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

[back to top]

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.

[back to top]

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.

[back to top]

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

[back to top]

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

[back to top]

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.

[back to top]

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.

[back to top]

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

[back to top]

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.

[back to top]

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.

[back to top]

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.

[back to top]

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).

[back to top]

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.

[back to top]

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.

[back to top]

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

[back to top]

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 Trade creditors 98.7 129.3 - - Bills of exchange payable 0.9 0.9 - - Corporation tax 11.1 5.6 5.7 - Other taxation 21.1 31.7 - 12.2 Social security 6.3 6.3 - - Accruals and deferred income 87.7 92.4 1.0 2.2 Proposed dividend 31.9 30.0 31.9 30.0 Other creditors 2.8 3.1 - - 260.5 299.3 38.6 44.4

[back to top]

17. Creditors: amounts falling due after more than one year               Group         Company Borrowings and finance leases 1998 £m 1997 £m 1998 £m 1997 £m Bank loans Secured 15.5 18.5 - - Unsecured 5.5 116.3 1.6 104.6   21.0 134.8 1.6 104.6 Loan stock Unsecured 5.5% loan stock 2001/06 1.6 1.6 1.6 1.6 US loan notes (6.70% to 7.17%) 2007/22 60.5 61.0 - -   62.1 62.6 1.6 1.6 Other loans Secured 4.9 4.9 - - Obligations under finance leases 0.9 1.2 - - 5.8 6.1 - - Total loans 88.9 203.5 3.2 106.2 Security consists of charges over the assets of certain overseas subsidiary companies.   Total borrowings and finance leases         Group         Company 1998 £m 1997 £m 1998 £m 1997 £m Secured 21.3 24.6 - - Unsecured 67.6 178.9 3.2 106.2 Total loans 88.9 203.5 3.2 106.2         Group         Company Repayment of loans 1998 £m 1997 £m 1998 £m 1997 £m Bank loans Between one and two years 6.1 11.0 1.6 - Between two and five years 6.7 115.1 - 104.6 In five years or more 8.2 8.7 - - 21.0 134.8 1.6 104.6 Loan stock and other loans Between one and two years 0.8 0.4 - - Between two and five years 1.3 1.8 0.6 0.6 In five years or more 65.8 66.5 1.0 1.0 67.9 68.7 1.6 1.6 Total loans 88.9 203.5 3.2 106.2 Of the loans and loan stock repayable more than five years from the balance sheet date, the US loan notes mature between 2007 and 2022. The majority of other loans are repayable in instalments between 2004 and 2007.             Group         Company Other creditors 1998 £m 1997 £m 1998 £m 1997 £m Amounts owed to subsidiary undertakings - - 43.2 45.1 Overseas taxation 20.9 21.8 - - Accruals and deferred income 5.3 6.4 - - 26.2 28.2 43.2 45.1

[back to top]

18. Financial Instruments   Currency profile of assets and liabilities Assets excluding cash and debt 1998 £m Cash 1998 £m Debt 1998 £m Exchange contracts 1998 £m Net asset exposure 1998 £m Net asset exposure 1997 £m Sterling 98 4 (17 ) 281 366 266 US Dollars 162 10 (73 ) (93 ) 6 42 Euro-bloc currencies 177 17 (38 ) (151 ) 5 (12 ) Rest of World 58 16 (5 ) (37 ) 32 29 Total 495 47 (133 ) - 409 325 Exchange contracts are financial instruments used as currency hedges of overseas net assets. Currency profile of interest exposure at 31 December 1998 Financial assets Cash and exchange contracts £m Floating rate £m Fixed rate £m Weighted average interest rate % Weighted average period for which rate is fixed ( years) Sterling 285 255 30 7.5 1.0 US Dollars 10 10 - - - Euro-bloc currencies 17 17 - - - Rest of World 16 16 - - - Total 328 298 30 Floating rate financial assets comprise short term cash of £47m bearing interest at short term bank deposit rates and the asset side of exchange contracts where the interest element is based primarily on six month inter bank rate. Financial liabilities Debt and exchange contracts £m Floating rate £m Fixed for more than 1 year £m Weighted average interest rate % Weighted average period for which rate is fixed (years) Sterling 17 15 2 5.5 7.5 US Dollars 166 88 78 6.9 10.7 Euro-bloc currencies 189 156 33 5.7 3.5 Rest of World 42 42 - - - Total 414 301 113 Interests 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 six month inter bank rate. Undrawn committed facilities The Group has various undrawn committed borrowing facilities. The facilities available at 31 December 1998 in respect of which all conditions precedent had been met were as follows: £m Expiring within one year - Expiring between one and two years 38 Expiring after more than two years 133 171 The weighted average life of these facilities is 3.2 years. There is no material difference between the fair value and book value of the financial instruments.

[back to top]

19. Provisions for liabilities and charges   Deferred taxation £m Post- retirement liabilities £m Other £m Total £m At 31 December 1997 3.0 24.1 23.4 50.5 Exchange adjustment - 0.5 0.2 0.7 Disposals (0.4 ) - (0.1 ) (0.5 ) Utilised in the year - (1.0 ) (8.3 ) (9.3 ) Advance corporation tax 5.5 - - 5.5 Profit and loss account 0.6 2.0 4.0 6.6 At 31 December 1998 8.7 25.6 19.2 53.5 Post-retirement liabilities are in respect of overseas pension liabilities and US post-retirement benefits which have not been separately funded. At 31 December 1998 other provisions comprise mainly environmental provisions of £6m and warranties given in the normal course of trade of £9m. The potential liability for deferred tax calculated at 30% (1997 : 31%) is analysed as follows: 1998 1997 Provided £m Not provided £m Provided £m Not provided £m Accelerated capital allowances 7.3 5.2 8.4 6.5 Other timing differences 1.4 - 0.1 - Advance corporation tax recoverable - - (5.5 ) (3.5 ) 8.7 5.2 3.0 3.0

[back to top]

20. Share capital   1998 £m 1997 £m Authorised 440m ordinary shares of 25p each 110.0 110.0 Issued and fully paid 350.2m (1997 : 348.7m) ordinary shares of 25p each 87.5 87.2 During the year 1,494,905 shares were issued under employee share schemes realising £4.2m. Share Options All UK employees may participate in the IMI SAYE Share Option (1994) Scheme and selected senior executives within the Group participate in the IMI Executive Share Option (1995) Scheme. At 31 December 1998 options to purchase ordinary shares had been granted to and not exercised by participants of IMI share option schemes as follows:     Date of grant Number of shares Price Date of exercise Scheme code   IMI Savings Related Share Option Scheme   16.04.92 164,403 213p 01.07.97 or 01.07.99 A     21.04.93 316,406 213p 01.06.98 or 01.06.00 B       08.04.94 633,812 280p 01.08.99 or 01.08.01 C                           IMI SAYE Share Option (1994) Scheme   11.04.95 816,389 242p 01.07.00 or 01.07.02 D       04.04.96 741,920 286p 01.07.01 or 01.07.03 E       08.04.97 818,478 314p 01.07.00, 01.07.02 or 01.07.04 F       07.04.98 1,015,435 365p 01.07.01, 01.07.03 or 01.07.05 G                   IMI Executive Share Option (1985) Scheme   20.04.89 100,000 226.1p 20.04.92 to 20.04.99 H     19.04.90 73,000 224.4p 19.04.93 to 19.04.00 I       19.04.91 161,600 247.7p 19.04.94 to 19.04.01 J       16.04.92 166,400 236.1p 16.04.95 to 16.04.02 K       15.04.93 286,600 265.7p 15.04.96 to 15.04.03 L       07.04.94 204,600 349.9p 07.04.97 to 07.04.04 M       11.04.95 304,700 301.3p 11.04.98 to 11.04.05 N                           IMI Executive Share Option (1995)Scheme 19.09.96 398,400 398.9p 19.09.99 to 19.09.06 O       26.03.97 721,100 390.8p 26.03.00 to 26.03.07 P       18.09.97 758,800 384.9p 18.09.00 to 18.09.07 Q       25.03.98 731,471 455.1p 25.03.01 to 25.03.08 R

[back to top]

21. Reserves   Group Share premium account £m Revaluation reserve £m Other reserves £m Profit and loss account £m Total £m At 31 December 1997 125.3 1.0 (419.0 ) 530.9 238.2 Transfers - - 420.6 (420.6 ) - As re-stated 125.3 1.0 1.6 110.3 238.2   Retained profit for the year - - - 65.1 65.1 Amounts taken directly to reserves: Adjustments to goodwill in respect of prior year - - - (4.5 ) (4.5 ) Previously acquired goodwill taken through the profit and loss account - - - 19.8 19.8 Currency translation differences - - - (0.2 ) (0.2 ) Transfer 0.3 - - (0.3 ) - Share premiums received 3.6 - - - 3.6 At 31 December 1998 129.2 1.0 1.6 190.2 322.0 In accordance with FRS10, goodwill arising on acquisitions prior to 1 January 1998 amounting to £438.9m, previously deducted from Other reserves, was transferred and deducted from the Profit and loss account. Realised merger reserves in respect of prior acquisitions were also transferred to the Profit and loss account. Other reserves represent a capital redemption reserve. At the year end the aggregate amount of goodwill arising on acquisitions prior to 1 January 1998 deducted from the Profit and loss account reserve amounted to £427.3m. Currency translation differences include a credit of £2.7m (1997 : charge of £4.8m) in respect of currency loans and hedging transactions used for overseas investments. Company Share premium account £m Other reserves £m Profit and loss account £m Total £m At 31 December 1997 125.3 1.6 132.9 259.8 Retained profit for the year - - 14.0 14.0 Transfer 0.3 - (0.3 ) - Share premiums received 3.6 - - 3.6 At 31 December 1998 129.2 1.6 146.6 277.4

[back to top]

22. Acquisitions   The only material acquisition during the year was KIP Inc. based in Connecticut, USA. KIP Inc. £m Others £m Total £m Book value at acquisition Fixed assets 3.4 0.3 3.7 Working capital 0.9 0.6 1.5 Net borrowings (3.3 ) - (3.3 ) Net assets 1.0 0.9 1.9 Fair value adjustments Fixed asset revaluations - (0.1 ) (0.1 ) Working capital - (0.1 ) (0.1 ) - (0.2 ) (0.2 ) Fair value to the Group 1.0 0.7 1.7 Purchase consideration 18.5 3.7 22.2 Goodwill arising in year 17.5 3.0 20.5 Adjustments in respect of prior year 4.5 25.0 Goodwill arising in 1997 in respect of the acquisition of Herion-Werke in November 1997 was provisional as the fair value of the assets acquired had not been fully evaluated. This evaluation was completed during the year resulting in an increase in goodwill of £4.5m, principally due to adjustment to the values of fixed assets and stock. The sales and operating profit of KIP in the periods before acquisition, as reported using their accounting policies, were as follows: Sales £m Operating profit £m 1997 year 12 2.4 1998 to date of acquisition 7 0.9 The reported sales and operating profit figures of KIP have been converted to sterling at the average rate of exchange for 1998.

[back to top]

23. Cash flow notes   1998 £m 1997 £m a) Return on investments and servicing of finance Interest received 9.6 3.5 Interest paid (15.0 ) (9.3 ) Dividends to minorities (0.3 ) (0.2 ) (5.7 ) (6.0 ) b) Capital expenditure and financial investment Purchase of fixed assets (54.4 ) (56.6 ) Sale of fixed assets 6.5 3.3 (Purchase)/sale of current asset investments (0.6 ) 1.1 (48.5 ) (52.2 ) c) Acquisitions and disposals Purchase of subsidiary undertakings (20.4 ) (165.2 ) Net overdrafts acquired with subsidiaries (3.3 ) (1.2 ) Sale of businesses 73.6 4.3 Cash at date of disposal - (0.5 ) 49.9 (162.6 ) d) Purchase of subsidiary undertakings Net assets acquired: Tangible fixed assets 3.7 63.7 Stocks 2.2 48.1 Debtors 2.3 55.9 Creditors (3.1 ) (57.9 ) Overdrafts/borrowings (3.3 ) (54.5 ) Investments - 0.7 Taxation (0.1 ) (4.3 ) 1.7 51.7 Goodwill 20.5 114.4 22.2 166.1 Satisfied by: Cash consideration 20.4 165.2 Deferred consideration 1.8 0.9 22.2 166.1 Acquisitions referred to innote 1 contributed a cash inflow of £7m to the Group’s net operating cash flow. e) Sale of businesses 1998 £m Net assets disposed of: Tangible fixed assets 17.5 Stocks 16.0 Debtors 22.5 Creditors (15.9 ) Taxation (1.1 ) Goodwill 19.8 58.8 Profit on disposal 14.8 73.6 Satisfied by: Cash 73.6 f) Analysis of net borrowings 1998 £m 1997 £m Cash and deposits 47.0 63.5 Borrowings & finance leases due within 1 year (43.9 ) (49.1 ) Borrowings & finance leases due after more than 1 year (88.9 ) (203.5 ) (85.8 ) (189.1 )

[back to top]

24. Post-retirement liabilities   United Kingdom The principal pension plan operated for UK employees is the IMI Pension Fund, a defined benefit plan with assets held separately from the Company in a separate trust fund. The latest formal actuarial valuation of the Fund was as at 31 March 1996 and used the Projected Unit method of valuation. The main financial assumptions adopted were that the annual investment return will exceed the increase in earnings by 2.5% and the increase in pensions by 4.5%. The actuarial value of the Fund assets was 115% of the liabilities to cover benefits accrued to members. The surplus, resulting in an abatement of the company contributions, is being spread over the average remaining service life of employees in membership. The market value of the assets of the Fund at the valuation date was £780m. Overseas Both defined contributions and defined benefit plans operate in overseas subsidiaries. The contributions to the defined contribution plans are made in accordance with the rules of the plans. Each of the major defined benefit plans have been subject to valuation by an independent actuary within the last three years and the valuations showed that the overall value of the assets were sufficient to cover the value of the benefits accrued to members. For certain pension plans, principally in Germany and Sweden, and US post-retirement benefits, the annual actuarial liability is funded by insurance and/or provisions made by the subsidiaries concerned. The provisions are shown innote 19.

25. Operating leases   1998 1997 Land and buildings £m Others £m Land and buildings £m Others £m Annual commitments under operating leases expiring: Within one year 2.7 1.0 3.0 0.4 In the second to fifth year 7.9 3.6 7.4 1.1 After five years 4.9 0.1 4.4 0.1 15.5 4.7 14.8 1.6

[back to top]

26. Commitments   Group contracts in respect of future capital expenditure which had been placed at the balance sheet date amounted to £10m (1997 : £7m). Foreign exchange commitments at the balance sheet date amounted to £333m (1997 : £197m).

[back to top]

27. Contingencies   Group contingent liabilities relating to guarantees in the normal course of business and other items amounted to £17m (1997 : £16m). There is a right of set-off with three of the Company’s bankers relating to the balances of the Company and a number of its wholly-owned UK subsidiaries.

[back to top]