REG - Johnson Matthey PLC - Half year results <Origin Href="QuoteRef">JMAT.L</Origin> - Part 2
21/11/2017 07:05
- Part 2: For the preceding part double click ID:nRSU0359Xa
Attributable to:
Owners of the parent company 168.7 177.7 386.0
Non-controlling interests (0.2) (0.6) (1.4)
168.5 177.1 384.6
pence pence pence
Earnings per ordinary share attributable to the equity holders of the parent company
Basic 87.9 92.7 201.2
Diluted 87.8 92.6 200.8
Condensed Consolidated Statement of Total Comprehensive Income
for the six months ended 30th September 2017
Six months ended Year ended
30.9.17 30.9.16 31.3.17
Notes £ million £ million £ million
Profit for the period 168.5 177.1 384.6
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Remeasurements of post-employment benefits assets and liabilities 11 (0.9) (243.0) (18.4)
Tax on above items taken directly to or transferred from equity 1.5 38.0 2.0
0.6 (205.0) (16.4)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (59.3) 136.1 165.2
Cash flow hedges 4.5 (7.6) (1.4)
Fair value gain / (loss) on net investment hedges 2.5 (19.7) (21.0)
Fair value gain on available-for-sale investments 0.4 7.0 7.0
Tax on above items taken directly to or transferred from equity - 1.2 (0.4)
(51.9) 117.0 149.4
Other comprehensive (expense) / income for the period (51.3) (88.0) 133.0
Total comprehensive income for the period 117.2 89.1 517.6
Attributable to:
Owners of the parent company 117.5 89.7 518.5
Non-controlling interests (0.3) (0.6) (0.9)
117.2 89.1 517.6
Condensed Consolidated Balance Sheet
as at 30th September 2017
30.9.17 30.9.16 31.3.17
Notes £ million £ million £ million
Assets
Non-current assets
Property, plant and equipment 1,189.2 1,153.4 1,235.1
Goodwill 598.8 600.5 607.1
Other intangible assets 287.6 279.0 288.3
Deferred income tax assets 24.1 47.7 25.6
Investments and other receivables 109.3 106.9 107.3
Interest rate swaps 8 9.1 17.3 17.4
Post-employment benefit net assets 11 132.7 10.0 116.6
Total non-current assets 2,350.8 2,214.8 2,397.4
Current assets
Inventories 911.7 855.0 772.3
Current income tax assets 25.8 47.4 20.4
Trade and other receivables 1,140.8 1,039.3 1,139.4
Cash and cash equivalents ─ cash and deposits 8 132.9 171.2 330.4
Interest rate swaps 8 - 2.5 -
Other financial assets 12.7 10.7 7.5
Total current assets 2,223.9 2,126.1 2,270.0
Total assets 4,574.7 4,340.9 4,667.4
Liabilities
Current liabilities
Trade and other payables (899.1) (868.2) (968.3)
Current income tax liabilities (129.1) (144.5) (133.5)
Cash and cash equivalents ─ bank overdrafts 8 (21.0) (19.0) (31.8)
Other borrowings, finance leases and related swaps 8 (34.3) (150.5) (20.2)
Other financial liabilities (12.0) (24.8) (14.9)
Provisions (24.8) (28.5) (21.0)
Total current liabilities (1,120.3) (1,235.5) (1,189.7)
Non-current liabilities
Borrowings, finance leases and related swaps 8 (977.6) (918.3) (1,011.5)
Deferred income tax liabilities (107.7) (93.8) (113.0)
Employee benefit obligations 11 (115.8) (243.2) (111.8)
Provisions (14.8) (19.2) (18.4)
Other payables (4.8) (5.9) (5.9)
Total non-current liabilities (1,220.7) (1,280.4) (1,260.6)
Total liabilities (2,341.0) (2,515.9) (2,450.3)
Net assets 2,233.7 1,825.0 2,217.1
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) (50.6) (55.5) (55.5)
Other reserves 94.8 114.7 146.6
Retained earnings 1,840.4 1,416.0 1,776.5
Total equity attributable to owners of the parent company 2,253.6 1,844.2 2,236.6
Non-controlling interests (19.9) (19.2) (19.5)
Total equity 2,233.7 1,825.0 2,217.1
Condensed Consolidated Cash Flow Statement
for the six months ended 30th September 2017
Six months ended Year ended
30.9.17 30.9.16 31.3.17
Notes £ million £ million £ million
Cash flows from operating activities
Profit before tax 204.7 210.0 461.6
Adjustments for:
Share of loss / (profit) of joint venture and associate 0.8 0.1 (0.2)
Depreciation, amortisation, impairment losses and (profit) / loss on
sale of non-current assets and investments 94.7 84.4 176.6
Share-based payments 3.5 7.1 10.6
Changes in working capital and provisions (264.1) (158.6) (95.4)
Changes in fair value of financial instruments (3.5) (2.5) (3.2)
Net finance costs 16.4 16.4 31.8
Income tax paid (44.7) (33.0) (58.9)
Net cash inflow from operating activities 7.8 123.9 522.9
Cash flows from investing activities
Dividends received from joint venture 0.6 - -
Interest received 1.4 1.5 4.8
Purchases of non-current assets and investments (81.2) (108.1) (259.5)
Proceeds from sale of non-current assets and investments 0.5 0.2 3.9
Purchases of businesses - (19.5) (19.7)
Net cash outflow from investing activities (78.7) (125.9) (270.5)
Cash flows from financing activities
Net cost of ESOT transactions in own shares - (6.0) (6.1)
Proceeds from / (repayment of) borrowings and finance leases 14.9 (5.8) (52.4)
Dividends paid to equity owners of the parent company 7 (104.5) (99.7) (139.0)
Settlement of currency swaps for net investment hedging (2.7) (6.2) (7.3)
Interest paid (19.5) (19.9) (42.1)
Net cash outflow from financing activities (111.8) (137.6) (246.9)
(Decrease) / increase in cash and cash equivalents in period (182.7) (139.6) 5.5
Exchange differences on cash and cash equivalents (4.0) 8.0 9.3
Cash and cash equivalents at beginning of period 298.6 283.8 283.8
Cash and cash equivalents at end of period 8 111.9 152.2 298.6
Reconciliation to net debt
(Decrease) / increase in cash and cash equivalents in period (182.7) (139.6) 5.5
(Proceeds from) / repayment of borrowings and finance leases (14.9) 5.8 52.4
Change in net debt resulting from cash flows (197.6) (133.8) 57.9
Borrowings acquired with subsidiaries - (4.6) (4.8)
New finance leases - - (0.1)
Exchange differences on net debt 22.4 (83.5) (93.8)
Movement in net debt in period (175.2) (221.9) (40.8)
Net debt at beginning of period (715.7) (674.9) (674.9)
Net debt at end of period 8 (890.9) (896.8) (715.7)
Condensed Consolidated Statement of Changes in Equity
for the six months ended 30th September 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 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 7) - - - - (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
Total comprehensive income for the period - - - 31.9 396.9 (0.3) 428.5
Dividends paid (note 7) - - - - (39.3) - (39.3)
Share-based payments - - - - 6.6 - 6.6
Cost of shares transferred to employees - - - - (3.1) - (3.1)
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
Total comprehensive income for the period - - - (51.8) 169.3 (0.3) 117.2
Dividends paid (note 7) - - - - (104.5) (0.1) (104.6)
Share-based payments - - - - 6.7 - 6.7
Cost of shares transferred to employees - - 4.9 - (8.2) - (3.3)
Tax on share-based payments - - - - 0.6 - 0.6
At 30th September 2017 220.7 148.3 (50.6) 94.8 1,840.4 (19.9) 2,233.7
Notes on the Accounts for the six months ended 30th September 2017
1 Basis of preparation
The half-yearly accounts were approved by the Board of Directors on 20th November 2017, 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 2017. 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 2017 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.
IFRS 9 - 'Financial Instruments' will be adopted from 1st April 2018. The group's evaluation of the effect of this standard
is still ongoing but it is not currently anticipated that it will have a material effect on the reported results and
financial position of the group.
IFRS 15 - 'Revenue from Contracts with Customers' will be adopted from 1st April 2018. In the current period, further work
has been carried out through a detailed review of contracts generating revenue. The review continues to support the
conclusion reached initially that IFRS 15 will not have a significant impact on the timing and amount of revenue
recognised. Some impact is expected as a result of allocating revenue to various performance obligations and also as a
result of meeting IFRS 15's over time revenue recognition criteria. Due to the insignificant impact of adopting IFRS 15,
the group has concluded that the modified retrospective transition option will be chosen. An adjustment will be made to
equity to reflect the IFRS 15 impact on contracts which are open at the date of adoption.
IFRS 16 - 'Leases' will be adopted from 1st April 2019. The effect on the reported results and financial position of the
group is still being evaluated.
2 Segmental information
Efficient
Clean Natural New
Air Resources Health Markets Eliminations Total
£ million £ million £ million £ million £ million £ million
Six months ended 30th September 2017
Revenue from external customers 2,006.4 4,168.9 122.3 180.7 - 6,478.3
Inter-segment revenue 127.6 1,033.8 - 9.6 (1,171.0) -
Total revenue 2,134.0 5,202.7 122.3 190.3 (1,171.0) 6,478.3
External sales excluding precious metals 1,194.1 402.8 119.3 137.1 - 1,853.3
Inter-segment sales 0.1 55.1 - 5.4 (60.6) -
Sales excluding precious metals 1,194.2 457.9 119.3 142.5 (60.6) 1,853.3
Segmental underlying operating profit 167.9 69.8 21.7 8.7 - 268.1
Unallocated corporate expenses (17.8)
Underlying operating profit (note 4) 250.3
Segmental net assets 1,084.6 1,272.7 534.2 218.4 - 3,109.9
Six months ended 30th September 2016 (restated)
Revenue from external customers 1,763.7 3,578.7 112.5 170.0 - 5,624.9
Inter-segment revenue 85.6 778.4 0.1 8.1 (872.2) -
Total revenue 1,849.3 4,357.1 112.6 178.1 (872.2) 5,624.9
External sales excluding precious metals 1,053.9 375.4 109.4 137.3 - 1,676.0
Inter-segment sales 0.1 44.7 0.1 6.6 (51.5) -
Sales excluding precious metals 1,054.0 420.1 109.5 143.9 (51.5) 1,676.0
Segmental underlying operating profit 151.9 73.4 20.7 4.5 - 250.5
Unallocated corporate expenses (14.4)
Underlying operating profit (note 4) 236.1
Segmental net assets 1,015.4 1,235.5 494.1 203.9 - 2,948.9
Year ended 31st March 2017 (restated)
Revenue from external customers 3,779.5 7,643.2 240.5 367.8 - 12,031.0
Inter-segment revenue 175.0 1,724.0 0.3 17.9 (1,917.2) -
Total revenue 3,954.5 9,367.2 240.8 385.7 (1,917.2) 12,031.0
External sales excluding precious metals 2,223.1 826.0 236.0 292.4 - 3,577.5
Inter-segment sales 0.4 92.8 0.3 15.4 (108.9) -
Sales excluding precious metals 2,223.5 918.8 236.3 307.8 (108.9) 3,577.5
Segmental underlying operating profit 318.2 163.0 51.7 12.2 - 545.1
Unallocated corporate expenses (31.8)
Underlying operating profit (note 4) 513.3
Segmental net assets 1,090.2 1,132.2 525.6 209.0 - 2,957.0
Segmental information has been restated for the six months ended 30th September 2016 and year ended 31st March 2017 to
reflect a change in group structure.
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 30.9.17 30.9.16 31.3.17
US dollar / £ 1.295 1.374 1.308
Euro / £ 1.138 1.223 1.191
Chinese renminbi / £ 8.76 9.06 8.79
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 Restated six months ended 30.9.16 Change at
ended At last At this this year's
30.9.17 year's rates year's rates rates
£ million £ million £ million %
Sales excluding precious metals
Clean Air 1,194.2 1,054.0 1,112.3 +7
Efficient Natural Resources 457.9 420.1 437.3 +5
Health 119.3 109.5 113.8 +5
New Markets 142.5 143.9 153.4 -7
Elimination of inter-segment sales (60.6) (51.5) (54.5)
Sales excluding precious metals 1,853.3 1,676.0 1,762.3 +5
Underlying operating profit
Clean Air 167.9 151.9 163.0 +3
Efficient Natural Resources 69.8 73.4 77.5 -10
Health 21.7 20.7 21.7 -
New Markets 8.7 4.5 5.6 +55
Unallocated corporate expenses (17.8) (14.4) (13.7)
Underlying operating profit 250.3 236.1 254.1 -1
4 Underlying profit reconciliation
30.9.17 30.9.16 31.3.17
£ million £ million £ million
Underlying operating profit 250.3 236.1 513.3
Amortisation of acquired intangibles (note 5) (9.9) (9.6) (20.1)
Major impairment and restructuring charges (note 6) (18.5) - -
Operating profit 221.9 226.5 493.2
Underlying profit before tax 233.1 219.6 481.7
Amortisation of acquired intangibles (note 5) (9.9) (9.6) (20.1)
Major impairment and restructuring charges (note 6) (18.5) - -
Profit before tax 204.7 210.0 461.6
Tax on underlying profit before tax (41.7) (35.3) (82.0)
Tax on amortisation of acquired intangibles (note 5) 2.4 2.4 5.0
Tax on major impairment and restructuring charges (note 6) 3.1 - -
Income tax expense (36.2) (32.9) (77.0)
Underlying profit for the period 191.6 184.9 401.1
Amortisation of acquired intangibles (note 5) (9.9) (9.6) (20.1)
Major impairment and restructuring charges (note 6) (18.5) - -
Tax thereon 5.5 2.4 5.0
Profit for the period attributable to owners of the parent company 168.7 177.7 386.0
million million million
Weighted average number of shares in issue 191.9 191.8 191.9
pence pence pence
Underlying earnings per share 99.8 96.4 209.1
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 Major impairment and restructuring charges
As part of the group's operational efficiency program announced at 31st March 2017 a restructuring charge of £18.5 million
has been incurred in the period (nil in the six months ended 30th September 2016 and year ended 31st March 2017). This
primarily relates to redundancies and business closures and can be split out by sector as follows: Efficient Natural
Resources £7.3 million, Health £1.7 million and New Markets £9.5 million. Of the total £7.8 million relates to asset write
offs, £6.5 million to provisions and £4.2 million to cash costs incurred.
7 Dividends
An interim dividend of 21.75 pence per ordinary share has been proposed by the board which will be paid on 6th February
2018 to shareholders on the register at the close of business on 30th November 2017. The estimated amount to be paid is
£41.8 million and has not been recognised in these accounts.
Six months ended Year ended
30.9.17 30.9.16 31.3.17
£ million £ million £ million
2015/16 final ordinary dividend paid ─ 52.0 pence per share - 99.7 99.7
2016/17 interim ordinary dividend paid ─ 20.5 pence per share - - 39.3
2016/17 final ordinary dividend paid ─ 54.5 pence per share 104.5 - -
Total dividends 104.5 99.7 139.0
8 Net debt
30.9.17 30.9.16 31.3.17
£ million £ million £ million
Cash and deposits 132.9 171.2 330.4
Bank overdrafts (21.0) (19.0) (31.8)
Cash and cash equivalents 111.9 152.2 298.6
Other current borrowings, finance leases and related swaps (34.3) (150.5) (20.2)
Current interest rate swaps - 2.5 -
Non-current borrowings, finance leases and related swaps (977.6) (918.3) (1,011.5)
Non-current interest rate swaps 9.1 17.3 17.4
Net debt (890.9) (896.8) (715.7)
9 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 2017 precious metal leases were
£222.8 million (30th September 2016 £79.8 million, 31st March 2017 £77.0 million).
10 Contingent liabilities
A group company, Johnson Matthey Inc, has been made a defendant to a contract dispute lawsuit alongside a supplier to an
automotive OEM in the United States. The dispute relates to engine emission after treatment systems for which the group
supplied coated substrate as a component. The group does not believe it has warranty liability in respect of its supplies
of coated substrate for the after treatment systems in the affected engines and will vigorously defend its position in the
litigation. With respect to these legal proceedings, the group is currently unable to make a reliable estimate of the
expected financial effect, if any.
11 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 2017.
Movements in the net post-employment benefits 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 2017 106.4 (9.6) (20.1) (33.9) (33.6) 9.2
Current service cost (20.7) - (4.7) (0.2) (1.5) (27.1)
Net interest 1.2 (0.1) (0.4) (0.6) (0.3) (0.2)
Past service credit 5.1 - - - - 5.1
Remeasurements 5.6 - (4.3) (2.2) - (0.9)
Company contributions 25.6 - 5.0 0.7 1.2 32.5
Exchange adjustments - - 1.5 2.4 (1.0) 2.9
At 30th September 2017 123.2 (9.7) (23.0) (33.8) (35.2) 21.5
These are included in the balance sheet as:
30.9.17 30.9.17 30.9.16 30.9.16 31.3.17 31.3.17
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 123.2 - - (141.0) 106.4 -
UK post-retirement medical benefits plan - (9.7) - (10.7) - (9.6)
US pension plans - (23.0) 0.7 (15.3) - (20.1)
US post-retirement medical benefits plan 7.7 (41.5) 7.4 (37.8) 8.3 (42.2)
Other plans 1.8 (37.0) 1.9 (34.6) 1.9 (35.5)
Total post-employment plans 132.7 (111.2) 10.0 (239.4) 116.6 (107.4)
Other long term employee benefits (4.6) (3.8) (4.4)
Total long term employee benefits obligations (115.8) (243.2) (111.8)
12 Transactions with related parties
There have been no material changes in related party relationships in the six months ended 30th September 2017 and no other
related party transactions have taken place which have materially affected the financial position or performance of the
group during that period.
13 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:
30.9.17 30.9.17 30.9.16 30.9.16 31.3.17 31.3.17
Level 1 Level 2 Level 1 Level 2 Level 1 Level 2
£ million £ million £ million £ million £ million £ million
Quoted bonds purchased to fund pension deficit
included in:
Non-current investments 55.7 - 58.1 - 54.1 -
Quoted available-for-sale investments included in:
Non-current investments 0.2 - 0.8 - 0.3 -
Interest rate swaps included in:
Non-current
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