1. Segmental analysis 2. Operating profit 3. Profit on disposal of discontinued operations 4. The following have been charged in arriving at profit before taxation 5. Net interest payable 6. Taxation 7. Profits applicable to shareholders of IMI plc 8. Dividends 9. Earnings per ordinary share

10. Employee information 11. Intangible fixed assets 12. Tangible fixed assets 13. Fixed assets - investments 14. Stocks 15. Debtors 16. Creditors: amounts falling due within one year 17. Creditors: amounts falling due after more than one year 18. Financial Instruments

19. Provisions for liabilities and charges 20. Share Capital 21. Reserves 22. Acquisitions 23. Cash flow notes 24. Post-retirement liabilities 25. Operating leases 26. Commitments 27. Contingencies

1. Segmental Analysis   BY ACTIVITY Turnover £m 1998 Operating profit £m Net assets £m Turnover £m 1997 Operating profit £m Net assets £m Hydronic Controls 431 61.5 148 471 59.6 149 Drinks Dispense 370 38.5 124 345 35.7 118 Fluid Power Continuing operations 320 32.8 336 38.0 Acquisitions 144 6.6 - - Fluid Power total 464 39.4 237 336 38.0 236 Energy Controls 156 16.6 42 145 14.3 37 Total continuing operations 1,421 156.0 551 1,297 147.6 540 BY GEOGRAPHICAL ORIGIN UK 389 40.3 162 427 49.1 164 Rest of Europe 545 64.8 202 394 49.2 216 The Americas 430 49.2 165 404 46.3 138 Asia/Pacific 57 1.7 22 72 3.0 22 Total continuing operations 1,421 156.0 551 1,297 147.6 540 The segmental analysis above reflects the new business area names of Hydronic Controls (formerly Building Products) and Energy Controls (formerly Special Engineering). There have been no changes to the constituent operations within each business area other than the acquisitions and disposals described below. Acquisitions KIP Inc., based in the USA, was acquired by Fluid Power in June 1998. KIP contributed turnover of £6m and operating profit of £0.8m, before goodwill amortisation of £0.4m. Herion-Werke, based primarily in Germany, was acquired by Fluid Power in November 1997. Turnover of £138m and operating profit of £6.2m arising in the period since acquisition (including turnover of £21m and operating profit of £0.7m in respect of 1997) are included within acquisitions. Discontinued operations Discontinued operations include IMI Waterheating, previously reported within Hydronic Controls, and IMI Birmingham Mint, IMI Pactrol, the Industrial Heat Exchanger Division of IMI Marston and five smaller engineering components businesses which were previously reported within Energy Controls. Discontinued operations were previously included by geographical origin primarily within the UK. The reported figures for 1997 have been re-stated in respect of these discontinued operations.   TURNOVER BY GEOGRAPHICAL DESTINATION 1998 £m 1997 £m UK 306 335 Germany 238 159 Rest of Europe 356 301 USA 358 336 Asia 62 67 Rest of World 101 99 Total continuing operations 1,421 1,297 RECONCILIATION OF NET ASSETS 1998 £m 1997 £m Operating assets of continuing operations 551 540 Discontinued operations - 31 Investments 13 12 Net borrowings (86 ) (189 ) Taxation liabilities and dividend payable (69 ) (69 ) Net assets per Group balance sheet 409 325

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2. Operating profit   1998 1997 Continuing operations £m Discontinued operations £m Total £m Continuing operations £m Discontinued operations £m Total £m Turnover 1421.0 33.6 1454.6 1296.5 137.4 1433.9 Cost of sales (940.4 ) (26.9 ) (967.3 ) (878.0 ) (113.6 ) (991.6 ) Gross profit 480.6 6.7 487.3 418.5 23.8 442.3 Distribution costs (194.2 ) (2.5 ) (196.7 ) (157.3 ) (9.8 ) (167.1 ) Administrative expenses (132.2 ) (2.4 ) (134.6 ) (115.1 ) (9.3 ) (124.4 ) Other operating income 1.8 - 1.8 1.5 - 1.5 Operating profit 156.0 1.8 157.8 147.6 4.7 152.3 Continuing operations for 1998 include the following amounts relating to acqusitions: cost of sales £98.0m, distribution costs £22.5m, administrative expenses £16.8m.

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3. Profit on disposal of discontinued operations   Profit on disposal of discontinued operations comprises the surplus arising on the sale of the discontinued businesses(note 1) which is stated after deducting £19.8m for previously acquired goodwill. The profit in 1997 represents the surplus arising following the sale of Conax Buffalo, the release of provisions of £4.2m in respect of IMI Yorkshire Alloys and the cost of establishing a provision of £2.0m in respect of the disposal of certain businesses within Energy Controls which was completed in February 1998.

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4. The following have been charged in arriving at profit before taxation   1998 £m 1997 £m Depreciation of tangible fixed assets 55.1 48.0 Amortisation of goodwill 0.4 - Bonus under employees’ profit sharing scheme 2.0 2.5 Auditor’s remuneration: Fees and expenses 1.9 1.7 Non-audit services (mainly overseas) 0.9 0.7 Rentals under operating leases: Property rents 9.8 9.4 Hire of plant and machinery 4.0 2.3 Research and development expenditure 19.1 16.1

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5. Net interest payable   1998 £m 1997 £m Interest payable: Bank loans and overdrafts 9.2 7.5 Interest on finance leases 0.2 0.2 Other loans 5.4 1.6 14.8 9.3 Interest receivable (9.2 ) (3.5 ) 5.6 5.8

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6. Taxation   1998 £m 1997 £m UK corporation tax 17.7 7.8 Overseas taxes 32.8 32.3 Adjustment in respect of previous years (0.8 ) - 49.7 40.1 Current UK corporation tax has been provided at the average rate for the year of 31.0% (1997:31.5%). Deferred tax has been provided at 30.0% (1997:31.0%). The charge for UK corporation tax has been reduced by double taxation relief of £1.6m (1997: £39.5m). A charge of £0.6m (1997 : £2.3m) is included in respect of deferred taxation. UK corporation tax includes a credit of £3.5m (1997: £11.9m) for advance corporation tax.

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7. Profits applicable to shareholders of IMI plc   Of the Group profit of £117.0m (1997 : £108.6m), £65.9m (1997 : £49.3m) has been dealt with in the profit and loss account of the Company.

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8. Dividends       1998 £m   1997 £m   Ordinary dividend: Interim 5.7p (1997 : 5.4p) 20.0 18.8 Proposed final 9.1p (1997 : 8.6p) 31.9 30.0 51.9 48.8

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9. Earnings per ordinary share   The weighted average number of shares in issue during the year was 349.5m, 350.7m diluted for the effect of outstanding share options (1997 : 347.9m, 349.9m diluted). Earnings per share have been calculated on earnings of £117.0m (1997 : £108.6m) and adjusted earnings per share have been calculated on earnings £106.2m (1997 : £106.7m) being the profit for the year before exceptional items. The impact on the tax charge of paying Foreign Income Dividends has increased both earnings per share and adjusted earnings per share by 1.0p (1997: 2.5p). Adjusted earnings per share figures have been shown because the Directors consider that they give a more meaningful indication of the underlying performance.

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10. Employee information   The number of people employed by the Group on average each month during the year was: 1998 1997 Hydronic Controls 4,229 4,516 Drinks Dispense 4,302 4,187 Fluid Power 7,087 5,153 Energy Controls 1,878 2,858 Other 224 231 17,720 16,945 The aggregate employment cost for the year was: £m £m Wages and salaries 380.1 346.7 Social security costs 54.1 44.6 Pension costs 12.9 9.9 447.1 401.2 Directors’ emoluments for the year were: £000 £000 Emoluments for qualifying service 1,501 1,534 Gains on exercise of share options 6 51 The detailed information concerning Directors’ emoluments, shareholdings and options is shown in theCorporate Governance Report.

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11. Intangible fixed assets   Goodwill Gross book value £m Amortisation £m Net book value £m At 31 December 1997 - - - Acquisitions during the year 20.5 - 20.5 Amortisation - 0.4 (0.4 ) At 31 December 1998 20.5 0.4 20.1 Goodwill arising from the acquisitions in the year is being amortised over 20 years.

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12. Tangible fixed assets     Land and buildings Plant and machinery   Assets in course of construction Total Gross book value £m Depre-ciation £m Net book value £m Gross book value £m Depre- ciation £m Net book value £m Gross book value £m Net book value £m At 31 December 1997 173.6 60.1 113.5 571.9 367.0 204.9 13.8 332.2 Exchange adjustments 4.2 1.2 3.0 5.6 3.3 2.3 - 5.3 Acquisitions 4.8 3.3 1.5 12.0 9.8 2.2 - 3.7 Disposal of subsidiaries (7.2 ) (2.2 ) (5.0 ) (33.9 ) (22.1 ) (11.8 ) (0.7 ) (17.5 ) Additions 5.2 5.2 35.6 35.6 13.6 54.4 Disposals (5.2 ) (1.2 ) (4.0 ) (57.8 ) (51.3 ) (6.5 ) - (10.5 ) Transfers 0.7 0.7 16.2 16.2 (16.9 ) - Depreciation for year 5.9 (5.9 ) 49.2 (49.2 ) - (55.1 ) At 31 December 1998 176.1 67.1 109.0 549.6 355.9 193.7 9.8 312.5 The net book value of land and buildings comprises: 1998 £m 1997 £m Freehold: land 15.4 13.0 buildings 85.2 91.2 Long leasehold 6.5 6.6 Short leasehold 1.9 2.7 109.0 113.5 Gross book value represents cost except for £1.0m in respect of revaluations of land and buildings in certain overseas subsidiaries. Included in the total net book value is £2.8m (1997 : £2.4m) in respect of assets acquired under finance leases. Depreciation for the year on these assets was £0.5m (1997 : £0.3m).

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13. Fixed assets - investments   Company Subsidiary undertakings Shares £m Loans £m Total £m At 31 December 1997 at cost 80.6 242.1 322.7 Transfer to other group companies (4.8 ) - (4.8 ) Advances during the year - 100.9 100.9 At 31 December 1998 at cost 75.8 343.0 418.8 Details of subsidiary undertakings at 31 December 1998 are shown inSubsidiary Undertakings. The Company’s cost of investment in subsidiary undertakings is stated at the aggregate of (a) the cash consideration, (b) the nominal value of the shares issued as consideration where sections 131 and 133 of the Companies Act 1985 apply and (c) in all other cases the market value of the Company’s shares on the date they were issued as consideration.

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14. Stocks   1998 £m 1997 £m Raw materials and consumables 91.7 99.5 Work in progress 51.6 67.8 Finished goods 114.5 114.8 Payments on account (5.6 ) (9.2 ) 252.2 272.9 The replacement value of stocks is not considered to be significantly different from the amounts stated above.

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15. Debtors           Group         Company 1998 £m 1997 £m 1998 £m 1997 £m Falling due for payment within one year: Trade debtors 195.6 226.6 - - Amounts owed by subsidiary undertakings - - 52.2 218.2 Prepayments and accrued income 8.7 10.4 1.1 0.9 Other debtors 21.2 21.4 7.5 4.7 225.5 258.4 60.8 223.8 Falling due for payment after more than one year: Pension fund prepayment 8.9 7.0 - - Other debtors 3.7 10.5 - 7.5 12.6 17.5 - 7.5 238.1 275.9 60.8 231.3

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16. Creditors: amounts falling due within one year           Group         Company Borrowings and finance leases 1998 £m 1997 £m 1998 £m 1997 £m Bank loans and overdrafts 43.2 48.7 30.7 12.3 Obligations under finance leases 0.1 0.2 - - Other loans 0.6 0.2 - - 43.9 49.1 30.7 12.3 The Group borrowings include bank loans and overdrafts of £4.9m (1997: £2.8m) and obligations under finance leases of £0.1m (1997: £0.2m) which are secured by charges over the assets of certain overseas subsidiary companies. Other creditors         Group         Company 1998 £m 1997 £m 1998 £m 1997 £m