REG - Johnson Matthey PLC - Final Results <Origin Href="QuoteRef">JMAT.L</Origin> - Part 2
01/06/2017 07:06
- Part 2: For the preceding part double click ID:nRSA7793Ga
0.2 -
Profit before tax 461.6 386.3
Income tax expense (77.0) (60.6)
Profit for the year 384.6 325.7
Attributable to:
Owners of the parent company 386.0 333.1
Non-controlling interests (1.4) (7.4)
384.6 325.7
pence pence
Earnings per ordinary share attributable to the equity holders of the parent company
Basic 201.2 166.2
Diluted 200.8 165.9
Consolidated Statement of Total Comprehensive Income
for the year ended 31st March 2017
2017 2016
Notes £ million £ million
Profit for the year 384.6 325.7
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefit assets and liabilities 10 (18.4) 180.1
Tax on above items taken directly to or transferred from equity 2.0 (39.1)
(16.4) 141.0
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 163.9 23.8
Share of currency translation differences of joint venture and associate 1.3 0.3
Cash flow hedges (1.4) 5.6
Fair value losses on net investment hedges (21.0) (1.2)
Fair value gains / (losses) on available-for-sale investments 7.0 (5.5)
Tax on above items taken directly to or transferred from equity (0.4) (4.7)
149.4 18.3
Other comprehensive income for the year 133.0 159.3
Total comprehensive income for the year 517.6 485.0
Attributable to:
Owners of the parent company 518.5 492.8
Non-controlling interests (0.9) (7.8)
517.6 485.0
Consolidated Balance Sheet
as at 31st March 2017
2017 2016
Notes £ million £ million
Assets
Non-current assets
Property, plant and equipment 1,235.1 1,086.3
Goodwill 607.1 570.0
Other intangible assets 288.3 225.0
Deferred income tax assets 25.6 22.2
Investments and other receivables 107.3 92.3
Interest rate swaps 7 17.4 11.1
Post-employment benefit net assets 10 116.6 109.1
Total non-current assets 2,397.4 2,116.0
Current assets
Inventories 772.3 653.7
Current income tax assets 20.4 21.9
Trade and other receivables 1,139.4 948.0
Cash and cash equivalents ─ cash and deposits 7 330.4 304.5
Interest rate swaps 7 - 4.6
Other financial assets 7.5 8.5
Total current assets 2,270.0 1,941.2
Total assets 4,667.4 4,057.2
Liabilities
Current liabilities
Trade and other payables (968.3) (812.3)
Current income tax liabilities (133.5) (115.0)
Cash and cash equivalents ─ bank overdrafts 7 (31.8) (20.7)
Other borrowings, finance leases and related swaps 7 (20.2) (138.5)
Other financial liabilities (14.9) (17.9)
Provisions (21.0) (41.3)
Total current liabilities (1,189.7) (1,145.7)
Non-current liabilities
Borrowings, finance leases and related swaps 7 (1,011.5) (835.9)
Deferred income tax liabilities (113.0) (99.4)
Employee benefit obligations 10 (111.8) (115.1)
Provisions (18.4) (20.6)
Other payables (5.9) (5.9)
Total non-current liabilities (1,260.6) (1,076.9)
Total liabilities (2,450.3) (2,222.6)
Net assets 2,217.1 1,834.6
Equity
Share capital 220.7 220.7
Share premium account 148.3 148.3
Shares held in employee share ownership trust (ESOT) (55.5) (54.9)
Other reserves 146.6 (2.3)
Retained earnings 1,776.5 1,541.3
Total equity attributable to owners of the parent company 2,236.6 1,853.1
Non-controlling interests (19.5) (18.5)
Total equity 2,217.1 1,834.6
Consolidated Cash Flow Statement
for the year ended 31st March 2017
2017 2016
Notes £ million £ million
Cash flows from operating activities
Profit before tax 461.6 386.3
Adjustments for:
Share of profit of joint venture and associate (0.2) -
Profit on sale of continuing activities - (130.0)
Depreciation, amortisation, impairment losses and loss on sale of non-current assets 176.6 252.0
Share-based payments 10.6 (2.8)
(Increase) / decrease in inventories (36.7) 211.6
(Increase) / decrease in receivables (111.1) 153.2
Increase in payables 120.7 47.1
Decrease in provisions (27.5) (0.7)
Contributions in excess of employee benefit obligations charge (40.8) (21.0)
Changes in fair value of financial instruments (3.2) 4.0
Net finance costs 31.8 32.6
Income tax paid (58.9) (65.8)
Net cash inflow from operating activities 522.9 866.5
Cash flows from investing activities
Dividends received from joint venture - 0.3
Interest received 4.8 5.2
Purchases of non-current assets and investments (259.5) (253.5)
Proceeds from sale of non-current assets and investments 3.9 4.0
Purchase of interest in associate - (16.2)
Purchases of businesses (19.7) (16.6)
Net proceeds from sale of businesses - 244.6
Net cash outflow from investing activities (270.5) (32.2)
Cash flows from financing activities
Net cost of ESOT transactions in own shares (6.1) (3.1)
Proceeds from additional borrowings 80.8 134.4
Repayment of borrowings and finance leases (133.2) (211.6)
Dividends paid to equity holders of the parent company 6 (139.0) (444.6)
Settlement of currency swaps for net investment hedging (7.3) (4.8)
Interest paid (42.1) (33.9)
Net cash outflow from financing activities (246.9) (563.6)
Increase in cash and cash equivalents in the year 5.5 270.7
Exchange differences on cash and cash equivalents 9.3 9.2
Cash and cash equivalents at beginning of year 283.8 3.9
Cash and cash equivalents at end of year 7 298.6 283.8
Reconciliation to net debt
Increase in cash and cash equivalents in the year 5.5 270.7
Decrease in borrowings and finance leases 52.4 77.2
Change in net debt resulting from cash flows 57.9 347.9
Borrowings acquired with subsidiaries (4.8) -
New finance leases (0.1) -
Exchange differences on net debt (93.8) (28.4)
Movement in net debt in year (40.8) 319.5
Net debt at beginning of year (674.9) (994.4)
Net debt at end of year 7 (715.7) (674.9)
Consolidated Statement of Changes in Equity
for the year ended 31st March 2017
Share Shares Non-
Share premium held in Other Retained controlling Total
capital account ESOT reserves earnings interests equity
£ million £ million £ million £ million £ million £ million £ million
At 1st April 2015 220.7 148.3 (54.7) (21.0) 1,517.3 (10.5) 1,800.1
Total comprehensive income - - - 18.7 474.1 (7.8) 485.0
Dividends paid (note 6) - - - - (444.6) (0.2) (444.8)
Purchase of shares by ESOT - - (3.3) - - - (3.3)
Share-based payments - - - - 4.3 - 4.3
Cost of shares transferred to employees - - 3.1 - (10.1) - (7.0)
Tax on share-based payments - - - - 0.3 - 0.3
At 31st March 2016 220.7 148.3 (54.9) (2.3) 1,541.3 (18.5) 1,834.6
Total comprehensive income - - - 148.9 369.6 (0.9) 517.6
Dividends paid (note 6) - - - - (139.0) (0.1) (139.1)
Purchase of shares by ESOT - - (6.1) - - - (6.1)
Share-based payments - - - - 17.1 - 17.1
Cost of shares transferred to employees - - 5.5 - (11.9) - (6.4)
Tax on share-based payments - - - - (0.6) - (0.6)
At 31st March 2017 220.7 148.3 (55.5) 146.6 1,776.5 (19.5) 2,217.1
Notes on the Preliminary Accounts
for the year ended 31st March 2017
1 Basis of preparation
The financial information contained in this release does not constitute the company's statutory accounts for the years
ended 31st March 2017 or 31st March 2016 within the meaning of section 435 of the Companies Act 2006, but is derived from
those accounts. The accounts are prepared in accordance with International Financial Reporting Standards (IFRS) and
interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC) or the Standing
Interpretations Committee (SIC) as adopted by the European Union. For Johnson Matthey, there are no differences between
IFRS as adopted by the European Union and full IFRS as published by the International Accounting Standards Board and so the
accounts comply with IFRS. The accounting policies applied are set out in the Annual Report and Accounts for the year ended
31st March 2016. None of the new standards or amendments to standards and interpretations which the group has adopted
during the year has had a material effect on the reported results or financial position of the group. Statutory accounts
for 2016 have been delivered to the Registrar of Companies and those for 2017 will be delivered following the company's
Annual General Meeting. The auditors have reported on both of these sets of accounts. Their reports were unqualified, did
not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their
report and did not contain any statement under sections 498(2) or 498(3) of the Companies Act 2006. The accounts for the
year ended 31st March 2017 were approved by the Board of Directors on 31st May 2017.
2 Amortisation of acquired intangibles
The amortisation of intangible assets which arise on the acquisition of businesses, together with any subsequent impairment
of these intangible assets, is shown separately on the face of the income statement. It is excluded from underlying
operating profit.
3 Segmental information by business segment
Emission Precious
Control Process Metal Fine New
Technologies Technologies Products Chemicals Businesses Eliminations Total
£ million £ million £ million £ million £ million £ million £ million
Year ended 31st March 2017
Revenue from external customers 3,779.5 537.8 7,206.1 308.9 198.7 - 12,031.0
Inter-segment revenue 175.0 63.7 1,688.0 6.0 2.5 (1,935.2) -
Total revenue 3,954.5 601.5 8,894.1 314.9 201.2 (1,935.2) 12,031.0
External sales excluding precious metals 2,223.1 523.4 363.4 278.7 188.9 - 3,577.5
Inter-segment sales 0.4 63.4 39.7 4.8 2.4 (110.7) -
Sales excluding precious metals 2,223.5 586.8 403.1 283.5 191.3 (110.7) 3,577.5
Segment underlying operating profit / (loss) 318.2 90.4 86.4 64.5 (14.4) - 545.1
Unallocated corporate expenses (31.8)
Underlying operating profit 513.3
Amortisation of acquired intangibles (note 2) (20.1)
Operating profit 493.2
Net finance costs (31.8)
Share of profit of joint venture 0.2
Profit before tax 461.6
Segment net assets 1,090.2 802.4 347.9 554.1 162.4 - 2,957.0
Year ended 31st March 2016
Revenue from external customers 3,262.8 519.4 6,454.1 318.5 159.1 - 10,713.9
Inter-segment revenue 221.0 31.3 1,213.3 6.4 1.6 (1,473.6) -
Total revenue 3,483.8 550.7 7,667.4 324.9 160.7 (1,473.6) 10,713.9
External sales excluding precious metals 1,912.7 510.0 307.9 291.4 155.0 - 3,177.0
Inter-segment sales 0.4 31.2 34.6 4.8 1.5 (72.5) -
Sales excluding precious metals 1,913.1 541.2 342.5 296.2 156.5 (72.5) 3,177.0
Segment underlying operating profit / (loss) 272.2 73.6 66.3 82.3 (17.9) - 476.5
Unallocated corporate expenses (25.7)
Underlying operating profit 450.8
Profit on sale or liquidation of businesses 130.0
Amortisation of acquired intangibles (note 2) (20.9)
Major impairment and restructuring charges (141.0)
Operating profit 418.9
Net finance costs (32.6)
Profit before tax 386.3
Segment net assets 903.2 756.2 313.5 457.3 100.8 - 2,531.0
4 Effect of exchange rate changes on translation of foreign subsidiaries' sales excluding precious metals and operating profit
Average exchange rates used for translation of results of foreign operations 2017 2016
US dollar / £ 1.308 1.510
Euro / £ 1.191 1.367
Chinese renminbi / £ 8.79 9.60
The main impact of exchange rate movements on the group's sales and operating profit comes from the translation of foreign
subsidiaries' results into sterling.
Year ended Year ended 31st March 2016 Change at
31st March At last At this this year's
2017 year's rates year's rates rates
£ million £ million £ million %
Sales excluding precious metals
Emission Control Technologies 2,223.5 1,913.1 2,139.1 +4
Process Technologies 586.8 541.2 588.6 -
Precious Metal Products 403.1 342.5 380.5 +6
Fine Chemicals 283.5 296.2 325.6 -13
New Businesses 191.3 156.5 173.8 +10
Elimination of inter-segment sales (110.7) (72.5) (79.9)
Sales excluding precious metals 3,577.5 3,177.0 3,527.7 +1
Less Research Chemicals - (38.3) (43.9)
Sales excluding precious metals for continuing businesses 3,577.5 3,138.7 3,483.8 +3
Underlying operating profit
Emission Control Technologies 318.2 272.2 313.2 +2
Process Technologies 90.4 73.6 83.0 +9
Precious Metal Products 86.4 66.3 74.1 +17
Fine Chemicals 64.5 82.3 91.6 -30
New Businesses (14.4) (17.9) (16.3) +12
Unallocated corporate expenses (31.8) (25.7) (25.7)
Underlying operating profit 513.3 450.8 519.9 -1
Less Research Chemicals - (7.5) (8.3)
Underlying operating profit for continuing businesses 513.3 443.3 511.6 -
Fine Chemicals' Research Chemicals business was sold on 30th September 2015.
5 Underlying profit reconciliation
2017 2016
£ million £ million
Underlying operating profit, continuing businesses at constant rates (note 4) 513.3 511.6
Underlying operating profit of Research Chemicals (note 4) - 8.3
Translation exchange effect to this year's rates - (69.1)
Underlying operating profit (note 4) 513.3 450.8
Profit on sale or liquidation of businesses - 130.0
Amortisation of acquired intangibles (note 2) (20.1) (20.9)
Major impairment and restructuring charges - (141.0)
Operating profit 493.2 418.9
Underlying profit before tax 481.7 418.2
Profit on sale or liquidation of businesses - 130.0
Amortisation of acquired intangibles (note 2) (20.1) (20.9)
Major impairment and restructuring charges - (141.0)
Profit before tax 461.6 386.3
Tax on underlying profit before tax (82.0) (67.4)
Tax on profit on sale or liquidation of businesses - (15.5)
Tax on amortisation of acquired intangibles (note 2) 5.0 4.9
Tax on major impairment and restructuring charges - 17.4
Income tax expense (77.0) (60.6)
Underlying profit for the period 401.1 358.2
Profit on sale or liquidation of businesses - 130.0
Amortisation of acquired intangibles (note 2) (20.1) (20.9)
Major impairment and restructuring charges - (141.0)
Tax thereon 5.0 6.8
Profit for the period attributable to owners of the parent company 386.0 333.1
million million
Weighted average number of shares in issue 191.9 200.5
pence pence
Underlying earnings per share 209.1 178.7
6 Dividends
A final dividend of 54.5 pence per ordinary share has been proposed by the board which will be paid on 1st August 2017 to
shareholders on the register at the close of business on 9th June 2017, subject to shareholders' approval. The estimated
amount to be paid is £104.5 million and has not been recognised in these accounts.
2017 2016
£ million £ million
2014/15 final ordinary dividend paid − 49.5 pence per share - 100.5
Special dividend paid − 150.0 pence per share - 304.5
2015/16 interim ordinary dividend paid − 19.5 pence per share - 39.6
2015/16 final ordinary dividend paid − 52.0 pence per share 99.7 -
2016/17 interim ordinary dividend paid − 20.5 pence per share 39.3 -
Total dividends 139.0 444.6
7 Net debt
2017 2016
£ million £ million
Cash and deposits 330.4 304.5
Bank overdrafts (31.8) (20.7)
Cash and cash equivalents 298.6 283.8
Other current borrowings, finance leases and related swaps (20.2) (138.5)
Current interest rate swaps - 4.6
Non-current borrowings, finance leases and related swaps (1,011.5) (835.9)
Non-current interest rate swaps 17.4 11.1
Net debt (715.7) (674.9)
8 Precious metal operating leases
The group leases, rather than purchases, precious metals to fund temporary peaks in metal requirements provided market
conditions allow. These leases are from banks for specified periods (typically a few months) and for which the group pays a
fee. These arrangements are classified as operating leases. The group holds sufficient precious metal inventories to meet
all the obligations under these lease arrangements as they fall due. At 31st March 2017 precious metal leases were £77.0
million (2016: £70.3 million).
9 Transactions with related parties
There were no material changes in related party relationships in the year ended 31st March 2017 and no other related party
transactions have taken place which have materially affected the financial position or performance of the group during the
year.
10 Post-employment benefits
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.
Movements in the net post-employment benefit assets and liabilities, including reimbursement rights, were:
UK post- US post-
retirement retirement
UK medical US medical
pension benefits pensions benefits Other Total
£ million £ million £ million £ million £ million £ million
At 1st April 2016 100.8 (10.5) (21.4) (41.9) (29.6) (2.6)
Current service cost - in operating profit (28.5) - (10.0) (0.8) (2.2) (41.5)
Current service cost - capitalised (1.0) - (0.1) - - (1.1)
Net interest 3.6 (0.4) (1.1) (1.5) (0.6) -
Past service cost (2.5) - - 16.8 - 14.3
Remeasurements (22.2) 0.9 6.1 (2.0) (1.2) (18.4)
Company contributions 56.2 0.4 9.6 1.1 2.4 69.7
Exchange adjustments - - (3.2) (5.6) (2.4) (11.2)
At 31st March 2017 106.4 (9.6) (20.1) (33.9) (33.6) 9.2
These are included in the balance sheet as:
2017 2017 2017 2016 2016 2016
Post- Post-
employment Employee employment Employee
benefit benefit benefit benefit
net assets obligations Total net assets obligations Total
£ million £ million £ million £ million £ million £ million
UK pension plan 106.4 - 106.4 100.8 - 100.8
UK post-retirement medical benefits plan - (9.6) (9.6) - (10.5) (10.5)
US pension plans - (20.1) (20.1) - (21.4) (21.4)
US post-retirement medical benefits plan 8.3 (42.2) (33.9) 6.7 (48.6) (41.9)
Other plans 1.9 (35.5) (33.6) 1.6 (31.2) (29.6)
Total post-employment plans 116.6 (107.4) 9.2 109.1 (111.7) (2.6)
Other long term employee benefits (4.4) (3.4)
Total long term employee benefit obligations (111.8) (115.1)
Definition and reconciliation of non-GAAP measures to GAAP measures
for the year ended 31st March 2017
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.
Sales excluding precious metals (sales)
The group believes that sales excluding precious metals is a better measure of the growth of the group than revenue. Total
revenue can be heavily distorted by year on year fluctuations in the market prices of precious metals. In addition, in many
cases, the value of precious metals is passed directly on to our customers.
Underlying profit and earnings
These are the equivalent GAAP measures adjusted to exclude amortisation of acquired intangibles (note 2), major impairment
and restructuring charges, profit or loss on disposal of businesses, significant tax rate changes and, where relevant,
related tax effects. The group believes that these measures provide a better guide to the underlying performance of the
group. These are reconciled in note 5.
Working capital days
Non-precious metal related inventories, trade and other receivables and trade and other payables (including any classified
as held for sale) divided by sales excluding precious metals for the last three months multiplied by 90 days.
Free cash flow
Net cash flow from operating activities, after net interest paid, net purchases of non-current assets and investments and
dividends received from joint venture.
Capex
Additions of property, plant and equipment plus additions of other intangible assets.
Capex to depreciation ratio
Capex divided by depreciation. Depreciation is the depreciation charge of property, plant and equipment plus the
amortisation charge of other intangible assets excluding amortisation of acquired intangibles (note 2).
Return on invested capital (ROIC)
Annualised underlying operating profit divided by the monthly average of equity plus net debt for the same period.
2017 2016
£ million £ million
Average net debt 878.5 691.0
Average equity 1,937.1 1,909.2
Average capital employed 2,815.6 2,600.2
Annualised underlying operating profit 513.3 450.8
ROIC 18.2% 17.3%
Inventories 772.3 653.7
Trade and other receivables 1,139.4 948.0
Trade and other payables (968.3) (812.3)
Total working capital 943.4 789.4
Less precious metal working capital (335.5) (256.5)
Working capital (excluding precious metals) 607.9 532.9
2017 2016
£ million £ million
Earnings before interest, tax, depreciation and amortisation (EBITDA) 665.0 590.1
Depreciation and amortisation (171.8) (157.6)
Impairment of acquired intangibles
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