TIDMJMAT
RNS Number : 5766A
Johnson Matthey PLC
25 May 2023
Preliminary results for the
year ended 31(st) March 2023
25(th) May 2023
Catalysing the net zero transition to drive value creation
Continued progress on strategic execution
-- Results in line with expectations albeit below the prior year,
against a challenging macroeconomic backdrop
-- Delivering on strategic milestones
-- Executing on transformation: delivered c.GBP45 million cost
savings in the year and on track for at least GBP150 million
annualised cost savings by 2024/25
-- Business wins in Catalyst Technologies and Hydrogen Technologies
underpin confidence in strong growth prospects
-- Strong cash generation and platform wins in Clean Air support
long-term GBP4 billion+ cash generation target
-- Accelerating demand for our energy transition solutions supported
by government-led investment programmes
Reported results Underlying results (continuing)(1)
---------------------------- --------------------------------------------
Year ended Year ended
31(st) March 31(st) March
--------------- ----------- ---------------
% change,
% % constant
2023 2022 change 2023 2022 change FX rates
------------- ----------- ---------- ------ -------- ----------- ----- ------- ---------------
Revenue GBPm 14,933 16,025 -7
Sales excluding
precious
metals(3) GBPm 4,201 3,778 +11 +6
Operating
profit GBPm 406 255 +59 465 553 -16 -21
Profit before
tax
(continuing) GBPm 344 195 +76 404 493 -18
Profit after
tax
(continuing) GBPm 264 116 n/a 326 407 -20
Basic earnings
per
share
(continuing) pence 144.2 60.9 n/a 178.6 213.2 -16
Ordinary
dividend
per share pence 77.0 77.0 -
--------------- ----------- ---------- ------ -------- ----------- ----- ------- ---------------
Underlying performance - continuing operations(1)(,) (2)
-- Sales of GBP4.2 billion, up 6%, with higher prices to partially
recover cost inflation, partly offset by lower average PGM prices
-- Underlying operating profit of GBP465 million, down 21%. Almost
half was due to lower average PGM prices with the remainder
largely due to cost inflation and lower volumes in PGM Services
and Clean Air. This was partly offset by transformation benefits
-- Underlying earnings per share of 178.6p, down 16% due to lower
underlying operating profit
-- Free cash flow of GBP74 million, compared to GBP221 million
in the prior year largely reflecting lower underlying operating
profit and working capital movements
-- Strong balance sheet with net debt of GBP1.0 billion; net debt
to EBITDA of 1.6 times
Reported results
-- Revenue down 7%, driven by lower average PGM prices
-- Operating profit of GBP406 million, up materially, largely due
to the absence of a one-off impairment in the prior period relating
to Battery Materials
-- Profit before tax (continuing) of GBP344 million, compared to
GBP195 million in the prior period, reflecting higher operating
profit due to the absence of the Battery Materials impairment
-- Reported earnings per share (continuing) of 144.2 pence
-- Cash inflow from operating activities of GBP291 million (2021/22:
GBP605 million)
-- Ordinary dividend of 77.0 pence per share stable year-on-year
Strategic highlights
-- Agreed two strategic partnerships in Hydrogen Technologies (Plug
Power and Hystar), won five additional large scale projects
in Catalyst Technologies, and won Euro 7 business in Clean Air
-- Hydrogen Technologies partnerships underpin targeted sales of
more than GBP200 million by the end of 2024/25, with significant
growth in sales and profitability thereafter. This business
is anticipated to be breakeven in 2025/26
-- Catalyst Technologies expected to deliver high single digit
growth over the medium term, with margins returning to mid-teens
within the next two years (by end of 2024/25)
-- Clean Air - delivered GBP1.4 billion cash over two years, and
outperforming the rate of business wins required to achieve
our cash generation target of at least GBP4 billion by 2030/31
-- Delivered c.GBP45 million cost savings in 2022/23 and on track
to deliver at least
GBP150 million annualised savings by 2024/25
-- Committed to achieving net zero by 2040 and now targeting 42%
reduction in Scope 1 and Scope 2, and 42% reduction in Scope
3 greenhouse gas emissions by 2030
Liam Condon, Chief Executive Officer, commented:
I have now been with Johnson Matthey just over a year and it is
exciting to see the progress we are making. We have navigated global
macroeconomic challenges to report full year results in line with
market expectations, with a stronger second half as we indicated
back in November. We have also been delivering against our strategic
milestones with important customer wins, which will drive growth.
These include the strategic partnerships with Plug Power and Hystar
in Hydrogen Technologies and the five large project wins in Catalyst
Technologies, which already demonstrate our ability to win in a
net zero world. It has been a good start and a year of progress,
but there is much more to do.
The opportunity for Johnson Matthey is even greater than I had
expected with government-led investment programmes developing at
pace. The Inflation Reduction Act in the US, the EU's Green Deal
Industrial Plan and continued commitments in the UK - all within
the past year - are driving the net zero transition with greater
urgency.
We have made progress in many areas and remain focused on accelerating
our plans to simplify the organisation and speed up our decision
making, as we build a stronger and more flexible platform for growth.
Despite continued market volatility we are on track to deliver
on our commitments and, with the opportunities ahead of us, I see
a very bright future for Johnson Matthey.
Outlook for the year ending 31(st) March 2024
For 2023/24, we expect at least mid-single digit growth in operating
performance at constant precious metal prices and constant currency.
This is underpinned by efficiency benefits of
c.GBP55 million in the year.
In Clean Air, we expect strong growth in operating performance.
Whilst external data suggest limited growth in vehicle production
for 2023/24, margin expansion should mainly be driven by efficiency
benefits. PGM Services' performance will be largely driven by precious
metal prices, with recycling volumes expected to be subdued. We
expect strong growth in operating performance for Catalyst Technologies.
This reflects an improvement in licensing income and a significant
uplift in margins, benefiting from pricing and efficiencies. We
expect sales to grow strongly in Hydrogen Technologies and we will
continue to invest for growth resulting in an operating loss at
a similar level to 2022/23.
Precious metal prices have been volatile and consequently it is
difficult to predict how they may develop. To illustrate the impact
they may have on our results, assuming prices remain at their current
level for the remainder of 2023/24 there would be an adverse impact
of c.GBP50 million on full year operating performance compared
with the prior year. We are focused on mitigating the potential
impact on our performance.
At current foreign exchange rates , translational foreign exchange
movements for the year ending 31(st) March 2024 are expected to
adversely impact underlying operating profit by
c.GBP10 million.
Dividend
The board will propose a final ordinary dividend for the year of
55.0 pence per share at the Annual General Meeting (AGM) on 20(th)
July 2023. Together with the interim dividend of
22.0 pence per share, this gives a total ordinary dividend of
77.0 pence per share, maintained at the same level as the prior
year. Subject to approval by shareholders, the final dividend will
be paid on 1(st) August 2023, with an ex-dividend date of 8(th)
June 2023.
Board changes
We are pleased to announce the appointment of Barbara Jeremiah
as an independent
Non-Executive Director. This appointment is with effect from 1(st)
July 2023 and Barbara will also become a member of all four board
committees. Barbara brings strong leadership, deep understanding
of metals and extensive experience in North American markets.
Chris Mottershead will step down as Chair of the Remuneration Committee
following the Company's AGM in July 2023 and from the board on
26(th) January 2024, following a nine-year tenure.
Barbara will become the Senior Independent Director, succeeding
John O'Higgins who will become Chair of the Remuneration Committee.
These changes will take effect from the end of our AGM.
Catalyst Technologies seminar
We will host a Catalyst Technologies seminar on 27(th) June to
provide a deep-dive into the strong growth prospects of this business.
Enquiries:
Investor Relations
Director of Investor Relations
Senior Investor Relations
Martin Dunwoodie Manager +44 20 7269 8241
Louise Curran Senior Investor Relations +44 20 7269 8235
Carla Fabiano Manager +44 20 7269 8004
Media
Group Corporate Affairs
Barney Wyld Director +44 20 7269 8001
Harry Cameron Teneo +44 7799 152148
Notes:
1. Underlying is before profit or loss on disposal of businesses,
gain or loss on significant legal proceedings together with associated
legal costs, amortisation of acquired intangibles, share of profits
or losses from non-strategic equity investments, major impairment
and restructuring charges and, where relevant, related tax effects.
For definitions and reconciliations of other non-GAAP measures,
see pages 47 to 50.
2. Unless otherwise stated, sales and operating profit commentary
refers to performance at constant exchange rates. Growth at constant
rates excludes the translation impact of foreign exchange movements,
with 2021/22 results converted at 2022/23 average rates. In 2022/23,
the translational impact of exchange rates on group sales and
underlying operating profit was a benefit of GBP193 million and
GBP38 million respectively.
3. Revenue excluding sales of precious metals to customers and the
precious metal content of products sold to customers.
4. Delivered around GBP600 million of cash in 2022/23 at actual
precious metal prices, which equates to just over GBP400 million
at constant prices (March 2022). Delivered around GBP1.4 billion
cumulatively since 2021/22 at actual metal prices. At least GBP4
billion of cash under our range of scenarios from 1(st) April
2021 to 31(st) March 2031. Cash target pre-tax and post restructuring
costs.
5. Outlook commentary for Clean Air, PGM Services, Catalyst Technologies
and Hydrogen Technologies assumes constant precious metal prices
and constant currency.
6. Based on average precious metal prices in May 2023 (month to
date).
7. c.GBP50 million adverse impact represents a gross PGM price impact
before any foreign exchange movement.
A US$100 per troy ounce change in the average annual platinum,
palladium and rhodium metal prices each have an impact of approximately
GBP1 million, GBP1.5 million and GBP0.75 million respectively
on full year underlying operating profit. This assumes no foreign
exchange movement.
8. At average foreign exchange rates for May 2023 month to date
(GBP:US$ 1.25, GBP:EUR 1.14, GBP:RMB 8.70) translational foreign
exchange movements for the year ending 31(st) March 2024 are
expected to adversely impact underlying operating profit by c.GBP10
million.
Chief Executive Officer update
In May 2022 we published our strategy to reinvigorate
Johnson Matthey
and drive value creation. This is centered around a more
focused
portfolio based on our core competencies - our expertise in
platinum
group metal (PGM) chemistry and refining, catalysis and
process
technology. We also set out the changes we need to
transform our
culture and enable the success of our strategy.
We are now a year in and have made a good start. I am
encouraged,
but there is much more to do. Transformation and cultural
change
take time, but we are starting to see the benefits as we
focus,
simplify and execute. We are already focusing our portfolio
with
the divestment of some non-core activities. Simplification
is underway,
for example with our efficiency programme, new finance
shared service
centre and digital HR platform. We are also executing on
our commitments,
evidenced by the strategic partnerships with Plug Power and
Hystar,
contract wins in Catalyst Technologies and business wins in
Clean
Air. To drive further discipline around execution w e are
embedding
"Play to Win" behaviours across the organisation, changing
remuneration
to link much more directly to delivery of the strategy, and
implementing
sharper performance management with more robust and
frequent feedback.
Our financial performance for the year was in line with market
expectations, albeit below the prior year. The main factors driving
performance were lower precious metal prices
(c.GBP55 million impact(1)) and lower auto related volumes in
Clean Air and PGM Services. The cost inflation of c.GBP150 million
suffered in the year, particularly energy, raw materials and labour
was almost completely recovered through pricing of c.GBP95 million
and transformation savings of c.GBP45 million. As we sharpened
our commercial focus and took action to increase efficiency, the
recovery rate improved through the year as expected.
Growth markets accelerating
The past year has seen an acceleration and expansion of our growth
markets, creating significant opportunities for our decarbonisation
solutions. In the US, the Inflation Reduction Act enacted in August
is the largest climate incentive programme in history changing
the landscape for clean energy. The Act includes c.US$370 billion
of incentives that will reduce the cost of clean energy projects,
increasing investment and demand. Europe has introduced the Green
Industrial Deal, a key pillar of which is the Net-Zero Industry
Act which aims to scale up the manufacturing of clean technologies
in the EU and support the fast transition to net zero. In the UK,
the government has recently published its Hydrogen Champion Report
with recommendations to accelerate the growth of the hydrogen sector.
We expect these programmes will drive market growth and accelerate
demand for our leading solutions.
Strategic milestones overview
In May 2022, we outlined 10 strategic milestones and have made
good progress to date:
Customers:
-- 2 strategic partnerships in Hydrogen Technologies - Plug
Power
and Hystar
-- Won targeted Euro 7 business, on track to deliver GBP4
billion+
cash(2) for Clean Air
-- Won 5 additional large scale projects in Catalyst
Technologies
(targeting >10 across Catalyst Technologies and Hydrogen
Technologies
by end of 2023/24)
Notes:
1. Gross PGM price impact was c.GBP55 million, which was partly
offset by foreign exchange benefits. Foreign exchange benefit
reflects the pricing of PGMs in US dollars.
2. At least GBP4 billion of cash under our range of scenarios from
1(st) April 2021 to 31(st) March 2031. Cash target
pre-tax and post restructuring costs.
Investments:
-- PGM Services refining capability expansion in China complete
and ramping up
-- Construction of Hydrogen Technologies CCM plant in the UK to
expand total capacity from 2GW to 5GW is on track
-- Targeted capacity expansion (fuel cells catalyst, formaldehyde
catalyst) on track
-- Continuing to divest non-core assets - Piezo Products within
Medical Device Components and Diagnostic Services (Value Businesses)
People: Employee engagement did not improve as the degree and
pace of transformation has impacted workload - this is the only
target not on track
Sustainability:
-- Reduced Scope 1+2 CO (2) e (carbon dioxide equivalent) emissions
by 13% in 2022/23, ahead of targeted c.10% reduction by 2023/24
(from a 2019/20 baseline)
-- Helped customers reduce CO (2) e emissions by 850,000 tonnes
p.a. through use of our products (target >1mt p.a. by 2023/24)
Customers: winning new business to drive growth
1.
Catalyst Technologies - Our Catalyst Technologies business is
further strengthening its focus on the syngas value chain, growing
the existing business alongside new opportunities in low carbon
hydrogen (or carbon capture and storage - CCS-enabled hydrogen),
sustainable fuels and low carbon solutions (retrofitting existing
chemicals plants to decarbonise them). These growth opportunities
will transform the scale and profitability of our business.
In the period to May 2023, we secured five low carbon hydrogen
and sustainable fuels licences. The total sales value of these
licences is c.GBP120 million over five years, subject to project
completion. These projects include three sustainable fuels projects
(including Strategic Biofuels' renewable diesel plant), and two
low carbon hydrogen projects (H2H Saltend in the UK and a large
scale low carbon hydrogen project in North America). These project
wins are an important validation of our technologies in these new
growth markets. We also gained a licence in low carbon solutions
enabling the decarbonisation of existing assets. Across these areas,
we now have a pipeline of more than 100 projects compared to over
70 projects a year ago.
In the near-term, we are committed to improving performance in
Catalyst Technologies and strengthening our platform for growth.
We have recently initiated a value creation programme with three
main components: pricing, manufacturing efficiency and procurement.
With the combination of growth and efficiency programmes, we are
confident Catalyst Technologies will deliver high single digit
growth over the medium term, with margins returning to mid-teens
within the next two years (by end of 2024/25).
Hydrogen Technologies - In Hydrogen Technologies, our ambition
is to be the market leader in CCMs (catalyst coated membranes).
We are scaling the business in pursuit of our ambition and set
a milestone to have signed at least two large scale strategic partnerships
by the end of 2022/23. This is only the beginning and we expect
further strategic partnerships in future.
In January, we agreed a long-term strategic partnership with Plug
Power in the US, one of the leading players in the hydrogen economy.
This includes a supply and joint development agreement to at least
2030 as well as co-investment in new manufacturing capacity in
the US. We have secured a second strategic partnership, this time
in Europe, with Hystar a high-tech spin-out from SINTEF which is
one of Europe's largest independent research institutions.
We will be supplying MEA (membrane electrode assembly) components
for electrolysers to Hystar for the next three years. We will collaborate
to enable further scale up and automation for Hystar's planned
multi-GW production line, expected to be operational by 2025. Hystar
is currently undertaking its HyPilot project with partners including
Yara and Equinor, with end market demand driven by the trends in
food production and energy security. We also entered a strategic
partnership with Enapter (a leader in anion exchange membrane electrolysis),
and extended our partnership with SFC Energy. These partnerships
underpin our targeted sales of more than GBP200 million from Hydrogen
Technologies by the end of 2024/25, with significant growth in
sales and profitability thereafter. We anticipate this business
to be breakeven in 2025/26.
PGM Services - In our refining business we won new contracts with
a large miner and increased our market share with some key recyclers.
We also won new contracts across our products business, most notably
with our pharmaceutical and agrochemical customers.
Clean Air - In Clean Air we are focused on our target of generating
at least GBP4 billion of cash to 2030/31 which is underpinned by
tightening emission control legislation, business wins, manufacturing
footprint consolidation and other fixed cost reductions. In 2022/23
we generated GBP600 million of cash, taking our cumulative cash
generation over two years to GBP1.4 billion at actual precious
metal prices.
Clean Air continues to benefit from tightening emissions control
legislation globally, including the Euro 7 proposal submitted to
the European Parliament in November 2022. This tightening will
result in more complex emission control systems and increase our
value per vehicle.
We have continued to build our commercial muscle, improving our
inflation recovery rate with the majority of the recovery in the
second half of the year, whilst also winning our targeted business
linked to Euro 7 and equivalent legislation globally. During the
year we won all of Mercedes Benz's light duty diesel business in
Europe, a large truck OEM's Euro 7 business in heavy duty diesel
as well as the global contracts covering light duty gasoline and
diesel with a leading automotive OEM. As further evidence of our
stronger commercial muscle, these wins were achieved whilst negotiating
inflationary cost increases and improving our customer satisfaction
score. Consequently, we are outperforming the rate of business
wins required to achieve our cash generation target of at least
GBP4 billion by 2030/31.
As we continue to drive efficiency in Clean Air, we are reducing
fixed costs and streamlining SG&A expenses and production overheads.
We have also announced our intention to close or exit 4 of our
16 sites including completion of the closure of our UK manufacturing
facility. We will be repurposing this building for our new Hydrogen
Technologies gigafactory.
Investments: scaling to capture future growth
2.
We are making disciplined investments to drive growth and deliver
attractive returns. Over the three year period to 2024/25 we now
expect cumulative capital expenditure of c.GBP1.1 billion (previously
c.GBP1 billion) mainly reflecting an acceleration in Hydrogen Technologies
to capture our US opportunity with Plug and modest inflation effects.
PGM Services is our foundational business and a key enabler of
growth for the group. It is therefore critical that we invest to
retain our position as the world's leading recycler of PGMs. We
are investing in the capacity, resilience, efficiency and long-term
sustainability of our refinery assets. In China, the expansion
of our refining facility was completed. With this capability, we
can now offer full refining services in China. Alongside these
investments, we are expanding our fuel cells catalyst capacity
within PGM Services to support our Hydrogen Technologies business
as it scales up.
In Hydrogen Technologies, we are scaling our business and manufacturing
capacity to meet growing customer demand. In the UK, construction
of our planned 3GW capacity expansion is on track to be completed
by the end of 2023/24. Following the announcement of the strategic
partnership with Plug Power, we are co-investing into a new manufacturing
plant in the US. This plant - expected to start production in 2025
- will initially have 5GW capacity scaling to 10GW over time. Overall,
these expansion plans will take our capacity from 2GW today, scaling
up to 15GW over time.
To further simplify our portfolio, we are continuing to divest
non-core assets and we are on track to complete the divestiture
of Value Businesses by the end of 2023/24. We sold Piezo Products
(part of Medical Device Components) and recently announced the
sale of Diagnostic Services, both within Value Businesses. In addition,
we exited battery materials recycling.
People
3.
Our people and culture change will be key to the success of our
strategy. In the past year, we have been driving change to create
a stronger performance culture:
People growth - sharper and simpler performance management,
1. an increased focus on people development, and greater recognition
of performance and success
Customer focus - building our commercial muscle , increasing
2. our execution capability in capital projects and improving our
manufacturing efficiency
Simplification - enhanced cost discipline, streamlining processes
3. to improve speed and user experience, assigning clear accountabilities
Change takes time and is challenging for any organisation but I
am pleased with the positive attitude of our employees and their
commitment to making JM a success. We remain focused on significantly
improving engagement over time. From a 2022/23 baseline of 6.9,
we are now targeting a 3 decimal point increase in employee engagement
to 7.2 by 2024/25, with a target of 8.0 and above in the longer
term.
We have made progress with our transformation programme, delivering
c.GBP45 million of cost savings in 2022/23, ahead of our target
of c.GBP35 million, and are on track to deliver at least GBP150
million savings by the end of 2024/25. Examples of the actions
taken to deliver these benefits include delayering the organisation
with 170 management roles removed; procurement, IT and HR savings;
and creating a finance shared service centre in Malaysia. Going
forward our focus will be on further consolidating our Clean Air
manufacturing footprint, additional procurement savings, enhanced
capability in capital project delivery, and further rationalising
real estate. Associated costs to deliver the programme are around
GBP100 million, all of which are cash.
Sustainability
4.
Sustainability is at the heart of everything we do at Johnson Matthey.
We are committed to achieving net zero by 2040 and this year we
have decided to increase our ambition with new GHG (greenhouse
gas) reduction targets to 2030. We are now targeting a 42% reduction
in both Scope 1 and Scope 2, and Scope 3 GHG emissions (purchased
goods and services category)(1) which is fully aligned with a 1.5
degree scenario pathway to net zero. We have submitted these targets
to SBTi (Science Based Targets initiative) for validation according
to their Net Zero Standard.
To support our new strategy and provide focus and simplification,
we have also reduced the number of sustainability targets for 2030
and organised them under two new themes - Planet and People. These
changes will better articulate the most material benefits that
we can bring to society.
We are on track to deliver the sustainability milestones we committed
to during our strategy update in May 2022. We have already achieved
our targeted c.10% reduction in our Scope 1 and 2 CO(2) e emissions.
In addition, we are also helping customers reduce their own GHG
emissions by more than 1 million tonnes per annum through the use
of our products by the end of 2023/24. As at 31(st) March 2023,
our customers have avoided 850,000 tonnes p.a. of GHG emissions
using our products and solutions.
1. Previous target was a reduction in Scope 1 and Scope 2 GHG emissions
of at least 33% by 2030, and reduction of Scope 3 GHG emissions
(purchased goods and services category) of at least 20% by 2030.
Baseline measure is 2019/20.
Summary of underlying operating results from continuing operations
Unless otherwise stated, commentary refers to performance at constant
rates(1). Percentage changes in the tables are calculated on rounded
numbers.
Sales Year ended % change % change,
(GBP million) 31(st) March constant
FX rates
----------------------- -------- ---------
2023 2022(2)
----------------------- ------ ------- -------- ---------
Clean Air 2,644 2,457 +8 +2
PGM Services 570 587 -3 -8
Catalyst Technologies 560 454 +23 +17
Hydrogen Technologies 55 25 +120 +112
Value Businesses(3)(,) 470 354 +33 +28
Eliminations (98) (99)
----------------------- ------ ------- -------- ---------
Sales (continuing) 4,201 3,778 +11 +6
----------------------- ------ ------- -------- ---------
Underlying operating profit Year ended % change % change,
(GBP million) 31(st) March constant
FX rates
---------------------------- -------- ---------
2023 2022(2)
---------------------------- ----- -------- -------- ---------
Clean Air 230 302 -24 -28
PGM Services 257 308 -17 -21
Catalyst Technologies 51 50 +2 -2
Hydrogen Technologies (45) (33) n/a n/a
Value Businesses(3)(,) 40 12 n/a n/a
Corporate (68) (86)
---------------------------- ----- -------- -------- ---------
Underlying operating profit
(continuing) 465 553 -16 -21
---------------------------- ----- -------- -------- ---------
Reconciliation of underlying operating profit Year ended
to operating profit 31(st) March
(GBP million)
--------------------------------------------------
2023 2022(2)
-------------------------------------------------- ----- --------
Underlying operating profit (continuing) 465 553
Profit on disposal of businesses 12 106
Major impairment and restructuring charges (41) (440)
Amortisation of acquired intangibles (5) (6)
Gains and losses on significant legal proceedings (25) 42
Operating profit (continuing) 406 255
-------------------------------------------------- ----- --------
Notes:
1. Growth at constant rates excludes the translation impact of foreign
exchange movements, with 2021/22 results converted at 2022/23
average rates. In 2022/23, the translational impact of exchange
rates on group sales and underlying operating profit was a benefit
of GBP193 million and GBP38 million respectively.
2. 2021/22 is restated to reflect the group's new reporting structure
.
3. Includes Battery Systems, Medical Device Components, Diagnostic
Services, Battery Materials and Advanced Glass Technologies.
4. Sales relating to divestments: Advanced Glass Technologies (2021/22:
GBP62 million, 2022/23: nil) and Battery Materials (2021/22:
GBP12 million, 2022/23: GBP21 million).
5. Operating profit or loss related to divestments: Advanced Glass
Technologies (2021/22: GBP16 million,
2022/23: -GBP1 million) and Battery Materials (2021/22: -GBP22
million, 2022/23: GBP3 million).
6. For further detail on these items please see page 20.
Second half performance - continuing operations
Sales H2 H2 % change % change,
(GBP million) constant
FX rates
---------------------- -------- ---------
2022/23 2021/22(1)
---------------------- ------- ---------- -------- ---------
Clean Air 1,366 1,261 +8 +3
PGM Services 288 287 - -5
Catalyst Technologies 285 231 +23 +17
Hydrogen Technologies 32 15 +113 +100
Value Businesses 235 173 +36 +29
Eliminations (50) (45)
---------------------- ------- ---------- -------- ---------
Sales (continuing) 2,156 1,922 +12 +7
---------------------- ------- ---------- -------- ---------
Continuing sales were up 7% in the second half, with good growth
across most of our businesses. Clean Air grew supported by higher
pricing as we benefited from increased inflation recovery. In Catalyst
Technologies, performance was strong driven by growth in licensing
following recent project wins and also first fills as new plants
came online. Performance was also supported by better pricing.
Sales in Hydrogen Technologies more than doubled, with higher commercial
volumes enabled by improved operational performance. Within Value
Businesses, Battery Systems saw strong performance. Sales were
partly offset by PGM Services which was impacted by lower average
PGM prices and reduced refinery volumes.
Underlying operating profit H2 H2 % change % change,
(GBP million) constant
FX rates
---------------------------- -------- ---------
2022/23 2021/22(1)
---------------------------- ------- ---------- -------- ---------
Clean Air 122 152 -20 -24
PGM Services 132 141 -6 -12
Catalyst Technologies 30 20 +50 +43
Hydrogen Technologies (21) (21) n/a n/a
Value Businesses 19 11 +73 +46%
Corporate (39) (47)
---------------------------- ------- ---------- -------- ---------
Underlying operating profit
(continuing) 243 256 -5 -12
---------------------------- ------- ---------- -------- ---------
Continuing underlying operating profit declined 12% in the second
half, with the largest decline in Clean Air. Clean Air was impacted
by lower volumes and mix, although we did experience benefits from
our transformation programme. PGM Services saw weaker performance
largely reflecting lower average PGM prices and reduced refinery
volumes. Across our other businesses, Catalyst Technologies and
Value Businesses grew year-on-year whilst Corporate costs were
lower.
Notes:
1. 2021/22 is restated to reflect the group's new reporting structure.
Full year operating results by sector
Clean Air
Improved sequential performance supported by increased inflation
recovery
-- Sales up 2% supported by pricing as we partially recovered higher
input costs
-- Underlying operating profit decreased 28% impacted by cost inflation,
product mix and lower volumes
-- Margins saw an improvement during the second half resulting from
increased inflation recovery and benefits from our transformation
programme
-- On track to deliver at least GBP4 billion of cash in the decade
to 2030/31, having delivered GBP1.4 billion since 2020/21 at
actual precious metal prices
% change % change,
Year ended constant FX
31(st) March rates
-------- ------------
2023 2022
-------- ------------
GBP million GBP million
----------- ----------- -------- ------------
Sales
Light duty diesel 1,075 1,005 +7 +4
Light duty gasoline 599 574 +4 -1
Heavy duty diesel 970 878 +10 +3
Total sales 2,644 2,457 +8 +2
Underlying operating profit 230 302 -24 -28
Underlying margin 8.7% 12.3%
Reported operating profit 191 273
---------------------------- ----------- ----------- -------- ------------
Clean Air provides catalysts for emission control after-treatment
systems used in light and heavy duty vehicles powered by internal
combustion engines.
Sales during the period were up 2%. Vehicle production was impacted
by a challenging supply chain environment as well as COVID-related
lockdowns in China. Although semiconductor shortages have gradually
eased, other supply chain disruptions such as labour availability
and logistic bottlenecks have continued to affect vehicle production.
As the year progressed, pent-up demand and the easing of supply
chain issues led to an improvement in production activity.
Light duty catalysts - diesel and gasoline
Light duty diesel
Light duty diesel sales were up 4%, outperforming a declining market.
We saw strong performance in the Americas and good performance
in Europe, partly offset by a decline in Asia. In Europe, which
represents around 60% of our total light duty diesel sales, our
growth was driven by strong platform performance despite some automotive
OEMs continuing to prioritise commercial vehicles over the passenger
car platforms that we serve. In the Americas we significantly outperformed
a growing market, driven by the ramp up of a new platform and strong
platform performance.
In Asia, our performance was in line with a declining market, which
was impacted by a weak commercial vehicle market in China and an
increase in electric vehicle penetration. Our sales decline in
the region was also the result of lower revenue per unit as a result
of product mix.
Light duty gasoline
Light duty gasoline sales were down 1%, underperforming the overall
global market. In Europe and Asia, previous platform losses led
to a decline in sales in both regions. In the Americas, sales grew
slightly ahead of a strong underlying market as we benefited from
the ramp up of new platforms. We continue to invest in light duty
gasoline to support our future growth with early signs of success.
For example, two OEMs in the high performance sports car segment
have chosen JM to be sole supplier which validates the strength
of our technology and gives confidence in winning future light
duty gasoline platforms.
Heavy duty diesel catalysts
In heavy duty diesel sales were up 3%, significantly outperforming
a declining market. We saw strong performance in Europe and the
Americas, partly offset by a decline in Asia. In Europe our sales
significantly outperformed a growing market due to higher revenue
per vehicle and we also benefited from good performance in our
off road platforms. In the Americas, the high value Class 8 truck
cycle peaked during the last quarter of our fiscal year. As expected,
our heavy duty sales benefited from this cycle and were also supported
by improved product mix. Sales in Asia declined as COVID lockdowns
in China significantly impacted vehicle production and led to customers
building stock in the prior year in anticipation of these lockdowns.
Looking ahead, our leading position in heavy duty means we are
well placed to benefit from future developments including hydrogen
powered internal combustion engines.
Underlying operating profit
Underlying operating profit declined 28% to GBP230 million and
margins decreased to 8.7%. This largely reflected cost inflation,
product mix, lower volumes, and the transactional impact of exchange
rates. We saw a sequential improvement in margins during the year,
benefiting from an acceleration in the recovery of cost inflation
and benefits from our transformation programme.
On track to deliver at least GBP4 billion of cash in the decade
to 2030/31(1)
We delivered another year of strong cash flow as we continue to
focus on driving efficiencies, optimising capital expenditure and
working capital. We generated around GBP600 million(2) of cash
and a cumulative GBP1.4 billion(2) since 2021/22, the first year
of this guidance.
Notes:
1. At least GBP4 billion of cash under our range of scenarios from
1(st) April 2021 to 31(st) March 2031. Cash target
pre-tax and post restructuring costs.
2. Delivered around GBP600 million of cash in 2022/23 at actual
precious metal prices, which equates to just over GBP400 million
at constant prices (March 2022). Delivered around GBP1.4 billion
cumulatively since 2021/22 at actual metal prices.
PGM Services
Performance reflects lower average PGM prices and reduced refinery
volumes
-- Sales performance primarily reflects lower average PGM prices
and reduced refinery volumes due to lower auto scrap levels as
a result of the continued buoyant used car market
-- Underlying operating profit was down mainly due to lower average
PGM prices and reduced refinery volumes
-- Cost inflation was more than offset by efficiencies as well as
higher pricing across both our refining and products businesses
% change % change,
Year ended constant FX
31(st) March rates
2023 2022
GBP million GBP million
----------- -----------
Sales
PGM Services 570 587 -3 -8
Underlying operating profit 257 308 -17 -21
Underlying margin 45.1% 52.5%
Reported operating profit 257 307
----------------------------- ----------- ----------- -------- ------------
PGM Services is the world's largest recycler of platinum group
metals (PGMs). This business has an important role in enabling
the energy transition through providing circular solutions as demand
for scarce critical materials increases. PGM Services provides
a strategic service to the group, supporting Clean Air, Catalyst
Technologies and Hydrogen Technologies with security of metal supply
in a volatile market, recycling capabilities and manufactures value
added PGM products for both internal and external customers.
In PGM Services, sales declined 8% against a strong prior year.
This was primarily driven by lower average PGM prices, where average
prices for platinum, palladium and rhodium declined around 10%,
20% and 30% compared to the prior year. Recent PGM price weakness
has been driven by lower auto demand and also liquidation of some
excess rhodium positions in an illiquid market.
In our refineries, intake volumes were down as expected due to
lower auto scrap resulting from a buoyant used car market. Sales
were partly offset by benefits from operational efficiency and
higher pricing. In a volatile market, our metal trading business
had another good year, with sales only moderately down against
a strong prior period.
Across our PGM products businesses, sales were moderately down.
This was primarily driven by lower sales of catalysts for the pharmaceutical
and agricultural chemicals markets due to the phasing of customers'
orders.
Underlying operating profit
Underlying operating profit declined 21% mainly impacted by lower
average PGM prices
(c.GBP55 million impact(1)) and reduced refinery volumes. Cost
inflation was more than offset by efficiency benefits, as well
as higher pricing across both our refining and products businesses.
Notes:
1. Gross PGM price impact was c.GBP55 million, which was partly
offset by foreign exchange benefits. Foreign exchange benefit
reflects the pricing of PGMs in US dollars.
Catalyst Technologies
Strong sales growth and improved performance in the second half
-- Sales up 17% largely reflecting growth in licensing and catalyst
refills, as well as improved pricing
-- Strong performance in licensing with five licence wins within
low carbon hydrogen and sustainable fuels (includes one win in
May 2023)
-- Underlying operating profit was in line with the prior year.
Improved pricing, licensing and transformation benefits offset
significant cost inflation and the loss of Russian business
% change % change,
Year ended constant FX
31(st) March rates
2023 2022
GBP million GBP million
----------- -----------
Sales
Catalyst Technologies 560 454 +23 +17
Underlying operating profit 51 50 +2 -2
Underlying margin 9.1% 11.0%
Reported operating profit 43 78
----------------------------- ----------- ----------- -------- ------------
Catalyst Technologies is focused on enabling the decarbonisation
of chemical and fuels value chains and we have leading positions
in syngas: methanol, ammonia, hydrogen and formaldehyde. Catalyst
Technologies has three key segments: industrial and consumer, traditional
fuels and sustainable solutions that help catalyse the transition
to net zero. Our revenue streams include licensing and engineering
income, first fill and refill catalysts.
Sales during the period were up 17%, with strong growth in licensing
and growth in first fills and refills reflecting higher pricing
and positive mix.
Industrial and consumer
Industrial and consumer includes our traditional syngas (methanol,
ammonia and formaldehyde) catalyst offerings as well as the majority
of our current licensing business. We saw double digit sales growth
reflecting strong growth in licensing and first fills as new plants
came on stream following licence wins in recent years. In the year,
we signed six new licences (2021/22: three licences). Refills also
grew well supported by growth in ammonia and formaldehyde.
Traditional fuels
Traditional fuels includes our refining additives, hydrogen and
natural gas purification offerings. Growth in the segment was mainly
driven by refills. High global demand for liquified natural gas
has led to strong sales of our natural gas purification catalysts.
Sustainable solutions
Sustainable solutions includes our new growth markets with our
technology in low carbon hydrogen, sustainable fuels and low carbon
solutions. In the period to May 2023, we won five large scale projects
across low carbon hydrogen and sustainable fuels:
-- H2H Saltend, expected to be one of the UK's largest low carbon
hydrogen projects
-- A large scale low carbon hydrogen licence in North America
-- A sustainable fuels project with Strategic Biofuels, also in
North America
-- A commercial scale sustainable fuels project in North America
-- A commercial scale sustainable fuels project in Europe
In addition, we won a low carbon solutions licence in the year
which will enable the decarbonisation of one of our customer's
existing assets.
Underlying operating profit
Underlying operating profit of GBP51 million was in line with the
prior year and margins declined to 9.1%. However, we saw good improvement
in operating margin from the first to the second half of the year
(1H: 7.6% and 2H: 10.5%). Higher pricing, licensing and the benefits
of our transformation programme offset significant cost inflation
and the loss of catalyst sales and higher margin licensing income
in Russia (c.GBP10 million loss of profit).
Hydrogen Technologies
Sales more than doubled and continued investment to scale the business
-- Agreed strategic partnerships with Plug Power and Hystar
-- Sales more than doubled driven by higher volumes for new and
existing customers in fuel cells, growth in electrolysers and
increased manufacturing output as we focused on improving operational
performance
-- Underlying operating loss reflects continued investment to scale
the business to meet demand partly offset by higher volumes
Year ended % change % change, constant FX rates
31(st) March
2023 2022
GBP million GBP million
Sales
Hydrogen Technologies 55 25 +120 +112
Underlying operating loss (45) (33) n/a n/a
Underlying margin n/a n/a
Reported operating loss (46) (33)
-------------------------- ----------- ----------- -------- ---------------------------
In Hydrogen Technologies, we provide catalyst coated membranes
that are critical performance defining components of fuel cells
and electrolysers.
In Hydrogen Technologies, sales in the year more than doubled to
GBP55 million. This was primarily driven by growth in fuel cells
where we delivered higher commercial volumes for new and existing
customers, enabled by improved operational performance. We continue
to focus our fuel cells business towards strategic customers to
develop deeper and longer relationships. This trend will continue
given the recent strategic partnership announcements, for example
with Plug Power which entails a long-term supply agreement, joint
development agreement and co-investment into new manufacturing
capacity. In electrolysers, we saw higher sales from the supply
of samples, prototypes and components as we develop strategic partners.
In the year, we saw higher manufacturing output as we focused on
operational performance to improve our processes and drive efficiency.
Sales also benefited as constraints eased following the greater
use of capacity in the prior period to qualify new customer products.
Underlying operating loss
Underlying operating loss of GBP45 million primarily reflects increased
investment into product development and building capability as
we scale the business to meet customer demand, partly offset by
higher volumes.
Value Businesses
Comparable performance materially improved
-- Market recovery and structural improvements driving improved
performance
-- Completed the sale of Piezo Products, part of Medical Device
Components, and agreed the sale of Diagnostic Services with completion
expected in the third quarter of calendar 2023
Year ended % change % change, constant FX rates
31(st) March
2023 2022
GBP million GBP million
Sales
Value Businesses(1) 470 354 +33 +28
Underlying operating profit(2) 40 12 n/a n/a
Underlying margin 8.5% 3.4%
Reported operating profit / (loss) 38 (276)
----------------------------------- ----------- ----------- -------- ---------------------------
Value Businesses is managed to drive shareholder value from activities
considered to be
non-core to JM, and now principally comprises Battery Systems,
Medical Device Components and Diagnostic Services. In the year,
we completed the sale of Piezo Products, part of Medical Device
Components, and we have also agreed the sale of Diagnostic Services
and Battery Materials. In 2021/22, we completed the sale of Advanced
Glass Technologies.
Overall, sales in Value Businesses were up 28% in the year. On
a like for like basis (i.e. excluding Advanced Glass Technologies
and Battery Materials), sales were up 55%.
In Battery Systems, sales almost doubled. We ramped up production
of higher value next generation e-bike products and satisfied a
backlog of orders as supply chain constraints eased. Medical Device
Components also saw strong sales growth as we gained market share
following recent project wins, and benefited from higher effective
production capacity following investments to upgrade assets and
drive efficiency. Diagnostic Services also grew strongly reflecting
a continued recovery in demand as COVID-related travel disruption
eased and a stronger commercial focus, supported by a higher oil
price which drove increased customer activity.
Underlying operating profit
Underlying operating profit of GBP40 million, an improvement of
GBP28 million on the prior year, reflecting both a supportive market
environment and the execution of comprehensive value creation plans
that each business is driving forward.
Excluding the results of Advanced Glass Technologies and Battery
Materials, underlying operating profit was GBP38 million(2), an
improvement of GBP20 million.
Corporate
Corporate costs were GBP68 million, a decrease of GBP18 million
from the prior period, largely reflecting transformation benefits
as well as a one-off benefit from lower pension charges.
Notes:
1. Sales relating to divestments: Advanced Glass Technologies (2021/22:
GBP62 million, 2022/23: GBPnil) and Battery Materials (2021/22:
GBP12 million, 2022/23: GBP21 million).
2. Operating profit or loss related to divestments: Advanced Glass
Technologies (2021/22: GBP16 million,
2022/23: -GBP1 million) and Battery Materials (2021/22: -GBP22
million, 2022/23: GBP3 million).
Financial review - continuing operations
Research and development (R&D)
R&D spend was GBP213 million in the year. This was up from GBP201
million in the prior year and represents c.5% of sales excluding
precious metals. We are investing in our growth areas, including
Catalyst Technologies and also Hydrogen Technologies as we continue
to commercialise our fuel cell and electrolyser offerings. In addition,
we are also investing in our Clean Air business to support future
platform wins ahead of new emission regulations.
Foreign exchange
The calculation of growth at constant rates excludes the impact
of foreign exchange movements arising from the translation of overseas
subsidiaries' profit into sterling. The group does not hedge the
impact of translation effects on the income statement. The principal
overseas currencies, which represented 79% of the non-sterling
denominated underlying operating profit in the year ended 31(st)
March 2023, were:
Share of 2022/23 Average exchange % change
non-sterling denominated rate
underlying operating Year ended
profit 31(st) March
------------------------- --------
2023 2022
----------------- ------------------------- -------- -------- --------
US dollar 34% 1.20 1.36 -12%
Euro 37% 1.16 1.18 -2%
Chinese renminbi 8% 8.26 8.75 -6%
----------------- ------------------------- -------- -------- --------
For the year, the impact of exchange rates increased sales by GBP193
million and underlying operating profit by GBP38 million.
If current exchange rates (GBP:US$ 1.25, GBP:EUR 1.14, GBP:RMB
8.70) are maintained throughout the year ending 31(st) March 2024,
foreign currency translation will have an adverse impact of
c.GBP10 million on underlying operating profit. A one cent change
in the average US dollar and euro exchange rates have an impact
of approximately GBP2 million on operating profit whilst a ten
fen change in the average rate of the Chinese renminbi approximately
has a GBP1 million impact on full year underlying operating profit.
Efficiency savings
We have commenced our new group transformation programme as part
of which we expect to deliver efficiencies of at least GBP150 million
by 2024/25. Associated costs to deliver the programme are around
GBP100 million, all of which are cash. In 2022/23, we delivered
c.GBP45 million of savings, ahead of our target of c.GBP35 million.
GBP million Efficiency savings Associated costs
delivered in incurred in
2022/23 2022/23
------------------------- ------------------ ----------------
Transformation programme 45 20
------------------------- ------------------ ----------------
Items outside underlying operating profit
Non-underlying (charge) / income As at As at
(GBP million) 31(st) March 31(st) March
2023 2022
----------------------------------------------------- ------------------ -------------
Profit on disposal of businesses 12 106
Major impairment and restructuring
charges (41) (440)
Amortisation of acquired intangibles (5) (6)
Gains and losses on significant legal
proceedings (25) 42
Total (59) (298)
----------------------------------------------------- ------------------ -------------
A gain of GBP12 million was recognised relating to the sale of
our Battery Materials Canada and Piezo Products businesses.
There was a GBP41 million charge relating to major impairment and
restructuring charges comprised of a net impairment charge of GBP10
million and restructuring charges of GBP31 million. The impairment
charge includes impact from further consolidation of our Clean
Air manufacturing footprint to create a simplified and agile structure,
as well as an impairment of goodwill in Diagnostic Services and
further impairment charges in relation to parts of the Battery
Materials business. Restructuring charges were also recognised
in relation to our Clean Air manufacturing footprint as well as
the transformation initiatives announced in May 2022 which largely
comprise redundancy and implementation costs.
The group paid GBP25 million in respect of a settlement with a
customer on mutually acceptable terms with no admission of fault
relating to failures in certain engine systems for which the group
supplied a particular coated substrate as a component for that
customer's emissions after-treatment systems.
Finance charges
Net finance charges in the period amounted to GBP61 million, broadly
in line with the prior year charge of GBP60 million.
Taxation
The tax charge on underlying profit before tax for the year ended
31(st) March 2023 was GBP78 million, an effective underlying tax
rate of 19.3%, up from 17.4% in 2021/22. This largely reflects
the settlement of provisions for uncertain tax positions in the
prior year.
The effective tax rate on reported profit for the year ended 31(st)
March 2023 was 23.2%. This represents a tax charge of GBP73 million,
compared with GBP57 million in the prior period.
We currently expect the effective tax rate on underlying profit
for the year ending 31(st) March 2024 to be around 20% reflecting
the increase to the UK corporate tax rate.
Post-employment benefits
IFRS - accounting basis
At 31(st) March 2023, the group's net post-employment benefit position,
was a surplus of
GBP165 million.
The cost of providing post-employment benefits in the year was
GBP40 million, down from
GBP62 million last year.
Capital expenditure
Capital expenditure was GBP303 million in the year, 1.6 times depreciation
and amortisation (excluding amortisation of acquired intangibles).
In the period, key projects included:
-- Hydrogen Technologies - investing to increase manufacturing
capacity in the UK
-- PGM Services - investing in the resilience, efficiency and long-term
sustainability of our refinery assets, and also our fuel cells
capacity expansion
Strong balance sheet
Net debt as at 31(st) March 2023 was GBP1,023 million, an increase
from GBP856 million at
31(st) March 2022 and GBP963 million at 30(th) September 2022.
Net debt is GBP19 million higher at
GBP1,042 million when post tax pension deficits are included.
The group's net debt (including post tax pension deficits) to EBITDA
was 1.6 times (31(st) March 2022: 1.2 times,
30(th) September 2022: 1.5 times), which was at the lower end
of our target range of 1.5 to 2.0 times.
We use short-term metal leases as part of our mix of funding for
working capital, which are outside the scope of IFRS 16 as they
qualify as short-term leases. Precious metal leases amounted to
GBP138 million as at 31(st) March 2023 (31(st) March 2022: GBP140
million,
30(th) September 2022: GBP129 million).
Free cash flow and working capital
Free cash flow was GBP74 million in the year, compared to GBP221
million in the prior period, largely reflecting lower underlying
operating profit and working capital movements.
Excluding precious metal, average working capital days to 31(st)
March 2023 increased to 42 days compared to 36 days to 31(st) March
2022.
Going concern
The directors have reviewed a range of scenario forecasts for the
group and have reasonable expectation that there are no material
uncertainties that cast doubt about the group's ability to continue
operating for at least twelve months from the date of approving
these annual accounts.
As at 31(st) March 2023, the group maintains a strong balance sheet
with around GBP1.6 billion of available cash and undrawn committed
facilities. Free cash flow was positive in the year at GBP74 million.
Net debt at 31(st) March 2023 was GBP1,023 million at 1.6 times
net debt (including post tax pension deficits) to EBITDA which
was at the lower end of our target range.
Although impacted by the significant headwinds faced in the current
macroeconomic environment such as high inflation, the impacts of
Russia's war with Ukraine and uncertainty in outlook for major
economies, the group's performance during the period was resilient,
both in terms of underlying operating profit and cash flow. For
the purposes of assessing going concern, we have revisited our
financial projections using the latest forecasts for our base case
scenario. The base case scenario was stress tested to a severe-but-plausible
downside case which reflects severe recession scenarios.
The severe-but-plausible case for Clean Air modelled scenarios
assuming a smaller LD vehicle market from reduced vehicle production
and/or market consumer demand disruption or greater share of zero
emission vehicles in market, assumed to result in a 10% drop in
sales.
For PGM Services and Catalyst Technologies, it also assumed a reduction
in sales and associated operating profit based on adverse scenarios
using external and internal market insights.
Additionally, as part of viability testing, the group considered
scenarios including the impact from metal price volatility, higher
inflation, delays in capital projects and delivery of cost transformation
savings, and slow down of operations in China. Whilst the combined
impact would reduce profitability and EBITDA against our latest
forecast, our balance sheet remains strong with ample working capital
and net debt/EBITDA ratios.
The group has a robust funding position comprising a range of long-term
debt and a
GBP1 billion five year committed revolving credit facility maturing
in March 2027 which was entirely undrawn at 31(st) March 2023.
There was GBP521 million of cash held in money market funds and
GBP129 million of other cash and bank deposits. Of the existing
loans, GBP151 million of term debt and GBP4 million of other bank
loans mature in the period to June 2024. We assume no refinancing
of this debt in our going concern modelling. As a long time, highly
rated issuer in the US private placement market and having recently
extended its UK Export Financing facility, the group expects to
be able to access additional funding in its existing markets if
required but the going concern conclusion is not dependant on such
access as the company has sufficient financing and liquidity to
fund its obligations in the base and severe-but-plausible scenarios.
The group also has a number of additional sources of funding available
including uncommitted metal lease facilities that support precious
metal funding. Whilst we would fully expect to be able to utilise
the metal lease facilities, they are excluded from our going concern
modelling.
Under all scenarios above, the group has sufficient headroom against
committed facilities and key financial covenants are not in breach
during the going concern period. To give further assurance on liquidity,
we have also undertaken a reverse stress test to identify what
additional or alternative scenarios and circumstances would threaten
our current financing arrangements. This shows that we have headroom
against a further decline in profitability beyond the severe-but-plausible
scenario or a significant increase in borrowings. Furthermore,
the group has a range of levers which it could utilise to protect
headroom including reducing capital expenditure, renegotiating
payment terms and reducing future dividend distributions.
The directors are therefore of the opinion that the group has adequate
resources to fund its operations for the period of at least twelve
months following the date of these financial statements and there
are no material uncertainties relating to going concern so determine
that it is appropriate to prepare the accounts on a going concern
basis.
Consolidated Income Statement
for the year ended 31(st) March 2023
2023 2022
Notes GBPm GBPm
Revenue 2,3 14,933 16,025
Cost of sales (13,939) (14,971)
-------- --------
Gross profit 994 1,054
Distribution costs (117) (101)
Administrative expenses (412) (400)
Profit on disposal of businesses 13 12 106
Amortisation of acquired intangibles 4 (5) (6)
Gains and losses on significant legal proceedings 4 (25) 42
Major impairment and restructuring charges 5 (41) (440)
-------- --------
Operating profit 406 255
Finance costs (110) (101)
Investment income 49 41
Share of losses of associates (1) -
-------- --------
Profit before tax from continuing operations 344 195
Tax expense (80) (79)
-------- --------
Profit for the year from continuing operations 264 116
Profit / (loss) after tax from discontinued operations 12 (217)
-------- --------
Profit / (loss) for the year 276 (101)
-------- --------
pence pence
Earnings / (loss) per ordinary share
Basic 6 150.9 (52.6)
Diluted 6 150.2 (52.6)
Earnings per ordinary share from continuing operations
Basic 6 144.2 60.9
Diluted 6 143.6 60.8
Consolidated Statement of Total Comprehensive Income
for the year ended 31(st) March 2023
2023 2022
Notes GBPm GBPm
----- -----
Profit / (loss) for the year 276 (101)
----- -----
Other comprehensive (expense) / income
Items that will not be reclassified to the income
statement in subsequent years
Remeasurements of post-employment benefit assets
and liabilities 14 (149) 177
Fair value losses on equity investments at fair
value through other
comprehensive income (12) (5)
Tax on items that will not be reclassified to the
income statement 37 (35)
----- -----
Total items that will not be reclassified to the
income statement (124) 137
----- -----
Items that may be reclassified to the income statement
Exchange differences on translation of foreign
operations 33 75
Exchange differences on translation of discontinued
foreign operations 12 (32) 5
Amounts credited / (charged) to hedging reserve 114 (36)
Fair value losses on net investment hedges (10) (2)
Tax on above items taken directly to or transferred
from equity (28) 10
----- -----
Total items that may be reclassified to the income statement
(in subsequent years) 77 52
----- -----
Other comprehensive (expense) / income for the year (47) 189
----- -----
Total comprehensive income for the year 229 88
----- -----
Total comprehensive income for the year arises from:
Continuing operations 249 300
Discontinued operations 12 (20) (212)
229 88
----- -----
Consolidated Statement of Financial Position
as at 31(st) March 2023
2023 2022
Notes GBPm GBPm
Assets
Non-current assets
Property, plant and equipment 8 1,332 1,238
Right-of-use assets 49 61
Goodwill 364 366
Other intangible assets 9 287 267
Investments in joint ventures and associates 75 2
Investments at fair value through other comprehensive
income 49 45
Other receivables 10 113 42
Interest rate swaps 20 12
Other financial assets 48 -
Deferred tax assets 121 98
Post-employment benefit net assets 14 203 352
------- -------
Total non-current assets 2,661 2,483
------- -------
Current assets
Inventories 1,702 1,549
Taxation recoverable 12 18
Trade and other receivables 10 1,882 1,796
Cash and cash equivalents 650 391
Other financial assets 47 27
Assets classified as held for sale 12 75 402
------- -------
Total current assets 4,368 4,183
------- -------
Total assets 7,029 6,666
------- -------
Liabilities
Current liabilities
Trade and other payables 11 (2,497) (2,563)
Lease liabilities (9) (10)
Taxation liabilities (105) (97)
Cash and cash equivalents -- bank overdrafts (13) (37)
Borrowings and related swaps (155) (265)
Other financial liabilities (27) (44)
Provisions (63) (56)
Liabilities classified as held for sale 12 (25) (80)
------- -------
Total current liabilities (2,894) (3,152)
------- -------
Non-current liabilities
Borrowings and related swaps (1,460) (899)
Lease liabilities (31) (40)
Deferred tax liabilities (19) (18)
Interest rate swaps (15) (2)
Employee benefit obligations 14 (41) (72)
Other financial liabilities - (12)
Provisions (28) (28)
Trade and other payables 11 (2) (2)
------- -------
Total non-current liabilities (1,596) (1,073)
------- -------
Total liabilities (4,490) (4,225)
------- -------
Net assets 2,539 2,441
------- -------
Equity
Share capital 215 218
Share premium 148 148
Treasury shares (19) (24)
Other reserves 118 50
Retained earnings 2,077 2,049
------- -------
Total equity 2,539 2,441
------- -------
The accounts were approved by the Board of Directors on 25(th)
May 2023 and signed on its behalf by:
Directors
L Condon
S Oxley
Consolidated Statement of Cash Flows
for the year ended 31(st) March 2023
2023 2022
Notes GBPm* GBPm*
Cash flows from operating activities
Profit before tax from continuing operations 344 195
Profit / (loss) before tax from discontinued operations 5 (239)
Adjustments for:
Share of losses of associates 1 -
Profit on disposal of businesses (23) (106)
Depreciation 151 151
Amortisation 36 39
Impairment losses 27 632
(Profit) / loss on sale of non-current assets (6) 2
Share-based payments 7 8
(Increase) / decrease in inventories (139) 123
(Increase) / decrease in receivables (102) 588
Decrease in payables (4) (783)
Increase in provisions 7 25
Contributions in excess of employee benefit obligations
charge (21) (2)
Changes in fair value of financial instruments 22 19
Net finance costs 61 60
Income tax paid (75) (107)
----- -----
Net cash inflow from operating activities 291 605
----- -----
Cash flows from investing activities
Interest received 28 32
Purchases of property, plant and equipment (253) (358)
Purchases of intangible assets (63) (95)
Purchases of investments held at fair value through
other comprehensive income (17) -
Government grant income received 7 -
Proceeds from sale of non-current assets 8 1
Proceeds from sale of investments in joint ventures 2 -
Net proceeds from sale of businesses 187 160
----- -----
Net cash outflow from investing activities (101) (260)
----- -----
Cash flows from financing activities
Purchase of treasury shares (45) (155)
Proceeds from borrowings 672 9
Repayment of borrowings (281) (140)
Dividends paid to equity shareholders 7 (141) (139)
Interest paid (94) (111)
Principal element of lease payments (14) (14)
----- -----
Net cash inflow / (outflow) from financing activities 97 (550)
----- -----
Change in cash and cash equivalents 287 (205)
Exchange differences on cash and cash equivalents 4 6
Cash and cash equivalents at beginning of year 346 545
Cash and cash equivalents at end of year 637 346
----- -----
Cash and deposits 129 254
Money market funds 521 137
Bank overdrafts (13) (37)
Bank overdrafts transferred to liabilities classified
as held for sale - (8)
----- -----
Cash and cash equivalents 637 346
----- -----
* For cash flows of discontinued operations see note 12.
Consolidated Statement of Changes in Equity
for the year ended 31(st) March 2023
Share
Share premium Treasury Other Retained Total
capital account shares reserves earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm
At 1(st) April 2021 221 148 (29) - 2,345 2,685
Total comprehensive income - - - 47 41 88
Dividends paid (note 7) - - - - (139) (139)
Purchase of treasury shares (3) - - 3 (200) (200)
Share-based payments - - - - 15 15
Cost of shares transferred
to employees - - 5 - (13) (8)
At 31(st) March 2022 218 148 (24) 50 2,049 2,441
Total comprehensive income - - - 65 164 229
Dividends paid (note 7) - - - - (141) (141)
Purchase of treasury shares (3) - - 3 (1) (1)
Share-based payments - - - - 18 18
Cost of shares transferred
to employees - - 5 - (14) (9)
Tax on share-based payments - - - - 2 2
At 31(st) March 2023 215 148 (19) 118 2,077 2,539
------- ------- -------- -------- -------- ------
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
1 Preparation
Basis of preparation and statement of compliance
The financial statements of the group have been prepared on a
going concern basis in accordance with International Accounting
Standards (IAS) in conformity with the requirements of the
Companies Act 2006. The financial statements are also prepared in
accordance with International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board (IASB),
adopted pursuant to Regulation (EC) No 1606/2002 as it applies to
the European Union, including the interpretations issued by the
IFRS Interpretations Committee. Except for the changes noted below,
the accounting policies applied are set out in the Annual Report
and Accounts for the year ended 31(st) March 2022.
As at 31(st) March 2023, the group maintains a strong balance
sheet with around GBP1.6 billion of available cash and undrawn
committed facilities. Free cash flow was positive in the year at
GBP74 million. However, net debt increased since 31(st) March 2022
to GBP1,023 million with the payment of dividends and the share
buyback. Net debt (including post tax pension deficits) to
underlying EBITDA at 1.6 times was at the lower end of our target
range.
The directors have reviewed the base case scenario forecasts for
the group and are of the opinion that the group has adequate
resources to fund its operations for the period of at least twelve
months from the date of signing these financial statements. In
forming this view, the base case scenario was stress tested to
represent a severe-but-plausible downside case scenario which
modelled a material reduction in trading.
In both scenarios outlined above, we have sufficient headroom
against committed facilities and key financial covenants are not in
breach during the going concern period. Accordingly, the directors
continue to adopt the going concern basis in preparing the
financial statements.
Statutory accounts for 2022 have been delivered to the Registrar
of Companies and those for 2023 will be delivered following the
company's Annual General Meeting. The auditor, PwC, has reported on
both sets of accounts. Their reports were unqualified, did not
include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
did not contain any statement under sections 498(2) or 498(3) of
the Companies Act 2006. The accounts for the year ended 31(st)
March 2023 were approved by the Board of Directors on 25(th) May
2023.
These accounts do not include all the information required for
full annual statements and should be read in conjunction with the
2023 Annual Report. They are not statutory accounts per section 435
of the Companies Act 2006.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
1 Preparation (continued)
Changes in accounting policies
Amendments to accounting standards
The IASB has issued the following amendments, which have been
endorsed by the UK Endorsement Board, for annual periods beginning
on or after 1(st) January 2022:
- Annual improvements to IFRS Standards 2018-2020;
- Amendments to IAS 16, Property, Plant and Equipment: Proceeds before intended use;
- Amendments to IAS 37, Onerous Contracts = Cost of Fulfilling a Contract; and
- Amendments to IFRS 3, Reference to the Conceptual Framework
These changes have not had a material impact on the group. The
group has not early adopted any standard, interpretation or
amendment that was issued but is not yet effective.
New significant accounting policies adopted by the group
Investments in joint ventures and associates
A joint venture is a joint arrangement whereby investees are
able to exercise joint control of the arrangement.
Associates are entities over which the group exercises
significant influence when it has the power to participate in the
financial and operating policy decisions of the entity but it does
not have the power to control or jointly control the entity.
Investments in joint ventures and associates are accounted for
using the equity method of accounting and are initially recognised
at cost. Thereafter the investments are adjusted to recognise the
group's share of the post-acquisition profits or losses after tax
of the investee in the income statement, and the group's share of
movements in other comprehensive income of the investee in other
comprehensive income. Dividends received or receivable from
associates are recognised as a reduction in the carrying amount of
the investment. The carrying value of the investments are reviewed
for impairment triggers on a regular basis.
Where the group's share of losses in an equity-accounted
investment equals or exceeds its interest in the entity, the group
does not recognise further losses unless it has incurred
obligations to do so.
Unrealised gains and losses on transactions between the group
and its associates are eliminated to the extent of the group's
interest in these joint ventures and associates.
Non-GAAP measures
The group uses various measures to manage its business which are
not defined by generally accepted accounting principles (GAAP). The
group's management believes these measures provide valuable
additional information to users of the accounts in understanding
the group's performance. The group's non-GAAP measures are defined
and reconciled to GAAP measures in note 19.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
2 Segmental information
Revenue, sales, underlying operating profit and net assets by
sector
Year ended 31(st)
March 2023
Clean PGM Catalyst Hydrogen Value
Air Services Technologies Technologies Businesses Corporate Eliminations Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from external
customers 6,273 7,360 673 62 565 - - 14,933
Inter-segment revenue - 3,227 14 - - - (3,241) -
----- -------- ------------ ------------ ---------- --------- ------------ -------
Revenue 6,273 10,587 687 62 565 - (3,241) 14,933
----- -------- ------------ ------------ ---------- --------- ------------ -------
External sales 2,644 485 547 55 470 - - 4,201
Inter-segment sales - 85 13 - - - (98) -
----- -------- ------------ ------------ ---------- --------- ------------ -------
Sales(1) 2,644 570 560 55 470 - (98) 4,201
----- -------- ------------ ------------ ---------- --------- ------------ -------
Underlying operating
profit / (loss)(1) 230 257 51 (45) 40 (68) - 465
----- -------- ------------ ------------ ---------- --------- ------------ -------
Segmental net assets 1,784 (2) 680 114 175 515 - 3,266
----- -------- ------------ ------------ ---------- --------- ------------ -------
Net debt (note 19) (1,023)
Post-employment benefits net assets and liabilities (note
14) 162
Deferred tax net asset 102
Provisions and non-current other payables (93)
Investments in joint ventures and associates 75
Net assets held for sale (note 12) 50
Net assets 2,539
-------
Year ended 31(st) March 2022*
PGM Catalyst Hydrogen Value
Clean Services Technologies Technologies Businesses Eliminations
Air (restated) (restated) (restated) (restated) Corporate (restated) Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue from external
customers 7,085 7,880 581 30 449 - - 16,025
Inter-segment revenue 4 4,549 6 - 1 - (4,560) -
----- ---------- ------------ ------------ ---------- --------- ------------ ------
Revenue 7,089 12,429 587 30 450 - (4,560) 16,025
----- ---------- ------------ ------------ ---------- --------- ------------ ------
External sales 2,455 497 448 25 353 - - 3,778
Inter-segment sales 2 90 6 - 1 - (99) -
----- ---------- ------------ ------------ ---------- --------- ------------ ------
Sales(1) 2,457 587 454 25 354 - (99) 3,778
----- ---------- ------------ ------------ ---------- --------- ------------ ------
Underlying operating
profit / (loss)(1) 302 308 50 (33) 12 (86) - 553
----- ---------- ------------ ------------ ---------- --------- ------------ ------
Segmental net assets 2,108 (702) 743 51 169 330 - 2,699
----- ---------- ------------ ------------ ---------- --------- ------------ ------
Net debt (856)
Post-employment benefit net assets and liabilities (note
14) 280
Deferred tax net asset 80
Provisions and non-current other payables (86)
Investments in joint ventures and associates 2
Net assets held for sale 322
Net assets 2,441
------
(1) Sales and underlying operating profit are non-GAAP measures (see
note 19). Sales excludes the sale of precious metals. Underlying operating
profit excludes profit or loss on disposal of businesses, gain or loss
on significant legal proceedings, together with associated legal costs,
amortisation of acquired intangibles and major impairment and restructuring
charges.
* The comparative period is restated to reflect the group's updated
reporting segments. The overall group total is as previously reported.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
3 Revenue
Products and services
The group's principal products and services by operating sector
and sub-sector are disclosed in the table below, together with
information regarding performance obligations and revenue recognition.
Revenue is recognised by the group as contractual performance obligations
to customers are completed.
Primary Principal products and Performance
Sub-sector industry services obligations Revenue recognition
-------------------- ----------------- ------------------------------ ---------------- ------------------------
Clean Air
---------------------------------------------------------------------------------------------------------------------
Light Duty Automotive Catalysts for cars and Point in On despatch
Catalysts other light duty vehicles time or delivery
Heavy Duty Automotive Catalysts for trucks, Point in On despatch
Catalysts buses and non-road equipment time or delivery
PGM Services
---------------------------------------------------------------------------------------------------------------------
Platinum Various Platinum Group Metal Over time Based on output
Group Metal refining and recycling
Services services
Platinum Group Metal Point in On receipt of
trading time payment
Other precious metal Point in On despatch
products time or delivery
Platinum Group Metal Point in On despatch
chemical, industrial time or delivery
products and catalysts
Catalyst Technologies
---------------------------------------------------------------------------------------------------------------------
Catalyst Chemicals Speciality catalysts Point in On despatch
Technologies / oil and and additives time or delivery
gas
Process technology licences Over time Based on costs
incurred or
straight-line
over the licence
term(1)
Engineering design services Over time Based on costs
incurred
Hydrogen Technologies
---------------------------------------------------------------------------------------------------------------------
Fuel Cells Various Fuel cell catalyst coated Point in On despatch
technologies membrane time or delivery
Electrolysis Various Electrolyser catalyst Point in On despatch
technology coated membrane time or delivery
Value Businesses
---------------------------------------------------------------------------------------------------------------------
Other Markets Various Precious metal pastes Point in On despatch
(excluding and enamels, battery time or delivery
Diagnostic systems and products
Services) found in devices used
in medical procedures
Diagnostic Oil and Detection, diagnostic Over time Based on costs
Services gas and measurement solutions incurred
(1) Revenue recognition depends on whether the licence is distinct
in the context of the contract.
Metal revenue: Metal revenue relates to the sales of precious
metals to customers, either in pure form or contained within a
product. Metal revenue arises in each of the reportable segments
in the Group. Metal revenue is affected by fluctuations in the
market prices of precious metals and, in many cases, the value
of precious metals is passed directly on to customers. Given the
high value of these metals this makes up a significant proportion
of revenue.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
3 Revenue (continued)
Revenue from external customers by principal
products and services
Year ended 31(st) March
2023
Continuing operations
------------------------------------------------------------
Clean PGM Catalyst Hydrogen Value
Air Services Technologies Technologies Businesses Total
GBPm GBPm GBPm GBPm GBPm GBPm
Metal 3,629 6,875 126 7 95 10,732
Heavy Duty Catalysts 970 - - - - 970
Light Duty Catalysts 1,674 - - - - 1,674
Catalyst Technologies - - 547 - - 547
Platinum Group Metal Services - 485 - - - 485
Fuel Cells - - - 55 - 55
Battery Systems - - - - 284 284
Diagnostic Services - - - - 71 71
Medical Device Components - - - - 93 93
Other - - - - 22 22
Revenue 6,273 7,360 673 62 565 14,933
Year ended 31(st) March 2022*
Continuing operations
------------------------------------------------------------
PGM Catalyst Hydrogen Value
Services Technologies Technologies Businesses
Clean
Air (restated) (restated) (restated) (restated) Total
GBPm GBPm GBPm GBPm GBPm GBPm
----- ---------- ------------- ------------- ----------- ------
Metal 4,630 7,383 133 5 96 12,247
Heavy Duty Catalysts 849 - - - - 849
Light Duty Catalysts 1,578 - - - - 1,578
Catalyst Technologies - - 448 - - 448
Platinum Group Metal Services - 497 - - - 497
Fuel Cells - - - 25 - 25
Battery Materials - - - - 12 12
Battery Systems - - - - 151 151
Advanced Glass Technologies - - - - 62 62
Diagnostic Services - - - - 54 54
Medical Device Components - - - - 74 74
Other 28 - - - - 28
Revenue 7,085 7,880 581 30 449 16,025
* The comparative period is restated to reflect the group's updated
reporting segments. The overall group total is as previously reported.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
4 Operating profit
Operating profit is arrived at after charging
/ (crediting):
2023 2022
GBPm GBPm
------ ------
Total research and development expenditure 213 201
Less: Development expenditure capitalised - (22)
------ ------
Research and development expenditure charged
to the income statement 213 179
Less: External funding received from governments (19) (18)
Net research and development expenditure
charged to the income statement 194 161
------ ------
Inventories recognised as an expense 12,962 14,121
Write-down of inventories recognised as
an expense 39 26
Reversal of write-down of inventories from increases
in net realisable value (19) (16)
Net gains on foreign exchange (11) (2)
Net losses on foreign currency forwards
at fair value through profit or loss 19 6
Past service credit (20) (11)
------ ------
Depreciation of:
Property, plant and equipment 137 125
Right-of-use assets 14 13
Depreciation 151 138
------ ------
Amortisation of:
Internally generated intangible assets 1 1
Acquired intangibles 5 6
Other intangible assets 30 32
Amortisation 36 39
------ ------
Gains and losses on significant legal proceedings 25 (42)
------ ------
Profit on disposal of businesses (note
13) (12) (106)
------ ------
Impairment losses included in administrative
expenses 3 3
Impairment losses 3 3
------ ------
Impairment losses and reversals included in major impairment
and restructuring charges 10 401
Restructuring charges included in major
impairment and restructuring charges 31 39
Major impairment and restructuring charges
(note 5) 41 440
------ ------
Fees payable to the company's auditor and
its associates for:
The audit of these accounts 2.2 2.1
The audit of the accounts of the company's
subsidiaries 2.4 2.4
The audit of prior period accounts 0.2 0.2
Total audit fees 4.8 4.7
------ ------
Audit-related assurance services 0.4 0.4
Total non audit fees 0.4 0.4
------ ------
Total fees payable to the company's auditor
and its associates 5.2 5.1
------ ------
Gains and losses on significant legal proceedings
During the year, the group paid GBP25 million in respect of a
settlement with a customer on mutually acceptable terms with no
admission of fault relating to failures in certain engine systems
for which the group supplied a particular coated substrate as a
component for that customer's emissions after-treatment
systems.
During the prior year, the group recognised a gain of GBP44
million in relation to damages and interest from a company found to
have unlawfully copied one of our technology designs. An additional
gain of GBP6 million was recognised following conclusion of legal
proceedings associated to investments in Battery Materials, this
was partially offset by a GBP8 million charge for environmental and
other costs. Gains and losses on significant legal proceedings are
reported as non-underlying.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
5 Major impairment and restructuring charges
2023 2022
GBPm GBPm
Property, plant and equipment 17 238
Right-of-use assets - 4
Goodwill 4 45
Other intangible assets 3 78
Inventories (8) 17
Trade and other receivables (6) 19
Impairment losses and
reversals 10 401
Restructuring charges 31 39
---- ----
Total major impairment and restructuring charges 41 440
---- ----
Major impairment and restructuring charges are shown separately
on the face of the income statement and excluded from underlying
operating profit (see note 19).
Major impairments - The group's net impairment charge of GBP10
million includes further impairment charges to plants and related
production assets in Clean Air as the sector continues to
consolidate its existing capacity into new, more efficient plants
in order to create a simplified and agile structure. Further
impairment charges were also recognised in relation to parts of the
Battery Materials business reflecting elements of the contract to
sell the business to EV Metals Group.
On 3(rd) May 2023 the group announced the sale of its Diagnostic
Services business to Sullivan Street Partners. The business is
presented as held for sale (refer to note 12) at fair value less
estimated costs to sell. This has resulted in an impairment to
goodwill of GBP4 million.
The major impairments charge also includes impairment reversals
for previously impaired Clean Air equipment that has been
re-purposed, and Russia related inventories and receivables that
have subsequently been recovered in cash. Although this cash is
reported as restricted (see note 19), there are no impairment
indicators.
Major restructuring - The group's transformation programme was
launched in May 2022 and was designed to drive increased
competitiveness, improved execution capability and create financial
headroom to facilitate further investment in high growth areas.
Restructuring charges of GBP17 million have been recognised of
which the majority is redundancy and implementation costs. The
remaining charge is related to Clean Air's ongoing plant
consolidation initiatives.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
6 Earnings / (loss) per share
2023 2022
pence pence
Basic 150.9 (52.6)
Diluted 150.2 (52.6)
Basic from continuing operations 144.2 60.9
Diluted from continuing operations 143.6 60.8
-------------- -------------
Earnings per ordinary share have been calculated by dividing profit
for the period by the weighted average number of shares in issue during
the period.
Weighted average number of shares in
issue 2023 2022
-------------- -------------
Basic 183,012,301 191,568,756
Dilution for long term incentive
plans 851,432 585,024
-------------- -------------
Diluted 183,863,733 192,153,780
-------------- -------------
7 Dividends
A final dividend of 55.00 pence per ordinary share has been
proposed by the board which will be paid on 1(st) August 2023 to
shareholders on the register at the close of business on 10(th)
June 2023, subject to shareholders' approval. The estimated amount
to be paid is GBP101 million and has not been recognised in these
accounts.
2023 2022
GBPm GBPm
2020/21 final ordinary dividend paid -- 50.00
pence per share - 96
2021/22 interim ordinary dividend paid -- 22.00
pence per share - 43
2021/22 final ordinary dividend paid -- 55.00
pence per share 100 -
2022/23 interim ordinary dividend paid -- 22.00
pence per share 41 -
Total dividends 141 139
---- ----
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
8 Property, plant and equipment
Freehold Assets
in
land Leasehold Plant the course
and and of
buildings improvements machinery construction Total
GBPm GBPm GBPm GBPm GBPm
Cost
At 1(st) April 2022 570 27 2,055 304 2,956
Additions 1 - 24 217 242
Transferred to assets
classified
as held for sale (note 12) - (1) (41) - (42)
Transfers from assets in the
course
of construction 22 2 128 (152) -
Disposals (1) (1) (33) (13) (48)
Disposal of businesses (note
13) - - (10) - (10)
Exchange adjustments 7 1 28 4 40
At 31(st) March 2023 599 28 2,151 360 3,138
Accumulated depreciation and impairment
At 1(st) April 2022 265 14 1,424 15 1,718
Charge for the year 17 1 119 - 137
Impairment losses - - 8 4 12
Transferred to assets
classified
as held for sale (note 12) - (1) (31) - (32)
Disposals (1) - (33) (11) (45)
Disposal of businesses (note
13) - - (8) - (8)
Exchange adjustments 3 1 20 - 24
At 31(st) March 2023 284 15 1,499 8 1,806
Carrying amount at 31(st)
March
2023 315 13 652 352 1,332
Carrying amount at 1(st)
April
2022 305 13 631 289 1,238
During the year, the group recognised impairments of GBP12
million. The impairment charge is comprised of GBP3 million
included in administrative expenses, see note 4, and a net GBP9
million charge included in non-underlying expenses.
During the prior year, the group recognised impairments of
GBP295 million. The impairment charge is comprised of GBP2 million
included in administrative expenses, and GBP238 million included in
non-underlying expenses. A further GBP55 million of impairment
charges were incurred in relation to the Health segment.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
9 Other intangible assets
Customer
contracts Patents, Acquired
research
and Computer trademarks and Development
relationships software and licences technology expenditure Total
GBPm GBPm GBPm GBPm GBPm GBPm
Cost
At 1(st) April 2022 132 419 47 37 135 770
Additions - 59 2 - - 61
Transferred to assets
classified
as held for sale (note
12) (1) (1) - (1) - (3)
Disposals (2) (2) (7) - - (11)
Disposal of businesses
(note
13) (13) - - - - (13)
Exchange adjustments - - 1 1 - 2
At 31(st) March 2023 116 475 43 37 135 806
Accumulated amortisation and impairment
At 1(st) April 2022 112 178 44 36 133 503
Charge for the year 4 31 - 1 - 36
Impairment losses - 3 - - - 3
Transferred to assets
classified
as held for sale (note
12) (1) (1) - (1) - (3)
Disposals (2) (2) (6) - - (10)
Disposal of businesses
(note
13) (13) - - - - (13)
Exchange adjustments 1 - 1 1 - 3
At 31(st) March 2023 101 209 39 37 133 519
Carrying amount at
31(st)
March 2023 15 266 4 - 2 287
Carrying amount at
1(st)
April 2022 20 241 3 1 2 267
During the year, the group recognised impairments of GBP3
million, see note 5.
During the prior year, the group recognised impairments of
GBP102 million. The impairment charge is comprised of GBP1 million
included in administrative expenses and GBP78 million included in
non-underlying expenses. A further GBP23 million of impairment
charges were incurred in relation to the Health segment.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
10 Trade and other receivables
2023 2022
GBPm GBPm
Current
Trade receivables 1,304 1,393
Contract receivables 70 88
Prepayments 83 75
Value added tax and other sales tax receivable 142 89
Advance payments to customers 10 10
Amounts receivable under precious metal sale
and repurchase agreements(1) 222 114
Other receivables 51 27
------- ------
Trade and other receivables 1,882 1,796
------- ------
Non-current
Value added tax and other sales tax receivable 3 3
Advance payments to customers 53 39
Other receivables 57 -
------- ------
Other receivables 113 42
------- ------
(1) The fair value of the precious metal contracted to be sold by
the group under sale and repurchase agreements is GBP215 million (31(st)
March 2022: GBP108 million).
11 Trade and other payables
2023 2022
GBPm GBPm
Current
Trade payables 831 753
Contract liabilities 181 273
Accruals 338 439
Amounts payable under precious metal sale and
repurchase agreements(1) 838 793
Other payables 309 305
------ ------
Trade and other payables 2,497 2,563
------ ------
Non-current
Other payables 2 2
------ ------
Trade and other payables 2 2
------ ------
(1) The fair value of the precious metal contracted to be repurchased
by the group under sale and repurchase agreements is GBP802 million
(31(st) March 2022: GBP782 million).
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
12 Discontinued operations and assets and
liabilities classified as held for sale
The group strategically drives for efficiency and disciplined
capital allocation to enhance returns, as such we continue to
actively manage our portfolio. In line with this strategy and to
focus on our core businesses, during the period we completed the
sale of our Health, Battery Materials UK, Battery Materials Canada
and Piezo Products businesses.
The Health segment is classified as a discontinued operation and
presented separately in the consolidated income statement. The
Health segment was classified as held for sale and a discontinued
operation for the year to 31(st) March 2022.
Financial information relating to the Health discontinued
operations for the period to disposal date (1(st) June 2022) is set
out below. The 30% equity interest in the business is equity
accounted as an investment in associate.
2023 2022
GBPm GBPm
Revenue 35 164
Expenses (41) (161)
Underlying operating (loss) / profit from discontinued
operations (6) 3
Major impairment and restructuring costs from discontinued
operations - (242)
Loss before tax from discontinued operations (6) (239)
Tax credit 2 22
Profit on disposal of discontinued operations after
tax (see note 13)* 16 -
16
Profit / (loss) from discontinued operations 12 (217)
Exchange differences on translation of discontinued
operations (32) 5
Other comprehensive (expense) / income from discontinued
operations (32) 5
Total comprehensive expense from discontinued
operations (20) (212)
Net cash inflow from operating activities 13 33
Net cash outflow from investing activities (5) (30)
Net cash outflow from financing activities - (6)
Net increase / (decrease) in cash generated by
the discontinued operations 8 (3)
pence pence
Earnings / (loss) per ordinary share from discontinued
operations
Basic earnings / (loss) per ordinary share from
discontinued operations 6.7 (113.5)
Diluted earnings / (loss) per ordinary share from
discontinued operations 6.6 (113.5)
* The profit on disposal of discontinued operations after tax
includes a tax credit of GBP5 million.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
12 Discontinued operations and assets and
liabilities classified as held for sale
(continued)
The group decided to sell its Battery Materials Germany and
Poland business. As at 31(st) March 2023, the fair value of the
proceeds less costs to sell for the Battery Materials business was
estimated to be GBP15 million. The business is classified as a
disposal group held for sale.
Additionally, in May 2023 the group agreed to sell its
Diagnostic Services business. As at 31(st) March 2023, the proceeds
less costs to sell for the Diagnostic Services business was
estimated to be GBP37 million and so an impairment of GBP4 million
against goodwill has been recognised, see note 5. The business is
classified as a disposal group held for sale.
The major classes of assets and liabilities comprising the
businesses classified as held for sale as at 31(st) March are:
2023
Diagnostic Battery
Services Materials Total 2022
GBP
million GBPm GBPm GBPm
Non-current
assets
Property, plant and equipment 10 17 27 146
Right-of-use-assets 9 - 9 2
Other intangible assets - 1 1 52
Deferred tax assets 3 - 3 -
Current assets
Inventories 5 - 5 138
Taxation recoverable - - - 1
Trade and other receivables 30 - 30 63
Assets classified as held for
sale 57 18 75 402
Current liabilities
Trade and other payables (11) (3) (14) (60)
Lease liabilities (1) - (1) (2)
Taxation liabilities (1) - (1) -
Cash and cash equivalents - bank
overdrafts - - - (8)
Provisions - - - (2)
Non-current
liabilities
Lease liabilities (9) - (9) (7)
Provisions - - - (1)
Liabilities classified as held
for sale (22) (3) (25) (80)
Net assets of disposal
group 35 15 50 322
The prior year held for sale balances relate to Health and Battery
Materials.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
13 Disposals
Health (discontinued operation)
On 1(st) June 2022, the group completed the sale of its Health
business for a gross consideration of GBP325 million. This gross
consideration is comprised of GBP150 million cash, a GBP50 million
vendor loan note (which we have recorded as an other receivable),
GBP75 million in the form of shares which constitutes a 30% equity
interest in the business (which we have equity accounted for as an
investment in associate) and GBP50 million in contingent
consideration (which we have recognised at a fair value of GBPnil).
After adjusting for working capital and an additional GBP3 million
cash receipt due to cash in business upon disposal, the net
consideration was GBP272 million. The business was disclosed as a
disposal group held for sale as at 31(st) March 2022.
Battery Materials
On 26(th) May 2022, the group completed the sale of part of its
Battery Materials UK business for a cash consideration of GBP20
million. The business was disclosed as a disposal group held for
sale as at 31(st) March 2022.
On 1(st) November 2022, the group completed the sale of its
Battery Materials Canada business for a cash consideration of GBP12
million. The business was disclosed as a disposal group held for
sale as at 30(th) September 2022.
Piezo Products
On 31(st) January 2023, the group completed the sale of its
Piezo Products business for a cash consideration of GBP18 million.
The business was disclosed as a disposal group held for sale as at
30(th) September 2022.
Continuing operations
Battery Battery
Health Materials Materials Piezo
(discontinued) UK Canada Products Total
GBPm GBPm GBPm GBPm GBPm
Proceeds
Cash consideration 153 20 12 18 50
Cash and cash equivalents
disposed (5) - - (2) (2)
Net cash consideration 148 20 12 16 48
Disposal costs paid (1) (1) (1) (1) (3)
Net cash inflow 147 19 11 15 45
Assets and liabilities
disposed
Non-current assets
Property, plant and equipment 105 14 1 2 17
Right-of-use-assets 1 - - - -
Goodwill - - - 4 4
Other intangible assets 42 10 - - 10
Deferred tax assets 13 - - - -
Current assets
Inventories 142 - 1 5 6
Trade and other receivables 60 - 7 1 8
Cash and cash equivalents 5 - - 2 2
Current liabilities
Trade and other payables (71) - (1) (1) (2)
Lease liabilities (1) (5) - - (5)
Provisions (1) - - - -
Non-current liabilities
Lease liabilities (2) - - - -
Pension liabilities - - - (4) (4)
Provisions (1) - - - -
Net assets disposed 292 19 8 9 36
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
13 Disposals (continued)
Continuing operations
Battery Battery
Health Materials Materials Piezo
(discontinued) UK Canada Products Total
GBPm GBPm GBPm GBPm GBPm
Cash consideration 153 20 12 18 50
Non-cash consideration 119 - - - -
Less: carrying amount
of net assets sold (292) (19) (8) (9) (36)
Less: disposal costs (1) (1) (1) (1) (3)
Cumulative currency
translation
gain / (loss) recycled
from other
comprehensive
income 32 - (2) 3 1
Profit recognised in
the income statement 11 - 1 11 12
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
14 Post-employment benefits
Background
The group operates a number of post-employment benefit plans
around the world, the forms and benefits of which vary with
conditions and practices in the countries concerned. The major
defined benefit plans are pension plans and post-retirement medical
plans in the UK and the US.
Financial
assumptions
2023 2023 2023 2022 2022 2022
US Other US Other
UK plan plans plans UK plan plans plans
% % % % % %
First year's
rate of
increase
in salaries 4.40 4.50 3.97 3.85 3.00 2.20
Ultimate rate
of increase
in
salaries 3.40 4.50 2.20 3.85 3.00 2.20
Rate of
increase in
pensions
in payment 2.90 - 2.80 3.20 - 2.11
Discount rate 4.80 4.90 4.40 2.80 3.70 2.13
Inflation - 2.50 3.90 - 2.20 2.15
- UK Retail
Prices Index
(RPI) 3.10 - - 3.60 - -
- UK Consumer
Prices Index
(CPI) 2.65 - - 3.10 - -
Financial
information
Movements in the net post-employment benefit assets and liabilities,
including reimbursement rights, were:
UK post- US post-
UK UK retirement retirement
pension pension
- -
legacy cash medical US medical
balance
section section benefits pensions benefits Other Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At 1(st) April
2022 351 (18) (9) (2) (13) (26) 283
Current service
cost - in
operating profit (4) (21) - (5) - (1) (31)
Past service
credit - in
operating profit (2) - - 22 - - 20
Administrative
expenses -
in operating
profit (4) - - (1) - - (5)
Interest 9 1 - - (1) (1) 8
Remeasurements (189) 44 1 (14) 3 6 (149)
Company
contributions 8 21 1 7 1 2 40
Disposal of
business - - - - - 3 3
Exchange - - - (1) - (3) (4)
At 31(st) March
2023 169 27 (7) 6 (10) (20) 165
The post-employment benefit assets and liabilities are included
in the balance sheet as follows:
2023 2023 2023 2022 2022 2022
Post- Post-
employment Employee employment Employee
benefit benefit
benefit net benefit net
net assets obligations Total net assets obligations Total
GBPm GBPm GBPm GBPm GBPm GBPm
UK pension - legacy section 169 - 169 351 - 351
UK pension - cash balance
section 27 - 27 - (18) (18)
UK post-retirement medical
benefits - (7) (7) - (9) (9)
US pensions 6 - 6 - (2) (2)
US post-retirement medical
benefits - (10) (10) - (13) (13)
Other 1 (21) (20) 1 (27) (26)
Total post-employment plans 203 (38) 165 352 (69) 283
Other long-term employee
benefits (3) (3)
Total long-term employee benefit
obligations (41) (72)
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
15 Fair values
Fair value hierarchy
Fair values are measured using a hierarchy where the inputs
are:
-- Level 1 -- quoted prices in active markets for identical assets or liabilities.
-- Level 2 -- not level 1 but are observable for that asset or
liability either directly or indirectly.
-- Level 3 -- not based on observable market data (unobservable).
Fair value of financial instruments
Certain of the group's financial instruments are held at fair
value. The fair value of a financial instrument is the price that
would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the
balance sheet date.
The fair value of forward foreign exchange contracts, interest
rate swaps, forward precious metal price contracts and currency
swaps is estimated by discounting the future contractual cash flows
using forward exchange rates, interest rates and prices at the
balance sheet date.
The fair value of trade and other receivables measured at fair
value is the face value of the receivable less the estimated costs
of converting the receivable into cash.
The fair value of money market funds is calculated by
multiplying the net asset value per share by the investment held at
the balance sheet date.
There were no transfers of any financial instrument between the
levels of the fair value hierarchy during the current or prior
years.
Notes on the Preliminary Accounts
for the year ended 31st March 2023
15 Fair values (continued)
Fair value
2023 2022 hierarchy
GBPm GBPm Level
Financial instruments measured at fair
value
Non-current
Investments at fair value through other
comprehensive income(1) 49 45 1
Interest rate swaps - assets 20 12 2
Other financial assets
(2) 48 - 2
Interest rate swaps - liabilities (15) (2) 2
Borrowings and related
swaps (5) (2) 2
Other financial liabilities
(2) - (12) 2
Current
Trade receivables(3) 329 492 2
Other receivables(4) 21 44 2
Cash and cash equivalents - money market
funds 521 137 2
Other financial
assets (2) 47 27 2
Other financial liabilities
(2) (27) (44) 2
Financial instruments not measured at fair
value
Non-current
Borrowings and related swaps (1,455) (897) -
Lease liabilities (31) (40) -
Trade and other receivables 57 - -
Other payables (2) (2) -
Current
Amounts receivable under precious metal
sale and repurchase agreements 222 114 -
Amounts payable under precious metal sale
and repurchase agreements (838) (793) -
Cash and cash equivalents - cash and deposits 129 254 -
Cash and cash equivalents - bank overdrafts (13) (37) -
Borrowings and related swaps (155) (265) -
Lease liabilities (9) (10) -
Trade and other receivables 1,075 972 -
Trade and other payables (1,478) (1,497) -
(1) Investments at fair value through other comprehensive income
are quoted bonds purchased to fund pension deficits (GBP36 million)
and an investment held at fair value through other comprehensive
income (GBP13 million).
(2) Includes forward foreign exchange contracts, forward precious
metal price contracts and currency swaps.
(3) 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.
(4) Other receivables with cash flows that do not represent solely
the payment of principal and interest.
The fair values are calculated using level 2 inputs by
discounting future cash flows to net present values using
appropriate market interest rates prevailing at the year end.
The fair value of financial instruments, excluding accrued
interest, is approximately equal to book value except for:
2023 2022
Carrying Fair Carrying Fair
amount value amount value
GBPm GBPm GBPm GBPm
US Dollar Bonds 2023, 2025, 2027, 2028,
2029 and 2030 (648) (618) (688) (662)
Euro Bonds 2023, 2025, 2028, 2030 and
2032 (368) (340) (176) (179)
Sterling Bonds 2024, 2025 and 2029 (145) (137) (110) (107)
KfW US Dollar Loan 2024 (40) (39) (38) (36)
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
16 Precious metal leases
The group leases precious metals to fund temporary peaks in
metal requirements provided market conditions allow. These leases
are from banks for specified periods (less than 12 months) and the
group pays a fee which is expensed on a straight-line basis over
the lease term in finance costs. The group holds sufficient
precious metal inventories to meet all the obligations under these
lease arrangements as they fall due. At 31(st) March 2023, precious
metal leases were GBP138 million at closing prices (31(st) March
2022: GBP140 million).
17 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(1) . 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.
Following the sale of its Health business in May 2022, the group
has been engaged in correspondence with the purchaser of the Health
business, Veranova Bidco LP regarding certain warranties in the
sale and purchase agreement (the "SPA") dated 16(th) December 2021.
The purchaser has issued a claim against the group entities in
connection with: i) certain alleged representations said to have
been made during the course of the negotiation of the SPA; and, ii)
certain warranties given in the SPA at the time of signing. Having
reviewed the claim with its advisers, the group is of the opinion
that it has a defensible position in respect of these allegations
and if required, it will vigorously defend its position. The
outcome of any legal proceedings relating to this matter is not
certain, nor is the group able to make a reliable estimate of the
possible financial impact at this stage, if any.
(1) A previously disclosed contingent liability relating to
failures in certain engine systems for which the group supplied a
particular coated substrate as a component for that customer's
emissions after-treatment systems was settled on mutually
acceptable terms with no admission of fault, see note 4.
18 Transactions with related parties
There have been no material changes in total compensation for
key management personnel during the year.
During the year the group recharged transition related costs of
GBP8 million (2022: GBPnil) to related parties. The amounts owed by
related parties were GBP3 million at 31(st) March 2023 (31(st)
March 2022: GBPnil).
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
19 Non-GAAP measures
The group uses various measures to manage its business which are
not defined by generally accepted accounting principles (GAAP). The
group's management believes these measures provide valuable
additional information to users of the accounts in understanding
the group's performance. Certain of these measures are financial
Key Performance Indicators which measure progress against our
strategy.
All non-GAAP measures are on a continuing operations basis.
Definitions
-Measure Definition Purpose
Sales(1) Revenue excluding sales Provides a better measure of
of precious metals to customers the growth of the group as revenue
and the precious metal content can be heavily distorted by
of products sold to customers. 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 profit excluding Provides a measure of operating
operating non-underlying items. profitability that is comparable
profit(2) over time.
Underlying Underlying operating profit Provides a measure of how we
operating divided by sales. convert our sales into underlying
profit margin(1, operating profit and the efficiency
2) of our business.
Underlying Profit before tax excluding Provides a measure of profitability
profit before non-underlying items. that is comparable over time.
tax(2)
Underlying Profit for the year excluding Provides a measure of profitability
profit for non-underlying items and that is comparable over time.
the year(2) related tax effects.
Underlying Underlying profit for the Our principal measure used to
earnings per year divided by the weighted assess the overall profitability
share(1, 2) average number of shares of the group.
in issue.
Return on Annualised underlying operating Provides a measure of the group's
invested capital profit divided by the 12 efficiency in allocating the
(ROIC)(1) month average capital employed capital under its control to
(net debt plus equity), profitable investments. The
excluding average post tax group has a long-term target
pension net assets. of a return on invested capital
of 20% to ensure focus on efficient
use of the group's capital.
Average working Monthly average of non-precious Provides a measure of efficiency
capital days metal related inventories, in the business with lower days
(excluding trade and other receivables driving higher returns and a
precious metals)(1) and trade and other payables healthier liquidity position
(including any classified for the group.
as held for sale) divided
by sales for the last three
months multiplied by 90
days.
Free cash Net cash flow from operating Provides a measure of the cash
flow activities after net interest the group generates through
paid, net purchases of non-current its operations, less capital
assets and investments, expenditure.
proceeds from disposal of
businesses, dividends received
from joint ventures and
associates and the principal
element of lease payments.
Net debt (including Net debt, including post Provides a measure of the group's
post tax pension tax pension deficits and ability to repay its debt. The
deficits) quoted bonds purchased to group has a long-term target
to underlying fund the UK pension (excluded of net debt (including post
EBITDA when the UK pension plan tax pension deficits) to underlying
is in surplus) divided by EBITDA of between 1.5 and 2.0
underlying EBITDA for the times, although in any given
same period. year it may fall outside this
range depending on future plans.
(1) Key Performance Indicator
(2) Underlying profit measures are before profit or loss on
disposal of businesses, gains or loss on significant legal
proceedings, together with associated legal costs, amortisation of
acquired intangibles, major impairment and restructuring charges,
share of profits or losses from non-strategic equity investments
and, where relevant, related tax effects. These items have been
excluded by management as they are not deemed to be relevant to an
understanding of the underlying performance of the business.
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
19 Non-GAAP measures (continued)
Reconciliations to GAAP measures
Sales
2023 2022
GBPm GBPm
Revenue (note 3) 14,933 16,025
Less: sales of precious metals to customers
(note 3) (10,732) (12,247)
Sales 4,201 3,778
Underlying profit measures
Year ended 31(st) March
2023
Profit Profit
Operating before for the
profit tax Tax expense year
GBPm GBPm GBPm GBPm
Underlying 465 404 (78) 326
Profit on disposal of businesses 12 12 (1) 11
Amortisation of acquired intangibles (5) (5) 1 (4)
Gains and losses on significant legal
proceedings (25) (25) 5 (20)
Major impairment and restructuring
charges (41) (41) (7) (48)
Share of losses of associates - (1) - (1)
Reported 406 344 (80) 264
Year ended 31(st) March
2022
Profit Profit
Operating before for the
profit tax Tax expense year
GBPm GBPm GBPm GBPm
Underlying 553 493 (86) 407
Profit on disposal of businesses 106 106 (4) 102
Amortisation of acquired intangibles (6) (6) 1 (5)
Gains and losses on significant legal
proceedings 42 42 (6) 36
Major impairment and restructuring
charges (440) (440) 16 (424)
Reported 255 195 (79) 116
Underlying earnings per share
2023 2022
Underlying profit for the year (GBP
million) 326 407
Weighted average number of shares in
issue (millions) 183.0 191.6
Underlying earnings per
share (pence) 178.6 213.2
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
19 Non-GAAP measures (continued)
Return on invested capital (ROIC)
2023 2022
GBPm GBPm
Underlying operating profit 465 553
Average net debt 1,267 877
Average equity 2,524 2,467
Average capital employed 3,791 3,344
Less: Average pension net assets (312) (221)
Less: Average related deferred taxation 84 48
Average capital employed (excluding post
tax pension net assets) 3,563 3,171
ROIC (excluding post tax pension net assets) 13.1% 17.4%
ROIC 12.3% 16.5%
Average working capital days (excluding precious
metals)
2023 2022
GBPm GBPm
Inventories 1,702 1,549
Trade and other receivables 1,882 1,796
Trade and other payables (2,497) (2,563)
1,087 782
Working capital balances classified as held for
sale 22 -
Total working capital 1,109 782
Less: Precious metal working capital (622) (562)
Working capital (excluding precious metals) 487 220
Average working capital days (excluding
precious metals) 42 36
Free cash flow from continuing operations
2023 2022
GBPm GBPm
Net cash inflow from operating activities 291 605
Interest received 28 32
Interest paid (94) (111)
Purchases of property, plant and equipment (253) (358)
Purchases of intangible assets (63) (95)
Purchases of investments held at fair value through
other comprehensive income (17) -
Government grant income 7 -
Net proceeds from sale of businesses 187 160
Proceeds from sale of non-current assets 8 1
Proceeds from sale of investment in joint 2 -
ventures
Principal element of lease payments (14) (14)
Less: Free cash (inflow) / outflow from discontinued
operations (8) 1
Free cash flow 74 221
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
19 Non-GAAP measures (continued)
Net debt (including post tax pension deficits)
to underlying EBITDA
2023 2022
GBPm GBPm
Cash and deposits 129 254
Money market funds 521 137
Bank overdrafts (13) (37)
Bank overdrafts transferred to liabilities
classified as held for sale - (8)
Cash and cash equivalents 637 346
Less: Cash and cash equivalents - bank overdrafts
from discontinued operations - 8
--------
Cash and cash equivalents from continuing
operations 637 354
Interest rate swaps - non-current
assets 20 12
Interest rate swaps - non-current
liabilities (15) (2)
Borrowings and related swaps - current (155) (265)
Borrowings and related swaps - non-current (1,460) (899)
Lease liabilities - current (9) (10)
Lease liabilities - non-current (31) (40)
Lease liabilities - current - transferred to liabilities
classified as held for sale (1) (2)
Lease liabilities - non-current - transferred to
liabilities classified as held for sale (9) (7)
Less: Lease liabilities relating to discontinued
operations - 3
Net debt (1,023) (856)
Increase / (decrease) in cash and
cash equivalents 287 (205)
Less: (Increase) / decrease in cash and cash equivalents
from discontinued operations (8) 3
Less: (Increase) / decrease in borrowings (391) 131
Less: Principal element of lease payments 14 14
Less: Principal element of lease payments from
discontinued operations - (1)
Increase in net debt resulting from cash flows (98) (58)
New leases, remeasurements and modifications (13) (9)
Less: New leases, remeasurements and modifications
from discontinued operations - 3
Exchange differences on net
debt (53) (24)
Other non-cash movements (3) 2
Movement in net debt (167) (86)
Net debt at beginning of year (856) (770)
Net debt at end of year (1,023) (856)
Net debt (1,023) (856)
Add: Pension deficits (21) (29)
Add: Related deferred tax 2 4
Net debt (including post tax pension
deficits) (1,042) (881)
Underlying operating profit 465 553
Add back: Depreciation and amortisation excluding
amortisation of acquired intangibles 182 171
Underlying EBITDA 647 724
Net debt (including post tax pension deficits)
to underlying EBITDA 1.6 1.2
At 31(st) March 2023 cash and cash equivalents includes GBP15
million (31(st) March 2022: GBP111 million) of restricted amounts
relating to cash held in Russia. The prior year balance relates
to restricted amounts in South Africa.
2023 2022
GBPm GBPm
Underlying EBITDA 647 724
Depreciation and amortisation (187) (177)
Gains and losses on significant legal proceedings (25) 42
Major impairment and restructuring
charges (41) (440)
Profit on disposal of businesses 12 106
Finance costs (110) (101)
Investment income 49 41
Share of losses of associates (1) -
Income tax expense (80) (79)
Profit for the year from continuing
operations 264 116
Notes on the Preliminary Accounts
for the year ended 31(st) March 2023
Events after the balance sheet
20 date
On 3(rd) May 2023, the group agreed to sell its Diagnostic
Services business to Sullivan Street Partners and Souter
Investments.
Financial Calendar
2023
8(th) June
Ex dividend date
9(th) June
Final dividend record date
20(th) July
Annual General Meeting (AGM)
1(st) August
Payment of final dividend subject to the approval of shareholders at
the AGM
22(nd) November
Announcement of the results for the six months ending 30(th) September
2023
Cautionary Statement
This announcement contains forward-looking statements that are subject
to risk factors associated with, amongst other things, the economic
and business circumstances occurring from time to time in the countries
and sectors in which Johnson Matthey operates. It is believed that
the expectations reflected in this announcement are reasonable but
they may be affected by a wide range of variables which could cause
actual results to differ materially from those currently anticipated.
Johnson Matthey Plc
Registered Office: 5(th) Floor, 25 Farringdon Street, London EC4A 4AB
Telephone: +44 (0) 20 7269 8000
Fax: +44 (0) 20 7269 8433
Internet address: www.matthey.com
E-mail: jmpr@matthey.com
Registered in England - Number 00033774
LEI code: 2138001AVBSD1HSC6Z10
Registrars
Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA
Telephone: +44(0)371 384 2344*
Internet address: www.shareview.co.uk
* Lines are open 8.30am to 5.30pm Monday to Friday excluding public
holidays in England and Wales
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END
FR NKQBDCBKDFPB
(END) Dow Jones Newswires
May 25, 2023 02:00 ET (06:00 GMT)
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