Report of the Directors
Business Review

Financial Review

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Robert MacLeod
Group Finance Director

“In 2011/12 the group’s
underlying profit before tax
increased by 23% to
£426.0 million.”

Profit Before Tax

The group’s underlying profit before tax increased by 23% to £426.0 million (2010/11 £345.5 million). Profit before tax was 58% higher at £409.3 million (2010/11 restated £259.3 million). Items excluded from underlying profit were:

Underlying Profit Reconciliation

  Year to 31st March 2012 Year to 31st March 2011
  Profit
before
tax

£ million
Income
tax
expense

£ million
Profit from
continuing
operations

£ million
Profit
before
tax
restated
£ million
Income
tax
expense
restated
£ million
Profit from
continuing
operations
restated
£ million
Underlying basis 426.0 (100.0) 326.0 345.5 (91.7) 253.8
Amortisation of acquired intangibles (16.7) 6.1 (10.6) (14.5) 4.6 (9.9)
Major impairment / restructuring:            
Closure of autocatalyst facility in Brussels (57.0) 8.1 (48.9)
Closure of Vertec business (14.8) 3.5 (11.3)
Dissolution of associate 0.1 0.1
Reported basis 409.3 (93.9) 315.4 259.3 (75.5) 183.8

Exchange Rates

The main impact of exchange rate movements on the group’s results comes from the translation of foreign subsidiaries’ profit into sterling as the group does not hedge the impact on the income statement or balance sheet of these translation effects. The group’s underlying operating profit at constant exchange rates is shown in the table below:

Underlying Operating Profit

  Year to 31st March   2011 at 2012
exchange
 
  2012
£ million
2011
£ million
%
change
rates
£ million
%
change
Environmental Technologies 211.8 164.7 +29 163.8 +29
Precious Metal Products 200.8 172.9 +16 172.7 +16
Fine Chemicals 69.7 56.2 +24 55.5 +26
Corporate (32.2) (27.6)   (27.5)  
Total group 450.1 366.2 +23 364.5 +23

During the year, sterling strengthened slightly against the US dollar but weakened slightly against the Chinese renminbi and the euro. Together these decreased reported group underlying operating profit for the year by £1.0 million.

Of the group’s underlying operating profit that is denominated in overseas currencies the average exchange rates during 2011/12 were:

  Share of
2011/12
non-sterling
denominated
underlying
Average exchange rate
  operating profit 2011/12 2010/11
US dollar 49% 1.597 1.555
Euro 25% 1.160 1.176
Chinese renminbi 8% 10.21 10.43

Going forward, each one cent change in the average US dollar exchange rate and each one cent change in the euro exchange rate have approximately a £0.9 million and £0.6 million effect respectively on underlying operating profit in a full year.

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