Final Results
Johnson,Matthey PLC
6 June 2002
For Release at 7.00 am Thursday 6th June 2002
Preliminary Results for the year ended 31st March 2002
Johnson Matthey delivers good growth in challenging markets
Results
• Operating profit before exceptional items and goodwill amortisation up
10% to £193.3 million
• Profit before tax, exceptional items and goodwill amortisation up 4% to
£187.2 million
• Earnings per share before exceptional items and goodwill amortisation
up 6% to 60.4 pence
• Dividend for the year increased by 6% to 24.6 pence
Business developments
• Strong year from Catalysts & Chemicals with profits up 17% at £94.7
million showing the benefit of the major investment in new technology
• Construction of new fuel cell components factory at Swindon well
underway
• Pharmaceutical Materials makes a strong start as a new division with
first year profits of £31.3 million. Both Meconic and Pharm-Eco
acquisitions achieve good results
• Precious Metals' profits only slightly down at £55.9 million despite
significantly lower average metal prices, with continuing good demand
for platinum
• Colours & Coatings' profits of £25.5 million affected by weak demand
for Tableware products. Major site rationalisation programme underway
to reduce costs
• Continued investment in research and development and new manufacturing
facilities to support the future growth of the group
Commenting on the results, Chris Clark, Chief Executive of Johnson Matthey said:
'The growth achieved by Johnson Matthey this year in difficult market conditions
emphasises the resilience of the group. We continue to see excellent
opportunities for our growth businesses despite uncertain economic conditions.
The outlook for platinum demand remains encouraging. Both Catalysts & Chemicals
and Pharmaceutical Materials are well placed to deliver further growth in the
current year.'
Enquiries:
Chris Clark, Chief Executive, Johnson Matthey 020 7269 8435
John Sheldrick, Group Finance Director, Johnson Matthey 020 7269 8421
Howard Lee / Laura Hickman, Gavin Anderson & Co 020 7554 1400
www.matthey.com
Review of the year ended 31st March 2002
Introduction
Johnson Matthey delivered good results in 2001/02 despite more difficult market
conditions. Most of the growth was generated by Catalysts & Chemicals Division
and the newly formed Pharmaceutical Materials Division. The group has continued
to invest significantly in new production facilities and R & D to support future
growth.
Review of Results
In the financial year to 31st March 2002 Johnson Matthey's profit before tax,
exceptional items and goodwill amortisation rose by 4% to £187.2 million.
Earnings per share before exceptional items and goodwill amortisation rose by 6%
to 60.4 pence.
Total sales fell by 18% to £4.8 billion reflecting significantly lower prices
for platinum and palladium, particularly in the second half of the year. Sales
excluding the value of precious metals rose by 12% to £1.1 billion, with double
digit growth in Catalysts & Chemicals. Pharmaceutical Materials' sales
benefited from the contribution from the two acquisitions made in 2001/02 as
well as from good organic growth in the second half of the year.
Operating profit before exceptional items and goodwill amortisation rose by 10%
to £193.3 million. The group had a net interest charge of £6.1 million compared
with a net credit of £5.3 million last year. This change reflects the funding
costs of the major investments and share buy-backs undertaken in the year, and
higher interest paid on gold and silver leases.
Dividend
The board is recommending to shareholders a final dividend of 17.1 pence making
a total dividend for the year of 24.6 pence, an increase of 6%. The proposed
dividend would be covered 2.5 times by earnings.
Operations
Catalysts & Chemicals Division's sales fell by 11% to £1,303 million reflecting
the significant fall in platinum group metal (pgm) prices. Sales excluding the
value of precious metals rose by 11% to £597 million. The division's operating
profit rose by 17% to £94.7 million.
The Catalytic Systems' business, which encompasses our global autocatalyst,
heavy duty diesel and stationary source emission businesses, had an excellent
year. Global car sales in Johnson Matthey's financial year were 2 to 3% down on
last year but catalyst volumes were flat, as we gained market share in Europe.
The double digit growth in sales excluding the value of precious metals reflects
the continued introduction of new products using more complex formulations with
higher material costs. Over half of the products that we make in Catalytic
Systems today have been introduced into production within the last two years.
Margins have improved as these higher performance products, precision coated to
tolerances that have become the industry benchmark, have saved our customers
money whilst achieving tighter legislative limits.
The heavy duty diesel (HDD) market has also taken several steps forward in
recent months. The retrofitting of aftertreatment devices has continued to grow
as several major cities, including New York, Los Angeles, Washington DC, Seattle
and more recently Hong Kong and Tokyo, have instigated significant trials of
clean buses and trucks. Johnson Matthey's patented CRT(R) technology has secured
a majority share of these trials and subsequent sales. We are also
collaborating with all manufacturers of HDD engines as they prepare to start
fitting these devices as original equipment in the next few years.
Chemicals also had a good year, with most of the growth coming in pgm refining
with increased intake from primary producers. Catalyst sales were weaker,
reflecting the downturn in some of the end markets. A number of new products
were introduced in 2001/02, which should have a positive impact on the current
financial year. Construction began during the year on a pgm chemicals
manufacturing facility in Shanghai to better serve the developing Chinese
market. The plant is scheduled to open in late summer 2002. Our catalogue
based Research Chemicals business, which sells fine chemicals mainly to research
institutes, pharmaceutical and chemical companies, achieved excellent growth.
In February 2002 we acquired Avocado Research Chemicals Limited, which is a
supplier of specialised organic chemicals with an established catalogue. Since
acquisition the business has performed well.
We have stepped up our investment in Fuel Cells, the costs of which are included
in the results of Catalysts & Chemicals Division. The year has seen the
completion of our major investment in expanding fuel cell R & D and testing
facilities at our research centre at Sonning Common, UK. This facility is now
operating on a 24 hour basis and is an invaluable, world class resource for our
research and product development teams as well as our partners in our many
collaborative programmes. Good progress has been made on the first phase of our
dedicated manufacturing facility for Membrane Electrode Assemblies (MEAs) at
Swindon, UK. A new plant for testing and developing fuel processors and
associated catalyst coated components has been completed at West Whiteland, USA.
Precious Metals Division's sales fell by 24% to £3.2 billion, as a result of the
fall in pgm prices. Despite this drop, the operating profit for the division
fell by only 3% to £55.9 million. Commission income was lower, reflecting the
impact of lower pgm prices. This reduction was largely offset by higher volumes
of platinum sold, good results on pgm fabrication, and the inclusion in last
year's figures of a one-off charge of £2.6 million to restructure our Canadian
business.
Platinum and palladium prices fell sharply in the first half of 2001/02 from the
highs seen in January 2001. The average price of platinum for the year was $503
per oz, 13% lower than in 2000/01. The average price of palladium was also
lower at $473 per oz, down 39% in the same period. The prospect of a global
economic slowdown, the liquidation of long positions held by speculators and, in
the case of palladium, a sharp fall in consumer demand, saw prices reach their
low points in October. Thereafter the prices of both metals enjoyed a modest
recovery as economic sentiment improved in the USA and Russian palladium sales
were curtailed.
Although negative market sentiment undermined the price of platinum, the metal's
fundamentals remained strong with demand outstripping supply. Autocatalyst
demand increased as the market share of diesel engine cars, which use platinum
based catalysts, grew significantly and new legislation in Europe came into
force. Although jewellery demand declined in the USA and Japan as consumer
spending fell, the market in China once again displayed remarkable growth.
The group's platinum fabrication businesses achieved good growth in the year
with most of the increase coming from products for medical devices. However,
trading profit for the Gold and Silver business was below last year. The gold
refining market remains very competitive with pressure on margins.
Colours & Coatings Division increased its sales by 1% to £253 million.
Operating profit for the division fell by 21% to £25.5 million.
All of the division's businesses experienced weaker demand in the second half of
the year. The Glass sector performed well with good sales of decorative and
gold products in Europe. The Structural Ceramics sector, which sells mainly to
the tile industry, achieved modest sales growth but margins came under pressure
in the second half. Tableware experienced very difficult market conditions with
a sharp fall in demand. The division took swift action to reduce costs by
rationalising production including the closure of a major site in Staffordshire.
This rationalisation should produce savings of £3 million in 2002/03 and £7
million in the following year and should also be cash positive following the
sale of assets.
Pharmaceutical Materials Division increased sales by 200% to £106 million, with
most of the rise coming from the acquisition of Meconic plc at the beginning of
July 2001 and Pharm-Eco Laboratories, Inc., acquired in April 2001. Operating
profit rose by 74% to £31.3 million.
Profit for the group's existing business, based in New Jersey in the US, was 8%
up on last year at £19.4 million with most of the growth coming in the second
half. The business benefited from three new product introductions, which
received FDA approval in 2001/02 and were launched towards the end of the
financial year. Meconic, through its operating company Macfarlan Smith, made a
good start under Johnson Matthey ownership making a profit of £10.0 million in
the nine month period with good sales of specialist opiates. Pharm-Eco also
performed well with a steady increase in sales since its acquisition and a
strong order book for the new financial year.
Exceptional Items and Goodwill Amortisation
Exceptional items included in operating profit gave rise to a net charge of
£18.1 million. They comprised the cost of rationalising production in the
Tableware sector of Colours & Coatings (£24.0 million); the cost of eliminating
board and other related costs at Meconic following its acquisition (£1.3
million); partly offset by a gain on disposal of some of the group's holding of
unhedged palladium stock (£7.2 million).
In addition, in early September 2001 we sold our loss-making French ceramic
print business (part of Tableware). This sale gave rise to an exceptional book
loss of £5.5 million shown in sale of discontinued operations.
Goodwill amortisation increased to £6.8 million following the acquisitions of
Meconic, Pharm-Eco and Avocado.
Interest and Exchange Rates
The group had a net interest charge of £6.1 million for the year compared with a
net credit of £5.3 million last year. The change reflects the funding cost of
the major investments and share buy-backs undertaken in the period. Interest
payable on gold and silver leases rose to £3.5 million in the year, compared
with £1.4 million last year. This rise reflects higher average holdings and
also high lease rates, particularly for silver in the second half of the year.
Exchange translation reduced the group's profits by £2.1 million compared with
2000/01. The group benefited from the stronger US dollar which averaged $1.43/£
compared with $1.48/£ for our last financial year. However, this benefit was
more than offset by the impact of other currencies, particularly the South
African rand which averaged R13.7/£ compared with R10.8/£ in 2000/01. To some
extent the group was able to mitigate this weakness by linking the prices of
products manufactured in South Africa to the Euro or US dollar, which produced
higher profits in rands.
Taxation
This year the group has adopted FRS 19, a new accounting standard requiring
companies to provide fully for deferred tax. Last year's results have been
restated accordingly. The effect of the new standard is to increase the group's
average tax rate by about 1%, and to increase the net deferred tax liability
included in the balance sheet by £44.3 million.
Compared with last year's restated figure, the group's total tax charge fell by
£4.0 million, as a result of the inclusion of tax credits on the exceptional
charges. Excluding these credits, tax was £1.9 million higher than last year,
reflecting the growth in profit before tax.
Before exceptional items and goodwill amortisation the average tax rate for the
year was 29.9%, which was very similar to last year.
Cash Flow
Johnson Matthey's net cash inflow from operations rose by 43% to £224.1 million.
Working capital showed a small net inflow of £1.9 million. A significant
reduction in debtors was achieved, benefiting in part from the fall in the
palladium price. Inventories rose significantly at year end, part of which
should be temporary, as metal holdings have been increased during the major
upgrading of the pgm refinery at Royston.
Capital expenditure rose to £133.8 million, which was nearly £30 million higher
than last year and represents about 2.8 times depreciation. Capital expenditure
in 2002/03 is budgeted to be somewhat lower, at around 2 times depreciation. As
a consequence of the high level of capital expenditure in 2001/02, free cash
flow for the group (after interest, tax and dividends but before acquisitions
and share buy-backs) was negative at £19.6 million.
The group spent a total of £230.9 million on acquisitions, which included £46.8
million of debt acquired and £40.6 million of loan notes issued as part of the
purchase price. We also bought back 4.9 million shares in the year for a cash
cost of £45.9 million (an average price of £9.32 per share), which has improved
the financial efficiency of the balance sheet, and was earnings enhancing. As a
consequence of this expenditure the group moved from a net cash position of
£139.9 million at 31st March 2001 to a net borrowing position of £159.0 million
at 31st March 2002.
Johnson Matthey's balance sheet remains very strong, with shareholders' funds of
£813.7 million and gearing (net borrowings / shareholders' funds and minority
interests) of 19%.
Pensions
In the accounts for the year ended 31st March 2002 the group is adopting the
transitional arrangements for reporting under FRS 17, the new accounting
standard on retirement benefits. Under these arrangements the surplus or
deficit arising on the group's pension funds calculated in accordance with FRS
17 is shown as a note on the accounts.
The group operates significant defined benefit pension schemes in the UK and in
the US. At 31st March 2002 the group had a net surplus before tax on these
schemes of £106.7 million calculated using FRS 17. Reported earnings for 2001/
02 would not have been materially different under the new standard.
Business Developments
In 2001/02 we have made significant progress on growing our businesses, both by
increasing investment in new facilities and R & D and also by the successful
completion of three bolt-on acquisitions. Capital expenditure of £133.8 million
has been carefully targeted at the growth parts of the business, particularly
Catalytic Systems, Chemicals, Fuel Cells and Pharmaceutical Materials. Our
investment in R & D has been increased, particularly for Fuel Cells.
Despite these major steps the group still has a strong balance sheet. This will
allow us to invest in organic growth and pursue further bolt-on acquisitions.
Catalysts & Chemicals
Over the last two years we have invested heavily in new process technology for
autocatalyst production around the world. The majority of our products are now
manufactured using this new technology, which enables us to produce more
advanced catalysts to higher specifications at a minimum cost for our customers.
In the coming year we will be completing the final phase of this investment
programme. Capital expenditure in 2002/03 will be somewhat lower than in 2001/
02.
New product development is the lifeblood of our autocatalyst business. In 2002/
03 we will be putting additional investment into expanding our technology
centres at Royston in the UK and Gothenburg in Sweden with particular emphasis
on developing new diesel catalysts. Additional investment is also planned at
our testing facilities in Detroit in the US and at Kitsuregawa in Japan.
In Chemicals, we are part way through a major project to expand and upgrade our
pgm refineries at Royston and Brimsdown in the UK and at West Deptford in the
US. In collaboration with Chematur we have developed an innovative technology
for catalyst recovery using a unique, patented processing technique. We will
introduce this new technology in the second half of 2002/03 under the trade name
Aquacat (R). Two novel polymer fibre technologies, resulting from our
investment in Oy Smoptech AB, were commercialised during the year and offer good
prospects for growth. The year also saw the launch of Johnson Matthey Catalytic
Services, a new business providing a fee based contract development and
optimisation service for catalytic processes.
Our Fuel Cells business has made very good progress during the year in both
product development and in emerging commercial relationships with key customers.
We have been selected as the lead supplier and MEA development partner in
several of our key customer programmes in the past year. These are targeting
nearer term commercial opportunities in stationary and portable power
applications as well as longer term automotive development. While our customer
relationships remain largely confidential, the market is visibly developing.
Some early commercial fuel cell products have been launched aimed at niche
markets where early adopters of this new technology are willing to pay a premium
for some of the benefits of fuel cells. These include back up power systems for
telecommunications and portable power applications.
Precious Metals
Johnson Matthey has maintained its position as the world's largest fabricator
and distributor of platinum group metals (pgms). We continue to seek new
markets for pgms and to invest in R & D to find new applications for the metals.
We are the sole marketing agent for Anglo Platinum, which is the world's
leading primary producer of pgms.
Demand for pgms has increased significantly over the last ten years.
Consumption of platinum has risen by more than 50% to 6.2 million ounces per
annum while palladium usage has grown even more strongly. The outlook for
platinum is good with increasing demand for autocatalysts, particularly for
diesel powered vehicles, and the continued growth of demand for platinum
jewellery in China. The primary producers are responding to this anticipated
growth by increasing supply but demand is still expected to outstrip supply over
the next few years. Johnson Matthey is well positioned to benefit from this
growth in the platinum market.
Colours & Coatings
Colours & Coatings experienced more difficult market conditions in 2001/02 but
still managed to achieve margins of 10%. Our recent investment strategy has
ensured that we are the world's lowest cost frit producer, enabling us to
protect our margins. New frit facilities in Spain and Brazil are being
commissioned and will be fully operational by the summer of 2002. We are also
continually introducing new high margin products, particularly in Glass, where
over 35% of turnover comes from products launched in the last two years. Having
completed the current investment in our new facilities, future investment is
likely to be reduced, resulting in strong cash generation.
Pharmaceutical Materials
Pharmaceutical Materials became a stand alone division in 2001 following the
acquisitions of Pharm-Eco and Meconic. The new division has performed very well
in its first year. The addition of Pharm-Eco has enabled the group to offer
manufacturing services to customers from pre-clinical trials all the way through
to full scale manufacture of proprietary and generic drugs. The subsequent
acquisition of Meconic has, through its operating company Macfarlan Smith, given
the division a European base and provides major opportunities for cross selling
and sharing research and development.
Johnson Matthey manufactures active pharmaceutical ingredients, which are sold
to pharmaceutical companies. The division has a strong worldwide position in
the manufacture of controlled substances, particularly painkillers where the
world market is estimated to be growing at 6% p.a. Within that market the
growth of semi-synthetic opiates is more rapid, both in North America and
Europe. We were notified this month that the group will receive conditional
registration from the US Drug Enforcement Administration (DEA) to import the raw
materials needed to manufacture codeine and morphine. This will enable our West
Deptford, New Jersey facility to improve its market share of opiate drugs in the
US. Johnson Matthey will now be positioned to manufacture a full range of these
products on both sides of the Atlantic. Overall, we see excellent long term
growth prospects for this division.
Outlook
The growth achieved by Johnson Matthey this year in difficult market conditions
emphasises the resilience of the group. We continue to see excellent
opportunities for our growth businesses despite uncertain economic conditions.
The outlook for platinum demand remains encouraging. Both Catalysts & Chemicals
and Pharmaceutical Materials are well placed to deliver further growth in the
current year.
Consolidated Profit and Loss Account
for the year ended 31st March 2002
2002 2002 2002 2001 2001
Before
Before exceptional
exceptional Exceptional items and
items and items and goodwill
goodwill goodwill amortisation Total
amortisation amortisation Total restated restated
Notes £ million £ million £ million £ million £ million
Turnover 1
Continuing 4,761.6 - 4,761.6 5,899.5 5,899.5
operations
Acquisitions 67.3 - 67.3 - -
Total 4,828.9 - 4,828.9 5,899.5 5,899.5
continuing
operations
Discontinued 1.2 - 1.2 4.2 4.2
operations
Group 4,830.1 - 4,830.1 5,903.7 5,903.7
turnover
Operating profit 1
Continuing 181.2 - 181.2 174.9 174.9
operations
Acquisitions 12.7 - 12.7 - -
Continuing 193.9 - 193.9 174.9 174.9
operations
before
goodwill
amortisation
Goodwill - (6.8) (6.8) - (0.3)
amortisation
Continuing 193.9 (6.8) 187.1 174.9 174.6
operations
before
exceptional
items
Exceptional 2 - (18.1) (18.1) - (0.6)
items
Total 193.9 (24.9) 169.0 174.9 174.0
continuing
operations
Discontinued (0.5) - (0.5) 0.1 0.1
operations
Group 193.4 (24.9) 168.5 175.0 174.1
operating
profit
Share of (0.1) - (0.1) 0.2 0.2
profit in
associates
- continuing
Share of - - - (0.2) (0.2)
profit in
associates
- discontinued
Total 193.3 (24.9) 168.4 175.0 174.1
operating
profit
Profit on 3 - (5.6) (5.6) - 1.1
sale /
closure of
discontinued
operations
Profit on 193.3 (30.5) 162.8 175.0 175.2
ordinary
activities
before
interest
Net (6.1) - (6.1) 5.3 5.3
interest
Profit on 187.2 (30.5) 156.7 180.3 180.5
ordinary
activities
before
taxation
Taxation 4 (56.0) 5.8 (50.2) (54.1) (54.2)
Profit 131.2 (24.7) 106.5 126.2 126.3
after
taxation
Equity 0.3 - 0.3 (0.6) (0.6)
minority
interests
Profit 131.5 (24.7) 106.8 125.6 125.7
attributable
to shareholders
Dividends 5 (53.2) - (53.2) (51.3) (51.3)
Retained 78.3 (24.7) 53.6 74.3 74.4
profit
restated restated
pence pence pence pence
Earnings per
ordinary
share (EPS)
Basic 6 60.4 49.0 57.2 57.3
Diluted 6 59.7 48.5 56.5 56.5
Dividend 5 24.6 24.6 23.3 23.3
per
ordinary
share
Consolidated Balance Sheet
as at 31st March 2002
2002 2001
restated
£ million £ million
Fixed assets
Goodwill 182.6 8.6
Tangible fixed assets 495.1 386.8
Investments 2.7 1.0
680.4 396.4
Current assets
Stocks 414.3 278.8
Debtors: due within one year 345.2 416.2
Debtors: due after more than one 108.8 103.9
year
Short term investments 16.6 15.9
Cash at bank and in hand 92.6 237.4
977.5 1,052.2
Creditors: Amounts falling due
within one year
Borrowings and (65.8) (19.8)
finance leases
Precious metal (131.0) (91.8)
leases
Other (359.2) (367.8)
creditors
Net current assets 421.5 572.8
Total assets less current 1,101.9 969.2
liabilities
Creditors: Amounts falling due
after more than one year
Borrowings and (185.8) (77.7)
finance leases
Other (0.4) (1.0)
creditors
Provisions for liabilities and (98.1) (79.2)
charges
Net assets 817.6 811.3
Capital and reserves
Called up share capital 218.7 222.5
Share premium account 128.2 123.2
Capital redemption reserve 4.9 -
Associates' reserves (0.2) -
Profit and loss account 462.1 461.0
Shareholders' funds 813.7 806.7
Equity minority interests 3.9 4.6
817.6 811.3
Consolidated Cash Flow Statement
for the year ended 31st March 2002
2002 2001
£ million £ million
Reconciliation of operating profit
to net cash inflow from operating
activities
Operating profit 168.5 174.1
Depreciation and amortisation 55.1 41.1
charges
Profit on sale of tangible fixed (1.4) (0.7)
assets and investments
(Increase) / decrease in owned (83.6) 15.0
stocks
Decrease / (increase) in debtors 73.9 (82.0)
Increase in creditors and 11.6 9.0
provisions
Net cash inflow from operating 224.1 156.5
activities
Cash Flow Statement
Net cash inflow from operating 224.1 156.5
activities
Dividends received from associates 0.1 0.1
Returns on investments and (4.9) 5.8
servicing of finance
Taxation (55.8) (38.2)
Capital expenditure and financial (131.0) (94.7)
investment
Acquisitions (143.5) (6.2)
Disposals (2.2) 0.6
Equity dividends paid (52.1) (46.5)
Net cash flow before use of liquid (165.3) (22.6)
resources and financing
Management of liquid resources 0.2 157.8
Financing
Issue and (44.1) 7.9
purchase of
share capital
Decrease in (45.9) (10.9)
borrowings and
finance leases
due within one
year
Increase / 103.4 (1.2)
(decrease) in
borrowings due
after one year
Net cash inflow / (outflow) from 13.4 (4.2)
financing
(Decrease) / increase in cash in (151.7) 131.0
the period
Reconciliation of net cash flow to
movement in net debt
(Decrease) / increase in cash in (151.7) 131.0
the period
Cash (inflow) / outflow from (57.5) 12.1
movement in borrowings and finance
leases
Cash inflow from movement in liquid (0.2) (157.8)
resources
Change in net funds / debt (209.4) (14.7)
resulting from cash flows
Borrowings acquired with (46.8) (1.3)
subsidiaries
Loan notes issued to acquire (40.6) -
subsidiaries
New finance leases (4.3) -
Translation difference 2.2 (9.9)
Movement in net funds / debt in (298.9) (25.9)
year
Net funds at beginning of year 139.9 165.8
Net (debt) / funds at end of year (159.0) 139.9
Total Recognised Gains and Losses
for the year ended 31st March 2002
2002 2001
restated
£ million £ million
Profit attributable to shareholders 106.8 125.7
Currency translation differences on (8.0) 9.5
foreign currency net investments
and related loans
Taxation on translation differences 0.5 (9.7)
on foreign currency loans
Total recognised gains and losses 99.3 125.5
relating to the year
Prior year adjustment (44.3)
Total gains and losses recognised 55.0
since last annual report
There were no material differences between reported profits and losses and
historical profits and losses on ordinary
activities before tax for 2002 and 2001.
Movement in Shareholders' Funds
for the year ended 31st March 2002
2002 2001
restated
£ million £ million
Profit attributable to shareholders 106.8 125.7
Dividends (53.2) (51.3)
Retained profit 53.6 74.4
Other recognised gains and losses (7.5) (0.2)
relating to the year
New share capital subscribed 6.1 7.9
Rollover of share options on 0.7 -
acquisitions
Purchase of own shares (45.9) -
Net movement in shareholders' funds 7.0 82.1
Opening shareholders' funds
(originally £851.0 million before
prior year adjustment of £44.3 million) 806.7 724.6
Closing shareholders' funds 813.7 806.7
Notes to the Preliminary Financial Statements
for the year ended 31st March 2002
1 Segmental information
Turnover Sales excluding Operating profit Net operating
precious metals assets
2002 2001 2002 2001 2002 2001 2002 2001
restated restated restated restated
Activity analysis £million £million £million £million £million £million £million £million
Catalysts & Chemicals 1,302.6 1,467.6 596.8 535.3 94.7 80.9 446.4 413.4
Precious Metals 3,167.4 4,145.7 143.0 161.9 55.9 57.4 82.0 38.8
Colours & Coatings 253.4 251.0 250.5 245.6 25.5 32.1 200.7 193.4
Pharmaceutical Materials 105.5 35.2 101.4 29.9 31.3 18.0 268.4 39.4
Corporate - - - - (13.6) (13.3) (20.9) (16.3)
4,828.9 5,899.5 1,091.7 972.7 193.8 175.1 976.6 668.7
Discontinued operations 1.2 4.2 1.2 4.2 (0.5) (0.1) - 2.7
Total turnover 4,830.1 5,903.7 1,092.9 976.9
Goodwill amortisation (6.8) (0.3)
Exceptional items included in total operating profit (note 2) (18.1) (0.6)
168.4 174.1 976.6 671.4
Profit on sale / closure of discontinued operations (note 3) (5.6) 1.1
Net interest (6.1) 5.3
Profit on ordinary activities before taxation 156.7 180.5
Net (borrowings and finance leases) / cash (159.0) 139.9
Net assets 817.6 811.3
Turnover Operating profit Net operating assets
2002 2001 2002 2001 2002 2001
restated restated restated
Geographical analysis by origin £ million £ million £ million £ million £ million £ million
Europe 3,304.1 4,111.8 75.3 66.9 625.0 421.0
North America 1,280.1 1,585.2 84.6 81.4 245.1 158.4
Asia 955.5 1,094.4 13.3 13.8 48.7 65.7
Rest of the World 271.3 307.7 20.6 13.0 57.8 23.6
5,811.0 7,099.1 193.8 175.1 976.6 668.7
Discontinued operations 2.0 5.0 (0.5) (0.1) - 2.7
5,813.0 7,104.1
Less inter-segment sales (982.9) (1,200.4)
Total turnover 4,830.1 5,903.7
Goodwill amortisation (6.8) (0.3)
Exceptional items included in total operating profit (note 2) (18.1) (0.6)
168.4 174.1 976.6 671.4
Profit on sale / closure of discontinued operations (note 3) (5.6) 1.1
Net interest (6.1) 5.3
Profit on ordinary activities before taxation 156.7 180.5
Net (borrowings and finance leases) / cash (159.0) 139.9
Net assets 817.6 811.3
The activity analyses have been restated to show Pharmaceutical
Materials as a new segment. This was previously
included within Catalysts & Chemicals. The group sold its French print
business (part of Colours & Coatings) during
the year (note 9) and its results are now
reported in discontinued operations.
Notes to the Preliminary Financial Statements
for the year ended 31st March 2002
2 Exceptional items included in total operating profit
An exceptional charge of £18.1 million (2001 £0.6 million) has been
included in total operating profit. This comprises:
2002 2001
£ million £ million
Profit on sale of unhedged palladium 7.2 -
Cost of rationalising Meconic plc (1.3) -
Cost of rationalising Colours & (24.0) -
Coatings
Cost of rationalising Precision - (0.6)
Studios
(18.1) (0.6)
3 Profit on sale /closure of discontinued operations
2002 2001
£ million £ million
Sale of French print business (5.5) -
Sale of Electronic Materials - 3.4
Sale of Organic Pigments - (1.2)
Closure of Metawave Video Systems (0.1) (1.1)
Ltd
(5.6) 1.1
4 Taxation
Under the provisions of FRS 19 - 'Deferred Tax', which the group adopted on
1st April 2001, the group has restated its
deferred tax balances to recognise deferred tax on all timing
differences that have originated but not reversed by the
balance sheet date as a change in accounting policy.
Consequently the group has restated its comparatives for the
year to 31st March 2001. The effect is to increase the taxation charge for
the year included in the profit and loss account
by £1.9 million. The taxation charge on translation differences on foreign
currency loans in the statement of recognised
gains and losses has increased by £11.1 million. The deferred
tax balance included in provisions for liabilities and
charges at 31st March 2001 has increased by £44.8 million and debtors now
include a deferred tax asset of £0.5 million.
2002 2001
restated
£ million £ million
Tax on ordinary activities before 56.0 54.1
exceptional items and goodwill
amortisation
Tax on exceptional items included in (5.2) (0.2)
total operating profit
Tax on profit on sale / closure of (0.6) 0.3
discontinued operations
50.2 54.2
5 Dividends
A final dividend of 17.1 pence (2001 16.3 pence) per ordinary
share is proposed for payment on 6th August 2002 to
shareholders on the register at 14th June 2002. Together with the interim
dividend of 7.5 pence (2001 7.0 pence) this
would make a total dividend of 24.6 pence (2001 23.3 pence) giving a total
payment of £53.2 million (2001 £51.3 million).
Notes to the Preliminary Financial Statements
for the year ended 31st March 2002
6 Earnings per ordinary share
Profit for the year attributable to shareholders is £106.8
million (2001 restated £125.7 million). This is divided by the
weighted average number of shares in issue calculated as 217,829,287 (2001
219,467,375) to give basic earnings per share of 49.0 pence (2001
restated 57.3 pence).
The calculation of diluted earnings per share is based on the weighted
average number of shares in issue adjusted by the
dilutive outstanding share options and long term incentive plan. These
adjustments give rise to an increase in the weighted
average number of shares in issue of 2,357,398 (2001 2,816,102), giving
diluted earnings per share of 48.5 pence (2001
restated 56.5 pence).
Before exceptional items, the tax thereon and goodwill amortisation, basic
earnings per share were 60.4 pence (2001 restated 57.2 pence) and diluted
earnings per share were 59.7 pence (2001 restated 56.5 pence).
2002 2001
restated
£ £
million million
Attributable profit 106.8 125.7
Goodwill amortisation 6.8 0.3
Exceptional items 23.7 (0.5)
Tax thereon (5.8) 0.1
Adjusted profit 131.5 125.6
Earnings per share before
exceptional items and goodwill
amortisation
Basic 60.4p 57.2p
Diluted 59.7p 56.5p
7 Purchase of own shares
During the year the group has purchased an aggregate of 4,931,000 of its
own ordinary shares of £1 each for an aggregate consideration of £45.9 million
through the market. The average price paid per share was £9.32.
8 Acquisitions
Meconic plc
On 21st June 2001 the group announced that it had agreed terms
for a recommended cash offer for Meconic plc, the
quoted UK parent company of Macfarlan Smith, a manufacturer of active
pharmaceutical ingredients and fine chemicals
based in Edinburgh. On 9th July 2001 the group announced that it had
acquired over 50% of the company and hence the
offer became unconditional.
The results of Meconic plc since its acquisition on 9th July
2001 have been included in the results of Pharmaceutical
Materials, and were turnover of £54.5 million and operating
profit of £10.0 million. This has been accounted for by
acquisition accounting. The purchase consideration was £148.3 million, of
which £18.9 million was paid as loan notes
and £0.7 million as rollover of share options. Costs incurred were £5.8
million, including £0.1 million accrued. The fair
value of the net assets acquired was £20.8 million, resulting in
goodwill of £133.3 million. Borrowings acquired were £20.6 million.
Pharm-Eco Laboratories, Inc.
On 20th April 2001 the group acquired Pharm-Eco Laboratories, Inc. located
in Massachusetts in the US for £6.0 million,
and costs incurred were £1.5 million. The company provides contract
research, process development and small scale
synthesis services to the pharmaceutical industry, and its post acquisition
results have been included in Pharmaceutical
Materials. Its turnover and operating profit since acquisition were £11.7
million and £1.9 million respectively. This has
been accounted for by acquisition accounting. The fair value of the net
liabilities acquired was £15.2 million, including £26.0 million of other
borrowings, resulting in goodwill of £22.7 million.
Notes to the Preliminary Financial Statements
for the year ended 31st March 2002
8 Acquisitions continued
Avocado Research Chemicals Limited
On 7th February 2002 the group acquired Avocado Research Chemicals Limited,
a manufacturer and supplier of organic
compounds for use in research laboratories, located in Lancashire in the
UK. Its post acquisition results have been included
in Catalysts & Chemicals and were turnover of £1.1 million and operating
profit of £0.6 million. This has been accounted
for by acquisition accounting. The purchase consideration was loan notes of
£28.1 million, of which £6.4 million is deferred
and contingent on future profits. Costs incurred were £0.2 million. The
fair value of net assets acquired was £4.1 million, resulting in goodwill of
£24.2 million. Overdrafts acquired were £1.2 million.
Oy Smoptech AB
On 31st January 2002 the group acquired 40.7% of Oy Smoptech AB for
£0.3 million, increasing the group's holding
to 50.7%. This has been accounted for by acquisition accounting. The
company is located in Finland and produces
advanced polymer fibres for catalyst related products, and its post
acquisition results have been included in Catalysts
& Chemicals. The fair value of the net liabilities at acquisition was £0.2
million and the value previously included in fixed
assets investments was £0.2 million, resulting in goodwill of £0.7
million. Cash acquired was £0.1 million and other
loans were £0.2 million.
9 Sale of French print business
On 6th September 2001 the group sold its French print business, Matthey
Beyrand et Cie S.A. The assets disposed of were £4.0 million, including cash
of £1.1 million. Costs incurred were £1.5 million, including £0.1 million
accrued. The loss on disposal was £5.5 million.
10 Basis of preparation
The financial information contained in this release does not constitute the
company's statutory accounts for the years ended
31st March 2002 or 2001 but is derived from those accounts. Statutory
accounts for 2001 have been delivered to the Registrar
of Companies and those for 2002 will be delivered following the company's
Annual General Meeting. The auditors' reports on
those accounts were unqualified and did not contain any statement under
sections 237(2) and 237(3) of the Companies
Act 1985. The accounts for the year ended 31st March 2002 were approved by
the Board of Directors on 30th May 2002.
Financial Calendar 2002
14th June
Final ordinary dividend record date
16th July
111th Annual General Meeting (AGM)
6th August
Payment of final dividend subject to
declaration at the AGM
28th November
Announcement of results for six months ending
30th September 2002
Johnson Matthey Public Limited Company
Registered Office: 2-4 Cockspur Street,
Trafalgar Square, London SW1Y 5BQ
Telephone: 020 7269 8400
Internet address: www.matthey.com
E-mail: jmpr@matthey.com
Registered in England - Number 33774
Registrars
Lloyds TSB Registrars, The Causeway, Worthing,
West Sussex BN99 6DA
Telephone: 01903 502541
This information is provided by RNS
The company news service from the London Stock Exchange
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