Report of the Directors
Business Review

Chairman’s Statement

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Tim Stevenson
Chairman

“Welcome to this, our first integrated annual report, which I hope will provide you with a deeper understanding of the many aspects of our business, its performance, its long term prospects, its governance and, ultimately, how we deliver value to our stakeholders.”

In my first statement as Chairman, I am delighted to report that Johnson Matthey performed very strongly in 2011/12. During the year the company benefited from good demand for its products as well as robust precious metal prices, particularly in the first half. The group’s continuing strong performance is enabled by our long term investment in research and development (R&D) and our strategy of organic growth, complemented by bolt-on acquisitions. Together these have enabled the company to achieve leading positions in a number of rapidly growing markets. The result is another year of strong growth in underlying earnings per share, which were up 29% to 153.7 pence.

The group’s cash generation has also been strong: at 31st March 2012 the group’s net debt (including post tax pension deficits) to EBITDA ratio was 1.0 times. As a result of this very good performance the board has carried out a review of the group’s balance sheet structure. The outlook for the group remains strong; we believe it has ample resources to fund forecast capital expenditure and a further increase in R&D. The board is therefore recommending a special dividend to shareholders of 100 pence per share, which represents a total payment of approximately £212 million.

Sustainability continues to be a key element of the company’s strategy and I am very pleased to be introducing this, Johnson Matthey’s first ‘integrated’ annual report, which describes all aspects of our financial and non-financial performance. I believe that this reflects both our values and our determination to build a sustainable business, as well as communicating to all of our stakeholders our commitment to sustainable growth. In this year’s annual report we have also included more comprehensive governance reporting, including in the Corporate Governance Report which forms a key part of the Report of the Directors.

This is in light of changes introduced by the UK Corporate Governance Code (the Code), which replaced the Combined Code on Corporate Governance in June 2010. While we reflected certain aspects of the Code on a voluntary basis in last year’s annual report, this year’s Corporate Governance Report fully reflects a number of substantial changes in corporate governance reporting. I hope that this integrated annual report will provide you with a deeper understanding of the many aspects of our business, its performance, its long term prospects, its governance and, ultimately, how we deliver value to our customers and to other stakeholders.

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