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 20131 Target Progress
At least double
earnings per share
Underlying earnings
per share (pence)
82.22 150.0 164.4
Halve carbon intensity Global warming potential
(tonnes CO2 eq / £ million sales)
2943 154 147
Achieve zero waste
to landfill
Waste to landfill (tonnes) 16,5553 3,218 0
Halve key resources
per unit of output
Electricity consumption
(GJ / £ million sales)
1,0983 627 549
    Natural gas consumption
(GJ / £ million sales)
1,6043 988 802
    Water consumption
(m3 ’000 / £ million sales)
1.4263 0.913 0.713
Achieve zero greater than three day accidents Annual greater than three day accident rate per 1,000 employees 4.094 2.68 0
Achieve zero occupational illness cases Annual incidence of occupational illness cases per 1,000 employees 5.35 2.7 0
1
Data presented is for the period 1st April 2012 to 31st March 2013.
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
At 31st March 2007.
5
Baseline is incidence of occupational illness cases per 1,000 employees in calendar year 2008.

Our Progress

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

In 2012/13, after two very strong years, our financial performance was weaker with underlying earnings per share (EPS) at 150.0 pence. However, given that the drivers of our business remain in place, we believe the group is still on track to achieve its target to double underlying EPS from the 2007 baseline by 2017. Initiatives across the group’s businesses to reduce carbon emissions and improve resource efficiency are paying off and we remain well on track to achieve our targets to halve carbon intensity and key resources per unit of output by 2017. Good progress is being made to reduce the amount of waste we send to landfill, supported by efforts from our Manufacturing Excellence programme. Whilst our number of greater than three day accidents increased this year, we have further developed our safety culture programmes which will support our businesses in working towards our target of zero greater than three day accidents. We have made further good progress this year in the area of health and our incidence of occupational illness cases has reduced to 2.7 cases per 1,000 employees, beating our original target. As a result, and to drive further continued improvement, we have amended our target on occupational illness cases to zero, as outlined in the strategy section and the Health and Safety section.

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

Economic Impact and Distribution of Value to Stakeholders

In 2012/13 the group generated an underlying operating profit of £414.8 million and revenue of £10.7 billion in the year. Of this revenue, £8.1 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 £10.7 billion revenue, the costs of goods and services were £9.7 billion (including £8.1 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 52% 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 14% of the total, and corporate income taxes of 8% were payable to governments. In 2012/13 we retained / invested 26% 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 and for the first time this year, following the introduction of our Community Investment Policy in June 2012, we have reported details of time spent by our employees in volunteering activities. This is outlined further in the Social section.

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