Interim Results
Johnson,Matthey PLC
27 November 2003
For Release at 7.00 am Thursday 27th November 2003
Interim Results for the half year ended 30th September 2003
Catalysts and Pharmaceutical Materials drive growth in profits
Summary Results
• Operating profit before goodwill amortisation up 13% to £103.1 million
• Profit before tax and goodwill amortisation up 4% to £97.5 million
• Earnings per share before goodwill amortisation up 5% to 31.8 pence
• Interim dividend increased by 5% to 8.2 pence
Six months to 30th September
2003 20023 % change
Turnover £2,165m £2,247m -4
Sales excluding precious metals £625m £562m +11
Operating profit1 £103.1m £91.0m +13
Profit before tax1 £97.5m £93.7m +4
Earnings per share1 31.8p 30.4p +5
Earnings per share2 27.8p 28.1p -1
Dividend per share 8.2p 7.8p +5
Exceptional items £ nil £ nil
Goodwill amortisation £(9.9)m £(4.8)m
1Before goodwill amortisation 2After goodwill amortisation 3Restated for FRS17
Business Progress
• Strong growth from Catalysts with profits up 28% to £56.5 million
• Environmental Catalysts and Technologies (ECT) ahead despite weaker car
production in the US and Europe, reflecting good demand in Asia and
increasing contribution from heavy duty diesel catalysts
• Process Catalysts and Technologies (PCT) well up benefiting from a good
contribution from the former Synetix businesses
• Pharmaceutical Materials' profits up 8% to £20.7 million with good growth at
West Deptford and Macfarlan Smith
• Renewed long term contracts agreed with Anglo Platinum
• Precious Metals' profits reduced by 10% to £21.9 million reflecting weak
trading conditions for palladium and rhodium
• Colours & Coatings' profits up 2% to £11.8 million. Group to divest
Structural Ceramics and Speciality Coatings
Commenting on the results, Chris Clark, Chief Executive of Johnson Matthey said:
'Johnson Matthey has made further progress in the last six months with good
growth in Catalysts and Pharmaceutical Materials. The outlook for both of these
divisions remains encouraging while the renewed contracts with Anglo Platinum
will underpin the long term growth of Precious Metals Division.'
Enquiries:
Chris Clark, Chief Executive, Johnson Matthey 020 7269 8435
John Sheldrick, Group Finance Director, Johnson Matthey 020 7269 8438
Howard Lee / Laura Hickman, Gavin Anderson & Co 020 7554 1400
www.matthey.com
Report to Shareholders
Introduction
Johnson Matthey has made encouraging progress in the first half of 2003/04, with
Catalysts Division and Pharmaceutical Materials Division continuing to deliver
good growth. Catalysts Division's profits rose by 28% in the half year
including a good contribution from the former Synetix businesses acquired from
ICI in November 2002.
Johnson Matthey enjoys a close relationship with Anglo Platinum, the world's
largest producer of platinum, which stretches back over 70 years. Renewed long
term contracts have been signed with Anglo Platinum which will take effect on
1st January 2004 and extend the relationship well into the next decade. These
renewed contracts bring a reduction in commissions and discounts from current
levels, but Johnson Matthey will benefit from the planned expansion in mine
output over the lives of the contracts.
With the increasing focus on Catalysts, Precious Metals and Pharmaceutical
Materials the Board has decided that it will divest the Structural Ceramics and
Speciality Coatings businesses which form the majority of Colours & Coatings
Division. The Decorative Precious Metals and Glass coatings businesses, which
have very close links with other parts of Johnson Matthey, will be retained.
Review of Results
For the current financial year Johnson Matthey has adopted FRS 17, the new
accounting standard for pensions. Last year's results have been restated
accordingly.
Total sales for the group fell by 4% in the half year to £2,165 million
reflecting lower prices for palladium and rhodium and the lower levels of
trading activity in those metals. Sales excluding the value of precious metals
rose by 11% to £625 million.
Operating profit before goodwill amortisation rose by 13% to £103.1 million
despite the impact of the weaker US dollar. Interest also rose significantly,
partly reflecting higher average borrowings following the acquisition of Synetix
but also as a consequence of the change to FRS 17 and the reduction in the
pension fund surplus at 31st March 2003. Profit before tax and goodwill
amortisation rose by 4% to £97.5 million. Earnings per share before goodwill
amortisation rose by 5% to 31.8 pence.
Goodwill amortisation rose by £5.1 million to £9.9 million reflecting the
additional goodwill arising on the acquisition of Synetix in 2002. Earnings per
share after goodwill amortisation fell by 1% to 27.8 pence. There were no
exceptional items in the half year.
Dividend
The interim dividend has been increased by 5% to 8.2 pence, in line with the
growth in earnings per share before goodwill amortisation.
Operations
Catalysts Division's sales rose by 13% to £593 million despite the fall in
palladium and rhodium prices. Sales excluding the value of precious metals rose
by 27% to £380 million benefiting from the six months' contribution from the
former Synetix businesses. The division's operating profit rose by 28% to £56.5
million.
Environmental Catalysts and Technologies (ECT), which encompasses Johnson
Matthey's worldwide autocatalyst, heavy duty diesel (HDD) and stationary source
emission control businesses, was ahead of last year despite the weaker car
market in the US. Light duty vehicle sales in the US were down 1% in Johnson
Matthey's half year, while production fell by over 7% reflecting increased
imports. In Europe, car sales were slightly up for the same period while
production fell by 2%.
Growth in Asian sales and increasing sales of heavy duty diesel products more
than made up for the weaker demand in the US and Europe. Car sales in China
have risen strongly so far this year and the group's business there achieved
significant growth.
HDD retrofit sales grew substantially in the half year with particularly strong
sales in Japan supported by an incentive programme from the Tokyo Metropolitan
Government. HDD sales to original equipment manufacturers also continue to grow
and we are increasing our investment in joint development programmes with the
major manufacturers.
Process Catalysts and Technologies (PCT), which sells catalysts to the
chemicals, pharmaceutical, oil & gas and other markets, was strongly ahead
benefiting from the contribution from the former Synetix businesses. The
integration of those businesses into Johnson Matthey has progressed very well
and results are in line with our expectations at the time of the acquisition.
Overall, the catalyst part of PCT is achieving good growth but refining profits
are down reflecting the impact of the fall in the palladium price. Research
Chemicals, our catalogue business, continues to achieve good growth.
The Fuel Cells business made good progress. Demand for membrane electrode
assemblies (MEAs) from the Swindon facility continues to grow and a number of
prototype units containing Johnson Matthey products are now in durability
trials, with the main focus being on stationary power and transport sectors.
Net expense for the half year was £6.2 million.
Precious Metals Division's sales fell by 9% to £1,380 million, reflecting
subdued trading activity for palladium and rhodium. Operating profit fell by
10% to £21.9 million. Demand for platinum in autocatalysts reached a record
high as diesel car sales grew strongly in Europe and US manufacturers used less
metal from inventories than in 2002. Despite a fall in jewellery usage, total
platinum demand matched last year's record and, with mine output only slightly
higher, the platinum market remained in deficit for the fifth consecutive year.
The price soared, averaging $673 per oz in the first half, 24% higher than the
same period last year. By the end of the half year, platinum was trading over
$730 per oz, a 23 year high.
By comparison, the markets for palladium and rhodium performed very poorly and
this was reflected in subdued trading margins. Despite higher demand for both
metals, a large increase in primary sales left the markets in surplus for the
third consecutive year. The palladium price collapsed by 46% to an average of
$183 per oz, whilst rhodium suffered a 39% fall to $512 per oz.
The division's platinum fabrication businesses achieved further growth with good
demand for medical components. Gold refining was down on last year with the
stronger gold price having little immediate impact on mine output and margins
continuing to be under pressure.
Colours & Coatings Division's sales fell by 4% to £126.7 million reflecting a
softening in demand in the European tile market. Profits were up 2% to £11.8
million with an improvement in margins.
The Structural Ceramics sector, which sells largely to the tile industry,
experienced weaker demand from tile manufacturers in Europe, partly as a
reflection of the weakness in some euro-zone economies and partly as a result of
the impact of the strong euro on sales from Europe into Asia. However, our
Glass coatings business continued to achieve good growth in sales and profits
benefiting from new product introductions and market share gains.
Pharmaceutical Materials Division's sales fell by 2% to £64.7 million, partly as
a result of exchange translation. Profits rose by 8% to £20.7 million.
West Deptford was well ahead in the half year with good growth in controlled
drugs and an expanded range of platinum based anticancer compounds. Macfarlan
Smith's sales were slightly below last year reflecting the impact of
significantly lower raw material costs which were passed on to customers in
lower prices. However, profits were well ahead of last year benefiting from
increased sales of high margin specialist opiates. Pharm-Eco experienced the
industry-wide drop in demand for contract research in the first quarter but was
able to respond by gaining new business and the market has subsequently
recovered. Significant progress was made on the development and
commercialisation of prostaglandin products for both the US and European
markets.
Finance
Exchange Rates
Over a third of the group's profits were made in North America, mainly in the
USA. The US dollar weakened significantly from $1.51/£ in the first half of
last year to an average of $1.62/£ for the six months to 30th September 2003,
which reduced reported group profit before tax for the half year by £2.8
million.
The group has significant operations in several euro-zone countries and in South
Africa whose currencies have strengthened against sterling. The group benefited
by £1.4 million from the translation of profits made in euros, mainly in Colours
& Coatings, but the euro's strength had a negative impact on demand. The
overall impact of the appreciation of the South African rand was broadly neutral
since the products the group manufactures there are generally for export.
Interest
In the six months to 30th September 2003 the group's interest charge rose by
£4.2 million to £8.5 million as a result of the increase in average net
borrowings following the acquisition of Synetix in November 2002. Interest was
slightly lower than the second half of last year reflecting the benefit of lower
interest rates.
The group has adopted FRS 17, the new accounting standard for pensions, for the
current financial year. Under FRS 17 the net return on retirement benefits
assets and liabilities fell from £7.0 million in the first half of last year to
£2.9 million in the six months to 30th September 2003. The drop reflects the
fall in the value of the pension fund surplus last year as measured on 31st
March 2003 when world equity markets were particularly depressed.
Taxation
The group's tax charge for the six month period rose by £0.2 million to £28.0
million. Before goodwill amortisation the average tax rate increased slightly
from 29.7% to 29.9%.
Cash Flow
Johnson Matthey's net cash flow from operations was £142.4 million which was 23%
up on last year. Capital expenditure was slightly higher than last year at
£58.3 million which was 1.9 times depreciation, reflecting the group's
continuing strategy of investing in its growth businesses. The rate of
expenditure is planned to fall somewhat in the second half of the year.
Net cash flow was positive at £19.5 million. After taking into account
favourable exchange translation, net borrowings fell by £22.6 million to £379.9
million. Shareholders' funds (restated for FRS 17) rose by £50.8 million to
£850.7 million with gearing (net borrowings / shareholders' funds and minority
interests) of 44%.
Business Developments
Johnson Matthey continues to be the largest fabricator of platinum group metal
(pgm) products in the world and has a distribution capability second to none.
Our sales and marketing activities promote demand for existing and new pgm
products worldwide. The use of platinum is expected to show significant growth
over the next decade, with many of the new applications developed in Johnson
Matthey's own laboratories.
The group continues to enjoy a close relationship with Anglo Platinum, the
world's largest producer of platinum, a relationship which goes back over 70
years. With effect from 1st January 2004, we have renewed our long term
contracts with Anglo Platinum, which will extend the relationship well into the
next decade. Under the revised terms, group income will fall in the short term
but will then grow as pgm sales increase over the lives of the contracts. At
current pgm prices the immediate impact of the new contracts will be a reduction
in income of roughly £1.5 million per quarter starting on 1st January 2004.
Elsewhere in Precious Metals Division the platinum fabrication business
continues to prosper driven by increasing demand for medical components. To
meet this increasing demand, in August 2003 the business moved to larger
premises in San Diego with expanded production capacity.
Our Environmental Catalysts and Technologies (ECT) business continues to benefit
from growth in the demand for heavy duty diesel aftertreatment technologies. In
the first half, sales in Japan grew substantially as a result of an incentive
scheme promoted by the Metropolitan Government of Tokyo to improve air quality
in the city. Further schemes of this kind are under discussion in cities in
many parts of the world. Meanwhile, regulations affecting the sale of new
vehicles will be introduced in the USA in 2007 and in Europe in 2008 which will
substantially increase the demand for catalytic devices for trucks and buses.
Johnson Matthey has a number of joint development programmes with major engine
makers and is already supplying production quantities of catalysts to these
companies.
The acquisition of Synetix has led to a major expansion of our Process Catalysts
and Technologies (PCT) business. PCT's catalyst business is focused largely on
the process catalyst market where there are a wide range of diverse
applications. Following the acquisition of Synetix from ICI in November 2002
PCT has been reorganised to create a fully integrated business focused on its
major market segments.
There are a number of niche markets for process catalysts which have excellent
growth prospects over the medium term. One of the largest potential new markets
is catalysts for gas to liquids (GTL) applications. GTL technology is used to
convert stranded natural gas into clean diesel fuel and other valuable products.
We expect a steady growth in the number of new GTL plants being announced
through the second half of this decade as the trend to ultra clean fuels gathers
pace. The capital cost of each GTL facility is very high and the main steps in
the process require large quantities of catalysts. Johnson Matthey already has
leading technology in the development of these catalysts and is working with
many of the world's major oil and gas companies to meet their process
requirements. By 2010 the total market for catalysts for the GTL processes
could be worth over US $400 million p.a.
Our Pharmaceutical Materials Division continues to make good progress. The new
morphine and codeine extraction facility at West Deptford has now been completed
and commissioning has commenced. The new facility is on track to be in
commercial production by the end of this financial year. We are building a new
facility at Macfarlan Smith to produce a range of specialist products (mainly
highly potent analgesics) which are difficult to manufacture and only sell in
small volumes but attract high margins. This new facility should be in
production in the first quarter of our next financial year.
Over the last few years we have successfully restructured our Colours & Coatings
Division and created a business which is among the most profitable in its
industry. However the Structural Ceramics and Speciality Coatings sectors
(which contributed roughly two thirds of the division's profits last year) have
relatively little overlap with the rest of the Johnson Matthey group. Following
a strategic review the Board has decided to invite offers for these two combined
businesses. The remaining Decorative Precious Metals and Glass coatings
businesses, which have close links to the group's other precious metals
activities, will be retained and would be transferred to Precious Metals
Division following a divestment of Structural Ceramics and Speciality Coatings.
Outlook
The outlook for the second half of the year is similar to the first with further
growth expected in Catalysts and Pharmaceutical Materials. Results for Precious
Metals will be impacted by the terms of the renewed contracts with Anglo
Platinum which take effect on 1st January 2004.
The current weakness of the US dollar will have an adverse impact on exchange
translation compared with the first half of this year. However, despite adverse
currency movements we are confident that the group will achieve growth in
earnings per share (before exceptional items and goodwill amortisation) and
dividends for the full year.
The longer term outlook for Johnson Matthey remains very encouraging with
significant growth opportunities in Catalysts, Fuel Cells and Pharmaceutical
Materials while the renewed contracts with Anglo Platinum will underpin the
longer term growth of Precious Metals Division.
Consolidated Profit and Loss Account
for the six months ended 30th September 2003
---------------------Six months to-------------------------- Year to
30.9.03 30.9.03 30.9.03 30.9.02 30.9.02 31.3.03
Before
Before goodwill
goodwill Goodwill amortisation Total Total
amortisation amortisation Total restated restated restated
Notes £ million £ million £ £ million £ £
million million million
Turnover 3 2,164.7 - 2,164.7 2,246.6 2,246.6 4,323.9
Operating profit 5
Before goodwill amortisation 102.9 - 102.9 91.0 91.0 188.7
Goodwill amortisation - (9.9) (9.9) - (4.8) (13.7)
Before exceptional items 102.9 (9.9) 93.0 91.0 86.2 175.0
Exceptional items - - - - - (7.4)
Group operating profit 102.9 (9.9) 93.0 91.0 86.2 167.6
Share of profit in associates 0.2 - 0.2 - - 0.5
Share of exceptional items in - - - - - (0.2)
associates
Total operating profit 5 103.1 (9.9) 93.2 91.0 86.2 167.9
Profit on sale of continuing - - - - - 4.9
operations
Profit on ordinary activities 103.1 (9.9) 93.2 91.0 86.2 172.8
before interest
Net interest (8.5) - (8.5) (4.3) (4.3) (13.2)
Net return on retirement benefits
assets
and liabilities 6 2.9 - 2.9 7.0 7.0 13.9
Profit on ordinary activities 97.5 (9.9) 87.6 93.7 88.9 173.5
before taxation
Taxation 7 (29.2) 1.2 (28.0) (27.8) (27.8) (53.7)
Profit after taxation 68.3 (8.7) 59.6 65.9 61.1 119.8
Minority interests 0.9 - 0.9 (0.2) (0.2) 0.4
Profit attributable to shareholders 69.2 (8.7) 60.5 65.7 60.9 120.2
Dividends 8 (17.9) - (17.9) (17.0) (17.0) (55.5)
Retained profit 51.3 (8.7) 42.6 48.7 43.9 64.7
restated restated restated
pence pence pence pence pence
Earnings per ordinary share (EPS)
Basic 9 27.8 28.1 55.4
Diluted 9 27.7 27.9 55.1
EPS before exceptional items and
goodwill amortisation
Basic 9 31.8 30.4 61.8
Diluted 9 31.7 30.1 61.4
Dividend per ordinary share 8 8.2 8.2 7.8 7.8 25.5
Consolidated Balance Sheet
as at 30th September 2003
30.9.03 30.9.02 31.3.03
restated restated
Notes £ million £ million £ million
Fixed assets
Goodwill 364.2 176.3 373.4
Tangible fixed assets 622.1 500.0 601.1
Investments 6.0 2.2 6.4
992.3 678.5 980.9
Current assets
Stocks 444.4 397.6 438.4
Debtors 356.5 326.9 365.8
Short term investments 16.8 15.8 15.3
Cash at bank and in hand 76.7 89.1 100.4
894.4 829.4 919.9
Creditors: Amounts falling due within one year
Borrowings and finance leases (64.0) (85.4) (46.5)
Precious metal leases (121.1) (122.1) (128.0)
Other creditors (383.8) (321.6) (388.3)
Net current assets 325.5 300.3 357.1
Total assets less current liabilities 1,317.8 978.8 1,338.0
Creditors: Amounts falling due after more than one year
Borrowings and finance leases (392.6) (153.1) (456.4)
Other creditors (0.6) (0.5) (0.6)
Provisions for liabilities and charges (39.4) (38.5) (48.0)
Net assets excluding retirement benefits assets and liabilities 885.2 786.7 833.0
Retirement benefits net assets 6 3.3 78.6 3.6
Retirement benefits net liabilities 6 (28.2) (15.5) (25.9)
Net assets including retirement benefits assets and liabilities 860.3 849.8 810.7
Capital and reserves
Called up share capital 220.4 219.3 219.5
Share premium account 136.0 131.1 131.8
Capital redemption reserve 4.9 4.9 4.9
Associates' reserves - (0.3) 0.1
Profit and loss account 489.4 491.3 443.6
Shareholders' funds 850.7 846.3 799.9
Minority interests 9.6 3.5 10.8
860.3 849.8 810.7
Consolidated Cash Flow Statement
for the six months ended 30th September 2003
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
£ million £ million £ million
Reconciliation of operating profit to
net cash inflow from operating activities
Operating profit 93.0 86.2 167.6
Depreciation and amortisation charges 41.0 29.9 68.1
(Profit) / loss on disposal of tangible fixed assets and investments (0.9) (0.1) 0.5
Pension contributions less than / (in excess of) operating charge 6.1 8.7 (6.7)
Increase in owned stocks (13.7) (3.6) (7.7)
(Increase) / decrease in debtors (1.1) (1.6) 13.9
Increase / (decrease) in creditors and provisions 18.0 (3.8) (5.8)
Net cash inflow from operating activities 142.4 115.7 229.9
Cash Flow Statement
Net cash inflow from operating activities 142.4 115.7 229.9
Dividends received from associates - - 0.1
Returns on investments and servicing of finance (8.1) (4.7) (13.4)
Taxation (19.5) (18.7) (42.4)
Capital expenditure and financial investment (62.4) (58.3) (124.7)
Acquisitions 2.2 0.1 (271.2)
Disposals - 0.9 22.4
Equity dividends paid (38.6) (37.1) (54.0)
Net cash flow before use of liquid resources and financing 16.0 (2.1) (253.3)
Management of liquid resources 10.5 12.3 1.0
Financing
Issue and purchase of share capital 3.5 1.7 2.8
(Decrease) / increase in borrowings and finance leases (63.5) 2.4 259.7
Net cash (outflow) / inflow from financing (60.0) 4.1 262.5
(Decrease) / increase in cash in the period (33.5) 14.3 10.2
Reconciliation of net cash flow to movement in net debt
(Decrease) / increase in cash in the period (33.5) 14.3 10.2
Cash outflow / (inflow) from movement in borrowings and finance leases 63.5 (2.4) (259.7)
Cash inflow from movements in liquid resources (10.5) (12.3) (1.0)
Change in net debt resulting from cash flows 19.5 (0.4) (250.5)
Borrowings acquired with subsidiaries - - (0.4)
Loan notes cancelled / (issued) to acquire subsidiaries 1.1 (6.8) (6.8)
Translation difference 2.0 16.8 14.2
Movement in net debt in period 22.6 9.6 (243.5)
Net debt at beginning of period (402.5) (159.0) (159.0)
Net debt at end of period (379.9) (149.4) (402.5)
Total Recognised Gains and Losses
for the six months ended 30th September 2003
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
£ million £ million £ million
Profit attributable to shareholders 60.5 60.9 120.2
Currency translation differences on foreign currency net investments
and related loans (2.7) (23.9) (3.8)
Taxation on translation differences on foreign currency loans 5.8 10.2 8.3
Actuarial loss on retirement benefits schemes - - (133.6)
Taxation on actuarial loss on retirement benefits schemes - - 41.9
Total recognised gains and losses relating to the period 63.6 47.2 33.0
Prior year adjustment (95.7)
Total gains and losses recognised since last annual report (32.1)
Movement in Shareholders' Funds
for the six months ended 30th September 2003
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
£ million £ million £ million
Profit attributable to shareholders 60.5 60.9 120.2
Dividends (17.9) (17.0) (55.5)
Retained profit 42.6 43.9 64.7
Other recognised gains and losses relating to the period 3.1 (13.7) (87.2)
New share capital subscribed 5.1 3.5 4.4
Goodwill written back on set up of AGR Matthey - - 5.4
Net movement in shareholders' funds 50.8 33.7 (12.7)
Opening shareholders' funds (originally £895.6 million before prior year
adjustment of £95.7 million) 799.9 812.6 812.6
Closing shareholders' funds 850.7 846.3 799.9
Notes on the Accounts
for the six months ended 30th September 2003
1 Basis of preparation
The interim accounts were approved by the Board of Directors on 25th November
2003, and are unaudited but have been reviewed by the auditors. They do not
constitute statutory accounts, but have been prepared on the basis of the
accounting policies set out in the annual report for the year ended 31st March
2003, with the exception of the implementation of Financial Reporting Standard
(FRS) 17 - 'Retirement Benefits' as described in note 2. Information in respect
of the year ended 31st March 2003 is derived from the company's statutory
accounts for that year which have been delivered to the Registrar of Companies.
The auditors' report on those accounts was unqualified and did not contain any
statement under 237(2) and 237(3) of the Companies Act 1985.
2 FRS 17 - 'Retirement Benefits'
Under the provisions of FRS 17 - 'Retirement Benefits', which the group adopted
on 1st April 2003, the group has restated its accounts to reflect the revised
recognition of its retirement benefits schemes and the resultant changes to
deferred tax and amounts recognised in the profit and loss account and statement
of recognised gains and losses. Consequently, the group has restated its
comparatives for the six months to 30th September 2002 and the year to
31st March 2003. The effect is to decrease the profit after taxation by
£0.9 million in the six months to 30th September 2002 and by £1.8 million in the
year to 31st March 2003. The group's net assets at 30th September 2002 have
decreased by £2.1 million and at 31st March 2003 by £95.7 million.
3 Group turnover
Six months to Year to
30.9.03 30.9.02 31.3.03
Activity analysis £ million £ million £ million
Catalysts 593.3 526.1 1,083.4
Precious Metals 1,380.0 1,522.6 2,857.1
Colours & Coatings 126.7 131.6 255.7
Pharmaceutical Materials 64.7 66.3 127.7
2,164.7 2,246.6 4,323.9
Six months to Year to
30.9.03 30.9.02 31.3.03
Geographical analysis by origin £ million £ million £ million
Europe 1,533.4 1,491.6 2,964.7
North America 499.9 576.8 1,082.2
Asia 394.3 488.4 844.7
Rest of the World 119.3 129.6 234.2
2,546.9 2,686.4 5,125.8
Less inter-segment sales (382.2) (439.8) (801.9)
2,164.7 2,246.6 4,323.9
4 Total turnover excluding the value of precious metals
Six months to Year to
30.9.03 30.9.02 31.3.03
Activity analysis £ million £ million £ million
Catalysts 379.9 299.3 652.5
Precious Metals 59.1 69.0 132.0
Colours & Coatings 125.1 130.2 252.5
Pharmaceutical Materials 61.0 63.6 121.9
625.1 562.1 1,158.9
Notes on the Accounts
for the six months ended 30th September 2003
5 Total operating profit
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
Activity analysis £ million £ million £ million
Catalysts 56.5 44.0 95.3
Precious Metals 21.9 24.2 48.0
Colours & Coatings 11.8 11.6 25.3
Pharmaceutical Materials 20.7 19.1 36.7
Corporate (7.8) (7.9) (16.1)
103.1 91.0 189.2
Goodwill amortisation (9.9) (4.8) (13.7)
Exceptional items included in total operating profit - - (7.6)
93.2 86.2 167.9
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
Geographical analysis £ million £ million £ million
Europe 39.0 25.7 59.3
North America 36.7 44.3 87.3
Asia 12.3 6.1 12.4
Rest of the World 15.1 14.9 30.2
103.1 91.0 189.2
Goodwill amortisation (9.9) (4.8) (13.7)
Exceptional items included in total operating profit - - (7.6)
93.2 86.2 167.9
6 Retirement benefits assets and liabilities
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
Net return £ million £ million £ million
Expected return on scheme assets 18.8 23.3 46.4
Interest on scheme liabilities (15.9) (16.3) (32.5)
2.9 7.0 13.9
Pension fund assets and liabilities
Under FRS 17 the net assets of the group's retirement benefits schemes which are
in surplus and the net liabilities of the schemes which are in deficit are shown
separately in the balance sheet. At 31st March 2003 the group's UK defined
benefit pension schemes held assets with a market value of £478.3 million and
had a net surplus, after tax, of £2.6 million. The group's other main pension
schemes are in the USA. At 31st March 2003 these schemes held assets with a
market value of £54.5 million and had a net deficit of £9.1 million. The group
also operates schemes for post-retirement medical benefits (now closed to new
members) which are unfunded and had net liabilities of £15.6 million at 31st
March 2003.
Notes on the Accounts
for the six months ended 30th September 2003
7 Taxation
Six months to Year to
30.9.03 30.9.02 31.3.03
restated restated
£ million £ million £ million
United Kingdom 12.1 10.5 22.6
Overseas 17.1 17.3 33.8
Tax on ordinary activities before exceptional items and goodwill 29.2 27.8 56.4
amortisation
Tax on goodwill amortisation (1.2) - (0.7)
Tax on exceptional items included in total operating profit - - (2.0)
28.0 27.8 53.7
8 Dividends
An interim dividend of 8.2 pence per ordinary share will be paid on 4th February
2004 to shareholders on the register at the close of business on 5th December
2003.
9 Earnings per ordinary share
The calculation of earnings per ordinary share is based on a weighted average of
217,587,885 shares in issue (six months to 30th September 2002 - 216,714,951
shares, year to 31st March 2003 - 216,938,883). The calculation of diluted
earnings per ordinary share is based on the weighted average number of shares in
issue adjusted by the dilutive outstanding share options and long term incentive
plan.
Before exceptional items, goodwill amortisation and the tax thereon, basic
earnings per ordinary share were 31.8 pence (six months to 30th September 2002
restated - 30.4 pence, year to 31st March 2003 restated - 61.8 pence) and
diluted earnings per ordinary share were 31.7 pence (six months to 30th
September 2002 restated - 30.1 pence, year to 31st March 2003 restated - 61.4
pence).
10 Synetix
The group acquired the Synetix division of ICI in the year to 31st March 2003
and the estimated goodwill disclosed in those accounts was £191.4 million. This
has been restated to £195.7 million following the implementation of FRS 17.
Goodwill has now been revised to £198.5 million due to a further fair value
adjustment to the estimated realisable value of debtors.
Independent Review Report
by KPMG Audit Plc to Johnson Matthey Plc
Introduction
We have been instructed by the company to review the financial information set
out in the consolidated profit and loss account through to note 10 inclusive and
we have read the other information contained in the interim report and
considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by law,
we do not accept or assume responsibility to anyone other than the company for
our review work, for this report, or for the conclusions we have reached.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority which require that the accounting
policies and presentation applied to the interim figures should be consistent
with those applied in preparing the preceding annual accounts except where they
are to be changed in the next annual accounts in which case any changes, and the
reasons for them, are to be disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
- 'Review of Interim Financial Information', issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether accounting policies and presentation have been consistently
applied, unless otherwise disclosed. A review is substantially less in scope
than an audit performed in accordance with Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly we do not express
an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30th September 2003.
KPMG Audit Plc
Chartered Accountants
London
25th November 2003
Financial Calendar
2003
3rd December
Ex dividend date
5th December
Interim ordinary dividend record date
2004
4th February
Payment of interim dividend on ordinary shares
3rd June
Announcement of results for the year ending 31st March 2004
20th July
113th Annual General Meeting
Johnson Matthey Public Limited Company
Registered Office: 2-4 Cockspur Street, Trafalgar Square, London SW1Y
5BQ
Telephone: 020 7269 8400
Internet address: www.matthey.com
E-mail: jmpr@matthey.com
Registered in England - Number 33774
Registrars
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA
Telephone: 0870 600 3970
This information is provided by RNS
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