Report of the Directors
Business Review

Group Performance Review

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Progress Towards Sustainability 2017

Sustainability 2017 Target Sustainability 2017
Key Performance Indicators
Baseline 2007 20121 Target Progress
At least double
earnings per share
Underlying earnings
per share (pence)
82.22 153.7 164.4
Halve carbon intensity Global warming potential
(tonnes CO2 eq / £ million sales)
2943 156 147
Achieve zero waste to landfill Waste to landfill (tonnes) 16,5553 10,708 0
Halve key resources per
unit of output
Electricity consumption
(GJ / £ million sales)
1,0983 626 549
    Natural gas consumption
(GJ / £ million sales)
1,6043 1,012 802
    Water consumption
(m3 ’000 / £ million sales)
1.4263 0.822 0.713
Achieve zero greater than
three day accidents
Annual greater than three day
accident rate per 1,000 employees
n/a 2.07 0
Reduce occupational illness cases
by at least 30% by 2013/14
Annual incidence of occupational
illness cases per 1,000 employees
5.34 3.5 3.7
1
Data presented is for the period 1st April 2011 to 31st March 2012.
2
Data presented is for the period 1st April 2006 to 31st March 2007.
3
Data presented is for the period 1st January 2006 to 31st December 2006.
4
Baseline is incidence of occupational illness cases per 1,000 employees in calendar year 2008.

Our Progress

Johnson Matthey has made good progress towards its Sustainability 2017 targets this year.

In 2011/12 our financial performance was strong with underlying earnings per share (EPS) at 153.7 pence and we believe the group remains on track to achieve its target to double underlying EPS from the 2007 baseline by 2017. As outlined in the Our Strategy section, the group has amended its target on carbon this year and progress towards the new target, to halve carbon intensity, has been very good. Similarly, initiatives across the group’s businesses to improve resource efficiency are paying off and we remain well on track to achieve our target to halve key resources per unit of output by 2017. Steady progress is being made to reduce the amount of waste we send to landfill, although year on year waste to landfill increased in 2011/12, as explained in the Environment section. Work to drive continuous improvement in health and safety is reflected by the good progress we have made this year in further reducing our number of greater than three day accidents towards our target of zero accidents, and in maintaining our incidence of occupational illness cases below our target.

Further details of the group’s performance towards its Sustainability 2017 targets are explained in the section on A Vision for Sustainability, the Health and Safety section, the Environment section and on the company’s website.

Economic Impact and Distribution of Value to Stakeholders

2011/12 marked another strong performance from Johnson Matthey with good growth across all three divisions.

The group generated an underlying operating profit of £450.1 million and revenue of £12.0 billion in the year. Of this revenue, £9.3 billion represents the value of precious metals in our products which in many cases is passed directly on to our customers. As a result, we may see quite large year on year swings in the revenue line depending on the movements in the market prices of precious metals during the year. Sales excluding the value of precious metals is thus a better measure of the sales growth in our business.

Of the £12 billion revenue, the costs of goods and services were £11 billion (including £9 billion for precious metals) while our own operations created an estimated £1 billion in underlying added value.

Employees received the largest share of this underlying added value, some 49% of the total, reflecting the fact that Johnson Matthey is a high technology company employing many highly skilled employees across the globe. Amounts payable to providers of capital, i.e. our shareholders and financiers, were 35% of the total (including the proposed special dividend of £212 million), and corporate income taxes of 10% were payable to governments. In 2011/12 we retained / invested 5% in the business for future growth and £0.6 million was invested in our local communities.

This community investment represents cash donations made by Johnson Matthey and does not include the value of employee time donated during working hours. We are continuing to develop our systems to capture further information on our contribution to local communities, such as employees’ time from volunteering.

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