Johnson Matthey full year results

Johnson Matthey PLC
25 May 2023
 

Preliminary results for the                       
year ended 31st March 2023

25th May 2023


Catalysing the net zero transition to drive value creation

 

Continued progress on strategic execution

·     

Results in line with expectations albeit below the prior year, against a challenging macroeconomic backdrop

·     

Delivering on strategic milestones

·     

Executing on transformation: delivered c.£45 million cost savings in the year and on track for at least £150 million annualised cost savings by 2024/25

·     

Business wins in Catalyst Technologies and Hydrogen Technologies underpin confidence in strong growth prospects

·     

Strong cash generation and platform wins in Clean Air support long-term £4 billion+ cash generation target

·     

Accelerating demand for our energy transition solutions supported by government-led investment programmes

 

 


Reported results

 

Underlying results (continuing)¹

 



Year ended
31st March

%
change


Year ended
31st March

%
change

% change, constant FX rates

 

2023

2022


2023

2022

 

Revenue

£m

14,933

16,025

-7






 

Sales excluding
precious metals³

£m





4,201

3,778

+11

+6

 

Operating profit

£m

406

255

+59


465

553

-16

-21

 

Profit before tax (continuing)

£m

344

195

+76


404

493

-18


 

Profit after tax (continuing)

£m

264

116

n/a


326

407

-20


 

Basic earnings per share (continuing)

pence

144.2

60.9

n/a


178.6

213.2

-16


 

Ordinary dividend
per share

pence

77.0

77.0

-






 


Underlying performance - continuing operations¹,²

·     

Sales of £4.2 billion, up 6%, with higher prices to partially recover cost inflation, partly offset by lower average PGM prices

·     

Underlying operating profit of £465 million, down 21%. Almost half was due to lower average PGM prices with the remainder largely due to cost inflation and lower volumes in PGM Services and Clean Air. This was partly offset by transformation benefits

·     

Underlying earnings per share of 178.6p, down 16% due to lower underlying operating profit

·     

Free cash flow of £74 million, compared to £221 million in the prior year largely reflecting lower underlying operating profit and working capital movements

·     

Strong balance sheet with net debt of £1.0 billion; net debt to EBITDA of 1.6 times


Reported results

·     

Revenue down 7%, driven by lower average PGM prices

·     

Operating profit of £406 million, up materially, largely due to the absence of a one-off impairment in the prior period relating to Battery Materials

·     

Profit before tax (continuing) of £344 million, compared to £195 million in the prior period, reflecting higher operating profit due to the absence of the Battery Materials impairment

·     

Reported earnings per share (continuing) of 144.2 pence

·     

Cash inflow from operating activities of £291 million (2021/22: £605 million)

·     

Ordinary dividend of 77.0 pence per share stable year-on-year

 

Strategic highlights

·     

Agreed two strategic partnerships in Hydrogen Technologies (Plug Power and Hystar), won five additional large scale projects in Catalyst Technologies, and won Euro 7 business in Clean Air

·     

Hydrogen Technologies partnerships underpin targeted sales of more than £200 million by the end of 2024/25, with significant growth in sales and profitability thereafter. This business is anticipated to be breakeven in 2025/26

·     

Catalyst Technologies expected to deliver high single digit growth over the medium term, with margins returning to mid-teens within the next two years (by end of 2024/25)

·     

Clean Air - delivered £1.4 billion⁴ cash over two years, and outperforming the rate of business wins required to achieve our cash generation target of at least £4 billion by 2030/31

·     

Delivered c.£45 million cost savings in 2022/23 and on track to deliver at least
£150 million annualised savings by 2024/25

·     

Committed to achieving net zero by 2040 and now targeting 42% reduction in Scope 1 and Scope 2, and 42% reduction in Scope 3 greenhouse gas emissions by 2030


Liam Condon, Chief Executive Officer, commented:

I have now been with Johnson Matthey just over a year and it is exciting to see the progress we are making. We have navigated global macroeconomic challenges to report full year results in line with market expectations, with a stronger second half as we indicated back in November. We have also been delivering against our strategic milestones with important customer wins, which will drive growth. These include the strategic partnerships with Plug Power and Hystar in Hydrogen Technologies and the five large project wins in Catalyst Technologies, which already demonstrate our ability to win in a net zero world. It has been a good start and a year of progress, but there is much more to do.


The opportunity for Johnson Matthey is even greater than I had expected with government-led investment programmes developing at pace. The Inflation Reduction Act in the US, the EU's Green Deal Industrial Plan and continued commitments in the UK - all within the past year - are driving the net zero transition with greater urgency.


We have made progress in many areas and remain focused on accelerating our plans to simplify the organisation and speed up our decision making, as we build a stronger and more flexible platform for growth. Despite continued market volatility we are on track to deliver on our commitments and, with the opportunities ahead of us, I see a very bright future for Johnson Matthey.

 

 

Outlook for the year ending 31st March 2024

For 2023/24, we expect at least mid-single digit growth in operating performance at constant precious metal prices and constant currency. This is underpinned by efficiency benefits of
c.£55 million in the year.


In Clean Air, we expect strong growth in operating performance. Whilst external data suggest limited growth in vehicle production for 2023/24, margin expansion should mainly be driven by efficiency benefits. PGM Services' performance will be largely driven by precious metal prices, with recycling volumes expected to be subdued. We expect strong growth in operating performance for Catalyst Technologies. This reflects an improvement in licensing income and a significant uplift in margins, benefiting from pricing and efficiencies. We expect sales to grow strongly in Hydrogen Technologies and we will continue to invest for growth resulting in an operating loss at a similar level to 2022/23.⁵


Precious metal prices have been volatile and consequently it is difficult to predict how they may develop. To illustrate the impact they may have on our results, assuming prices remain at their current level⁶ for the remainder of 2023/24 there would be an adverse impact of c.£50 million⁷ on full year operating performance compared with the prior year. We are focused on mitigating the potential impact on our performance.


At current foreign exchange rates⁸, translational foreign exchange movements for the year ending 31st March 2024 are expected to adversely impact underlying operating profit by
c.£10 million.


Dividend

The board will propose a final ordinary dividend for the year of 55.0 pence per share at the Annual General Meeting (AGM) on 20th July 2023. Together with the interim dividend of
22.0 pence per share, this gives a total ordinary dividend of 77.0 pence per share, maintained at the same level as the prior year. Subject to approval by shareholders, the final dividend will be paid on 1st August 2023, with an ex-dividend date of 8th June 2023.


Board changes

We are pleased to announce the appointment of Barbara Jeremiah as an independent
Non-Executive Director. This appointment is with effect from 1st July 2023 and Barbara will also become a member of all four board committees. Barbara brings strong leadership, deep understanding of metals and extensive experience in North American markets.


Chris Mottershead will step down as Chair of the Remuneration Committee following the Company's AGM in July 2023 and from the board on 26th January 2024, following a nine-year tenure.


Barbara will become the Senior Independent Director, succeeding John O'Higgins who will become Chair of the Remuneration Committee. These changes will take effect from the end of our AGM.


Catalyst Technologies seminar

We will host a Catalyst Technologies seminar on 27th June to provide a deep-dive into the strong growth prospects of this business.


















 



 

Enquiries: 



Investor Relations

 

 

Martin Dunwoodie

Louise Curran

Carla Fabiano

Director of Investor Relations

Senior Investor Relations Manager

Senior Investor Relations Manager

+44 20 7269 8241

+44 20 7269 8235

+44 20 7269 8004

Media

 

 

Barney Wyld

Harry Cameron 

Group Corporate Affairs Director

Teneo

+44 20 7269 8001

+44 7799 152148

 

 

 

Notes:

1. 

Underlying is before profit or loss on disposal of businesses, gain or loss on significant legal proceedings together with associated legal costs, amortisation of acquired intangibles, share of profits or losses from non-strategic equity investments, major impairment and restructuring charges and, where relevant, related tax effects. For definitions and reconciliations of other non-GAAP measures, see pages 47 to 50.

2. 

Unless otherwise stated, sales and operating profit commentary refers to performance at constant exchange rates. Growth at constant rates excludes the translation impact of foreign exchange movements, with 2021/22 results converted at 2022/23 average rates. In 2022/23, the translational impact of exchange rates on group sales and underlying operating profit was a benefit of £193 million and £38 million respectively.

3. 

Revenue excluding sales of precious metals to customers and the precious metal content of products sold to customers.

4. 

Delivered around £600 million of cash in 2022/23 at actual precious metal prices, which equates to just over £400 million at constant prices (March 2022). Delivered around £1.4 billion cumulatively since 2021/22 at actual metal prices. At least £4 billion of cash under our range of scenarios from 1st April 2021 to 31st March 2031. Cash target pre-tax and post restructuring costs.

5. 

Outlook commentary for Clean Air, PGM Services, Catalyst Technologies and Hydrogen Technologies assumes constant precious metal prices and constant currency.

6. 

Based on average precious metal prices in May 2023 (month to date).

7. 

c.£50 million adverse impact represents a gross PGM price impact before any foreign exchange movement.

A US$100 per troy ounce change in the average annual platinum, palladium and rhodium metal prices each have an impact of approximately £1 million, £1.5 million and £0.75 million respectively on full year underlying operating profit. This assumes no foreign exchange movement.

8. 

At average foreign exchange rates for May 2023 month to date (£:US$ 1.25, £:€ 1.14, £:RMB 8.70) translational foreign exchange movements for the year ending 31st March 2024 are expected to adversely impact underlying operating profit by c.£10 million.

 

 



 

Chief Executive Officer update

 

In May 2022 we published our strategy to reinvigorate Johnson Matthey and drive value creation. This is centered around a more focused portfolio based on our core competencies - our expertise in platinum group metal (PGM) chemistry and refining, catalysis and process technology. We also set out the changes we need to transform our culture and enable the success of our strategy.

 


 

We are now a year in and have made a good start. I am encouraged, but there is much more to do. Transformation and cultural change take time, but we are starting to see the benefits as we focus, simplify and execute. We are already focusing our portfolio with the divestment of some non-core activities. Simplification is underway, for example with our efficiency programme, new finance shared service centre and digital HR platform. We are also executing on our commitments, evidenced by the strategic partnerships with Plug Power and Hystar, contract wins in Catalyst Technologies and business wins in Clean Air. To drive further discipline around execution we are embedding "Play to Win" behaviours across the organisation, changing remuneration to link much more directly to delivery of the strategy, and implementing sharper performance management with more robust and frequent feedback.

 


 

Our financial performance for the year was in line with market expectations, albeit below the prior year. The main factors driving performance were lower precious metal prices
(c.£55 million impact¹) and lower auto related volumes in Clean Air and PGM Services. The cost inflation of c.£150 million suffered in the year, particularly energy, raw materials and labour was almost completely recovered through pricing of c.£95 million and transformation savings of c.£45 million. As we sharpened our commercial focus and took action to increase efficiency, the recovery rate improved through the year as expected.

 

Growth markets accelerating

The past year has seen an acceleration and expansion of our growth markets, creating significant opportunities for our decarbonisation solutions. In the US, the Inflation Reduction Act enacted in August is the largest climate incentive programme in history changing the landscape for clean energy. The Act includes c.US$370 billion of incentives that will reduce the cost of clean energy projects, increasing investment and demand. Europe has introduced the Green Industrial Deal, a key pillar of which is the Net-Zero Industry Act which aims to scale up the manufacturing of clean technologies in the EU and support the fast transition to net zero. In the UK, the government has recently published its Hydrogen Champion Report with recommendations to accelerate the growth of the hydrogen sector. We expect these programmes will drive market growth and accelerate demand for our leading solutions.


Strategic milestones overview

In May 2022, we outlined 10 strategic milestones and have made good progress to date:


Customers:

·   

2 strategic partnerships in Hydrogen Technologies - Plug Power and Hystar

·   

Won targeted Euro 7 business, on track to deliver £4 billion+ cash² for Clean Air

·   

Won 5 additional large scale projects in Catalyst Technologies (targeting >10 across Catalyst Technologies and Hydrogen Technologies by end of 2023/24)




 

Notes:

1.  

Gross PGM price impact was c.£55 million, which was partly offset by foreign exchange benefits. Foreign exchange benefit reflects the pricing of PGMs in US dollars.

2.  

At least £4 billion of cash under our range of scenarios from 1st April 2021 to 31st March 2031. Cash target
pre-tax and post restructuring costs.

 

 

Investments:

·   

PGM Services refining capability expansion in China complete and ramping up

·   

Construction of Hydrogen Technologies CCM plant in the UK to expand total capacity from 2GW to 5GW is on track

·   

Targeted capacity expansion (fuel cells catalyst, formaldehyde catalyst) on track

·   

Continuing to divest non-core assets - Piezo Products within Medical Device Components and Diagnostic Services (Value Businesses)


People: Employee engagement did not improve as the degree and pace of transformation has impacted workload - this is the only target not on track


Sustainability:

·   

Reduced Scope 1+2 CO2e (carbon dioxide equivalent) emissions by 13% in 2022/23, ahead of targeted c.10% reduction by 2023/24 (from a 2019/20 baseline)

·   

Helped customers reduce CO2e emissions by 850,000 tonnes p.a. through use of our products (target >1mt p.a. by 2023/24)


1.  

Customers: winning new business to drive growth

Catalyst Technologies - Our Catalyst Technologies business is further strengthening its focus on the syngas value chain, growing the existing business alongside new opportunities in low carbon hydrogen (or carbon capture and storage - CCS-enabled hydrogen), sustainable fuels and low carbon solutions (retrofitting existing chemicals plants to decarbonise them). These growth opportunities will transform the scale and profitability of our business.

 

In the period to May 2023, we secured five low carbon hydrogen and sustainable fuels licences. The total sales value of these licences is c.£120 million over five years, subject to project completion. These projects include three sustainable fuels projects (including Strategic Biofuels' renewable diesel plant), and two low carbon hydrogen projects (H2H Saltend in the UK and a large scale low carbon hydrogen project in North America). These project wins are an important validation of our technologies in these new growth markets. We also gained a licence in low carbon solutions enabling the decarbonisation of existing assets. Across these areas, we now have a pipeline of more than 100 projects compared to over 70 projects a year ago.


In the near-term, we are committed to improving performance in Catalyst Technologies and strengthening our platform for growth. We have recently initiated a value creation programme with three main components: pricing, manufacturing efficiency and procurement.


With the combination of growth and efficiency programmes, we are confident Catalyst Technologies will deliver high single digit growth over the medium term, with margins returning to mid-teens within the next two years (by end of 2024/25). 

 

Hydrogen Technologies - In Hydrogen Technologies, our ambition is to be the market leader in CCMs (catalyst coated membranes). We are scaling the business in pursuit of our ambition and set a milestone to have signed at least two large scale strategic partnerships by the end of 2022/23. This is only the beginning and we expect further strategic partnerships in future.  

 

In January, we agreed a long-term strategic partnership with Plug Power in the US, one of the leading players in the hydrogen economy. This includes a supply and joint development agreement to at least 2030 as well as co-investment in new manufacturing capacity in the US. We have secured a second strategic partnership, this time in Europe, with Hystar a high-tech spin-out from SINTEF which is one of Europe's largest independent research institutions.

 

We will be supplying MEA (membrane electrode assembly) components for electrolysers to Hystar for the next three years. We will collaborate to enable further scale up and automation for Hystar's planned multi-GW production line, expected to be operational by 2025. Hystar is currently undertaking its HyPilot project with partners including Yara and Equinor, with end market demand driven by the trends in food production and energy security. We also entered a strategic partnership with Enapter (a leader in anion exchange membrane electrolysis), and extended our partnership with SFC Energy. These partnerships underpin our targeted sales of more than £200 million from Hydrogen Technologies by the end of 2024/25, with significant growth in sales and profitability thereafter. We anticipate this business to be breakeven in 2025/26.


PGM Services - In our refining business we won new contracts with a large miner and increased our market share with some key recyclers. We also won new contracts across our products business, most notably with our pharmaceutical and agrochemical customers.

 

Clean Air - In Clean Air we are focused on our target of generating at least £4 billion of cash to 2030/31 which is underpinned by tightening emission control legislation, business wins, manufacturing footprint consolidation and other fixed cost reductions. In 2022/23 we generated £600 million of cash, taking our cumulative cash generation over two years to £1.4 billion at actual precious metal prices.


Clean Air continues to benefit from tightening emissions control legislation globally, including the Euro 7 proposal submitted to the European Parliament in November 2022. This tightening will result in more complex emission control systems and increase our value per vehicle.


We have continued to build our commercial muscle, improving our inflation recovery rate with the majority of the recovery in the second half of the year, whilst also winning our targeted business linked to Euro 7 and equivalent legislation globally. During the year we won all of Mercedes Benz's light duty diesel business in Europe, a large truck OEM's Euro 7 business in heavy duty diesel as well as the global contracts covering light duty gasoline and diesel with a leading automotive OEM. As further evidence of our stronger commercial muscle, these wins were achieved whilst negotiating inflationary cost increases and improving our customer satisfaction score. Consequently, we are outperforming the rate of business wins required to achieve our cash generation target of at least £4 billion by 2030/31.


As we continue to drive efficiency in Clean Air, we are reducing fixed costs and streamlining SG&A expenses and production overheads. We have also announced our intention to close or exit 4 of our 16 sites including completion of the closure of our UK manufacturing facility. We will be repurposing this building for our new Hydrogen Technologies gigafactory.


2.  

Investments: scaling to capture future growth

We are making disciplined investments to drive growth and deliver attractive returns. Over the three year period to 2024/25 we now expect cumulative capital expenditure of c.£1.1 billion (previously c.£1 billion) mainly reflecting an acceleration in Hydrogen Technologies to capture our US opportunity with Plug and modest inflation effects.


PGM Services is our foundational business and a key enabler of growth for the group. It is therefore critical that we invest to retain our position as the world's leading recycler of PGMs. We are investing in the capacity, resilience, efficiency and long-term sustainability of our refinery assets. In China, the expansion of our refining facility was completed. With this capability, we can now offer full refining services in China. Alongside these investments, we are expanding our fuel cells catalyst capacity within PGM Services to support our Hydrogen Technologies business as it scales up.  

 

In Hydrogen Technologies, we are scaling our business and manufacturing capacity to meet growing customer demand. In the UK, construction of our planned 3GW capacity expansion is on track to be completed by the end of 2023/24. Following the announcement of the strategic partnership with Plug Power, we are co-investing into a new manufacturing plant in the US. This plant - expected to start production in 2025 - will initially have 5GW capacity scaling to 10GW over time. Overall, these expansion plans will take our capacity from 2GW today, scaling up to 15GW over time.


To further simplify our portfolio, we are continuing to divest non-core assets and we are on track to complete the divestiture of Value Businesses by the end of 2023/24. We sold Piezo Products (part of Medical Device Components) and recently announced the sale of Diagnostic Services, both within Value Businesses. In addition, we exited battery materials recycling.


3.  

People

Our people and culture change will be key to the success of our strategy. In the past year, we have been driving change to create a stronger performance culture:


1.

People growth - sharper and simpler performance management, an increased focus on people development, and greater recognition of performance and success


2.

Customer focus - building our commercial muscle, increasing our execution capability in capital projects and improving our manufacturing efficiency

 

3.

Simplification - enhanced cost discipline, streamlining processes to improve speed and user experience, assigning clear accountabilities


Change takes time and is challenging for any organisation but I am pleased with the positive attitude of our employees and their commitment to making JM a success. We remain focused on significantly improving engagement over time. From a 2022/23 baseline of 6.9, we are now targeting a 3 decimal point increase in employee engagement to 7.2 by 2024/25, with a target of 8.0 and above in the longer term.


We have made progress with our transformation programme, delivering c.£45 million of cost savings in 2022/23, ahead of our target of c.£35 million, and are on track to deliver at least £150 million savings by the end of 2024/25. Examples of the actions taken to deliver these benefits include delayering the organisation with 170 management roles removed; procurement, IT and HR savings; and creating a finance shared service centre in Malaysia. Going forward our focus will be on further consolidating our Clean Air manufacturing footprint, additional procurement savings, enhanced capability in capital project delivery, and further rationalising real estate. Associated costs to deliver the programme are around £100 million, all of which are cash.


4.  

Sustainability

Sustainability is at the heart of everything we do at Johnson Matthey. We are committed to achieving net zero by 2040 and this year we have decided to increase our ambition with new GHG (greenhouse gas) reduction targets to 2030. We are now targeting a 42% reduction in both Scope 1 and Scope 2, and Scope 3 GHG emissions (purchased goods and services category)¹ which is fully aligned with a 1.5 degree scenario pathway to net zero. We have submitted these targets to SBTi (Science Based Targets initiative) for validation according to their Net Zero Standard.


To support our new strategy and provide focus and simplification, we have also reduced the number of sustainability targets for 2030 and organised them under two new themes - Planet and People. These changes will better articulate the most material benefits that we can bring to society.


We are on track to deliver the sustainability milestones we committed to during our strategy update in May 2022. We have already achieved our targeted c.10% reduction in our Scope 1 and 2 CO2e emissions. In addition, we are also helping customers reduce their own GHG emissions by more than 1 million tonnes per annum through the use of our products by the end of 2023/24. As at 31st March 2023, our customers have avoided 850,000 tonnes p.a. of GHG emissions using our products and solutions.

 

1.  

Previous target was a reduction in Scope 1 and Scope 2 GHG emissions of at least 33% by 2030, and reduction of Scope 3 GHG emissions (purchased goods and services category) of at least 20% by 2030. Baseline measure is 2019/20.



 

Summary of underlying operating results from continuing operations

Unless otherwise stated, commentary refers to performance at constant rates¹. Percentage changes in the tables are calculated on rounded numbers.

 

Sales

(£ million)

Year ended
31st March

% change

% change,
constant FX rates

2023

2022²

Clean Air

2,644

2,457

+8

+2

PGM Services

570

587

-3

-8

Catalyst Technologies

560

454

+23

+17

Hydrogen Technologies

55

25

+120

+112

Value Businesses³,

470

354

+33

+28

Eliminations

(98)

(99)



Sales (continuing)

4,201

3,778

+11

+6

 

 

Underlying operating profit
(£ million)

Year ended
31st March

% change

% change,
 constant FX rates

2023

2022²

Clean Air

230

302

-24

-28

PGM Services

257

308

-17

-21

Catalyst Technologies

51

50

+2

-2

Hydrogen Technologies

(45)

(33)

n/a

n/a

Value Businesses³,

40

12

n/a

n/a

Corporate

(68)

(86)



Underlying operating profit (continuing)

465

553

-16

-21

 

 

Reconciliation of underlying operating profit
to operating profit
(£ million)

Year ended
31st March

2023

2022²

Underlying operating profit (continuing)

465

553

Profit on disposal of businesses⁶

12

106

Major impairment and restructuring charges⁶

(41)

(440)

Amortisation of acquired intangibles

(5)

(6)

Gains and losses on significant legal proceedings⁶

(25)

42

Operating profit (continuing)

406

255

 

Notes:

1.  

Growth at constant rates excludes the translation impact of foreign exchange movements, with 2021/22 results converted at 2022/23 average rates. In 2022/23, the translational impact of exchange rates on group sales and underlying operating profit was a benefit of £193 million and £38 million respectively.

2.  

2021/22 is restated to reflect the group's new reporting structure.

3.  

Includes Battery Systems, Medical Device Components, Diagnostic Services, Battery Materials and Advanced Glass Technologies.

4.  

Sales relating to divestments: Advanced Glass Technologies (2021/22: £62 million, 2022/23: nil) and Battery Materials (2021/22: £12 million, 2022/23: £21 million).

5.  

Operating profit or loss related to divestments: Advanced Glass Technologies (2021/22: £16 million,
2022/23: -£1 million) and Battery Materials (2021/22: -£22 million, 2022/23: £3 million).

6.  

For further detail on these items please see page 20.



 

Second half performance - continuing operations

 

Sales

(£ million)

H2

H2

% change

% change,
constant FX rates

2022/23

2021/22¹

Clean Air

1,366

1,261

+8

+3

PGM Services

288

287

-

-5

Catalyst Technologies

285

231

+23

+17

Hydrogen Technologies

32

15

+113

+100

Value Businesses

235

173

+36

+29

Eliminations

(50)

(45)



Sales (continuing)

2,156

1,922

+12

+7


 

Continuing sales were up 7% in the second half, with good growth across most of our businesses. Clean Air grew supported by higher pricing as we benefited from increased inflation recovery. In Catalyst Technologies, performance was strong driven by growth in licensing following recent project wins and also first fills as new plants came online. Performance was also supported by better pricing.  Sales in Hydrogen Technologies more than doubled, with higher commercial volumes enabled by improved operational performance. Within Value Businesses, Battery Systems saw strong performance. Sales were partly offset by PGM Services which was impacted by lower average PGM prices and reduced refinery volumes.


 

Underlying operating profit
(£ million)

H2

H2

% change

% change,
 constant FX rates

2022/23

2021/22¹

Clean Air

122

152

-20

-24

PGM Services

132

141

-6

-12

Catalyst Technologies

30

20

+50

+43

Hydrogen Technologies

(21)

(21)

n/a

n/a

Value Businesses

19

11

+73

+46%

Corporate

(39)

(47)



Underlying operating profit (continuing)

243

256

-5

-12

 

Continuing underlying operating profit declined 12% in the second half, with the largest decline in Clean Air. Clean Air was impacted by lower volumes and mix, although we did experience benefits from our transformation programme. PGM Services saw weaker performance largely reflecting lower average PGM prices and reduced refinery volumes. Across our other businesses, Catalyst Technologies and Value Businesses grew year-on-year whilst Corporate costs were lower.

 

 

 

Notes:

1.  

2021/22 is restated to reflect the group's new reporting structure.

 



Full year operating results by sector

 

Clean Air

 

Improved sequential performance supported by increased inflation recovery

·    

Sales up 2% supported by pricing as we partially recovered higher input costs

·    

Underlying operating profit decreased 28% impacted by cost inflation, product mix and lower volumes

·    

Margins saw an improvement during the second half resulting from increased inflation recovery and benefits from our transformation programme

·    

On track to deliver at least £4 billion of cash in the decade to 2030/31, having delivered £1.4 billion since 2020/21 at actual precious metal prices

 


Year ended
31st March

% change

% change, constant FX rates


2023

2022

 

£ million

£ million

Sales





Light duty diesel

1,075

1,005

+7

+4

Light duty gasoline

599

574

+4

-1

Heavy duty diesel

970

878

+10

+3

Total sales

2,644

2,457

+8

+2

 

 




Underlying operating profit

230

302

-24

-28

Underlying margin

8.7%

12.3%

 

 

Reported operating profit

191

273

 

 

 

Clean Air provides catalysts for emission control after-treatment systems used in light and heavy duty vehicles powered by internal combustion engines.

 

Sales during the period were up 2%. Vehicle production was impacted by a challenging supply chain environment as well as COVID-related lockdowns in China. Although semiconductor shortages have gradually eased, other supply chain disruptions such as labour availability and logistic bottlenecks have continued to affect vehicle production. As the year progressed, pent-up demand and the easing of supply chain issues led to an improvement in production activity.


Light duty catalysts - diesel and gasoline

Light duty diesel

Light duty diesel sales were up 4%, outperforming a declining market. We saw strong performance in the Americas and good performance in Europe, partly offset by a decline in Asia. In Europe, which represents around 60% of our total light duty diesel sales, our growth was driven by strong platform performance despite some automotive OEMs continuing to prioritise commercial vehicles over the passenger car platforms that we serve. In the Americas we significantly outperformed a growing market, driven by the ramp up of a new platform and strong platform performance.


In Asia, our performance was in line with a declining market, which was impacted by a weak commercial vehicle market in China and an increase in electric vehicle penetration. Our sales decline in the region was also the result of lower revenue per unit as a result of product mix.


Light duty gasoline

Light duty gasoline sales were down 1%, underperforming the overall global market. In Europe and Asia, previous platform losses led to a decline in sales in both regions. In the Americas, sales grew slightly ahead of a strong underlying market as we benefited from the ramp up of new platforms. We continue to invest in light duty gasoline to support our future growth with early signs of success. For example, two OEMs in the high performance sports car segment have chosen JM to be sole supplier which validates the strength of our technology and gives confidence in winning future light duty gasoline platforms.


Heavy duty diesel catalysts

In heavy duty diesel sales were up 3%, significantly outperforming a declining market. We saw strong performance in Europe and the Americas, partly offset by a decline in Asia. In Europe our sales significantly outperformed a growing market due to higher revenue per vehicle and we also benefited from good performance in our off road platforms. In the Americas, the high value Class 8 truck cycle peaked during the last quarter of our fiscal year. As expected, our heavy duty sales benefited from this cycle and were also supported by improved product mix. Sales in Asia declined as COVID lockdowns in China significantly impacted vehicle production and led to customers building stock in the prior year in anticipation of these lockdowns. Looking ahead, our leading position in heavy duty means we are well placed to benefit from future developments including hydrogen powered internal combustion engines.


Underlying operating profit

Underlying operating profit declined 28% to £230 million and margins decreased to 8.7%. This largely reflected cost inflation, product mix, lower volumes, and the transactional impact of exchange rates. We saw a sequential improvement in margins during the year, benefiting from an acceleration in the recovery of cost inflation and benefits from our transformation programme.


On track to deliver at least £4 billion of cash in the decade to 2030/311

We delivered another year of strong cash flow as we continue to focus on driving efficiencies, optimising capital expenditure and working capital. We generated around £600 million² of cash and a cumulative £1.4 billion² since 2021/22, the first year of this guidance.



 

 

 

 

 

 

 

 

 

 

Notes:

1.  

At least £4 billion of cash under our range of scenarios from 1st April 2021 to 31st March 2031. Cash target
pre-tax and post restructuring costs.

2.  

Delivered around £600 million of cash in 2022/23 at actual precious metal prices, which equates to just over £400 million at constant prices (March 2022). Delivered around £1.4 billion cumulatively since 2021/22 at actual metal prices.

PGM Services

 

Performance reflects lower average PGM prices and reduced refinery volumes

·   

Sales performance primarily reflects lower average PGM prices and reduced refinery volumes due to lower auto scrap levels as a result of the continued buoyant used car market

·   

Underlying operating profit was down mainly due to lower average PGM prices and reduced refinery volumes

·   

Cost inflation was more than offset by efficiencies as well as higher pricing across both our refining and products businesses

 


Year ended
31st March

  % change

% change, constant FX rates


2023

2022

 

£ million

£ million

Sales





PGM Services

570

587

-3

-8




 

 

Underlying operating profit

257

308

-17

-21

Underlying margin

45.1%

52.5%

 

 

Reported operating profit

257

307

 

 







 

PGM Services is the world's largest recycler of platinum group metals (PGMs). This business has an important role in enabling the energy transition through providing circular solutions as demand for scarce critical materials increases. PGM Services provides a strategic service to the group, supporting Clean Air, Catalyst Technologies and Hydrogen Technologies with security of metal supply in a volatile market, recycling capabilities and manufactures value added PGM products for both internal and external customers.


In PGM Services, sales declined 8% against a strong prior year. This was primarily driven by lower average PGM prices, where average prices for platinum, palladium and rhodium declined around 10%, 20% and 30% compared to the prior year. Recent PGM price weakness has been driven by lower auto demand and also liquidation of some excess rhodium positions in an illiquid market.


In our refineries, intake volumes were down as expected due to lower auto scrap resulting from a buoyant used car market. Sales were partly offset by benefits from operational efficiency and higher pricing. In a volatile market, our metal trading business had another good year, with sales only moderately down against a strong prior period.


Across our PGM products businesses, sales were moderately down. This was primarily driven by lower sales of catalysts for the pharmaceutical and agricultural chemicals markets due to the phasing of customers' orders.


Underlying operating profit

Underlying operating profit declined 21% mainly impacted by lower average PGM prices
(c.£55 million impact¹) and reduced refinery volumes. Cost inflation was more than offset by efficiency benefits, as well as higher pricing across both our refining and products businesses.

 

Notes:

1.  

Gross PGM price impact was c.£55 million, which was partly offset by foreign exchange benefits. Foreign exchange benefit reflects the pricing of PGMs in US dollars.



Catalyst Technologies

 

Strong sales growth and improved performance in the second half

·   

Sales up 17% largely reflecting growth in licensing and catalyst refills, as well as improved pricing

·   

Strong performance in licensing with five licence wins within low carbon hydrogen and sustainable fuels (includes one win in May 2023)

·   

Underlying operating profit was in line with the prior year. Improved pricing, licensing and transformation benefits offset significant cost inflation and the loss of Russian business

 


Year ended
31st March

  % change

% change, constant FX rates


2023

2022

 

£ million

£ million

Sales





Catalyst Technologies

560

454

+23

+17




 

 

Underlying operating profit

51

50

+2

-2

Underlying margin

9.1%

11.0%

 

 

Reported operating profit

43

78

 

 







 

Catalyst Technologies is focused on enabling the decarbonisation of chemical and fuels value chains and we have leading positions in syngas: methanol, ammonia, hydrogen and formaldehyde. Catalyst Technologies has three key segments: industrial and consumer, traditional fuels and sustainable solutions that help catalyse the transition to net zero. Our revenue streams include licensing and engineering income, first fill and refill catalysts.


Sales during the period were up 17%, with strong growth in licensing and growth in first fills and refills reflecting higher pricing and positive mix.


Industrial and consumer

Industrial and consumer includes our traditional syngas (methanol, ammonia and formaldehyde) catalyst offerings as well as the majority of our current licensing business. We saw double digit sales growth reflecting strong growth in licensing and first fills as new plants came on stream following licence wins in recent years. In the year, we signed six new licences (2021/22: three licences).  Refills also grew well supported by growth in ammonia and formaldehyde.


Traditional fuels

Traditional fuels includes our refining additives, hydrogen and natural gas purification offerings. Growth in the segment was mainly driven by refills. High global demand for liquified natural gas has led to strong sales of our natural gas purification catalysts.


Sustainable solutions

Sustainable solutions includes our new growth markets with our technology in low carbon hydrogen, sustainable fuels and low carbon solutions. In the period to May 2023, we won five large scale projects across low carbon hydrogen and sustainable fuels:


·   

H2H Saltend, expected to be one of the UK's largest low carbon hydrogen projects

·   

A large scale low carbon hydrogen licence in North America

·   

A sustainable fuels project with Strategic Biofuels, also in North America

·   

A commercial scale sustainable fuels project in North America

·   

A commercial scale sustainable fuels project in Europe



In addition, we won a low carbon solutions licence in the year which will enable the decarbonisation of one of our customer's existing assets.


Underlying operating profit

Underlying operating profit of £51 million was in line with the prior year and margins declined to 9.1%. However, we saw good improvement in operating margin from the first to the second half of the year (1H: 7.6% and 2H: 10.5%). Higher pricing, licensing and the benefits of our transformation programme offset significant cost inflation and the loss of catalyst sales and higher margin licensing income in Russia (c.£10 million loss of profit).

 

Hydrogen Technologies

 

Sales more than doubled and continued investment to scale the business

·   

Agreed strategic partnerships with Plug Power and Hystar

·   

Sales more than doubled driven by higher volumes for new and existing customers in fuel cells, growth in electrolysers and increased manufacturing output as we focused on improving operational performance

·   

Underlying operating loss reflects continued investment to scale the business to meet demand partly offset by higher volumes

 

 

Year ended
31st March

% change

% change, constant FX rates

 

2023

2022

 

£ million

£ million

Sales





Hydrogen Technologies

55

25

+120

+112






Underlying operating loss

(45)

(33)

n/a

n/a

Underlying margin

n/a

n/a

 

 

Reported operating loss

(46)

(33)

 

 

 

In Hydrogen Technologies, we provide catalyst coated membranes that are critical performance defining components of fuel cells and electrolysers.


In Hydrogen Technologies, sales in the year more than doubled to £55 million. This was primarily driven by growth in fuel cells where we delivered higher commercial volumes for new and existing customers, enabled by improved operational performance. We continue to focus our fuel cells business towards strategic customers to develop deeper and longer relationships. This trend will continue given the recent strategic partnership announcements, for example with Plug Power which entails a long-term supply agreement, joint development agreement and co-investment into new manufacturing capacity. In electrolysers, we saw higher sales from the supply of samples, prototypes and components as we develop strategic partners.


In the year, we saw higher manufacturing output as we focused on operational performance to improve our processes and drive efficiency. Sales also benefited as constraints eased following the greater use of capacity in the prior period to qualify new customer products.


Underlying operating loss

Underlying operating loss of £45 million primarily reflects increased investment into product development and building capability as we scale the business to meet customer demand, partly offset by higher volumes.

 

 

 

 



 

Value Businesses

 

Comparable performance materially improved

·   

Market recovery and structural improvements driving improved performance

·   

Completed the sale of Piezo Products, part of Medical Device Components, and agreed the sale of Diagnostic Services with completion expected in the third quarter of calendar 2023

 

 

Year ended
31st March

% change

% change, constant FX rates

 

2023

2022

 

£ million

£ million

Sales





Value Businesses¹

470

354

+33

+28






Underlying operating profit²

40

12

n/a

n/a

Underlying margin

8.5%

3.4%

 

 

Reported operating profit / (loss)

38

(276)

 

 

 

Value Businesses is managed to drive shareholder value from activities considered to be
non-core to JM, and now principally comprises Battery Systems, Medical Device Components and Diagnostic Services. In the year, we completed the sale of Piezo Products, part of Medical Device Components, and we have also agreed the sale of Diagnostic Services and Battery Materials. In 2021/22, we completed the sale of Advanced Glass Technologies.


Overall, sales in Value Businesses were up 28% in the year. On a like for like basis (i.e. excluding Advanced Glass Technologies and Battery Materials), sales were up 55%.


In Battery Systems, sales almost doubled. We ramped up production of higher value next generation e-bike products and satisfied a backlog of orders as supply chain constraints eased. Medical Device Components also saw strong sales growth as we gained market share following recent project wins, and benefited from higher effective production capacity following investments to upgrade assets and drive efficiency. Diagnostic Services also grew strongly reflecting a continued recovery in demand as COVID-related travel disruption eased and a stronger commercial focus, supported by a higher oil price which drove increased customer activity.


Underlying operating profit

Underlying operating profit of £40 million, an improvement of £28 million on the prior year, reflecting both a supportive market environment and the execution of comprehensive value creation plans that each business is driving forward.


Excluding the results of Advanced Glass Technologies and Battery Materials, underlying operating profit was £38 million², an improvement of £20 million.


Corporate

Corporate costs were £68 million, a decrease of £18 million from the prior period, largely reflecting transformation benefits as well as a one-off benefit from lower pension charges.

 

Notes:

1.  

Sales relating to divestments: Advanced Glass Technologies (2021/22: £62 million, 2022/23: £nil) and Battery Materials (2021/22: £12 million, 2022/23: £21 million).

2.  

Operating profit or loss related to divestments: Advanced Glass Technologies (2021/22: £16 million,
2022/23: -£1 million) and Battery Materials (2021/22: -£22 million, 2022/23: £3 million).

 

 

Financial review - continuing operations


Research and development (R&D)

R&D spend was £213 million in the year. This was up from £201 million in the prior year and represents c.5% of sales excluding precious metals. We are investing in our growth areas, including Catalyst Technologies and also Hydrogen Technologies as we continue to commercialise our fuel cell and electrolyser offerings. In addition, we are also investing in our Clean Air business to support future platform wins ahead of new emission regulations.

 

Foreign exchange

The calculation of growth at constant rates excludes the impact of foreign exchange movements arising from the translation of overseas subsidiaries' profit into sterling. The group does not hedge the impact of translation effects on the income statement. The principal overseas currencies, which represented 79% of the non-sterling denominated underlying operating profit in the year ended 31st March 2023, were:


 


Share of 2022/23
non-sterling denominated
underlying operating profit

Average exchange rate

Year ended
31st March

% change


 

2023

2022

US dollar

34%

1.20

1.36

-12%

Euro

37%

1.16

1.18

-2%

Chinese renminbi

8%

8.26

8.75

-6%

 

For the year, the impact of exchange rates increased sales by £193 million and underlying operating profit by £38 million.

 


 

If current exchange rates (£:US$ 1.25, £:€ 1.14, £:RMB 8.70) are maintained throughout the year ending 31st March 2024, foreign currency translation will have an adverse impact of
c.£10 million on underlying operating profit. A one cent change in the average US dollar and euro exchange rates have an impact of approximately £2 million on operating profit whilst a ten fen change in the average rate of the Chinese renminbi approximately has a £1 million impact on full year underlying operating profit.

 

 

 

Efficiency savings

 

We have commenced our new group transformation programme as part of which we expect to deliver efficiencies of at least £150 million by 2024/25. Associated costs to deliver the programme are around £100 million, all of which are cash. In 2022/23, we delivered c.£45 million of savings, ahead of our target of c.£35 million.

 

£ million

Efficiency savings delivered in
2022/23

Associated costs incurred in 

2022/23

Transformation programme

45

20

 

 

 

 

 

 

 

 

 

 

Items outside underlying operating profit

 

 

 

Non-underlying (charge) / income

(£ million)

As at
31st March 2023

As at
31st March 2022

Profit on disposal of businesses

12

106

Major impairment and restructuring charges

(41)

(440)

Amortisation of acquired intangibles

(5)

(6)

Gains and losses on significant legal proceedings

(25)

42

Total

(59)

(298)





 

A gain of £12 million was recognised relating to the sale of our Battery Materials Canada and Piezo Products businesses.


There was a £41 million charge relating to major impairment and restructuring charges comprised of a net impairment charge of £10 million and restructuring charges of £31 million. The impairment charge includes impact from further consolidation of our Clean Air manufacturing footprint to create a simplified and agile structure, as well as an impairment of goodwill in Diagnostic Services and further impairment charges in relation to parts of the Battery Materials business. Restructuring charges were also recognised in relation to our Clean Air manufacturing footprint as well as the transformation initiatives announced in May 2022 which largely comprise redundancy and implementation costs.


The group paid £25 million in respect of a settlement with a customer on mutually acceptable terms with no admission of fault relating to failures in certain engine systems for which the group supplied a particular coated substrate as a component for that customer's emissions after-treatment systems.


Finance charges

Net finance charges in the period amounted to £61 million, broadly in line with the prior year charge of £60 million.


Taxation

The tax charge on underlying profit before tax for the year ended 31st March 2023 was £78 million, an effective underlying tax rate of 19.3%, up from 17.4% in 2021/22. This largely reflects the settlement of provisions for uncertain tax positions in the prior year.


The effective tax rate on reported profit for the year ended 31st March 2023 was 23.2%. This represents a tax charge of £73 million, compared with £57 million in the prior period.


We currently expect the effective tax rate on underlying profit for the year ending 31st March 2024 to be around 20% reflecting the increase to the UK corporate tax rate.


Post-employment benefits

IFRS - accounting basis

At 31st March 2023, the group's net post-employment benefit position, was a surplus of
£165 million.


The cost of providing post-employment benefits in the year was £40 million, down from
£62 million last year.

 

 

Capital expenditure

Capital expenditure was £303 million in the year, 1.6 times depreciation and amortisation (excluding amortisation of acquired intangibles). In the period, key projects included:


·     

Hydrogen Technologies - investing to increase manufacturing capacity in the UK

·     

PGM Services - investing in the resilience, efficiency and long-term sustainability of our refinery assets, and also our fuel cells capacity expansion


Strong balance sheet

Net debt as at 31st March 2023 was £1,023 million, an increase from £856 million at
31st March 2022 and £963 million at 30th September 2022. Net debt is £19 million higher at
£1,042 million when post tax pension deficits are included. The group's net debt (including post tax pension deficits) to EBITDA was 1.6 times (31st March 2022: 1.2 times,
30th September 2022: 1.5 times), which was at the lower end of our target range of 1.5 to 2.0 times.


We use short-term metal leases as part of our mix of funding for working capital, which are outside the scope of IFRS 16 as they qualify as short-term leases. Precious metal leases amounted to £138 million as at 31st March 2023 (31st March 2022: £140 million,
30th September 2022: £129 million). 


Free cash flow and working capital

Free cash flow was £74 million in the year, compared to £221 million in the prior period, largely reflecting lower underlying operating profit and working capital movements.


Excluding precious metal, average working capital days to 31st March 2023 increased to 42 days compared to 36 days to 31st March 2022.


Going concern

The directors have reviewed a range of scenario forecasts for the group and have reasonable expectation that there are no material uncertainties that cast doubt about the group's ability to continue operating for at least twelve months from the date of approving these annual accounts.


As at 31st March 2023, the group maintains a strong balance sheet with around £1.6 billion of available cash and undrawn committed facilities. Free cash flow was positive in the year at £74 million. Net debt at 31st March 2023 was £1,023 million at 1.6 times net debt (including post tax pension deficits) to EBITDA which was at the lower end of our target range.


Although impacted by the significant headwinds faced in the current macroeconomic environment such as high inflation, the impacts of Russia's war with Ukraine and uncertainty in outlook for major economies, the group's performance during the period was resilient, both in terms of underlying operating profit and cash flow. For the purposes of assessing going concern, we have revisited our financial projections using the latest forecasts for our base case scenario. The base case scenario was stress tested to a severe-but-plausible downside case which reflects severe recession scenarios.


The severe-but-plausible case for Clean Air modelled scenarios assuming a smaller LD vehicle market from reduced vehicle production and/or market consumer demand disruption or greater share of zero emission vehicles in market, assumed to result in a 10% drop in sales. 

 

 

For PGM Services and Catalyst Technologies, it also assumed a reduction in sales and associated operating profit based on adverse scenarios using external and internal market insights.


Additionally, as part of viability testing, the group considered scenarios including the impact from metal price volatility, higher inflation, delays in capital projects and delivery of cost transformation savings, and slow down of operations in China. Whilst the combined impact would reduce profitability and EBITDA against our latest forecast, our balance sheet remains strong with ample working capital and net debt/EBITDA ratios.


The group has a robust funding position comprising a range of long-term debt and a
£1 billion five year committed revolving credit facility maturing in March 2027 which was entirely undrawn at 31st March 2023. There was £521 million of cash held in money market funds and £129 million of other cash and bank deposits. Of the existing loans, £151 million of term debt and £4 million of other bank loans mature in the period to June 2024. We assume no refinancing of this debt in our going concern modelling.  As a long time, highly rated issuer in the US private placement market and having recently extended its UK Export Financing facility, the group expects to be able to access additional funding in its existing markets if required but the going concern conclusion is not dependant on such access as the company has sufficient financing and liquidity to fund its obligations in the base and severe-but-plausible scenarios. The group also has a number of additional sources of funding available including uncommitted metal lease facilities that support precious metal funding. Whilst we would fully expect to be able to utilise the metal lease facilities, they are excluded from our going concern modelling.


Under all scenarios above, the group has sufficient headroom against committed facilities and key financial covenants are not in breach during the going concern period. To give further assurance on liquidity, we have also undertaken a reverse stress test to identify what additional or alternative scenarios and circumstances would threaten our current financing arrangements. This shows that we have headroom against a further decline in profitability beyond the severe-but-plausible scenario or a significant increase in borrowings. Furthermore, the group has a range of levers which it could utilise to protect headroom including reducing capital expenditure, renegotiating payment terms and reducing future dividend distributions. 


The directors are therefore of the opinion that the group has adequate resources to fund its operations for the period of at least twelve months following the date of these financial statements and there are no material uncertainties relating to going concern so determine that it is appropriate to prepare the accounts on a going concern basis.

 

 

 

 

 

 

 

 

 

 

 


Consolidated Income Statement

for the year ended 31st March 2023











2023 

 

2022 




Notes

 

£m

 

£m





 

 

 



Revenue

2,3


14,933

 

16,025


Cost of sales



(13,939)

 

(14,971)


Gross profit


 

994


1,054


Distribution costs


 

(117)


(101)


Administrative expenses


 

(412)


(400)


Profit on disposal of businesses

13

 

12


106


Amortisation of acquired intangibles

4

 

(5)

 

(6)


Gains and losses on significant legal proceedings

4

 

(25)

 

42


Major impairment and restructuring charges

5

 

(41)


(440)


Operating profit


 

406


255


Finance costs


 

(110)


(101)


Investment income


 

49


41


Share of losses of associates


 

(1)


-


Profit before tax from continuing operations


 

344

 

195


Tax expense


 

(80)

 

(79)


Profit for the year from continuing operations


 

264

 

116


Profit / (loss) after tax from discontinued operations


 

12

 

(217)


Profit / (loss) for the year


 

276

 

(101)


 

 


 

 

 






 

 pence 

 

 pence





 

 

 



Earnings / (loss) per ordinary share

 

 

 



 

Basic

6

 

150.9


(52.6)


 

Diluted

6

 

150.2


(52.6)





 

 




Earnings per ordinary share from continuing operations

 



 

Basic

6

 

144.2


60.9


 

Diluted

6

 

143.6


60.8





 

 




 



 

Consolidated Statement of Total Comprehensive Income

for the year ended 31st March 2023













2023 

 

2022 



 

Notes

 

£m

 

£m


Profit / (loss) for the year

 

 

276

 

(101)


Other comprehensive (expense) / income

 

 

 





Items that will not be reclassified to the income statement in subsequent years

 

 





Remeasurements of post-employment benefit assets and liabilities

14

 

(149)


177



Fair value losses on equity investments at fair value through other


 






    comprehensive income


 

(12)


(5)


 

Tax on items that will not be reclassified to the income statement

 

 

37

 

(35)


Total items that will not be reclassified to the income statement

 

 

(124)

 

137



Items that may be reclassified to the income statement

 

 

 





Exchange differences on translation of foreign operations

 

 

33

 

75



Exchange differences on translation of discontinued foreign operations

12

 

(32)

 

5



Amounts credited / (charged) to hedging reserve

 

 

114


(36)



Fair value losses on net investment hedges

 

 

(10)


(2)



Tax on above items taken directly to or transferred from equity

 

 

(28)

 

10


Total items that may be reclassified to the income statement (in subsequent years)

 

77

 

52


Other comprehensive (expense) / income for the year

 

 

(47)

 

189


Total comprehensive income for the year

 

 

229

 

88


 

 

 

 

 

 



Total comprehensive income for the year arises from:

 

   Continuing operations



249


300


   Discontinued operations

12


(20)


(212)




 

 

229

 

88




 

 

 

 



Consolidated Statement of Financial Position

as at 31st March 2023













2023 

 

2022 




Notes

 

£m

 

£m

 




 

 

 


 

Assets






 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

8

 

1,332

 

1,238

 

Right-of-use assets


 

49

 

61

 

Goodwill


 

364

 

366

 

Other intangible assets

9

 

287

 

267

 

Investments in joint ventures and associates


 

75

 

2

 

Investments at fair value through other comprehensive income


 

49

 

45

 

Other receivables

10

 

113

 

42

 

Interest rate swaps


 

20

 

12

 

Other financial assets


 

48

 

-

 

Deferred tax assets


 

121

 

98

 

Post-employment benefit net assets

14

 

203

 

352

 

Total non-current assets

 

 

2,661

 

2,483

 

 

 


 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories


 

1,702

 

1,549

 

Taxation recoverable


 

12

 

18

 

Trade and other receivables

10

 

1,882

 

1,796

 

Cash and cash equivalents


 

650

 

391

 

Other financial assets


 

47

 

27

 

Assets classified as held for sale

12

 

75

 

402

 

Total current assets


 

4,368

 

4,183

 

Total assets


 

7,029

 

6,666

 

 

 


 

 

 

 

 

Liabilities


 

 

 

 

 

Current liabilities


 

 

 


 

Trade and other payables

11

 

(2,497)

 

(2,563)

 

Lease liabilities


 

(9)

 

(10)

 

Taxation liabilities


 

(105)

 

(97)

 

Cash and cash equivalents ─ bank overdrafts


 

(13)

 

(37)

 

Borrowings and related swaps


 

(155)

 

(265)

 

Other financial liabilities


 

(27)

 

(44)

 

Provisions


 

(63)

 

(56)

 

Liabilities classified as held for sale

12

 

(25)

 

(80)

 

Total current liabilities

 

 

(2,894)

 

(3,152)

 

 

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Borrowings and related swaps


 

(1,460)

 

(899)

 

Lease liabilities


 

(31)

 

(40)

 

Deferred tax liabilities


 

(19)

 

(18)

 

Interest rate swaps


 

(15)

 

(2)

 

Employee benefit obligations

14

 

(41)

 

(72)

 

Other financial liabilities


 

-

 

(12)

 

Provisions


 

(28)

 

(28)

 

Trade and other payables

11

 

(2)

 

(2)

 

Total non-current liabilities


 

(1,596)

 

(1,073)

 

Total liabilities


 

(4,490)

 

(4,225)

 

Net assets


 

2,539

 

2,441

 




 

 

 


 

Equity


 

 

 

 

 

Share capital


 

215

 

218

 

Share premium


 

148

 

148

 

Treasury shares


 

(19)

 

(24)

 

Other reserves


 

118

 

50

 

Retained earnings


 

2,077

 

2,049

 

Total equity


 

2,539

 

2,441

 




 

 

 


 

The accounts were approved by the Board of Directors on 25th May 2023 and signed on its behalf by:

 

Directors

L Condon                                

S Oxley

Consolidated Statement of Cash Flows

for the year ended 31st March 2023













2023 

 

2022 




Notes


£m* 

 

£m* 

 



 

 

 

 


 

Cash flows from operating activities

 

 

 

 

 

 

Profit before tax from continuing operations


 

344

 

195

 

Profit / (loss) before tax from discontinued operations


 

5

 

(239)

 

Adjustments for:


 

 

 


 


Share of losses of associates


 

1

 

-

 


Profit on disposal of businesses


 

(23)

 

(106)

 


Depreciation


 

151

 

151

 


Amortisation


 

36

 

39

 


Impairment losses


 

27

 

632

 


(Profit) / loss on sale of non-current assets


 

(6)

 

2

 


Share-based payments


 

7

 

8

 


(Increase) / decrease in inventories


 

(139)

 

123

 


(Increase) / decrease in receivables


 

(102)

 

588

 


Decrease in payables


 

(4)

 

(783)

 


Increase in provisions


 

7

 

25

 


Contributions in excess of employee benefit obligations charge

 

(21)

 

(2)

 


Changes in fair value of financial instruments


 

22

 

19

 


Net finance costs


 

61

 

60

 

Income tax paid


 

(75)

 

(107)

 

Net cash inflow from operating activities

 

 

291

 

605

 

 

 


 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Interest received


 

28

 

32

 

Purchases of property, plant and equipment


 

(253)

 

(358)

 

Purchases of intangible assets


 

(63)

 

(95)

 

Purchases of investments held at fair value through other comprehensive income


 

(17)

 

-

 

Government grant income received


 

7

 

-

 

Proceeds from sale of non-current assets


 

8

 

1

 

Proceeds from sale of investments in joint ventures


 

2

 

-

 

Net proceeds from sale of businesses


 

187

 

160

 

Net cash outflow from investing activities

 

 

(101)

 

(260)

 

 

 


 

 

 


 

Cash flows from financing activities

 

 

 

 

 

 

Purchase of treasury shares


 

(45)

 

(155)

 

Proceeds from borrowings


 

672

 

9

 

Repayment of borrowings


 

(281)

 

(140)

 

Dividends paid to equity shareholders

7

 

(141)

 

(139)

 

Interest paid


 

(94)

 

(111)

 

Principal element of lease payments


 

(14)

 

(14)

 

Net cash inflow / (outflow) from financing activities

 


97

 

(550)

 

 

 

 

 

 

 

 

 

Change in cash and cash equivalents

 

287

 

(205)

 

Exchange differences on cash and cash equivalents


 

4

 

6

 

Cash and cash equivalents at beginning of year


 

346

 

545

 

Cash and cash equivalents at end of year


 

637

 

346

 

 

 


 

 

 


 

Cash and deposits


 

129

 

254

 

Money market funds


 

521

 

137

 

Bank overdrafts


 

(13)

 

(37)

 

Bank overdrafts transferred to liabilities classified as held for sale


 

-

 

(8)

 

Cash and cash equivalents


 

637

 

346

 

 

 


 

 

 


 

* For cash flows of discontinued operations see note 12.

 

Consolidated Statement of Changes in Equity

for the year ended 31st March 2023







 










Share 








Share 

premium 

Treasury 

Other 


Retained 


Total 





capital 

account 

shares 

reserves 


earnings 


equity 





£m 

£m 

£m 

£m 

 

£m 

 

£m 








 


 




At 1st April 2021



221

148

(29)

-


2,345


2,685


Total comprehensive income



-

-

-

47

 

41

 

88


Dividends paid (note 7)



-

-

-

-

 

(139)

 

(139)


Purchase of treasury shares



(3)

-

-

3

 

(200)

 

(200)


Share-based payments



-

-

-

-

 

15

 

15


Cost of shares transferred to employees



-

-

5

-

 

(13)

 

(8)


At 31st March 2022



218

148

(24)

50


2,049


2,441


Total comprehensive income



-

-

-

65

 

164

 

229


Dividends paid (note 7)



-

-

-

-

 

(141)

 

(141)


Purchase of treasury shares



(3)

-

-

3

 

(1)

 

(1)


Share-based payments



-

-

-

-

 

18

 

18


Cost of shares transferred to employees



-

-

5

-

 

(14)

 

(9)


Tax on share-based payments



-

-

-

-


2


2


At 31st March 2023

 

 

215

148

(19)

118

 

2,077

 

2,539

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

1

Preparation


 

 


Basis of preparation and statement of compliance

 

The financial statements of the group have been prepared on a going concern basis in accordance with International Accounting Standards (IAS) in conformity with the requirements of the Companies Act 2006. The financial statements are also prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB), adopted pursuant to Regulation (EC) No 1606/2002 as it applies to the European Union, including the interpretations issued by the IFRS Interpretations Committee. Except for the changes noted below, the accounting policies applied are set out in the Annual Report and Accounts for the year ended 31st March 2022.

 

As at 31st March 2023, the group maintains a strong balance sheet with around £1.6 billion of available cash and undrawn committed facilities. Free cash flow was positive in the year at £74 million. However, net debt increased since 31st March 2022 to £1,023 million with the payment of dividends and the share buyback. Net debt (including post tax pension deficits) to underlying EBITDA at 1.6 times was at the lower end of our target range.

 

The directors have reviewed the base case scenario forecasts for the group and are of the opinion that the group has adequate resources to fund its operations for the period of at least twelve months from the date of signing these financial statements. In forming this view, the base case scenario was stress tested to represent a severe-but-plausible downside case scenario which modelled a material reduction in trading.

 

In both scenarios outlined above, we have sufficient headroom against committed facilities and key financial covenants are not in breach during the going concern period. Accordingly, the directors continue to adopt the going concern basis in preparing the financial statements.

 

Statutory accounts for 2022 have been delivered to the Registrar of Companies and those for 2023 will be delivered following the company's Annual General Meeting. The auditor, PwC, has reported on both sets of accounts. Their reports were unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and did not contain any statement under sections 498(2) or 498(3) of the Companies Act 2006. The accounts for the year ended 31st March 2023 were approved by the Board of Directors on 25th May 2023.

 

These accounts do not include all the information required for full annual statements and should be read in conjunction with the 2023 Annual Report. They are not statutory accounts per section 435 of the Companies Act 2006.

Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

1

Preparation (continued)


 

 


Changes in accounting policies

 

Amendments to accounting standards

The IASB has issued the following amendments, which have been endorsed by the UK Endorsement Board, for annual periods beginning on or after 1st January 2022:

-     Annual improvements to IFRS Standards 2018-2020;

-     Amendments to IAS 16, Property, Plant and Equipment: Proceeds before intended use;

-     Amendments to IAS 37, Onerous Contracts = Cost of Fulfilling a Contract; and

-     Amendments to IFRS 3, Reference to the Conceptual Framework

 

These changes have not had a material impact on the group. The group has not early adopted any standard, interpretation or amendment that was issued but is not yet effective.

 

New significant accounting policies adopted by the group

 

Investments in joint ventures and associates

A joint venture is a joint arrangement whereby investees are able to exercise joint control of the arrangement.

 

Associates are entities over which the group exercises significant influence when it has the power to participate in the financial and operating policy decisions of the entity but it does not have the power to control or jointly control the entity.

 

Investments in joint ventures and associates are accounted for using the equity method of accounting and are initially recognised at cost. Thereafter the investments are adjusted to recognise the group's share of the post-acquisition profits or losses after tax of the investee in the income statement, and the group's share of movements in other comprehensive income of the investee in other comprehensive income. Dividends received or receivable from associates are recognised as a reduction in the carrying amount of the investment. The carrying value of the investments are reviewed for impairment triggers on a regular basis.

 

Where the group's share of losses in an equity-accounted investment equals or exceeds its interest in the entity, the group does not recognise further losses unless it has incurred obligations to do so.

 

Unrealised gains and losses on transactions between the group and its associates are eliminated to the extent of the group's interest in these joint ventures and associates.

 

Non-GAAP measures

The group uses various measures to manage its business which are not defined by generally accepted accounting principles (GAAP). The group's management believes these measures provide valuable additional information to users of the accounts in understanding the group's performance. The group's non-GAAP measures are defined and reconciled to GAAP measures in note 19.

Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

2

Segmental information

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue, sales, underlying operating profit and net assets by sector

 

 

 

Year ended 31st March 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Clean

PGM

Catalyst

Hydrogen

Value






 

Air

Services

Technologies

Technologies

Businesses

Corporate

Eliminations 

Total 

 



£m

£m

£m

£m

£m

£m

£m

£m

 













Revenue from external customers

6,273

7,360

673

62

565

-

-

14,933

 


Inter-segment revenue

-

3,227

14

-

-

-

(3,241)

-

 


Revenue

6,273

10,587

687

62

565

-

(3,241)

14,933

 



 

 

 

 

 

 

 

 

 


External sales

2,644

485

547

55

470

-

-

4,201

 


Inter-segment sales

-

85

13

-

-

-

(98)

-

 


Sales1

2,644

570

560

55

470

-

(98)

4,201

 


 











Underlying operating profit / (loss)1

230

257

51

(45)

40

(68)

-

465

 


Segmental net assets

1,784

(2)

680

114

175

515

-

3,266

 


 








 

 


Net debt (note 19)






(1,023)

 


Post-employment benefits net assets and liabilities (note 14)


162

 


Deferred tax net asset

102

 


Provisions and non-current other payables





(93)

 


Investments in joint ventures and associates





75

 


Net assets held for sale (note 12)





50

 










 

 


Net assets








2,539

 

 


Year ended 31st March 2022*





 




 

 

 





 




 


PGM

Catalyst

Hydrogen

Value






 

Clean

Services

Technologies

Technologies

Businesses


Eliminations 




 

Air

(restated)

(restated)

(restated)

(restated)

Corporate

(restated)

Total



 

£m

£m

£m

£m

£m

£m

£m

£m



 











Revenue from external customers

7,085

7,880

581

30

449

 -  

 -  

16,025



Inter-segment revenue

4

4,549

6

-

1

 -  

(4,560)

-



Revenue

7,089

12,429

587

30

450

-

(4,560)

16,025














External sales

2,455

497

448

25

353

 -  

 -  

3,778



Inter-segment sales

2

90

6

-

1

 -  

(99)

-



Sales1

2,457

587

454

25

354

-

(99)

3,778



 











Underlying operating profit / (loss)1

302

308

50

(33)

12

(86)

 -  

553



Segmental net assets

2,108

(702)

743

51

169

330

 -  

2,699













Net debt








(856)



Post-employment benefit net assets and liabilities (note 14)


280



Deferred tax net asset


80



Provisions and non-current other payables


(86)



Investments in joint ventures and associates


2



Net assets held for sale


322














Net assets








2,441














1 Sales and underlying operating profit are non-GAAP measures (see note 19). Sales excludes the sale of precious metals. Underlying operating profit excludes profit or loss on disposal of businesses, gain or loss on significant legal proceedings, together with associated legal costs, amortisation of acquired intangibles and major impairment and restructuring charges.














* The comparative period is restated to reflect the group's updated reporting segments. The overall group total is as previously reported.


Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

3

Revenue





 

 

 

 

 













 

Products and services

 

 

 

 

 








 


The group's principal products and services by operating sector and sub-sector are disclosed in the table below, together with information regarding performance obligations and revenue recognition. Revenue is recognised by the group as contractual performance obligations to customers are completed.

 

 

 

 









 


Sub-sector

Primary industry

Principal products and services

Performance obligations

 

Revenue recognition

 


 

 

 

 

 

 

 

 

 

 

 


Clean Air

 


Light Duty Catalysts

Automotive

Catalysts for cars and other light duty vehicles

Point in time


On despatch or delivery

 












 


Heavy Duty Catalysts

Automotive

Catalysts for trucks, buses and non-road equipment

Point in time


On despatch or delivery

 












 


PGM Services

 


Platinum Group Metal Services

Various

Platinum Group Metal refining and recycling services

Over time

 


Based on output

 








 


Platinum Group Metal trading

Point in time


On receipt of payment

 








 


Other precious metal products

Point in time


On despatch or delivery

 








 


Platinum Group Metal chemical, industrial products and catalysts

Point in time


On despatch or delivery

 












 


Catalyst Technologies

 


Catalyst Technologies

Chemicals / oil and gas

Speciality catalysts and additives

Point in time


On despatch or delivery

 








 


Process technology licences

Over time

 


Based on costs incurred or straight-line over the licence term1

 








 


Engineering design services

Over time

 


Based on costs incurred

 












 


Hydrogen Technologies

 


Fuel Cells technologies

Various

Fuel cell catalyst coated membrane

Point in time


On despatch or delivery

 












 


Electrolysis technology

Various

Electrolyser catalyst coated membrane

Point in time


On despatch or delivery

 












 


Value Businesses

 


Other Markets (excluding Diagnostic Services)

Various

Precious metal pastes and enamels, battery systems and products found in devices used in medical procedures

Point in time


On despatch or delivery

 












 


Diagnostic Services

Oil and gas

Detection, diagnostic and measurement solutions

Over time

 


Based on costs incurred

 












 


1 Revenue recognition depends on whether the licence is distinct in the context of the contract.

 


 

 

 

 

 

 

 

 

 

 

 


Metal revenue: Metal revenue relates to the sales of precious metals to customers, either in pure form or contained within a product. Metal revenue arises in each of the reportable segments in the Group. Metal revenue is affected by fluctuations in the market prices of precious metals and, in many cases, the value of precious metals is passed directly on to customers. Given the high value of these metals this makes up a significant proportion of revenue.

 


 


 



























Notes on the Preliminary Accounts

for the year ended 31st March 2023













3

Revenue (continued)


 

 





 

 

 

 


 

 

 

 

 



Revenue from external customers by principal products and services

 

 



 

 

 

 

 

 

 

 

 

 



Year ended 31st March 2023

 


 

 

 

 

 

Continuing operations

 







Clean Air

PGM

Services

Catalyst

Technologies

Hydrogen

Technologies

Value Businesses

Total 







£m

£m

£m

£m

£m

£m









 

 

 










 

 

 










 

 

 



Metal


3,629

6,875

126

7

95

10,732


Heavy Duty Catalysts


970

-

-

-

-

970


Light Duty Catalysts


1,674

-

-

-

-

1,674


Catalyst Technologies


-

-

547

-

-

547


Platinum Group Metal Services


-

485

-

-

-

485


Fuel Cells


-

-

-

55

-

55


Battery Systems




-

-

-

-

284

284


Diagnostic Services


-

-

-

-

71

71


Medical Device Components



-

-

-

-

93

93


Other


-

-

-

-

22

22

 

 

 

 

 

 

 

 

 

 

 


 

Revenue

 

6,273

7,360

673

62

565

14,933







 

 

 

 

 










 

 

 










 

 

 



Year ended 31st March 2022*



 

 

 

 

 

Continuing operations









PGM

Services

Catalyst

Technologies

Hydrogen

Technologies

Value Businesses








Clean Air

(restated)

(restated)

(restated)

(restated)

Total 







£m

£m

£m

£m

£m

£m


Metal


4,630

7,383

133

5

96

12,247


Heavy Duty Catalysts


849

-

-

-

-

849


Light Duty Catalysts


1,578

-

-

-

-

1,578


Catalyst Technologies


-

-

448

-

-

448


Platinum Group Metal Services


-

497

-

-

-

497


Fuel Cells


-

-

-

25

-

25


Battery Materials




-

-

-

-

12

12


Battery Systems




-

-

-

-

151

151


Advanced Glass Technologies


-

-

-

-

62

62


Diagnostic Services


-

-

-

-

54

54


Medical Device Components



-

-

-

-

74

74


Other


28

-

-

-

-

28


 

 

 

 

 


 

 

 

 



Revenue

 

7,085

7,880

581

30

449

16,025







 

 

 

 

 








 

 

 

 

 








 

 

 

 

 



* The comparative period is restated to reflect the group's updated reporting segments. The overall group total is as previously reported.


Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

4

Operating profit


 


 

 


 


 

Operating profit is arrived at after charging / (crediting):







2023 

2022 




£m

£m


 

 

 





 



Total research and development expenditure


213

201


Less: Development expenditure capitalised


-

(22)

 

 

 









Research and development expenditure charged to the income statement


213

179


Less: External funding received from governments


(19)

(18)


 

 

 







 

Net research and development expenditure charged to the income statement

 

194

161

 

 

 

 


 

 

 

 


 

 

 

 



Inventories recognised as an expense


12,962

14,121


Write-down of inventories recognised as an expense


39

26


Reversal of write-down of inventories from increases in net realisable value

(19)

(16)


Net gains on foreign exchange


(11)

(2)


Net losses on foreign currency forwards at fair value through profit or loss


19

6


Past service credit


(20)

(11)


 

 






 



Depreciation of:





Property, plant and equipment


137

125


Right-of-use assets


14

13


 

 

 





 


 

Depreciation

 

151

138


 

 

 





 



Amortisation of:

 




Internally generated intangible assets


1

1


Acquired intangibles


5

6


Other intangible assets


30

32


 

 

 





 


 

Amortisation

 

36

39


 

 

 





 


 

Gains and losses on significant legal proceedings

 

25

(42)

 

 

 

 


 

Profit on disposal of businesses (note 13)

 

(12)

(106)

 

 

 

 



Impairment losses included in administrative expenses


3

3


 

 

 





 


 

Impairment losses

 

3

3

 

 

 

 


 

 

 

 



Impairment losses and reversals included in major impairment and restructuring charges

10

401


Restructuring charges included in major impairment and restructuring charges


31

39


 

 

 


 

 

 

 


 

 

 

 


 

Major impairment and restructuring charges (note 5)

 

41

440

 

 

 

 


 

Fees payable to the company's auditor and its associates for:

 

 



The audit of these accounts


2.2

2.1


The audit of the accounts of the company's subsidiaries


2.4

2.4


The audit of prior period accounts


0.2

0.2


 

 

 





 


 

Total audit fees

 

4.8

4.7

 

 

 

 



Audit-related assurance services


0.4

0.4


 

 

 





 


 

Total non audit fees

 

0.4

0.4


 

 

 





 


 

Total fees payable to the company's auditor and its associates

 

5.2

5.1

 





Gains and losses on significant legal proceedings

During the year, the group paid £25 million in respect of a settlement with a customer on mutually acceptable terms with no admission of fault relating to failures in certain engine systems for which the group supplied a particular coated substrate as a component for that customer's emissions after-treatment systems.

During the prior year, the group recognised a gain of £44 million in relation to damages and interest from a company found to have unlawfully copied one of our technology designs. An additional gain of £6 million was recognised following conclusion of legal proceedings associated to investments in Battery Materials, this was partially offset by a £8 million charge for environmental and other costs. Gains and losses on significant legal proceedings are reported as non-underlying.

Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

5

Major impairment and restructuring charges





 

 

 

 

 






























 











2023 

 

2022 












£m

 

£m












 

 

 

 


Property, plant and equipment


17

 

238



Right-of-use assets


-

 

4



Goodwill


4

 

45



Other intangible assets


3

 

78



Inventories


(8)

 

17



Trade and other receivables


(6)

 

19



Impairment losses and reversals









10

 

401



 










 




Restructuring charges









31

 

39



Total major impairment and restructuring charges

 

41


440


 

Major impairment and restructuring charges are shown separately on the face of the income statement and excluded from underlying operating profit (see note 19).

 

Major impairments - The group's net impairment charge of £10 million includes further impairment charges to plants and related production assets in Clean Air as the sector continues to consolidate its existing capacity into new, more efficient plants in order to create a simplified and agile structure. Further impairment charges were also recognised in relation to parts of the Battery Materials business reflecting elements of the contract to sell the business to EV Metals Group.

On 3rd May 2023 the group announced the sale of its Diagnostic Services business to Sullivan Street Partners. The business is presented as held for sale (refer to note 12) at fair value less estimated costs to sell. This has resulted in an impairment to goodwill of £4 million.

The major impairments charge also includes impairment reversals for previously impaired Clean Air equipment that has been re-purposed, and Russia related inventories and receivables that have subsequently been recovered in cash. Although this cash is reported as restricted (see note 19), there are no impairment indicators.

 

Major restructuring - The group's transformation programme was launched in May 2022 and was designed to drive increased competitiveness, improved execution capability and create financial headroom to facilitate further investment in high growth areas. Restructuring charges of £17 million have been recognised of which the majority is redundancy and implementation costs. The remaining charge is related to Clean Air's ongoing plant consolidation initiatives.

Notes on the Preliminary Accounts

for the year ended 31st March 2023

 

6

Earnings / (loss) per share


 

 


 










2023 

 

2022 











pence

 

pence











 

 

 

 


Basic





150.9

 

(52.6)



Diluted





150.2

 

(52.6)



Basic from continuing operations







144.2

 

60.9



Diluted from continuing operations





143.6

 

60.8











 

 




Earnings per ordinary share have been calculated by dividing profit for the period by the weighted average number of shares in issue during the period.











 

 




Weighted average number of shares in issue






2023 

 

2022 



Basic








183,012,301

 

191,568,756



Dilution for long term incentive plans








851,432

 

585,024



Diluted








183,863,733

 

192,153,780











 

 



 

7

Dividends


 

 


A final dividend of 55.00 pence per ordinary share has been proposed by the board which will be paid on 1st August 2023 to shareholders on the register at the close of business on 10th June 2023, subject to shareholders' approval. The estimated amount to be paid is £101 million and has not been recognised in these accounts.

 

 










2023 

 

2022 











£m 

 

£m 











 

 

 

 


2020/21 final ordinary dividend paid ─ 50.00 pence per share





-

 

96



2021/22 interim ordinary dividend paid ─ 22.00 pence per share





-

 

43



2021/22 final ordinary dividend paid ─ 55.00 pence per share





100

 

-



2022/23 interim ordinary dividend paid ─ 22.00 pence per share





41

 

-



Total dividends

 

 

 

 

 

 

 

141


139


Notes on the Preliminary Accounts

for the year ended 31st March 2023




 

8

Property, plant and equipment


 


 


 

 

 

 

 

 

 

Freehold



Assets in


 

 

 

 

 

 

land and

Leasehold

Plant and

the course of








buildings 

improvements

machinery 

construction 

Total 







£m 

£m 

£m 

£m 

£m 













Cost







At 1st April 2022

570

27

2,055

304

2,956


Additions

1

-

24

217

242


Transferred to assets classified as held for sale (note 12)

-

(1)

(41)

-

(42)


Transfers from assets in the course of construction

22

2

128

(152)

-


Disposals

(1)

(1)

(33)

(13)

(48)


Disposal of businesses (note 13)

-

-

(10)

-

(10)


Exchange adjustments

7

1

28

4

40




















At 31st March 2023

599

28

2,151

360

3,138




















Accumulated depreciation and impairment






At 1st April 2022

265

14

1,424

15

1,718


Charge for the year

17

1

119

-

137


Impairment losses

-

-

8

4

12


Transferred to assets classified as held for sale (note 12)

-

(1)

(31)

-

(32)


Disposals

(1)

-

(33)

(11)

(45)


Disposal of businesses (note 13)

-

-

(8)

-

(8)


Exchange adjustments

3

1

20

-

24













At 31st March 2023

284

15

1,499

8

1,806









Carrying amount at 31st March 2023

315

13

652

352

1,332


Carrying amount at 1st April 2022

305

13

631

289

1,238


























During the year, the group recognised impairments of £12 million. The impairment charge is comprised of £3 million included in administrative expenses, see note 4, and a net £9 million charge included in non-underlying expenses.

During the prior year, the group recognised impairments of £295 million. The impairment charge is comprised of £2 million included in administrative expenses, and £238 million included in non-underlying expenses. A further £55 million of impairment charges were incurred in relation to the Health segment.

Notes on the Preliminary Accounts

for the year ended 31st March 2023




 

9

Other intangible assets


 

 

 


 

 

 

 

 

 

Customer






 

 

 

 

 

contracts


Patents,

Acquired



 

 

 

 

 

and 

Computer 

trademarks

research and 

Development 







relationships 

software 

and licences 

technology 

expenditure 

Total 






£m 

£m 

£m 

£m 

£m 

£m 













Cost








At 1st April 2022

132

419

47

37

135

770


Additions

-

59

2

-

-

61


Transferred to assets classified as held for sale (note 12)

(1)

(1)

-

(1)

-

(3)


Disposals

(2)

(2)

(7)

-

-

(11)


Disposal of businesses (note 13)

(13)

-

-

-

-

(13)


Exchange adjustments

-

-

1

1

-

2










At 31st March 2023

116

475

43

37

135

806













Accumulated amortisation and impairment

 






At 1st April 2022

112

178

44

36

133

503


Charge for the year

4

31

-

1

-

36


Impairment losses

-

3

-

-

-

3


Transferred to assets classified as held for sale (note 12)

(1)

(1)

-

(1)

-

(3)


Disposals

(2)

(2)

(6)

-

-

(10)


Disposal of businesses (note 13)

(13)

-

-

-

-

(13)


Exchange adjustments

1

-

1

1

-

3










At 31st March 2023

101

209

39

37

133

519