Preliminary results for year ended 31st March 2020

Companies

Johnson Matthey (JMAT)

UK 100

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Reported results		Year ended 31^st March		% change
Reported results		2020	2019	% change
Revenue	£ million	14,577	10,745	+36
Operating profit	£ million	388	531	-27
Profit before tax (PBT)	£ million	305	488	-38
Earnings per share (EPS)	pence	132.3	215.2	-39
Ordinary dividend per share	pence	55.625	85.5	-35

Underlying performance¹		Year ended 31^st March		% change	% change, constant rates²
Underlying performance¹		2020	2019	% change	% change, constant rates²
Sales excluding precious metals (sales)³	£ million	4,170	4,214	-1	-2
Operating profit	£ million	539	566	-5	-6
Profit before tax	£ million	455	523	-13	-14
Earnings per share	pence	199.2	228.8	-13

Reported results
·	Reported revenue increased 36% driven by higher average precious metal prices
·	Reported operating profit declined 27% driven by a restructuring and impairment charge of £140 million and a c.£60 million impact related to COVID-19
·	Reported EPS declined 39%, reflecting lower operating profit and higher net finance charges
·	Cash inflow from operating activities was £598 million

Underlying performance¹
·	Sales declined 2% driven by Clean Air and Health, partly offset by higher sales in Efficient Natural Resources and New Markets
·	Underlying operating profit declined 6% primarily driven by a c.£60 million impact related to COVID-19. Excluding COVID-19, underlying operating profit grew 5%
	·	Of the c.£60 million, c.£30 million reflected lower demand in Clean Air, and the remainder was due to higher trade debtor provisions across the group and delayed sales due to logistical challenges in our other businesses
·	Underlying EPS declined 13% reflecting lower underlying operating profit and higher net finance charges. Net finance charges grew primarily driven by increased average precious metal borrowings due to higher precious metal prices, on which we pay higher interest on average than the rest of our borrowings
·	Strong balance sheet with net debt of £1.1 billion; net debt to EBITDA of 1.6 times
·	Return on invested capital (ROIC) decreased from 16.4% to 13.3% mainly due to increased capital expenditure, higher average precious metal working capital through the year and lower underlying operating profit

Dividend
The group has a strong balance sheet, good cash generation and liquidity headroom. However, given the heightened degree of current uncertainty and to balance the needs of all stakeholders, the board will propose a final ordinary dividend for the year of 31.125 pence at the Annual General Meeting on 23^rd July 2020, representing half the level of the 2018/19 final dividend. This is not intended to be a rebasing; the board remains committed to a progressive dividend and anticipates restoring future dividend payments to levels seen prior to the COVID-19 pandemic when circumstances permit.

Subject to approval by shareholders, the final dividend will be paid to shareholders on 4^th August 2020, with an ex dividend date of 18^th June 2020.

Outlook for the year ending 31^st March 2021
Given the ongoing uncertainty, we are unable to provide financial guidance for the year ending 31^st March 2021. Looking at each of our sectors:

·	Clean Air has a direct link to consumer demand. Following automotive OEM shutdowns earlier in the year, we are now seeing our customers gradually reopen their plants. Production in China is recovering towards prior year levels, and Europe and the US are now also gradually ramping up. However, visibility on the path of recovery remains low. This significant uncertainty has led to a wide range of forecasts for automotive and truck production for the coming year. External data currently suggests a decline of c.25% in light duty for Europe and the US, but better in Asia , while for heavy duty the declines are slightly more. Although the actual outcomes could be materially different. We have a flexible cost base in Clean Air, enabling us to manage different levels of activity, with c.75% of costs before mitigation being variable

·	Efficient Natural Resources serves a diverse range of end markets and is subject to a broader range of variables. It is later cycle than Clean Air, so while we have seen little impact so far on the business from macroeconomic weakness, we expect this will come through as lower demand begins to affect the industries it serves and because of volatile feedstock dynamics. Pgm prices will also influence operating performance. Operating leverage is greater here as the sector operates with a larger number of sites and higher fixed costs

·	Health is relatively unaffected by changes in the macroeconomic environment. We expect to benefit from new supply agreements for APIs used in generic opioid addiction therapies as well as our continued work with innovator customers

·	In Battery Materials, commercialisation of eLNO remains on track

Our newly announced efficiency initiatives will deliver additional annualised savings of at least £80 million by 2022/23 for a cash cost of c.£80 million, with initial savings of at least £30 million supporting operating performance in 2020/21. We have a strong balance sheet and liquidity position and expect to generate further cash through precious metal working capital improvements as we continue to reduce refinery backlogs. We remain committed to our investment in our strategic growth projects which will support our medium term growth.

Notes:
In our pre-close trading update (30^th March 2020) we guided to an impact of around £50 million on our trading performance from COVID-19. Vara consensus for full year underlying operating profit in 2019/20 was £581 million (range: £562 million to £593 million) as at 29^th March 2020.
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, major impairment and restructuring charges and, where relevant, related tax effects. For definitions and reconciliations of other non-GAAP measures, see pages 43 to 47.
2.	Unless otherwise stated, sales and operating profit commentary refers to performance at constant rates. Growth at constant rates excludes the translation impact of foreign exchange movements, with 2018/19 results converted at 2019/20 average exchange rates
3.	Revenue excluding sales of precious metals to customers and the precious metal content of products sold to customers
eLNO is a trademark of Johnson Matthey Public Limited Company


The COVID-19 pandemic has led to significant challenges across the world. We continue to work hard to respond to these unprecedented circumstances and actively manage the ongoing risks to our people, operations and customers. To maintain the health, safety and wellbeing of our people we have implemented working from home arrangements where possible and ensured the highest standards of safety in all working practices.

Immediate and decisive action in response to COVID-19
In the year, we made good strategic progress and delivered operating performance, excluding the effects of COVID-19, slightly ahead of market expectations. Due to COVID-19, we experienced an adverse impact of c.£60 million to underlying operating profit in the year ended 31^st March 2020, of which c.£30 million reflected lower demand in Clean Air, and the remainder was due to higher trade debtor provisions across the group of c.£15 million, and delayed sales due to logistical challenges in our other businesses.

Our immediate response to COVID-19 was to take decisive action to maintain our strong balance sheet and strengthen our liquidity through cost reduction, tightly managing our operations to optimise working capital and postponing non-strategic capex. Our cost reduction measures included adjusting working patterns, reducing contractor spend and restricting travel costs and we optimised working capital by reacting quickly and temporarily stopping production at our Clean Air plants, managing our raw materials purchases and controlling pgm refinery intakes.

Following the temporary closure of numerous automotive OEM production plants due to government mandated closures and lower consumer demand, our Clean Air plants are now gradually resuming production across all regions. Across the remainder of our business, the vast majority of our plants are operational and we have adopted new working practices in line with local guidelines. Alongside maintaining our operations where it is safe to do so, we are balancing obligations to our stakeholders through maintaining payment terms with suppliers and offering support to small suppliers who may be facing hardship.

Resilient business portfolio with a strong balance sheet
We are well positioned in an uncertain world. We have a resilient and diverse business portfolio which is exposed to a range of end markets and geographies and our flexible cost base, particularly in Clean Air where c.75% of our costs are variable, enables us to adapt quickly to changes in demand, reduce our costs and preserve cash. When the macroeconomic environment weakens, our business model provides a natural hedge which strengthens our balance sheet and liquidity as we have significant precious metal working capital inflows when demand is lower. The strength of our position means that we decided not to take any support from the UK government for furloughed staff, or draw down on the Bank of England's COVID Corporate Financing Facility (CCFF) despite qualifying for the loan.

We have a strong balance sheet with good access to liquidity of c.£1.3 billion. Earlier in the year we concluded a £1 billion five year committed revolving credit facility and more recently we issued US$300 million of private placement notes.

Net debt at 31^st March 2020 was £1.1 billion (31^st March 2019: £866 million) and our leverage ratio (net debt to EBITDA) was 1.6 times (31^st March 2019: 1.3 times). This was at the bottom end of our target range of 1.5 to 2.0 times, benefiting from a £345 million reduction in precious metal working capital volumes. This progress was despite the impact of COVID-19 on EBITDA and reflects our focus on the effective management of our precious metal working capital. The actions we have taken include strong progress in reducing our refining backlogs where we have made faster progress than expected, optimising our precious metal working capital across our businesses and reviewing commercial terms with pgm collectors as well as our Clean Air customers.

We maintain a balanced debt maturity profile across different lenders. Committed facilities are renewed regularly and there is no material refinancing due in 2020 or 2021. There is material headroom in relation to debt covenants^¹ of 3.5 times net debt to EBITDA which are tested annually, with the next test based on financials for the period ending 31^st March 2021.

Notes:
1.	The majority of our facilities contain a net debt to EBITDA covenant of 3.5 times. Two legacy loans (£41 million and £148 million maturing after 31^st March 2021) contain a 3.0 times covenant and are expected to be amended. Our headroom assumes repayment of these legacy loans.
Accelerating our strategy to drive efficiency
Across the group, we have been investing to drive efficiency across our manufacturing footprint and operations. We are now able to accelerate a number of these initiatives. We are consolidating our Clean Air footprint and optimising our group operating model to create further organisational efficiency across the group.

In total, the acceleration of our strategic initiatives will deliver annualised savings of at least £80 million over the next three years, of which at least £30 million will benefit 2020/21. Together with the £145 million of cost savings previously announced, of which we have already delivered £116 million, this will take total annualised cost savings to c.£225 million by the end of 2022/23. There will be associated one off costs of c.£240 million related to these new savings which will be taken outside of underlying operating profit, of which the cash element will be c.£80 million. Over three years, this is expected to result in a reduction in staff numbers of c.2,500 subject to consultation. For further detail on these costs, please see page 19. The key actions include:

·	Consolidating Clean Air footprint In Clean Air, we have been investing in new world class plants in Europe and Asia. These plants are identical and highly flexible, allowing us to drive efficiency and increase agility across our global footprint by consolidating some of our existing older capacity in Europe into this new capacity. This will deliver c.£30 million of annualised cost benefits by the end of 2022/23.

·	Driving organisational efficiency In recent years we have been investing into our corporate functions. For example we are rolling out our single global ERP (enterprise resource planning) system, and have invested into our global procurement and IT functions to increase our capability and standardise our processes. This is allowing us to review our group operating model to remove duplication of activities between the corporate centre and the sectors and reduce complexity across the organisation. A simplified organisation will enable faster decision making and reduce costs. Overall, these measures are expected to deliver c.£50 million of annualised cost benefits by the end of 2022/23.

Summary of efficiency initiatives

Initiative £ million		Delivered to date	Annualised benefits by 2022/23
Procurement¹		71	100
Restructuring		25	25
Health footprint optimisation		20	20
Previous initiatives beginning 2017		116	145
Clean Air footprint		-	30
Group wide organisational efficiency		-	50
New initiatives		-	80
Total efficiency initiatives		116	225

Addressing climate change continues to drive our medium term growth
Our vision is for a world that is cleaner and healthier, today and for future generations. Our strategy for sustained growth and value creation is driven by the application of our world class science to solve the challenges arising from key global trends including climate change as well as increasing population and longevity, and resource challenges. In collaboration with our customers, we use our science to solve their most complex problems and in doing so we are creating long term value for our shareholders and society.

Through our leading positions in high margin, technology driven growth markets, we will deliver growth over the medium term. In the year, we made good strategic progress across our sectors and further developed in key areas:

·	In Clean Air, we continued to benefit from tightening legislation globally, especially in Europe and Asia and maintained our strong market shares in our key light duty diesel and heavy duty segments. With the construction of our new plants in Europe and Asia largely complete, our global, efficient and flexible manufacturing footprint is enabling us to drive efficiency across the sector.

·	In Efficient Natural Resources, we continue to focus our resource on selected, higher growth segments; target our R&D investment for future growth; and drive operational efficiency. Our refinery upgrade programme, which will ensure our assets operate effectively and reliably, is progressing well. We made good progress in developing and commercialising new technologies which includes our mono ethylene glycol technology as we began work on the first project and our Fischer Tropsch waste to aviation fuel technology as we produced the first catalyst. Across the sector, we continued to help our customers optimise their operations, for example our formaldehyde team launched a new digital portal for enhanced interaction with customers. To support our longer term growth, we progressed our business development projects including battery materials recycling and our work with various partners to drive the acceleration of adoption of hydrogen as a more significant part of the energy mix.

·	In Health, we have agreed new multi-year supply agreements with generic partners for the supply of APIs used in generic opioid addiction therapies. We made further progress towards delivering an additional c.£100 million operating profit from our pipeline of generic and innovators APIs by 2025 although it may be delayed a year given the inherent uncertainty around the timing of individual drug launches. On the innovator side, we saw recent success with our customer - Immunomedics - who recently received regulatory approval for production of an immuno-oncology treatment for triple negative breast cancer. Immunomedics is now increasing volumes in support of the commercial launch.

·	In Battery Materials, we are making significant progress in commercialising eLNO, our portfolio of leading ultra-high energy density cathode materials which will compete with materials such as NMC 811. eLNO will suit a broad range of applications, particularly in enabling greater adoption of long range, pure battery electric vehicles.

	Feedback from testing with customers remains positive, specifically our ability to provide tailored solutions. In the year, we moved to full cell testing with four customers - two global automotive OEMs and two non-automotive customers. Our progress with non-automotive customers is another important validation of eLNO in commercial applications and offers a faster route to qualification. Full cell testing means we are collaborating more intensively with customers to further develop, formulate and test eLNO and they have reduced their number of potential suppliers. This gives us increased confidence that our materials provide the performance our customers seek. Alongside this full cell testing, we continue to work in the validation phase with a number of global automotive OEMs and cell manufacturers.

	We broke ground on our first commercial plant in Konin, Poland, which is expected to be on stream in 2022 and supplying platforms in production in 2024. Our total investment to first commercial production will amount to c.£350 million, although we are seeing some upward pressure as we finalise the design and build in more flexibility to meet our customers' requirements. Beyond this, scale up is likely to be phased as we match capacity to market demand. As part of the commercialisation process, we are also securing sources of renewable energy for the site in Poland.

·	There is increasing momentum around the significant role that hydrogen will play in enabling the energy transition to a clean, low carbon economy. We have a unique competitive advantage for this transition, with a number of market leading solutions across the hydrogen value chain including hydrogen production technologies and fuel cells:

	·	Hydrogen production technologies: As the market evolves, we are well positioned due to our development of a new, market leading process to produce low carbon hydrogen (LCH™) or "blue" hydrogen. Carbon capture and storage is easier and cheaper using our process and we are already starting to commercialise this technology. We are collaborating on one of the UK's leading low carbon hydrogen projects - HyNet North West - which will use our LCH hydrogen technology in a refinery for the first time.

	·	Fuel cell technologies: Fuel cells will play a key role in the decarbonisation of transportation. With our expertise in precious metals, ability to provide customised solutions and established manufacturing footprint, we are well positioned for this market. Today, we supply fuel cells for non-automotive and automotive applications including commercial vehicles in China, and we are working with a number of customers, including major automotive OEMs, on a variety of applications as this market develops. We continue to invest in our technology and have committed £15 million to double our manufacturing capacity across the UK and China.

Sales (£ million)	Year ended 31^st March		% change	% change, constant rates
Sales (£ million)	2020	2019	% change	% change, constant rates
Clean Air	2,618	2,720	-4	-4
Efficient Natural Resources	1,079	991	+9	+8
Health	223	257	-13	-15
New Markets	389	362	+7	+7
Eliminations	(139)	(116)
Sales	4,170	4,214	-1	-2

Underlying operating profit (£ million)	Year ended 31^st March		% change	% change, constant rates
Underlying operating profit (£ million)	2020	2019	% change	% change, constant rates
Clean Air	295	393	-25	-25
Efficient Natural Resources	256	181	+41	+40
Health	27	43	-37	-38
New Markets	(1)	2	n/a	n/a
Corporate	(38)	(53)
Underlying operating profit	539	566	-5	-6

Reconciliation of underlying operating profit to operating profit (£ million)	Year ended 31^st March
	2020	2019
Underlying operating profit	539	566
Profit / (loss) on disposal of businesses¹	2	(12)
Loss on significant legal proceedings	-	(17)
Amortisation of acquired intangibles	(13)	(14)
Major impairment and restructuring charges¹	(140)	8
Operating profit	388	531

Sales outperformed in a weak market
·	In light duty, Europe sales grew 2% and Asia sales grew 4%, both well ahead of markets that declined, as we benefited from tightening legislation which increased the value per vehicle
·	Globally, heavy duty sales declined 13% which was broadly in line with the market
·	Strong market shares were maintained in our key light duty diesel and heavy duty segments
·	Operating profit was down as guided, primarily driven by a weak global heavy duty market, COVID-19 related costs, infrastructure investment and one-off costs in the first half associated with manufacturing inefficiencies

	Year ended 31^st March		% change	% change, constant rates
	2020	2019
	£ million	£ million
Sales
LDV Europe	1,046	1,031	+1	+2
LDV Asia	381	361	+5	+4
LDV Americas	315	346	-9	-11
Total Light Duty Vehicle Catalysts	1,742	1,738	-	-

HDD Americas	443	476	-7	-10
HDD Europe	277	334	-17	-16
HDD Asia	111	128	-13	-14
Total Heavy Duty Diesel Catalysts	831	938	-11	-13

Other - stationary	45	44	+1	-

Total sales	2,618	2,720	-4	-4

Underlying operating profit	295	393	-25	-25
Margin	11.3%	14.4%
Return on invested capital (ROIC)	18.4%	30.0%
Reported operating profit	236	390	-40

Light Duty Vehicle (LDV) catalysts
In LDV catalysts, we provide catalysts for emission control after-treatment systems for cars and other light duty vehicles powered by diesel and gasoline. Global sales were flat year on year, but well ahead of the decline in global light duty vehicle production of 10%, which was more pronounced in the second half as COVID-19 affected the global automotive market. Our customers first began to close their plants in China towards the end of January and then in Europe and the US from the middle of March.

In Europe, diesel accounts for around 80% of our LDV business. Sales of diesel catalysts were flat as we outperformed a market that declined, driven by the annualisation of our diesel market share gains. We maintained a market share of c.65% in light duty diesel vehicles.

In Western Europe, diesel accounted for 31% of new passenger car sales in 2019/20, compared with 35% in the last financial year. Light duty commercial vehicles remain largely diesel today. When these are included, the overall share of diesel sales in Western Europe was 39% for 2019/20, compared with 42% in 2018/19.
Sales of gasoline catalysts were up in both Europe and Asia, significantly ahead of markets that declined 7% and 13% respectively. Growth was primarily driven by increased value per vehicle with the implementation of tighter legislative standards.

Americas LDV declined, driven by weaker performance in diesel largely due to the ramp down of a platform.

Heavy Duty Diesel (HDD) catalysts
In HDD catalysts, we provide catalysts for emission control after-treatment systems for trucks, buses and non-road equipment. Global sales were down 13%, broadly in line with the decline in market production of 11%.

In Americas, the high value Class 8 truck cycle peaked in September, then declined sharply in the second half. Our Class 8 sales declined as expected, slightly behind the market due to product mix.

Our European and Asian HDD businesses also declined broadly in line with their respective markets. Over the medium term, tightening legislation in China and India will drive a significant uplift in value.

Consolidating Clean Air footprint
We have been investing in our world class plants in Europe and Asia and this is enabling us to drive further efficiency and agility across the sector by consolidating some of our existing older capacity in Europe into these new, more efficient plants. In the year, this gave rise to an impairment charge of £61 million on our older manufacturing assets, taken outside of underlying operating profit.

Underlying operating profit
Operating profit declined 25% and margin declined 3.1 percentage points. This was primarily driven by a weak global heavy duty market, c.£40 million of COVID-19 related costs (including c.£10 million higher trade debtor provisions) and higher costs of c.£20 million from investment in infrastructure and start up costs for new plants. There were also one-off costs of c.£15 million which included additional freight costs and inefficiencies within our manufacturing footprint due to phasing of the completion of our new plant in Poland.

ROIC
ROIC was down 11.6 percentage points to 18.4% reflecting lower operating profit and higher invested capital from our new plants which are not yet yielding returns.

Significant growth in operating profit and margin expansion
·	Sales grew 8% primarily driven by strong performance in PGM Services
·	Significant operating profit growth and margin expanded 5.5 percentage points. This reflected higher average pgm prices and strength in our PGM Services trading business in a more volatile price environment, partly offset by higher refining operating costs and further investment in our refineries

Catalyst Technologies
Our Catalyst Technologies business licenses key process technology and manufactures high value speciality catalysts and additives for the chemical and oil and gas industries. We saw a small impact from COVID-19 in the year, with the vast majority of our Catalyst Technology plants maintaining operations. Sales were slightly down driven by refill additives and copper zeolites to Clean Air, partly offset by strong growth in first fill catalysts and licensing.

Refill catalysts and additives sales were slightly lower
This is recurring business which makes up the majority of sales within Catalyst Technologies. Refill additives declined due to feedstock dynamics driving lower volumes. In refill catalysts, sales were stable. We saw good performance in ammonia and formaldehyde, ahead of the market. However, we saw lower sales in methanol following strong demand in the prior period and in hydrogen refill catalysts due to the lower oil price.

First fill catalystsalmost doubled
First fill catalysts are lumpy in nature and driven by the start-up of new plants. They are a lead indicator of future refill catalyst demand. In the year, we saw strong sales growth driven by methanol and ammonia catalysts with new plants in Asia coming onstream.

Licensing saw good growth
Our licensing business is dependent on new plant builds and revenue is recognised over the period of construction. We saw good performance in the period driven by formaldehyde and methanol following recent license wins in these segments. We also began to recognise income from our newly developed mono ethylene glycol technology as we started work on the first project following the license win last year. In the year, we signed four new licenses and are pleased with the progress we are making in developing and commercialising technologies.

PGM Services
PGM Services is the world's leading secondary refiner of platinum group metals and provides a strategic service to the group, mainly supporting Clean Air with security of metal supply in a volatile market. It comprises our pgm refining, recycling and trading activities and produces chemical compounds and industrial products containing pgms. Towards the end of the year, our pgm refineries continued to operate albeit at lower capacity due to compliance with local guidelines and new working practices in light of COVID-19.
PGM Services sales grew strongly, up 36%
In the year, sales grew 36%. We saw strong growth in our refinery and trading businesses due to higher and more volatile average pgm prices. Average palladium and rhodium prices were up 56% and 137% respectively, whilst the platinum price increased 5%, compared to the same period last year. Sales of chemical products grew driven by Clean Air which uses pgm materials in its catalyst products, however, sales of industrial products containing pgms were down.

Refinery backlog volumes improved
Following unscheduled downtime in one of our pgm refineries in 2018/19 which resulted in higher precious metal working capital, we made strong progress this year in reducing the volume of precious metal working capital in our refineries whilst ensuring continued supply to our Clean Air business and external customers. Our progress has been faster than expected and, as a result of the work we have done to improve our precious metal working capital efficiency, we now expect to remove at least a further £300 million¹ of precious metal working capital volume from our backlogs by the end of 2020/21.

As previously announced, the £100 million investment in our new refinery is underway.This will further reduce precious metal working capital, ensure our assets operate effectively and reliably, and strengthen our position as a long term supplier to our customers.

Advanced Glass Technologies
Advanced Glass Technologies mainly provides black obscuration enamels and silver paste for automotive glass applications. Sales were lower largely driven by the automotive segment as a result of the slowdown in global car production, impacted by COVID-19.

Diagnostic Services
Diagnostic Services provides specialised detection, diagnostic and measurement solutions for our customers in the petroleum industry. Sales were down as we saw an impact from the declining oil price and COVID-19.

Underlying operating profit
Operating profit grew significantly, up 40%, and margin expanded 5.5 percentage points. This was primarily driven by a £47 million benefit from higher average pgm prices and strength in our PGM Services trading business in a more volatile price environment, partly offset by higher refinery operating costs as we continue to work down our backlogs and further investment in our refineries.

ROIC
ROIC increased 4.6 percentage points to 17.2% reflecting higher operating profit.

Notes:
1.	Based on 31^st March 2020 prices.

Performance affected by temporary disruption in the opioid addiction therapy market
·	Generics declined as expected, affected by temporary disruption in the opioid addiction therapy market and lower sales of ADHD APIs. We have now agreed new multi-year supply agreements for opioid addiction therapies with generic partners from which we will begin to see the benefit in 2020/21
·	Innovators grew driven by a customer who received regulatory approval for a novel immuno-oncology treatment
·	Operating profit declined materially driven by weaker sales performance, partly offset by stock build to meet higher customer demand in 2020/21 and a net benefit from footprint optimisation
·	We made further progress towards delivering an additional c.£100 million of operating profit from our pipeline of generic and innovator APIs by 2025 although this may be delayed a year given the inherent uncertainty around the timing of individual drug launches.


		2020	2019
	Notes	£ million	£ million

Assets
Non-current assets
Property, plant and equipment		1,403	1,271
Right-of-use assets		88	-
Goodwill		580	578
Other intangible assets		396	336
Investments in joint venture and associate		23	20
Investments at fair value through other comprehensive income		49	52
Other receivables		63	39
Interest rate swaps		34	13
Deferred tax assets		66	58
Post-employment benefit net assets	6	317	209
Total non-current assets		3,019	2,576

Current assets
Inventories		1,902	1,316
Current tax assets		31	37
Trade and other receivables		2,077	1,553
Cash and cash equivalents ─ cash and deposits		112	90
Cash and cash equivalents ─ money market funds		192	347
Other financial assets		28	22
Assets held for sale		-	7
Total current assets		4,342	3,372
Total assets		7,361	5,948

Liabilities
Current liabilities
Trade and other payables		(2,745)	(1,647)
Lease liabilities		(12)	-
Current tax liabilities		(106)	(130)
Cash and cash equivalents ─ bank overdrafts		(31)	(59)
Borrowings and related swaps		(331)	(184)
Other financial liabilities		(50)	(13)
Provisions		(11)	(20)
Total current liabilities		(3,286)	(2,053)


			2020	2019
		Notes	£ million	£ million

Cash flows from operating activities
Profit before tax			305	488
Adjustments for:
	Share of profit of joint venture and associate		(3)	-
	(Profit) / loss on disposal of businesses		(2)	12
	Depreciation		154	142
	Amortisation		24	29
	Impairment losses / (reversals)		146	(7)
	Loss on sale of non-current assets		5	2
	Share-based payments		(1)	10
	Increase in inventories¹		(575)	(394)
	Increase in receivables²		(541)	(246)
	Increase in payables³		1,115	416
	Decrease in provisions		(6)	(24)
	Contributions in excess of employee benefit obligations charge		(24)	(40)
	Changes in fair value of financial instruments		24	(2)
	Net finance costs		86	43
Income tax paid			(109)	(95)
Net cash inflow from operating activities			598	334

Cash flows from investing activities
Interest received			104	61
Purchases of property, plant and equipment			(332)	(215)
Purchases of intangible assets			(111)	(86)
Proceeds from sale of assets held for sale			7	-
Proceeds from sale of non-current assets			1	1
Proceeds from sale of businesses			-	2
Net cash outflow from investing activities			(331)	(237)

Cash flows from financing activities
Proceeds from borrowings			135	245
Repayment of borrowings			(123)	(2)
Dividends paid to equity shareholders		5	(167)	(156)
Settlement of currency swaps			-	(2)
Interest paid			(202)	(108)
Principal element of lease payments			(13)	-


		Share	Shares
	Share	premium	held in	Other	Retained	Total
	capital	account	ESOT	reserves	earnings	equity
	£ million	£ million	£ million	£ million	£ million	£ million

At 1^st April 2018	221	148	(48)	62	1,995	2,378
Total comprehensive income	-	-	-	21	357	378
Dividends paid (note 5)	-	-	-	-	(156)	(156)
Share-based payments	-	-	-	-	17	17
Cost of shares transferred to employees	-	-	3	-	(10)	(7)
Tax on share-based payments	-	-	-	-	1	1
Reclassification	-	-	-	4	(4)	-
At 31^st March 2019	221	148	(45)	87	2,200	2,611
Impact of adoption of IFRIC 23	-	-	-	-	5	5
At 31^st March 2019 (restated)	221	148	(45)	87	2,205	2,616
Total comprehensive income	-	-	-	55	321	376
Dividends paid (note 5)	-	-	-	-	(167)	(167)
Share-based payments	-	-	-	-	5	5
Cost of shares transferred to employees	-	-	13	-	(19)	(6)
At 31^st March 2020	221	148	(32)	142	2,345	2,824

Health
Given the nature of our Health business in providing critical products and services into the pharmaceutical sector, COVID-19 had limited impact in the year. We maintained the vast majority of our operations although we experienced some delays to shipment of orders following increased border controls.

Generics
Our Generics business develops and manufactures generic active pharmaceutical ingredients (APIs) for a variety of treatments. Sales were down significantly, with a mixed performance across the business.

Agreed new multi-year supply agreements for opioid addiction therapies Sales of controlled APIs were lower. Speciality opiates were broadly flat in the year. Following a strong first half, sales declined in the second half due to developments in the opioid addiction therapy market which drove lower demand in the short term for APIs used in generic opioid addiction therapies. Although these developments affected our performance in the year, we have now agreed new multi-year supply agreements with generic partners and we will start to see the benefit from these in 2020/21. Sales of APIs for ADHD treatments declined as one of our customers moved to dual sourcing for some high margin APIs. Sales of bulk opiates in Europe were stable.

Our non-controlled APIs declined as expected. This primarily reflected a continued reduction in sales of dofetilide as new competitors for our customer entered the market.

Innovators
Our Innovators business provides custom development and manufacturing services for active ingredients of new drugs during their lifecycle, including for initial clinical evaluation and subsequently for commercial supply post regulatory approval.

Recent regulatory approval for our customer's novel immuno-oncology treatment Our Innovators business grew slightly. This was primarily driven by higher sales in relation to our strategic partnership with Immunomedics for the manufacture of a drug linker used in the production of an immuno-oncology treatment for triple negative breast cancer. Immunomedics has recently received approval for this therapy from the FDA (Food and Drug Administration) and is now increasing volumes to support commercial demand.

API product pipeline
In the year, we continued to develop our new product pipeline across both our Generics and Innovators businesses. We made further progress towards delivering an additional c.£100 million of operating profit from this by 2025 although it may be delayed a year given the inherent uncertainty around the timing of individual drug launches.

We recently undertook a strategic review of our new product introduction process. Following this review, we made organisational changes, improved the new product introduction process and took the decision to deprioritise 21 generic molecules and refocus our resources on the most attractive opportunities. This gave rise to an impairment charge of £20 million in relation to previously capitalised development expenditure, taken outside of underlying operating profit.

Overall, our pipeline now comprises 54 molecules which includes generic APIs, innovator APIs and new applications. This includes four launched molecules and eight generics which are awaiting regulatory approval.

Specifically within Innovators, at the start of the year, we had four projects in late stage testing programmes. Of these, two projects - including Immunomedics - have now been approved, one project did not receive approval and has been cancelled and the remaining opportunity is still in late stage testing.

Underlying operating profit
Operating profit declined 38% driven by weaker business performance including temporary disruption in the opioid addiction therapy market and lower ADHD sales. This was partly offset by stock build to meet higher demand from customers in 2020/21 which led to a greater absorption of fixed costs into inventory on the balance sheet and a net benefit from footprint optimisation.

ROIC
ROIC declined 3.7 percentage points to 5.3% mainly driven by lower operating profit.

Strong sales growth and continued progress in commercialising eLNO
·	Sales up 7% driven by strong demand for fuel cells and non-automotive battery systems
·	Operating profit declined as we invested in the development of our Battery Materials business and recognised an £8 million one-off impairment in the first half in relation to our demo plant
·	Significant progress in commercialising eLNO as we broke ground on our first commercial plant and now have four customers in full cell testing

	Share of 2019/20 non-sterling denominated underlying operating profit	Average exchange rate Year ended 31^st March		% change
		Average exchange rate Year ended 31^st March
		2020	2019
US dollar	40%	1.271	1.310	-3
Euro	33%	1.143	1.134	+1
Chinese renminbi	12%	8.85	8.81	-

¹ Annualised benefits from 2020/21 of at least £30 million.
²Includes cash costs of c.£80 million.

Profit / (loss) on disposal of businesses
Profit / (loss) on disposal of businesses is shown separately on the face of the income statement and excluded from underlying operating profit. In the year, we released a £2 million provision in relation to the disposal of Johnson Matthey Gold and Silver Refining Holdings in March 2015. In the year ended 31^st March 2019, the group sold its water disinfection business, Miox. After costs, the net proceeds were £2 million which resulted in a loss on sale of £12 million.

Finance charges
Net finance charges in the year amounted to £86 million, up from £43 million in 2018/19. This was primarily driven by increased average precious metal borrowings due to higher precious metal prices, on which we pay higher interest on average than the rest of our borrowings.

Taxation
The effective tax rate on reported profit for the year ended 31^st March 2020 was 16.4%, up from 15.3% in the prior year.

The tax charge on underlying profit before tax for the year ended 31^st March 2020 was £72 million, an effective underlying tax rate of 15.7%, broadly unchanged from 15.9% in the prior year. This was around 2% lower than expected due to profit mix across different tax jurisdictions following the impact of COVID-19. The current year tax charge includes increases in provisions for uncertain tax positions, £12 million of which was recognised in the first half and relates to reassessments of prior years.

Post-employment benefits
IFRS - accounting basis
At 31^st March 2020, the group's net post-employment benefit position, after taking account of the bonds held to fund the UK pension scheme deficit, was a surplus of £262 million.

The cost of providing post-employment benefits in the year was £49 million, down from £56 million last year. The post-employment benefits cost also included a past service credit of £20 million, which compared to a £9 million credit in the prior period.

Actuarial - funding basis
The UK pension scheme has a legacy defined benefit career average section which was closed to new entrants on 1^st October 2012 when a new defined benefit cash balance section was opened.

The last triennial actuarial valuation of the career average section as at 1^st April 2018 revealed a deficit of £34 million, or a surplus of £9 million after taking account of the future additional deficit funding contributions from the special purpose vehicle set up in January 2013. The valuation results as at 1^st April 2018 allowed for the equalisation of Guaranteed Minimum Pension.

The last triennial actuarial valuation of the cash balance section as at 1^st April 2018 revealed a surplus of £0.2 million.
In order to reduce the group's long term pension risk exposure a number of changes to the UK pension scheme became effective from 1^st July 2018, including:
·	Contributions from those employees who remain in the career average section increased and will further rise over the next few years to help fund the increased cost of providing these benefits
·	The accrual rate in the career average section reduced from 1/80th to 1/100th for each year of future service after this date
·	New benefit levels with varying employee contribution rates were introduced in the cash balance section
·	Employees in the career average section were given the option of switching to the cash balance section.

The latest actuarial valuations of our two US pension schemes showed a surplus of £1 million at 1^stJuly 2019, an improvement from a £2 million deficit at 1^st July 2018.

Capital expenditure
Capital expenditure was £465 million in the year, 3.1 times depreciation and amortisation (excluding amortisation of acquired intangibles). In the period, projects included:
·		Clean Air manufacturing plants in Europe and Asia. This increased capacity will enable us to consolidate our manufacturing footprint to drive efficiency and improve flexibility, and support demand from tightening legislation in these regions
·		Investment in the development and commercialisation of eLNO. We broke ground on our first commercial plant in Konin, Poland for the first 10,000 metric tonnes which has the potential for expansion to 100,000 metric tonnes. We are on track to start production in 2022 and supply platforms in production in 2024
·		Upgrade to our core IT business systems
·		Investment in our Health manufacturing facilities and continued investment in our API product pipeline
·		Investment in the efficiency and resilience of our refineries within Efficient Natural Resources

Capital expenditure for 2020/21 is expected to be up to £400 million as our investment into strategic growth projects continues. Key projects include:
·		Investment in eLNO as we continue to commercialise our ultra-high energy battery cathode material
·		Completion of our new Clean Air plants in China and India
·		Investment in the efficiency and resilience of our refineries within Efficient Natural Resources
·		Upgrade to our IT systems as we continue to roll out our single global ERP system

Depreciation and amortisation (excluding amortisation of acquired intangibles) is expected to increase to around £200 million in 2020/21. This increase is largely due to the depreciation of our new Clean Air plants and our investment to upgrade our core IT systems.

Accelerating reduction of precious metal working capital
We have a disciplined approach to managing precious metal working capital and have accelerated our actions in this area. In the year, we made substantial progress in reducing precious metal volumes amounting to £345 million¹ which was achieved through:

·			Progressing backlog reduction, with £162 million of precious metal volume removed
·			Optimising precious metal volumes across our businesses, particularly between Clean Air and Efficient Natural Resources, and reviewing commercial terms with pgm collectors as well as our Clean Air customers. This removed £49 million of precious metal volume
·			Substantial inflows of £134 million as a result of supply chain management in Clean Air, reducing metal at every stage so we were not sitting on excess inventory, as demand slowed due to the impact of COVID-19

We are focused on further reducing precious metal working capital. We are now targeting at least a further £300 million² reduction in precious metal backlogs by 31^st March 2021, although we expect this to be offset by higher demand in Clean Air depending on the path of recovery.

Notes:
1.	Based on 2019/20 blended prices.
2.	Based on 31^st March 2020 prices.
Free cash flow and working capital
Free cash flow was an inflow of £52 million, an improvement on the prior year. This was primarily due to better net working capital where we saw an outflow of £1 million compared to an outflow of £224 million in the prior year.

Excluding precious metal, working capital days increased to 52 days at 31^st March 2020 compared to 48 days in the prior year.

Average working capital days excluding precious metals increased by 4 days to 63 days. We are targeting an improvement in average non precious metal working capital to between 50 and 60 days over the medium term.

Dividend
The group has a strong balance sheet, good cash generation and liquidity headroom. However, given the heightened degree of current uncertainty and to balance the needs of all stakeholders, the board will propose a final ordinary dividend for the year of 31.125 pence at the Annual General Meeting on 23^rd July 2020, representing half the level of the 2018/19 final dividend. This is not intended to be a rebasing; the board remains committed to a progressive dividend and anticipates restoring future dividend payments to levels seen prior to the COVID-19 pandemic when circumstances permit. Subject to approval by shareholders, the final dividend will be paid to shareholders on 4^th August 2020, with an ex dividend date of 18^th June 2020.

Return on invested capital (ROIC)
ROIC declined to 13.3% at 31^st March 2020 from 16.4% in the prior year mainly due to higher capital expenditure, increased average precious metal working capital through the year and lower operating profit.

Capital structure
Net debt at 31^st March 2020 was £1.1 billion. This is a decrease of £394 million from 30^th September 2019 and an increase of £228 million from 31^st March 2019. Net debt increased by £43 million to £1.1 billion when adjusted for the post tax pension deficits. The group's net debt (including post tax pension deficits) to EBITDA was 1.6 times (31^st March 2019: 1.3 times), at the bottom end of our target range of 1.5 to 2.0 times.

Contingent liabilities
The group is involved in various disputes and claims which arise from time to time in the course of its business including, for example, in relation to commercial matters, product quality or liability, employee matters and tax audits. The group is also involved from time to time in the course of its business in legal proceedings and actions, engagement with regulatory authorities and in dispute resolution processes. These are reviewed on a regular basis and, where possible, an estimate is made of the potential financial impact on the group. In appropriate cases a provision is recognised based on advice, best estimates and management judgement. Where it is too early to determine the likely outcome of these matters, no provision is made. Whilst the group cannot predict the outcome of any current or future such matters with any certainty, it currently believes the likelihood of any material liabilities to be low, and that such liabilities, if any, will not have a material adverse effect on its consolidated income, financial position or cash flows.

On a specific matter, the group previously disclosed that it had been informed by two customers of failures in certain engine systems for which the group supplied a particular coated substrate as a component for their customers' emissions after-treatment systems. The particular coated substrate was sold to only these two customers. The group has not been contacted by any regulatory authority about these engine system failures. The reported failures have not been demonstrated to be due to the coated substrate supplied by the group. As previously disclosed, we settled with one of these customers on mutually acceptable terms with no admission of fault.

Having reviewed its contractual obligations and the information currently available to it, the group believes it has defensible warranty positions in respect of its supplies of coated substrate for the after-treatment systems in the affected engines remaining at issue. If required, it will vigorously assert its available contractual protections and defences. The outcome of any discussions relating to the matters raised is not certain, nor is the group able to make a reliable estimate of the possible financial impact at this stage, if any. The group works with all its customers to ensure appropriate product quality and we have not received claims in respect of our emissions after-treatment components from this or any other customer. Our vision is for a world that's cleaner and healthier; today and for future generations. We are committed to enabling improving air quality and we work constructively with our customers to achieve this.

UK's withdrawal from European Union
JM is continuing to monitor and assess the potential impact of the UK's withdrawal from the European Union on current operations and strategy. Plans are well developed and JM is confident that the acute demands of managing the COVID-19 response will not reduce its ability to respond to changes caused by the withdrawal.

Going concern
The group has a strong balance sheet with c.£1.3 billion of available cash and undrawn committed facilities at 31^st March 2020. Leverage, measured by net debt (including post tax pension deficits) to EBITDA, was at the bottom of our target range at 1.6 times. COVID-19 has introduced unprecedented uncertainty to the market outlook and in response to this we have undertaken extensive reviews of our businesses and projections under a range of potential outcomes.

Our review used a number of external sources to identify a range of potential economic scenarios and assessed our headroom under each scenario against committed facilities and key financial covenants over the going concern period.
At a macro-level we have used the GDP forecasts from a range of external parties for these scenarios, which are: (1) a deep recession base case which models an extended shutdown followed by an extended recovery period, and (2) a downside of a very deep recession comprising of a deeper shutdown with a challenging, stuttering recovery. The key macro assumptions for our financial year 2020/21 are shown below:

2020/21 GDP growth projections aligned with the scenarios

				Deep recession	Very deep recession
Description				Extended shutdown followed by extended recovery period	Deeper shutdown impact with challenging, stuttering recovery
Global				(1.0%) to (2.0%)	(3.5%) to (4.5%)
US				(0.6%)	(2.7%)
China				1.2%	(3.0%)
Europe				(6.5%)	(c.10%)
Source: JM analysis; Oxford Economics; McKinsey; IMF (International Monetary Fund); IEA (Institute of Economic Affairs); OBR (Office for Budget Responsibility) (UK); JPM Cazenove and Citi

Clean Air
With the legislative frameworks in place and assumed to remain for vehicle emissions in the markets in which we operate, our key market variable is the level of automotive production. Our scenarios utilise a range of external forecasts and our deep recession scenario assumes a decline of c.25% in light duty production for Europe and the US, but better in Asia, while for heavy duty the declines are slightly more. In our very deep recession scenario, we assume a c.35% decline in light duty production for Europe and the US, but better in Asia, while for heavy duty the declines are again slightly more. For US truck sales, we assume that the bottom of the cycle will occur in 2021/22 in both scenarios and we keep our assumptions on battery electric vehicles consistent at 2% of all vehicles globally.

Within these market assumptions, we have planned for a much greater impact in the early part of 2020/21 and an increase in production over the year, with slower recovery in the very deep scenario. With a high proportion of variable costs, we expect to mitigate a significant portion of the decline in sales. Working capital drops significantly in the short term before building again to support the growth to normalise by the end of the year. We also assume that we will continue with our strategic investments in the new facilities in China and India in the period.
Efficient Natural Resources
The impact on our Efficient Natural Resources sector varies by sub-sector. The Catalyst Technologies businesses have seen little impact from the COVID-19 slowdown to date, but we do expect an impact as lower demand begins to impact the industries they serve. The key drivers for our businesses are diverse and will depend upon the specific markets they address as well as feedstock prices. At a market level we have assumed an oil price of $25-35/bbl for our deep scenario and $20-30/bbl for the very deep scenario together with an overall decline in investment in the oil and gas sector of 35% and 50% respectively. In these businesses we have a higher proportion of fixed costs so the impact of lower demand on profitability will be greater.

Platinum Group Metal (PGM) Services is most impacted by pgm prices and for the purpose of our scenarios we assume lower prices, which adversely impacts profitability. The lower demand on our refineries in the short term in part due to lower Clean Air volumes under these scenarios will allow us to accelerate our progress on backlog reduction as well as meeting planned shutdowns for maintenance and stock counts. This in turn reduces the sensitivity of our working capital to pgm prices.

Health and New Markets
Health is relatively unaffected by COVID-19 with demand for many products unaffected.

Most of our businesses in New Markets see only short term impacts from disruption to manufacturing and supply chains while the underlying market demand remains e.g. fuel cells and medical devices. We assume that our strategic focus and investment in Battery Materials is maintained throughout the period.

Funding and available liquidity
The group has a robust funding position. JM signed a £1 billion five year committed revolving credit facility in March this year which secures liquidity for the next five years and was entirely undrawn at 31^st March 2020. Our longer term funding comes from the US private placement market and other regional lenders including the European Investment Bank and KfW. The maturity profile at 31^st March 2020 is excellent with only £130 million of term debt maturing before June 2021. In April 2020, we secured a further US$300 million of funding from the US private placement market for the next five to seven years. JM has also secured access to the Bank of England's COVID Corporate Financing Facility (CCFF) which would provide additional back-stop liquidity for the next year if needed.

In addition, as a long-time, highly rated issuer in the US private placement market, JM expects to be able to access additional funding in its existing markets should it need to. The group also has a number of additional sources of funding available including uncommitted lease facilities that can provide precious metal funding.

At 31^st March 2020 the group had metal lease facilities of c.£800 million, of which £451 million (31^st March 2019: £372 million) was drawn. As these metal leases are for periods of less than 12 months they have been excluded from our going concern assessment, with the assumption that when these leases mature they are replaced with our other existing committed credit facilities. The metal leasing market remains active and there is no indication that renewing these lease facilities when they mature will not be possible. Similarly, we have also excluded from our modelling the funding facilities obtained under the CCFF. While metal leasing facilities and the CCFF are excluded from our modelling under a normal situation, we would expect to have access to facilities such as these.

Conclusion
The group has a robust funding position and has tested its performance under a deep recession scenario and stress tested with a more extreme very deep scenario. In both scenarios, we have sufficient headroom against committed facilities and key financial covenants in the going concern period (15 months following 31^st March 2020). There remain risks to the group including more extreme economic outcomes and our delivery of refinery backlog reductions. Against these the group still has a range of levers which it could utilise to protect headroom including delaying inventory builds, reducing capital expenditure 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 15 months following 31^st March 2020 and so determine that it is appropriate to prepare the accounts on a going concern basis.

2	Segmental information
	Revenue, sales, underlying operating profit and net assets by sector
	Year ended 31^st March 2020
			Efficient
		Clean	Natural		New
		Air	Resources	Health	Markets	Corporate	Eliminations		Total
		£ million	£ million	£ million	£ million	£ million	£ million		£ million

	Revenue from external customers	6,172	7,670	229	506	-	-		14,577
	Inter-segment revenue	1	4,291	-	6	-	(4,298)		-
	Revenue	6,173	11,961	229	512	-	(4,298)		14,577

	External sales	2,617	945	223	385	-	-		4,170
	Inter-segment sales	1	134	-	4	-	(139)		-
	Sales¹	2,618	1,079	223	389	-	(139)		4,170

	Underlying operating profit¹	295	256	27	(1)	(38)	-		539

	Segmental net assets	1,361	1,267	520	236	332	-		3,716

	Net debt (note 12)							(1,094)
	Post-employment benefit net assets and liabilities							213
	Deferred tax net liabilities							(8)
	Provisions and non-current other payables							(26)
	Investments in joint venture and associate							23

	Net assets							2,824

Year ended 31^st March 2019

		Efficient
	Clean	Natural		New
	Air	Resources	Health	Markets	Corporate	Eliminations	Total
	£ million	£ million	£ million	£ million	£ million	£ million	£ million

Revenue from external customers	4,948	5,074	259	464	-	-	10,745
Inter-segment revenue	210	2,608	-	9	-	(2,827)	-
Revenue	5,158	7,682	259	473	-	(2,827)	10,745

External sales	2,719	880	256	359	-	-	4,214
Inter-segment sales	1	111	1	3	-	(116)	-
Sales¹	2,720	991	257	362	-	(116)	4,214

Underlying operating profit¹	393	181	43	2	(53)	-	566

Segmental net assets	1,339	1,243	496	235	108	-	3,421

Net debt (note 12)							(866)
Post-employment benefit net assets and liabilities							103
Deferred tax net liabilities							(33)
Provisions and non-current other payables							(34)
Investments in joint venture and associate							20


Net assets							2,611

¹Sales and underlying operating profit are non-GAAP measures (see note 12). 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.

Impact of exchange rate movements on sales and underlying operating profit by sector

The main impact of exchange rate movements on sales and underlying operating profit is from the translation of the results of foreign operations into sterling.


Average exchange rates
				2020		2019

US dollar / £				1.271		1.310
Euro / £				1.143		1.134
Chinese renminbi / £				8.85		8.81


		Year ended	Year ended 31^st March 2019				Change at
		31^st March 2020	At last year's rates		At this year's rates		this year's rates
		£ million	£ million		£ million		%


	Clean Air	2,618	2,720		2,739		-4
	Efficient Natural Resources	1,079	991		1,002		+8
	Health	223	257		262		-15
	New Markets	389	362		363		+7
	Inter-segment sales	(139)	(116)		(116)
	Sales¹	4,170	4,214		4,250		-2


	Clean Air	295	393		395		-25
	Efficient Natural Resources	256	181		183		+40
	Health	27	43		44		-38
	New Markets	(1)	2		3		n/a
	Corporate	(38)	(53)		(54)
	Underlying operating profit¹	539	566		571		-6

	¹Sales and underlying operating profit are non-GAAP measures (see note 12). 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.


3	Revenue

	Revenue from external customers by principal products and services

	Year ended 31^st March 2020
			Clean Air	Efficient Natural Resources	Health	New Markets	Total
			£ million	£ million	£ million	£ million	£ million



	Metal		3,555	6,725	6	121	10,407
	Heavy Duty Catalysts		831	-	-	-	831
	Light Duty Catalysts		1,742	-	-	-	1,742
	Catalyst Technologies		-	513	-	-	513
	Platinum Group Metal Services		-	298	-	-	298
	Advanced Glass Technologies		-	70	-	-	70
	Diagnostic Services		-	64	-	-	64
	Generics		-	-	134	-	134
	Innovators		-	-	89	-	89
	Alternative Powertrain		-	-	-	237	237
	Medical Device Components		-	-	-	71	71
	Life Science Technologies		-	-	-	47	47
	Other		44	-	-	30	74



	Revenue		6,172	7,670	229	506	14,577



		Year ended 31^st March 2019
			Clean Air	Efficient Natural Resources	Health	New Markets	Total
			£ million	£ million	£ million	£ million	£ million
		Metal	2,229	4,194	3	105	6,531
		Heavy Duty Catalysts	938	-	-	-	938
		Light Duty Catalysts	1,737	-	-	-	1,737
		Catalyst Technologies	-	504	-	-	504
		Platinum Group Metal Services	-	233	-	-	233
		Advanced Glass Technologies	-	75	-	-	75
		Diagnostic Services	-	68	-	-	68
		Generics	-	-	171	-	171
		Innovators	-	-	85	-	85
		Alternative Powertrain	-	-	-	206	206
		Medical Device Components	-	-	-	70	70
		Life Science Technologies	-	-	-	46	46
		Other	44	-	-	37	81



		Revenue	4,948	5,074	259	464	10,745

	Financial assumptions

			2020		2020		2020		2019		2019		2019
			UK plan		US plans		Other plans		UK plan		US plans		Other plans
			%		%		%		%		%		%


	First year's rate of increase in salaries		-		-		2.15		3.85		3.00		2.45
	Ultimate rate of increase in salaries		2.60		3.00		2.15		3.85		3.00		2.45
	Rate of increase in pensions in payment		2.50		-		1.70		2.95		-		1.50
	Discount rate		2.30		3.00		1.87		2.40		3.80		1.82
	Inflation				2.20		1.65				2.20		1.60
	- UK Retail Prices Index (RPI)		2.50						3.10
	- UK Consumer Prices Index (CPI)		1.85						2.10

Financial information
Movements in the net post-employment benefit assets and liabilities, including reimbursement rights, were:
						UK post-				US post-
		UK pension -		UK pension -		retirement				retirement
		legacy		cash balance		medical		US		medical
		section		section		benefits		pensions		benefits		Other	Total
		million		million		£ million		£ million		£ million		£ million	£ million
At 1^st April 2019		199		(1)		(9)		(15)		(29)		(38)	107
Current service cost - in operating profit		(8)		(21)		-		(8)		(1)		(3)	(41)
Past service credit - in operating profit		-		-		-		-		10		10	20
Administrative expenses - in operating profit		(3)		-		-		(1)		-		-	(4)
Interest		5		-		-		(1)		(1)		(1)	2
Remeasurements		86		6		(3)		3		(7)		2	87
Company contributions		27		19		-		-		3		3	52
Exchange		-		-		-		(2)		(2)		(1)	(5)
At 31^st March 2020		306		3		(12)		(24)		(27)		(28)	218

The post-employment benefit assets and liabilities are included in the balance sheet as follows:

	2020	2020	2020	2019	2019	2019
	Post-			Post-
	employment	Employee		employment	Employee
	benefit	benefit net		benefit	benefit net
	net assets	obligations	Total	net assets	obligations	Total
	£ million	£ million	£ million	£ million	£ million	£ million
UK pension - legacy section	306	-	306	199	-	199
UK pension - cash balance section	3	-	3	-	(1)	(1)
UK post-retirement medical benefits	-	(12)	(12)	-	(9)	(9)
US pensions	-	(24)	(24)	-	(15)	(15)
US post-retirement medical benefits	7	(34)	(27)	8	(37)	(29)
Other	1	(29)	(28)	2	(40)	(38)
Total post-employment plans	317	(99)	218	209	(102)	107
Other long term employee benefits		(5)			(4)
Total long term employee benefit obligations		(104)			(106)

	2020	2019	Fair value hierarchy
	£ million	£ million	Level
Financial instruments measured at fair value

Non-current
Investments at fair value through other comprehensive income	49	52	1
Interest rate swaps	34	13	2
Borrowings and related swaps	(6)	(5)	2

Current
Trade receivables¹	328	173	2
Other receivables²	72	9	2
Cash and cash equivalents - money market funds	192	347	2
Other financial assets³	28	22	2
Other financial liabilities³	(50)	(13)	2

Financial instruments not measured at fair value

Non-current
Borrowings and related swaps	(988)	(1,068)
Lease liabilities	(64)	-

Current
Cash and cash equivalents - cash and deposits	112	90
Cash and cash equivalents - bank overdrafts	(31)	(59)
Borrowings and related swaps	(331)	(184)
Lease liabilities	(12)	-

¹ Trade receivables held in a part of the group with a business model to hold trade receivables for collection or sale. The remainder of the group operates a hold to collect business model and receives the face value, plus relevant interest, of its trade receivables from the counterparty without otherwise exchanging or disposing of such instruments. ² Other receivables with cash flows that do not represent solely the payment of principal and interest. ³ Includes forward foreign exchange contracts, forward precious metal price contracts and currency swaps.

The fair value of financial instruments, excluding accrued interest, is approximately equal to book value except for:

	2020		2019
	Carrying amount	Fair value	Carrying amount	Fair value
	£ million	£ million	£ million	£ million


US Dollar Bonds 2022, 2023, 2025 and 2028	(514)	(496)	(481)	(477)
Euro Bonds 2021, 2023, 2025 and 2028	(264)	(247)	(251)	(264)
Euro EIB loan 2019	-	-	(107)	(108)
Sterling Bonds 2024 and 2025	(110)	(108)	(110)	(118)
KfW US dollar loan 2024	(41)	(41)	(38)	(39)

	Balance sheet
	The following table shows the effect of adopting IFRS 16 on the group's balance sheet at 1^st April 2019:

											£ million

	Non-current assets
	Right-of-use assets										89
	Other receivables¹										(14)
	Total non-current assets										75
	Total assets										75

	Current liabilities
	Trade and other payables										1
	Lease liabilities										(11)
	Total current liabilities										(10)

	Non-current liabilities
	Lease liabilities										(66)
	Provisions										1
	Total non-current liabilities										(65)
	Total liabilities										(75)
	Net assets										-

	¹Prepayments reclassified as right-of-use assets.

	The weighted average incremental borrowing rate applied to lease liabilities was 4.2%.


											£ million
	Future minimum amounts payable under non-cancellable operating leases reported under
	IAS 17 at 31^st March 2019										76
	Change in assessment of lease term										22
	Low-value or short-term leases										(1)
	Reclassification of onerous lease provision										1
	Impact of discounting lease liabilities										(21)
	Lease liabilities recognised on transition to IFRS 16 at 1^st April 2019										77



	Current										11
	Non-current										66
	Lease liabilities recognised on transition to IFRS 16 at 1^st April 2019										77

Measure	Definition	Purpose
Sales¹	Revenue excluding sales of precious metals to customers and the precious metal content of products sold to customers.	Provides a better measure of the growth of the group as revenue can be heavily distorted by year on year fluctuations in the market prices of precious metals and, in many cases, the value of precious metals is passed directly on to customers.
Underlying operating profit²	Operating profit excluding non-underlying items.	Provides a measure of operating profitability that is comparable over time.
Underlying operating profit margin^{1, 2}	Underlying operating profit divided by sales.	Provides a measure of how we convert our sales into underlying operating profit and the efficiency of our business.
Underlying profit before tax²	Profit before tax excluding non-underlying items.	Provides a measure of profitability that is comparable over time.
Underlying profit for the year²	Profit for the year excluding non-underlying items and related tax effects.	Provides a measure of profitability that is comparable over time.
Underlying earnings per share^{1, 2}	Underlying profit for the year divided by the weighted average number of shares in issue.	Our principal measure used to assess the overall profitability of the group.
Return on invested capital (ROIC)¹	Underlying operating profit divided by average total equity, excluding post tax pension net assets, plus average net debt for the same period.	Provides a measure of the group's efficiency in allocating the capital under its control to profitable investments. The group has a long term target of a return on invested capital of 20% to ensure focus on efficient use of the group's capital.
Average working capital days (excluding precious metals)¹	Monthly average of non-precious metal related inventories, trade and other receivables and trade and other payables (including any classified as held for sale) divided by sales for the last three months multiplied by 90 days.	Provides a measure of efficiency in the business with lower days driving higher returns and a healthier liquidity position for the group.
Free cash flow	Net cash flow from operating activities after net interest paid, net purchases of non-current assets and investments, dividends received from joint venture and associate and the principal element of lease payments.	Provides a measure of the cash the group generates through its operations, less capital expenditure.
Net debt (including post tax pension deficits) to underlying EBITDA	Net debt, including post tax pension deficits and quoted bonds purchased to fund the UK pension (excluded when the UK pension plan is in surplus) divided by underlying EBITDA for the same period.	Provides a measure of the group's ability to repay its debt. The group has a long term target of net debt (including post tax pension deficits) to underlying EBITDA of between 1.5 and 2.0 times, although in any given year it may fall outside this range depending on future plans.


	Reconciliations to GAAP measures
	Sales
	See note 2.
	Underlying profit measures
		Operating profit	Profit before tax		Tax expense		Profit for the year
	Year ended 31^st March 2020	£ million	£ million		£ million		£ million


	Underlying	539	455		(72)		383
	Profit on disposal of businesses	2	2		-		2
	Amortisation of acquired intangibles	(13)	(13)		3		(10)
	Major impairment and restructuring charges	(140)	(140)		16		(124)
	Interest on non-underlying tax provisions	-	1		-		1
	Change in non-underlying tax provisions	-	-		3		3
	Reported	388	305		(50)		255


		Operating profit	Profit before tax		Tax expense		Profit for the year
	Year ended 31^st March 2019	£ million	£ million		£ million		£ million

	Underlying	566	523		(83)		440
	Loss on disposal of businesses	(12)	(12)		4		(8)
	Loss on significant legal proceedings	(17)	(17)		3		(14)
	Amortisation of acquired intangibles	(14)	(14)		3		(11)
	Major impairment and restructuring charges	8	8		(2)		6
	Reported	531	488		(75)		413



Underlying earnings per share
				2020		2019
Underlying profit for the year (£ million)				383		440
Weighted average number of shares in issue (number)				192,437,993		192,128,811
Underlying earnings per share (pence)				199.2		228.8