Chairman Tim Stevenson gives an overview of Johnson Matthey's performance in 2014/15

Tim Stevenson OBE, Chairman of Johnson Matthey and Lord Lieutenant of Oxfordshire
Tim Stevenson OBE, Chairman of Johnson Matthey and Lord Lieutenant of Oxfordshire
I am pleased to report that 2014/15 has been a good year for Johnson Matthey. The group has made further progress, in line with our strategy of organic growth supported by targeted acquisitions and disciplined portfolio management. We have continued to invest in research, in infrastructure and in our people. As a result, we saw underlying earnings per share increase by 6% to 180.6 pence.

Summary

  • Robust strategy of organic growth supported by targeted acquisitions and disciplined portfolio management.
  • Proposed dividend of 68.0 pence up 9% on last year.
  • Leadership changes effectively managed.
  • External evaluation of the board's performance confirmed its effectiveness.
  • Company remains in great shape with exciting future ahead.

A Robust Strategy

2014/15 was not without its challenges and in the first half of the year foreign currency exchange rates were not in our favour. Furthermore, as expected, the change in our contracts with Anglo American Platinum Limited impacted performance in our Precious Metal Products Division. However, our resilience and diverse portfolio ensured we continued to make progress; and when we adjust for these two headwinds, performance was strong, demonstrating that our underlying business is in good shape and continues to grow well.

In pursuit of our strategy to focus on value adding sustainable technologies, we made a number of bolt-on acquisitions this year, including two in our new business area of Battery Technologies. We have also taken steps to more actively manage the group's portfolio and completed the sale of our Gold and Silver Refining business in March. We are also in advanced negotiations on the sale of our Research Chemicals business. These divestments will help us to concentrate our efforts on what we do best and in the areas where we can create the most value.

Evolution Not Revolution

The changes in leadership last June renewed the energy of the business and continued to build on the foundations that outgoing Chief Executive, Neil Carson, put in place during his successful ten years in the role. Neil was replaced by Robert MacLeod who had led the development of the group's strategy during his five years as Johnson Matthey's Group Finance Director.

Robert's understanding of our culture, values and markets, together with his fresh approach from recent outside experience, made him, in the view of the non-executive directors, the stand-out candidate for the job. He has demonstrated his continued commitment to the group's strategy early on by making sure that last summer it was clearly communicated to all of our employees.

Den Jones joined us in June 2014 from BG Group, replacing Robert as Group Finance Director. Den brings with him a strong blend of financial leadership experience, international knowledge and highly developed commercial awareness.

Under this new leadership, our group, its strategy, its processes and its structure will continue to evolve. We must remain true to our aspiration of becoming the best that we can be and, in the process, strike the right balance between continuity and transformation, aiming to improve by evolution not revolution. This approach will help build a more sustainable and profitable company for our shareholders, a better place to work for our people and will create value adding sustainable technologies for our customers.

Board Matters

During the year we enhanced the breadth of experience on the board with the appointment of Chris Mottershead. Chris brings with him a strong technical background and a combination of relevant industrial and academic experience from his time at BP and King's College London. I expect him to bring diversity of perspective, offering a deep expertise in energy technology and related global sustainability issues that will enhance the contribution of the board.

One of my key responsibilities as Chairman is to promote effective governance at Johnson Matthey, this being a key element of ensuring that we remain a successful and sustainable company. During the year we commissioned an external evaluation of the board's performance. The findings confirmed that the board is well balanced in its diverse mix of skills and experience and performing effectively, but that there is scope for it, as a body, to provide the executive with even greater challenge and contribution to the development and implementation of strategy. We shall be working on achieving this and I am confident that, with the strong team that now comprises the board, this key element of governance will be achieved.

A matter of continuing high priority for the board has been the wellbeing – not only of our people, but of our suppliers, customers and communities too. All board meetings begin with health and safety at the top of the agenda. New metrics introduced this year have begun an important reinvigoration of the group's performance in this crucial area but there is more to do. I am pleased that we are heading in the right direction.

Innovation and Innovators

The progress that Johnson Matthey makes each year is made possible by the dedication of our people. They are our innovators. Across all our divisions and functions, employees are collaborating to drive innovation, focusing on our customers' needs, creating value for our shareholders and delivering the sustainable technologies that make a real difference to people's lives. On behalf of all our stakeholders, I would like to thank every employee for their enthusiasm, hard work and commitment over the last year.

Without that commitment and the continued professionalism of our people we can't hope to achieve our ambitious plans. The extent of their contribution was recognised this year when Johnson Matthey was awarded the title of Britain's Most Admired Company, voted for by our peers. This is an important and deserved accolade.

In the Annual Report, you can hear from some of our people and find out more about the areas they are working in. You'll also see the steps we are taking to better serve our customers, develop our talent and build our health and safety culture, all of which will drive business performance over the coming years.

Conclusion

In conclusion: your company remains in great shape and has an exciting future. A unique combination of adaptability, unrivalled technological expertise, committed people and absolute integrity has made us successful for almost two centuries. The long term drivers for your company remain firmly in place and I am confident that these, together with our robust strategy, should ensure the continued growth of Johnson Matthey over the coming years.