REG - Johnson Matthey PLC - Half-year Report <Origin Href="QuoteRef">JMAT.L</Origin> - Part 2
17/11/2016 07:31
- Part 2: For the preceding part double click ID:nRSQ3917Pa
30.9.15 31.3.16
Notes £ million £ million £ million
Revenue 2 5,624.9 5,755.1 10,713.9
Cost of sales (5,228.9) (5,351.6) (9,947.1)
Gross profit 396.0 403.5 766.8
Operating expenses (159.9) (178.5) (316.0)
Profit on sale or liquidation of businesses - 130.9 130.0
Amortisation of acquired intangibles 5 (9.6) (9.0) (20.9)
Major impairment and restructuring charges - - (141.0)
Operating profit 226.5 346.9 418.9
Finance costs (18.9) (20.3) (40.2)
Finance income 2.5 3.5 7.6
Share of (loss) / profit of joint venture and associate (0.1) 0.1 -
Profit before tax 210.0 330.2 386.3
Income tax expense (32.9) (50.9) (60.6)
Profit for the period 177.1 279.3 325.7
Attributable to:
Owners of the parent company 177.7 280.0 333.1
Non-controlling interests (0.6) (0.7) (7.4)
177.1 279.3 325.7
pence pence pence
Earnings per ordinary share attributable to the equity holders of the parent company
Basic 92.7 137.9 166.2
Diluted 92.6 137.8 165.9
Condensed Consolidated Statement of Total Comprehensive Income
for the six months ended 30th September 2016
Six months ended Year ended
30.9.16 30.9.15 31.3.16
Notes £ million £ million £ million
Profit for the period 177.1 279.3 325.7
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefits assets and liabilities 10 (243.0) 74.0 180.1
Tax on above items taken directly to or transferred from equity 38.0 (19.0) (39.1)
(205.0) 55.0 141.0
Items that may be reclassified subsequently to profit or loss:
Currency translation differences 136.1 (39.1) 24.1
Cash flow hedges (7.6) 6.7 5.6
Fair value (loss) / gain on net investment hedges (19.7) 4.7 (1.2)
Fair value gain / (loss) on available-for-sale investments 7.0 (3.9) (5.5)
Tax on above items taken directly to or transferred from equity 1.2 (3.0) (4.7)
117.0 (34.6) 18.3
Other comprehensive (expense) / income for the period (88.0) 20.4 159.3
Total comprehensive income for the period 89.1 299.7 485.0
Attributable to:
Owners of the parent company 89.7 300.4 492.8
Non-controlling interests (0.6) (0.7) (7.8)
89.1 299.7 485.0
Condensed Consolidated Balance Sheet
as at 30th September 2016
30.9.16 30.9.15 31.3.16
Notes £ million £ million £ million
Assets
Non-current assets
Property, plant and equipment 1,153.4 1,075.9 1,086.3
Goodwill 600.5 553.6 570.0
Other intangible assets 279.0 202.7 225.0
Deferred income tax assets 47.7 22.6 22.2
Investments and other receivables 106.9 94.1 92.3
Interest rate swaps 7 17.3 17.2 11.1
Post-employment benefits net assets 10 10.0 6.2 109.1
Total non-current assets 2,214.8 1,972.3 2,116.0
Current assets
Inventories 855.0 639.4 653.7
Current income tax assets 47.4 26.3 21.9
Trade and other receivables 1,039.3 967.4 948.0
Cash and cash equivalents ─ cash and deposits 7 171.2 481.2 304.5
Interest rate swaps 7 2.5 - 4.6
Other financial assets 10.7 13.6 8.5
Total current assets 2,126.1 2,127.9 1,941.2
Total assets 4,340.9 4,100.2 4,057.2
Liabilities
Current liabilities
Trade and other payables (868.2) (761.9) (812.3)
Current income tax liabilities (144.5) (113.7) (115.0)
Cash and cash equivalents ─ bank overdrafts 7 (19.0) (17.3) (20.7)
Other borrowings, finance leases and related swaps 7 (150.5) (29.3) (138.5)
Other financial liabilities (24.8) (10.9) (17.9)
Provisions (28.5) (23.6) (41.3)
Total current liabilities (1,235.5) (956.7) (1,145.7)
Non-current liabilities
Borrowings, finance leases and related swaps 7 (918.3) (893.0) (835.9)
Deferred income tax liabilities (93.8) (96.9) (99.4)
Employee benefits obligations 10 (243.2) (125.3) (115.1)
Provisions (19.2) (26.0) (20.6)
Other payables (5.9) (5.8) (5.9)
Total non-current liabilities (1,280.4) (1,147.0) (1,076.9)
Total liabilities (2,515.9) (2,103.7) (2,222.6)
Net assets 1,825.0 1,996.5 1,834.6
Equity
Share capital 220.7 220.7 220.7
Share premium account 148.3 148.3 148.3
Shares held in employee share ownership trust (ESOT) (55.5) (54.9) (54.9)
Other reserves 114.7 (55.6) (2.3)
Retained earnings 1,416.0 1,749.3 1,541.3
Total equity attributable to owners of the parent company 1,844.2 2,007.8 1,853.1
Non-controlling interests (19.2) (11.3) (18.5)
Total equity 1,825.0 1,996.5 1,834.6
Condensed Consolidated Cash Flow Statement
for the six months ended 30th September 2016
Six months ended Year ended
30.9.16 30.9.15 31.3.16
Notes £ million £ million £ million
Cash flows from operating activities
Profit before tax 210.0 330.2 386.3
Adjustments for:
Share of profit of joint venture 0.1 (0.1) -
Profit on sale of continuing activities - (130.9) (130.0)
Depreciation, amortisation, impairment losses and (profit) / loss on
sale of non-current assets and investments 84.4 77.1 252.0
Share-based payments 7.1 1.2 (2.8)
Changes in working capital and provisions (158.6) 294.0 390.2
Changes in fair value of financial instruments (2.5) (7.6) 4.0
Net finance costs 16.4 16.8 32.6
Income tax paid (33.0) (35.5) (65.8)
Net cash inflow from operating activities 123.9 545.2 866.5
Cash flows from investing activities
Dividends received from joint venture - - 0.3
Interest received 1.5 2.2 5.2
Purchases of non-current assets and investments (108.1) (103.1) (253.5)
Proceeds from sale of non-current assets and investments 0.2 0.2 4.0
Purchase of interest in associate - (16.2) (16.2)
Purchases of businesses (19.5) (15.5) (16.6)
Net proceeds from sale of businesses - 251.1 244.6
Net cash (outflow) / inflow from investing activities (125.9) 118.7 (32.2)
Cash flows from financing activities
Net cost of ESOT transactions in own shares (6.0) (3.1) (3.1)
Repayment of borrowings and finance leases (5.8) (83.0) (77.2)
Dividends paid to owners of the parent company 6 (99.7) (100.5) (444.6)
Settlement of currency swaps for net investment hedging (6.2) (0.1) (4.8)
Interest paid (19.9) (17.3) (33.9)
Net cash outflow from financing activities (137.6) (204.0) (563.6)
(Decrease) / increase in cash and cash equivalents in period (139.6) 459.9 270.7
Exchange differences on cash and cash equivalents 8.0 0.1 9.2
Cash and cash equivalents at beginning of period 283.8 3.9 3.9
Cash and cash equivalents at end of period 7 152.2 463.9 283.8
Reconciliation to net debt
(Decrease) / increase in cash and cash equivalents in period (139.6) 459.9 270.7
Repayment of borrowings and finance leases 5.8 83.0 77.2
Change in net debt resulting from cash flows (133.8) 542.9 347.9
Borrowings acquired with subsidiaries (4.6) - -
Exchange differences on net debt (83.5) 10.3 (28.4)
Movement in net debt in period (221.9) 553.2 319.5
Net debt at beginning of period (674.9) (994.4) (994.4)
Net debt at end of period 7 (896.8) (441.2) (674.9)
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30th September 2016
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 for the period - - - (34.6) 335.0 (0.7) 299.7
Dividends paid (note 6) - - - - (100.5) (0.1) (100.6)
Purchase of shares by ESOT - - (3.2) - - - (3.2)
Share-based payments - - - - 5.0 - 5.0
Cost of shares transferred to employees - - 3.0 - (6.6) - (3.6)
Tax on share-based payments - - - - (0.9) - (0.9)
At 30th September 2015 220.7 148.3 (54.9) (55.6) 1,749.3 (11.3) 1,996.5
Total comprehensive income for the period - - - 53.3 139.1 (7.1) 185.3
Dividends paid (note 6) - - - - (344.1) (0.1) (344.2)
Purchase of shares by ESOT - - (0.1) - - - (0.1)
Share-based payments - - - - (0.7) - (0.7)
Cost of shares transferred to employees - - 0.1 - (3.5) - (3.4)
Tax on share-based payments - - - - 1.2 - 1.2
At 31st March 2016 220.7 148.3 (54.9) (2.3) 1,541.3 (18.5) 1,834.6
Total comprehensive income for the period - - - 117.0 (27.3) (0.6) 89.1
Dividends paid (note 6) - - - - (99.7) (0.1) (99.8)
Purchase of shares by ESOT - - (6.1) - - - (6.1)
Share-based payments - - - - 10.5 - 10.5
Cost of shares transferred to employees - - 5.5 - (8.8) - (3.3)
At 30th September 2016 220.7 148.3 (55.5) 114.7 1,416.0 (19.2) 1,825.0
Notes on the Accounts
for the six months ended 30th September 2016
1 Basis of preparation
The half-yearly accounts were approved by the Board of Directors on 16th November 2016, and are unaudited but have been
reviewed by the auditors. These condensed consolidated accounts do not constitute statutory accounts within the meaning of
section 435 of the Companies Act 2006, but have been prepared in accordance with International Accounting Standard (IAS) 34
─ 'Interim Financial Reporting' and the Disclosure and Transparency Rules of the UK's Financial Conduct Authority. The
accounting policies applied are set out in the Annual Report and Accounts for the year ended 31st March 2016. None of the
amendments to standards and interpretations which the group has adopted during the period has had a material effect on the
reported results or financial position of the group. Information in respect of the year ended 31st March 2016 is derived
from the company's statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor's
report on those statutory accounts was unqualified, did not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying its report and did not contain any statement under sections 498(2) or
498(3) of the Companies Act 2006.
2 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
Six months ended 30th September 2016
Revenue from external customers 1,763.7 240.1 3,386.0 145.4 89.7 - 5,624.9
Inter-segment revenue 85.6 31.1 764.1 2.8 0.9 (884.5) -
Total revenue 1,849.3 271.2 4,150.1 148.2 90.6 (884.5) 5,624.9
External sales excluding precious metals 1,053.9 233.7 170.5 130.8 87.1 - 1,676.0
Inter-segment sales 0.1 31.3 18.7 1.8 0.7 (52.6) -
Sales excluding precious metals 1,054.0 265.0 189.2 132.6 87.8 (52.6) 1,676.0
Segmental underlying operating profit / (loss) 151.9 39.3 40.9 26.9 (8.5) - 250.5
Unallocated corporate expenses (14.4)
Underlying operating profit (note 4) 236.1
Segmental net assets 1,015.4 804.5 447.7 522.9 158.4 - 2,948.9
Six months ended 30th September 2015
Revenue from external customers 1,656.4 283.1 3,574.1 168.3 73.2 - 5,755.1
Inter-segment revenue 113.9 5.9 644.0 4.2 0.7 (768.7) -
Total revenue 1,770.3 289.0 4,218.1 172.5 73.9 (768.7) 5,755.1
External sales excluding precious metals 938.7 277.3 157.7 155.0 71.4 - 1,600.1
Inter-segment sales 0.2 5.8 18.9 2.8 0.7 (28.4) -
Sales excluding precious metals 938.9 283.1 176.6 157.8 72.1 (28.4) 1,600.1
Segmental underlying operating profit / (loss) 136.0 35.9 36.1 40.6 (9.9) - 238.7
Unallocated corporate expenses (13.7)
Underlying operating profit 225.0
Segmental net assets 932.2 768.6 312.7 421.1 152.3 - 2,586.9
Sales excluding precious metals for the six months ended 30th September 2015 have been adjusted to include certain non pass
through precious metals.
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 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
Segmental 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
Segmental net assets 903.2 756.2 313.5 457.3 100.8 - 2,531.0
3 Effect of exchange rate changes on translation of foreign subsidiariesʼ sales excluding precious
metals and operating profits
Six months ended Year ended
Average exchange rates used for translation of results of foreign operations 30.9.16 30.9.15 31.3.16
US dollar / £ 1.374 1.543 1.510
Euro / £ 1.223 1.389 1.367
Chinese renminbi / £ 9.06 9.64 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.
Six months Six months ended 30.9.15 Change at
ended At last At this this year's
30.9.16 year's rates year's rates rates
£ million £ million £ million %
Sales excluding precious metals
Emission Control Technologies 1,054.0 938.9 1,021.6 +3
Process Technologies 265.0 283.1 302.8 -12
Precious Metal Products 189.2 176.6 192.7 -2
Fine Chemicals 132.6 157.8 170.4 -22
New Businesses 87.8 72.1 77.8 +13
Elimination of inter-segment sales (52.6) (28.4) (30.3)
Sales excluding precious metals 1,676.0 1,600.1 1,735.0 -3
Underlying operating profit
Emission Control Technologies 151.9 136.0 152.3 -
Process Technologies 39.3 35.9 39.6 -1
Precious Metal Products 40.9 36.1 39.4 +4
Fine Chemicals 26.9 40.6 44.4 -39
New Businesses (8.5) (9.9) (9.6) +11
Unallocated corporate expenses (14.4) (13.7) (13.8)
Underlying operating profit 236.1 225.0 252.3 -6
4 Underlying profit reconciliation
30.9.16 30.9.15 31.3.16
£ million £ million £ million
Underlying operating profit 236.1 225.0 450.8
Profit on sale or liquidation of businesses - 130.9 130.0
Amortisation of acquired intangibles (note 5) (9.6) (9.0) (20.9)
Major impairment and restructuring charges - - (141.0)
Operating profit 226.5 346.9 418.9
Underlying profit before tax 219.6 208.3 418.2
Profit on sale or liquidation of businesses - 130.9 130.0
Amortisation of acquired intangibles (note 5) (9.6) (9.0) (20.9)
Major impairment and restructuring charges - - (141.0)
Profit before tax 210.0 330.2 386.3
Tax on underlying profit before tax (35.3) (33.7) (67.4)
Tax on profit on sale or liquidation of businesses - (19.4) (15.5)
Tax on amortisation of acquired intangibles (note 5) 2.4 2.2 4.9
Tax on major impairment and restructuring charges - - 17.4
Income tax expense (32.9) (50.9) (60.6)
Underlying profit for the period 184.9 175.3 358.2
Profit on sale or liquidation of businesses - 130.9 130.0
Amortisation of acquired intangibles (note 5) (9.6) (9.0) (20.9)
Major impairment and restructuring charges - - (141.0)
Tax thereon 2.4 (17.2) 6.8
Profit for the period attributable to owners of the parent company 177.7 280.0 333.1
million million million
Weighted average number of shares in issue 191.8 203.1 200.5
pence pence pence
Underlying earnings per share 96.4 86.3 178.7
5 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.
6 Dividends
An interim dividend of 20.5 pence per ordinary share has been proposed by the board which will be paid on 7th February 2017
to shareholders on the register at the close of business on 25th November 2016. The estimated amount to be paid is £39.3
million and has not been recognised in these accounts.
Six months ended Year ended
30.9.16 30.9.15 31.3.16
£ million £ million £ million
2014/15 final ordinary dividend paid ─ 49.5 pence per share - 100.5 100.5
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 - -
Total dividends 99.7 100.5 444.6
7 Net debt
30.9.16 30.9.15 31.3.16
£ million £ million £ million
Cash and deposits 171.2 481.2 304.5
Bank overdrafts (19.0) (17.3) (20.7)
Cash and cash equivalents 152.2 463.9 283.8
Other current borrowings, finance leases and related swaps (150.5) (29.3) (138.5)
Current interest rate swaps 2.5 - 4.6
Non-current borrowings, finance leases and related swaps (918.3) (893.0) (835.9)
Non-current interest rate swaps 17.3 17.2 11.1
Net debt (896.8) (441.2) (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 30th September 2016 precious metal leases were
£79.8 million (30th September 2015 £55.4 million, 31st March 2016 £70.3 million).
9 Transactions with related parties
There have been no material changes in related party relationships in the six months ended 30th September 2016 and no other
related party transactions have taken place which have materially affected the financial position or performance of the
group during that period.
10 Post-employment benefits
The group has updated the valuation of its main post-employment benefit plans, which are its UK and US pension plans and US
post-retirement medical benefits plan, at 30th September 2016.
Movements in the net post-employment benefits assets and liabilities 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 (14.8) - (5.0) (0.5) (1.1) (21.4)
Net interest 1.8 (0.2) (0.6) (0.9) (0.3) (0.2)
Past service (cost) / credit - - - 15.6 - 15.6
Remeasurements (253.8) - 9.9 0.9 - (243.0)
Company contributions 25.0 - 4.4 - 1.0 30.4
Exchange adjustments - - (1.9) (3.6) (2.7) (8.2)
At 30th September 2016 (141.0) (10.7) (14.6) (30.4) (32.7) (229.4)
These are included in the balance sheet as:
30.9.16 30.9.16 30.9.15 30.9.15 31.3.16 31.3.16
Post- Post- Post-
employment Employee employment Employee employment Employee
benefits benefits benefits benefits benefits benefits
net assets obligations net assets obligations net assets obligations
£ million £ million £ million £ million £ million £ million
UK pension plan - (141.0) - (5.4) 100.8 -
UK post-retirement medical benefits plan - (10.7) - (11.2) - (10.5)
US pension plans 0.7 (15.3) - (21.2) - (21.4)
US post-retirement medical benefits plan 7.4 (37.8) 5.2 (50.3) 6.7 (48.6)
Other plans 1.9 (34.6) 1.0 (34.2) 1.6 (31.2)
Total post-employment plans 10.0 (239.4) 6.2 (122.3) 109.1 (111.7)
Other long term employee benefits (3.8) (3.0) (3.4)
Total long term employee benefits obligations (243.2) (125.3) (115.1)
11 Financial Instruments
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. The fair values
are estimated by discounting the future contractual cash flows using appropriate market sourced data at the balance sheet
date.
• Level 3 ─ not based on observable market data (unobservable).
Financial instruments measured at fair value are:
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