were previously reported separately under 'Financial income' and 'Financial expense'. These amounts are now reported under \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019 and prior year comparatives have been represented as they relate to the same underlying transactions. Included in financial instruments are current year trading gains and losses on economically effective transactions which for management reporting purposes are included in adjusted revenue and operating profit (see Note 3). For statutory purposes, these are shown within net financial income and expense above. Gains or losses for future year transactions are in respect of financial instruments held by the Group to provide stability of future trading cash flows. 2022 2021 Recognised in other comprehensive income \u00a3m \u00a3m (Loss)/gain arising on hedging instruments designated in hedges of the net assets in foreign operations (7.5) 20.0 Exchange differences on translation of foreign operations net of funding revaluations 40.9 (33.8) Exchange differences reclassified to income statement on disposal of operations 0.6 0.1 Income tax on items recognised in other comprehensive income (0.3) 1.2 Total items recognised in other comprehensive income (net of tax) 33.7 (12.5) Recognised in statement of changes in equity Translation reserve 33.7 (12.5) IMI operates through subsidiary companies all around the world that pay many different taxes such as corporate income taxes, VAT, payroll withholdings, social security contributions, customs import duties and excise duties. This note aggregates only those corporate income taxes that are or will be levied on the profits of IMI plc and its subsidiary companies for periods leading up to and including the balance sheet date. The profits of each company are subject to certain adjustments as specified by applicable tax laws in each country to arrive at the tax liability that is expected to result on its tax returns. Where these adjustments have future tax impact then deferred taxes may also be recorded. Accounting policy Current tax payable/receivable represents the expected tax payable/receivable on the taxable profits for the year, using tax rates enacted or substantively enacted at the balance sheet date and taking into account any adjustments in respect of prior years. Deferred tax is provided, using the balance sheet method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that the timing of the reversal of the differences can be controlled and it is probable that the differences will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on the tax laws that have been enacted or substantively enacted by the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle the balances on a net basis. In common with many multinational companies, IMI faces tax audits in jurisdictions around the world, including in relation to transfer pricing of goods and services between associated entities within the Group, the outcomes of which are uncertain. These tax audits may be subject to inter-government negotiations. The matters under discussion are often complex and can take many years to resolve. Tax liabilities are recorded based on management\u2019s estimate of either the most likely amount or the expected amount depending on which method is expected to better reflect the resolution of the uncertainty. Tax governance, risk and strategy IMI recognises its corporate responsibility to ensure that all businesses within the IMI Group follow responsible tax practices to enhance long-term shareholder value whilst also contributing to the public expenditure and the overall welfare of the communities in which it operates. Accordingly, the IMI Tax Policy sets the core principles of compliance, fairness, value and transparency for the management of the Group\u2019s tax affairs. This Policy has been approved by the Board, fully communicated to subsidiary businesses and is reviewed to ensure responsible business practices across the Group are maintained. The Group Finance Director has primary responsibility for all tax matters and keeps the Board appraised of any significant issues or changes to the Tax Policy. A robust tax governance framework has also been established under which the Executive Committee and the IMI Board are appraised on a regular basis of any material or significant tax matters, so that appropriate action can be effected. Through IMI Workplace and Knowledge Library, the Group communicates policies, procedures, guidance and best practices to improve the management of taxation across its subsidiary companies worldwide. Compliance: IMI pays and collects significant amounts of taxes around the world as a result of its business activities. It seeks to manage its taxation obligations worldwide in compliance with all applicable tax laws and regulations, as well as fully in line with the Group\u2019s Code of Conduct. Accordingly, the tax contribution by the individual businesses is monitored and robust standard tax compliance processes operate together with appropriate financial controls to ensure that all tax returns are complete, accurate and filed on a timely basis with the tax authorities around the world and the declared taxes paid on time. Furthermore, the preparation and filing of the corporate income tax returns for IMI subsidiary companies worldwide have been largely outsourced to one tax advisory firm. Tax laws are often complex, which can lead to inconsistent interpretations by different stakeholders. Where this occurs, IMI may reduce uncertainty and controversy through various actions, including proactive discussion with the fiscal authorities to obtain early resolution and securing external tax advice to ensure the robust interpretation of tax laws and practices. The Group Tax Policy is fully aligned with the Group\u2019s Code of Conduct, which requires the Group and its employees and agents to act in compliance with applicable laws and with fairness and integrity in all of its business dealings. IMI has a zero-tolerance approach to tax evasion and the facilitation of tax evasion. Consideration of UK legislation regarding third party tax evasion has also been incorporated into the Group\u2019s prevention procedures, including employee training. Fairness: IMI seeks to record its profits across the subsidiary companies around the world on an arm\u2019s length basis in accordance with internationally accepted best practices, recognising the relative contributions of people, assets, intellectual property and risks borne by the various businesses. The resulting allocation of profits is regularly tested for compliance with this standard. IMI has taken action to ensure that it meets the enhanced transfer pricing disclosures and documentation requirements by tax authorities as a result of the Base Erosion & Profit Shifting (commonly referred to as \u2018BEPS\u2019) initiative by the OECD. Value: IMI manages the impact of taxation on its businesses in a responsible manner by only adopting legitimate and commercial positions. In doing so, the Group may make use of legitimate tax incentives, exemptions and statutory alternatives offered by governments and will look to ensure that it is not taxed more than once on the same profit. As a UK headquartered group, IMI\u2019s profits are ultimately subject to UK taxation, although as the Group pays significant taxes overseas, the overall effective tax rate for the Group is marginally above the UK statutory tax rate. Transparency: IMI aims to build positive working relationships with tax authorities by co-operating in a constructive, open and timely manner. IMI seeks to disclose its tax affairs in its published accounts and taxation returns fully in accordance with the applicable standards and, where appropriate, will supplement its tax disclosures with further information to better inform, and to be transparent to, its stakeholders. Risk: IMI engages external support to manage tax risks and achieve the strategic objectives outlined above. Tax risks are regularly assessed for all companies within the Group, promptly addressed and reported so that they may be appropriately provided and disclosed in the relevant accounts and tax returns. To the extent that identified tax risks are material they will be reported to the Executive Committee through the Group\u2019s process for strategic risk management as described on page 86. 9. Taxation UK Corporation tax The rate of corporation tax in the UK for 2022 was 19% (2021: 19%). As from 1 April 2023, it will increase from 19% to 25%. UK deferred tax assets and liabilities have therefore been calculated using a rate of 25% (2021: 25%). Tax payments During the year, the Group made payments of corporate income tax of \u00a348.6m (2021: \u00a350.9m), principally arising as follows: Jurisdiction of companies making corporate income tax payments: There is normally an element of volatility in the annual payments of corporate income taxes due to the timing of assessments, acquisition and disposals, exceptional items and payments on account in the many countries in which the Group operates. Changes in the jurisdictions in which profits are earned can have an impact on cashflow levels which may take time to be reflected in the tax cashflow. The level of payments made during 2022 decreased slightly compared to 2021. Sweden and the UK decreased due to the recovery of tax debtors. German payments for 2022 now represent a more normal level having recovered tax debtors in earlier periods. Other territorial movements in payments largely reflect shifts in trading. In addition, the Group makes substantial other tax payments relating to employment, consumption, procurement and investment to tax authorities around the world. Recognised in the income statement This section sets out the current and deferred tax charges, which together comprise the total tax charge in the income statement. 2022 2021 \u00a3m \u00a3m Current tax charge Current year charge 63.0 53.9 Adjustments in respect of prior years (1.9) (11.1) 61.1 42.8 Deferred taxation Origination and reversal of temporary differences (2.0) 5.5 Total income tax charge 59.1 48.3 9. Taxation (continued) South Korea \u00a32.7m Italy \u00a31m Japan \u00a33.1m Switzerland \u00a35.8m US \u00a31.1m Germany \u00a310.4m UK \u00a35.7m Sweden \u00a30.5m Austria \u00a30.1m India \u00a33.8m Singapore \u00a30.9m Other \u00a37.8m China \u00a33.4m Czech \u00a32.3m 2022 \u00a348.6m India \u00a31.9m UK \u00a314.6m Switzerland \u00a35.1m Japan \u00a33.6m Italy \u00a30.4m US \u00a31.7m Sweden \u00a33.5m Austria \u00a31.4m China \u00a33.4m Singapore \u00a31.7m Other \u00a36m Germany \u00a33m Czech \u00a32.3m South Korea \u00a32.3m 2021 \u00a350.9m Reconciliation of effective tax rate As IMI's head office and parent company is domiciled in the UK, the Group references its effective tax rate to the UK corporation tax rate, despite only a small portion of the Group's business being in the UK. Therefore, the following tax reconciliation applies the UK corporation tax rate for the year to profit before tax, both before and after adjusting items. The resulting tax charge is reconciled to the actual tax charge for the Group, by taking account of specific tax adjustments as follows: 2022 2021 Adjusting Adjusting Adjusted items Statutory Adjusted items Statutory \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Profit before tax 346.1 (60.7) 285.4 307.0 (62.4) 244.6 Income tax using the Company's domestic rate of tax of 19.00% (2021: 19.00%) 65.8 (11.5) 54.3 58.3 (11.9) 46.4 Effects of: Non-deductible items 3.0 0.4 3.4 1.4 0.8 2.2 Non taxable loss on disposal of businesses - 0.9 0.9 - 0.7 0.7 Utilisation of losses on which no deferred tax had been recognised (1.0) - (1.0) (0.4) - (0.4) Current year losses for which no deferred tax asset has been recognised 0.2 - 0.2 0.3 0.1 0.4 Recognition of deferred tax asset on previously unprovided timing differences (0.8) - (0.8) (2.8) - (2.8) Change in future tax rate on deferred tax - - - - 18.6 18.6 Differing tax rates 12.5 (4.4) 8.1 6.2 (4.8) 1.4 Adjustments to prior year current and deferred tax charges (6.0) - (6.0) (1.6) (16.6) (18.2) Total tax in income statement 73.7 (14.6) 59.1 61.4 (13.1) 48.3 Income tax expense reported in the consolidated income statement 73.7 (14.6) 59.1 61.4 (13.1) 48.3 Effective rate of tax: 21.3% 20.7% 20.0% 19.7% Events after the reporting period In the Autumn Statement of November 2022, the UK government reconfirmed its intention to introduce legislation to give effect to the OECD Inclusive Framework agreement that there should be a minimum global corporate income tax rate of 15%. Based on current proposals this would apply to IMI from 1 January 2024. It therefore does not impact IMI\u2019s results for 2022, and it is not expected to have a material impact on IMI\u2019s financial statements for subsequent years. However, this will continue to be monitored. Recognised outside of the income statement In addition to amounts charged to the income statement, some current tax and deferred tax is charged/(credited) directly to equity or through other comprehensive income, which can be analysed as follows: 2022 2021 \u00a3m \u00a3m Deferred tax: On equity-settled transactions 1.9 (2.5) On re-measurement gains and on defined benefit plans (20.4) 18.4 Effect of rate change on previously recognised items - (15.8) (18.5) 0.1 Current tax: On change in value of effective net investment hedge derivatives 0.3 (1.2) On equity-settled transactions - (0.5) (18.2) (1.6) Of which the following amounts are charged/(credited): to the statement of comprehensive income (20.1) 1.4 to the statement of changes in equity 1.9 (3.0) (18.2) (1.6) 9. Taxation (continued) Recognised deferred tax assets and liabilities Deferred taxes record the tax consequences of temporary differences between the accounting and taxation recognition of certain items, as explained below: Assets Liabilities 2022 2021 2022 2021 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets 6.2 11.1 (64.7) (59.8) (58.5) (48.7) Inventories 5.5 4.5 (1.7) (1.2) 3.8 3.3 Revaluation of derivatives 0.5 0.1 (0.8) (0.7) (0.3) (0.6) Pension and share-based payments 12.1 18.9 (7.1) (32.8) 5.0 (13.9) Short-term timing differences 30.7 28.8 (5.8) (3.8) 24.9 25.0 Other tax credits and losses 1.7 4.4 - - 1.7 4.4 56.7 67.8 (80.1) (98.3) (23.4) (30.5) Offsetting within tax jurisdictions (32.2) (28.1) 32.2 28.1 - - Total deferred tax assets and liabilities 24.5 39.7 (47.9) (70.2) (23.4) (30.5) The movement in the net deferred tax balances has been recognised in the financial statements as analysed below: Recognised Recognised in the outside the Balance at income income Acquisitions / Balance at 1 Jan 22 statement statement Exchange disposals 31 Dec 22 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets (48.7) (5.4) (4.4) (58.5) Inventories 3.3 0.4 0.1 3.8 Revaluation of derivatives (0.6) 0.3 (0.3) Pension and share-based payments (13.9) (0.2) 18.5 0.6 Short-term timing differences 25.0 9.7 1.6 (11.4) 24.9 Other tax credits and losses 4.4 (2.8) 0.1 1.7 Net deferred tax (liability)/asset (30.5) 2.0 18.5 (2.0) (11.4) (23.4) Recognised Recognised in the outside the Balance at income income Acquisitions / Balance at 1 Jan 21 statement statement Exchange disposals 31 Dec 21 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets (31.3) 12.3 0.6 (30.3) (48.7) Inventories 2.1 1.0 (0.1) 0.3 3.3 Revaluation of derivatives (1.1) 0.5 (0.6) Pension and share-based payments 7.0 (20.1) (0.1) (0.7) (13.9) Short-term timing differences 24.2 (0.3) (0.4) 1.5 25.0 Other tax credits and losses 1.5 1.1 (0.2) 2.0 4.4 Net deferred tax asset/(liability) 2.4 (5.5) (0.1) (0.8) (26.5) (30.5) All exchange movements are taken through the translation reserve. Unrecognised deferred tax assets and liabilities Deferred assets are reviewed at each reporting date. Deferred tax assets have not been recognised for the following temporary differ 2022 Gross amount \u00a3m Tax losses expiring: Within 10 years 7.4 Available indefinitely 46.0 Capital losses expiring: Within 10 years - Available indefinitely 119.2 Surplus interest expiring: Within 10 years 0.5 Available indefinitely - 173.1 Deferred tax assets have not been recognised for these temporary differences due to uncertainty over suitable future taxable profits a recovered. In assessing the probability of recovery, the Group assesses the likelihood of them being recovered within a reasonably fores minimum of five years, taking into account the future expected profit profile business model of the relevant company and country. The losses and interest, and any potential legislative restrictions on use. In some instances, these amounts are yet to be accepted by the ta The majority of these amounts have no expiry date as noted in the table above. It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However, \u00a311 earnings may still result in a tax liability principally as a result of withholding taxes levied by the overseas jurisdictions in which those su are not expected to exceed \u00a36.6m (2021: \u00a37.5m) of which \u00a33.2m (2021: \u00a32.2m) has been provided on the basis that the Group expec Accounting policy Dividends are recognised as a liability in the period in which they are approved by shareholders. Dividends After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided for and th Current year final dividend - 17.4p per qualifying ordinary share (2021: 15.8p) The following dividends were declared and paid by the Group during the year: Prior year final dividend paid - 15.8p per qualifying ordinary share (2021 final year dividend: 15.0p) Current year interim dividend paid - 8.3p per qualifying ordinary share (2021: 7.9p) Dividend policy and share buybacks As part of the capital management process, the Group ensures that adequate reserves are available in IMI plc in order to meet pro purchase of shares for employee share scheme incentives and any on-market share buyback programme. The Group does not have a formal dividend policy or pay out ratio. The Group\u2019s aim is to continue with progressive dividends which t for both the interim and final dividend payments. In the event that the Board cannot identify sufficient investment opportunities t growth initiatives and acquisitions, the return of funds to shareholders through share buybacks or special dividends will be consider of shares are regularly bought in the market by an employee benefit trust in order to hedge the exposure under certain manageme purchases are shown in Note 22 to the financial statements. 10. Dividends 11. Intangible assets Accounting policy Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period to period. i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. Analysis of intangible assets Non-acquired Acquired Other Other non- intangibles Other customer acquired acquired under intangible Goodwillrelationships ** intangibles** intangibles* construction assets \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Cost As at 1 January 2021 487.4 244.0 132.3 170.2 9.8 556.3 Exchange adjustments (14.7) (7.9) (5.2) (3.0) (0.8) (16.9) Acquisitions 97.4 51.4 58.2 109.6 Additions 4.5 6.8 11.3 Transfers from assets in the course of construction 6.9 (6.9) - Disposals (0.5) (3.6) (0.3) (6.4) (10.3) As at 31 December 2021 569.6 283.9 185.0 172.2 8.9 650.0 Exchange adjustments 48.3 21.2 22.3 12.7 (0.7) 55.5 Acquisitions (Note 23) 153.5 30.9 16.5 47.4 Additions 7.0 7.1 14.1 Transfers from assets in the course of construction 9.3 (9.3) - Disposals (6.0) (6.0) As at 31 December 2022 771.4 336.0 223.8 195.2 6.0 761.0 Amortisation As at 1 January 2021 37.9 204.8 106.7 94.5 406.0 Exchange adjustments (1.9) (7.7) (3.7) (0.9) (12.3) Disposals (3.3) (0.3) (5.9) (9.5) Impairment charge 0.1 0.1 Amortisation for year 10.5 4.5 16.2 31.2 As at 31 December 2021 36.0 204.3 107.2 104.0 - 415.5 Exchange adjustments 1.7 14.0 11.5 6.8 32.3 Acquisitions - Disposals (6.0) (6.0 Impairment charge 0.7 0.7 Amortisation for year 17.2 12.3 18.5 48.0 As at 31 December 2022 37.7 235.5 131.0 124.0 - 490.5 Net book value at 31 December 2021 533.6 79.6 77.8 68.2 8.9 234.5 Net book value at 31 December 2022 733.7 100.5 92.8 71.2 6.0 270.5 * Other non-acquired intangibles includes capitalised development costs with a carrying value of \u00a333.1m (2021: \u00a334.5m) and capitalised software costs with a carrying value of \u00a338.1m (2021: \u00a333.7m). ** An amount included in other acquired intangibles in prior period has been reclassified to acquired customer relationships as part of finalisation of provisional accounting for Adaptas . 11. Intangible assets (continued) Goodwill impairment testing Accounting policy For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Impairment The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether impairment indicators exist. If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date. The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs. Reversals of impairment Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Group has 12 (2021:13) cash generating units to which goodwill is allocated. The recoverable amount of a CGU is the higher of its fair value less costs to sell and its value in use. Value in use is determined using cash flow projections from financial budgets, forecasts and plans approved by the Board covering a five-year period and include a terminal value multiple. The projected cash flows reflect the latest expectation of demand for products and services, including consideration of the future impacts of climate change which is considered as part of the Group\u2019s five-year strategic planning process. The key assumptions in these calculations are the long-term growth rates and the discount rates applied to forecast cash flows in addition to the achievement of the forecasts themselves. Long-term growth rates are based on long-term economic forecasts for growth in the manufacturing sector in the geographical regions in which the cash generating unit operates. Pre-tax discount rates specific to each cash generating unit are calculated by adjusting country and region-specific post- tax weighted average cost of capital (\u2018WACC\u2019) for specific country risk premium, the Group\u2019s size risk premium and tax rate relevant to the jurisdiction in which the cash flows are generated. This exercise resulted in the use of the following ranges of values for the key assumptions: 2022 2021 % % Discount rate 8.8 \u2013 13.3 7.3 \u2013 11.2 Long-term growth rate 1.2 \u2013 2.0 1.5 \u2013 2.0 For the purpose of assessing the significance of CGUs, the Group uses a threshold of 10% of the total goodwill balance. The recoverable amount of the CGUs is determined from a value in use calculation and the key assumptions used in this calculation are the discount rate, growth rate and operating cash flows. These estimates are determined using the methodology discussed above and for those CGUs considered to be significant; outlined in the table below: * IMI Precision Fluid OEM CGU is a new group of CGUs in the current year that combines IMI Precision Americas \u2013 Fluid Technologies, IMI Precision EMEA \u2013 Fluid Technologies and Adaptas. The goodwill balance of Heatmiser UK Ltd of \u00a3102.2m has not been included in the 2022 analysis above due to provisional accounting used for the purchase price allocation. The carrying amount of Goodwill allocated to CGUs deemed to be non-significant is \u00a3307.8m (2021: \u00a3268.1m). Sensitivity to changes in assumptions The key estimates reflect the combination of assumptions used, including the long- term growth rates and the discount rate applied to forecast cash flows in addition to the achievement of the forecasts themselves. The Directors do not consider that any reasonably possible changes to the key assumptions would cause the carrying amount to exceed the recoverable amount of the CGU. The aggregate amount of goodwill arising from acquisitions prior to 1 January 2004 which had been deducted from the profit and loss reserves and incorporated into the IFRS transitional balance sheet as at 1 January 2004, amounted to \u00a3364m. The cumulative impairment recognised in relation to goodwill is \u00a341m (2021: \u00a341m) 2022 Goodwill \u00a3m Discount rate % Growth rate % CGU IMI Precision \u2013 Fluid OEM* 208.9 10.3 2.0 IMI Critical \u2013 Petrochemical & Isolation 117.4 10.0 2.0 IMI Critical \u2013 Control Valves 99.6 13.3 2.0 2021 CGU IMI Critical \u2013 Petrochemical & Isolation 110.6 10.9 2.0 IMI Critical \u2013 Control Valves 95.9 10.8 2.0 IMI Precision Americas \u2013 Fluid Technologies 59.0 10.9 1.7 This note details the physical assets used by the Group to generate revenues and profits, in addition to those disclosed in Note 13 'Leases'. These assets include manufacturing, distribution and office sites, and equipment used in the manufacture of the Group\u2019s products. The cost of these assets represents the amount initially paid for them. Accounting policy Freehold land and assets in the course of construction are not depreciated. Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 11). Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Costs in respect of tooling owned by the Group for clearly identifiable new products are capitalised net of any contribution received from customers and are included in plant and equipment. Depreciation is charged to the income statement, from the date the asset is brought in to use, on a straight-line basis (unless such a basis is not aligned with the anticipated benefit) so as to write down the cost of assets to residual values over the period of their estimated useful lives within the following ranges: \u2022 Freehold buildings - 25 to 50 years \u2022 Plant and equipment - 3 to 20 years Assets in the course of construction comprise assets which are not currently ready to be brought in to use. Assets under construction are not depreciated. If there has been a technological change or decline in business performance the directors review the value of the assets to ensure they have not fallen below their depreciated value. If an asset\u2019s value falls below its depreciated value, a one-off impairment charge is made against profit. Assets in the Land & Plant & course of buildings equipment construction Total \u00a3m \u00a3m \u00a3m \u00a3m Cost As at 1 January 2021 189.6 698.2 16.9 904.7 Exchange adjustments (5.6) (27.3) (1.4) (34.3) Acquisitions (Note 23) 4.1 5.0 0.5 9.6 Additions 1.1 20.6 24.5 46.2 Transfers from assets in the course of construction 1.8 12.1 (13.9) - Disposals (4.3) (33.9) (38.2) As at 31 December 2021 186.7 674.7 26.6 888.0 Exchange adjustments 8.7 43.9 (0.4) 52.2 Acquisitions (Note 23) 2.9 1.8 0.2 4.9 Additions 3.6 23.7 29.9 57.2 Transfers from assets in the course of construction 0.8 24.4 (25.2) - Disposals (4.3) (32.8) (0.1) (37.2) As at 31 December 2022 198.4 735.7 31.0 965.1 Depreciation As at 1 January 2021 97.0 541.7 638.7 Exchange adjustments (0.6) (28.3) (28.9 Disposals (2.6) (32.3) (34.9) Impairment charge 3.1 2.3 5.4 Depreciation 3.7 36.3 40.0 As at 31 December 2021 100.6 519.7 - 620.3 Exchange adjustments 3.6 35.6 39.2 Disposals (2.1) (30.5) (32.6) Reversal of impairment (1.9) (1.0) (2.9 Depreciation 4.7 37.2 41.9 As at 31 December 2022 104.9 561.0 - 665.9 NBV at 31 December 2021 86.1 155.0 26.6 267.7 NBV at 31 December 2022 93.5 174.7 31.0 299.2 A reversal of impairment \u00a32.9m occurred during the year (2021: an impairment charge of \u00a35.4m). The recoverable amount of these assets has been determined using their fair value less costs to sell, estimated by both internal and external valuation specialists. Group contracts in respect of future capital expenditure which had been placed at the balance sheet date amounted to \u00a33.7m (2021: \u00a33.4m). 12. Property, plant and equipment Accounting policy The Group leases various properties, plant, equipment and cars. Rental contracts are negotiated individually and have a range of initial terms and may have extension options. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of: i. fixed payments less any lease incentives receivable; ii. variable lease payments that are based on an index or a rate; iii. amounts expected to be payable by the Group under residual value guarantees; iv. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and v. payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the entity\u2019s incremental borrowing rate is used, being the rate that the entity would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising: i. the amount of the initial measurement of lease liability; ii. any lease payments made at or before the commencement date less any lease incentives received; and iii. restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture. Extension and termination options - Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Critical judgement In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows of \u00a3nil have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Group. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of \u00a38.3m (2021: \u00a311.0m). 13. Leases 13. Leases (continued) Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period: Land & Plant & buildings equipment Total \u00a3m \u00a3m \u00a3m As at 1 January 2021 72.6 13.0 85.6 Additions 14.9 5.0 19.9 Acquisitions 3.8 0.1 3.9 Extensions 12.4 0.7 13.1 Payment changes 0.5 0.1 0.6 Terminations (1.5) (0.4) (1.9 Depreciation expense (20.9) (7.4) (28.3 Exchange (0.9) (0.5) (1.4 As at 31 December 2021 80.9 10.6 91.5 Additions 27.9 7.3 35.2 Acquisitions - 0.1 0.1 Extensions 8.0 1.0 9.0 Payment changes 1.6 0.2 1.8 Terminations (0.5) (0.2) (0.7 Impairment (0.6) - (0.6 Depreciation expense (25.0) (7.3) (32.3) Exchange 2.5 0.5 3.0 As at 31 December 2022 94.8 12.2 107.0 Set out below are the carrying amounts of lease liabilities and the movements during the period: Land & Plant & buildings equipment Total \u00a3m \u00a3m \u00a3m As at 1 January 2021 75.5 12.8 88.3 Additions 14.6 5.1 19.7 Acquisitions 3.8 0.1 3.9 Extensions 12.1 0.7 12.8 Payment changes (0.8) 0.1 (0.7 Terminations (1.5) (0.3) (1.8 Accretion of interest 2.6 0.2 2.8 Payments (22.3) (7.7) (30.0 Exchange (0.8) (0.3) (1.1 As at 31 December 2021 83.2 10.7 93.9 Additions 23.7 7.3 31.0 Acquisitions - 0.1 0.1 Extensions 8.1 1.0 9.1 Payment changes 1.7 0.2 1.9 Terminations (0.5) (0.2) (0.7 Accretion of interest 2.6 0.2 2.8 Payments (27.2) (7.9) (35.1) Exchange 2.2 0.5 2.7 As at 31 December 2022 93.8 11.9 105.7 Current 20.0 5.8 25.8 Non-current 73.8 6.1 79.9 The following are the amounts recognised in the income statement: 2022 2021 \u00a3m \u00a3m Depreciation expense of right-of-use assets (32.3) (28.3) Interest expense on lease liabilities (2.8) (2.8) Total amount recognised in profit or loss (35.1) (31.1) Practical expedients applied The Group has used the following practical expedients permitted by the standard: i. the use of a single discount rate to a portfolio of leases with reasonably similar characteristics No practical expedient has been applied in relation to short-term leases and low value assets and is not expected to be used in subsequent periods. Future cash outflows that the Group is potentially exposed to in relation to the measurement of lease liabilities which have not been reflected is \u00a3nil (2021: \u00a3nil). Accounting policy i. Defined contribution (\u2018DC\u2019) pension plans Arrangements where the employer pays fixed contributions into an external fund on behalf of the employee (who is responsible for making the investment decision and therefore assumes the risks and rewards of fund performance). Contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. ii. Defined benefit (\u2018DB\u2019) pension plans A defined benefit pension plan is a pension arrangement in which the employer promises a specified annual benefit on retirement that is pre-determined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. In some cases, this benefit is paid as a lump sum on leaving the Company or while in the service of the Company rather than as a pension. The Group underwrites one or more risks in meeting these obligations and therefore any net liability or surplus in these arrangements is shown on the Group balance sheet. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or curtailment, and the date that the Group recognises restructuring-related costs. The discount rate is the yield at the balance sheet date on high quality corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. At each year end the Company and the local actuaries consider whether the plans are affected by the asset ceiling requirements. When the calculation results in a net asset to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan and restricted by any relevant asset ceiling. Any deduction made by the tax authorities in the event of a refund of a surplus would be regarded by the Group as an income tax. When the benefits of a plan are improved, the expense is recognised immediately in the income statement. Re-measurement gains and losses are recognised immediately in equity and disclosed in the statement of comprehensive income. iii. Long-term service and other post-employment benefits The Group\u2019s net obligation in respect of long-term service and other post-employment benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the balance sheet date on high quality bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. Key source of estimation uncertainty Key source of estimation uncertainty \u2013The present value of the Group\u2019s defined benefit pension plans and other post-employment benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, inflation, future salary increases, mortality rates and future pension increases. The assumptions used and analysis of their sensitivity is set out below. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. 14. Retirement benefits Summary information Net pension deficit: \u00a318.9m (2021: surplus of \u00a362.5m) The assets and liabilities of the defined benefit schemes are aggregated, recognised in the consolidated balance sheet and shown within non-current liabilities or in non-current assets if a scheme is in surplus and it is deemed recoverable. Number of DB arrangements: 70 (2021: 70) There has been no change to the number of schemes during the year. The following table shows a summary of the geographical profile of the Group\u2019s defined benefit schemes: Net surplus/ Quantity Quantity Assets Liabilities (deficit) 2022 2021 \u00a3m \u00a3m \u00a3m Australia 3 3 (0.4) (0.4) Austria 6 6 (2.4) (2.4) France 3 3 0.2 (0.9) (0.7) Germany 30 30 7.0 (42.8) (35.8) India 6 6 (1.2) (1.2) Italy 6 6 (2.2) (2.2) Mexico 5 5 (0.8) (0.8) Spain 2 2 Switzerland 5 5 74.0 (73.9) UAE 1 1 (1.3) (1.3) US* 2 2 (2.6) (2.6) UK 1 1 325.3 (296.9) 70 70 406.5 (425.4) (18.9) * The US deficit above excludes \u00a31.8m of assets relating to unqualified plans classified as investments (see Note 17). As at 31 December 2022, the Group has recognised a net defined benefit surplus of \u00a328.4m (2021: \u00a3129.0m) for the UK Deferred Fund. No asset ceiling has been applied to the net surplus recognised since the Group has an unconditional right to a refund of surplus assets following the settlement of the liabilities. % % Qty Assets of total Liabilities of total Type of scheme No. \u00a3m assets \u00a3m liabilities 2022 Final salary* 25 325.9 79% (333.6) 78% Cash balance** 12 79.1 19% (76.3) 18% Jubilee Awards*** 14 - 0% (2.7) 1% Other 19 7.2 2% (12.8) 3% Total 70 412.2 100% (425.4) 100% Asset ceiling (5.7) Revised assets 406.5 2021 Final salary* 25 632.5 88% (549.2) 84% Cash balance** 12 80.6 11% (87.1) 13% Jubilee Awards*** 14 - 0% (3.0) 0% Other 19 6.6 1% (17.9) 3% Total 70 719.7 100% (657.2) 100% The Group provides pension benefits through a mixture of funded and unfunded DB and DC arrangements. Assessments of the obligations of the defined benefit plans are carried out by actuaries, based on the projected unit credit method. A historical split of the types of defined benefit schemes in operation is as follows: * Final salary scheme: The pension available to a member in a final salary arrangement will be a proportion of the member\u2019s salary at or around their retirement date. This proportion will be determined by the member\u2019s length of pensionable service, their accrual rate and any particular circumstances under which the member retires (for example early ill-health retirement). ** Cash balance: A cash balance scheme is a form of defined benefit pension under which the member has the right to a defined lump sum on retirement rather than a defined amount of pension receivable. For example a cash balance plan may have minimum or guaranteed rates of return on pension contributions. The amount of pension to which that lump sum may be converted is determined by the annuity rates prevailing at the time of conversion. *** Jubilee Awards: Jubilee plans provide for cash award payments which are based on completed lengths of service. These payments are often made on cessation of service with the company, subject to a minimum period of service. Asset profile of schemes The following table sets out the profile of the overall assets of the schemes (to give an indication of their risk profile), the comparative amounts of the funded and unfunded defined benefit liabilities ('DBOs') and a split of the balance sheet impact between schemes with a net pension surplus and a net pension deficit. 2022 2021 \u00a3m \u00a3m Quoted equities 24.7 27.8 Quoted bonds 23.3 256.8 Total quoted assets 48.0 284.6 Unquoted equities 103.3 120.8 Insurance policies* 272.0 254.7 Property 19.5 20.0 Other** (30.6) 39.6 Total unquoted assets 364.2 435.1 Fair value of assets 412.2 719.7 Restriction due to asset ceiling (5.7) - DBOs for funded schemes (378.3) (598.1) DBOs for unfunded schemes (47.1) (59.1) Surplus/(deficit) for DBOs (18.9) 62.5 Schemes in net pension deficit (47.4) (66.5) Schemes in net pension surplus 28.5 129.0 * The value of the insurance policies match the value of the IAS 19 liabilities insured. ** 'Other' assets primarily consists of cash, currency swaps and UK commercial real estate debt. The overseas assets of \u00a386.9m (2021: \u00a387.8m) comprise equities of \u00a324.7m (2021: \u00a327.8m), bonds of \u00a321.0m (2021: \u00a320.2m), insurance of \u00a37.5m (2021: \u00a34.1m), property of \u00a319.5m (2021: \u00a319.2m) and other assets of \u00a314.2m (2021: \u00a316.5m). This excludes the impact of the restriction due to the asset ceiling of \u00a35.7m (2021: \u00a3nil) associated with schemes in Switzerland and Germany. Funded: The majority of the Group defined benefit and other post-employment benefit arrangements are funded, which means they are linked to specific plan assets that have been segregated in a trust or foundation. Unfunded: Plans that are not funded are those that are not backed by segregated assets. These include some pension plans but also a number of other long-term arrangements for the benefit of our employees, with benefits payable while they are employed by the Group but more than 12 months after the related service is rendered. Actuarial gains and losses on other long-term arrangements are recognised in the income statement in the period in which they arise. Average duration by geography The following table shows the weighted average number of years (or duration) over which pension benefits are expected to be paid. Location 2022 2021 UK 15.4 21.7 Switzerland 14.1 16.8 US 5.1 5.5 Eurozone 11.9 14.6 The UK Funds The United Kingdom constitutes 70% (2021: 77%) of total defined benefit liabilities and 80% (2021: 88%) of total defined benefit assets. Historically, the IMI Pension Fund offered final salary benefits to UK employees until it closed to new entrants in 2005 and to future accrual on 31 December 2010. In December 2014, winding-up procedures commenced and those members who were not eligible or did not take up the offer of a single cash lump sum transferred to one of two new Funds (IMI 2014 Pensioner Fund or the IMI 2014 Deferred Fund \u2013 \u2018the UK Funds\u2019). Ongoing pension benefits in the UK are provided via the Trustee\u2019s defined contribution plan - The IMI Retirement Savings Plan. All UK pension assets are run on behalf of the Trustee by the Board of the IMI Common Investment Fund. Liability management During 2022, the Group completed an insurance buy-in exercise for the remaining uninsured members. The Trustees agreed to defer part of the premium owed to the insurance company for this buy-in and the outstanding amount is expected to be paid over the next 5 years. The present value of the deferred premium has been deducted from the total asset value for the current year. Consistent with the accounting treatment of previous buy-in transactions, the impact has been recognised in the other comprehensive income statement. During 2021, the Group completed a bulk insurance buy-in exercise in relation to certain members of the UK Deferred Fund. The difference between the value of the liabilities insured and the cost of the premium to insure them of \u00a326.4m was recognised as a loss in other comprehensive income. Contributions The March 2021 Valuation was completed in December 2021 and the Funds\u2019 Actuary certified that no deficit funding contributions would be required over and above the projected investment returns and the scheduled payments, of \u00a37.0m per annum, due from the Scottish Limited Partnerships until the earlier of full funding of the UK Deferred Fund or 2030. During 2022, the Group ceased contributions to the Scottish Limited Partnership as the UK Deferred Fund is fully funded. The final payment of \u00a33.5m for 2021 was made in February 2022. 14. Retirement benefits (continued) Specific effect on the financial statements The corresponding entries for increases and decreases in the net pension deficit reported in the balance sheet are reflected as follows: i. Cash flow statement: When the Group makes cash contributions to fund the pension deficit/surplus they are reflected in the cash flow statement and reduce the net deficit/increase the net surplus. ii. Income statement: Movements in the overall net pension deficit/surplus are recognised in the income statement when they relate to changes in the overall pension promise, due to either an additional period of service (known as \u2018current service cost\u2019), changes to pension terms in the scheme rules (known as \u2018past service cost\u2019), or closure of all or part of a scheme (known as settlements and curtailments). The interest charge/income on the net deficit/surplus position is also recognised in the income statement. iii. Other comprehensive income (OCI): Movements in the overall net pension deficit/surplus are recognised through OCI when they relate to changes in actuarial assumptions or the difference (\u2018experience gain or loss\u2019) between previous assumptions and actual results. The table below reconciles the movement in the UK and overseas net defined benefit (obligation)/surplus between 1 January 2022 and 31 December 2022. UK Overseas Total \u00a3m \u00a3m \u00a3m Net defined benefit surplus/(obligation) at 1 January 2022 129.0 (66.5) 62.5 Movement recognised in: Income statement 2.3 (6.0) (3.7 OCI (102.9) 20.2 (82.7) Cash flow statement - 8.2 8.2 Exchange movements - (3.2) (3.2 Net defined benefit surplus/(obligation) at 31 December 2022 28.4 (47.3) (18.9 Risks faced by the schemes The main risks that the Group face in respect of the UK Deferred Fund, which makes up 70% of the Group\u2019s liabilities, are: Risk Description/mitigation Interest rate risk Under IAS 19, the discount rate should be set with reference to the yield on high quality corporate bonds (typically taken to mean those rated AA) of term appropriate to the duration of the liabilities. A decrease in corporate bond yields and therefore the resulting discount rate, leads to a higher value being placed on the pension liabilities. The Trustees\u2019 investment strategy for the UK Deferred Fund includes investing in liability-driven investments and bonds whose values increase with decreases in interest rates. The Trustees have a target to hedge 100% of interest rate risk. The Trustee\u2019s investment managers measure and monitor the hedging arrangements in place and the latest performance report shows this target is being met. Note that the Scheme hedges interest rate risk on a scheme funding basis (relative to gilts) whereas AA corporate bonds are implicit in the IAS 19 discount rate and so there is some mismatching risk to the Group should yields on gilts and corporate bonds diverge. The Scheme\u2019s exposure to corporate bonds mitigates this risk to some extent. Inflation risk In the UK Deferred Fund, a large proportion of the benefits are linked to inflation. Therefore, an increase in inflation would lead to higher benefits being paid than expected. To mitigate this risk, the UK Deferred Fund aims to hedge 100% of the Fund\u2019s liabilities against inflation risk. The Trustee\u2019s investment managers measure and monitor the hedging arrangements in place and the latest performance report shows this target is being met. Investment risk The UK Deferred Fund holds investments in asset classes, such as private equity and property, which have volatile market values. These assets are expected to provide better returns than Government bonds over the long-term. However, the short-term volatility can cause additional funding to be required, if a deficit emerges. As these investments make up around 27% of the total assets, the risk to the Group is relatively small. Mortality risk The majority of the plans\u2019 obligations are to provide benefits for the life of each retired member and his/her spouse, so increases in life expectancy result in an increase in the plans\u2019 liabilities. An increase of one year in life expectancy for the UK Deferred Fund would act to increase liabilities by c.\u00a310.4m. The Group has an objective to insure benefits as members retire in order to reduce mortality risk . Cash flow impacts 2022 2021 UK Overseas Total UK Overseas Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Amounts from employees - 2.3 2.3 - 2.2 2.2 Amounts from employers 3.5 2.9 6.4 7.0 2.7 9.7 Benefits and settlements paid directly by the Group - 5.3 5.3 - 4.1 4.1 Total 3.5 10.5 14.0 7.0 9.0 16.0 The expected contributions to the DB arrangements in 2023 are \u00a32.9m of normal employer contributions and \u00a32.4m of normal employee contributions, both in relation to overseas pension funds. Other comprehensive income Movements in pension assets and liabilities that arise during the year from changes in actuarial assumptions, or because actual experience is different from the actuarial assumptions, are recognised in equity via other comprehensive income. These movements are analysed below: 2022 2021 Overseas Overseas Overseas Overseas post non-post post non-post UK employment employment Total UK employment employment Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Change in discount rate 203.9 26.0 229.9 49.9 8.0 57.9 Change in inflation 2.2 9.3 11.5 (16.0) - (16.0) Change in other assumptions 2.3 - 2.3 5.4 3.2 8.6 Actuarial experience - Liabilities (2.1) (1.2) (3.3) 3.6 1.4 5.0 Asset experience (309.2) (8.5) (317.7) 8.0 7.4 15.4 Actuarial (losses)/gains in the year (102.9) 25.6 (77.3) 50.9 20.0 70.9 Change in the asset ceiling (5.4) (5.4) - Exchange (losses)/gains (2.8) (0.4) (3.2) 4.0 0.3 4.3 (Losses)/gains recognised through equity (102.9) 17.4 (0.4) (85.9) 50.9 24.0 0.3 75.2 IMI takes advice from actuaries regarding the appropriateness of the assumptions used to determine the present value of the defined benefit obligations. These assumptions include the discount rate applied to the assets and liabilities, the life expectancy of the members, their expected salary and pension increases and inflation. The assumptions used for this purpose in these financial statements are summarised below: Weighted Averages 31 Dec 2022 31 Dec 2021 31 Dec 2020 UK* Overseas UK** Overseas UK Overseas % pa % pa % pa % pa % pa % pa Inflation \u2013 RPI 3.4 n/a 3.4 n/a 3.1 n/a Inflation \u2013 CPI (pre-2030) 2.4 1.5 2.4 1.3 2.1 1.3 Inflation \u2013 CPI (post-2030) 3.4 1.5 3.4 1.3 3.1 1.3 Discount rate 4.8 3.0 1.9 0.8 1.4 0.4 Expected salary increases n/a 1.8 n/a 1.7 n/a 1.6 Rate of pension increases 3.3 0.5 3.3 0.7 3.1 0.7 * Assumptions based on 31 December 2022 market conditions and based on the weighted average of various buy-in policy assumptions. ** Assumptions based on 31 December 2021 UK market conditions excluding buy-ins 2022 2021 2020
Years Years Years
Life expectancy (IMI Pension Fund only)***
Current male pensioners 21.5 21.8 21.8
Current female pensioners 23.9 24.1 24.6
Future male pensioners 22.8 23.1 23.5
Future female pensioners 25.4 25.6 26.4
*** Life expectancies are based on members with a pension size of \u00a35k-\u00a320k for male members and \u00a31k-\u00a38k for female members.
The mortality assumptions used for the UK Funds above reflect its scheme specific experience, together with an allowance for improvements over time. The experience
was reviewed as part of the formal triennial actuarial valuation carried out as at 31 March 2021. The assumptions used as at 31 December 2022 have been based on the
results of this review, with the allowance for improvements over time updated to reflect the latest data available.
The table below illustrates how the UK Funds\u2019 net pension surplus would decrease
The table below shows how the net pension deficit for IMI\u2019s non-UK plans would
(excluding the impact of inflation rate and interest rate hedging), as at 31 December
increase, in the event of the following reasonable changes in the key
2022, in the event of the following reasonable changes in the key assumptions above.
assumptions above.
UK 2022 2021
Non-UK 2022 2021
\u00a3m \u00a3m
\u00a3m \u00a3m
Discount rate 0.1% pa lower* 5.0 11.0
Discount rate 0.1% pa lower 1.4 2.5
Inflation-linked pension increases 0.1% pa higher 4.0 0.0
Salary increases 0.1% higher 0.3 0.3
Increase of one year in life expectancy from age 65 10.0 18.0
Increase of one year in life expectancy at age 65 2.7 4.2
10% fall in non-bond-like assets** 11.0 37.0
* Due to the volatility of the discount rate year on year, sensitivities using a
percentage of 0.1% are shown to provide the users of the accounts the ability
to adjust the sensitivities as they consider necessary.
** Fund assets excluding cash, bonds and insurance policies.
In each case all other assumptions are unchanged.
Income statement
In accordance with IAS 19, pension costs recorded through the income statement primarily represent the increase in the DBO based on employee service during the
year and the interest on the net liability or surplus for DBOs in respect of employee service in previous years. The table below shows the cost reported in the income
statement in respect of pension obligations (excluding defined benefit contributions):
2022 2021
Overseas Overseas Overseas Overseas
post non-post post non-post
UK employment employment Total UK employment employment Total
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Current service cost 4.5 0.8 5.3 5.1 0.8 5.9
Settlement/curtailment gain - (0.4) (0.4)
Recognition of gains (0.1) (0.1) -
Pension expense/(income) - operating costs - 4.5 0.7 5.2 (0.4) 5.1 0.8 5.5
Interest on DBO 9.2 1.1 0.1 10.4 9.0 0.6 0.1 9.7
Interest on assets (11.5) (0.4) (11.9) (10.6) (0.1) (10.7)
Interest (income)/expense \u2013 financing costs (2.3) 0.7 0.1 (1.5) (1.6) 0.5 0.1 (1.0)
Overall reconciliation of changes in the net (liability)/surplus for DBOs 2022 2021 Net DB Net DB Asset asset/ asset/ DBO Assets ceiling (liability) DBO Assets (liability) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Brought forward at start of year (657.2) 719.7 - 62.5 (740.8) 718.8 (22.0) Income statement (charges)/credits Current service cost (5.3) (5.3) (5.9) (5.9) Settlements 1.2 (1.2) - 25.3 (24.9) 0.4 Net interest (cost)/income on net DB (liability)/asset (10.4) 11.9 1.5 (9.7) 10.7 1.0 Immediate recognition of gains/(losses) \u2013 other long-term benefits 0.1 0.1 - Total charged to income statement (14.4) 10.7 - (3.7) 9.7 (14.2) (4.5) Remeasurements recognised in other comprehensive income Actuarial (loss)/gain due to actuarial experience (3.3) (3.3) 5.0 5.0 Actuarial gain due to financial assumption changes 241.6 241.6 41.9 41.9 Actuarial gain due to demographic assumption changes 2.2 2.2 8.6 8.6 Return on plan assets* less than discount rate (317.8) (317.8) 15.4 15.4 Change in asset ceiling (5.4) (5.4) - Total remeasurements recognised in other comprehensive income 240.5 (317.8) (5.4) (82.7) 55.5 15.4 70.9 Cash flows in the year Employer contributions 2.9 2.9 9.7 9.7 Employee contributions (2.3) 2.3 - (2.2) 2.2 - Benefits paid directly by the Company 5.3 5.3 4.1 4.1 Benefits paid from plan assets 13.6 (13.6) - 10.8 (10.8) - Net cash inflow/(outflow) 16.6 (8.4) - 8.2 12.7 1.1 13.8 Other movements Changes in exchange rates (10.9) 8.0 (0.3) (3.2) 5.7 (1.4) 4.3 Total other movements (10.9) 8.0 (0.3) (3.2) 5.7 (1.4) 4.3 Carried forward at end of year (425.4) 412.2 (5.7) (18.9) (657.2) 719.7 62.5 * Net of management costs 15. Inventories Accounting policy Inventories are valued at the lower of cost and net realisable value. Due to the varying nature of the Group\u2019s operations, both first in, first out and weighted average methodologies are employed. In respect of work in progress and finished goods, cost includes all direct costs of production and the appropriate proportion of production overheads. The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications, there is a risk of products requiring modification, which can lead to excess or obsolete inventory. The amount of inventory provision recognised is disclosed below: Inventories 2022 2021 \u00a3m \u00a3m Raw materials and consumables 169.0 135.4 Work in progress 136.7 107.0 Finished goods 110.6 92.8 416.3 335.2 Inventories are stated after: Allowance for impairment 52.5 46.2 In 2022, the cost of inventories recognised as an expense (being segmental cost of sales) amounted to \u00a31,112.1m (2021: \u00a31,004.6m). In 2022, the write-down of inventories to net realisable value amounted to \u00a30.1m (2021: \u00a30.4m). The reversal of write-downs amounted to \u00a3nil (2021: \u00a3nil). Write-downs and reversals in both years relate to ongoing assessments of inventory obsolescence, excess inventory holding and inventory resale values across all of the Group\u2019s businesses. 16. Trade and other receivables Accounting policy The recoverable amount of the Group\u2019s receivables other than financial assets held at fair value is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration of less than one year are not discounted. The expected credit loss is calculated based on the ageing of individual customers receivables, giving consideration to the geographical location in which they operate, historical collectability and the customer\u2019s financial position, where this information is known. The maximum exposure to credit risk for trade receivables at the reporting date by Trade and other receivables segment was as follows: 2022 2021 Carrying amount \u00a3m \u00a3m 2022 2021 Current \u00a3m \u00a3m Trade receivables 368.5 325.4 IMI Precision Engineering 164.2 128.3 Prepayments* 23.6 29.6 IMI Critical Engineering 147.1 153.8 Accrued income* 2.3 0.3 IMI Hydronic Engineering 57.2 43.3 Other receivables 90.5 58.7 368.5 325.4 484.9 414.0 Receivables are stated after: Impairment provisions for trade receivables Allowance for impairment 16.4 15.7 The ageing of trade receivables at the reporting date was: * 'Prepayments' and 'Accrued income' are now disclosed separately given their quantum. Prior period comparatives have been re-presented. 2022 2021 Gross Impairment Gross Impairment Credit risk \u00a3m \u00a3m \u00a3m \u00a3m Credit risk is the risk of financial loss to the Group if a customer or counterparty to Not past due 317.0 (0.1) 285.8 (0.3) a financial instrument fails to meet its contractual obligations, and arises principally Past due 1-30 days 30.7 (0.9) 24.5 (1.0) from the Group\u2019s receivables from customers, cash and cash equivalents held by Past due 31-90 days 14.4 (0.9) 9.2 (1.1) the Group\u2019s banks and other financial assets. At the end of 2022 these totalled Past due over 90 days 22.8 (14.5) 21.6 (13.3) \u00a3526.1m (2021: \u00a3446.0m). Total 384.9 (16.4) 341.1 (15.7) Managing credit risk arising from customers The Group\u2019s exposure to credit risk is influenced mainly by the individual The net movement in the allowance for impairment in respect of trade receivables characteristics of each customer. The demographics of the Group\u2019s customer base, during the year was as follows: including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. Our largest single customer accounted for 2% of our 2022 revenues (2021: 3%). 2022 2021 \u00a3m \u00a3m Geographically there is no unusual concentration of credit risk. The Group\u2019s contract Net balance at 1 January 15.7 19.5 approval procedure ensures that large contracts are signed off at executive director level at which time the risk profile of the contract, including potential credit and Acquisitions (0.4) (0.1) foreign exchange risks, is reviewed. Credit risk is minimised through due diligence on Utilised during the year 2.0 (3.0) potential customers, appropriate credit limits, cash flow management and the use Charged to the income statement (0.1) 1.7 of documentary credits where appropriate. Released (1.6) (1.3) Exchange 0.8 (1.1) Exposure to credit risk in respect of trade receivables Net balance at 31 December 16.4 15.7 Carrying amount Managing credit risk arising from counterparties 2022 2021 A group of relationship banks provides the bulk of the banking services, with \u00a3m \u00a3m pre-approved credit limits set for each institution. Financial derivatives are entered into with these core banks and the credit exposure to these instruments UK 18.1 12.9 is included when considering the credit exposure to the counterparties. At the end Germany 33.0 24.9 of 2022, credit exposure including cash deposited did not exceed \u00a316.0m with any Rest of Europe 98.3 83.3 single institution (2021: \u00a315.8m). USA 75.7 62.5 Asia Pacific 95.6 93.4 Rest of World 47.8 48.4 368.5 325.4 17. Financial assets and liabilities Financial instruments included in the financial statements are measured at either fair value or amortised cost. The measurement of this fair value can in some cases be subjective, and can depend on the inputs used in the calculations. The Group generally calculates its own fair values using comparable observed market prices and a valuation model using the respective and relevant market data for the instrument being valued. The table below sets out the Group's accounting classification of each class of financial assets and liabilities, and their fair values at 31 December 2022 and 31 December 2021. Under IFRS 9, all derivative financial instruments not in a hedge relationship are classified as derivatives at fair value through the income statement. The Group does not use derivatives for speculative purposes and transacts all derivatives with suitable investment grade counterparties. All transactions in derivative financial instruments are undertaken to manage the risks arising from the Group\u2019s business activities. Other Financial At Total Designated derivatives assets at amortised carrying Fair value at fair value at fair value fair value* cost value if different \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m 2022 Cash and cash equivalents 133.0 133.0 Bank overdrafts (93.8) (93.8) Borrowings due within one year (150.1) (150.1) (150.1 Borrowings due after one year (595.4) (595.4) (554.2 Lease liabilities (105.7) (105.7) Trade and other payables** (447.6) (447.6) Trade receivables 368.5 368.5 Investments 2.0 2.0 Other current financial assets/(liabilities) Derivative assets*** 15.7 15.7 Derivative liabilities**** (3.9) (9.9) (13.8) Total (3.9) 5.8 135.0 (1,024.1) (887.2) 2021 Cash and cash equivalents 94.6 94.6 Bank overdrafts (65.5) (65.5) Borrowings due within one year (127.7) (127.7) (128.3 Borrowings due after one year (430.3) (430.3) (446.6 Lease liabilities (93.9) (93.9) Trade and other payables** (406.9) (406.9) Trade receivables 325.4 325.4 Investments 2.9 2.9 Other current financial assets/(liabilities) Derivative assets*** 4.9 5.1 10.0 Derivative liabilities**** (6.3) (6.3) Total 4.9 (1.2) 97.5 (798.9) (697.7) * This classification includes items for which the movement in fair value will be recognised in both profit and loss and other comprehensive income. ** Trade and other payables exclude corporation tax and include liabilities of \u00a39.9m (2021: \u00a36.5m) falling due after more than one year. *** Includes \u00a32.6m (2021: \u00a30.1m) falling due after more than one year. **** Derivative liabilities include liabilities of \u00a30.4m (2021: \u00a30.2m) falling due after more than one year: \u00a30.4m in 1-2 years and \u00a3nil in 2-3 years (2021: \u00a30.1m in 1-2 years and \u00a30.1m in 2-3 years). Derivative liabilities designated at fair value represent the fair value of unsettled net investment hedge derivatives. The decrease in value of net investment hedge derivatives in the year of \u00a38.8m is shown in the consolidated statement of comprehensive income. The increase in other derivative assets and liabilities at fair value of \u00a37.0m is recognised in the income statement and consists of a \u00a37.8m increase of unsettled net foreign currency and metal forward contracts, which are not designated as hedges for accounting purposes and a decrease of \u00a30.8m of forward contracts to be utilised against specific trade receivables and trade payables. There are no other financial liabilities included within payables disclosed above. Fair value Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The following table shows the Group's financial instruments held at fair value (excluding cash): Quoted prices in active markets for identical assets and observable Unobservable liabilities inputs inputs Level 1 Level 2 Level 3 Total \u00a3m \u00a3m \u00a3m \u00a3m As at 31 December 2022 Financial assets measured at fair value Equity instruments* 2.0 2.0 Foreign currency forward contracts 15.7 15.7 2.0 15.7 7.7 Financial liabilities measured at fair value Foreign currency forward contracts (13.8) (13.8 (13.8) (13.8) As at 31 December 2021 Financial assets measured at fair value Equity instruments* 2.9 Foreign currency forward contracts 10.0 10.0 2.9 10.0 Financial liabilities measured at fair value Foreign currency forward contracts (6.3) (6.3 (6.3) (6.3) * Equity instruments primarily relate to investments in funds in order to satisfy long-term benefit arrangements. Valuation techniques for level 2 inputs Derivative assets and liabilities of \u00a315.7m and \u00a313.8m respectively are valued by level 2 techniques. The valuations are derived from discounted contractual cash flows using observable, and directly relevant, market interest rates and foreign exchange rates from market data providers. Valuation techniques for level 3 inputs At 31 December 2022, the Group held one external investment at fair value using significant unobservable (level 3) inputs. The valuation is derived using the cash flows of the investment which indicate a fair value of \u00a3nil. Valuation methodology Cash and cash equivalents, bank overdrafts, trade payables and trade receivables are carried at their book values as this approximates to their fair value due to the short-term nature of the instruments. Long-term and short-term borrowings, apart from any which are subject to hedging arrangements, are carried at amortised cost as it is the intention that they will not be repaid prior to maturity, where this option exists. The fair values are evaluated by the Group based on parameters such as interest rates and relevant credit spreads. Long-term borrowings which are subject to hedging arrangements are valued using appropriate discount rates to value the relevant hedged cash flows. Derivative assets and liabilities, including foreign exchange forward contracts, interest rate swaps and metal hedges, are valued using comparable observed market prices and a valuation model using foreign exchange spot and forward rates, interest rate curves and forward rate curves for the underlying commodities. 17. Financial assets and liabilities (continued) 18. Financial risk management Overview The Group\u2019s activities expose it to a variety of financial risks: interest rate, foreign exchange and base metal price movements in addition to funding and liquidity risks. The financial instruments used to manage these risks themselves introduce exposure to market risk and liquidity risk. The Board has overall responsibility for the establishment and oversight of the Group\u2019s risk management framework. As described in the Corporate Governance Report on page 101 the Executive Committee monitors risk and internal controls and the Audit Committee monitors financial risk, while the other Board committees also play a part in contributing to the oversight of risk. The Audit Committee oversees how management monitors compliance with the Group\u2019s financial risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the financial risks faced by the Group. The Group Assurance department undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The following sections discuss the management of specific financial risk factors in detail, including market risk, foreign exchange risk, interest rate risk, commodity risk and liquidity risk. The management of credit risk is disclosed in Note 16. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the Group\u2019s income and cash flows or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. Under the management of the central Treasury function, the Group enters into derivatives in the ordinary course of business and also manages financial liabilities in order to mitigate market risks. All such transactions are carried out within the guidelines set by the Board and are undertaken only if they relate to underlying exposures. Foreign exchange risk The Group publishes consolidated accounts in sterling but conducts much of its global business in other currencies. As a result it is subject to the risks associated with foreign exchange movements affecting transaction costs (\u2018transactional risk\u2019), translation of foreign profits (\u2018profit translation risk\u2019) and translation of the underlying net assets of foreign operations (\u2018asset translation risk\u2019). Management of transactional risk The Group\u2019s wide geographical spread both in terms of cost base and customer locations helps to reduce the impact on profitability of swings in exchange rates as well as creating opportunities for central netting of exposures. It is the Group\u2019s policy to minimise risk to exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using currency instruments (primarily forward exchange contracts). A proportion of forecast exposures are hedged depending on the level of confidence and hedging is periodically adjusted following regular reviews. On this basis over 50% of the Group\u2019s annual exposures to transactional risk are likely to be hedged at any point in time and the Group\u2019s net transactional exposure to different currencies varies from time to time. Management of profit translation risk The Group is exposed to the translation of profits denominated in foreign currencies into the sterling-based income statement. The interest cost related to the currency liabilities hedging the asset base provides a partial hedge to this exposure. Short-term currency option contracts may be used to provide limited protection against sterling strength on an opportunistic basis. The translation of US dollar and euro-based profits represent the most significant translation exposures for the Group. Management of asset translation risk The Group hedges its net investments in its major overseas operations by way of external currency loans and forward currency contracts. The intention is to manage the Group's exposure to gains and losses in Group equity resulting from retranslation of currency net assets at balance sheet dates. To the extent that an instrument used to hedge a net investment in a foreign operation is determined to be an effective hedge, the gain or loss arising is recognised directly in the translation reserves. Any ineffective portion is recognised immediately in the income statement. The Group have designated \u00a3288m (2021: \u00a3360m) of loans in a net investment hedge of USD net assets and \u00a3381m (2021: \u00a3193m) of EUR net assets. No ineffectiveness was recorded (2021: nil) and a loss of \u00a38.8m (2021: \u00a30.5m loss) was taken to the translation reserve. The amount accumulated in this reserve in respect of gains/losses arising on hedging instruments designated in net investment hedges up to 31 December 2022 was an accumulated loss of \u00a31.2m (2021: accumulated profit of \u00a37.6m). Currency profile of assets and liabilities liabilities subject Lease Exchange to interest Other Total Total Cash* Debt liabilities contracts rate risk net assets** net assets net assets 2022 2022 2022 2022 2022 2022 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Sterling (68) (77) (16) 209 48 143 191 207 US dollar (4) (288) (9) (301) 669 368 178 Euro 52 (381) (31) (106) (466) 530 64 163 Other 59 (50) (103) (94) 377 283 231 Total 39 (746) (106) - (813) 1,719 906 779 * Cash is stated net of overdrafts. ** Other net assets includes leased assets: \u00a314.9m Sterling (2021: \u00a316.5m), \u00a38.1m US Dollar (2021: \u00a310.6m), \u00a333.3m Euro (2021: \u00a315.5m) and \u00a350.7m Other (2021: \u00a348.9m). Exchange contracts and non-sterling debt are financial instruments used as currency hedges of overseas net assets. Interest rate risk The Group is exposed to a number of global interest rates through assets and liabilities denominated in jurisdictions to which these rates are applied, most notably US, Eurozone and UK rates. The Group is exposed to these because market movements in these rates will increase or decrease the interest charge recognised in the Group income statement. Management of interest rate risk The Group adopts a policy of maintaining a portion of its liabilities at fixed interest rates and reviewing the balance of the floating rate exposure to ensure that if interest rates rise globally the effect on the Group\u2019s income statement is manageable. Interest rates are managed using fixed and floating rate debt and financial instruments including interest rate swaps. Floating rate liabilities comprise short-term debt which bears interest at short-term bank rates and the liability side of exchange contracts where the interest element is based primarily on three-month inter-bank rates. All cash surpluses are invested for short periods and are treated as floating rate investments. Non-interest bearing financial assets and liabilities including short-term trade receivables and payables have been excluded from the following analysis. 18. Financial risk management (continued) Interest rate risk profile The following table shows how much of our cash, interest-bearing liabilities and exchange contracts attract both fixed and floating rate interest charges, and how this is analysed between currencies: Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts* contracts rate risk* rate rate fixed for which 2022 2022 2022 2022 2022 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (94) 141 47 47 US dollar (297) (4) (301) (136) (165) 3.9 3.6 Euro (517) 52 (465) (84) (381) 2.3 5.0 Other (153) 59 (94) (94) Total (1,061) 248 (813) (267) (546) * Net of lease liabilities; \u00a316m Sterling, \u00a39m US Dollar, \u00a331m Euro and \u00a350m Other. Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts** contracts rate risk** rate rate fixed for which 2021 2021 2021 2021 2021 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (20) 19 (1) (1) US dollar (371) 196 (175) (15) (160) 4.1 4.4 Euro (440) 41 (399) (206) (193) 1.4 4.3 Other (142) 94 (48) (48) Total (973) 350 (623) (270) (353) ** Net of lease liabilities; \u00a317m Sterling, \u00a311m US Dollar, \u00a315m Euro and \u00a351m Other. Market risk sensitivity analysis on financial instruments In estimating the sensitivity of the financial instruments all other variables are held constant to determine the impact on profit before tax and equity. The analysis is for illustrative purposes only, as in practice market rates rarely change in isolation. The values shown in the table below are estimates of the impact on financial instruments only. Actual results in the future may differ materially from these estimates. As such this table should not be considered as a projection of likely future gains and losses in these financial instruments. Sensitivity table The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the specified changes occur only to the financial derivatives and do not reflect the opposite movement from the impact of the specific change on the underlying business that they are designed to hedge. 1% 1% 10% 10% decrease increase 10% 10% decrease in increase in in interest in interest weakening strengthening base metal base metal rates rates in sterling in sterling costs costs \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m At 31 December 2022 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 Impact on equity: (loss)/gain (77.2) 77.2 At 31 December 2021 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 0.2 (0.2) Impact on equity: (loss)/gain (53.7) 53.7 Commodity risk The Group\u2019s operating companies purchase metal and metal components and are therefore exposed to changes in commodity prices. The Group manages this exposure through a centralised process hedging copper, zinc and aluminium using a combination of financial contracts and local supply agreements designed to minimise the volatility of short-term margins. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Management of liquidity risk The Group\u2019s approach to managing liquidity is to ensure, as far as possible, that it will always have adequate resources to meet its liabilities when they fall due, with sufficient headroom to cope with abnormal market conditions. This position is reviewed on a quarterly basis. Funding for the Group is co-ordinated centrally by the Treasury function and comprises committed bilateral facilities with a core group of banks, and a series of US loan note issues. The level of facilities is maintained such that facilities and term loans exceed the forecast peak gross debt of the Group over a rolling 12-month view by an appropriate amount taking into account market conditions and corporate activity, including acquisitions, organic growth plans and share buybacks. In addition, we undertake regular covenant compliance reviews to ensure that we remain fully within those covenant limits. At the end of 2022 the Group had undrawn committed facilities totaling \u00a3200m (2021: \u00a3230m) and was holding cash and cash equivalents of \u00a3133m (2021: \u00a395m). There are no significant seasonal funding requirements or capital intensive investment areas for the Group. Capital management Overview Capital management concerns the decision as to how the Group\u2019s activities are financed and specifically, how much of the Group capital is provided by borrowings (or debt) and how much of it is financed with equity raised from the issue of share capital. The Board\u2019s policy is to maintain a balance sheet with a broad capital base and the strength to sustain the future development of the business including acquisitions. The capital base of the Group includes total equity and reserves and net debt. Employee benefit obligations net of deferred tax form part of the extended capital base. Management of this element of the capital base is discussed further in Note 14 of the financial statements. Undrawn committed funding facilities are maintained as described in Note 19 to provide additional capital for growth (including acquisitions and organic investments) and liquidity requirements as discussed above. Capital base 2022 2021 \u00a3m \u00a3m Total equity 906 779 Gross debt including overdrafts 839 624 Gross cash (133) (95) Capital base 1,612 1,308 Employee benefits and deferred tax assets 53 169 Extended capital base 1,665 1,477 Undrawn funding facilities 200 230 Available capital base 1,865 1,707 Part of the capital base is held in currencies to broadly match the currency base of the assets being funded as described in the asset translation risk section. Debt or equity The balance between debt and equity in the capital base of the Group is considered regularly by the Board in light of market conditions, business forecasts, growth opportunities and the ratio of net debt to adjusted EBITDA. Funding covenants currently limit net debt to a maximum of 3.0 times EBITDA. The net debt to EBITDA ratio at the end of 2022 was 1.8 times (2021: 1.5 times). Through the life of our five-year plan, the Board would consider appropriate acquisitions that could take net debt up to 2.5 times EBITDA on acquisition, provided that a clear plan exists to reduce this ratio back to under 2.0 times. It is expected that at these levels our debt would continue to be perceived as investment grade. The potential benefits to equity shareholders of greater leverage are offset by higher risk and the cost and availability of funding. The Board will consider raising additional equity in the event that it is required to support the capital base of the Group. Weighted average cost of capital The Group currently uses a post-tax weighted average cost of capital (\u2018WACC\u2019) of 8% (2021: 7%) as a benchmark for investment returns. This is reviewed regularly in the light of changes in market rates. The Board tracks the Group\u2019s return on invested capital and seeks to ensure that it consistently delivers returns in excess of the WACC. 18. Financial risk management (continued) 19. Net debt Net debt is the Group\u2019s key measure used to evaluate total outstanding debt, net of the current cash resources. Some of the Group\u2019s borrowings (and cash) are held in foreign currencies. Movements in foreign exchange rates affect the sterling value of the net debt. Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Movement in net debt 2022 2021 \u00a3m \u00a3m Adjusted EBITDA* 457.0 403.5 Working capital movements (85.1) (50.6) Capital and development expenditure (71.3) (57.5) Provisions and employee benefit movements** 1.5 (0.5) Principal elements of lease payments (32.3) (30.0) Other 20.2 9.0 Adjusted operating cash flow*** 290.0 273.9 Adjusting items (52.6) (35.6) Tax paid (48.6) (50.9) Interest (19.2) (12.1) Derivatives (8.6) 26.4 Additional pension scheme funding (3.5) (7.0) Free cash flow before corporate activity 157.5 194.7 Dividends paid to equity shareholders (62.2) (61.8) Acquisition of subsidiaries (213.3) (203.9) Disposal of subsidiaries - 0.1 Net purchase of own shares and share buyback programme (18.8) (225.6) Net cash flow (excluding debt movements) (136.8) (296.5) * Adjusted profit after tax \u00a3272.4m before interest \u00a317.7m, tax \u00a373.7m, depreciation \u00a374.2m, amortisation \u00a318.5m and impairment on property, plant and equipment and non-acquired intangible assets \u00a30.5m. ** Movement in provisions and employee benefits as per the statement of cash flows \u00a313.8m adjusted for the movement in the restructuring provisions \u00a315.3m. *** Adjusted operating cash flow is the cash generated from the operations shown in the statement of cash flows less cash spent acquiring property, plant and equipment, non-acquired intangible assets and investments; plus cash received from the sale of property, plant and equipment and the sale of investments, excluding the cash impact of adjusting items. This measure best reflects the operating cash flows of the Group. Reconciliation of net cash to movement in net debt 2022 2021 \u00a3m \u00a3m Net increase/(decrease) in cash and cash equivalents excluding foreign exchange 11.0 (86.7) Less: cash acquired/disposed (10.0) (1.8) Net drawdown of borrowings excluding foreign exchange and net debt disposed/acquired (137.8) (208.0) Increase in net debt before acquisitions, disposals and foreign exchange (136.8) (296.5) Net cash acquired/disposed 10.0 - Currency translation differences (50.6) (4.5) Movement in lease liabilities (11.8) (5.6) Movement in net debt in the year (189.2) (306.6) Net debt at the start of the year (622.8) (316.2) Net debt at the end of the year (812.0) (622.8 ) Reconciliation of adjusted operating cash flow to cash flow statement
2022 2021
\u00a3m \u00a3m
Cash generated from operations 335.8 327.1
Principal lease payments (32.3) (30.0)
Settlement of transactional derivatives 2.3 (5.9)
Acquisition of property, plant and equipment and non-acquired intangibles (71.3) (57.5)
Adjusting items 52.6 35.6
Proceeds from sale of property, plant and equipment 2.9 4.6
Adjusted operating cash flow 290.0 273.9
Reconciliation of cash and cash equivalents
2022 2021
\u00a3m \u00a3m
Cash and cash equivalents in current assets 133.0 94.6
Bank overdraft in current liabilities (93.8) (65.5)
Cash and cash equivalents 39.2 29.1
Analysis of net debt
Borrowings and
finance leases due
Cash and cash within after more Lease Total
equivalents one year than one year creditors net debt
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
At 1 January 2021 134.4 (362.3) (88.3) (316.2)
Lease additions, extensions, terminations and payment changes (33.9) (33.9)
Lease payments and interest 27.2 27.2
Cash flow excluding settlement of currency derivatives hedging balance sheet
and net cash/debt disposed of/acquired (122.2) (126.7) (81.3) (330.2)
Cash/debt acquired 1.8 (1.8)
Settlement of currency derivatives hedging balance sheet 20.5 20.5
Currency translation differences (5.4) 0.8 13.3 1.1 9.8
At 31 December 2021 29.1 (127.7) (430.3) (93.9) (622.8)
Lease additions, extensions, terminations and payment changes (41.4) (41.4)
Lease payments and interest 32.3 32.3
Cash flow excluding settlement of currency derivatives hedging balance sheet
and net cash/debt disposed of/acquired 2.5 (21.1) (123.1) (141.7)
Cash/debt acquired 10.0 10.0
Settlement of currency derivatives hedging balance sheet (6.3) (6.3)
Currency translation differences 3.9 (1.3) (42.0) (2.7) 42.1
At 31 December 2022 39.2 (150.1) (595.4) (105.7) (812.0)
Undrawn committed facilities
The Group has various undrawn committed borrowing facilities. The facilities available at 31 December in respect of which all conditions precedent had been met were
as follows:
2022 2021
\u00a3m \u00a3m
Expiring between one and two years 193.5 145.4
Expiring after more than two years 6.0 84.2
Total 199.5 229.6
The weighted average life of these facilities is 0.9 years (2021: 1.7 years).
Terms and debt repayment schedule The terms and conditions of cash and cash equivalents, outstanding loans, lease liabilities and derivative financial liabilities were as follows: Effective Carrying Contractual 0 to 1 to 2 to 3 to 4 to 5 years interest rate value cash flows <1 year <2 years <3 years <4 years <5 years and over % \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m 2022 Cash and cash equivalents Floating 133.0 133.0 133.0 Revolving credit facilities Floating (100.5) (100.5) (100.5) Term loan 2023 Floating (49.6) (49.6) (49.6) Term loan 2024 Floating (49.6) (49.6) (24.8) (24.8) US loan notes 2025 1.39% (132.7) (138.1) (1.8) (1.8) (134.5) US loan notes 2026 3.86% (103.3) (119.3) (4.0) (4.0) (4.0) (107.3) US loan notes 2027 3.92% (62.0) (74.0) (2.4) (2.4) (2.4) (2.4) (64.4) US loan notes 2028 1.53% (70.8) (77.4) (1.1) (1.1) (1.1) (1.1) (1.1) (71.9 US loan notes 2029 3.30% (88.5) (108.8) (2.9) (2.9) (2.9) (2.9) (2.9) (94.3 US loan notes 2030 3.40% (88.5) (112.5) (3.0) (3.0) (3.0) (3.0) (3.0) (97.5 Bank overdrafts Floating (93.8) (93.8) (93.8) Lease liabilities Various (105.7) (105.7) (25.8) (22.1) (15.8) (11.8) (9.9) (20.3 Derivative financial liabilities (13.8) (13.8) (13.4) (0.4) Total (825.8) (910.1) (190.1) (62.5) (163.7) (128.5) (81.3) (284.0) 2021 Cash and cash equivalents Floating 94.6 94.6 94.6 Revolving credit facilities Floating (70.3) (70.3) (70.3) Term loan 2024 Floating (133.3) (133.3) (44.4) (44.4) (44.5) Acquired loan note (1.8) (1.8) (1.8) US loan notes 2022 7.17% (11.1) (12.7) (12.7) US loan notes 2025 1.39% (126.1) (133.3) (1.8) (1.8) (1.8) (127.9) US loan notes 2026 3.86% (92.6) (110.6) (3.6) (3.6) (3.6) (3.6) (96.2) US loan notes 2027 3.92% (55.6) (68.8) (2.2) (2.2) (2.2) (2.2) (2.2) (57.8) US loan notes 2028 1.53% (67.2) (74.2) (1.0) (1.0) (1.0) (1.0) (1.0) (69.2) Bank overdrafts Floating (65.5) (65.5) (65.5) Lease liabilities Various (93.9) (93.9) (23.9) (18.3) (14.0) (9.2) (7.4) (21.1) Derivative financial liabilities (6.3) (6.3) (6.1) (0.1) (0.1) Total (629.1) (676.1) (138.7) (71.4) (67.2) (143.9) (106.8) (148.1) Contractual cash flows include undiscounted committed interest cash flows and, where the amount payable is not fixed, the amount disclosed is determined by reference to the conditions existing at the reporting date. Changes in liabilities arising from financing activities The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing activities. Financing Acquisition New 1 Jan 2022 cash flows* of subsidiary leases Exchange Other** 31 Dec 22 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m 2022 Revolving credit facilities (70.3) (35.0) 4.8 (100.5) Term loan 2023 and 2024 (133.3) 24.0 10.1 (99.2) Acquired loan (1.8) 1.8 - US loan notes (352.6) (221.9) 28.7 (545.8) Bank overdrafts (65.5) (28.3) (93.8) Lease liabilities (93.9) 35.1 (41.4) (2.7) (2.8) (105.7) Total (717.4) (224.3) - (41.4) 40.9 (2.8) (945.0) Financing Acquisition New 1 Jan 2021 cash flows* of subsidiary leases Exchange Other** 31 Dec 21 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m 2021 Revolving credit facilities - (71.7) 1.4 (70.3) Term loan 2024 - (136.2) 2.9 (133.3) Acquired loan - (1.8) (1.8) US loan notes (362.3) 9.7 (352.6) Bank overdrafts (73.5) 8.0 (65.5) Lease liabilities (88.3) 30.0 (33.9) 1.1 (2.8) (93.9) Total (524.1) (169.9) (1.8) (33.9) 15.1 (2.8) (717.4) * Financing cash flows exclude the impact of interest paid ** Includes IFRS 16 interest payments Interest-bearing loans and borrowings The Group borrows money from financial institutions in the form of bonds and other financial instruments. These generally have fixed interest rates and are for a fixed term or are drawn from committed borrowing facilities that generally have floating interest rates. For more information about the Group\u2019s exposure to interest rate and foreign currency risk, see Note 18. 2022 2021 \u00a3m \u00a3m Current liabilities Unsecured loan notes and other loans 150.1 127.7 Lease liabilities 25.8 23.9 Total 175.9 151.6 Non-current liabilities Unsecured loan notes and other loans 595.4 430.3 Lease liabilities 79.9 70.0 Total 675.3 500.3 Non-cash changes Non-cash changes 19. Net debt (continued) Accounting policy A provision is recorded instead of a payable when uncertainty exists over the timing and amount of the cash outflow. Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are valued at management\u2019s best estimate of the amount required to settle the present obligation at the balance sheet date. A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. The recognition of a provision requires estimation. The principal estimates made in respect of the Group\u2019s provisions using the best estimate methodology (with the exception of provisions indemnities as noted below) concern the timing and amount of payments required to: - cover the costs of known restructuring projects; - reimburse customers for potential product warranty claims; - ensure that current and former manufacturing sites meet relevant environmental standards; - reflect the estimated outcome of ongoing legal disputes; and - provide against indemnities following the disposal of subsidiaries. Analysis of the Group\u2019s provisions: Trade Environmental Restructuring warranties & legal Total \u00a3m \u00a3m \u00a3m \u00a3m Current 27.8 9.9 0.4 38.1 Non-current 3.8 8.6 5.9 18.3 At 1 January 2022 31.6 18.5 6.3 56.4 Arising during the year 28.9 2.0 3.0 33.9 Released during the year - - (2.5) (2.5) Utilised during the year (44.2) (3.2) - (47.4) Exchange adjustment 1.5 0.6 - 2.1 At 31 December 2022 17.8 17.9 6.8 42.5 Current 17.6 9.2 0.4 27.2 Non-current 0.2 8.7 6.4 15.3 17.8 17.9 6.8 42.5 Restructuring The restructuring provision reflects residual amounts committed but not spent in relation to a number of specific projects that are discussed further in Note 3, where the cost is a reliable estimate of the obligation. The opening balance of \u00a331.6m relates to a closure of a factory in Europe within our IMI Precision Engineering division and the Customer First project, which both simplify the structure of the division and ensures the business structure is aligned to our customer base. The utilised balance includes \u00a344.2m of cash settlements. Arising during the year primarily relates to the ongoing projects from prior year. The provision as at 31 December 2022 of \u00a317.8m primarily relates to the expected redundancy payments for facility closures with the majority of the resulting outflow expected during 2023. Trade warranties The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications, there is a risk of products requiring modification, which can lead to warranty claims. Trade warranties are given in the normal course of business and cover a range of periods, typically one to two years, with the expected amounts falling due in less than and greater than one year separately analysed above. The provision represents the directors\u2019 best estimate of the Group\u2019s liability based on past experience. Environmental & legal Environmental and legal provisions recognise the Group's obligation to remediate contaminated land at a number of current and former sites, together with current legal cases for which a settlement is considered probable. Due to the long-term nature of the liabilities, the timescales are uncertain and the provisions represent the directors' best estimates of these costs. 20. Provisions 21. Trade and other payables 2022 2021 \u00a3m \u00a3m Current Trade payables 150.9 120.3 Social security and other taxation 34.8 27.1 Accruals* 43.9 23.6 Deferred income* - - Progress billings and advance payments from customers 71.9 73.2 Other payables* 136.2 156.2 437.7 400.4 Non-current Other payables 9.9 6.5 447.6 406.9 * 'Accruals', 'Deferred income' and 'Other payables' have been disclosed separately given their quantum. Prior period comparatives have been re-presented. 22. Share capital The movement in the number of ordinary shares of 28 4/7p each issued by IMI plc is as follows: Number and value of shares 2022 2021 Ordinary Shares Ordinary Shares 28 4/7p per share 28 4/7p per share Number (m) Value (\u00a3m) Number (m) Value (\u00a3m) In issue at the start of the year 274.9 78.6 286.5 81.8 Issued to satisfy employee share schemes 0.1 - 0.1 Share cancellations - - (11.7) (3.2) In issue at the end of the year 275.0 78.6 274.9 78.6 All issued share capital at 31 December 2022 and 2021 is fully paid and conveys the same rights. Share movements in the year Movements in shares due to share issues and purchases during the year were as follows: Number of ordinary shares of 28 4/7p each (million) Employee Benefit Trust Treasury Other Total In issue at 31 December 2021 1.8 14.3 258.8 274.9 New issues to satisfy employee share scheme awards - - 0.1 0.1 Market purchases 1.4 - (1.4) Shares allocated under employee share schemes (0.8) - 0.8 At 31 December 2022 2.4 14.3 258.3 275.0 During the year 0.1m (2021: 0.1m) shares were issued under employee share schemes realising \u00a31.2m (2021: \u00a31.0m). Employee Benefit Trust The Employee Benefit Trust made market purchases of a total of 1.4m (2021: 1.7m) shares with an aggregate market value of \u00a320.0m (2021: \u00a330.0m) and a nominal value of \u00a30.4m (2021: \u00a30.5m). Associated transaction costs amounted to \u00a3nil (2021: \u00a3nil). Share options exercised in 2022 were settled using the shares in the Group's Employee Benefit Trust. In 2022, 0.8m (2021: 1.0m) shares were issued for cash of \u00a3nil (2021: \u00a33.4m). Of the 16.7m (2021: 16.1m) shares held within retained earnings, 2.4m (2021: 1.8m) shares with an aggregate market value of \u00a330.9m (2021: \u00a327.9m) are held in trust to satisfy employee share scheme vesting. Share buyback In 2021, on-market purchases of 11.7m shares were conducted relating to the share buyback programme. The aggregate market value of these shares at the dates of purchase were \u00a3200.0m, which includes dealing costs related to these purchases of \u00a31.9m. In accounting for business combinations, the identifiable assets, liabilities and contingent liabilities acquired have to be measured at their fair values. In particular, an estimate has been made of the forecast future sales under pre- existing commercial relationships which have been discounted at an appropriate discount rate to value the commercial relationships and brand intangibles. The acquisitions have been accounted for as a business combination. During the year ended 31 December 2022, the Group made three acquisitions, namely: - Bahr Modultechnik GmbH (\"Bahr\") - CorSolutions LLC (\u201cCorSolutions\u201d) - Heatmiser UK Ltd (\u201cHeatmiser\u201d) Below and adjacent are summaries of the assets acquired and liabilities assumed and the purchase consideration of: a) the total of acquisitions; b) Bahr Modultechnik GmbH (\"Bahr\"); c) CorSolutions LLC (\u201cCorSolutions\u201d); d) Heatmiser UK Ltd (\u201cHeatmiser\u201d); and e) Prior year acquisitions As at the date of approval of the financial statements, the acquisition accounting for all prior year acquisitions is complete. The accounting for all current year acquisitions is provisional, relating to finalisation of the initial consideration which is subject to agreement of certain contractual adjustments and certain other provisional balances. a) Total of acquisitions Total \u00a3m Intangible assets 47.4 Property, plant and equipment 4.9 Inventories 9.4 Trade and other receivables 9.3 Cash and cash equivalents 12.1 Trade and other payables (7.2) Current taxation (1.2) Deferred taxation (11.3) Total identified net assets at fair value 63.4 Goodwill arising on acquisition 153.5 Purchase consideration 216.9 b) Bahr Modultechnik GmbH (\"Bahr\") Fair value at 9 June 2022 \u00a3m Intangible assets 38.6 Property, plant and equipment 4.7 Inventories 3.1 Trade and other receivables 1.5 Cash and cash equivalents 4.7 Trade and other payables (1.6) Current taxation (1.0) Deferred taxation (11.3) Total identified net assets at fair value 38.7 Goodwill arising on acquisition 49.6 Purchase consideration transferred 88.3 On 9 June 2022 the Group acquired 100% of the share capital, and associated voting rights, of Bahr Modultechnik GmbH (\"Bahr\") for cash consideration of \u00a388.3m. Bahr is a leading provider of highly configured modular electric linear motion systems, based on a broad portfolio of specialist components and is based in Luhden, Germany. The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over the acquired business, the skills and experience of the assembled workforce, the increase in scale, synergies and the future growth opportunities that the businesses provide to the Group\u2019s operations. Acquisition costs of \u00a30.9m were recognised in the income statement in 2022. The revenue and adjusted operating profit included in the income statement for 2022 contributed by Bahr were \u00a37.8m and \u00a31.8m respectively. If the acquisition had taken place on 1 January 2022, Bahr would have contributed revenue and adjusted operating profit of \u00a314m and \u00a34.3m respectively. 23. Acquisitions c) CorSolutions LLC (\u201cCorSolutions\u201d) Fair value at 27 October 2022 \u00a3m Intangible assets 8.8 Inventories 0.6 Deferred taxation - Total identified net assets at fair value 9.4 Goodwill arising on acquisition 1.7 Purchase consideration 11.1 On 27 October 2022 the Group acquired 100% of the share capital, and associated voting rights, of CorSolutions LLC (\u201cCorSolutions\u201d) for initial cash consideration of \u00a37.5m and an expected earn-out of \u00a33.6m. CorSolutions is a leading innovator in micro-fluid flow control and is based in Ithaca, New York. The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over the acquired business, the skills and experience of the assembled workforce, the increase in scale, synergies and the future growth opportunities that the businesses provide to the Group\u2019s operations. Acquisition costs of \u00a3nil were recognised in the income statement in 2022. The revenue and adjusted operating loss included in the income statement for 2022 contributed by CorSolutions were \u00a30.2m and \u00a30.3m respectively. If the acquisition had taken place on 1 January 2022, CorSolutions would have contributed revenue and adjusted operating profit of \u00a31.3m and \u00a30.5m respectively. d) Heatmiser UK Ltd (\u201cHeatmiser\u201d) Fair value at 23 December 2022 \u00a3m Property, plant and equipment 0.2 Inventories 5.7 Trade and other receivables 7.8 Cash and cash equivalents 7.4 Trade and other payables (5.6) Current taxation (0.2) Total identified net assets at fair value 15.3 Goodwill arising on acquisition 102.2 Purchase consideration transferred 117.5 On 23 December 2022 the Group acquired 100% of the share capital, and associated voting rights, of Heatmiser UK Ltd (\u201cHeatmiser\u201d) for initial cash consideration of \u00a3117.5m, with up to a further \u00a38.0m payable based on future financial performance. Heatmiser is a leading UK smart thermostatic control manufacturer and is based in Blackburn, UK. Due to the timing of the acquisition, the analysis of acquired intangibles has not yet been completed so all of the purchase price aside from the operating balance sheet is allocated to goodwill as permitted when an acquisition is close to a period end. The provisional purchase price allocation will be completed in the first half of 2023. The goodwill recognised above includes certain intangible assets that cannot be separately identified and measured due to their nature. This includes control over the acquired business, the skills and experience of the assembled workforce, the increase in scale, synergies and the future growth opportunities that the businesses provide to the Group\u2019s operations. Acquisition costs of \u00a32.0m were recognised in the income statement in 2022. There was no revenue and adjusted operating profit contributed by Heatmiser to be included in the income statement for 2022. If the acquisition had taken place on 1 January 2022, Heatmiser would have contributed revenue and adjusted operating profit of \u00a324.0m and \u00a39.5m respectively. e) Acquisitions in 2021 On 20 December 2021 the Group acquired 100% of the share capital, and associated voting rights, of Adaptas Solutions (\"Adaptas\") for cash consideration of \u00a3203.9m. Adaptas is a manufacturer of mission critical mass spectrometry subsystems and components and is based in North America with facilities in the UK, Australia and China. This acquisition has been accounted for as a business combination. Our accounting has been finalised and there are no changes to the provisional fair value amounts recognised in the 2021 Annual Report & Accounts in respect of the identified assets acquired and liabilities assumed. 24. Disposals
25. Contingent liabilities
Disposals in 2022
A contingent liability is a liability that is not sufficiently certain to qualify for
recognition as a provision because significant subjectivity exists regarding
The Group disposed of its Russian subsidiary IMI International LLC on 27 May
its outcome.
2022 for proceeds of \u00a3nil resulting in a loss on disposal for the Group of \u00a34.8m
after disposing of \u00a33.3m of net assets and incurring \u00a30.9m of associated disposal
Group contingent liabilities relating to guarantees in the normal course of business
costs. In addition, the exit resulted in a \u00a34.2m impairment of assets related to
and other items amounted to \u00a3132m (2021: \u00a3112m).
Russian contracts.
The exit from Russia is presented in the income statement as an adjusting
item but it is not disclosed as a discontinued item because it did not represent
a separate major line of business.
27 May 2022
\u00a3m
Net assets disposed (3.3)
Costs of disposal (0.9)
Foreign exchange loss reclassified on disposal (0.6)
Loss on disposal (4.8)
Net cash flow arising on disposal
Cash costs of disposal (0.9)
Net cash flow arising on disposal of operations (0.9)
Disposals in 2021
In 2021, the Group disposed of Interativa Industria, Comercio e Representacoes
Ltda.
This disposal resulted in a loss of \u00a33.8m and is presented in the income
statement as an adjusting item as it meets our definition of adjusting items
based on its nature and quantum. The loss on disposal is not disclosed within
discontinued operations because this business did not represent a separate
major line of business.
A summary of the proceeds received, assets disposed and resulting loss on
disposal is included in the table below:
23 July 2021
\u00a3m
Sale consideration 0.2
Net assets disposed (3.8)
Costs of disposal (0.1)
Foreign exchange loss reclassified on disposal (0.1)
Loss on disposal (3.8)
Net cash flow arising on disposal
Sale consideration 0.2
Cash costs of disposal (0.1)
Net cash flow arising on disposal of operations 0.1
26. Related party
transactions
Related parties include the key management personnel. The Board, including the
non-executive directors are considered to be the key management personnel of
the Group.
2022 2021
\u00a3m \u00a3m
Short-term employee benefits* 3.5 4.3
Share-based payments** 2.2 1.8
Total 5.7 6.1
* Short-term employee benefits comprise salary, including employers' social
contributions, benefits earned during the year and bonuses awarded for the
year.
** For details of the share-based payment charge for key management personnel,
see Note 6.
Transactions with associated companies
2022 2021
\u00a3m \u00a3m
Sales to associated companies - 0.5
Purchases from associated companies - -
Accounts receivable - -
Accounts payable - -
Total - 0.5
There are no other related party transactions.
27. Subsequent events
Events that occur in the period between 31 December and the date
of approval of the Annual Report can be categorised as adjusting or non-
adjusting depending on whether the condition existed at 31 December.
If the event is an adjusting event, then an adjustment to the results is made.
If a non-adjusting event after the year end is material, non-disclosure
could influence decisions that readers of the financial statements make.
Accordingly, for each material non-adjusting event after the reporting period
we disclose the nature of the event and an estimate of its financial effect,
or a statement that such an estimate cannot be made.
There were no adjusting or non-adjusting subsequent events after the balance
sheet date of 31 December 2022.
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"fact-3": {
"value": "plc",
"dimensions": {
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"language": "en",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"dimensions": {
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"fact-329": {
"value": "Basis of accounting
The financial statements are presented in Pounds Sterling (which is the Company\u2019s
functional currency), rounded to the nearest hundred thousand, except revenues,
which are rounded to the nearest whole million. They are prepared on the historical
cost basis except for derivative financial instruments; financial assets classified
as fair value through profit and loss or other comprehensive income; assets and
liabilities acquired through business combinations, which are stated at fair value
and retirement benefits. Non-current assets and liabilities held for sale are stated
at the lower of their carrying amounts and their fair values less costs to sell.
The accounting policies described in the notes to the financial statements
have been applied consistently throughout the Group for the purposes of these
consolidated financial statements.
(i) New or amended UK Endorsed Accounting Standards
adopted by the Group during 2022
Noted below are the amended and new International Financial Reporting
Standards which became effective for the Group as of 1 January 2022, none of
which have a material impact on the financial statements:
\u2022 Amendments to IAS 16: Property, Plant and Equipment \u2013 proceeds before
intended use
\u2022 Annual Improvements to IFRS Standards 2018-2020 (May 2020)
\u2022 Amendments to IFRS 3 (May 2020): Reference to the Conceptual Framework
\u2022 Amendments to IAS 37 (May 2020): Onerous Contracts \u2013 costs of fulfilling a
contract
(ii) New accounting standards in issue but not yet effective
New standards and interpretations that are in issue but not yet effective are
listed below:
\u2022 Amendments to IFRS 16: Covid-19 related rent concessions beyond 30
June 2021
\u2022 Amendments to IFRS 17: Insurance contracts
\u2022 Amendments to IAS 1: Classification of liabilities as current or non-current
\u2022 Amendments to IAS 1: Classification of liabilities as current or non-current \u2013
deferral of effective date
\u2022 Amendments to IFRS 4: Extension of the temporary exemption from
applying IFRS 9
\u2022 Amendments to IAS 1 and IFRS practice statement 2: Disclosure of
accounting policies
\u2022 Amendments to IAS 12: Deferred tax related to assets and liabilities arising from
a single transaction
\u2022 Amendments to IAS 8: Definition of accounting estimates
\u2022 Amendments to IFRS 17: Initial application of IFRS 17 and IFRS 9 \u2013
Comparative Information
\u2022 Amendments to IFRS 16: Lease liability in a sale and leaseback
The adoption of the above standards and interpretations is not expected to lead
to any changes to the Group\u2019s accounting policies or have any other material
impact on the financial position or performance of the Group.
Going concern
Accounting standards require that directors satisfy themselves that it is reasonable
for them to conclude whether it is appropriate to prepare financial statements
on a going concern basis. The Group\u2019s business activities, together with the factors
likely to affect its business development, performance and position are set out
in the Strategic Report. Principal risks are detailed on pages 88 to 93. The financial
position of the Group, its cash flows, liquidity position and borrowing facilities
are described in these financial statements. In addition, Note 18 includes the
Group\u2019s objectives, policies and processes for managing its capital; its financial
risk management objectives; details of its financial instruments and hedging
activities; and its exposures to credit risk and liquidity risk. Note 14 to the financial
statements addresses the management of the funding risks of the Group\u2019s employee
benefit obligations.
After making enquiries, the directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational
existence for the foreseeable future and for a period of at least twelve months
following the approval of the Annual Report & Accounts. Accordingly, they continue
to adopt the going concern basis in preparing the financial statements.
The directors have considered the current macroeconomic conditions. The Group
is well diversified and maintains a balanced portfolio operating across a range of
markets, sectors and geographies with no single dependency. Performance in each
of IMI\u2019s three divisions has been robust during the year.
Across the Group, supply chain disruptions have been well managed and alternative
suppliers or contingency stocks have addressed the few instances of part shortages.
During this period of uncertainty, the Group continues to maintain a robust financial
position. At 31 December 2022, the group had cash and cash equivalents of \u00a339.2m
and undrawn committed facilities of \u00a3200m in the form of Revolving Credit Facilities
(RCF), of which \u00a3110m is due for renewal in 2023 (\u00a350m already renewed in
February 2023), \u00a384m in 2024 and \u00a36m in 2025. Forecasts indicate that the Group
can operate within the level of facilities in place without the need to obtain any new
facilities in the twelve-month period following the approval of the Annual Report
& Accounts.
The directors have assessed the viability of the Group (page 94) and reviewed
detailed cash flow forecasts for a period of at least twelve months following the
date of approval of the Annual Report & Accounts. After applying a reverse stress
test on the Group\u2019s banking covenants and making comparisons to the detailed
forecasts, the directors have a reasonable expectation that the financial
headroom will not be exhausted during this period.
Covenant compliance reviews are undertaken to ensure that the Group remains fully
within the covenant limits. Funding covenants currently require EBITDA to be no less
than 4.0 times interest and net debt to be no more than 3.0 times EBITDA. Those
covenant ratios, at 31 December 2022, were 23.8 times and 1.8 times, respectively.
A reverse stress test shows that for there to be a breach of covenants during the
twelve-month period following the approval of the Annual Report & Accounts,
forecast revenue would need to fall by 23% and forecast EBITDA by 39% after
taking into account the mitigating actions that would be undertaken in these
circumstances. The mitigating actions include, but are not limited to, reducing
working capital, restricting capital expenditure, reducing overhead spend and
employee costs, cutting or suspending dividend payments to shareholders.
Re-presentations
The following re-presentations have been included in the following financial
statements in the current year and as a result, 2021 comparatives have been
re-presented accordingly:
Consolidated income statement
\u2018Net financial income/(expense) relating to financial instruments\u2019 which was
previously recorded within \u2018Financial income\u2019 or \u2018Financial expense\u2019 is now disclosed
as \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019.
Prior year comparatives have been re-presented.
Consolidated statement of cash flows
The \u2018Increase/(decrease) in provisions and employee benefits\u2019 within \u2018Cash flows
from operating activities\u2019 are now disclosed separately as \u2018Increase/(decrease) in
provisions\u2019 and \u2018Increase/(decrease) in employee benefits\u2019. Prior year comparatives
have been re-presented.
The \u2018Proceeds/(expenditure) for shares acquired for employee share scheme trust\u2019
within \u2018Cash flows from financing activities\u2019 is now split into \u2018Proceeds from shares
issued from employee share scheme trust\u2019 and \u2018Shares acquired for employee share
scheme trust\u2019. Prior year comparatives have been re-presented.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBasisOfPreparationOfFinancialStatementsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-363": {
"value": "(i) New or amended UK Endorsed Accounting Standards adopted by the Group during 2022 Noted below are the amended and new International Financial Reporting Standards which became effective for the Group as of 1 January 2022, none of which have a material impact on the financial statements: \u2022 Amendments to IAS 16: Property, Plant and Equipment \u2013 proceeds before intended use \u2022 Annual Improvements to IFRS Standards 2018-2020 (May 2020) \u2022 Amendments to IFRS 3 (May 2020): Reference to the Conceptual Framework \u2022 Amendments to IAS 37 (May 2020): Onerous Contracts \u2013 costs of fulfilling a contract ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfChangesInAccountingPoliciesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-364": {
"value": "(ii) New accounting standards in issue but not yet effective New standards and interpretations that are in issue but not yet effective are listed below: \u2022 Amendments to IFRS 16: Covid-19 related rent concessions beyond 30 June 2021 \u2022 Amendments to IFRS 17: Insurance contracts \u2022 Amendments to IAS 1: Classification of liabilities as current or non-current \u2022 Amendments to IAS 1: Classification of liabilities as current or non-current \u2013 deferral of effective date \u2022 Amendments to IFRS 4: Extension of the temporary exemption from applying IFRS 9 \u2022 Amendments to IAS 1 and IFRS practice statement 2: Disclosure of accounting policies \u2022 Amendments to IAS 12: Deferred tax related to assets and liabilities arising from a single transaction \u2022 Amendments to IAS 8: Definition of accounting estimates \u2022 Amendments to IFRS 17: Initial application of IFRS 17 and IFRS 9 \u2013 Comparative Information \u2022 Amendments to IFRS 16: Lease liability in a sale and leaseback The adoption of the above standards and interpretations is not expected to lead to any changes to the Group\u2019s accounting policies or have any other material impact on the financial position or performance of the Group. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfExpectedImpactOfInitialApplicationOfNewStandardsOrInterpretations",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-365": {
"value": "Going concern Accounting standards require that directors satisfy themselves that it is reasonable for them to conclude whether it is appropriate to prepare financial statements on a going concern basis. The Group\u2019s business activities, together with the factors likely to affect its business development, performance and position are set out in the Strategic Report. Principal risks are detailed on pages 88 to 93. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in these financial statements. In addition, Note 18 includes the Group\u2019s objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. Note 14 to the financial statements addresses the management of the funding risks of the Group\u2019s employee benefit obligations. After making enquiries, the directors have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future and for a period of at least twelve months following the approval of the Annual Report & Accounts. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. The directors have considered the current macroeconomic conditions. The Group is well diversified and maintains a balanced portfolio operating across a range of markets, sectors and geographies with no single dependency. Performance in each of IMI\u2019s three divisions has been robust during the year. Across the Group, supply chain disruptions have been well managed and alternative suppliers or contingency stocks have addressed the few instances of part shortages. During this period of uncertainty, the Group continues to maintain a robust financial position. At 31 December 2022, the group had cash and cash equivalents of \u00a339.2m and undrawn committed facilities of \u00a3200m in the form of Revolving Credit Facilities (RCF), of which \u00a3110m is due for renewal in 2023 (\u00a350m already renewed in February 2023), \u00a384m in 2024 and \u00a36m in 2025. Forecasts indicate that the Group can operate within the level of facilities in place without the need to obtain any new facilities in the twelve-month period following the approval of the Annual Report & Accounts. The directors have assessed the viability of the Group (page 94) and reviewed detailed cash flow forecasts for a period of at least twelve months following the date of approval of the Annual Report & Accounts. After applying a reverse stress test on the Group\u2019s banking covenants and making comparisons to the detailed forecasts, the directors have a reasonable expectation that the financial headroom will not be exhausted during this period. Covenant compliance reviews are undertaken to ensure that the Group remains fully within the covenant limits. Funding covenants currently require EBITDA to be no less than 4.0 times interest and net debt to be no more than 3.0 times EBITDA. Those covenant ratios, at 31 December 2022, were 23.8 times and 1.8 times, respectively. A reverse stress test shows that for there to be a breach of covenants during the twelve-month period following the approval of the Annual Report & Accounts, forecast revenue would need to fall by 23% and forecast EBITDA by 39% after taking into account the mitigating actions that would be undertaken in these circumstances. The mitigating actions include, but are not limited to, reducing working capital, restricting capital expenditure, reducing overhead spend and employee costs, cutting or suspending dividend payments to shareholders. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoingConcernExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-366": {
"value": "Re-presentations The following re-presentations have been included in the following financial statements in the current year and as a result, 2021 comparatives have been re-presented accordingly: Consolidated income statement \u2018Net financial income/(expense) relating to financial instruments\u2019 which was previously recorded within \u2018Financial income\u2019 or \u2018Financial expense\u2019 is now disclosed as \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019. Prior year comparatives have been re-presented. Consolidated statement of cash flows The \u2018Increase/(decrease) in provisions and employee benefits\u2019 within \u2018Cash flows from operating activities\u2019 are now disclosed separately as \u2018Increase/(decrease) in provisions\u2019 and \u2018Increase/(decrease) in employee benefits\u2019. Prior year comparatives have been re-presented. The \u2018Proceeds/(expenditure) for shares acquired for employee share scheme trust\u2019 within \u2018Cash flows from financing activities\u2019 is now split into \u2018Proceeds from shares issued from employee share scheme trust\u2019 and \u2018Shares acquired for employee share scheme trust\u2019. Prior year comparatives have been re-presented. ",
"dimensions": {
"concept": "imiplc:DisclosureOfRepresentations",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-327": {
"value": "Where appropriate, the significant accounting policies are presented in the note to which it applies to aid the reader\u2019s understanding of their application. Set out below
are the significant accounting policies which do not have a specific note.
A. Subsidiaries
The Group financial statements consolidate the financial statements of IMI plc
and the entities it controls (its subsidiaries) for the year to 31 December 2022.
The Group has no significant interests which are accounted for as associates or
joint ventures.
Subsidiaries are consolidated from the date of their acquisition, being the date on
which the Group obtains control, and continue to be consolidated until the date
that such control ceases. Control comprises the power to govern the financial and
operating policies of the investee so as to obtain benefit from its activities and is
achieved through direct or indirect ownership of voting rights, currently exercisable or
convertible potential voting rights or by way of contractual agreement. The financial
statements of subsidiaries used in the preparation of the consolidated financial
statements are prepared for the same reporting year as the parent company and are
based on consistent accounting policies. All intragroup balances and transactions,
including unrealised profits arising from them, are eliminated in full.
A change in the ownership interest of a subsidiary, without loss of control,
is accounted for as an equity transaction. If the Group loses control over a
subsidiary, it:
\u2022 derecognises the assets (including any goodwill relating to the subsidiary) and
liabilities of the subsidiary;
\u2022 derecognises the carrying amount of any non-controlling interest;
\u2022 derecognises the cumulative translation differences recorded in equity;
\u2022 recognises the fair value of the consideration received;
\u2022 recognises the fair value of any investment retained;
\u2022 recognises any surplus or deficit in profit or loss; and
\u2022 reclassifies the parent\u2019s share of components previously recognised in other
comprehensive income to profit or loss or retained earnings, as appropriate.
Taxation on the above accounting entries would also be recognised,
where applicable.
B. Use of critical judgements and key sources of
estimation uncertainty
The preparation of financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets, liabilities, income and expenses.
Actual results may differ from these estimates.
i. Critical judgements
The critical judgements are the selection of the Alternative Performance Measures
and lease term determination disclosed in Notes 3 and 13 respectively.
ii. Key sources of estimation uncertainty
The Group bases its assumptions and estimates on information available
when the consolidated financial statements are prepared. Market changes
or circumstances arising beyond the control of the Group are reflected in the
assumptions and estimates when they occur. Revisions to accounting estimates
are recognised in the period in which the estimate is revised and in any future
periods affected. The key assumptions concerning the future, and other key
sources of estimation uncertainty at the reporting period that may have a
significant risk of causing a material adjustment to the carrying amounts of
assets and liabilities within the next financial year, are disclosed in Note 14
\u2018Retirement benefits\u2019.
iii. Changes in critical judgements and key sources of
estimation uncertainty
Management has reassessed the critical judgements and key sources of
estimation uncertainty presented in the 2021 Annual Report & Accounts and
concluded that, in the current year, no changes are required in the consideration
of what constitutes key judgements and estimates.
C. Revenue recognition
Revenue is recognised when obligations under the terms of a contract with our
customer are satisfied. This generally occurs when the goods are transferred,
or the services are provided, to our customer. Revenue is measured as the
amount of consideration we expect to receive in exchange for transferring goods
or providing services. Sales and other taxes collected from customers are excluded
from revenue. The nature of the equipment, valve and other contracts into which
the Group enters means that:
\u2022 the contracts usually contain distinct performance obligations, each of which
transfers control of the goods to the customer. Where such distinct performance
obligations are present, revenue is recognised on each element in accordance
with the policy on the sale of goods; and
\u2022 the service element of the contract is usually insignificant in relation to the total
contract value and is often provided on a short-term or one-off basis. Where this
is the case, revenue is recognised when the service is complete.
As a result of the above, the significant majority of the Group\u2019s revenue is
recognised on a sale of goods basis. Each of the divisional revenue streams
set out in Note 4 can consist of the sale of goods, the provision of services or
a combination of the two. The specific methods used to recognise the different
forms of revenue earned by the Group are set out below:
i. Sale of goods
Revenue from the sale of goods is recognised in the income statement net of
returns, trade discounts and volume rebates when control has been transferred
to our customer. No revenue is recognised where recovery of the consideration
is not probable or there are significant uncertainties regarding associated costs,
or the possible return of goods.
In IMI Hydronic, the amount of consideration received and the revenue recognised
varies in line with discounts and promotions offered to our customers and
their customers. The level of estimation uncertainty associated with variable
consideration is minimal, as discounts and rebates are accounted for at the point
of sale and adjusted as required at each financial year end.
The timing of the transfer of control to our customer varies depending on the
nature of the products sold and the individual terms of the contract of sale. Sales
made under internationally accepted trade terms, Incoterms 2020, are recognised
as revenue when the Group has completed the primary duties required to transfer
control as defined by the International Chamber of Commerce Official Rules
for the Interpretation of Trade Terms. Sales made outside Incoterms 2020 are
generally recognised on delivery to the customer. In limited instances, a customer
may request that the Group retains physical possession of an asset for a period
after control has been transferred to the customer. In these circumstances, the
Group provides this storage as a service to the customer and therefore revenue
is recognised prior to delivery of the asset.
2. Significant accounting policies
ii. Rendering of services
Servicing relates to repairs and maintenance activity that is completed at our
customer sites within our installed base. Revenue from the rendering of services is
usually insignificant in relation to the total contract value and is generally provided
on a short-term or one-off basis. Accordingly, revenue is usually recognised when
the service is complete.
Where this is not the case, revenue from services rendered is recognised in
proportion to the stage of completion of the service at the balance sheet date.
The stage of completion is assessed by reference to the contractual performance
obligations with each separate customer and the costs incurred on the contract
to date in comparison to the total forecast costs of the contract. Revenue
recognition commences only when the outcome of the contract can be reliably
measured. Installation fees are similarly recognised by reference to the stage of
completion on the installation unless they are incidental to the sale of the goods,
in which case they are recognised when the goods are sold.
iii. Combined services and goods
When a transaction combines a supply of goods with the provision of a significant
service, distinct performance obligations are identified and recognised in line with
the applicable policy. Revenue from a service that is incidental to the supply of
goods is recognised at the same time as the revenue from the supply of goods.
D. Foreign currencies
i. Foreign currency transactions
Monetary assets and liabilities denominated in foreign currencies have been
translated into sterling at the rates of exchange ruling at the balance sheet date.
Foreign exchange differences arising on translating transactions at the exchange
rate ruling on the transaction date are reflected in the income statement. Non-
monetary assets and liabilities that are measured at historical cost in a foreign
currency are translated using the exchange rates at the date of the transaction.
Non-monetary assets and liabilities denominated in foreign currencies that are
stated at fair value are translated into sterling at foreign exchange rates ruling
at the balance sheet date.
ii. Foreign operations
The income statements of overseas subsidiary undertakings are translated at the
appropriate average rate of exchange for the year and the adjustment to year
end rates is taken directly to reserves.
The assets and liabilities of foreign operations, including goodwill and fair value
adjustments arising on acquisition, are translated at foreign exchange rates ruling
at the balance sheet date.
Foreign exchange differences arising on retranslation are recognised directly
as a separate component of equity. Since 1 January 2004, the Group\u2019s date
of transition to IFRS, such differences have been recognised in the translation
reserve. When a foreign operation is disposed of, in part or in full, the relevant
amount in the translation reserve is transferred to profit or loss.
E. Financial instruments and fair value hedging
Financial instruments are initially recorded at fair value plus directly attributable
transaction costs unless the instrument is a derivative not designated as a hedge
(see below). Subsequent measurement depends on the designation
of the instrument, which follows the categories in IFRS 9:
\u2022 short-term borrowings and overdrafts are classified as financial liabilities at
amortised cost;
\u2022 derivatives, comprising interest rate swaps, foreign exchange contracts and
options, metals futures contracts and any embedded derivatives, are classified
as \u2018fair value through profit or loss\u2019 under IFRS 9, unless designated as hedges.
Derivatives not designated as hedges are initially recognised at fair value;
attributable transaction costs are recognised in profit or loss when incurred.
Subsequent to initial recognition, changes in fair value of such derivatives
and gains or losses on their settlement are recognised in net financial income
or expense;
\u2022 long-term loans and other interest bearing borrowings are generally held at
amortised cost using the effective interest rate method. Where the long-term
loan is hedged, generally by an interest rate swap, and the hedge is regarded as
effective, the carrying value of the long-term loan is adjusted for changes in fair
value of the hedge;
\u2022 trade receivables are stated at cost as reduced by appropriate impairment
allowances for expected irrecoverable amounts;
\u2022 trade payables are stated at cost;
\u2022 financial assets and liabilities are recognised on the balance sheet only when the
Group becomes a party to the contractual provisions of the instrument; and
\u2022 fair value through other comprehensive income (FVTOCI) financial instruments
are carried at fair value with gains and losses being recognised in equity, and
represent investments.
i. Derecognition of financial instruments
The Group derecognises a financial asset only when the contractual rights to
the cash flows from the asset expire, or when it transfers the financial asset and
substantially all the risks and rewards of ownership of the asset to another entity.
If the Group neither transfers nor retains substantially all of the risks and rewards
of ownership and continues to control the transferred asset, the Group recognises
its retained interest in the asset and an associated liability for amounts it
may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, the Group continues to
recognise the financial asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset measured at amortised cost, the difference
between the asset's carrying amount and the sum of the consideration received
and receivable is recognised in profit or loss. In addition, on derecognition of an
investment in a debt instrument classified as FVTOCI, the cumulative gain or
loss previously accumulated in the investments revaluation reserve is reclassified
to profit or loss. In contrast, on derecognition of an investment in an equity
instrument which the Group has elected on initial recognition to measure at
FVTOCI, the cumulative gain or loss previously accumulated in the investments
revaluation reserve is not reclassified to profit or loss, but is transferred to
retained earnings.
The Group derecognises financial liabilities when, and only when, the Group\u2019s
obligations are discharged, cancelled or have expired. The difference between the
carrying amount of the financial liability derecognised and the consideration paid
and payable is recognised in profit or loss.
2. Significant accounting policies (continued)
When the Group exchanges with the existing lender one debt instrument into
another one, with substantially different terms, such exchange is accounted for
as an extinguishment of the original financial liability and the recognition of a
new financial liability. Similarly, the Group accounts for substantial modification
of terms of an existing liability or part of it as an extinguishment of the original
financial liability and the recognition of a new liability. It is assumed that the terms
are substantially different if the discounted present value of the cash flows under
the new terms, including any fees paid net of any fees received and discounted
using the original effective interest rate is at least 10 per cent different from the
discounted present value of the remaining cash flows of the original financial
liability. If the modification is not substantial, the difference between: (1) the
carrying amount of the liability before the modification; and (2) the present
value of the cash flows after modification is recognised in profit or loss as the
modification gain or loss within other gains and losses.
ii. Derecognition of hedging arrangements
The Group discontinues hedge accounting only when the hedging relationship
(or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if
applicable). This includes instances when the hedging instrument expires or is
sold, terminated or exercised. The discontinuation is accounted for prospectively.
Any gain or loss recognised in other comprehensive income and accumulated in
cash flow hedge reserve at that time remains in equity and is reclassified to profit
or loss when the forecast transaction occurs. When a forecast transaction is no
longer expected to occur, the gain or loss accumulated in the cash flow hedge
reserve is reclassified immediately to profit or loss.
F. Other hedging
i. Hedge of monetary assets and liabilities, financial commitments or
forecast transactions
Where a derivative financial instrument is used as an economic hedge of the
foreign exchange or metals commodity price exposure of a recognised monetary
asset or liability, financial commitment or forecast transaction, but does not meet
the criteria to qualify for hedge accounting under IFRS 9, no hedge accounting is
applied and any gain or loss resulting from changes in fair value of the hedging
instrument is recognised in net financial income or expense.
Where such a derivative is a formally designated hedge of a forecast transaction
for accounting purposes, movements in the value of the derivative are recognised
directly in other comprehensive income to the extent the hedge is effective. The
Group assesses the effectiveness of the hedge based on the expected fair value
of the amount to be received and the movement in the fair value of the derivative
designated as the hedge.
For segmental reporting purposes, changes in the fair value of economic hedges
that are not designated hedges, which relate to current year trading, together
with the gains and losses on their settlement, are allocated to the operating profit
of the relevant business segment.
ii. Hedge of net investment in foreign operations
Where a foreign currency liability or derivative financial instrument is a formally
designated hedge of a net investment in a foreign operation, foreign exchange
differences arising on translation of the foreign currency liability or changes in the
fair value of the financial instrument are recognised directly in equity via other
comprehensive income, to the extent the hedge is effective. The Group assesses
the effectiveness of its net investment hedges based on fair value changes of its
net assets, including relevant goodwill designated as foreign currency assets, and
the fair value changes of both the debt designated as a hedge and the relevant
financial instrument.
G. Investments not held for trading
Investments that are designated as being not held for trading are initially
recognised at fair value. Subsequently, the fair value of the investment is
reassessed at each balance sheet date with movements in the fair value
recognised in other comprehensive income. In contrast, on derecognition of
an investment in an equity instrument which the Group has elected on initial
recognition to measure at fair value through other comprehensive income, the
cumulative gain or loss previously accumulated in the investments revaluation
reserve is not reclassified to profit or loss, but is transferred to retained earnings.
H. Discontinued operations
When the Group has assets and liabilities that have been sold in the year or
are likely to be sold rather than being held for continuing use, these assets and
liabilities are included in current assets and liabilities and denoted \u2018held for
sale\u2019 rather than in their usual categories. They are recognised at the lower of
carrying amount and fair value less costs to sell. Impairment losses on the initial
classification of assets held for sale are included in the income statement, even
for assets measured at fair value, as are impairment losses on subsequent
remeasurement and any reversal thereof. Once classified as held for sale,
assets are no longer depreciated or amortised.
If they represent a significant enough proportion of the Group, they are also
treated as discontinued operations. A discontinued operation is a component of
the Group\u2019s business that represents a separate major line of business that has
been disposed of, is held for sale or is a subsidiary acquired exclusively with a view
to re-sale. This means that their trading performance, i.e. their revenues, costs
and other items of income and expense, are no longer reported within the headline
figures in the income statement and are instead reported in a separate line, net
of tax, called \u2018discontinued operations\u2019. These amounts no longer form part of
continuing earnings per share. Comparative figures are re-presented to be shown
on the same basis.
This enables the income statement for the current and prior year to be presented
on a consistent basis and to convey a more forward-looking version of the results
for the year.
Accounting policy
The Group\u2019s policy is to exclude items from underlying performance that are considered to be significant in nature (i.e. outside of the normal course of business)
and/or quantum and where treatment as an adjusting item provides stakeholders with additional useful information to assess period-on-period trading
performance of the Group.
The Group believes APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful
information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal
management reporting to the Board and Executive Committee. Some of these measures are also used for the purpose of setting remuneration targets and
for banking covenants.
The adjusting items in the income statement and the reasons these are considered to be adjusting items are detailed below:
\u2022 Costs associated with major restructuring projects \u2013 these costs are reported as adjusting items on the basis that they are significant in quantum, relate to
specific, approved strategic initiatives following reviews of our organisation structure during the period and to provide stakeholders with comparability of
underlying results from one period to the next. Restructuring costs which are not considered to be major or one-off are included within underlying results in the
consolidated income statement.
\u2022 Impairment losses \u2013 impairment losses treated as adjusting items include those which are large in quantum or one-off in nature and as a result are not considered
to be usual operating costs of the Group. In addition to this, impairment losses associated with major restructuring projects are considered to be part of the
overall project and therefore follow the same treatment as restructuring projects, as described above. Impairment losses incurred, which are not significant or do
not form part of a major restructuring project are recorded as adjusted items. All impairment losses recorded as adjusting items in the current and prior period
relate to restructuring projects treated as adjusting items.
\u2022 Gains and losses on property disposals \u2013 significant quantum gains and losses on property disposals are not considered to relate to the underlying trading of the
business and are therefore treated as adjusting items. All gains and losses on property disposals associated with major restructuring projects are considered to b e
part of the overall project and therefore follow the same treatment as restructuring projects, as described above.
\u2022 Acquired intangible amortisation \u2013 the amortisation charge is not considered to be related to the underlying performance of the Group and can fluctuate
materially period-on-period as new businesses are acquired. All acquired intangible amortisation is treated as an adjusting item due to its nature. The trading
results of acquired businesses are included in the adjusted results.
\u2022 Gains and losses on disposal of subsidiaries \u2013 due to their one-off nature and large quantum, gains and losses on disposals are treated as adjusting items. If these
gains or losses are not considered to be one-off or material, these amounts would be included within underlying results. This also includes the impact from the exit
from Russia \u2013 the loss on disposal of the Group\u2019s Russian subsidiary and impairment of assets related to Russian contracts.
\u2022 The reversal of gains and losses on economic hedges \u2013 gains and losses on economic hedges are treated as an adjusting item on a qualitative basis. The adjusting
item reverses the treatment taken locally by the Group\u2019s businesses, where the impact of foreign currency forwards and commodity hedges are booked at the
hedged rate in the adjusted results of the local businesses. In compliance with IFRS 9 \u2018Financial Instruments\u2019, these do not meet the requirement of an effective
hedge and are therefore adjusted to be booked at the spot rate. The recognition of the gain and losses on the hedged items is recorded as a financing item,
including any unrealised gains and losses.
\u2022 Other acquisition costs \u2013 for an acquired business, the acquisition costs which are primarily advisor and legal fees and the one-off write-off of the inventory uplift
to fair value do not reflect trading performance and so are treated as adjusting items to ensure consistency between periods.
\u2022 Special pension events \u2013 due to their one-off nature and typically large quantum, special pension events are treated as adjusting items. Special pension events
which are not significant are recorded as adjusting items. There are no special pension events recorded as adjusting items in the current or prior period.
\u2022 Tax effect on adjusting items above \u2013 any tax effect of the above items is treated as an adjusting item.
\u2022 Other tax items \u2013 an assessment is made, on a case-by-case basis, for one-off tax items which significantly impact the Group\u2019s results to determine whether the
item should be treated as an adjusting item.
The policies outlined above are consistent with the policies adopted in the previous period.
Movements in revenue and adjusted operating profit are given on an organic basis (see definition below) so that performance is not distorted by acquisitions,
disposals and movements in exchange rates.
The directors\u2019 commentary discusses these APMs to remove the effects of items of both income and expense that are considered different in nature from
the underlying trading and normal quantum and where treatment as an adjusting item provide stakeholders with additional information to assess
period-on-period trading.
Critical judgement
Management have applied judgement in the selection of the APMs used in the Annual Report & Accounts. The APMs presented are used in discussions with the
investment analyst community and by the Board and management to monitor the trading performance of the Group.
Accounting policy
The fair value of the employee services received in exchange for the grant of the options is recognised as an expense each year. The total amount to be expensed
over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example,
profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become
exercisable. The fair value of the options is determined based on the Monte Carlo and Black-Scholes option-pricing models.
At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original
estimates, if any, in the income statement.
For newly issued shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium
when the options are exercised.
Accounting policy
Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income
statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised
in the income statement on the date that the dividend is declared.
Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and
losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income
statement applying territory specific incremental borrowing rates.
Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and
the employee benefit plan assets.
The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from
adjusted earnings.
Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get
ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur.
Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.
Accounting policy
Current tax payable/receivable represents the expected tax payable/receivable
on the taxable profits for the year, using tax rates enacted or substantively
enacted at the balance sheet date and taking into account any adjustments
in respect of prior years.
Deferred tax is provided, using the balance sheet method, on temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes. Deferred tax
is not recognised for the following temporary differences: the initial recognition
of goodwill, the initial recognition of assets or liabilities in a transaction that
is not a business combination and that affects neither accounting nor taxable
profit, and differences relating to investments in subsidiaries to the extent
that the timing of the reversal of the differences can be controlled and it
is probable that the differences will not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to apply when
the temporary differences reverse, based on the tax laws that have been
enacted or substantively enacted by the balance sheet date.
A deferred tax asset is recognised to the extent that it is probable that future
taxable profits will be available against which the temporary difference can
be utilised.
Deferred tax assets and liabilities are offset when there is a legally enforceable
right to offset current tax assets against current tax liabilities and when
deferred tax assets and liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entities or different taxable
entities where there is an intention to settle the balances on a net basis.
In common with many multinational companies, IMI faces tax audits in
jurisdictions around the world, including in relation to transfer pricing of goods
and services between associated entities within the Group, the outcomes of
which are uncertain. These tax audits may be subject to inter-government
negotiations. The matters under discussion are often complex and can take
many years to resolve. Tax liabilities are recorded based on management\u2019s
estimate of either the most likely amount or the expected amount
depending on which method is expected to better reflect the resolution
of the uncertainty.
Accounting policy
Dividends are recognised as a liability in the period in which they are approved by shareholders.
Accounting policy
Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an
adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period
to period.
i. Goodwill
Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net
identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less
any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been
represented by post-acquisition synergies and the skills and knowledge of the workforce.
ii. Research and Development
Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income
statement as an expense as incurred.
Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and
processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially
feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour
and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development
expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other
acquired or other non-acquired category of intangible assets depending on its origin.
iii. Software development costs
Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at
cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition,
software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy
\u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin.
iv. Customer relationships and other acquired intangible assets
Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by
reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate.
Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred.
v. Amortisation of intangible assets other than goodwill
Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of
digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use.
The estimated useful lives for:
\u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years)
\u2022 Software development costs are the life of the intangible asset (up to 17 years)
\u2022 Customer relationships are the life of the intangible asset (up to 17 years)
\u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years)
The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised
as an adjusting item in the income statement.
Accounting policy
For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating
units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our
businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill
is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an
operating segment before aggregation.
Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in
the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based
on the relative values of the operation disposed of and the portion of the CGU retained.
Impairment
The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine
whether impairment indicators exist.
If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount
of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement.
For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date.
The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment
is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted
to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.
Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because
it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash
inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs.
Reversals of impairment
Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss
has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent
that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss
had been recognised.
Accounting policy
Freehold land and assets in the course of construction are not depreciated.
Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 11).
Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property,
plant and equipment. Costs in respect of tooling owned by the Group for clearly identifiable new products are capitalised net of any contribution received from
customers and are included in plant and equipment.
Depreciation is charged to the income statement, from the date the asset is brought in to use, on a straight-line basis (unless such a basis is not aligned with the
anticipated benefit) so as to write down the cost of assets to residual values over the period of their estimated useful lives within the following ranges:
\u2022 Freehold buildings - 25 to 50 years
\u2022 Plant and equipment - 3 to 20 years
Assets in the course of construction comprise assets which are not currently ready to be brought in to use. Assets under construction are not depreciated.
If there has been a technological change or decline in business performance the directors review the value of the assets to ensure they have not fallen below their
depreciated value. If an asset\u2019s value falls below its depreciated value, a one-off impairment charge is made against profit.
Accounting policy
The Group leases various properties, plant, equipment and cars. Rental contracts are negotiated individually and have a range of initial terms and may have
extension options. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.
Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease
payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant
periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life
and the lease term on a straight-line basis.
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of:
i. fixed payments less any lease incentives receivable;
ii. variable lease payments that are based on an index or a rate;
iii. amounts expected to be payable by the Group under residual value guarantees;
iv. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and
v. payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the entity\u2019s incremental borrowing rate is used,
being the rate that the entity would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar
terms and conditions.
Right-of-use assets are measured at cost comprising:
i. the amount of the initial measurement of lease liability;
ii. any lease payments made at or before the commencement date less any lease incentives received; and
iii. restoration costs.
Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term
leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture.
Extension and termination options - Extension and termination options are included in a number of property and equipment leases across the Group. These terms
are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the
Group and not by the respective lessor.
Critical judgement
In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not
exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be
extended (or not terminated). Potential future cash outflows of \u00a3nil have not been included in the lease liability because it is not reasonably certain that the leases
will be extended (or not terminated).
The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of
the Group. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an
increase in recognised lease liabilities and right-of-use assets of \u00a38.3m (2021: \u00a311.0m).
Accounting policy
i. Defined contribution (\u2018DC\u2019) pension plans
Arrangements where the employer pays fixed contributions into an external fund on behalf of the employee (who is responsible for making the investment decision
and therefore assumes the risks and rewards of fund performance). Contributions to defined contribution pension plans are recognised as an expense in the
income statement as incurred.
ii. Defined benefit (\u2018DB\u2019) pension plans
A defined benefit pension plan is a pension arrangement in which the employer promises a specified annual benefit on retirement that is pre-determined by a
formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. In some cases, this
benefit is paid as a lump sum on leaving the Company or while in the service of the Company rather than as a pension. The Group underwrites one or more risks in
meeting these obligations and therefore any net liability or surplus in these arrangements is shown on the Group balance sheet.
The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that
employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any
plan assets are deducted. Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or curtailment, and the date that the
Group recognises restructuring-related costs. The discount rate is the yield at the balance sheet date on high quality corporate bonds of the appropriate currency
that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method.
At each year end the Company and the local actuaries consider whether the plans are affected by the asset ceiling requirements. When the calculation results in
a net asset to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan
and restricted by any relevant asset ceiling. Any deduction made by the tax authorities in the event of a refund of a surplus would be regarded by the Group as an
income tax.
When the benefits of a plan are improved, the expense is recognised immediately in the income statement. Re-measurement gains and losses are recognised
immediately in equity and disclosed in the statement of comprehensive income.
iii. Long-term service and other post-employment benefits
The Group\u2019s net obligation in respect of long-term service and other post-employment benefits, other than pension plans, is the amount of future benefit that
employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is
discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the balance sheet date on high quality bonds
of the appropriate currency that have durations approximating those of the Group\u2019s obligations.
Key source of estimation uncertainty
Key source of estimation uncertainty \u2013The present value of the Group\u2019s defined benefit pension plans and other post-employment benefits are determined
using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include
the determination of the discount rate, inflation, future salary increases, mortality rates and future pension increases. The assumptions used and analysis of
their sensitivity is set out below. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in
these assumptions.
Accounting policy
Inventories are valued at the lower of cost and net realisable value. Due to the varying nature of the Group\u2019s operations, both first in, first out and weighted average
methodologies are employed. In respect of work in progress and finished goods, cost includes all direct costs of production and the appropriate proportion of
production overheads.
The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications,
there is a risk of products requiring modification, which can lead to excess or obsolete inventory. The amount of inventory provision recognised is disclosed below:
Accounting policy
The recoverable amount of the Group\u2019s receivables other than financial assets held at fair value is calculated as the present value of expected future cash flows,
discounted at the original effective interest rate inherent in the asset. Receivables with a short duration of less than one year are not discounted.
The expected credit loss is calculated based on the ageing of individual customers receivables, giving consideration to the geographical location in which they operate,
historical collectability and the customer\u2019s financial position, where this information is known.
Accounting policy
A provision is recorded instead of a payable when uncertainty exists over the timing and amount of the cash outflow. Provisions are recognised when: the Group
has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the
amount can be reliably estimated. Provisions are valued at management\u2019s best estimate of the amount required to settle the present obligation at the balance
sheet date.
A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced
or has been announced publicly.
The recognition of a provision requires estimation. The principal estimates made in respect of the Group\u2019s provisions using the best estimate methodology
(with the exception of provisions indemnities as noted below) concern the timing and amount of payments required to:
- cover the costs of known restructuring projects;
- reimburse customers for potential product warranty claims;
- ensure that current and former manufacturing sites meet relevant environmental standards;
- reflect the estimated outcome of ongoing legal disputes; and
- provide against indemnities following the disposal of subsidiaries.
",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"fact-330": {
"value": "A. Subsidiaries The Group financial statements consolidate the financial statements of IMI plc and the entities it controls (its subsidiaries) for the year to 31 December 2022. The Group has no significant interests which are accounted for as associates or joint ventures. Subsidiaries are consolidated from the date of their acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases. Control comprises the power to govern the financial and operating policies of the investee so as to obtain benefit from its activities and is achieved through direct or indirect ownership of voting rights, currently exercisable or convertible potential voting rights or by way of contractual agreement. The financial statements of subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting year as the parent company and are based on consistent accounting policies. All intragroup balances and transactions, including unrealised profits arising from them, are eliminated in full. A change in the ownership interest of a subsidiary, without loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: \u2022 derecognises the assets (including any goodwill relating to the subsidiary) and liabilities of the subsidiary; \u2022 derecognises the carrying amount of any non-controlling interest; \u2022 derecognises the cumulative translation differences recorded in equity; \u2022 recognises the fair value of the consideration received; \u2022 recognises the fair value of any investment retained; \u2022 recognises any surplus or deficit in profit or loss; and \u2022 reclassifies the parent\u2019s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate. Taxation on the above accounting entries would also be recognised, where applicable. ",
"dimensions": {
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"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-331": {
"value": "B. Use of critical judgements and key sources of estimation uncertainty The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. i. Critical judgements The critical judgements are the selection of the Alternative Performance Measures and lease term determination disclosed in Notes 3 and 13 respectively. ii. Key sources of estimation uncertainty The Group bases its assumptions and estimates on information available when the consolidated financial statements are prepared. Market changes or circumstances arising beyond the control of the Group are reflected in the assumptions and estimates when they occur. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are disclosed in Note 14 \u2018Retirement benefits\u2019. iii. Changes in critical judgements and key sources of estimation uncertainty Management has reassessed the critical judgements and key sources of estimation uncertainty presented in the 2021 Annual Report & Accounts and concluded that, in the current year, no changes are required in the consideration of what constitutes key judgements and estimates. ",
"dimensions": {
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"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-332": {
"value": "C. Revenue recognition Revenue is recognised when obligations under the terms of a contract with our customer are satisfied. This generally occurs when the goods are transferred, or the services are provided, to our customer. Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Sales and other taxes collected from customers are excluded from revenue. The nature of the equipment, valve and other contracts into which the Group enters means that: \u2022 the contracts usually contain distinct performance obligations, each of which transfers control of the goods to the customer. Where such distinct performance obligations are present, revenue is recognised on each element in accordance with the policy on the sale of goods; and \u2022 the service element of the contract is usually insignificant in relation to the total contract value and is often provided on a short-term or one-off basis. Where this is the case, revenue is recognised when the service is complete. As a result of the above, the significant majority of the Group\u2019s revenue is recognised on a sale of goods basis. Each of the divisional revenue streams set out in Note 4 can consist of the sale of goods, the provision of services or a combination of the two. The specific methods used to recognise the different forms of revenue earned by the Group are set out below: i. Sale of goods Revenue from the sale of goods is recognised in the income statement net of returns, trade discounts and volume rebates when control has been transferred to our customer. No revenue is recognised where recovery of the consideration is not probable or there are significant uncertainties regarding associated costs, or the possible return of goods. In IMI Hydronic, the amount of consideration received and the revenue recognised varies in line with discounts and promotions offered to our customers and their customers. The level of estimation uncertainty associated with variable consideration is minimal, as discounts and rebates are accounted for at the point of sale and adjusted as required at each financial year end. The timing of the transfer of control to our customer varies depending on the nature of the products sold and the individual terms of the contract of sale. Sales made under internationally accepted trade terms, Incoterms 2020, are recognised as revenue when the Group has completed the primary duties required to transfer control as defined by the International Chamber of Commerce Official Rules for the Interpretation of Trade Terms. Sales made outside Incoterms 2020 are generally recognised on delivery to the customer. In limited instances, a customer may request that the Group retains physical possession of an asset for a period after control has been transferred to the customer. In these circumstances, the Group provides this storage as a service to the customer and therefore revenue is recognised prior to delivery of the asset. ii. Rendering of services Servicing relates to repairs and maintenance activity that is completed at our customer sites within our installed base. Revenue from the rendering of services is usually insignificant in relation to the total contract value and is generally provided on a short-term or one-off basis. Accordingly, revenue is usually recognised when the service is complete. Where this is not the case, revenue from services rendered is recognised in proportion to the stage of completion of the service at the balance sheet date. The stage of completion is assessed by reference to the contractual performance obligations with each separate customer and the costs incurred on the contract to date in comparison to the total forecast costs of the contract. Revenue recognition commences only when the outcome of the contract can be reliably measured. Installation fees are similarly recognised by reference to the stage of completion on the installation unless they are incidental to the sale of the goods, in which case they are recognised when the goods are sold. iii. Combined services and goods When a transaction combines a supply of goods with the provision of a significant service, distinct performance obligations are identified and recognised in line with the applicable policy. Revenue from a service that is incidental to the supply of goods is recognised at the same time as the revenue from the supply of goods. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForRecognitionOfRevenue",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"fact-333": {
"value": "D. Foreign currencies i. Foreign currency transactions Monetary assets and liabilities denominated in foreign currencies have been translated into sterling at the rates of exchange ruling at the balance sheet date. Foreign exchange differences arising on translating transactions at the exchange rate ruling on the transaction date are reflected in the income statement. Non- monetary assets and liabilities that are measured at historical cost in a foreign currency are translated using the exchange rates at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated into sterling at foreign exchange rates ruling at the balance sheet date. ii. Foreign operations The income statements of overseas subsidiary undertakings are translated at the appropriate average rate of exchange for the year and the adjustment to year end rates is taken directly to reserves. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on acquisition, are translated at foreign exchange rates ruling at the balance sheet date. Foreign exchange differences arising on retranslation are recognised directly as a separate component of equity. Since 1 January 2004, the Group\u2019s date of transition to IFRS, such differences have been recognised in the translation reserve. When a foreign operation is disposed of, in part or in full, the relevant amount in the translation reserve is transferred to profit or loss. ",
"dimensions": {
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-334": {
"value": "E. Financial instruments and fair value hedging Financial instruments are initially recorded at fair value plus directly attributable transaction costs unless the instrument is a derivative not designated as a hedge (see below). Subsequent measurement depends on the designation of the instrument, which follows the categories in IFRS 9: \u2022 short-term borrowings and overdrafts are classified as financial liabilities at amortised cost; \u2022 derivatives, comprising interest rate swaps, foreign exchange contracts and options, metals futures contracts and any embedded derivatives, are classified as \u2018fair value through profit or loss\u2019 under IFRS 9, unless designated as hedges. Derivatives not designated as hedges are initially recognised at fair value; attributable transaction costs are recognised in profit or loss when incurred. Subsequent to initial recognition, changes in fair value of such derivatives and gains or losses on their settlement are recognised in net financial income or expense; \u2022 long-term loans and other interest bearing borrowings are generally held at amortised cost using the effective interest rate method. Where the long-term loan is hedged, generally by an interest rate swap, and the hedge is regarded as effective, the carrying value of the long-term loan is adjusted for changes in fair value of the hedge; \u2022 trade receivables are stated at cost as reduced by appropriate impairment allowances for expected irrecoverable amounts; \u2022 trade payables are stated at cost; \u2022 financial assets and liabilities are recognised on the balance sheet only when the Group becomes a party to the contractual provisions of the instrument; and \u2022 fair value through other comprehensive income (FVTOCI) financial instruments are carried at fair value with gains and losses being recognised in equity, and represent investments. i. Derecognition of financial instruments The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in an equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. The Group derecognises financial liabilities when, and only when, the Group\u2019s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. When the Group exchanges with the existing lender one debt instrument into another one, with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses. ii. Derecognition of hedging arrangements The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss. ",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"fact-367": {
"value": "i. Derecognition of financial instruments The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all of the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. In addition, on derecognition of an investment in a debt instrument classified as FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is reclassified to profit or loss. In contrast, on derecognition of an investment in an equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. The Group derecognises financial liabilities when, and only when, the Group\u2019s obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss. When the Group exchanges with the existing lender one debt instrument into another one, with substantially different terms, such exchange is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Similarly, the Group accounts for substantial modification of terms of an existing liability or part of it as an extinguishment of the original financial liability and the recognition of a new liability. It is assumed that the terms are substantially different if the discounted present value of the cash flows under the new terms, including any fees paid net of any fees received and discounted using the original effective interest rate is at least 10 per cent different from the discounted present value of the remaining cash flows of the original financial liability. If the modification is not substantial, the difference between: (1) the carrying amount of the liability before the modification; and (2) the present value of the cash flows after modification is recognised in profit or loss as the modification gain or loss within other gains and losses. ii. Derecognition of hedging arrangements The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in cash flow hedge reserve at that time remains in equity and is reclassified to profit or loss when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in the cash flow hedge reserve is reclassified immediately to profit or loss. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDerecognitionOfFinancialInstrumentsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-335": {
"value": "F. Other hedging i. Hedge of monetary assets and liabilities, financial commitments or forecast transactions Where a derivative financial instrument is used as an economic hedge of the foreign exchange or metals commodity price exposure of a recognised monetary asset or liability, financial commitment or forecast transaction, but does not meet the criteria to qualify for hedge accounting under IFRS 9, no hedge accounting is applied and any gain or loss resulting from changes in fair value of the hedging instrument is recognised in net financial income or expense. Where such a derivative is a formally designated hedge of a forecast transaction for accounting purposes, movements in the value of the derivative are recognised directly in other comprehensive income to the extent the hedge is effective. The Group assesses the effectiveness of the hedge based on the expected fair value of the amount to be received and the movement in the fair value of the derivative designated as the hedge. For segmental reporting purposes, changes in the fair value of economic hedges that are not designated hedges, which relate to current year trading, together with the gains and losses on their settlement, are allocated to the operating profit of the relevant business segment. ii. Hedge of net investment in foreign operations Where a foreign currency liability or derivative financial instrument is a formally designated hedge of a net investment in a foreign operation, foreign exchange differences arising on translation of the foreign currency liability or changes in the fair value of the financial instrument are recognised directly in equity via other comprehensive income, to the extent the hedge is effective. The Group assesses the effectiveness of its net investment hedges based on fair value changes of its net assets, including relevant goodwill designated as foreign currency assets, and the fair value changes of both the debt designated as a hedge and the relevant financial instrument. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForHedgingExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-336": {
"value": "G. Investments not held for trading Investments that are designated as being not held for trading are initially recognised at fair value. Subsequently, the fair value of the investment is reassessed at each balance sheet date with movements in the fair value recognised in other comprehensive income. In contrast, on derecognition of an investment in an equity instrument which the Group has elected on initial recognition to measure at fair value through other comprehensive income, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForInvestmentsOtherThanInvestmentsAccountedForUsingEquityMethodExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-337": {
"value": "H. Discontinued operations When the Group has assets and liabilities that have been sold in the year or are likely to be sold rather than being held for continuing use, these assets and liabilities are included in current assets and liabilities and denoted \u2018held for sale\u2019 rather than in their usual categories. They are recognised at the lower of carrying amount and fair value less costs to sell. Impairment losses on the initial classification of assets held for sale are included in the income statement, even for assets measured at fair value, as are impairment losses on subsequent remeasurement and any reversal thereof. Once classified as held for sale, assets are no longer depreciated or amortised. If they represent a significant enough proportion of the Group, they are also treated as discontinued operations. A discontinued operation is a component of the Group\u2019s business that represents a separate major line of business that has been disposed of, is held for sale or is a subsidiary acquired exclusively with a view to re-sale. This means that their trading performance, i.e. their revenues, costs and other items of income and expense, are no longer reported within the headline figures in the income statement and are instead reported in a separate line, net of tax, called \u2018discontinued operations\u2019. These amounts no longer form part of continuing earnings per share. Comparative figures are re-presented to be shown on the same basis. This enables the income statement for the current and prior year to be presented on a consistent basis and to convey a more forward-looking version of the results for the year. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDiscontinuedOperationsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-338": {
"value": "3. Alternative Performance Measures (\u2018APMs\u2019) & adjusting items Accounting policy The Group\u2019s policy is to exclude items from underlying performance that are considered to be significant in nature (i.e. outside of the normal course of business) and/or quantum and where treatment as an adjusting item provides stakeholders with additional useful information to assess period-on-period trading performance of the Group. The Group believes APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board and Executive Committee. Some of these measures are also used for the purpose of setting remuneration targets and for banking covenants. The adjusting items in the income statement and the reasons these are considered to be adjusting items are detailed below: \u2022 Costs associated with major restructuring projects \u2013 these costs are reported as adjusting items on the basis that they are significant in quantum, relate to specific, approved strategic initiatives following reviews of our organisation structure during the period and to provide stakeholders with comparability of underlying results from one period to the next. Restructuring costs which are not considered to be major or one-off are included within underlying results in the consolidated income statement. \u2022 Impairment losses \u2013 impairment losses treated as adjusting items include those which are large in quantum or one-off in nature and as a result are not considered to be usual operating costs of the Group. In addition to this, impairment losses associated with major restructuring projects are considered to be part of the overall project and therefore follow the same treatment as restructuring projects, as described above. Impairment losses incurred, which are not significant or do not form part of a major restructuring project are recorded as adjusted items. All impairment losses recorded as adjusting items in the current and prior period relate to restructuring projects treated as adjusting items. \u2022 Gains and losses on property disposals \u2013 significant quantum gains and losses on property disposals are not considered to relate to the underlying trading of the business and are therefore treated as adjusting items. All gains and losses on property disposals associated with major restructuring projects are considered to b e part of the overall project and therefore follow the same treatment as restructuring projects, as described above. \u2022 Acquired intangible amortisation \u2013 the amortisation charge is not considered to be related to the underlying performance of the Group and can fluctuate materially period-on-period as new businesses are acquired. All acquired intangible amortisation is treated as an adjusting item due to its nature. The trading results of acquired businesses are included in the adjusted results. \u2022 Gains and losses on disposal of subsidiaries \u2013 due to their one-off nature and large quantum, gains and losses on disposals are treated as adjusting items. If these gains or losses are not considered to be one-off or material, these amounts would be included within underlying results. This also includes the impact from the exit from Russia \u2013 the loss on disposal of the Group\u2019s Russian subsidiary and impairment of assets related to Russian contracts. \u2022 The reversal of gains and losses on economic hedges \u2013 gains and losses on economic hedges are treated as an adjusting item on a qualitative basis. The adjusting item reverses the treatment taken locally by the Group\u2019s businesses, where the impact of foreign currency forwards and commodity hedges are booked at the hedged rate in the adjusted results of the local businesses. In compliance with IFRS 9 \u2018Financial Instruments\u2019, these do not meet the requirement of an effective hedge and are therefore adjusted to be booked at the spot rate. The recognition of the gain and losses on the hedged items is recorded as a financing item, including any unrealised gains and losses. \u2022 Other acquisition costs \u2013 for an acquired business, the acquisition costs which are primarily advisor and legal fees and the one-off write-off of the inventory uplift to fair value do not reflect trading performance and so are treated as adjusting items to ensure consistency between periods. \u2022 Special pension events \u2013 due to their one-off nature and typically large quantum, special pension events are treated as adjusting items. Special pension events which are not significant are recorded as adjusting items. There are no special pension events recorded as adjusting items in the current or prior period. \u2022 Tax effect on adjusting items above \u2013 any tax effect of the above items is treated as an adjusting item. \u2022 Other tax items \u2013 an assessment is made, on a case-by-case basis, for one-off tax items which significantly impact the Group\u2019s results to determine whether the item should be treated as an adjusting item. The policies outlined above are consistent with the policies adopted in the previous period. Movements in revenue and adjusted operating profit are given on an organic basis (see definition below) so that performance is not distorted by acquisitions, disposals and movements in exchange rates. The directors\u2019 commentary discusses these APMs to remove the effects of items of both income and expense that are considered different in nature from the underlying trading and normal quantum and where treatment as an adjusting item provide stakeholders with additional information to assess period-on-period trading. Critical judgement Management have applied judgement in the selection of the APMs used in the Annual Report & Accounts. The APMs presented are used in discussions with the investment analyst community and by the Board and management to monitor the trading performance of the Group. The table below details the definition of each APM and a reference to where it can be reconciled to the equivalent statutory measure.
APM Definition Reconciliation to statutory measure
Adjusted profit before tax
Adjusted net interest cost
Adjusted earnings per share
Adjusted effective tax rate
Adjusted EBITDA
Adjusted profit before tax is statutory profit before tax before adjusting items
as shown on the income statement.
Adjusted net interest cost is statutory net interest costs before adjusting
items as shown on the income statement.
Adjusted earnings per share is defined within the table in Note 7.
The adjusted effective tax rate is the tax impact on adjusted profit before
tax divided by adjusted profit before tax.
This measure reflects adjusted profit after tax before interest, tax,
depreciation, amortisation and impairment.
See income statement on page 162.
See income statement on page 162.
See Note 7.
See Note 9.
See Note 19.
Adjusted operating profit
Adjusted operating margin
Adjusted net financing costs
Organic revenue growth
Organic adjusted operating profit
Adjusted operating profit is statutory operating profit before adjusting items
as shown on the income statement.
Adjusted operating margin is adjusted operating profit divided by revenue.
Adjusted net financing costs is interest received and interest paid including
the impact on interest costs on leases before gains on instruments measured
at fair value through profit or loss (other economic hedges) and net financial
income relating to defined benefit pension schemes.
These two measures remove the impact of adjusting items, acquisitions,
disposals and movements in exchange rates and are reconciled in Note 4.
See income statement on page 162 and
segmental reporting in Note 4.
Adjusted operating cash flow This measure reflects cash generated from operations as shown in the
statement of cash flows less cash spent acquiring property, plant and
equipment, non-acquired intangible assets and investments; plus cash received
from the sale of property, plant and equipment, the sale of investments less the
repayment of principal amounts of lease payments excluding the cash impact of
adjusting items.
See Note 19.
Net debt
Net debt: adjusted EBITDA
Free cash flow before
corporate activity
Net debt is defined as the cash and cash equivalents, overdrafts,
interest-bearing loans and borrowings and lease liabilities.
Net debt divided by adjusted EBITDA as defined above.
This measure is a sub-total in the reconciliation of adjusted EBITDA to net
debt and is presented to assist the reader to understand the nature of
the current year\u2019s cash flows excluding dividends, share buybacks and the
purchase and issuance of own shares.
See Note 19.
See Note 19.
3. Alternative Performance Measures ('APMs') & adjusting items (continued)
Outlined below are the adjusting items impacting the current and prior year results.
2022 2021
Key \u00a3m \u00a3m
Recognised in arriving at operating profit
Reversal of net economic hedge contract losses/(gains) a) 3.0 (6.0)
Restructuring costs and associated impairment losses* b) (25.9) (39.7)
Loss on disposal of subsidiary c) - (3.8)
Acquired intangible amortisation and other acquisition costs d) (33.7) (18.1)
Exit from Russia e) (9.0) -
(65.6) (67.6)
Recognised in net financial expense
Gains on instruments measured at fair value through profit or loss a) 4.9 5.2
Recognised in taxation
Tax impact of adjusting items above f) 14.6 15.1
Change in UK tax rate f) - (18.6)
Resolution of tax authority audit f) - 16.6
14.6 13.1
(a) Reversal of net economic hedge contract losses/gains \u2013 for segmental
reporting purposes, changes in the fair value of economic hedges which are not
designated as hedges for accounting purposes, together with the gains and
losses on their settlement, are included in the revenue and adjusted operating
profit of the relevant business segment. The adjusting items at the operating
level reverse this treatment. The financing adjusting items reflect the change
in value or settlement of these contracts with the financial institutions with
whom they were transacted.
(b) Restructuring costs and associated impairment losses \u2013 the restructuring
costs of \u00a325.9m primarily relate to IMI Precision Engineering and were for
the Customer First project (across a number of businesses) and the
rationalisation of four facilities. These ongoing significant restructuring
projects are due to be completed in 2023, with the overall programme
expected to be largely complete during 2024, although the Group will
always seek and execute projects that improve its competitive position.
Restructuring costs and associated impairment losses of \u00a339.7m were
recognised in 2021. These included costs of \u00a335.6m, of which \u00a34.6m related
to impairment losses within IMI Precision Engineering, primarily for the
rationalisation of a factory in Europe, which was under consultation with
the Works Council, and the Customer First project, which both simplify the
structure of the division and ensures the business structure is aligned to our
customer base. In IMI Critical Engineering there were costs of \u00a30.8m relating
to the finalisation of the ongoing projects announced in 2020. In IMI Hydronic
Engineering there were costs of \u00a33.3m for the finalisation of the ongoing
projects announced in 2020 and a new project announced in 2021 to simplify
finance processes through a shared service centre in Poland.
(c) Loss on disposal of subsidiary \u2013 following the disposal of IMI Interativa in July
2021, the Group recorded a loss on disposal of \u00a33.8m. Further details are
included in Note 24.
(d) Acquired intangible amortisation and other acquisition items \u2013 of the total
\u00a333.7m, the acquired intangible amortisation charge was \u00a329.5m (2021:
\u00a315.0m) which largely relates to the amortisation of the intangible assets
recognised on the acquisitions of Adaptas and Bahr. Other acquisition costs of
\u00a34.2m primarily related to professional fees associated with the acquisition
of Heatmiser and Bahr and the Adaptas IFRS 3 release of the fair value uplift
to inventory, recognised to cost of sales. Other acquisition costs of \u00a33.1m for
2021 primarily related to professional fees associated with the acquisition of
Adaptas in December 2021.
(e) Exit from Russia \u2013 the Group\u2019s decision to end all new business in Russia
resulted in a charge of \u00a39.0m. The Group recorded a loss on disposal of
its Russian subsidiary of \u00a34.8m. In addition, the exit resulted in a \u00a34.2m
impairment of assets related to Russian contracts.
(f) Taxation \u2013 the tax effect of the above items has been recognised as an
adjusting item and amounts to \u00a314.6m (2021: \u00a315.1m). The UK Government
announced an increase in the corporation tax rate from 19% to 25%, with an
effective date of April 2023, which was substantively enacted on 24 May 2021.
In 2021, the impact of this on the Group\u2019s deferred tax liabilities of \u00a318.6m
was recorded as an adjusting item. A credit of \u00a316.6m due to the release of
provisions in respect of exposures related to prior years which are no longer
expected to arise, including the closure of open years with tax authorities was
also recorded as an adjusting item within the income statement in 2021.
* 'Restructuring costs and associated impairment losses' were previously reported
separately as 'Restructuring costs' and 'Impairment losses'. These amounts are
now reported together as they relate to the same projects.
",
"dimensions": {
"concept": "imiplc:DisclosureOfAlternativePerformanceMeasures",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-368": {
"value": "Accounting policy The Group\u2019s policy is to exclude items from underlying performance that are considered to be significant in nature (i.e. outside of the normal course of business) and/or quantum and where treatment as an adjusting item provides stakeholders with additional useful information to assess period-on-period trading performance of the Group. The Group believes APMs, which are not considered to be a substitute for, or superior to, IFRS measures, provide stakeholders with additional helpful information on the performance of the business. These APMs are consistent with how the business performance is planned and reported within the internal management reporting to the Board and Executive Committee. Some of these measures are also used for the purpose of setting remuneration targets and for banking covenants. The adjusting items in the income statement and the reasons these are considered to be adjusting items are detailed below: \u2022 Costs associated with major restructuring projects \u2013 these costs are reported as adjusting items on the basis that they are significant in quantum, relate to specific, approved strategic initiatives following reviews of our organisation structure during the period and to provide stakeholders with comparability of underlying results from one period to the next. Restructuring costs which are not considered to be major or one-off are included within underlying results in the consolidated income statement. \u2022 Impairment losses \u2013 impairment losses treated as adjusting items include those which are large in quantum or one-off in nature and as a result are not considered to be usual operating costs of the Group. In addition to this, impairment losses associated with major restructuring projects are considered to be part of the overall project and therefore follow the same treatment as restructuring projects, as described above. Impairment losses incurred, which are not significant or do not form part of a major restructuring project are recorded as adjusted items. All impairment losses recorded as adjusting items in the current and prior period relate to restructuring projects treated as adjusting items. \u2022 Gains and losses on property disposals \u2013 significant quantum gains and losses on property disposals are not considered to relate to the underlying trading of the business and are therefore treated as adjusting items. All gains and losses on property disposals associated with major restructuring projects are considered to b e part of the overall project and therefore follow the same treatment as restructuring projects, as described above. \u2022 Acquired intangible amortisation \u2013 the amortisation charge is not considered to be related to the underlying performance of the Group and can fluctuate materially period-on-period as new businesses are acquired. All acquired intangible amortisation is treated as an adjusting item due to its nature. The trading results of acquired businesses are included in the adjusted results. \u2022 Gains and losses on disposal of subsidiaries \u2013 due to their one-off nature and large quantum, gains and losses on disposals are treated as adjusting items. If these gains or losses are not considered to be one-off or material, these amounts would be included within underlying results. This also includes the impact from the exit from Russia \u2013 the loss on disposal of the Group\u2019s Russian subsidiary and impairment of assets related to Russian contracts. \u2022 The reversal of gains and losses on economic hedges \u2013 gains and losses on economic hedges are treated as an adjusting item on a qualitative basis. The adjusting item reverses the treatment taken locally by the Group\u2019s businesses, where the impact of foreign currency forwards and commodity hedges are booked at the hedged rate in the adjusted results of the local businesses. In compliance with IFRS 9 \u2018Financial Instruments\u2019, these do not meet the requirement of an effective hedge and are therefore adjusted to be booked at the spot rate. The recognition of the gain and losses on the hedged items is recorded as a financing item, including any unrealised gains and losses. \u2022 Other acquisition costs \u2013 for an acquired business, the acquisition costs which are primarily advisor and legal fees and the one-off write-off of the inventory uplift to fair value do not reflect trading performance and so are treated as adjusting items to ensure consistency between periods. \u2022 Special pension events \u2013 due to their one-off nature and typically large quantum, special pension events are treated as adjusting items. Special pension events which are not significant are recorded as adjusting items. There are no special pension events recorded as adjusting items in the current or prior period. \u2022 Tax effect on adjusting items above \u2013 any tax effect of the above items is treated as an adjusting item. \u2022 Other tax items \u2013 an assessment is made, on a case-by-case basis, for one-off tax items which significantly impact the Group\u2019s results to determine whether the item should be treated as an adjusting item. The policies outlined above are consistent with the policies adopted in the previous period. Movements in revenue and adjusted operating profit are given on an organic basis (see definition below) so that performance is not distorted by acquisitions, disposals and movements in exchange rates. The directors\u2019 commentary discusses these APMs to remove the effects of items of both income and expense that are considered different in nature from the underlying trading and normal quantum and where treatment as an adjusting item provide stakeholders with additional information to assess period-on-period trading. Critical judgement Management have applied judgement in the selection of the APMs used in the Annual Report & Accounts. The APMs presented are used in discussions with the investment analyst community and by the Board and management to monitor the trading performance of the Group. ",
"dimensions": {
"concept": "imiplc:DescriptionOfAccountingPolicyForAlternativePerformanceMeasuresAndAdjustingItems",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-339": {
"value": "Segmental information is presented in the consolidated financial statements for each of the Group's operating segments. The operating segment reporting format
reflects the Group's management and internal reporting structures and represents the information that was presented to the chief operating decision-maker, being
the Executive Committee. As described on page 10, each of the Group\u2019s three divisions has a number of key brands across its main markets and operational locations.
For the purposes of reportable segmental information, operating segments are aggregated into the Group\u2019s three divisions, as the nature of the products, production
processes and types of customer are similar within each division. Inter-segmental revenue is insignificant.
IMI Precision Engineering
IMI Precision Engineering specialises in the design and manufacture of motion and fluid control technologies where precision, speed and reliability are essential to the
processes in which they are involved.
IMI Critical Engineering
IMI Critical Engineering is a world-leading provider of flow control solutions that enable vital energy and process industries to operate safely, cleanly, reliably and more
efficiently. Our products control the flow of steam, gas and liquids in harsh environments and are designed to withstand temperature and pressure extremes as well as
intensely abrasive or corrosive cyclical operations.
IMI Hydronic Engineering
IMI Hydronic Engineering is a leading provider of technologies that deliver operational and energy efficient water-based heating and cooling systems for the residential
and commercial building sectors.
Performance is measured by the Executive Committee based on adjusted operating profit and organic revenue growth which are defined in Note 3. These two measures
represent the two short-term key performance indicators for the Group.
Businesses enter into forward currency and metal contracts to provide economic hedges against the impact on profitability of swings in rates and values in accordance
with the Group's policy to minimise the risk of volatility in revenues, costs and margins. Adjusted operating profits are therefore charged/credited with the impact of
these contracts. In accordance with IFRS 9, these contracts do not meet the requirements for hedge accounting and gains and losses are reversed out of operating profit
and are recorded in net financial income and expense for the purposes of the consolidated income statement.
4. Segmental information
The following table illustrates how the results for the segments reconcile to the overall results reported in the income statement.
Revenue Operating profit Operating margin
2022 2021 2022 2021 2022 2021
\u00a3m \u00a3m \u00a3m \u00a3m % %
IMI Precision Engineering 986 836 182.6 148.9 18.5% 17.8%
IMI Critical Engineering 713 691 135.5 125.0 19.0% 18.1%
IMI Hydronic Engineering 350 339 71.1 68.1 20.3% 20.1%
Corporate costs (25.4) (23.9)
Total revenue/operating profit and margin 2,049 1,866 363.8 318.1 17.8% 17.0%
Reversal of net economic hedge contract losses/(gains) 3.0 (6.0)
Restructuring costs and associated impairment losses* (25.9) (39.7)
Loss on disposal of subsidiary - (3.8)
Acquired intangible amortisation and other acquisition items (33.7) (18.1)
Exit from Russia (9.0) -
Statutory revenue/operating profit 2,049 1,866 298.2 250.5
Net financial expense (12.8) (5.9)
Statutory profit before tax 285.4 244.6
* 'Restructuring costs and associated impairment losses' were previously reported separately as 'Restructuring costs' and 'Impairment losses'. These amounts are now
reported together as they relate to the same projects.
The following table shows a reconciliation of divisional adjusted operating profit to statutory operating profit:
IMI Precision IMI Critical IMI Hydronic Corporate Total
Engineering Engineering Engineering
2022 2021 2022 2021 2022 2021 2022 2021 2022 2021
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Revenue 986 836 713 691 350 339 2,049 1,866
Adjusted operating profit 182.6 148.9 135.5 125.0 71.1 68.1 (25.4) (23.9) 363.8 318.1
Reconciliation to statutory operating profit:
Reversal of net economic hedge contract losses/(gains) (2.4) (3.4) 3.1 (1.9) 2.3 (0.7) 3.0 (6.0)
Restructuring costs and associated impairment losses (24.8) (35.6) (0.4) (0.8) (0.7) (3.3) (25.9) (39.7)
Loss on disposal of subsidiary (3.8) - (3.8)
Acquired intangible amortisation and other acquisition items (25.1) (10.3) (6.6) (7.8) (2.0) (33.7) (18.1)
Exit from Russia (0.2) (3.9) (0.1) (4.8) (9.0) -
Statutory operating profit 130.1 99.6 127.7 110.7 70.6 64.1 (30.2) (23.9) 298.2 250.5
Statutory operating margin (%) 13.2% 11.9% 17.9% 16.0% 20.2% 18.9% 14.6% 13.4%
The following table illustrates how revenue and adjusted operating profit have been impacted by movements in foreign exchange, acquisitions and disposals compared
to 2021:
Year ended 31 December 2021 Year ended 31 December 2022
As As Adjusted Organic
adjusted Disposals Exchange Organic adjusted Acquisitions Organic growth (%) growth (%)
Revenue
IMI Precision Engineering 836 (3) 41 874 986 (70) 916 18% 5%
IMI Critical Engineering 691 (16) 23 698 713 713 3% 2%
IMI Hydronic Engineering 339 (5) 3 337 350 350 3% 4%
Total 1,866 (24) 67 1,909 2,049 (70) 1,979 10% 4%
Adjusted operating profit
IMI Precision Engineering 148.9 (0.5) 7.4 155.8 182.6 (12.4) 170.2 23% 9%
IMI Critical Engineering 125.0 (3.3) 5.0 126.7 135.5 135.5 8% 7%
IMI Hydronic Engineering 68.1 (0.4) (0.2) 67.5 71.1 71.1 4% 5%
Corporate costs (23.9) (23.9) (25.4) (25.4)
Total 318.1 (4.2) 12.2 326.1 363.8 (12.4) 351.4 14% 8%
Adjusted operating profit margin (%) 17.0% 17.1% 17.8% 17.8%
The following table illustrates how the segmental assets and liabilities reconcile to the overall total assets and liabilities reported in the balance sheet: Assets Liabilities 2022 2021 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m IMI Precision Engineering 1,038.9 916.1 201.8 202.4 IMI Critical Engineering 894.1 714.6 262.5 231.2 IMI Hydronic Engineering 373.5 233.5 98.0 90.9 Total segmental assets/liabilities (including lease liabilities) 2,306.5 1,864.2 562.3 524.5 Corporate items 23.4 24.2 47.3 39.0 Employee benefits 28.5 129.0 47.4 66.5 Investments 2.0 2.9 - - Net debt items (excluding lease liabilities) 133.0 94.6 839.3 623.5 Net taxation 26.5 53.9 118.0 136.2 Total assets and liabilities in Group balance sheet 2,519.9 2,168.8 1,614.3 1,389.7 The following table includes other information to show how certain costs are allocated between the segments of the Group: Adjusting restructuring costs and Capital expenditure Amortisation** Depreciation *** associated impairment losses 2022 2021 2022 2021 2022 2021 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m IMI Precision Engineering 24.8 35.6 42.0 29.9 28.7 11.2 38.5 32.7 IMI Critical Engineering 0.4 0.8 15.8 9.8 13.2 14.7 20.7 20.5 IMI Hydronic Engineering 0.7 3.3 12.8 17.8 5.9 5.3 14.2 14.3 25.9 39.7 70.4 57.5 47.8 31.2 73.4 67.5 Corporate costs 0.7 - 0.2 - 0.8 0.8 Total 25.9 39.7 71.3 57.5 48.0 31.2 74.2 68.3 ** The amortisation figures above include the amortisation of acquired intangibles. \u00a322.9m (2021: \u00a37.2m) is included in respect of IMI Precision Engineering, \u00a36.6m (2021: \u00a37.8m) is included in respect of IMI Critical Engineering and \u00a3nil (2021: \u00a3nil) is included in respect of IMI Hydronic Engineering. *** The depreciation figures above include the impact of IFRS 16 'Leases': \u00a30.6m in respect of Corporate (2021: \u00a30.6m), \u00a315.1m in respect of IMI Precision Engineering (2021: \u00a312.3m), \u00a39.6m in respect of IMI Critical Engineering (2021: \u00a38.5m) and \u00a37.0m in respect of IMI Hydronic Engineering (2021: \u00a36.9m). The following table shows a geographical analysis of how the Group\u2019s revenue is derived by destination: 2022 2021 \u00a3m \u00a3m UK 93 83 Germany 265 238 Rest of Europe 520 520 Total Europe 878 841 USA 536 410 Rest of Americas 91 116 Total Americas 627 526 China 179 165 Rest of Asia Pacific 271 244 Total Asia Pacific 450 409 Middle East & Africa 94 90 Total revenue 2,049 1,866 Revenuebygeography(2022) Revenuebygeography(2021) Middle East & Africa Middle East & Africa 5% 5% Asia Pacific Asia Pacific 22% 22% Europe Europe 43% 45% Americas Americas 30% 28% The following table shows a geographical analysis of the location of the Group\u2019s intangible assets, property, plant and equipment and right of use assets: 2022 2021**** \u00a3m \u00a3m UK 180.1 78.4 Germany 306.8 202.4 Rest of Europe 307.4 278.6 USA 521.3 483.4 Asia Pacific 64.5 57.7 Rest of World 30.3 26.8 Total 1,410.4 1,127.3 **** Prior year comparatives have been reclassified to match the geographical allocation for Group revenue. The Group's revenue streams are disaggregated in the table below:
2022 2021
Revenue Revenue
Sector \u00a3m \u00a3m
IMI Precision Engineering
Industrial Automation 459 413
Life Sciences 152 91
Process Control 152 119
Precision Fluid OEM 304 210
Commercial Vehicle 186 180
Rail 37 33
Transportation 223 213
Total IMI Precision Engineering 986 836
IMI Critical Engineering
Power 153 144
Refining & Petrochemical 118 105
Oil & Gas 57 45
Nuclear 46 57
Marine 14 11
Other 23 17
Aftermarket 411 379
Refining & Petrochemical 100 108
Oil & Gas 69 77
Power 61 66
Marine 26 22
Nuclear 6 3
Other 40 36
New Construction 302 312
Total IMI Critical Engineering 713 691
IMI Hydronic Engineering*
TA 151 144
Heimeier 124 121
Pneumatex 66 61
Other 9 13
Total IMI Hydronic Engineering 350 339
Total revenue 2,049 1,866
Sale of goods 1,977 1,806
Sale of services 72 60
Total revenue 2,049 1,866
* Prior period IMI Hydronic Engineering results have been restated to reflect a \u00a315m reclassification between TA and Heimeier.
4. Segmental information (continued)
",
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"value": "5. Net operating costs Operating costs by function The following table shows how much of the operating costs disclosed in the income statement relate to selling and distribution costs and administrative expenses: 2022 \u00a3m 2021 \u00a3m Selling and distribution costs* (207.2) (187.3) Administrative expenses* (367.1) (356.3) (574.3) (543.6) * \u00a345.8m included in selling and distribution costs in prior period has been reclassified to administrative expenses to better reflect the underlying transactions. Employee information The average number of people employed by the Group during the year was: 2022 2021 IMI Precision Engineering 6,001 5,740 IMI Critical Engineering 3,106 3,117 IMI Hydronic Engineering 1,942 1,969 Corporate 80 90 Total Group 11,129 10,916 The aggregate employment cost charged to operating profit for the year was: 2022 \u00a3m 2021 \u00a3m Wages and salaries 505.9 491.9 Share-based payments 11.7 12.0 Social security costs 76.7 80.3 Pension costs** 8.3 9.5 Total 602.6 593.7 ** There are no special pension events included in 2022 pension costs (2021: \u00a3nil, see Note 3). The aggregate gains made by directors on the exercise of share options was \u00a32.6m (2021: \u00a31.6m). The remuneration, as defined in the Companies Act 2006 Schedule 5, for the executive directors comprises fixed and annual variable pay as set out in the table on page 128 of the Remuneration Report. For details of the non-executive directors\u2019 remuneration please refer to page 138 of the Remuneration Report. Research and development expenditure The cost of research and development expenditure charged directly to the income statement was \u00a370.3m (2021: \u00a349.7m). Included within this is amortisation of capitalised intangible development costs which amounted to \u00a38.2m (2021: \u00a37.1m) and across the Group a further \u00a35.9m (2021: \u00a34.6m) was capitalised in the year. Exchange on operating activities net of hedging arrangements The transactional foreign exchange gains in the Group were \u00a33.2m (2021: gains of \u00a35.1m). Audit fees The Group engages its auditor, Deloitte, to perform other assurance assignments in addition to their statutory audit duties where their expertise, experience and knowledge of the Group should enable them to perform these assignments more efficiently than other similar service providers. The Group\u2019s policy on such assignments is set out in the Audit Committee Report on page 118. Fees earned by Deloitte and its associates during the year are set out below: 2022 \u00a3m 2021 \u00a3m Fees earned by the Company\u2019s auditor for the audit of the Company\u2019s Annual Accounts 0.2 0.2 The audit of the Company\u2019s subsidiaries, pursuant to legislation 2.9 2.5 Other assurance services 0.1 0.1 Total 3.2 2.8 Operating profit is stated after charging/(crediting): 2022 2021 \u00a3m \u00a3m Net foreign exchange gains included in operating profit (3.2) (5.1) Research and development expense 70.3 49.7 Amortisation of intangible assets 48.0 31.2 Impairment of intangible assets treated as adjusting items 0.2 - Impairment of intangible assets 0.5 0.1 Depreciation of owned property, plant and equipment 41.9 40.0 (Reversal of impairment)/impairment of owned property, plant and equipment treated as adjusting items (2.3) 4.6 (Reversal of impairment)/impairment of owned property, plant and equipment (0.6) 0.8 Depreciation of right of use assets 32.3 28.3 Cost of inventories recognised as an expense 1,112.1 1,004.6 Loss/(profit) on disposal of property, plant and equipment 1.7 (1.3) ",
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"fact-369": {
"value": "Operating costs by function The following table shows how much of the operating costs disclosed in the income statement relate to selling and distribution costs and administrative expenses: 2022 \u00a3m 2021 \u00a3m Selling and distribution costs* (207.2) (187.3) Administrative expenses* (367.1) (356.3) (574.3) (543.6) * \u00a345.8m included in selling and distribution costs in prior period has been reclassified to administrative expenses to better reflect the underlying transactions. Employee information The average number of people employed by the Group during the year was: 2022 2021 IMI Precision Engineering 6,001 5,740 IMI Critical Engineering 3,106 3,117 IMI Hydronic Engineering 1,942 1,969 Corporate 80 90 Total Group 11,129 10,916 The aggregate employment cost charged to operating profit for the year was: 2022 \u00a3m 2021 \u00a3m Wages and salaries 505.9 491.9 Share-based payments 11.7 12.0 Social security costs 76.7 80.3 Pension costs** 8.3 9.5 Total 602.6 593.7 ** There are no special pension events included in 2022 pension costs (2021: \u00a3nil, see Note 3). The aggregate gains made by directors on the exercise of share options was \u00a32.6m (2021: \u00a31.6m). The remuneration, as defined in the Companies Act 2006 Schedule 5, for the executive directors comprises fixed and annual variable pay as set out in the table on page 128 of the Remuneration Report. For details of the non-executive directors\u2019 remuneration please refer to page 138 of the Remuneration Report. Research and development expenditure The cost of research and development expenditure charged directly to the income statement was \u00a370.3m (2021: \u00a349.7m). Included within this is amortisation of capitalised intangible development costs which amounted to \u00a38.2m (2021: \u00a37.1m) and across the Group a further \u00a35.9m (2021: \u00a34.6m) was capitalised in the year. Exchange on operating activities net of hedging arrangements The transactional foreign exchange gains in the Group were \u00a33.2m (2021: gains of \u00a35.1m). Audit fees The Group engages its auditor, Deloitte, to perform other assurance assignments in addition to their statutory audit duties where their expertise, experience and knowledge of the Group should enable them to perform these assignments more efficiently than other similar service providers. The Group\u2019s policy on such assignments is set out in the Audit Committee Report on page 118. Fees earned by Deloitte and its associates during the year are set out below: 2022 \u00a3m 2021 \u00a3m Fees earned by the Company\u2019s auditor for the audit of the Company\u2019s Annual Accounts 0.2 0.2 The audit of the Company\u2019s subsidiaries, pursuant to legislation 2.9 2.5 Other assurance services 0.1 0.1 Total 3.2 2.8 ",
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"fact-390": {
"value": "Employee information The average number of people employed by the Group during the year was: 2022 2021 IMI Precision Engineering 6,001 5,740 IMI Critical Engineering 3,106 3,117 IMI Hydronic Engineering 1,942 1,969 Corporate 80 90 Total Group 11,129 10,916 The aggregate employment cost charged to operating profit for the year was: 2022 \u00a3m 2021 \u00a3m Wages and salaries 505.9 491.9 Share-based payments 11.7 12.0 Social security costs 76.7 80.3 Pension costs** 8.3 9.5 Total 602.6 593.7 ** There are no special pension events included in 2022 pension costs (2021: \u00a3nil, see Note 3). The aggregate gains made by directors on the exercise of share options was \u00a32.6m (2021: \u00a31.6m). The remuneration, as defined in the Companies Act 2006 Schedule 5, for the executive directors comprises fixed and annual variable pay as set out in the table on page 128 of the Remuneration Report. For details of the non-executive directors\u2019 remuneration please refer to page 138 of the Remuneration Report. ",
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"fact-391": {
"value": "Research and development expenditure The cost of research and development expenditure charged directly to the income statement was \u00a370.3m (2021: \u00a349.7m). Included within this is amortisation of capitalised intangible development costs which amounted to \u00a38.2m (2021: \u00a37.1m) and across the Group a further \u00a35.9m (2021: \u00a34.6m) was capitalised in the year. ",
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"fact-392": {
"value": "Audit fees The Group engages its auditor, Deloitte, to perform other assurance assignments in addition to their statutory audit duties where their expertise, experience and knowledge of the Group should enable them to perform these assignments more efficiently than other similar service providers. The Group\u2019s policy on such assignments is set out in the Audit Committee Report on page 118. Fees earned by Deloitte and its associates during the year are set out below: 2022 \u00a3m 2021 \u00a3m Fees earned by the Company\u2019s auditor for the audit of the Company\u2019s Annual Accounts 0.2 0.2 The audit of the Company\u2019s subsidiaries, pursuant to legislation 2.9 2.5 Other assurance services 0.1 0.1 Total 3.2 2.8 ",
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"fact-341": {
"value": "6. Share-based payments The Group operates a number of equity and equity-related compensation benefits to reward its employees. The estimated cost of awarding these share options is charged to the income statement over the period that the Group benefits from the employees\u2019 services. This cost is then added back to retained earnings, to reflect that there is no overall impact on the Group\u2019s balance sheet until the shares are issued to the employees when the options are exercised. The individual share option schemes, the number of options outstanding under each of them, the estimated cost of these options recognised in the income statement and the assumptions used in arriving at this estimated cost are described below. Accounting policy The fair value of the employee services received in exchange for the grant of the options is recognised as an expense each year. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. The fair value of the options is determined based on the Monte Carlo and Black-Scholes option-pricing models. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the income statement. For newly issued shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. Outstanding share options At 31 December 2022, options to purchase ordinary shares had been granted to, but not yet exercised by, participants of IMI share option schemes as follows: Date of Number grant of shares Price Dates from which exercisable IMI Sharesave Scheme 21.04.17 1,516 1106.00p 01.08.20 or 01.08.22 04.04.18 11,335 1012.68p 01.08.21 or 01.08.23 04.04.19 33,303 884.16p 01.08.22 or 01.08.24 02.04.20 56,579 904.66p 01.08.23 or 01.08.25 02.04.21 68,400 1166.58p 01.08.24 or 01.08.26 31.03.22 97,876 1260.00p 01.08.25 or 01.08.27 269,009 Purchase Plans 15.08.22 83,380 1155.78p 15.08.24 83,380 IMI Incentive Plan 07.05.15 754 - 07.05.17 or 07.05.18 09.03.16 4,735 - 09.03.18 or 09.03.19 09.03.17 8,160 - 09.03.19 or 09.03.20 12.03.18 7,850 - 12.03.20 or 12.03.21 18.03.19 76,907 - 18.03.21 or 18.03.22 16.03.20 1,114,366 - 16.03.23 22.03.21 781,063 - 22.03.24 18.03.22 883,186 - 09.03.25 2,877,021 IMI Share Option Plan 12.03.13 76,300 1322.70p 12.03.16 22.10.13 9,000 1518.33p 22.10.16 11.03.14 82,000 1467.00p 11.03.17 167,300 Total 3,396,710 Schemes under which options are outstanding The options in the adjacent table relate to the following share-based payment schemes: IMI Sharesave Scheme (\u2018SAYE\u2019) This scheme is open to the majority of the Group\u2019s UK employees, including the executive directors, and allows the grant of options to all participants at a discount of up to 20% below the market price. Such schemes are not subject to performance conditions and offer tax incentives to encourage employees to use their own money to purchase IMI shares. SAYE options may be exercised within six months of the date they first become exercisable. Global Employee Share Purchase Plans (\u2018GESPP\u2019) These plans were introduced in 2011 for the US and Germany. The German and US GESPP\u2019s offer the opportunity to buy shares in IMI at a fixed price at a future date. The German GESPP mirrors the UK Sharesave Scheme, with a minimum/ maximum savings limit per month and contract duration of three to five years. The US GESPP also operates in a similar way to the UK Sharesave Scheme, with a minimum/maximum savings limit per month, but the contract duration is for a fixed period of two years and different taxation conditions apply for the exercise period. No further awards are intended to be granted under the German GESPP. IMI Share Option Plan (\u2018SOP\u2019) Share option awards were made from 2009 to selected senior managers and certain other employees under the SOP. These awards are not subject to performance conditions, but are subject to a three year vesting period. The purpose of the SOP is to give selected IMI employees (who are not executive directors of the Company) the opportunity to share the benefits of share price growth and to increase their IMI shareholding. Other share-based payment arrangements The Group also operates the following employee share plans: Share Incentive Plan (\u2018SIP\u2019) The SIP is open to the majority of the Group\u2019s UK employees, including the executive directors. This scheme covers two separate opportunities for employees to share in IMI\u2019s success as follows: \u2022 Partnership shares \u2013 allows employees to invest up to the statutory maximum from pre-tax pay, which is used to buy IMI shares. \u2022 Free shares \u2013 allows a grant of shares to employees each year, up to the statutory maximum. Shares acquired or awarded under the SIP are not subject to performance conditions and offer tax incentives to encourage employees to build up their shareholdings with the Company. The IMI Incentive Plan (\u2018IIP\u2019) In light of the expiry in 2015 of both the PSP and SMP, the IIP was introduced to act as the Company\u2019s sole senior executive long-term incentive plan. The IIP acts as an umbrella plan which allows the Company to grant different types of awards to different employee groups in an efficient way. The IIP is to be used annually to grant \u2018Performance Share Awards\u2019 in respect of ordinary shares to the executive directors and other members of senior management subject to performance conditions. The IIP will also be used annually to grant \u2018Bonus Share Awards\u2019 below board level. The IIP also gives the Company the ability to grant \u2018Restricted Stock Unit Awards\u2019 and \u2018Share Options\u2019. It is currently intended that Restricted Stock Unit Awards and share options will only be granted in response to specific business requirements. Options granted during the year Number of Weighted options average Normal granted option exercisable (thousand) price date SAYE 2019 200 884p 2022-2025 2020 68 905p 2023-2026 2021 75 1167p 2024-2027 2022 103 1260p 2025-2028 GESPP 2019 33 903p 2021 2020 43 956p 2022 2021 - - 2023 2022 85 1156p 2024 IIP 2019 845 - 2021-2022 2020 1,466 - 2022-2023 2021 891 - 2023-2024 2022 929 - 6. Share-based payments (continued) Movement in outstanding options in the year Options granted at Options not granted at nil cost 1 nil cost 2 Total Number of Weighted Number of Number of options Range of average options options (thousand) option prices option price (thousand) (thousand ) Outstanding at 1 January 2021 966 845-1518p 1098p 3,048 4,014 Exercisable at 1 January 2021 586 971-1518p 1216p 167 753 Granted 75 1167p 1167p 978 1,053 Exercised 395 845-1467p 1085p 500 895 Lapsed 108 845-1467p 1101p 461 569 Outstanding at 31 December 2021 538 845-1518p 1116p 3,065 3,603 Exercisable at 31 December 2021 222 845-1518p 1325p 272 494 Granted 188 1156-1260p 1213p 1,033 1,221 Exercised 142 845-1467p 947p 533 675 Lapsed 65 845-1467p 1025p 306 371 Outstanding at 31 December 2022 519 884-1518p 1209p 3,255 3,774 Exercisable at 31 December 2022 180 884-1518p 1197p 477 657 1 Options not granted at nil cost include options granted under the following schemes: IMI Sharesave Scheme, Global Employee Share Purchase Plans and IMI Share Option Plan. 2 Options granted at nil cost are those granted under the Performance Share Plan, Share Matching Plan and IMI Incentive Plan. Share-based payment charge for the year The total expense recognised for the year arising from share-based payments was \u00a311.7m (2021: \u00a312.0m) which comprises a charge of \u00a315.5m (2021: \u00a315.3m) for the year offset by a credit of \u00a33.8m (2021: \u00a33.3m) in respect of lapses. \u00a32.7m (2021: \u00a32.5m) of the total charge and \u00a30.5m (2021: \u00a30.7m) of the total credit is in respect of options granted to directors. Share-based payment valuation methodology The fair value of services received in return for share options granted are measured by reference to the fair value of share options granted, based on Black-Scholes and Monte Carlo option pricing models. The assumptions used for grants in 2022 included a dividend yield of 2.0% (2021: 1.7%), expected share price volatility of 32% (2021: 25%), a weighted average expected life of 3.5 years (2021: 3.5 years) and a weighted average interest rate of 1.75% (2021: 0.1%). The expected volatility is wholly based on the historical volatility (calculated based on the weighted average remaining life of the share options), adjusted for any expected changes to future volatility due to publicly available information. Other share-based payment disclosures The weighted average remaining contractual life for the share options outstanding as at 31 December 2022 is 4.8 years (2021: 7.1 years) and the weighted average fair value of share options granted in the year at their grant date was \u00a313.01 (2021: \u00a312.18). The weighted average share price at the date of exercise of share options exercised during the year was \u00a314.71 (2021: \u00a314.84). ",
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"value": " Accounting policy The fair value of the employee services received in exchange for the grant of the options is recognised as an expense each year. The total amount to be expensed over the vesting period is determined by reference to the fair value of the options granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options that are expected to become exercisable. The fair value of the options is determined based on the Monte Carlo and Black-Scholes option-pricing models. At each balance sheet date, the Group revises its estimates of the number of options that are expected to vest. It recognises the impact of the revision of original estimates, if any, in the income statement. For newly issued shares, the proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. ",
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"fact-342": {
"value": " 2022 2021 Key million million Weighted average number of shares for the purpose of basic earnings per share A 258.3 266.9 Dilutive effect of employee share options 1.2 1.1 Weighted average number of shares for the purpose of diluted earnings per share B 259.5 268.0 Key \u00a3m \u00a3m Statutory profit for the year C 226.3 196.3 Total adjusting items charges included in profit before tax 60.7 62.4 Total adjusting items credits included in taxation (14.6) (13.1) Earnings for adjusted EPS D 272.4 245.6 Key 2022 2021 Statutory EPS measures Statutory basic EPS C/A 87.6p 73.5p Statutory diluted EPS C/B 87.2p 73.2p Adjusted EPS measures Adjusted basic EPS D/A 105.5p 92.0p Adjusted diluted EPS D/B 105.0p 91.6p Earnings per share (\u2018EPS\u2019) is the amount of post-tax profit attributable to each share (excluding those held in the Employee Benefit Trust or by the Company). Basic EPS measures are calculated as the Group profit for the year attributable to equity shareholders divided by the weighted average number of shares in issue during the year. Diluted EPS takes into account the dilutive effect of all outstanding share options priced below the market price, in arriving at the number of shares used in its calculation. Both of these measures are also presented on an adjusted basis to assist the reader of the financial statements and provide insight into the performance of the Group. The note below demonstrates how this calculation has been performed. 7. Earnings per ordinary share ",
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},
"fact-399": {
"value": "8. Net financing costs Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 2022 2021 Financial Financial Interest instruments Total Interest instruments Total Recognised in the income statement \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Interest income on bank deposits 4.6 4.6 2.4 2.4 Financial income 4.6 - 4.6 2.4 - 2.4 Interest expense on interest-bearing loans and borrowings (21.0) (21.0) (11.7) (11.7) Interest expense on leases (2.8) (2.8) (2.8) (2.8) Financial expense (23.8) - (23.8) (14.5) - (14.5) Recognised in other comprehensive income Gains on instruments measured at fair value through profit or loss: Other economic hedges* 4.9 4.9 5.2 5.2 Net financial income relating to defined benefit pension schemes 1.5 1.5 1.0 1.0 Net financial (expense)/income (17.7) 4.9 (12.8) (11.1) 5.2 (5.9) *Gains and losses on financial instruments measured at fair value through profit or loss were previously reported separately under 'Financial income' and 'Financial expense'. These amounts are now reported under \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019 and prior year comparatives have been represented as they relate to the same underlying transactions. Included in financial instruments are current year trading gains and losses on economically effective transactions which for management reporting purposes are included in adjusted revenue and operating profit (see Note 3). For statutory purposes, these are shown within net financial income and expense above. Gains or losses for future year transactions are in respect of financial instruments held by the Group to provide stability of future trading cash flows. 2022 2021 Recognised in other comprehensive income \u00a3m \u00a3m (Loss)/gain arising on hedging instruments designated in hedges of the net assets in foreign operations (7.5) 20.0 Exchange differences on translation of foreign operations net of funding revaluations 40.9 (33.8) Exchange differences reclassified to income statement on disposal of operations 0.6 0.1 Income tax on items recognised in other comprehensive income (0.3) 1.2 Total items recognised in other comprehensive income (net of tax) 33.7 (12.5) Recognised in statement of changes in equity Translation reserve 33.7 (12.5) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceCostExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-397": {
"value": "8. Net financing costs Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 2022 2021 Financial Financial Interest instruments Total Interest instruments Total Recognised in the income statement \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Interest income on bank deposits 4.6 4.6 2.4 2.4 Financial income 4.6 - 4.6 2.4 - 2.4 Interest expense on interest-bearing loans and borrowings (21.0) (21.0) (11.7) (11.7) Interest expense on leases (2.8) (2.8) (2.8) (2.8) Financial expense (23.8) - (23.8) (14.5) - (14.5) Recognised in other comprehensive income Gains on instruments measured at fair value through profit or loss: Other economic hedges* 4.9 4.9 5.2 5.2 Net financial income relating to defined benefit pension schemes 1.5 1.5 1.0 1.0 Net financial (expense)/income (17.7) 4.9 (12.8) (11.1) 5.2 (5.9) *Gains and losses on financial instruments measured at fair value through profit or loss were previously reported separately under 'Financial income' and 'Financial expense'. These amounts are now reported under \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019 and prior year comparatives have been represented as they relate to the same underlying transactions. Included in financial instruments are current year trading gains and losses on economically effective transactions which for management reporting purposes are included in adjusted revenue and operating profit (see Note 3). For statutory purposes, these are shown within net financial income and expense above. Gains or losses for future year transactions are in respect of financial instruments held by the Group to provide stability of future trading cash flows. 2022 2021 Recognised in other comprehensive income \u00a3m \u00a3m (Loss)/gain arising on hedging instruments designated in hedges of the net assets in foreign operations (7.5) 20.0 Exchange differences on translation of foreign operations net of funding revaluations 40.9 (33.8) Exchange differences reclassified to income statement on disposal of operations 0.6 0.1 Income tax on items recognised in other comprehensive income (0.3) 1.2 Total items recognised in other comprehensive income (net of tax) 33.7 (12.5) Recognised in statement of changes in equity Translation reserve 33.7 (12.5) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-343": {
"value": "8. Net financing costs Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds. 2022 2021 Financial Financial Interest instruments Total Interest instruments Total Recognised in the income statement \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Interest income on bank deposits 4.6 4.6 2.4 2.4 Financial income 4.6 - 4.6 2.4 - 2.4 Interest expense on interest-bearing loans and borrowings (21.0) (21.0) (11.7) (11.7) Interest expense on leases (2.8) (2.8) (2.8) (2.8) Financial expense (23.8) - (23.8) (14.5) - (14.5) Recognised in other comprehensive income Gains on instruments measured at fair value through profit or loss: Other economic hedges* 4.9 4.9 5.2 5.2 Net financial income relating to defined benefit pension schemes 1.5 1.5 1.0 1.0 Net financial (expense)/income (17.7) 4.9 (12.8) (11.1) 5.2 (5.9) *Gains and losses on financial instruments measured at fair value through profit or loss were previously reported separately under 'Financial income' and 'Financial expense'. These amounts are now reported under \u2018Gains/(losses) on instruments measured at fair value through profit or loss\u2019 and prior year comparatives have been represented as they relate to the same underlying transactions. Included in financial instruments are current year trading gains and losses on economically effective transactions which for management reporting purposes are included in adjusted revenue and operating profit (see Note 3). For statutory purposes, these are shown within net financial income and expense above. Gains or losses for future year transactions are in respect of financial instruments held by the Group to provide stability of future trading cash flows. 2022 2021 Recognised in other comprehensive income \u00a3m \u00a3m (Loss)/gain arising on hedging instruments designated in hedges of the net assets in foreign operations (7.5) 20.0 Exchange differences on translation of foreign operations net of funding revaluations 40.9 (33.8) Exchange differences reclassified to income statement on disposal of operations 0.6 0.1 Income tax on items recognised in other comprehensive income (0.3) 1.2 Total items recognised in other comprehensive income (net of tax) 33.7 (12.5) Recognised in statement of changes in equity Translation reserve 33.7 (12.5) ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfFinanceIncomeExpenseExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-393": {
"value": "Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceCostsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-371": {
"value": "Accounting policy Financial income comprises interest receivable on funds invested, income from investments and gains on hedging instruments that are recognised in the income statement. Interest income is recognised in the income statement as it accrues, taking into account the effective yield on the asset. Dividend income is recognised in the income statement on the date that the dividend is declared. Financial expense comprises interest payable on borrowings calculated using the effective interest rate method, the interest related element of derivatives and losses on financial instruments that are recognised in the income statement. The interest expense component of lease payments is recognised in the income statement applying territory specific incremental borrowing rates. Net finance expense relating to defined benefit pension schemes represents the assumed interest on the difference between employee benefit plan liabilities and the employee benefit plan assets. The finance income or expense on mark-to-market movements on interest and foreign exchange derivatives and other financing costs are excluded from adjusted earnings. Borrowing costs directly attributable to the acquisition, construction or production of an asset that necessarily takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of the respective assets. All other borrowing costs are expensed in the period they occur. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForFinanceIncomeAndCostsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-344": {
"value": "IMI operates through subsidiary companies all around the world that pay many different taxes such as corporate income taxes, VAT, payroll withholdings, social security contributions, customs import duties and excise duties. This note aggregates only those corporate income taxes that are or will be levied on the profits of IMI plc and its subsidiary companies for periods leading up to and including the balance sheet date. The profits of each company are subject to certain adjustments as specified by applicable tax laws in each country to arrive at the tax liability that is expected to result on its tax returns. Where these adjustments have future tax impact then deferred taxes may also be recorded. Accounting policy Current tax payable/receivable represents the expected tax payable/receivable on the taxable profits for the year, using tax rates enacted or substantively enacted at the balance sheet date and taking into account any adjustments in respect of prior years. Deferred tax is provided, using the balance sheet method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that the timing of the reversal of the differences can be controlled and it is probable that the differences will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on the tax laws that have been enacted or substantively enacted by the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle the balances on a net basis. In common with many multinational companies, IMI faces tax audits in jurisdictions around the world, including in relation to transfer pricing of goods and services between associated entities within the Group, the outcomes of which are uncertain. These tax audits may be subject to inter-government negotiations. The matters under discussion are often complex and can take many years to resolve. Tax liabilities are recorded based on management\u2019s estimate of either the most likely amount or the expected amount depending on which method is expected to better reflect the resolution of the uncertainty. Tax governance, risk and strategy IMI recognises its corporate responsibility to ensure that all businesses within the IMI Group follow responsible tax practices to enhance long-term shareholder value whilst also contributing to the public expenditure and the overall welfare of the communities in which it operates. Accordingly, the IMI Tax Policy sets the core principles of compliance, fairness, value and transparency for the management of the Group\u2019s tax affairs. This Policy has been approved by the Board, fully communicated to subsidiary businesses and is reviewed to ensure responsible business practices across the Group are maintained. The Group Finance Director has primary responsibility for all tax matters and keeps the Board appraised of any significant issues or changes to the Tax Policy. A robust tax governance framework has also been established under which the Executive Committee and the IMI Board are appraised on a regular basis of any material or significant tax matters, so that appropriate action can be effected. Through IMI Workplace and Knowledge Library, the Group communicates policies, procedures, guidance and best practices to improve the management of taxation across its subsidiary companies worldwide. Compliance: IMI pays and collects significant amounts of taxes around the world as a result of its business activities. It seeks to manage its taxation obligations worldwide in compliance with all applicable tax laws and regulations, as well as fully in line with the Group\u2019s Code of Conduct. Accordingly, the tax contribution by the individual businesses is monitored and robust standard tax compliance processes operate together with appropriate financial controls to ensure that all tax returns are complete, accurate and filed on a timely basis with the tax authorities around the world and the declared taxes paid on time. Furthermore, the preparation and filing of the corporate income tax returns for IMI subsidiary companies worldwide have been largely outsourced to one tax advisory firm. Tax laws are often complex, which can lead to inconsistent interpretations by different stakeholders. Where this occurs, IMI may reduce uncertainty and controversy through various actions, including proactive discussion with the fiscal authorities to obtain early resolution and securing external tax advice to ensure the robust interpretation of tax laws and practices. The Group Tax Policy is fully aligned with the Group\u2019s Code of Conduct, which requires the Group and its employees and agents to act in compliance with applicable laws and with fairness and integrity in all of its business dealings. IMI has a zero-tolerance approach to tax evasion and the facilitation of tax evasion. Consideration of UK legislation regarding third party tax evasion has also been incorporated into the Group\u2019s prevention procedures, including employee training. Fairness: IMI seeks to record its profits across the subsidiary companies around the world on an arm\u2019s length basis in accordance with internationally accepted best practices, recognising the relative contributions of people, assets, intellectual property and risks borne by the various businesses. The resulting allocation of profits is regularly tested for compliance with this standard. IMI has taken action to ensure that it meets the enhanced transfer pricing disclosures and documentation requirements by tax authorities as a result of the Base Erosion & Profit Shifting (commonly referred to as \u2018BEPS\u2019) initiative by the OECD. Value: IMI manages the impact of taxation on its businesses in a responsible manner by only adopting legitimate and commercial positions. In doing so, the Group may make use of legitimate tax incentives, exemptions and statutory alternatives offered by governments and will look to ensure that it is not taxed more than once on the same profit. As a UK headquartered group, IMI\u2019s profits are ultimately subject to UK taxation, although as the Group pays significant taxes overseas, the overall effective tax rate for the Group is marginally above the UK statutory tax rate. Transparency: IMI aims to build positive working relationships with tax authorities by co-operating in a constructive, open and timely manner. IMI seeks to disclose its tax affairs in its published accounts and taxation returns fully in accordance with the applicable standards and, where appropriate, will supplement its tax disclosures with further information to better inform, and to be transparent to, its stakeholders. Risk: IMI engages external support to manage tax risks and achieve the strategic objectives outlined above. Tax risks are regularly assessed for all companies within the Group, promptly addressed and reported so that they may be appropriately provided and disclosed in the relevant accounts and tax returns. To the extent that identified tax risks are material they will be reported to the Executive Committee through the Group\u2019s process for strategic risk management as described on page 86. 9. Taxation UK Corporation tax
The rate of corporation tax in the UK for 2022 was 19% (2021: 19%). As from 1
April 2023, it will increase from 19% to 25%. UK deferred tax assets and liabilities
have therefore been calculated using a rate of 25% (2021: 25%).
Tax payments
During the year, the Group made payments of corporate income tax of \u00a348.6m
(2021: \u00a350.9m), principally arising as follows:
Jurisdiction of companies making corporate income tax payments:
There is normally an element of volatility in the annual payments of corporate income
taxes due to the timing of assessments, acquisition and disposals, exceptional
items and payments on account in the many countries in which the Group operates.
Changes in the jurisdictions in which profits are earned can have an impact on
cashflow levels which may take time to be reflected in the tax cashflow.
The level of payments made during 2022 decreased slightly compared to 2021.
Sweden and the UK decreased due to the recovery of tax debtors. German payments
for 2022 now represent a more normal level having recovered tax debtors in earlier
periods. Other territorial movements in payments largely reflect shifts in trading.
In addition, the Group makes substantial other tax payments relating to employment,
consumption, procurement and investment to tax authorities around the world.
Recognised in the income statement
This section sets out the current and deferred tax charges, which together
comprise the total tax charge in the income statement.
2022 2021
\u00a3m \u00a3m
Current tax charge
Current year charge 63.0 53.9
Adjustments in respect of prior years (1.9) (11.1)
61.1 42.8
Deferred taxation
Origination and reversal of temporary differences (2.0) 5.5
Total income tax charge 59.1 48.3
9. Taxation (continued)
South Korea \u00a32.7m
Italy \u00a31m
Japan \u00a33.1m
Switzerland \u00a35.8m
US \u00a31.1m
Germany \u00a310.4m
UK \u00a35.7m
Sweden \u00a30.5m
Austria \u00a30.1m
India \u00a33.8m
Singapore \u00a30.9m
Other \u00a37.8m
China \u00a33.4m
Czech \u00a32.3m
2022 \u00a348.6m
India \u00a31.9m
UK \u00a314.6m
Switzerland \u00a35.1m
Japan \u00a33.6m
Italy \u00a30.4m
US \u00a31.7m
Sweden \u00a33.5m
Austria \u00a31.4m
China \u00a33.4m
Singapore \u00a31.7m
Other \u00a36m
Germany \u00a33m
Czech \u00a32.3m
South Korea \u00a32.3m
2021 \u00a350.9m
Reconciliation of effective tax rate
As IMI's head office and parent company is domiciled in the UK, the Group references its effective tax rate to the UK corporation tax rate, despite only a small portion of
the Group's business being in the UK. Therefore, the following tax reconciliation applies the UK corporation tax rate for the year to profit before tax, both before and after
adjusting items. The resulting tax charge is reconciled to the actual tax charge for the Group, by taking account of specific tax adjustments as follows:
2022 2021
Adjusting Adjusting
Adjusted items Statutory Adjusted items Statutory
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Profit before tax 346.1 (60.7) 285.4 307.0 (62.4) 244.6
Income tax using the Company's domestic rate of tax of 19.00% (2021: 19.00%) 65.8 (11.5) 54.3 58.3 (11.9) 46.4
Effects of:
Non-deductible items 3.0 0.4 3.4 1.4 0.8 2.2
Non taxable loss on disposal of businesses - 0.9 0.9 - 0.7 0.7
Utilisation of losses on which no deferred tax had been recognised (1.0) - (1.0) (0.4) - (0.4)
Current year losses for which no deferred tax asset has been recognised 0.2 - 0.2 0.3 0.1 0.4
Recognition of deferred tax asset on previously unprovided timing differences (0.8) - (0.8) (2.8) - (2.8)
Change in future tax rate on deferred tax - - - - 18.6 18.6
Differing tax rates 12.5 (4.4) 8.1 6.2 (4.8) 1.4
Adjustments to prior year current and deferred tax charges (6.0) - (6.0) (1.6) (16.6) (18.2)
Total tax in income statement 73.7 (14.6) 59.1 61.4 (13.1) 48.3
Income tax expense reported in the consolidated income statement 73.7 (14.6) 59.1 61.4 (13.1) 48.3
Effective rate of tax: 21.3% 20.7% 20.0% 19.7%
Events after the reporting period
In the Autumn Statement of November 2022, the UK government reconfirmed its intention to introduce legislation to give effect to the OECD Inclusive Framework
agreement that there should be a minimum global corporate income tax rate of 15%. Based on current proposals this would apply to IMI from 1 January 2024. It therefore
does not impact IMI\u2019s results for 2022, and it is not expected to have a material impact on IMI\u2019s financial statements for subsequent years. However, this will continue to
be monitored.
Recognised outside of the income statement
In addition to amounts charged to the income statement, some current tax and deferred tax is charged/(credited) directly to equity or through other comprehensive
income, which can be analysed as follows:
2022 2021
\u00a3m \u00a3m
Deferred tax:
On equity-settled transactions 1.9 (2.5)
On re-measurement gains and on defined benefit plans (20.4) 18.4
Effect of rate change on previously recognised items - (15.8)
(18.5) 0.1
Current tax:
On change in value of effective net investment hedge derivatives 0.3 (1.2)
On equity-settled transactions - (0.5)
(18.2) (1.6)
Of which the following amounts are charged/(credited):
to the statement of comprehensive income (20.1) 1.4
to the statement of changes in equity 1.9 (3.0)
(18.2) (1.6)
9. Taxation (continued)
Recognised deferred tax assets and liabilities
Deferred taxes record the tax consequences of temporary differences between the accounting and taxation recognition of certain items, as explained below:
Assets Liabilities Net
2022 2021 2022 2021 2022 2021
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Intangible and tangible fixed assets 6.2 11.1 (64.7) (59.8) (58.5) (48.7)
Inventories 5.5 4.5 (1.7) (1.2) 3.8 3.3
Revaluation of derivatives 0.5 0.1 (0.8) (0.7) (0.3) (0.6)
Pension and share-based payments 12.1 18.9 (7.1) (32.8) 5.0 (13.9)
Short-term timing differences 30.7 28.8 (5.8) (3.8) 24.9 25.0
Other tax credits and losses 1.7 4.4 - - 1.7 4.4
56.7 67.8 (80.1) (98.3) (23.4) (30.5)
Offsetting within tax jurisdictions (32.2) (28.1) 32.2 28.1 - -
Total deferred tax assets and liabilities 24.5 39.7 (47.9) (70.2) (23.4) (30.5)
The movement in the net deferred tax balances has been recognised in the financial statements as analysed below:
Recognised Recognised
in the outside the
Balance at income income Acquisitions / Balance at
1 Jan 22 statement statement Exchange disposals 31 Dec 22
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Intangible and tangible fixed assets (48.7) (5.4) (4.4) (58.5)
Inventories 3.3 0.4 0.1 3.8
Revaluation of derivatives (0.6) 0.3 (0.3)
Pension and share-based payments (13.9) (0.2) 18.5 0.6 5.0
Short-term timing differences 25.0 9.7 1.6 (11.4) 24.9
Other tax credits and losses 4.4 (2.8) 0.1 1.7
Net deferred tax (liability)/asset (30.5) 2.0 18.5 (2.0) (11.4) (23.4)
Recognised Recognised
in the outside the
Balance at income income Acquisitions / Balance at
1 Jan 21 statement statement Exchange disposals 31 Dec 21
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Intangible and tangible fixed assets (31.3) 12.3 0.6 (30.3) (48.7)
Inventories 2.1 1.0 (0.1) 0.3 3.3
Revaluation of derivatives (1.1) 0.5 (0.6)
Pension and share-based payments 7.0 (20.1) (0.1) (0.7) (13.9)
Short-term timing differences 24.2 (0.3) (0.4) 1.5 25.0
Other tax credits and losses 1.5 1.1 (0.2) 2.0 4.4
Net deferred tax asset/(liability) 2.4 (5.5) (0.1) (0.8) (26.5) (30.5)
All exchange movements are taken through the translation reserve.
Unrecognised deferred tax assets and liabilities
Deferred assets are reviewed at each reporting date. Deferred tax assets have not been recognised for the following temporary differences:
2022 2021
Gross Tax Gross Tax
amount effected amount effected
\u00a3m \u00a3m \u00a3m \u00a3m
Tax losses expiring:
Within 10 years 7.4 1.8 8.5 2.1
Available indefinitely 46.0 12.0 43.3 11.4
Capital losses expiring:
Within 10 years - - - -
Available indefinitely 119.2 29.9 118.9 29.8
Surplus interest expiring:
Within 10 years 0.5 0.1 - -
Available indefinitely - - 13.2 3.4
173.1 43.8 183.9 46.7
Deferred tax assets have not been recognised for these temporary differences due to uncertainty over suitable future taxable profits a nd therefore their ability to be
recovered. In assessing the probability of recovery, the Group assesses the likelihood of them being recovered within a reasonably fores eeable timeframe, being typically a
minimum of five years, taking into account the future expected profit profile business model of the relevant company and country. The Group also considers the nature of the
losses and interest, and any potential legislative restrictions on use. In some instances, these amounts are yet to be accepted by the ta x authorities and could be challenged.
The majority of these amounts have no expiry date as noted in the table above.
It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However, \u00a311 2.9m (2021: \u00a3128.4m) of those
earnings may still result in a tax liability principally as a result of withholding taxes levied by the overseas jurisdictions in which those su bsidiaries operate. These tax liabilities
are not expected to exceed \u00a36.6m (2021: \u00a37.5m) of which \u00a33.2m (2021: \u00a32.2m) has been provided on the basis that the Group expects to remit these amounts.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-394": {
"value": "Accounting policy Current tax payable/receivable represents the expected tax payable/receivable on the taxable profits for the year, using tax rates enacted or substantively enacted at the balance sheet date and taking into account any adjustments in respect of prior years. Deferred tax is provided, using the balance sheet method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that the timing of the reversal of the differences can be controlled and it is probable that the differences will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on the tax laws that have been enacted or substantively enacted by the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle the balances on a net basis. In common with many multinational companies, IMI faces tax audits in jurisdictions around the world, including in relation to transfer pricing of goods and services between associated entities within the Group, the outcomes of which are uncertain. These tax audits may be subject to inter-government negotiations. The matters under discussion are often complex and can take many years to resolve. Tax liabilities are recorded based on management\u2019s estimate of either the most likely amount or the expected amount depending on which method is expected to better reflect the resolution of the uncertainty. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDeferredIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-372": {
"value": "Accounting policy Current tax payable/receivable represents the expected tax payable/receivable on the taxable profits for the year, using tax rates enacted or substantively enacted at the balance sheet date and taking into account any adjustments in respect of prior years. Deferred tax is provided, using the balance sheet method, on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that the timing of the reversal of the differences can be controlled and it is probable that the differences will not reverse in the foreseeable future. Deferred tax is measured at the tax rates that are expected to apply when the temporary differences reverse, based on the tax laws that have been enacted or substantively enacted by the balance sheet date. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entities or different taxable entities where there is an intention to settle the balances on a net basis. In common with many multinational companies, IMI faces tax audits in jurisdictions around the world, including in relation to transfer pricing of goods and services between associated entities within the Group, the outcomes of which are uncertain. These tax audits may be subject to inter-government negotiations. The matters under discussion are often complex and can take many years to resolve. Tax liabilities are recorded based on management\u2019s estimate of either the most likely amount or the expected amount depending on which method is expected to better reflect the resolution of the uncertainty. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForIncomeTaxExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-373": {
"value": "Recognised deferred tax assets and liabilities Deferred taxes record the tax consequences of temporary differences between the accounting and taxation recognition of certain items, as explained below: Assets Liabilities Net 2022 2021 2022 2021 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets 6.2 11.1 (64.7) (59.8) (58.5) (48.7) Inventories 5.5 4.5 (1.7) (1.2) 3.8 3.3 Revaluation of derivatives 0.5 0.1 (0.8) (0.7) (0.3) (0.6) Pension and share-based payments 12.1 18.9 (7.1) (32.8) 5.0 (13.9) Short-term timing differences 30.7 28.8 (5.8) (3.8) 24.9 25.0 Other tax credits and losses 1.7 4.4 - - 1.7 4.4 56.7 67.8 (80.1) (98.3) (23.4) (30.5) Offsetting within tax jurisdictions (32.2) (28.1) 32.2 28.1 - - Total deferred tax assets and liabilities 24.5 39.7 (47.9) (70.2) (23.4) (30.5) The movement in the net deferred tax balances has been recognised in the financial statements as analysed below: Recognised Recognised in the outside the Balance at income income Acquisitions / Balance at 1 Jan 22 statement statement Exchange disposals 31 Dec 22 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets (48.7) (5.4) (4.4) (58.5) Inventories 3.3 0.4 0.1 3.8 Revaluation of derivatives (0.6) 0.3 (0.3) Pension and share-based payments (13.9) (0.2) 18.5 0.6 5.0 Short-term timing differences 25.0 9.7 1.6 (11.4) 24.9 Other tax credits and losses 4.4 (2.8) 0.1 1.7 Net deferred tax (liability)/asset (30.5) 2.0 18.5 (2.0) (11.4) (23.4) Recognised Recognised in the outside the Balance at income income Acquisitions / Balance at 1 Jan 21 statement statement Exchange disposals 31 Dec 21 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Intangible and tangible fixed assets (31.3) 12.3 0.6 (30.3) (48.7) Inventories 2.1 1.0 (0.1) 0.3 3.3 Revaluation of derivatives (1.1) 0.5 (0.6) Pension and share-based payments 7.0 (20.1) (0.1) (0.7) (13.9) Short-term timing differences 24.2 (0.3) (0.4) 1.5 25.0 Other tax credits and losses 1.5 1.1 (0.2) 2.0 4.4 Net deferred tax asset/(liability) 2.4 (5.5) (0.1) (0.8) (26.5) (30.5) All exchange movements are taken through the translation reserve. Unrecognised deferred tax assets and liabilities Deferred assets are reviewed at each reporting date. Deferred tax assets have not been recognised for the following temporary differences: 2022 2021 Gross Tax Gross Tax amount effected amount effected \u00a3m \u00a3m \u00a3m \u00a3m Tax losses expiring: Within 10 years 7.4 1.8 8.5 2.1 Available indefinitely 46.0 12.0 43.3 11.4 Capital losses expiring: Within 10 years - - - - Available indefinitely 119.2 29.9 118.9 29.8 Surplus interest expiring: Within 10 years 0.5 0.1 - - Available indefinitely - - 13.2 3.4 173.1 43.8 183.9 46.7 Deferred tax assets have not been recognised for these temporary differences due to uncertainty over suitable future taxable profits a nd therefore their ability to be recovered. In assessing the probability of recovery, the Group assesses the likelihood of them being recovered within a reasonably fores eeable timeframe, being typically a minimum of five years, taking into account the future expected profit profile business model of the relevant company and country. The Group also considers the nature of the losses and interest, and any potential legislative restrictions on use. In some instances, these amounts are yet to be accepted by the ta x authorities and could be challenged. The majority of these amounts have no expiry date as noted in the table above. It is likely that the majority of unremitted earnings of overseas subsidiaries would qualify for the UK dividend exemption. However, \u00a311 2.9m (2021: \u00a3128.4m) of those earnings may still result in a tax liability principally as a result of withholding taxes levied by the overseas jurisdictions in which those su bsidiaries operate. These tax liabilities are not expected to exceed \u00a36.6m (2021: \u00a37.5m) of which \u00a33.2m (2021: \u00a32.2m) has been provided on the basis that the Group expects to remit these amounts.",
"dimensions": {
"concept": "ifrs-full:DisclosureOfDeferredTaxesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-345": {
"value": " Accounting policy Dividends are recognised as a liability in the period in which they are approved by shareholders. Dividends After the balance sheet date the following dividends were proposed by the directors. The dividends have not been provided for and th ere are no income tax consequences. 2022 2021 \u00a3m \u00a3m Current year final dividend - 17.4p per qualifying ordinary share (2021: 15.8p) 45.1 40.9 The following dividends were declared and paid by the Group during the year: 2022 2021 \u00a3m \u00a3m Prior year final dividend paid - 15.8p per qualifying ordinary share (2021 final year dividend: 15.0p) 40.8 40.8 Current year interim dividend paid - 8.3p per qualifying ordinary share (2021: 7.9p) 21.4 21.0 62.2 61.8 Dividend policy and share buybacks As part of the capital management process, the Group ensures that adequate reserves are available in IMI plc in order to meet pro posed shareholder dividends, the purchase of shares for employee share scheme incentives and any on-market share buyback programme. The Group does not have a formal dividend policy or pay out ratio. The Group\u2019s aim is to continue with progressive dividends which t ypically increase at a steady rate for both the interim and final dividend payments. In the event that the Board cannot identify sufficient investment opportunities t hrough capital expenditure, organic growth initiatives and acquisitions, the return of funds to shareholders through share buybacks or special dividends will be consider ed. It should be noted that a number of shares are regularly bought in the market by an employee benefit trust in order to hedge the exposure under certain manageme nt incentive plans. Details of these purchases are shown in Note 22 to the financial statements. 10. Dividends ",
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"concept": "ifrs-full:DisclosureOfDividendsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-374": {
"value": "Accounting policy Dividends are recognised as a liability in the period in which they are approved by shareholders. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForDividendsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-400": {
"value": "11. Intangible assets Accounting policy Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period to period. i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. Analysis of intangible assets Non-acquired Acquired Other Other non- intangibles Other customer acquired acquired under intangible Goodwill relationships ** intangibles** intangibles* construction assets \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Cost As at 1 January 2021 487.4 244.0 132.3 170.2 9.8 556.3 Exchange adjustments (14.7) (7.9) (5.2) (3.0) (0.8) (16.9) Acquisitions 97.4 51.4 58.2 109.6 Additions 4.5 6.8 11.3 Transfers from assets in the course of construction 6.9 (6.9) - Disposals (0.5) (3.6) (0.3) (6.4) (10.3) As at 31 December 2021 569.6 283.9 185.0 172.2 8.9 650.0 Exchange adjustments 48.3 21.2 22.3 12.7 (0.7) 55.5 Acquisitions (Note 23) 153.5 30.9 16.5 47.4 Additions 7.0 7.1 14.1 Transfers from assets in the course of construction 9.3 (9.3) - Disposals (6.0) (6.0) As at 31 December 2022 771.4 336.0 223.8 195.2 6.0 761.0 Amortisation As at 1 January 2021 37.9 204.8 106.7 94.5 406.0 Exchange adjustments (1.9) (7.7) (3.7) (0.9) (12.3) Disposals (3.3) (0.3) (5.9) (9.5) Impairment charge 0.1 0.1 Amortisation for year 10.5 4.5 16.2 31.2 As at 31 December 2021 36.0 204.3 107.2 104.0 - 415.5 Exchange adjustments 1.7 14.0 11.5 6.8 32.3 Acquisitions - Disposals (6.0) (6.0 ) Impairment charge 0.7 0.7 Amortisation for year 17.2 12.3 18.5 48.0 As at 31 December 2022 37.7 235.5 131.0 124.0 - 490.5 Net book value at 31 December 2021 533.6 79.6 77.8 68.2 8.9 234.5 Net book value at 31 December 2022 733.7 100.5 92.8 71.2 6.0 270.5 * Other non-acquired intangibles includes capitalised development costs with a carrying value of \u00a333.1m (2021: \u00a334.5m) and capitalised software costs with a carrying value of \u00a338.1m (2021: \u00a333.7m). ** An amount included in other acquired intangibles in prior period has been reclassified to acquired customer relationships as part of finalisation of provisional accounting for Adaptas 11. Intangible assets (continued) Goodwill impairment testing Accounting policy For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Impairment The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether impairment indicators exist. If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date. The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs. Reversals of impairment Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Group has 12 (2021:13) cash generating units to which goodwill is allocated. The recoverable amount of a CGU is the higher of its fair value less costs to sell and its value in use. Value in use is determined using cash flow projections from financial budgets, forecasts and plans approved by the Board covering a five-year period and include a terminal value multiple. The projected cash flows reflect the latest expectation of demand for products and services, including consideration of the future impacts of climate change which is considered as part of the Group\u2019s five-year strategic planning process. The key assumptions in these calculations are the long-term growth rates and the discount rates applied to forecast cash flows in addition to the achievement of the forecasts themselves. Long-term growth rates are based on long-term economic forecasts for growth in the manufacturing sector in the geographical regions in which the cash generating unit operates. Pre-tax discount rates specific to each cash generating unit are calculated by adjusting country and region-specific post- tax weighted average cost of capital (\u2018WACC\u2019) for specific country risk premium, the Group\u2019s size risk premium and tax rate relevant to the jurisdiction in which the cash flows are generated. This exercise resulted in the use of the following ranges of values for the key assumptions: 2022 2021 % % Discount rate 8.8 \u2013 13.3 7.3 \u2013 11.2 Long-term growth rate 1.2 \u2013 2.0 1.5 \u2013 2.0 For the purpose of assessing the significance of CGUs, the Group uses a threshold of 10% of the total goodwill balance. The recoverable amount of the CGUs is determined from a value in use calculation and the key assumptions used in this calculation are the discount rate, growth rate and operating cash flows. These estimates are determined using the methodology discussed above and for those CGUs considered to be significant; outlined in the table below: * IMI Precision Fluid OEM CGU is a new group of CGUs in the current year that combines IMI Precision Americas \u2013 Fluid Technologies, IMI Precision EMEA \u2013 Fluid Technologies and Adaptas. The goodwill balance of Heatmiser UK Ltd of \u00a3102.2m has not been included in the 2022 analysis above due to provisional accounting used for the purchase price allocation. The carrying amount of Goodwill allocated to CGUs deemed to be non-significant is \u00a3307.8m (2021: \u00a3268.1m). Sensitivity to changes in assumptions The key estimates reflect the combination of assumptions used, including the long- term growth rates and the discount rate applied to forecast cash flows in addition to the achievement of the forecasts themselves. The Directors do not consider that any reasonably possible changes to the key assumptions would cause the carrying amount to exceed the recoverable amount of the CGU. The aggregate amount of goodwill arising from acquisitions prior to 1 January 2004 which had been deducted from the profit and loss reserves and incorporated into the IFRS transitional balance sheet as at 1 January 2004, amounted to \u00a3364m. The cumulative impairment recognised in relation to goodwill is \u00a341m (2021: \u00a341m) . 2022 Goodwill \u00a3m Discount rate % Growth rate % CGU IMI Precision \u2013 Fluid OEM* 208.9 10.3 2.0 IMI Critical \u2013 Petrochemical & Isolation 117.4 10.0 2.0 IMI Critical \u2013 Control Valves 99.6 13.3 2.0 2021 CGU IMI Critical \u2013 Petrochemical & Isolation 110.6 10.9 2.0 IMI Critical \u2013 Control Valves 95.9 10.8 2.0 IMI Precision Americas \u2013 Fluid Technologies 59.0 10.9 1.7 ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfGoodwillExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-398": {
"value": "11. Intangible assets Accounting policy Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period to period. i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. Analysis of intangible assets Non-acquired Acquired Other Other non- intangibles Other customer acquired acquired under intangible Goodwill relationships ** intangibles** intangibles* construction assets \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Cost As at 1 January 2021 487.4 244.0 132.3 170.2 9.8 556.3 Exchange adjustments (14.7) (7.9) (5.2) (3.0) (0.8) (16.9) Acquisitions 97.4 51.4 58.2 109.6 Additions 4.5 6.8 11.3 Transfers from assets in the course of construction 6.9 (6.9) - Disposals (0.5) (3.6) (0.3) (6.4) (10.3) As at 31 December 2021 569.6 283.9 185.0 172.2 8.9 650.0 Exchange adjustments 48.3 21.2 22.3 12.7 (0.7) 55.5 Acquisitions (Note 23) 153.5 30.9 16.5 47.4 Additions 7.0 7.1 14.1 Transfers from assets in the course of construction 9.3 (9.3) - Disposals (6.0) (6.0) As at 31 December 2022 771.4 336.0 223.8 195.2 6.0 761.0 Amortisation As at 1 January 2021 37.9 204.8 106.7 94.5 406.0 Exchange adjustments (1.9) (7.7) (3.7) (0.9) (12.3) Disposals (3.3) (0.3) (5.9) (9.5) Impairment charge 0.1 0.1 Amortisation for year 10.5 4.5 16.2 31.2 As at 31 December 2021 36.0 204.3 107.2 104.0 - 415.5 Exchange adjustments 1.7 14.0 11.5 6.8 32.3 Acquisitions - Disposals (6.0) (6.0 ) Impairment charge 0.7 0.7 Amortisation for year 17.2 12.3 18.5 48.0 As at 31 December 2022 37.7 235.5 131.0 124.0 - 490.5 Net book value at 31 December 2021 533.6 79.6 77.8 68.2 8.9 234.5 Net book value at 31 December 2022 733.7 100.5 92.8 71.2 6.0 270.5 * Other non-acquired intangibles includes capitalised development costs with a carrying value of \u00a333.1m (2021: \u00a334.5m) and capitalised software costs with a carrying value of \u00a338.1m (2021: \u00a333.7m). ** An amount included in other acquired intangibles in prior period has been reclassified to acquired customer relationships as part of finalisation of provisional accounting for Adaptas . 11. Intangible assets (continued) Goodwill impairment testing Accounting policy For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Impairment The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether impairment indicators exist. If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date. The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs. Reversals of impairment Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Group has 12 (2021:13) cash generating units to which goodwill is allocated. The recoverable amount of a CGU is the higher of its fair value less costs to sell and its value in use. Value in use is determined using cash flow projections from financial budgets, forecasts and plans approved by the Board covering a five-year period and include a terminal value multiple. The projected cash flows reflect the latest expectation of demand for products and services, including consideration of the future impacts of climate change which is considered as part of the Group\u2019s five-year strategic planning process. The key assumptions in these calculations are the long-term growth rates and the discount rates applied to forecast cash flows in addition to the achievement of the forecasts themselves. Long-term growth rates are based on long-term economic forecasts for growth in the manufacturing sector in the geographical regions in which the cash generating unit operates. Pre-tax discount rates specific to each cash generating unit are calculated by adjusting country and region-specific post- tax weighted average cost of capital (\u2018WACC\u2019) for specific country risk premium, the Group\u2019s size risk premium and tax rate relevant to the jurisdiction in which the cash flows are generated. This exercise resulted in the use of the following ranges of values for the key assumptions: 2022 2021 % % Discount rate 8.8 \u2013 13.3 7.3 \u2013 11.2 Long-term growth rate 1.2 \u2013 2.0 1.5 \u2013 2.0 For the purpose of assessing the significance of CGUs, the Group uses a threshold of 10% of the total goodwill balance. The recoverable amount of the CGUs is determined from a value in use calculation and the key assumptions used in this calculation are the discount rate, growth rate and operating cash flows. These estimates are determined using the methodology discussed above and for those CGUs considered to be significant; outlined in the table below: * IMI Precision Fluid OEM CGU is a new group of CGUs in the current year that combines IMI Precision Americas \u2013 Fluid Technologies, IMI Precision EMEA \u2013 Fluid Technologies and Adaptas. The goodwill balance of Heatmiser UK Ltd of \u00a3102.2m has not been included in the 2022 analysis above due to provisional accounting used for the purchase price allocation. The carrying amount of Goodwill allocated to CGUs deemed to be non-significant is \u00a3307.8m (2021: \u00a3268.1m). Sensitivity to changes in assumptions The key estimates reflect the combination of assumptions used, including the long- term growth rates and the discount rate applied to forecast cash flows in addition to the achievement of the forecasts themselves. The Directors do not consider that any reasonably possible changes to the key assumptions would cause the carrying amount to exceed the recoverable amount of the CGU. The aggregate amount of goodwill arising from acquisitions prior to 1 January 2004 which had been deducted from the profit and loss reserves and incorporated into the IFRS transitional balance sheet as at 1 January 2004, amounted to \u00a3364m. The cumulative impairment recognised in relation to goodwill is \u00a341m (2021: \u00a341m) . 2022 Goodwill \u00a3m Discount rate % Growth rate % CGU IMI Precision \u2013 Fluid OEM* 208.9 10.3 2.0 IMI Critical \u2013 Petrochemical & Isolation 117.4 10.0 2.0 IMI Critical \u2013 Control Valves 99.6 13.3 2.0 2021 CGU IMI Critical \u2013 Petrochemical & Isolation 110.6 10.9 2.0 IMI Critical \u2013 Control Valves 95.9 10.8 2.0 IMI Precision Americas \u2013 Fluid Technologies 59.0 10.9 1.7 ",
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"fact-346": {
"value": "11. Intangible assets Accounting policy Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period to period. i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. Analysis of intangible assets
Non-acquired
Acquired Other Other non- intangibles Other
customer acquired acquired under intangible
Goodwill
relationships
** intangibles** intangibles* construction assets
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
Cost
As at 1 January 2021 487.4 244.0 132.3 170.2 9.8 556.3
Exchange adjustments (14.7) (7.9) (5.2) (3.0) (0.8) (16.9)
Acquisitions 97.4 51.4 58.2 109.6
Additions 4.5 6.8 11.3
Transfers from assets in the course of construction 6.9 (6.9) -
Disposals (0.5) (3.6) (0.3) (6.4) (10.3)
As at 31 December 2021 569.6 283.9 185.0 172.2 8.9 650.0
Exchange adjustments 48.3 21.2 22.3 12.7 (0.7) 55.5
Acquisitions (Note 23) 153.5 30.9 16.5 47.4
Additions 7.0 7.1 14.1
Transfers from assets in the course of construction 9.3 (9.3) -
Disposals (6.0) (6.0)
As at 31 December 2022 771.4 336.0 223.8 195.2 6.0 761.0
Amortisation
As at 1 January 2021 37.9 204.8 106.7 94.5 406.0
Exchange adjustments (1.9) (7.7) (3.7) (0.9) (12.3)
Disposals (3.3) (0.3) (5.9) (9.5)
Impairment charge 0.1 0.1
Amortisation for year 10.5 4.5 16.2 31.2
As at 31 December 2021 36.0 204.3 107.2 104.0 - 415.5
Exchange adjustments 1.7 14.0 11.5 6.8 32.3
Acquisitions -
Disposals (6.0) (6.0 )
Impairment charge 0.7 0.7
Amortisation for year 17.2 12.3 18.5 48.0
As at 31 December 2022 37.7 235.5 131.0 124.0 - 490.5
Net book value at 31 December 2021 533.6 79.6 77.8 68.2 8.9 234.5
Net book value at 31 December 2022 733.7 100.5 92.8 71.2 6.0 270.5
* Other non-acquired intangibles includes capitalised development costs with a carrying value of \u00a333.1m (2021: \u00a334.5m) and capitalised software costs with a carrying
value of \u00a338.1m (2021: \u00a333.7m).
** An amount included in other acquired intangibles in prior period has been reclassified to acquired customer relationships as part of finalisation of provisional
accounting for Adaptas .
Goodwill impairment testing Accounting policy For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Impairment The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether impairment indicators exist. If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date. The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs. Reversals of impairment Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. The Group has 12 (2021:13) cash generating units to which goodwill is allocated.
The recoverable amount of a CGU is the higher of its fair value less costs to sell
and its value in use. Value in use is determined using cash flow projections from
financial budgets, forecasts and plans approved by the Board covering a five-year
period and include a terminal value multiple. The projected cash flows reflect the
latest expectation of demand for products and services, including consideration
of the future impacts of climate change which is considered as part of the Group\u2019s
five-year strategic planning process.
The key assumptions in these calculations are the long-term growth rates and the
discount rates applied to forecast cash flows in addition to the achievement of the
forecasts themselves. Long-term growth rates are based on long-term economic
forecasts for growth in the manufacturing sector in the geographical regions in
which the cash generating unit operates. Pre-tax discount rates specific to each
cash generating unit are calculated by adjusting country and region-specific post-
tax weighted average cost of capital (\u2018WACC\u2019) for specific country risk premium,
the Group\u2019s size risk premium and tax rate relevant to the jurisdiction in which the
cash flows are generated.
This exercise resulted in the use of the following ranges of values for the key
assumptions:
2022 2021
% %
Discount rate 8.8 \u2013 13.3 7.3 \u2013 11.2
Long-term growth rate 1.2 \u2013 2.0 1.5 \u2013 2.0
For the purpose of assessing the significance of CGUs, the Group uses a threshold
of 10% of the total goodwill balance. The recoverable amount of the CGUs is
determined from a value in use calculation and the key assumptions used in this
calculation are the discount rate, growth rate and operating cash flows. These
estimates are determined using the methodology discussed above and for those
CGUs considered to be significant; outlined in the table below:
* IMI Precision Fluid OEM CGU is a new group of CGUs in the current year that
combines IMI Precision Americas \u2013 Fluid Technologies, IMI Precision EMEA \u2013
Fluid Technologies and Adaptas.
The goodwill balance of Heatmiser UK Ltd of \u00a3102.2m has not been included in
the 2022 analysis above due to provisional accounting used for the purchase price
allocation.
The carrying amount of Goodwill allocated to CGUs deemed to be non-significant
is \u00a3307.8m (2021: \u00a3268.1m).
Sensitivity to changes in assumptions
The key estimates reflect the combination of assumptions used, including the long-
term growth rates and the discount rate applied to forecast cash flows in addition
to the achievement of the forecasts themselves.
The Directors do not consider that any reasonably possible changes to the key
assumptions would cause the carrying amount to exceed the recoverable amount
of the CGU.
The aggregate amount of goodwill arising from acquisitions prior to 1 January 2004
which had been deducted from the profit and loss reserves and incorporated into
the IFRS transitional balance sheet as at 1 January 2004, amounted to \u00a3364m.
The cumulative impairment recognised in relation to goodwill is \u00a341m (2021: \u00a341m) .
2022 Goodwill
\u00a3m
Discount
rate
%
Growth
rate
%
CGU
IMI Precision \u2013 Fluid OEM*
208.9 10.3 2.0
IMI Critical \u2013 Petrochemical & Isolation 117.4 10.0 2.0
IMI Critical \u2013 Control Valves
99.6 13.3 2.0
2021
CGU
IMI Critical \u2013 Petrochemical & Isolation
110.6 10.9 2.0
IMI Critical \u2013 Control Valves
95.9 10.8 2.0
IMI Precision Americas \u2013 Fluid Technologies
59.0 10.9 1.7
",
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"value": "Accounting policy Intangible assets are disclosed as acquired intangible assets and non-acquired intangible assets. Amortisation of acquired intangible assets is treated as an adjusting item as described in Note 3 as the impact of any acquisitions, which are clearly identifiable, can materially impact the net book value, from period to period. i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. ",
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"fact-396": {
"value": " i. Goodwill Goodwill is initially measured at cost being the excess of the aggregate of the acquisition date fair value of the consideration transferred over the net identifiable amounts of the assets acquired and the liabilities assumed for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. The value of the goodwill can arise from a number of sources, but in relation to our more recent acquisitions, it has been represented by post-acquisition synergies and the skills and knowledge of the workforce. ",
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"fact-395": {
"value": "ii. Research and Development Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognised in the income statement as an expense as incurred. Expenditure on development activities, whereby research findings are applied to a plan or design for the production of new or substantially improved products and processes, is capitalised provided benefits are probable, cost can be reliably measured and if, and only if, the product or process is technically and commercially feasible and the Group has sufficient resources and intention to complete development. The expenditure capitalised includes the cost of materials, direct labour and directly attributable overheads. Other development expenditure is recognised in the income statement as an expense as incurred. Capitalised development expenditure is stated at cost less accumulated amortisation (see below) and impairment losses (see accounting policy \u2018Impairment\u2019) and is included in the other acquired or other non-acquired category of intangible assets depending on its origin. iii. Software development costs Software applications and systems that are not an integral part of their host computer equipment are capitalised on initial recognition as intangible assets at cost. Cost comprises the purchase price plus directly attributable costs incurred on development of the asset to bring it into use. Following initial recognition, software development costs are carried at cost less any accumulated amortisation (see below) and accumulated impairment losses (see accounting policy \u2018Impairment\u2019) and are included in the other acquired or other non-acquired category of intangible assets depending on their origin. iv. Customer relationships and other acquired intangible assets Customer relationships and other intangible assets that are acquired by the Group as part of a business combination are stated at their fair value calculated by reference to the net present value of future benefits accruing to the Group from utilisation of the asset, discounted at an appropriate discount rate. Expenditure on other internally generated intangible assets is recognised in the income statement as an expense as incurred. v. Amortisation of intangible assets other than goodwill Amortisation is charged to the income statement on a straight-line basis (other than for customer relationships and order book, which are charged on a sum of digits basis) over the estimated useful lives of the intangible assets. Amortisation commences from the date the intangible asset becomes available for use. The estimated useful lives for: \u2022 Capitalised development costs are the life of the intangible asset (usually a maximum of 17 years) \u2022 Software development costs are the life of the intangible asset (up to 17 years) \u2022 Customer relationships are the life of the intangible asset (up to 17 years) \u2022 Other intangible assets (including order books, brands and software) are the life of the intangible asset (up to 10 years) The Group splits its intangible assets between those arising on acquisitions and those which do not, because the amortisation of acquired intangibles is recognised as an adjusting item in the income statement. ",
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"fact-376": {
"value": "Accounting policy For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group\u2019s cash-generating units (or groups of \u2019CGUs\u2019). The composition of CGUs reflects both the way in which cash inflows are generated and the internal reporting structure. Where our businesses operate closely with each other we will continue to review whether they should be treated as a single CGU. Each unit or group of units to which goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes and shall not be larger than an operating segment before aggregation. Where goodwill forms part of a CGU and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the CGU retained. Impairment The carrying values of the Group\u2019s non-financial assets other than inventories and deferred tax assets, are reviewed at each balance sheet date to determine whether impairment indicators exist. If indicators exists, the recoverable amount of the asset or all assets within its CGU is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its CGU unit exceeds its recoverable amount. Impairment losses are recognised in the income statement. For goodwill and assets that are not yet available for use, the recoverable amount is evaluated at each balance sheet date. The recoverable amount of non-financial assets is the greater of their fair value less costs to sell and value in use. In assessing value in use, an individual assessment is made of the estimated future cash flows generated for each CGU derived from the Group\u2019s long-term forecasts for the next five years. These are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Management believe that this approach, including the use of the indefinite cash flow projection, is appropriate based upon both historical experience and because it is one of the bases management utilise to evaluate the fair value of investment opportunities. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the smallest cash generating unit to which the asset belongs. Reversals of impairment Impairments of goodwill are non-reversible. In respect of other assets, an impairment loss is reversed if at the balance sheet date there are indications that the loss has decreased or no longer exists following a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset\u2019s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. ",
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"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-347": {
"value": "This note details the physical assets used by the Group to generate revenues and profits, in addition to those disclosed in Note 13 'Leases'. These assets include manufacturing, distribution and office sites, and equipment used in the manufacture of the Group\u2019s products. The cost of these assets represents the amount initially paid for them. Accounting policy Freehold land and assets in the course of construction are not depreciated. Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 11). Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Costs in respect of tooling owned by the Group for clearly identifiable new products are capitalised net of any contribution received from customers and are included in plant and equipment. Depreciation is charged to the income statement, from the date the asset is brought in to use, on a straight-line basis (unless such a basis is not aligned with the anticipated benefit) so as to write down the cost of assets to residual values over the period of their estimated useful lives within the following ranges: \u2022 Freehold buildings - 25 to 50 years \u2022 Plant and equipment - 3 to 20 years Assets in the course of construction comprise assets which are not currently ready to be brought in to use. Assets under construction are not depreciated. If there has been a technological change or decline in business performance the directors review the value of the assets to ensure they have not fallen below their depreciated value. If an asset\u2019s value falls below its depreciated value, a one-off impairment charge is made against profit. Assets in the Land & Plant & course of buildings equipment construction Total \u00a3m \u00a3m \u00a3m \u00a3m Cost As at 1 January 2021 189.6 698.2 16.9 904.7 Exchange adjustments (5.6) (27.3) (1.4) (34.3) Acquisitions (Note 23) 4.1 5.0 0.5 9.6 Additions 1.1 20.6 24.5 46.2 Transfers from assets in the course of construction 1.8 12.1 (13.9) - Disposals (4.3) (33.9) (38.2) As at 31 December 2021 186.7 674.7 26.6 888.0 Exchange adjustments 8.7 43.9 (0.4) 52.2 Acquisitions (Note 23) 2.9 1.8 0.2 4.9 Additions 3.6 23.7 29.9 57.2 Transfers from assets in the course of construction 0.8 24.4 (25.2) - Disposals (4.3) (32.8) (0.1) (37.2) As at 31 December 2022 198.4 735.7 31.0 965.1 Depreciation As at 1 January 2021 97.0 541.7 638.7 Exchange adjustments (0.6) (28.3) (28.9 Disposals (2.6) (32.3) (34.9) Impairment charge 3.1 2.3 5.4 Depreciation 3.7 36.3 40.0 As at 31 December 2021 100.6 519.7 - 620.3 Exchange adjustments 3.6 35.6 39.2 Disposals (2.1) (30.5) (32.6) Reversal of impairment (1.9) (1.0) (2.9 Depreciation 4.7 37.2 41.9 As at 31 December 2022 104.9 561.0 - 665.9 NBV at 31 December 2021 86.1 155.0 26.6 267.7 NBV at 31 December 2022 93.5 174.7 31.0 299.2 A reversal of impairment \u00a32.9m occurred during the year (2021: an impairment charge of \u00a35.4m). The recoverable amount of these assets has been determined using their fair value less costs to sell, estimated by both internal and external valuation specialists. Group contracts in respect of future capital expenditure which had been placed at the balance sheet date amounted to \u00a33.7m (2021: \u00a33.4m). 12. Property, plant and equipment",
"dimensions": {
"concept": "ifrs-full:DisclosureOfPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-377": {
"value": "Accounting policy Freehold land and assets in the course of construction are not depreciated. Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see Note 11). Where an item of property, plant and equipment comprises major components having different useful lives, they are accounted for as separate items of property, plant and equipment. Costs in respect of tooling owned by the Group for clearly identifiable new products are capitalised net of any contribution received from customers and are included in plant and equipment. Depreciation is charged to the income statement, from the date the asset is brought in to use, on a straight-line basis (unless such a basis is not aligned with the anticipated benefit) so as to write down the cost of assets to residual values over the period of their estimated useful lives within the following ranges: \u2022 Freehold buildings - 25 to 50 years \u2022 Plant and equipment - 3 to 20 years Assets in the course of construction comprise assets which are not currently ready to be brought in to use. Assets under construction are not depreciated. If there has been a technological change or decline in business performance the directors review the value of the assets to ensure they have not fallen below their depreciated value. If an asset\u2019s value falls below its depreciated value, a one-off impairment charge is made against profit.",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForPropertyPlantAndEquipmentExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"fact-348": {
"value": " Accounting policy The Group leases various properties, plant, equipment and cars. Rental contracts are negotiated individually and have a range of initial terms and may have extension options. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of: i. fixed payments less any lease incentives receivable; ii. variable lease payments that are based on an index or a rate; iii. amounts expected to be payable by the Group under residual value guarantees; iv. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and v. payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the entity\u2019s incremental borrowing rate is used, being the rate that the entity would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising: i. the amount of the initial measurement of lease liability; ii. any lease payments made at or before the commencement date less any lease incentives received; and iii. restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture. Extension and termination options - Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Critical judgement In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows of \u00a3nil have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Group. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of \u00a38.3m (2021: \u00a311.0m). 13. Leases 13. Leases (continued)
Set out below are the carrying amounts of right-of-use assets recognised and the movements during the period:
Land & Plant &
buildings equipment Total
\u00a3m \u00a3m \u00a3m
As at 1 January 2021 72.6 13.0 85.6
Additions 14.9 5.0 19.9
Acquisitions 3.8 0.1 3.9
Extensions 12.4 0.7 13.1
Payment changes 0.5 0.1 0.6
Terminations (1.5) (0.4) (1.9 )
Depreciation expense (20.9) (7.4) (28.3 )
Exchange (0.9) (0.5) (1.4 )
As at 31 December 2021 80.9 10.6 91.5
Additions 27.9 7.3 35.2
Acquisitions - 0.1 0.1
Extensions 8.0 1.0 9.0
Payment changes 1.6 0.2 1.8
Terminations (0.5) (0.2) (0.7 )
Impairment (0.6) - (0.6 )
Depreciation expense (25.0) (7.3) (32.3)
Exchange 2.5 0.5 3.0
As at 31 December 2022 94.8 12.2 107.0
Set out below are the carrying amounts of lease liabilities and the movements during the period:
Land & Plant &
buildings equipment Total
\u00a3m \u00a3m \u00a3m
As at 1 January 2021 75.5 12.8 88.3
Additions 14.6 5.1 19.7
Acquisitions 3.8 0.1 3.9
Extensions 12.1 0.7 12.8
Payment changes (0.8) 0.1 (0.7 )
Terminations (1.5) (0.3) (1.8 )
Accretion of interest 2.6 0.2 2.8
Payments (22.3) (7.7) (30.0 )
Exchange (0.8) (0.3) (1.1 )
As at 31 December 2021 83.2 10.7 93.9
Additions 23.7 7.3 31.0
Acquisitions - 0.1 0.1
Extensions 8.1 1.0 9.1
Payment changes 1.7 0.2 1.9
Terminations (0.5) (0.2) (0.7 )
Accretion of interest 2.6 0.2 2.8
Payments (27.2) (7.9) (35.1)
Exchange 2.2 0.5 2.7
As at 31 December 2022 93.8 11.9 105.7
Current 20.0 5.8 25.8
Non-current 73.8 6.1 79.9
The following are the amounts recognised in the income statement:
2022 2021
\u00a3m \u00a3m
Depreciation expense of right-of-use assets (32.3) (28.3)
Interest expense on lease liabilities (2.8) (2.8)
Total amount recognised in profit or loss (35.1) (31.1)
Practical expedients applied
The Group has used the following practical expedients permitted by the standard:
i. the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
No practical expedient has been applied in relation to short-term leases and low value assets and is not expected to be used in subsequent periods.
Future cash outflows that the Group is potentially exposed to in relation to the measurement of lease liabilities which have not been reflected is \u00a3nil (2021: \u00a3nil).
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfLeasesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-378": {
"value": "Accounting policy The Group leases various properties, plant, equipment and cars. Rental contracts are negotiated individually and have a range of initial terms and may have extension options. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes. Leases are recognised as a right-of-use asset and a corresponding liability at the date at which the leased asset is available for use by the Group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of: i. fixed payments less any lease incentives receivable; ii. variable lease payments that are based on an index or a rate; iii. amounts expected to be payable by the Group under residual value guarantees; iv. the exercise price of a purchase option if the Group is reasonably certain to exercise that option; and v. payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be determined, the entity\u2019s incremental borrowing rate is used, being the rate that the entity would have to pay to borrow the funds necessary to obtain an asset of similar value in a similar economic environment with similar terms and conditions. Right-of-use assets are measured at cost comprising: i. the amount of the initial measurement of lease liability; ii. any lease payments made at or before the commencement date less any lease incentives received; and iii. restoration costs. Payments associated with short-term leases and leases of low-value assets are recognised on a straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less. Low-value assets comprise IT-equipment and small items of office furniture. Extension and termination options - Extension and termination options are included in a number of property and equipment leases across the Group. These terms are used to maximise operational flexibility in terms of managing contracts. The majority of extension and termination options held are exercisable only by the Group and not by the respective lessor. Critical judgement In determining the lease term, management considers all facts and circumstances that create an economic incentive to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated). Potential future cash outflows of \u00a3nil have not been included in the lease liability because it is not reasonably certain that the leases will be extended (or not terminated). The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this assessment and that is within the control of the Group. During the current financial year, the financial effect of revising lease terms to reflect the effect of exercising extension and termination options was an increase in recognised lease liabilities and right-of-use assets of \u00a38.3m (2021: \u00a311.0m). ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForLeasesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-349": {
"value": " Accounting policy i. Defined contribution (\u2018DC\u2019) pension plans Arrangements where the employer pays fixed contributions into an external fund on behalf of the employee (who is responsible for making the investment decision and therefore assumes the risks and rewards of fund performance). Contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. ii. Defined benefit (\u2018DB\u2019) pension plans A defined benefit pension plan is a pension arrangement in which the employer promises a specified annual benefit on retirement that is pre-determined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. In some cases, this benefit is paid as a lump sum on leaving the Company or while in the service of the Company rather than as a pension. The Group underwrites one or more risks in meeting these obligations and therefore any net liability or surplus in these arrangements is shown on the Group balance sheet. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or curtailment, and the date that the Group recognises restructuring-related costs. The discount rate is the yield at the balance sheet date on high quality corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. At each year end the Company and the local actuaries consider whether the plans are affected by the asset ceiling requirements. When the calculation results in a net asset to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan and restricted by any relevant asset ceiling. Any deduction made by the tax authorities in the event of a refund of a surplus would be regarded by the Group as an income tax. When the benefits of a plan are improved, the expense is recognised immediately in the income statement. Re-measurement gains and losses are recognised immediately in equity and disclosed in the statement of comprehensive income. iii. Long-term service and other post-employment benefits The Group\u2019s net obligation in respect of long-term service and other post-employment benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the balance sheet date on high quality bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. Key source of estimation uncertainty Key source of estimation uncertainty \u2013The present value of the Group\u2019s defined benefit pension plans and other post-employment benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, inflation, future salary increases, mortality rates and future pension increases. The assumptions used and analysis of their sensitivity is set out below. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. 14. Retirement benefits Summary information Net pension deficit: \u00a318.9m (2021: surplus of \u00a362.5m) The assets and liabilities of the defined benefit schemes are aggregated, recognised in the consolidated balance sheet and shown within non-current liabilities or in non-current assets if a scheme is in surplus and it is deemed recoverable. Number of DB arrangements: 70 (2021: 70) There has been no change to the number of schemes during the year. The following table shows a summary of the geographical profile of the Group\u2019s defined benefit schemes: Net surplus/ Quantity Quantity Assets Liabilities (deficit) 2022 2021 \u00a3m \u00a3m \u00a3m Australia 3 3 (0.4) (0.4) Austria 6 6 (2.4) (2.4) France 3 3 0.2 (0.9) (0.7) Germany 30 30 7.0 (42.8) (35.8) India 6 6 (1.2) (1.2) Italy 6 6 (2.2) (2.2) Mexico 5 5 (0.8) (0.8) Spain 2 2 Switzerland 5 5 74.0 (73.9) 0.1 UAE 1 1 (1.3) (1.3) US* 2 2 (2.6) (2.6) UK 1 1 325.3 (296.9) 28.4 70 70 406.5 (425.4) (18.9) * The US deficit above excludes \u00a31.8m of assets relating to unqualified plans classified as investments (see Note 17). As at 31 December 2022, the Group has recognised a net defined benefit surplus of \u00a328.4m (2021: \u00a3129.0m) for the UK Deferred Fund. No asset ceiling has been applied to the net surplus recognised since the Group has an unconditional right to a refund of surplus assets following the settlement of the liabilities. % % Qty Assets of total Liabilities of total Type of scheme No. \u00a3m assets \u00a3m liabilities 2022 Final salary* 25 325.9 79% (333.6) 78% Cash balance** 12 79.1 19% (76.3) 18% Jubilee Awards*** 14 - 0% (2.7) 1% Other 19 7.2 2% (12.8) 3% Total 70 412.2 100% (425.4) 100% Asset ceiling (5.7) Revised assets 406.5 2021 Final salary* 25 632.5 88% (549.2) 84% Cash balance** 12 80.6 11% (87.1) 13% Jubilee Awards*** 14 - 0% (3.0) 0% Other 19 6.6 1% (17.9) 3% Total 70 719.7 100% (657.2) 100% The Group provides pension benefits through a mixture of funded and unfunded DB and DC arrangements. Assessments of the obligations of the defined benefit plans are carried out by actuaries, based on the projected unit credit method. A historical split of the types of defined benefit schemes in operation is as follows: * Final salary scheme: The pension available to a member in a final salary arrangement will be a proportion of the member\u2019s salary at or around their retirement date. This proportion will be determined by the member\u2019s length of pensionable service, their accrual rate and any particular circumstances under which the member retires (for example early ill-health retirement). ** Cash balance: A cash balance scheme is a form of defined benefit pension under which the member has the right to a defined lump sum on retirement rather than a defined amount of pension receivable. For example a cash balance plan may have minimum or guaranteed rates of return on pension contributions. The amount of pension to which that lump sum may be converted is determined by the annuity rates prevailing at the time of conversion. *** Jubilee Awards: Jubilee plans provide for cash award payments which are based on completed lengths of service. These payments are often made on cessation of service with the company, subject to a minimum period of service. Asset profile of schemes The following table sets out the profile of the overall assets of the schemes (to give an indication of their risk profile), the comparative amounts of the funded and unfunded defined benefit liabilities ('DBOs') and a split of the balance sheet impact between schemes with a net pension surplus and a net pension deficit. 2022 2021 \u00a3m \u00a3m Quoted equities 24.7 27.8 Quoted bonds 23.3 256.8 Total quoted assets 48.0 284.6 Unquoted equities 103.3 120.8 Insurance policies* 272.0 254.7 Property 19.5 20.0 Other** (30.6) 39.6 Total unquoted assets 364.2 435.1 Fair value of assets 412.2 719.7 Restriction due to asset ceiling (5.7) - DBOs for funded schemes (378.3) (598.1) DBOs for unfunded schemes (47.1) (59.1) Surplus/(deficit) for DBOs (18.9) 62.5 Schemes in net pension deficit (47.4) (66.5) Schemes in net pension surplus 28.5 129.0 * The value of the insurance policies match the value of the IAS 19 liabilities insured. ** 'Other' assets primarily consists of cash, currency swaps and UK commercial real estate debt. The overseas assets of \u00a386.9m (2021: \u00a387.8m) comprise equities of \u00a324.7m (2021: \u00a327.8m), bonds of \u00a321.0m (2021: \u00a320.2m), insurance of \u00a37.5m (2021: \u00a34.1m), property of \u00a319.5m (2021: \u00a319.2m) and other assets of \u00a314.2m (2021: \u00a316.5m). This excludes the impact of the restriction due to the asset ceiling of \u00a35.7m (2021: \u00a3nil) associated with schemes in Switzerland and Germany. Funded: The majority of the Group defined benefit and other post-employment benefit arrangements are funded, which means they are linked to specific plan assets that have been segregated in a trust or foundation. Unfunded: Plans that are not funded are those that are not backed by segregated assets. These include some pension plans but also a number of other long-term arrangements for the benefit of our employees, with benefits payable while they are employed by the Group but more than 12 months after the related service is rendered. Actuarial gains and losses on other long-term arrangements are recognised in the income statement in the period in which they arise. Average duration by geography The following table shows the weighted average number of years (or duration) over which pension benefits are expected to be paid. Location 2022 2021 UK 15.4 21.7 Switzerland 14.1 16.8 US 5.1 5.5 Eurozone 11.9 14.6 The UK Funds The United Kingdom constitutes 70% (2021: 77%) of total defined benefit liabilities and 80% (2021: 88%) of total defined benefit assets. Historically, the IMI Pension Fund offered final salary benefits to UK employees until it closed to new entrants in 2005 and to future accrual on 31 December 2010. In December 2014, winding-up procedures commenced and those members who were not eligible or did not take up the offer of a single cash lump sum transferred to one of two new Funds (IMI 2014 Pensioner Fund or the IMI 2014 Deferred Fund \u2013 \u2018the UK Funds\u2019). Ongoing pension benefits in the UK are provided via the Trustee\u2019s defined contribution plan - The IMI Retirement Savings Plan. All UK pension assets are run on behalf of the Trustee by the Board of the IMI Common Investment Fund. Liability management During 2022, the Group completed an insurance buy-in exercise for the remaining uninsured members. The Trustees agreed to defer part of the premium owed to the insurance company for this buy-in and the outstanding amount is expected to be paid over the next 5 years. The present value of the deferred premium has been deducted from the total asset value for the current year. Consistent with the accounting treatment of previous buy-in transactions, the impact has been recognised in the other comprehensive income statement. During 2021, the Group completed a bulk insurance buy-in exercise in relation to certain members of the UK Deferred Fund. The difference between the value of the liabilities insured and the cost of the premium to insure them of \u00a326.4m was recognised as a loss in other comprehensive income. Contributions The March 2021 Valuation was completed in December 2021 and the Funds\u2019 Actuary certified that no deficit funding contributions would be required over and above the projected investment returns and the scheduled payments, of \u00a37.0m per annum, due from the Scottish Limited Partnerships until the earlier of full funding of the UK Deferred Fund or 2030. During 2022, the Group ceased contributions to the Scottish Limited Partnership as the UK Deferred Fund is fully funded. The final payment of \u00a33.5m for 2021 was made in February 2022. 14. Retirement benefits (continued) Specific effect on the financial statements The corresponding entries for increases and decreases in the net pension deficit reported in the balance sheet are reflected as follows: i. Cash flow statement: When the Group makes cash contributions to fund the pension deficit/surplus they are reflected in the cash flow statement and reduce the net deficit/increase the net surplus. ii. Income statement: Movements in the overall net pension deficit/surplus are recognised in the income statement when they relate to changes in the overall pension promise, due to either an additional period of service (known as \u2018current service cost\u2019), changes to pension terms in the scheme rules (known as \u2018past service cost\u2019), or closure of all or part of a scheme (known as settlements and curtailments). The interest charge/income on the net deficit/surplus position is also recognised in the income statement. iii. Other comprehensive income (OCI): Movements in the overall net pension deficit/surplus are recognised through OCI when they relate to changes in actuarial assumptions or the difference (\u2018experience gain or loss\u2019) between previous assumptions and actual results. The table below reconciles the movement in the UK and overseas net defined benefit (obligation)/surplus between 1 January 2022 and 31 December 2022. UK Overseas Total \u00a3m \u00a3m \u00a3m Net defined benefit surplus/(obligation) at 1 January 2022 129.0 (66.5) 62.5 Movement recognised in: Income statement 2.3 (6.0) (3.7) OCI (102.9) 20.2 (82.7) Cash flow statement - 8.2 8.2 Exchange movements - (3.2) (3.2 ) Net defined benefit surplus/(obligation) at 31 December 2022 28.4 (47.3) (18.9 ) Risks faced by the schemes The main risks that the Group face in respect of the UK Deferred Fund, which makes up 70% of the Group\u2019s liabilities, are: Risk Description/mitigation Interest rate risk Under IAS 19, the discount rate should be set with reference to the yield on high quality corporate bonds (typically taken to mean those rated AA) of term appropriate to the duration of the liabilities. A decrease in corporate bond yields and therefore the resulting discount rate, leads to a higher value being placed on the pension liabilities. The Trustees\u2019 investment strategy for the UK Deferred Fund includes investing in liability-driven investments and bonds whose values increase with decreases in interest rates. The Trustees have a target to hedge 100% of interest rate risk. The Trustee\u2019s investment managers measure and monitor the hedging arrangements in place and the latest performance report shows this target is being met. Note that the Scheme hedges interest rate risk on a scheme funding basis (relative to gilts) whereas AA corporate bonds are implicit in the IAS 19 discount rate and so there is some mismatching risk to the Group should yields on gilts and corporate bonds diverge. The Scheme\u2019s exposure to corporate bonds mitigates this risk to some extent. Inflation risk In the UK Deferred Fund, a large proportion of the benefits are linked to inflation. Therefore, an increase in inflation would lead to higher benefits being paid than expected. To mitigate this risk, the UK Deferred Fund aims to hedge 100% of the Fund\u2019s liabilities against inflation risk. The Trustee\u2019s investment managers measure and monitor the hedging arrangements in place and the latest performance report shows this target is being met. Investment risk The UK Deferred Fund holds investments in asset classes, such as private equity and property, which have volatile market values. These assets are expected to provide better returns than Government bonds over the long-term. However, the short-term volatility can cause additional funding to be required, if a deficit emerges. As these investments make up around 27% of the total assets, the risk to the Group is relatively small. Mortality risk The majority of the plans\u2019 obligations are to provide benefits for the life of each retired member and his/her spouse, so increases in life expectancy result in an increase in the plans\u2019 liabilities. An increase of one year in life expectancy for the UK Deferred Fund would act to increase liabilities by c.\u00a310.4m. The Group has an objective to insure benefits as members retire in order to reduce mortality risk Cash flow impacts 2022 2021 UK Overseas Total UK Overseas Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Amounts from employees - 2.3 2.3 - 2.2 2.2 Amounts from employers 3.5 2.9 6.4 7.0 2.7 9.7 Benefits and settlements paid directly by the Group - 5.3 5.3 - 4.1 4.1 Total 3.5 10.5 14.0 7.0 9.0 16.0 The expected contributions to the DB arrangements in 2023 are \u00a32.9m of normal employer contributions and \u00a32.4m of normal employee contributions, both in relation to overseas pension funds. Other comprehensive income Movements in pension assets and liabilities that arise during the year from changes in actuarial assumptions, or because actual experience is different from the actuarial assumptions, are recognised in equity via other comprehensive income. These movements are analysed below: 2022 2021 Overseas Overseas Overseas Overseas post non-post post non-post UK employment employment Total UK employment employment Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Change in discount rate 203.9 26.0 229.9 49.9 8.0 57.9 Change in inflation 2.2 9.3 11.5 (16.0) - (16.0) Change in other assumptions 2.3 - 2.3 5.4 3.2 8.6 Actuarial experience - Liabilities (2.1) (1.2) (3.3) 3.6 1.4 5.0 Asset experience (309.2) (8.5) (317.7) 8.0 7.4 15.4 Actuarial (losses)/gains in the year (102.9) 25.6 (77.3) 50.9 20.0 70.9 Change in the asset ceiling (5.4) (5.4) - Exchange (losses)/gains (2.8) (0.4) (3.2) 4.0 0.3 4.3 (Losses)/gains recognised through equity (102.9) 17.4 (0.4) (85.9) 50.9 24.0 0.3 75.2 IMI takes advice from actuaries regarding the appropriateness of the assumptions used to determine the present value of the defined benefit obligations. These assumptions include the discount rate applied to the assets and liabilities, the life expectancy of the members, their expected salary and pension increases and inflation. The assumptions used for this purpose in these financial statements are summarised below: Weighted Averages 31 Dec 2022 31 Dec 2021 31 Dec 2020 UK* Overseas UK** Overseas UK Overseas % pa % pa % pa % pa % pa % pa Inflation \u2013 RPI 3.4 n/a 3.4 n/a 3.1 n/a Inflation \u2013 CPI (pre-2030) 2.4 1.5 2.4 1.3 2.1 1.3 Inflation \u2013 CPI (post-2030) 3.4 1.5 3.4 1.3 3.1 1.3 Discount rate 4.8 3.0 1.9 0.8 1.4 0.4 Expected salary increases n/a 1.8 n/a 1.7 n/a 1.6 Rate of pension increases 3.3 0.5 3.3 0.7 3.1 0.7 * Assumptions based on 31 December 2022 market conditions and based on the weighted average of various buy-in policy assumptions. ** Assumptions based on 31 December 2021 UK market conditions excluding buy-ins.2022 2021 2020 Years Years Years Life expectancy (IMI Pension Fund only)*** Current male pensioners 21.5 21.8 21.8 Current female pensioners 23.9 24.1 24.6 Future male pensioners 22.8 23.1 23.5 Future female pensioners 25.4 25.6 26.4 *** Life expectancies are based on members with a pension size of \u00a35k-\u00a320k for male members and \u00a31k-\u00a38k for female members. The mortality assumptions used for the UK Funds above reflect its scheme specific experience, together with an allowance for improvements over time. The experience was reviewed as part of the formal triennial actuarial valuation carried out as at 31 March 2021. The assumptions used as at 31 December 2022 have been based on the results of this review, with the allowance for improvements over time updated to reflect the latest data available. The table below illustrates how the UK Funds\u2019 net pension surplus would decrease The table below shows how the net pension deficit for IMI\u2019s non-UK plans would (excluding the impact of inflation rate and interest rate hedging), as at 31 December increase, in the event of the following reasonable changes in the key 2022, in the event of the following reasonable changes in the key assumptions above. assumptions above. UK 2022 2021 Non-UK 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m Discount rate 0.1% pa lower* 5.0 11.0 Discount rate 0.1% pa lower 1.4 2.5 Inflation-linked pension increases 0.1% pa higher 4.0 0.0 Salary increases 0.1% higher 0.3 0.3 Increase of one year in life expectancy from age 65 10.0 18.0 Increase of one year in life expectancy at age 65 2.7 4.2 10% fall in non-bond-like assets** 11.0 37.0 * Due to the volatility of the discount rate year on year, sensitivities using a percentage of 0.1% are shown to provide the users of the accounts the ability to adjust the sensitivities as they consider necessary. ** Fund assets excluding cash, bonds and insurance policies. In each case all other assumptions are unchanged. Income statement In accordance with IAS 19, pension costs recorded through the income statement primarily represent the increase in the DBO based on employee service during the year and the interest on the net liability or surplus for DBOs in respect of employee service in previous years. The table below shows the cost reported in the income statement in respect of pension obligations (excluding defined benefit contributions): 2022 2021 Overseas Overseas Overseas Overseas post non-post post non-post UK employment employment Total UK employment employment Total \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Current service cost 4.5 0.8 5.3 5.1 0.8 5.9 Settlement/curtailment gain - (0.4) (0.4) Recognition of gains (0.1) (0.1) - Pension expense/(income) - operating costs - 4.5 0.7 5.2 (0.4) 5.1 0.8 5.5 Interest on DBO 9.2 1.1 0.1 10.4 9.0 0.6 0.1 9.7 Interest on assets (11.5) (0.4) (11.9) (10.6) (0.1) (10.7) Interest (income)/expense \u2013 financing costs (2.3) 0.7 0.1 (1.5) (1.6) 0.5 0.1 Overall reconciliation of changes in the net (liability)/surplus for DBOs 2022 2021 Net DB Net DB Asset asset/ asset/ DBO Assets ceiling (liability) DBO Assets (liability) \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Brought forward at start of year (657.2) 719.7 - 62.5 (740.8) 718.8 (22.0) Income statement (charges)/credits Current service cost (5.3) (5.3) (5.9) (5.9) Settlements 1.2 (1.2) - 25.3 (24.9) 0.4 Net interest (cost)/income on net DB (liability)/asset (10.4) 11.9 1.5 (9.7) 10.7 1.0 Immediate recognition of gains/(losses) \u2013 other long-term benefits 0.1 0.1 - Total charged to income statement (14.4) 10.7 - (3.7) 9.7 (14.2) (4.5) Remeasurements recognised in other comprehensive income Actuarial (loss)/gain due to actuarial experience (3.3) (3.3) 5.0 5.0 Actuarial gain due to financial assumption changes 241.6 241.6 41.9 41.9 Actuarial gain due to demographic assumption changes 2.2 2.2 8.6 8.6 Return on plan assets* less than discount rate (317.8) (317.8) 15.4 15.4 Change in asset ceiling (5.4) (5.4) - Total remeasurements recognised in other comprehensive income 240.5 (317.8) (5.4) (82.7) 55.5 15.4 70.9 Cash flows in the year Employer contributions 2.9 2.9 9.7 9.7 Employee contributions (2.3) 2.3 - (2.2) 2.2 - Benefits paid directly by the Company 5.3 5.3 4.1 4.1 Benefits paid from plan assets 13.6 (13.6) - 10.8 (10.8) - Net cash inflow/(outflow) 16.6 (8.4) - 8.2 12.7 1.1 13.8 Other movements Changes in exchange rates (10.9) 8.0 (0.3) (3.2) 5.7 (1.4) 4.3 Total other movements (10.9) 8.0 (0.3) (3.2) 5.7 (1.4) 4.3 Carried forward at end of year (425.4) 412.2 (5.7) (18.9) (657.2) 719.7 62.5 * Net of management costs .",
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"concept": "ifrs-full:DisclosureOfEmployeeBenefitsExplanatory",
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"fact-379": {
"value": "Accounting policy i. Defined contribution (\u2018DC\u2019) pension plans Arrangements where the employer pays fixed contributions into an external fund on behalf of the employee (who is responsible for making the investment decision and therefore assumes the risks and rewards of fund performance). Contributions to defined contribution pension plans are recognised as an expense in the income statement as incurred. ii. Defined benefit (\u2018DB\u2019) pension plans A defined benefit pension plan is a pension arrangement in which the employer promises a specified annual benefit on retirement that is pre-determined by a formula based on the employee's earnings history, tenure of service and age, rather than depending directly on individual investment returns. In some cases, this benefit is paid as a lump sum on leaving the Company or while in the service of the Company rather than as a pension. The Group underwrites one or more risks in meeting these obligations and therefore any net liability or surplus in these arrangements is shown on the Group balance sheet. The Group\u2019s net obligation in respect of defined benefit pension plans is calculated separately for each plan by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets are deducted. Past service costs are recognised in profit or loss on the earlier of the date of the plan amendment or curtailment, and the date that the Group recognises restructuring-related costs. The discount rate is the yield at the balance sheet date on high quality corporate bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. The calculation is performed by a qualified actuary using the projected unit credit method. At each year end the Company and the local actuaries consider whether the plans are affected by the asset ceiling requirements. When the calculation results in a net asset to the Group, the recognised asset is limited to the present value of any future refunds from the plan or reductions in future contributions to the plan and restricted by any relevant asset ceiling. Any deduction made by the tax authorities in the event of a refund of a surplus would be regarded by the Group as an income tax. When the benefits of a plan are improved, the expense is recognised immediately in the income statement. Re-measurement gains and losses are recognised immediately in equity and disclosed in the statement of comprehensive income. iii. Long-term service and other post-employment benefits The Group\u2019s net obligation in respect of long-term service and other post-employment benefits, other than pension plans, is the amount of future benefit that employees have earned in return for their service in the current and prior periods. The obligation is calculated using the projected unit credit method and is discounted to its present value and the fair value of any related assets is deducted. The discount rate is the yield at the balance sheet date on high quality bonds of the appropriate currency that have durations approximating those of the Group\u2019s obligations. Key source of estimation uncertainty Key source of estimation uncertainty \u2013The present value of the Group\u2019s defined benefit pension plans and other post-employment benefits are determined using actuarial valuations. An actuarial valuation involves making various assumptions that may differ from actual developments in the future. These include the determination of the discount rate, inflation, future salary increases, mortality rates and future pension increases. The assumptions used and analysis of their sensitivity is set out below. Due to the complexity of the valuation and its long-term nature, a defined benefit obligation is highly sensitive to changes in these assumptions. ",
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"concept": "ifrs-full:DescriptionOfAccountingPolicyForEmployeeBenefitsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
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"fact-350": {
"value": "15. Inventories Accounting policy Inventories are valued at the lower of cost and net realisable value. Due to the varying nature of the Group\u2019s operations, both first in, first out and weighted average methodologies are employed. In respect of work in progress and finished goods, cost includes all direct costs of production and the appropriate proportion of production overheads. The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications, there is a risk of products requiring modification, which can lead to excess or obsolete inventory. The amount of inventory provision recognised is disclosed below: Inventories 2022 2021 \u00a3m \u00a3m Raw materials and consumables 169.0 135.4 Work in progress 136.7 107.0 Finished goods 110.6 92.8 416.3 335.2 Inventories are stated after: Allowance for impairment 52.5 46.2 In 2022, the cost of inventories recognised as an expense (being segmental cost of sales) amounted to \u00a31,112.1m (2021: \u00a31,004.6m). In 2022, the write-down of inventories to net realisable value amounted to \u00a30.1m (2021: \u00a30.4m). The reversal of write-downs amounted to \u00a3nil (2021: \u00a3nil). Write-downs and reversals in both years relate to ongoing assessments of inventory obsolescence, excess inventory holding and inventory resale values across all of the Group\u2019s businesses. ",
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"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-380": {
"value": "Accounting policy Inventories are valued at the lower of cost and net realisable value. Due to the varying nature of the Group\u2019s operations, both first in, first out and weighted average methodologies are employed. In respect of work in progress and finished goods, cost includes all direct costs of production and the appropriate proportion of production overheads. The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications, there is a risk of products requiring modification, which can lead to excess or obsolete inventory. The amount of inventory provision recognised is disclosed below: ",
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"concept": "ifrs-full:DescriptionOfAccountingPolicyForMeasuringInventories",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
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"fact-351": {
"value": "16. Trade and other receivables Accounting policy The recoverable amount of the Group\u2019s receivables other than financial assets held at fair value is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration of less than one year are not discounted. The expected credit loss is calculated based on the ageing of individual customers receivables, giving consideration to the geographical location in which they operate, historical collectability and the customer\u2019s financial position, where this information is known. The maximum exposure to credit risk for trade receivables at the reporting date by Trade and other receivables segment was as follows: 2022 2021 Carrying amount \u00a3m \u00a3m 2022 2021 Current \u00a3m \u00a3m Trade receivables 368.5 325.4 IMI Precision Engineering 164.2 128.3 Prepayments* 23.6 29.6 IMI Critical Engineering 147.1 153.8 Accrued income* 2.3 0.3 IMI Hydronic Engineering 57.2 43.3 Other receivables 90.5 58.7 368.5 325.4 484.9 414.0 Receivables are stated after: Impairment provisions for trade receivables Allowance for impairment 16.4 15.7 The ageing of trade receivables at the reporting date was: * 'Prepayments' and 'Accrued income' are now disclosed separately given their quantum. Prior period comparatives have been re-presented. 2022 2021 Gross Impairment Gross Impairment Credit risk \u00a3m \u00a3m \u00a3m \u00a3m Credit risk is the risk of financial loss to the Group if a customer or counterparty to Not past due 317.0 (0.1) 285.8 (0.3) a financial instrument fails to meet its contractual obligations, and arises principally Past due 1-30 days 30.7 (0.9) 24.5 (1.0) from the Group\u2019s receivables from customers, cash and cash equivalents held by Past due 31-90 days 14.4 (0.9) 9.2 (1.1) the Group\u2019s banks and other financial assets. At the end of 2022 these totalled Past due over 90 days 22.8 (14.5) 21.6 (13.3) \u00a3526.1m (2021: \u00a3446.0m). Total 384.9 (16.4) 341.1 (15.7) Managing credit risk arising from customers The Group\u2019s exposure to credit risk is influenced mainly by the individual The net movement in the allowance for impairment in respect of trade receivables characteristics of each customer. The demographics of the Group\u2019s customer base, during the year was as follows: including the default risk of the industry and country in which customers operate, have less of an influence on credit risk. Our largest single customer accounted for 2% of our 2022 revenues (2021: 3%). 2022 2021 \u00a3m \u00a3m Geographically there is no unusual concentration of credit risk. The Group\u2019s contract Net balance at 1 January 15.7 19.5 approval procedure ensures that large contracts are signed off at executive director level at which time the risk profile of the contract, including potential credit and Acquisitions (0.4) (0.1) foreign exchange risks, is reviewed. Credit risk is minimised through due diligence on Utilised during the year 2.0 (3.0) potential customers, appropriate credit limits, cash flow management and the use Charged to the income statement (0.1) 1.7 of documentary credits where appropriate. Released (1.6) (1.3) Exchange 0.8 (1.1) Exposure to credit risk in respect of trade receivables Net balance at 31 December 16.4 15.7 Carrying amount Managing credit risk arising from counterparties 2022 2021 A group of relationship banks provides the bulk of the banking services, with \u00a3m \u00a3m pre-approved credit limits set for each institution. Financial derivatives are entered into with these core banks and the credit exposure to these instruments UK 18.1 12.9 is included when considering the credit exposure to the counterparties. At the end Germany 33.0 24.9 of 2022, credit exposure including cash deposited did not exceed \u00a316.0m with any Rest of Europe 98.3 83.3 single institution (2021: \u00a315.8m). USA 75.7 62.5 Asia Pacific 95.6 93.4 Rest of World 47.8 48.4 368.5 325.4 ",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"fact-381": {
"value": "Accounting policy The recoverable amount of the Group\u2019s receivables other than financial assets held at fair value is calculated as the present value of expected future cash flows, discounted at the original effective interest rate inherent in the asset. Receivables with a short duration of less than one year are not discounted. The expected credit loss is calculated based on the ageing of individual customers receivables, giving consideration to the geographical location in which they operate, historical collectability and the customer\u2019s financial position, where this information is known. ",
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"concept": "ifrs-full:DescriptionOfAccountingPolicyForTradeAndOtherReceivablesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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"fact-352": {
"value": "17. Financial assets and liabilities Financial instruments included in the financial statements are measured at either fair value or amortised cost. The measurement of this fair value can in some cases be subjective, and can depend on the inputs used in the calculations. The Group generally calculates its own fair values using comparable observed market prices and a valuation model using the respective and relevant market data for the instrument being valued. The table below sets out the Group's accounting classification of each class of financial assets and liabilities, and their fair values at 31 December 2022 and 31 December 2021. Under IFRS 9, all derivative financial instruments not in a hedge relationship are classified as derivatives at fair value through the income statement. The Group does not use derivatives for speculative purposes and transacts all derivatives with suitable investment grade counterparties. All transactions in derivative financial instruments are undertaken to manage the risks arising from the Group\u2019s business activities. Other Financial At Total Designated derivatives assets at amortised carrying Fair value at fair value at fair value fair value* cost value if different \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m 2022 Cash and cash equivalents 133.0 133.0 Bank overdrafts (93.8) (93.8) Borrowings due within one year (150.1) (150.1) (150.1 ) Borrowings due after one year (595.4) (595.4) (554.2 ) Lease liabilities (105.7) (105.7) Trade and other payables** (447.6) (447.6) Trade receivables 368.5 368.5 Investments 2.0 2.0 Other current financial assets/(liabilities) Derivative assets*** 15.7 15.7 Derivative liabilities**** (3.9) (9.9) (13.8) Total (3.9) 5.8 135.0 (1,024.1) (887.2) 2021 Cash and cash equivalents 94.6 94.6 Bank overdrafts (65.5) (65.5) Borrowings due within one year (127.7) (127.7) (128.3 ) Borrowings due after one year (430.3) (430.3) (446.6 ) Lease liabilities (93.9) (93.9) Trade and other payables** (406.9) (406.9) Trade receivables 325.4 325.4 Investments 2.9 2.9 Other current financial assets/(liabilities) Derivative assets*** 4.9 5.1 10.0 Derivative liabilities**** (6.3) (6.3) Total 4.9 (1.2) 97.5 (798.9) (697.7) * This classification includes items for which the movement in fair value will be recognised in both profit and loss and other comprehensive income. ** Trade and other payables exclude corporation tax and include liabilities of \u00a39.9m (2021: \u00a36.5m) falling due after more than one year. *** Includes \u00a32.6m (2021: \u00a30.1m) falling due after more than one year. **** Derivative liabilities include liabilities of \u00a30.4m (2021: \u00a30.2m) falling due after more than one year: \u00a30.4m in 1-2 years and \u00a3nil in 2-3 years (2021: \u00a30.1m in 1-2 years and \u00a30.1m in 2-3 years). Derivative liabilities designated at fair value represent the fair value of unsettled net investment hedge derivatives. The decrease in value of net investment hedge derivatives in the year of \u00a38.8m is shown in the consolidated statement of comprehensive income. The increase in other derivative assets and liabilities at fair value of \u00a37.0m is recognised in the income statement and consists of a \u00a37.8m increase of unsettled net foreign currency and metal forward contracts, which are not designated as hedges for accounting purposes and a decrease of \u00a30.8m of forward contracts to be utilised against specific trade receivables and trade payables. There are no other financial liabilities included within payables disclosed above. Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The following table shows the Group's financial instruments held at fair value (excluding cash): Quoted prices in active markets Significant for identical other assets and observable Unobservable liabilities inputs inputs Level 1 Level 2 Level 3 Total \u00a3m \u00a3m \u00a3m \u00a3m As at 31 December 2022 Financial assets measured at fair value Equity instruments* 2.0 2.0 Foreign currency forward contracts 15.7 15.7 2.0 15.7 7.7 Financial liabilities measured at fair value Foreign currency forward contracts (13.8) (13.8) (13.8) (13.8) As at 31 December 2021 Financial assets measured at fair value Equity instruments* 2.9 2.9 Foreign currency forward contracts 10.0 10.0 2.9 10.0 12.9 Financial liabilities measured at fair value Foreign currency forward contracts (6.3) (6.3) (6.3) (6.3) * Equity instruments primarily relate to investments in funds in order to satisfy long-term benefit arrangements. Valuation techniques for level 2 inputs Derivative assets and liabilities of \u00a315.7m and \u00a313.8m respectively are valued by level 2 techniques. The valuations are derived from discounted contractual cash flows using observable, and directly relevant, market interest rates and foreign exchange rates from market data providers. Valuation techniques for level 3 inputs At 31 December 2022, the Group held one external investment at fair value using significant unobservable (level 3) inputs. The valuation is derived using the cash flows of the investment which indicate a fair value of \u00a3nil. Valuation methodology Cash and cash equivalents, bank overdrafts, trade payables and trade receivables are carried at their book values as this approximates to their fair value due to the short-term nature of the instruments. Long-term and short-term borrowings, apart from any which are subject to hedging arrangements, are carried at amortised cost as it is the intention that they will not be repaid prior to maturity, where this option exists. The fair values are evaluated by the Group based on parameters such as interest rates and relevant credit spreads. Long-term borrowings which are subject to hedging arrangements are valued using appropriate discount rates to value the relevant hedged cash flows. Derivative assets and liabilities, including foreign exchange forward contracts, interest rate swaps and metal hedges, are valued using comparable observed market prices and a valuation model using foreign exchange spot and forward rates, interest rate curves and forward rate curves for the underlying commodities. 17. Financial assets and liabilities (continued) ",
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"fact-382": {
"value": "Fair value hierarchy The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The following table shows the Group's financial instruments held at fair value (excluding cash): Quoted prices in active markets Significant for identical other assets and observable Unobservable liabilities inputs inputs Level 1 Level 2 Level 3 Total \u00a3m \u00a3m \u00a3m \u00a3m As at 31 December 2022 Financial assets measured at fair value Equity instruments* 2.0 2.0 Foreign currency forward contracts 15.7 15.7 2.0 15.7 7.7 Financial liabilities measured at fair value Foreign currency forward contracts (13.8) (13.8) (13.8) (13.8) As at 31 December 2021 Financial assets measured at fair value Equity instruments* 2.9 2.9 Foreign currency forward contracts 10.0 10.0 2.9 10.0 12.9 Financial liabilities measured at fair value Foreign currency forward contracts (6.3) (6.3) (6.3) (6.3) * Equity instruments primarily relate to investments in funds in order to satisfy long-term benefit arrangements. Valuation techniques for level 2 inputs Derivative assets and liabilities of \u00a315.7m and \u00a313.8m respectively are valued by level 2 techniques. The valuations are derived from discounted contractual cash flows using observable, and directly relevant, market interest rates and foreign exchange rates from market data providers. Valuation techniques for level 3 inputs At 31 December 2022, the Group held one external investment at fair value using significant unobservable (level 3) inputs. The valuation is derived using the cash flows of the investment which indicate a fair value of \u00a3nil. Valuation methodology Cash and cash equivalents, bank overdrafts, trade payables and trade receivables are carried at their book values as this approximates to their fair value due to the short-term nature of the instruments. Long-term and short-term borrowings, apart from any which are subject to hedging arrangements, are carried at amortised cost as it is the intention that they will not be repaid prior to maturity, where this option exists. The fair values are evaluated by the Group based on parameters such as interest rates and relevant credit spreads. Long-term borrowings which are subject to hedging arrangements are valued using appropriate discount rates to value the relevant hedged cash flows. Derivative assets and liabilities, including foreign exchange forward contracts, interest rate swaps and metal hedges, are valued using comparable observed market prices and a valuation model using foreign exchange spot and forward rates, interest rate curves and forward rate curves for the underlying commodities. ",
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"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
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},
"fact-353": {
"value": "18. Financial risk management Overview The Group\u2019s activities expose it to a variety of financial risks: interest rate, foreign exchange and base metal price movements in addition to funding and liquidity risks. The financial instruments used to manage these risks themselves introduce exposure to market risk and liquidity risk. The Board has overall responsibility for the establishment and oversight of the Group\u2019s risk management framework. As described in the Corporate Governance Report on page 101 the Executive Committee monitors risk and internal controls and the Audit Committee monitors financial risk, while the other Board committees also play a part in contributing to the oversight of risk. The Audit Committee oversees how management monitors compliance with the Group\u2019s financial risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the financial risks faced by the Group. The Group Assurance department undertakes both regular and ad-hoc reviews of risk management controls and procedures, the results of which are reported to the Audit Committee. The following sections discuss the management of specific financial risk factors in detail, including market risk, foreign exchange risk, interest rate risk, commodity risk and liquidity risk. The management of credit risk is disclosed in Note 16. Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the Group\u2019s income and cash flows or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. Under the management of the central Treasury function, the Group enters into derivatives in the ordinary course of business and also manages financial liabilities in order to mitigate market risks. All such transactions are carried out within the guidelines set by the Board and are undertaken only if they relate to underlying exposures. Foreign exchange risk The Group publishes consolidated accounts in sterling but conducts much of its global business in other currencies. As a result it is subject to the risks associated with foreign exchange movements affecting transaction costs (\u2018transactional risk\u2019), translation of foreign profits (\u2018profit translation risk\u2019) and translation of the underlying net assets of foreign operations (\u2018asset translation risk\u2019). Management of transactional risk The Group\u2019s wide geographical spread both in terms of cost base and customer locations helps to reduce the impact on profitability of swings in exchange rates as well as creating opportunities for central netting of exposures. It is the Group\u2019s policy to minimise risk to exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using currency instruments (primarily forward exchange contracts). A proportion of forecast exposures are hedged depending on the level of confidence and hedging is periodically adjusted following regular reviews. On this basis over 50% of the Group\u2019s annual exposures to transactional risk are likely to be hedged at any point in time and the Group\u2019s net transactional exposure to different currencies varies from time to time. Management of profit translation risk The Group is exposed to the translation of profits denominated in foreign currencies into the sterling-based income statement. The interest cost related to the currency liabilities hedging the asset base provides a partial hedge to this exposure. Short-term currency option contracts may be used to provide limited protection against sterling strength on an opportunistic basis. The translation of US dollar and euro-based profits represent the most significant translation exposures for the Group. Management of asset translation risk The Group hedges its net investments in its major overseas operations by way of external currency loans and forward currency contracts. The intention is to manage the Group's exposure to gains and losses in Group equity resulting from retranslation of currency net assets at balance sheet dates. To the extent that an instrument used to hedge a net investment in a foreign operation is determined to be an effective hedge, the gain or loss arising is recognised directly in the translation reserves. Any ineffective portion is recognised immediately in the income statement. The Group have designated \u00a3288m (2021: \u00a3360m) of loans in a net investment hedge of USD net assets and \u00a3381m (2021: \u00a3193m) of EUR net assets. No ineffectiveness was recorded (2021: nil) and a loss of \u00a38.8m (2021: \u00a30.5m loss) was taken to the translation reserve. The amount accumulated in this reserve in respect of gains/losses arising on hedging instruments designated in net investment hedges up to 31 December 2022 was an accumulated loss of \u00a31.2m (2021: accumulated profit of \u00a37.6m). Currency profile of assets and liabilities liabilities subject Lease Exchange to interest Other Total Total Cash* Debt liabilities contracts rate risk net assets** net assets net assets 2022 2022 2022 2022 2022 2022 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Sterling (68) (77) (16) 209 48 143 191 207 US dollar (4) (288) (9) (301) 669 368 178 Euro 52 (381) (31) (106) (466) 530 64 163 Other 59 (50) (103) (94) 377 283 231 Total 39 (746) (106) - (813) 1,719 906 779 * Cash is stated net of overdrafts. ** Other net assets includes leased assets: \u00a314.9m Sterling (2021: \u00a316.5m), \u00a38.1m US Dollar (2021: \u00a310.6m), \u00a333.3m Euro (2021: \u00a315.5m) and \u00a350.7m Other (2021: \u00a348.9m). Exchange contracts and non-sterling debt are financial instruments used as currency hedges of overseas net assets. Interest rate risk The Group is exposed to a number of global interest rates through assets and liabilities denominated in jurisdictions to which these rates are applied, most notably US, Eurozone and UK rates. The Group is exposed to these because market movements in these rates will increase or decrease the interest charge recognised in the Group income statement. Management of interest rate risk The Group adopts a policy of maintaining a portion of its liabilities at fixed interest rates and reviewing the balance of the floating rate exposure to ensure that if interest rates rise globally the effect on the Group\u2019s income statement is manageable. Interest rates are managed using fixed and floating rate debt and financial instruments including interest rate swaps. Floating rate liabilities comprise short-term debt which bears interest at short-term bank rates and the liability side of exchange contracts where the interest element is based primarily on three-month inter-bank rates. All cash surpluses are invested for short periods and are treated as floating rate investments. Non-interest bearing financial assets and liabilities including short-term trade receivables and payables have been excluded from the following analysis. 18. Financial risk management (continued) Interest rate risk profile The following table shows how much of our cash, interest-bearing liabilities and exchange contracts attract both fixed and floating rate interest charges, and how this is analysed between currencies: Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts* contracts rate risk* rate rate fixed for which 2022 2022 2022 2022 2022 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (94) 141 47 47 US dollar (297) (4) (301) (136) (165) 3.9 3.6 Euro (517) 52 (465) (84) (381) 2.3 5.0 Other (153) 59 (94) (94) Total (1,061) 248 (813) (267) (546) * Net of lease liabilities; \u00a316m Sterling, \u00a39m US Dollar, \u00a331m Euro and \u00a350m Other. Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts** contracts rate risk** rate rate fixed for which 2021 2021 2021 2021 2021 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (20) 19 (1) (1) US dollar (371) 196 (175) (15) (160) 4.1 4.4 Euro (440) 41 (399) (206) (193) 1.4 4.3 Other (142) 94 (48) (48) Total (973) 350 (623) (270) (353) ** Net of lease liabilities; \u00a317m Sterling, \u00a311m US Dollar, \u00a315m Euro and \u00a351m Other. Market risk sensitivity analysis on financial instruments In estimating the sensitivity of the financial instruments all other variables are held constant to determine the impact on profit before tax and equity. The analysis is for illustrative purposes only, as in practice market rates rarely change in isolation. The values shown in the table below are estimates of the impact on financial instruments only. Actual results in the future may differ materially from these estimates. As such this table should not be considered as a projection of likely future gains and losses in these financial instruments. Sensitivity table The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the specified changes occur only to the financial derivatives and do not reflect the opposite movement from the impact of the specific change on the underlying business that they are designed to hedge. 1% 1% 10% 10% decrease increase 10% 10% decrease in increase in in interest in interest weakening strengthening base metal base metal rates rates in sterling in sterling costs costs \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m At 31 December 2022 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 Impact on equity: (loss)/gain (77.2) 77.2 At 31 December 2021 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 0.2 (0.2) Impact on equity: (loss)/gain (53.7) 53.7 Commodity risk The Group\u2019s operating companies purchase metal and metal components and are therefore exposed to changes in commodity prices. The Group manages this exposure through a centralised process hedging copper, zinc and aluminium using a combination of financial contracts and local supply agreements designed to minimise the volatility of short-term margins. Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Management of liquidity risk The Group\u2019s approach to managing liquidity is to ensure, as far as possible, that it will always have adequate resources to meet its liabilities when they fall due, with sufficient headroom to cope with abnormal market conditions. This position is reviewed on a quarterly basis. Funding for the Group is co-ordinated centrally by the Treasury function and comprises committed bilateral facilities with a core group of banks, and a series of US loan note issues. The level of facilities is maintained such that facilities and term loans exceed the forecast peak gross debt of the Group over a rolling 12-month view by an appropriate amount taking into account market conditions and corporate activity, including acquisitions, organic growth plans and share buybacks. In addition, we undertake regular covenant compliance reviews to ensure that we remain fully within those covenant limits. At the end of 2022 the Group had undrawn committed facilities totaling \u00a3200m (2021: \u00a3230m) and was holding cash and cash equivalents of \u00a3133m (2021: \u00a395m). There are no significant seasonal funding requirements or capital intensive investment areas for the Group. Capital management Overview Capital management concerns the decision as to how the Group\u2019s activities are financed and specifically, how much of the Group capital is provided by borrowings (or debt) and how much of it is financed with equity raised from the issue of share capital. The Board\u2019s policy is to maintain a balance sheet with a broad capital base and the strength to sustain the future development of the business including acquisitions. The capital base of the Group includes total equity and reserves and net debt. Employee benefit obligations net of deferred tax form part of the extended capital base. Management of this element of the capital base is discussed further in Note 14 of the financial statements. Undrawn committed funding facilities are maintained as described in Note 19 to provide additional capital for growth (including acquisitions and organic investments) and liquidity requirements as discussed above. Capital base 2022 2021 \u00a3m \u00a3m Total equity 906 779 Gross debt including overdrafts 839 624 Gross cash (133) (95) Capital base 1,612 1,308 Employee benefits and deferred tax assets 53 169 Extended capital base 1,665 1,477 Undrawn funding facilities 200 230 Available capital base 1,865 1,707 Part of the capital base is held in currencies to broadly match the currency base of the assets being funded as described in the asset translation risk section. Debt or equity The balance between debt and equity in the capital base of the Group is considered regularly by the Board in light of market conditions, business forecasts, growth opportunities and the ratio of net debt to adjusted EBITDA. Funding covenants currently limit net debt to a maximum of 3.0 times EBITDA. The net debt to EBITDA ratio at the end of 2022 was 1.8 times (2021: 1.5 times). Through the life of our five-year plan, the Board would consider appropriate acquisitions that could take net debt up to 2.5 times EBITDA on acquisition, provided that a clear plan exists to reduce this ratio back to under 2.0 times. It is expected that at these levels our debt would continue to be perceived as investment grade. The potential benefits to equity shareholders of greater leverage are offset by higher risk and the cost and availability of funding. The Board will consider raising additional equity in the event that it is required to support the capital base of the Group. Weighted average cost of capital The Group currently uses a post-tax weighted average cost of capital (\u2018WACC\u2019) of 8% (2021: 7%) as a benchmark for investment returns. This is reviewed regularly in the light of changes in market rates. The Board tracks the Group\u2019s return on invested capital and seeks to ensure that it consistently delivers returns in excess of the WACC. 18. Financial risk management (continued) ",
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"fact-383": {
"value": "Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and commodity prices will affect the Group\u2019s income and cash flows or the value of its financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters. Under the management of the central Treasury function, the Group enters into derivatives in the ordinary course of business and also manages financial liabilities in order to mitigate market risks. All such transactions are carried out within the guidelines set by the Board and are undertaken only if they relate to underlying exposures. Market risk sensitivity analysis on financial instruments In estimating the sensitivity of the financial instruments all other variables are held constant to determine the impact on profit before tax and equity. The analysis is for illustrative purposes only, as in practice market rates rarely change in isolation. The values shown in the table below are estimates of the impact on financial instruments only. Actual results in the future may differ materially from these estimates. As such this table should not be considered as a projection of likely future gains and losses in these financial instruments. Sensitivity table The outputs from the sensitivity analysis are estimates of the impact of market risk assuming that the specified changes occur only to the financial derivatives and do not reflect the opposite movement from the impact of the specific change on the underlying business that they are designed to hedge. 1% 1% 10% 10% decrease increase 10% 10% decrease in increase in in interest in interest weakening strengthening base metal base metal rates rates in sterling in sterling costs costs \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m At 31 December 2022 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 Impact on equity: (loss)/gain (77.2) 77.2 At 31 December 2021 Impact on income statement: gain/(loss) 2.0 (2.0) (11.3) 11.3 0.2 (0.2) Impact on equity: (loss)/gain (53.7) 53.7 ",
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"fact-384": {
"value": "Foreign exchange risk The Group publishes consolidated accounts in sterling but conducts much of its global business in other currencies. As a result it is subject to the risks associated with foreign exchange movements affecting transaction costs (\u2018transactional risk\u2019), translation of foreign profits (\u2018profit translation risk\u2019) and translation of the underlying net assets of foreign operations (\u2018asset translation risk\u2019). Management of transactional risk The Group\u2019s wide geographical spread both in terms of cost base and customer locations helps to reduce the impact on profitability of swings in exchange rates as well as creating opportunities for central netting of exposures. It is the Group\u2019s policy to minimise risk to exchange rate movements affecting sales and purchases by economically hedging or netting currency exposures at the time of commitment, or when there is a high probability of future commitment, using currency instruments (primarily forward exchange contracts). A proportion of forecast exposures are hedged depending on the level of confidence and hedging is periodically adjusted following regular reviews. On this basis over 50% of the Group\u2019s annual exposures to transactional risk are likely to be hedged at any point in time and the Group\u2019s net transactional exposure to different currencies varies from time to time. Management of profit translation risk The Group is exposed to the translation of profits denominated in foreign currencies into the sterling-based income statement. The interest cost related to the currency liabilities hedging the asset base provides a partial hedge to this exposure. Short-term currency option contracts may be used to provide limited protection against sterling strength on an opportunistic basis. The translation of US dollar and euro-based profits represent the most significant translation exposures for the Group. Management of asset translation risk The Group hedges its net investments in its major overseas operations by way of external currency loans and forward currency contracts. The intention is to manage the Group's exposure to gains and losses in Group equity resulting from retranslation of currency net assets at balance sheet dates. To the extent that an instrument used to hedge a net investment in a foreign operation is determined to be an effective hedge, the gain or loss arising is recognised directly in the translation reserves. Any ineffective portion is recognised immediately in the income statement. The Group have designated \u00a3288m (2021: \u00a3360m) of loans in a net investment hedge of USD net assets and \u00a3381m (2021: \u00a3193m) of EUR net assets. No ineffectiveness was recorded (2021: nil) and a loss of \u00a38.8m (2021: \u00a30.5m loss) was taken to the translation reserve. The amount accumulated in this reserve in respect of gains/losses arising on hedging instruments designated in net investment hedges up to 31 December 2022 was an accumulated loss of \u00a31.2m (2021: accumulated profit of \u00a37.6m). Currency profile of assets and liabilities Assets and liabilities subject Lease Exchange to interest Other Total Total Cash* Debt liabilities contracts rate risk net assets** net assets net assets 2022 2022 2022 2022 2022 2022 2022 2021 \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m Sterling (68) (77) (16) 209 48 143 191 207 US dollar (4) (288) (9) (301) 669 368 178 Euro 52 (381) (31) (106) (466) 530 64 163 Other 59 (50) (103) (94) 377 283 231 Total 39 (746) (106) - (813) 1,719 906 779 * Cash is stated net of overdrafts. ** Other net assets includes leased assets: \u00a314.9m Sterling (2021: \u00a316.5m), \u00a38.1m US Dollar (2021: \u00a310.6m), \u00a333.3m Euro (2021: \u00a315.5m) and \u00a350.7m Other (2021: \u00a348.9m). Exchange contracts and non-sterling debt are financial instruments used as currency hedges of overseas net assets. ",
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"fact-385": {
"value": "Interest rate risk The Group is exposed to a number of global interest rates through assets and liabilities denominated in jurisdictions to which these rates are applied, most notably US, Eurozone and UK rates. The Group is exposed to these because market movements in these rates will increase or decrease the interest charge recognised in the Group income statement. Management of interest rate risk The Group adopts a policy of maintaining a portion of its liabilities at fixed interest rates and reviewing the balance of the floating rate exposure to ensure that if interest rates rise globally the effect on the Group\u2019s income statement is manageable. Interest rates are managed using fixed and floating rate debt and financial instruments including interest rate swaps. Floating rate liabilities comprise short-term debt which bears interest at short-term bank rates and the liability side of exchange contracts where the interest element is based primarily on three-month inter-bank rates. All cash surpluses are invested for short periods and are treated as floating rate investments. Non-interest bearing financial assets and liabilities including short-term trade receivables and payables have been excluded from the following analysis. Interest rate risk profile The following table shows how much of our cash, interest-bearing liabilities and exchange contracts attract both fixed and floating rate interest charges, and how this is analysed between currencies: Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts* contracts rate risk* rate rate fixed for which 2022 2022 2022 2022 2022 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (94) 141 47 47 US dollar (297) (4) (301) (136) (165) 3.9 3.6 Euro (517) 52 (465) (84) (381) 2.3 5.0 Other (153) 59 (94) (94) Total (1,061) 248 (813) (267) (546) * Net of lease liabilities; \u00a316m Sterling, \u00a39m US Dollar, \u00a331m Euro and \u00a350m Other. Assets Weighted Debt and Cash and subject Weighted average exchange exchange to interest Floating Fixed average period contracts** contracts rate risk** rate rate fixed for which 2021 2021 2021 2021 2021 interest rate rate is fixed \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m % years Sterling (20) 19 (1) (1) US dollar (371) 196 (175) (15) (160) 4.1 4.4 Euro (440) 41 (399) (206) (193) 1.4 4.3 Other (142) 94 (48) (48) Total (973) 350 (623) (270) (353) ** Net of lease liabilities; \u00a317m Sterling, \u00a311m US Dollar, \u00a315m Euro and \u00a351m Other. ",
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"fact-386": {
"value": "Commodity risk The Group\u2019s operating companies purchase metal and metal components and are therefore exposed to changes in commodity prices. The Group manages this exposure through a centralised process hedging copper, zinc and aluminium using a combination of financial contracts and local supply agreements designed to minimise the volatility of short-term margins. ",
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"value": "Liquidity risk Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. Management of liquidity risk The Group\u2019s approach to managing liquidity is to ensure, as far as possible, that it will always have adequate resources to meet its liabilities when they fall due, with sufficient headroom to cope with abnormal market conditions. This position is reviewed on a quarterly basis. Funding for the Group is co-ordinated centrally by the Treasury function and comprises committed bilateral facilities with a core group of banks, and a series of US loan note issues. The level of facilities is maintained such that facilities and term loans exceed the forecast peak gross debt of the Group over a rolling 12-month view by an appropriate amount taking into account market conditions and corporate activity, including acquisitions, organic growth plans and share buybacks. In addition, we undertake regular covenant compliance reviews to ensure that we remain fully within those covenant limits. At the end of 2022 the Group had undrawn committed facilities totaling \u00a3200m (2021: \u00a3230m) and was holding cash and cash equivalents of \u00a3133m (2021: \u00a395m). There are no significant seasonal funding requirements or capital intensive investment areas for the Group. ",
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"fact-388": {
"value": "Capital management Overview Capital management concerns the decision as to how the Group\u2019s activities are financed and specifically, how much of the Group capital is provided by borrowings (or debt) and how much of it is financed with equity raised from the issue of share capital. The Board\u2019s policy is to maintain a balance sheet with a broad capital base and the strength to sustain the future development of the business including acquisitions. The capital base of the Group includes total equity and reserves and net debt. Employee benefit obligations net of deferred tax form part of the extended capital base. Management of this element of the capital base is discussed further in Note 14 of the financial statements. Undrawn committed funding facilities are maintained as described in Note 19 to provide additional capital for growth (including acquisitions and organic investments) and liquidity requirements as discussed above. Capital base 2022 2021 \u00a3m \u00a3m Total equity 906 779 Gross debt including overdrafts 839 624 Gross cash (133) (95) Capital base 1,612 1,308 Employee benefits and deferred tax assets 53 169 Extended capital base 1,665 1,477 Undrawn funding facilities 200 230 Available capital base 1,865 1,707 Part of the capital base is held in currencies to broadly match the currency base of the assets being funded as described in the asset translation risk section. Debt or equity The balance between debt and equity in the capital base of the Group is considered regularly by the Board in light of market conditions, business forecasts, growth opportunities and the ratio of net debt to adjusted EBITDA. Funding covenants currently limit net debt to a maximum of 3.0 times EBITDA. The net debt to EBITDA ratio at the end of 2022 was 1.8 times (2021: 1.5 times). Through the life of our five-year plan, the Board would consider appropriate acquisitions that could take net debt up to 2.5 times EBITDA on acquisition, provided that a clear plan exists to reduce this ratio back to under 2.0 times. It is expected that at these levels our debt would continue to be perceived as investment grade. The potential benefits to equity shareholders of greater leverage are offset by higher risk and the cost and availability of funding. The Board will consider raising additional equity in the event that it is required to support the capital base of the Group. Weighted average cost of capital The Group currently uses a post-tax weighted average cost of capital (\u2018WACC\u2019) of 8% (2021: 7%) as a benchmark for investment returns. This is reviewed regularly in the light of changes in market rates. The Board tracks the Group\u2019s return on invested capital and seeks to ensure that it consistently delivers returns in excess of the WACC. ",
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"fact-354": {
"value": "19. Net debt Net debt is the Group\u2019s key measure used to evaluate total outstanding debt, net of the current cash resources. Some of the Group\u2019s borrowings (and cash) are held in foreign currencies. Movements in foreign exchange rates affect the sterling value of the net debt. Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group\u2019s cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows. Movement in net debt 2022 2021 \u00a3m \u00a3m Adjusted EBITDA* 457.0 403.5 Working capital movements (85.1) (50.6) Capital and development expenditure (71.3) (57.5) Provisions and employee benefit movements** 1.5 (0.5) Principal elements of lease payments (32.3) (30.0) Other 20.2 9.0 Adjusted operating cash flow*** 290.0 273.9 Adjusting items (52.6) (35.6) Tax paid (48.6) (50.9) Interest (19.2) (12.1) Derivatives (8.6) 26.4 Additional pension scheme funding (3.5) (7.0) Free cash flow before corporate activity 157.5 194.7 Dividends paid to equity shareholders (62.2) (61.8) Acquisition of subsidiaries (213.3) (203.9) Disposal of subsidiaries - 0.1 Net purchase of own shares and share buyback programme (18.8) (225.6) Net cash flow (excluding debt movements) (136.8) (296.5) * Adjusted profit after tax \u00a3272.4m before interest \u00a317.7m, tax \u00a373.7m, depreciation \u00a374.2m, amortisation \u00a318.5m and impairment on property, plant and equipment and non-acquired intangible assets \u00a30.5m. ** Movement in provisions and employee benefits as per the statement of cash flows \u00a313.8m adjusted for the movement in the restructuring provisions \u00a315.3m. *** Adjusted operating cash flow is the cash generated from the operations shown in the statement of cash flows less cash spent acquiring property, plant and equipment, non-acquired intangible assets and investments; plus cash received from the sale of property, plant and equipment and the sale of investments, excluding the cash impact of adjusting items. This measure best reflects the operating cash flows of the Group. Reconciliation of net cash to movement in net debt 2022 2021 \u00a3m \u00a3m Net increase/(decrease) in cash and cash equivalents excluding foreign exchange 11.0 (86.7) Less: cash acquired/disposed (10.0) (1.8) Net drawdown of borrowings excluding foreign exchange and net debt disposed/acquired (137.8) (208.0) Increase in net debt before acquisitions, disposals and foreign exchange (136.8) (296.5) Net cash acquired/disposed 10.0 - Currency translation differences (50.6) (4.5) Movement in lease liabilities (11.8) (5.6) Movement in net debt in the year (189.2) (306.6) Net debt at the start of the year (622.8) (316.2) Net debt at the end of the year (812.0) (622.8 Reconciliation of adjusted operating cash flow to cash flow statement 2022 2021 \u00a3m \u00a3m Cash generated from operations 335.8 327.1 Principal lease payments (32.3) (30.0) Settlement of transactional derivatives 2.3 (5.9) Acquisition of property, plant and equipment and non-acquired intangibles (71.3) (57.5) Adjusting items 52.6 35.6 Proceeds from sale of property, plant and equipment 2.9 4.6 Adjusted operating cash flow 290.0 273.9 Reconciliation of cash and cash equivalents 2022 2021 \u00a3m \u00a3m Cash and cash equivalents in current assets 133.0 94.6 Bank overdraft in current liabilities (93.8) (65.5) Cash and cash equivalents 39.2 29.1 Analysis of net debt Borrowings and finance leases due Cash and cash within after more Lease Total equivalents one year than one year creditors net debt \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m At 1 January 2021 134.4 (362.3) (88.3) (316.2) Lease additions, extensions, terminations and payment changes (33.9) (33.9) Lease payments and interest 27.2 27.2 Cash flow excluding settlement of currency derivatives hedging balance sheet and net cash/debt disposed of/acquired (122.2) (126.7) (81.3) (330.2) Cash/debt acquired 1.8 (1.8) Settlement of currency derivatives hedging balance sheet 20.5 20.5 Currency translation differences (5.4) 0.8 13.3 1.1 9.8 At 31 December 2021 29.1 (127.7) (430.3) (93.9) (622.8) Lease additions, extensions, terminations and payment changes (41.4) (41.4) Lease payments and interest 32.3 32.3 Cash flow excluding settlement of currency derivatives hedging balance sheet and net cash/debt disposed of/acquired 2.5 (21.1) (123.1) (141.7) Cash/debt acquired 10.0 10.0 Settlement of currency derivatives hedging balance sheet (6.3) (6.3) Currency translation differences 3.9 (1.3) (42.0) (2.7) 42.1 At 31 December 2022 39.2 (150.1) (595.4) (105.7) (812.0) Undrawn committed facilities The Group has various undrawn committed borrowing facilities. The facilities available at 31 December in respect of which all conditions precedent had been met were as follows: 2022 2021 \u00a3m \u00a3m Expiring between one and two years 193.5 145.4 Expiring after more than two years 6.0 84.2 Total 199.5 229.6 The weighted average life of these facilities is 0.9 years (2021: 1.7 years). Terms and debt repayment schedule
The terms and conditions of cash and cash equivalents, outstanding loans, lease liabilities and derivative financial liabilities were as follows:
Effective Carrying Contractual 0 to 1 to 2 to 3 to 4 to 5 years
interest rate value cash flows <1 year <2 years <3 years <4 years <5 years and over
% \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2022
Cash and cash equivalents Floating 133.0 133.0 133.0
Revolving credit facilities Floating (100.5) (100.5) (100.5)
Term loan 2023 Floating (49.6) (49.6) (49.6)
Term loan 2024 Floating (49.6) (49.6) (24.8) (24.8)
US loan notes 2025 1.39% (132.7) (138.1) (1.8) (1.8) (134.5)
US loan notes 2026 3.86% (103.3) (119.3) (4.0) (4.0) (4.0) (107.3)
US loan notes 2027 3.92% (62.0) (74.0) (2.4) (2.4) (2.4) (2.4) (64.4)
US loan notes 2028 1.53% (70.8) (77.4) (1.1) (1.1) (1.1) (1.1) (1.1) (71.9 )
US loan notes 2029 3.30% (88.5) (108.8) (2.9) (2.9) (2.9) (2.9) (2.9) (94.3 )
US loan notes 2030 3.40% (88.5) (112.5) (3.0) (3.0) (3.0) (3.0) (3.0) (97.5 )
Bank overdrafts Floating (93.8) (93.8) (93.8)
Lease liabilities Various (105.7) (105.7) (25.8) (22.1) (15.8) (11.8) (9.9) (20.3 )
Derivative financial liabilities (13.8) (13.8) (13.4) (0.4)
Total (825.8) (910.1) (190.1) (62.5) (163.7) (128.5) (81.3) (284.0)
2021
Cash and cash equivalents Floating 94.6 94.6 94.6
Revolving credit facilities Floating (70.3) (70.3) (70.3)
Term loan 2024 Floating (133.3) (133.3) (44.4) (44.4) (44.5)
Acquired loan note (1.8) (1.8) (1.8)
US loan notes 2022 7.17% (11.1) (12.7) (12.7)
US loan notes 2025 1.39% (126.1) (133.3) (1.8) (1.8) (1.8) (127.9)
US loan notes 2026 3.86% (92.6) (110.6) (3.6) (3.6) (3.6) (3.6) (96.2)
US loan notes 2027 3.92% (55.6) (68.8) (2.2) (2.2) (2.2) (2.2) (2.2) (57.8)
US loan notes 2028 1.53% (67.2) (74.2) (1.0) (1.0) (1.0) (1.0) (1.0) (69.2)
Bank overdrafts Floating (65.5) (65.5) (65.5)
Lease liabilities Various (93.9) (93.9) (23.9) (18.3) (14.0) (9.2) (7.4) (21.1)
Derivative financial liabilities (6.3) (6.3) (6.1) (0.1) (0.1)
Total (629.1) (676.1) (138.7) (71.4) (67.2) (143.9) (106.8) (148.1)
Contractual cash flows include undiscounted committed interest cash flows and, where the amount payable is not fixed, the amount disclosed is determined by
reference to the conditions existing at the reporting date.
Changes in liabilities arising from financing activities
The table below details changes in the Group's liabilities arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing
activities are those for which cash flows were, or future cash flows will be, classified in the Group's consolidated cash flow statement as cash flows from financing
activities.
Financing Acquisition New
1 Jan 2022 cash flows* of subsidiary leases Exchange Other** 31 Dec 22
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2022
Revolving credit facilities (70.3) (35.0) 4.8 (100.5)
Term loan 2023 and 2024 (133.3) 24.0 10.1 (99.2)
Acquired loan (1.8) 1.8 -
US loan notes (352.6) (221.9) 28.7 (545.8)
Bank overdrafts (65.5) (28.3) (93.8)
Lease liabilities (93.9) 35.1 (41.4) (2.7) (2.8) (105.7)
Total (717.4) (224.3) - (41.4) 40.9 (2.8) (945.0)
Financing Acquisition New
1 Jan 2021 cash flows* of subsidiary leases Exchange Other** 31 Dec 21
\u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m \u00a3m
2021
Revolving credit facilities - (71.7) 1.4 (70.3)
Term loan 2024 - (136.2) 2.9 (133.3)
Acquired loan - (1.8) (1.8)
US loan notes (362.3) 9.7 (352.6)
Bank overdrafts (73.5) 8.0 (65.5)
Lease liabilities (88.3) 30.0 (33.9) 1.1 (2.8) (93.9)
Total (524.1) (169.9) (1.8) (33.9) 15.1 (2.8) (717.4)
* Financing cash flows exclude the impact of interest paid
** Includes IFRS 16 interest payments
Interest-bearing loans and borrowings
The Group borrows money from financial institutions in the form of bonds and other financial instruments. These generally have fixed interest rates and are for a fixed
term or are drawn from committed borrowing facilities that generally have floating interest rates. For more information about the Group\u2019s exposure to interest rate and
foreign currency risk, see Note 18.
2022 2021
\u00a3m \u00a3m
Current liabilities
Unsecured loan notes and other loans 150.1 127.7
Lease liabilities 25.8 23.9
Total 175.9 151.6
Non-current liabilities
Unsecured loan notes and other loans 595.4 430.3
Lease liabilities 79.9 70.0
Total 675.3 500.3
Non-cash changes
Non-cash changes
19. Net debt (continued)
",
"dimensions": {
"concept": "imiplc:DisclosureOfNetDebt",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-355": {
"value": " Accounting policy A provision is recorded instead of a payable when uncertainty exists over the timing and amount of the cash outflow. Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are valued at management\u2019s best estimate of the amount required to settle the present obligation at the balance sheet date. A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. The recognition of a provision requires estimation. The principal estimates made in respect of the Group\u2019s provisions using the best estimate methodology (with the exception of provisions indemnities as noted below) concern the timing and amount of payments required to: - cover the costs of known restructuring projects; - reimburse customers for potential product warranty claims; - ensure that current and former manufacturing sites meet relevant environmental standards; - reflect the estimated outcome of ongoing legal disputes; and - provide against indemnities following the disposal of subsidiaries. Analysis of the Group\u2019s provisions: Trade Environmental Restructuring warranties & legal Total \u00a3m \u00a3m \u00a3m \u00a3m Current 27.8 9.9 0.4 38.1 Non-current 3.8 8.6 5.9 18.3 At 1 January 2022 31.6 18.5 6.3 56.4 Arising during the year 28.9 2.0 3.0 33.9 Released during the year - - (2.5) (2.5) Utilised during the year (44.2) (3.2) - (47.4) Exchange adjustment 1.5 0.6 - 2.1 At 31 December 2022 17.8 17.9 6.8 42.5 Current 17.6 9.2 0.4 27.2 Non-current 0.2 8.7 6.4 15.3 17.8 17.9 6.8 42.5 Restructuring The restructuring provision reflects residual amounts committed but not spent in relation to a number of specific projects that are discussed further in Note 3, where the cost is a reliable estimate of the obligation. The opening balance of \u00a331.6m relates to a closure of a factory in Europe within our IMI Precision Engineering division and the Customer First project, which both simplify the structure of the division and ensures the business structure is aligned to our customer base. The utilised balance includes \u00a344.2m of cash settlements. Arising during the year primarily relates to the ongoing projects from prior year. The provision as at 31 December 2022 of \u00a317.8m primarily relates to the expected redundancy payments for facility closures with the majority of the resulting outflow expected during 2023. Trade warranties The Group sells a wide range of highly technical products and whilst they are designed and engineered to a high degree of precision and to customer specifications, there is a risk of products requiring modification, which can lead to warranty claims. Trade warranties are given in the normal course of business and cover a range of periods, typically one to two years, with the expected amounts falling due in less than and greater than one year separately analysed above. The provision represents the directors\u2019 best estimate of the Group\u2019s liability based on past experience. Environmental & legal Environmental and legal provisions recognise the Group's obligation to remediate contaminated land at a number of current and former sites, together with current legal cases for which a settlement is considered probable. Due to the long-term nature of the liabilities, the timescales are uncertain and the provisions represent the directors' best estimates of these costs. 20. Provisions ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfProvisionsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-389": {
"value": "Accounting policy A provision is recorded instead of a payable when uncertainty exists over the timing and amount of the cash outflow. Provisions are recognised when: the Group has a present legal or constructive obligation as a result of past events; it is probable that an outflow of resources will be required to settle the obligation; and the amount can be reliably estimated. Provisions are valued at management\u2019s best estimate of the amount required to settle the present obligation at the balance sheet date. A provision for restructuring is recognised when the Group has approved a detailed and formal restructuring plan, and the restructuring has either commenced or has been announced publicly. The recognition of a provision requires estimation. The principal estimates made in respect of the Group\u2019s provisions using the best estimate methodology (with the exception of provisions indemnities as noted below) concern the timing and amount of payments required to: - cover the costs of known restructuring projects; - reimburse customers for potential product warranty claims; - ensure that current and former manufacturing sites meet relevant environmental standards; - reflect the estimated outcome of ongoing legal disputes; and - provide against indemnities following the disposal of subsidiaries. ",
"dimensions": {
"concept": "ifrs-full:DescriptionOfAccountingPolicyForProvisionsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-356": {
"value": "21. Trade and other payables 2022 2021 \u00a3m \u00a3m Current Trade payables 150.9 120.3 Social security and other taxation 34.8 27.1 Accruals* 43.9 23.6 Deferred income* - - Progress billings and advance payments from customers 71.9 73.2 Other payables* 136.2 156.2 437.7 400.4 Non-current Other payables 9.9 6.5 447.6 406.9 * 'Accruals', 'Deferred income' and 'Other payables' have been disclosed separately given their quantum. Prior period comparatives have been re-presented. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfTradeAndOtherPayablesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-357": {
"value": "22. Share capital The movement in the number of ordinary shares of 28 4/7p each issued by IMI plc is as follows: Number and value of shares 2022 2021 Ordinary Shares Ordinary Shares 28 4/7p per share 28 4/7p per share Number (m) Value (\u00a3m) Number (m) Value (\u00a3m) In issue at the start of the year 274.9 78.6 286.5 81.8 Issued to satisfy employee share schemes 0.1 - 0.1 - Share cancellations - - (11.7) (3.2) In issue at the end of the year 275.0 78.6 274.9 78.6 All issued share capital at 31 December 2022 and 2021 is fully paid and conveys the same rights. Share movements in the year Movements in shares due to share issues and purchases during the year were as follows: Number of ordinary shares of 28 4/7p each (million) Employee Benefit Trust Treasury Other Total In issue at 31 December 2021 1.8 14.3 258.8 274.9 New issues to satisfy employee share scheme awards - - 0.1 0.1 Market purchases 1.4 - (1.4) - Shares allocated under employee share schemes (0.8) - 0.8 - At 31 December 2022 2.4 14.3 258.3 275.0 During the year 0.1m (2021: 0.1m) shares were issued under employee share schemes realising \u00a31.2m (2021: \u00a31.0m). Employee Benefit Trust The Employee Benefit Trust made market purchases of a total of 1.4m (2021: 1.7m) shares with an aggregate market value of \u00a320.0m (2021: \u00a330.0m) and a nominal value of \u00a30.4m (2021: \u00a30.5m). Associated transaction costs amounted to \u00a3nil (2021: \u00a3nil). Share options exercised in 2022 were settled using the shares in the Group's Employee Benefit Trust. In 2022, 0.8m (2021: 1.0m) shares were issued for cash of \u00a3nil (2021: \u00a33.4m). Of the 16.7m (2021: 16.1m) shares held within retained earnings, 2.4m (2021: 1.8m) shares with an aggregate market value of \u00a330.9m (2021: \u00a327.9m) are held in trust to satisfy employee share scheme vesting. Share buyback In 2021, on-market purchases of 11.7m shares were conducted relating to the share buyback programme. The aggregate market value of these shares at the dates of purchase were \u00a3200.0m, which includes dealing costs related to these purchases of \u00a31.9m. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfIssuedCapitalExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-358": {
"value": "In accounting for business combinations, the identifiable assets, liabilities
and contingent liabilities acquired have to be measured at their fair values.
In particular, an estimate has been made of the forecast future sales under pre-
existing commercial relationships which have been discounted at an appropriate
discount rate to value the commercial relationships and brand intangibles.
The acquisitions have been accounted for as a business combination.
During the year ended 31 December 2022, the Group made three acquisitions,
namely:
- Bahr Modultechnik GmbH (\"Bahr\")
- CorSolutions LLC (\u201cCorSolutions\u201d)
- Heatmiser UK Ltd (\u201cHeatmiser\u201d)
Below and adjacent are summaries of the assets acquired and liabilities assumed
and the purchase consideration of:
a) the total of acquisitions;
b) Bahr Modultechnik GmbH (\"Bahr\");
c) CorSolutions LLC (\u201cCorSolutions\u201d);
d) Heatmiser UK Ltd (\u201cHeatmiser\u201d); and
e) Prior year acquisitions
As at the date of approval of the financial statements, the acquisition accounting
for all prior year acquisitions is complete.
The accounting for all current year acquisitions is provisional, relating to
finalisation of the initial consideration which is subject to agreement of certain
contractual adjustments and certain other provisional balances.
a) Total of acquisitions
Total
\u00a3m
Intangible assets 47.4
Property, plant and equipment 4.9
Inventories 9.4
Trade and other receivables 9.3
Cash and cash equivalents 12.1
Trade and other payables (7.2)
Current taxation (1.2)
Deferred taxation (11.3)
Total identified net assets at fair value 63.4
Goodwill arising on acquisition 153.5
Purchase consideration 216.9
b) Bahr Modultechnik GmbH (\"Bahr\")
Fair value at
9 June 2022
\u00a3m
Intangible assets 38.6
Property, plant and equipment 4.7
Inventories 3.1
Trade and other receivables 1.5
Cash and cash equivalents 4.7
Trade and other payables (1.6)
Current taxation (1.0)
Deferred taxation (11.3)
Total identified net assets at fair value 38.7
Goodwill arising on acquisition 49.6
Purchase consideration transferred 88.3
On 9 June 2022 the Group acquired 100% of the share capital, and associated
voting rights, of Bahr Modultechnik GmbH (\"Bahr\") for cash consideration of
\u00a388.3m. Bahr is a leading provider of highly configured modular electric linear
motion systems, based on a broad portfolio of specialist components and is
based in Luhden, Germany.
The goodwill recognised above includes certain intangible assets that cannot
be separately identified and measured due to their nature. This includes control
over the acquired business, the skills and experience of the assembled workforce,
the increase in scale, synergies and the future growth opportunities that the
businesses provide to the Group\u2019s operations. Acquisition costs of \u00a30.9m were
recognised in the income statement in 2022.
The revenue and adjusted operating profit included in the income statement for
2022 contributed by Bahr were \u00a37.8m and \u00a31.8m respectively. If the acquisition
had taken place on 1 January 2022, Bahr would have contributed revenue and
adjusted operating profit of \u00a314m and \u00a34.3m respectively.
23. Acquisitions
c) CorSolutions LLC (\u201cCorSolutions\u201d)
Fair value at
27 October 2022
\u00a3m
Intangible assets 8.8
Inventories 0.6
Deferred taxation -
Total identified net assets at fair value 9.4
Goodwill arising on acquisition 1.7
Purchase consideration 11.1
On 27 October 2022 the Group acquired 100% of the share capital, and
associated voting rights, of CorSolutions LLC (\u201cCorSolutions\u201d) for initial cash
consideration of \u00a37.5m and an expected earn-out of \u00a33.6m. CorSolutions is
a leading innovator in micro-fluid flow control and is based in Ithaca, New York.
The goodwill recognised above includes certain intangible assets that cannot
be separately identified and measured due to their nature. This includes control
over the acquired business, the skills and experience of the assembled workforce,
the increase in scale, synergies and the future growth opportunities that the
businesses provide to the Group\u2019s operations. Acquisition costs of \u00a3nil were
recognised in the income statement in 2022.
The revenue and adjusted operating loss included in the income statement for 2022
contributed by CorSolutions were \u00a30.2m and \u00a30.3m respectively. If the acquisition
had taken place on 1 January 2022, CorSolutions would have contributed revenue
and adjusted operating profit of \u00a31.3m and \u00a30.5m respectively.
d) Heatmiser UK Ltd (\u201cHeatmiser\u201d)
Fair value at
23 December 2022
\u00a3m
Property, plant and equipment 0.2
Inventories 5.7
Trade and other receivables 7.8
Cash and cash equivalents 7.4
Trade and other payables (5.6)
Current taxation (0.2)
Total identified net assets at fair value 15.3
Goodwill arising on acquisition 102.2
Purchase consideration transferred 117.5
On 23 December 2022 the Group acquired 100% of the share capital, and
associated voting rights, of Heatmiser UK Ltd (\u201cHeatmiser\u201d) for initial cash
consideration of \u00a3117.5m, with up to a further \u00a38.0m payable based on future
financial performance. Heatmiser is a leading UK smart thermostatic control
manufacturer and is based in Blackburn, UK.
Due to the timing of the acquisition, the analysis of acquired intangibles has not
yet been completed so all of the purchase price aside from the operating balance
sheet is allocated to goodwill as permitted when an acquisition is close to a period
end. The provisional purchase price allocation will be completed in the first half
of 2023. The goodwill recognised above includes certain intangible assets that
cannot be separately identified and measured due to their nature. This includes
control over the acquired business, the skills and experience of the assembled
workforce, the increase in scale, synergies and the future growth opportunities
that the businesses provide to the Group\u2019s operations. Acquisition costs of \u00a32.0m
were recognised in the income statement in 2022.
There was no revenue and adjusted operating profit contributed by Heatmiser to
be included in the income statement for 2022. If the acquisition had taken place
on 1 January 2022, Heatmiser would have contributed revenue and adjusted
operating profit of \u00a324.0m and \u00a39.5m respectively.
e) Acquisitions in 2021
On 20 December 2021 the Group acquired 100% of the share capital, and
associated voting rights, of Adaptas Solutions (\"Adaptas\") for cash consideration
of \u00a3203.9m. Adaptas is a manufacturer of mission critical mass spectrometry
subsystems and components and is based in North America with facilities in the
UK, Australia and China.
This acquisition has been accounted for as a business combination. Our accounting
has been finalised and there are no changes to the provisional fair value amounts
recognised in the 2021 Annual Report & Accounts in respect of the identified
assets acquired and liabilities assumed.
",
"dimensions": {
"concept": "ifrs-full:DisclosureOfBusinessCombinationsExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-360": {
"value": "24. Disposals Disposals in 2022 The Group disposed of its Russian subsidiary IMI International LLC on 27 May 2022 for proceeds of \u00a3nil resulting in a loss on disposal for the Group of \u00a34.8m after disposing of \u00a33.3m of net assets and incurring \u00a30.9m of associated disposal costs. In addition, the exit resulted in a \u00a34.2m impairment of assets related to Russian contracts. The exit from Russia is presented in the income statement as an adjusting item but it is not disclosed as a discontinued item because it did not represent a separate major line of business. 27 May 2022 \u00a3m Net assets disposed (3.3) Costs of disposal (0.9) Foreign exchange loss reclassified on disposal (0.6) Loss on disposal (4.8) Net cash flow arising on disposal Cash costs of disposal (0.9) Net cash flow arising on disposal of operations Disposals in 2021 In 2021, the Group disposed of Interativa Industria, Comercio e Representacoes Ltda. This disposal resulted in a loss of \u00a33.8m and is presented in the income statement as an adjusting item as it meets our definition of adjusting items based on its nature and quantum. The loss on disposal is not disclosed within discontinued operations because this business did not represent a separate major line of business. A summary of the proceeds received, assets disposed and resulting loss on disposal is included in the table below: 23 July 2021 \u00a3m Sale consideration 0.2 Net assets disposed (3.8) Costs of disposal (0.1) Foreign exchange loss reclassified on disposal (0.1) Loss on disposal (3.8) Net cash flow arising on disposal Sale consideration 0.2 Cash costs of disposal (0.1) Net cash flow arising on disposal of operations ",
"dimensions": {
"concept": "imiplc:DisclosureOfDisposals",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-359": {
"value": "25. Contingent liabilities A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision because significant subjectivity exists regarding its outcome. Group contingent liabilities relating to guarantees in the normal course of business and other items amounted to \u00a3132m (2021: \u00a3112m). ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfContingentLiabilitiesExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-361": {
"value": "26. Related party transactions Related parties include the key management personnel. The Board, including the non-executive directors are considered to be the key management personnel of the Group. 2022 2021 \u00a3m \u00a3m Short-term employee benefits* 3.5 4.3 Share-based payments** 2.2 1.8 Total 5.7 6.1 * Short-term employee benefits comprise salary, including employers' social contributions, benefits earned during the year and bonuses awarded for the year. ** For details of the share-based payment charge for key management personnel, see Note 6. Transactions with associated companies 2022 2021 \u00a3m \u00a3m Sales to associated companies - 0.5 Purchases from associated companies - - Accounts receivable - - Accounts payable - - Total - 0.5 There are no other related party transactions. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfRelatedPartyExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-362": {
"value": "27. Subsequent events Events that occur in the period between 31 December and the date of approval of the Annual Report can be categorised as adjusting or non- adjusting depending on whether the condition existed at 31 December. If the event is an adjusting event, then an adjustment to the results is made. If a non-adjusting event after the year end is material, non-disclosure could influence decisions that readers of the financial statements make. Accordingly, for each material non-adjusting event after the reporting period we disclose the nature of the event and an estimate of its financial effect, or a statement that such an estimate cannot be made. There were no adjusting or non-adjusting subsequent events after the balance sheet date of 31 December 2022. ",
"dimensions": {
"concept": "ifrs-full:DisclosureOfEventsAfterReportingPeriodExplanatory",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
},
"fact-5": {
"value": "Lakeside Solihull Parkway Birmingham Business Park Birmingham B37 7XZ United Kingdom",
"dimensions": {
"concept": "ifrs-full:AddressOfRegisteredOfficeOfEntity",
"language": "en",
"entity": "scheme:2138002W9Q21PF751R30",
"period": "2022-01-01T00:00:00/2023-01-01T00:00:00"
}
}
}
}