| Review of Results 2006/07
Johnson Matthey achieved very good results in 2006/07 with sales, profit before tax and earnings per share all well ahead of last year. Catalysts Division and Precious Metal Products Division both achieved double digit growth in sales and operating profit despite adverse exchange translation. Sales were boosted by the significant rise in the prices of platinum group metals (pgms). Demand for catalysts was also very strong with expanding sales of catalysed soot filters (CSFs) for light duty diesel vehicles, the emergence of a new market for heavy duty diesel (HDD) catalysts to original equipment manufacturers and increased sales of process catalysts.
 We sold our Ceramics Division on 28th February 2007 for £143.9 million giving a profit on sale of £33.3 million after tax. The sale of Ceramics Division completes the process, announced in November 2003, of disposing of parts of the former Colours & Coatings Division and focusing the group on its core activities. Under International Financial Reporting Standards (IFRS) the results of Ceramics Division are shown in discontinued operations on a post tax basis. Profit before tax in the income statement comprises the results for the continuing businesses only. The results for 2005/06 shown in the income statement have been restated accordingly.
Revenue increased by 34% to £6,152 million. Precious metal prices grew strongly over the year which boosted sales in both Catalysts Division and Precious Metal Products Division. Sales excluding the value of precious metals rose by 25% reflecting good underlying volume growth and increased non precious metal material costs, some of which are a pass through for Johnson Matthey.
Operating profit before one-off items increased by 18% to £252.4 million, despite adverse exchange translation of £6.4 million. There were no one-off items in operating profit in 2006/07 whereas in 2005/06 a £6.0 million impairment charge was included. After one-off items growth in operating profit was 22%.
The group’s interest charge rose by £11.1 million as a result of higher average borrowings and higher interest rates. Profit before tax and one-off items for the continuing businesses rose by 15% to £226.5 million. After one-off items the rise was 18%. If the operating results for discontinued operations are included in the total, profit before tax was £242.6 million which was 10% up on last year’s reported profit before tax and one-off items of £219.8 million.
Total earnings per share, including the profit on disposal of Ceramics, rose by 37% to 96.9 pence. Earnings per share before one-off items (profit on sale of Ceramics Division and last year’s impairment charge) were 12% up at 81.2 pence.
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