For Release at 7.00 am Wednesday 23rd November 2005

 

Interim Results for the six months ended 30th September 2005

 

On track for good growth for the year

 

Summary Results

 

 

Half Year to 30th September

%

%

 

2005

2004

change

underlying

growth*

Revenue

Sales excluding precious metals

 

Profit before tax

Total earnings per share

 

Dividend per share

 

£2,283m

£637m

 

£106.4m

35.2p

 

9.1p

£2,461m

£586m

 

£88.3m

25.8p

 

8.7p

-7

+9

 

+20

+36

 

+5

-7

+9

 

+3

+5

 

+5

                              * excluding restructuring and disposal costs in 2004

 

·        Sales revenue down 7% reflecting lower precious metal trading volume.  Sales excluding precious metals up 9%

·        Profit before tax up 20% at £106.4 million.  Underlying growth of 3% excluding restructuring costs in 2004

·        Total earnings per share up 36% at 35.2 pence.  Underlying growth of 5% excluding restructuring and disposal costs in 2004.  Interim dividend increased by 5% to 9.1 pence

·        Impact of exchange translation slightly favourable

·        Strong operating cash flow.  Net cash inflow of £18.5 million after £11.9 million net cash cost of share purchases

 

Divisional Performance

 

Operating Profit

           

 

Half Year to 30th September

            %

£m

2005

2004*

change

Catalysts

65.2

61.2

+7

Precious Metal Products

30.6

27.5

+11

Pharmaceutical Materials

16.2

21.1

-23

Ceramics

10.8

9.2

+17

Corporate

  (8.3)

  (8.2)

 

Operating Profit

114.5

110.8

+3

                                                * excluding restructuring costs in 2004

 

 

 

Business Prospects

 

·        Good growth in Environmental Catalysts and Technologies expected in the second half of the year benefiting from the strength of the diesel catalyst market in Europe and good growth in Asia

·        Additional capital expenditure on new capacity to manufacture heavy duty diesel (HDD) catalysts and catalysed soot filters (CSFs) planned for the second half of 2005/06

·        Further expansion planned in Asia including a new facility to manufacture autocatalysts in Korea

·        High oil price supports growth in Process Catalysts and Technologies with increased demand for catalysts for hydrogen production and purification

·        Precious Metal Products to benefit from continued good growth in manufactured products and the firm platinum price

·        Pharmaceutical Materials’ profits expected to improve in the second half of the year with stronger sales in the US

·        Ceramics’ encouraging performance should continue in the second half of 2005/06 with good cash generation

 

 

 

Commenting on the results, Neil Carson, Chief Executive of Johnson Matthey said:

 

“In the first half good growth in Catalysts, Precious Metal Products and Ceramics has more than compensated for the shortfall in Pharmaceutical Materials caused mainly by the expiry of the carboplatin patent.  Our cash performance has also been good.

 

The outlook for the second half is for increased top-line growth driven by the launch of new products for heavy and light duty diesel vehicles, and growth in Asia.”                         

 

Enquiries:

 

Ian Godwin           

Director, IR and Corporate Communications    

020 7269 8410

John Sheldrick

Group Finance Director

020 7269 8438

Howard Lee          

The HeadLand Consultancy

020 7036 0369

Ella Tekdag          

The HeadLand Consultancy

020 7036 0316

 

 

www.matthey.com

 

 

 

Report to Shareholders

 

Introduction

 

Johnson Matthey’s performance in the first half of 2005/06 was encouraging.  Total earnings per share were up 36%.  Excluding restructuring and disposal costs included in last year’s figures the underlying growth in earnings per share was 5%.  The mix of profits in the first half was as expected at the time of our results in June with good increases in Catalysts, Precious Metal Products and Ceramics but a decline in Pharmaceutical Materials. 

 

This is the first time Johnson Matthey has reported its results under International Financial Reporting Standards (IFRS).  The impact of the transition from UK GAAP to IFRS was set out in our Report and Accounts for 2005, and is shown in note 12 on the interim accounts included in this report.

 

Review of Results

 

Revenue fell by 7% in the half year to £2,283 million, largely as a result of reduced activity on precious metal trading compared with the first half of 2004/05.  Sales excluding the value of precious metals rose by 9% reflecting good underlying growth in Catalysts Division and increased non precious metal material costs, some of which are a pass through for Johnson Matthey.

 

Operating profit increased by 3% (excluding restructuring costs in 2004) to £114.5 million.  Exchange translation was slightly favourable increasing profits by £0.7 million compared with last year.  Interest rose by £0.5 million, largely as a result of the increase in short term interest rates in the US.  Profit before tax was 20% up on last year at £106.4 million.  Excluding restructuring costs in 2004 the underlying increase in profit before tax was 3%.

 

Underlying earnings per share rose by 5% to 35.2 pence benefiting from a slightly more favourable average tax rate than last year and the accretive effect of share buy-backs.  Including restructuring and disposal costs in 2004 total earnings per share rose by 36%.

 

Dividend

 

The interim dividend has been increased by 5% to 9.1 pence, in line with the growth in earnings per share excluding restructuring and disposal costs.

 

Operations

 

Catalysts Division’s sales rose by 19% to £675 million, partly as a result of higher prices for platinum and rhodium.  Excluding the value of precious metals, sales rose by 14% to £375 million.  The division’s operating profit increased by 7% to £65.2 million.

 

Environmental Catalysts and Technologies (ECT) was ahead of last year with good growth in Europe and Asia more than offsetting a further decline in North America.  Results in Europe were boosted by early sales of heavy duty diesel (HDD) catalysts to original equipment manufacturers and sales of catalysed soot filters (CSFs) for light duty diesel vehicles.

 

In the six month period to 30th September 2005 global light duty vehicle sales increased by 4.9%.  Car production in this period rose by 2.9% as inventory levels were reduced particularly in North America and Asia.  Nearly all the growth in production came in Asia, with Europe slightly ahead and North America unchanged.  Diesel vehicles continued to take an increasing share of the European market.

 

 

 

 

 

 

 

Light Vehicle Sales and Production

 

 

 

  Half year to 30th September

 

 

 

2005

millions

2004

millions

change

%

 

North America

 

Europe

 

Asia

 

Global

 

Sales

Production

Sales

Production

Sales

Production

Sales

Production

 

10.7

7.8

9.3

10.2

7.2

10.9

32.3

31.7

 

10.3

7.8

9.1

10.1

6.5

10.2

30.8

30.8

 

3.9%

0.0%

2.2%

1.0%

10.8%

6.9%

4.9%

2.9%

Source: Global Insight

 

 

 

 

 

New emission control standards for HDD vehicles came into force in Europe in October 2005 for new models.  Johnson Matthey is supplying several of the leading original equipment manufacturers with products to meet this legislation.  The major growth in the market will occur in October 2006 when all new HDD vehicles sold in Europe will need to meet the new standards.  In North America similar legislation comes into force in January 2007.

 

We are seeing increasing demand from many of the leading car companies in Europe for CSFs to remove particles from diesel exhaust emissions.  Although legislation requiring such emission control devices does not come into force until 2010 many manufacturers plan to fit these devices much earlier.  We have commissioned a new factory in Royston to manufacture these products and are planning to put in additional capacity in the second half of the year.

 

We have brought forward investment at several of our major facilities around the world to manufacture HDD catalysts given the high level of orders we are seeing.  Overall, we plan to spend an additional £30 million on capital expenditure in the second half of this year compared with our original plans to create the additional capacity required for HDD catalysts and CSFs.

 

Our business in Asia is performing very well.  Over the next decade we expect that most of the growth in world car production will take place in the Asian region.  In the current financial year we have achieved strong volume growth in China and Japan.  In early September we announced plans to build a new autocatalyst factory in Gyeonggi province in Korea where we plan to manufacture catalysts for both diesel and petrol powered vehicles.

 

Process Catalysts and Technologies (PCT) achieved good growth in sales and profits in the half year.  The Ammonia, Methanol, Oil and Gas (AMOG) business was well ahead of 2004 with strong demand for catalysts for hydrogen production and purification.  Sales of edible oil catalysts were also ahead of last year but catalyst sales to the polymer market declined.  The high oil price is encouraging development of synthetic liquid products from natural gas and coal, which will underpin PCT’s catalyst growth in the medium term.

 

The division’s Research Chemicals business has successfully integrated the operations of Lancaster Synthesis which was acquired last year.  A new catalogue has been issued in North America covering the whole range of products sold by the business.  The catalogue will be launched for the rest of the world later this financial year which should provide a further boost to growth.

 

Our Fuel Cells business has continued to make good progress on developing Membrane Electrode Assembly (MEA) technology for the automotive market.  Rising oil prices and fuel shortages together with concerns about the impact of global warming have increased demand for fuel cell technology.  One consequence has been renewed interest in the use of phosphoric acid (PAFC) fuel cells for stationary applications.  Johnson Matthey has well established technology for components for PAFC fuel cells and is collaborating with fuel cell manufacturers on new product development in this area.  Another recent development is the emergence of prototype direct methanol fuel cells used as chargers for mobile phones or power sources for laptops.  The future development of this new market is still uncertain but Johnson Matthey is collaborating with a number of major electronics companies to supply catalysts and MEAs for their fuel cell development programmes.

 

Precious Metal Products Division’s sales fell by 16% to £1,460 million reflecting more subdued precious metal trading activity.  Sales excluding the value of precious metals grew by 4%.  Operating profit increased by 11% to £30.6 million.

Most of the growth in operating profit was generated by the manufacturing businesses.  Colour Technologies, which was transferred into the division following the restructuring of the former Colours & Coatings Division, achieved good growth in profits benefiting from cost reductions undertaken last year and good sales of automotive glass enamels.  Similarly the division’s gold businesses benefited from the closure of the UK bullion refinery (which had been loss making) and the transfer of some of its business to our North American refineries.  The platinum group metal (pgm) fabrication businesses also achieved good growth with increasing sales to the industrial sector and strong demand for medical device components.

 

Pgm refining has been transferred from Catalysts into Precious Metal Products Division.  We are successfully implementing the plan announced last June to restructure the business in the UK and reduce the quantity of precious metals held in the refinery.  Since inception of the programme more than £20 million has been released which has been used to fund share buy-backs.

 

The platinum marketing businesses experienced mixed trading conditions.  The platinum market continued to expand and the price remained firm.  Palladium was very subdued whereas rhodium was buoyant, reflecting the different supply – demand balances for these metals.

 

Demand for platinum is expected to rise by 2% in 2005.  Increased purchases from the automobile, glass and electronics industries have largely been offset by lower sales of platinum jewellery, where the high platinum price dampened demand.  The average price of platinum in the first half of Johnson Matthey’s financial year rose to $883 per ounce, up 5% compared to the same period last year.

 

In contrast, the price of palladium fell by 21% to $189 per ounce despite total demand growing by an estimated 6% in 2005.  The most significant increase in usage has come from China where sales of palladium jewellery rose by 71% to 1.2 million ounces, capturing market share from gold and platinum.  Demand from other sectors, including the automobile market, has remained fairly stable.  Despite the strong growth in Chinese jewellery, supply will exceed demand in 2005, although the market will be much closer to balance than in recent years.

 

The price of rhodium rose sharply to average $1,901 per ounce in our first half, almost double the price in the same period last year.  Demand grew faster than supplies and, with the market already in deficit from 2004, the price was both buoyant and volatile.

 

Pharmaceutical Materials Division’s sales fell by 13% to £58 million.  The fall in sales reflected reduced income from carboplatin, which went off patent in October 2004, and lower revenues from contract research.  Operating profit fell by 23% to £16.2 million.

 

The division’s European businesses performed well in the half year.  The fall in revenues and profits all occurred in the United States.  Part of the drop related to the phasing of sales over the year.  Our active pharmaceutical ingredient (API) manufacturing business in the US, which is based in West Deptford, NJ, makes a number of high margin products which are sold in batches and can cause profits to be “lumpy”.  With a number of sales falling into the second half of the year, we expect the contribution from this business for the second six months to be higher than the first.  In addition, prospects for the new product launches planned for calendar 2006 remain encouraging.

 

Macfarlan Smith, which is based in Edinburgh, UK and manufactures controlled drugs for sale to generic pharmaceutical companies, performed well in the period.  Sales and profits were both ahead of last year with good growth in low volume, high potency products (mainly analgesics) where new capacity has recently been installed.  A major expansion programme is also underway to increase capacity to manufacture specialist opiates (oxycodone, hydromorphone and buprenorphine) where demand is growing rapidly.  This facility will be completed by the end of the current financial year.

 

Ceramics Division is shown as a stand alone business for the first time following the restructuring of our Colours & Coatings Division.  That restructuring included the sale of our Pigments and Dispersions business, transfer of the Colour Technologies business to Precious Metal Products Division and closure or consolidation of a number of smaller manufacturing units.

The net impact has been to significantly reduce the cost base which has improved operating profit and margins.  Ceramics Division has also successfully grown its sales this year by 11% to £90 million.  Operating profit rose by 17% to £10.8 million.

 

The division is headquartered in Spain and is a global supplier of decorative materials to the ceramic industries, particularly tile manufacturing.  Sales were strong in China, where the tile market continues to grow rapidly.  The division is realising the benefits of the investments made in recent years to position it as one of the lowest cost global producers.  With capital expenditure below depreciation in the half year the division was highly cash generative.

 

Finance

 

Exchange rates

The main impact of exchange rate movements on the group’s results comes from the translation of foreign subsidiaries’ profits into sterling.  The group’s largest overseas investment is in the USA.  The average rate for the US dollar for the six months to 30th September 2005 was $1.820/£ which was slightly worse than the average rate for the first half of last year of $1.814/£.  However, a number of other currencies strengthened against sterling compared with the first half of last year including the euro which averaged €1.468/£ compared with €1.494/£ last year.  The South African Rand was virtually unchanged at R11.74/£.  Overall, the impact of currency movements was slightly favourable increasing group operating profit by £0.7 million compared with the first half of last year.

 

Interest

In the six months to 30th September 2005 the group’s interest charge increased by £0.5 million to £7.7 million.  Average interest rates for floating rate US dollars rose by about 2% compared with the first half of last year which more than offset the benefit of lower average borrowings.

 

 

Taxation

The group’s tax charge increased by £4.7 million to £31.1 million.  The rise reflects the

tax relief on the restructuring costs included in last year’s results.  On an underlying basis the average tax rate improved by 0.8% to 29.2%.  We also reached agreement with the Inland Revenue in the UK on several years’ tax assessments which resulted in a repayment of tax in the half year which benefited the group’s cash flow.  That amount had already been recognised in current tax so there was no impact on earnings.

 

Cash Flow

Johnson Matthey’s net cash flow from operating activities was very strong at £126.5 million which is an increase of £35.4 million compared with the first half of last year.  Under the new IFRS rules net cash flow from operating activities includes taxation which benefited from the settlement in the UK.  Working capital increased by £28.7 million despite the inventory reduction in pgm refining, largely as a result of the dramatic increase in the rhodium price and the increased prices of some other materials.

 

The cash outflow on capital expenditure in the half year was £44.9 million which was 1.3 times depreciation.  Including capitalised development costs and investments the cash outflow on capital investment was £48.4 million.  We are planning to invest more on capital expenditure in the second half of the year including £30 million of additional expenditure on production capacity for CSFs and HDD catalysts.  For the year as a whole we now expect to spend at a rate of 1.8 times depreciation.

 

We purchased £8.0 million of Johnson Matthey shares in the first half.  The net cash outflow on share purchases was £11.9 million including the cash cost of purchases made at the end of March 2005 where payment fell into the current financial year.  Despite this outflow the group still generated a net cash inflow of £18.5 million.  After taking into account the effect of exchange translation on foreign currency borrowings net debt fell by £8.8 million to £361.4 million and gearing (net debt / equity) fell by 2.7% to 37.0%.

 

In the second half of the year we plan to complete our previously announced programme of share buy-backs by purchasing a further £17 million of shares.  We intend to use future cash generation either to fund share buy-backs or to finance bolt on acquisitions.

Outlook

 

The outlook for the year as a whole remains very much the same as we set out in our annual report.  Following an encouraging first half we are expecting good growth for the year.

 

Catalysts Division is well positioned to benefit from growth in diesel emission control products including CSFs and HDD catalysts.  We also expect to see further growth in Asia so that overall ECT is expected to achieve about 10% growth in operating profit in the second half of the year.  PCT is also expected to achieve good growth in the second half.

 

Precious Metal Products Division achieved good growth in operating profit in the first half of the year.  We do not expect the second half to be quite so strong but the division is still expected to be ahead of last year for the second six months.

 

Pharmaceutical Materials Division is expected to achieve higher profits in the second half than the first with stronger sales in the US.  Ceramics Division’s second half is expected to be similar to the first with continued good cash generation.

 

The outlook for the group remains very encouraging.  We are well positioned to benefit from the emergence of a number of new markets driven by environmental concerns and high energy prices.  We are increasing our investment in R&D to ensure we have leading technology to meet these new market opportunities.

 

 

Consolidated Income Statement

 

 

 

 

 

 

 

for the six months ended 30th September 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Year ended

 

 

 

30.9.05

 

30.9.04

 

31.3.05

 

Notes

 

£ million

 

£ million

 

£ million

 

 

 

 

 

 

 

Revenue

2

 

2,282.9

 

2,460.6

 

4,626.2

Cost of goods sold

 

 

(2,088.2)

 

(2,267.1)

 

(4,246.4)

Gross profit

 

 

194.7

 

193.5

 

379.8

Operating expenses

 

 

(80.2)

 

(82.7)

 

(163.2)

Restructuring costs

 

 

- 

 

(15.4)

 

(36.7)

Operating profit

2,3

 

114.5

 

95.4

 

179.9

Interest payable

 

 

(15.7)

 

(13.4)

 

(32.2)

Interest receivable

 

 

8.0

 

6.2

 

19.2

Share of (loss) / profit of associates

 

 

(0.4)

 

0.1

 

0.5

Profit before tax

 

 

106.4

 

88.3

 

167.4

Income tax expense

4

 

(31.1)

 

(26.4)

 

(46.5)

Profit for the period from continuing operations

 

 

75.3

 

61.9

 

120.9

Loss for the period from discontinued operations

 

 

- 

 

(6.3)

 

(6.4)

Profit for the period

 

 

75.3

 

55.6

 

114.5

 

 

 

 

 

 

 

 

Attributable to:

 

 

 

 

 

 

 

Equity holders of the parent company

 

 

75.7

 

56.0

 

115.5

Minority interest

 

 

(0.4)

 

(0.4)

 

(1.0)

 

 

 

75.3

 

55.6

 

114.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

pence

 

pence

 

pence

Earnings per ordinary share attributable to the equity holders of the parent company

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

 

Basic

5

 

35.2

 

28.7

 

56.1

 

Diluted

5

 

35.1

 

28.6

 

56.0

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

Basic

5

 

35.2

 

25.8

 

53.2

 

Diluted

5

 

35.1

 

25.7

 

53.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Balance Sheet

 

 

 

 

 

 

 

as at 30th September 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

30.9.05

 

30.9.04

 

31.3.05

 

Notes

 

£ million

 

£ million

 

£ million

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

 

610.3

 

573.9

 

593.0

Goodwill

 

 

378.7

 

376.6

 

375.1

Other intangible assets

 

 

29.7

 

26.0

 

27.4

Investments in associates

 

 

4.4

 

4.4

 

4.8

Deferred income tax assets

 

 

2.2

 

11.0

 

2.0

Available-for-sale investments

 

 

2.2

 

1.9

 

1.9

Post-employment benefits net assets

 

 

49.6

 

47.2

 

45.2

Total non-current assets

 

 

1,077.1

 

1,041.0

 

1,049.4

 

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Inventories

 

 

344.2

 

327.9

 

307.3

Current income tax assets

 

 

0.5

 

1.4

 

2.2

Trade and other receivables

 

 

406.5

 

346.9

 

363.4

Available-for-sale investments

 

 

0.1

 

1.3

 

0.6

Cash and deposits

9

 

113.8

 

97.0

 

78.7

Other financial assets

 

 

4.0

 

- 

 

- 

Other current assets

 

 

7.1

 

7.1

 

7.1

Total current assets

 

 

876.2

 

781.6

 

759.3

Total assets

 

 

1,953.3

 

1,822.6

 

1,808.7

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Trade and other payables

 

 

(325.0)

 

(286.2)

 

(294.3)

Current income tax liabilities

 

 

(51.5)

 

(32.5)

 

(12.3)

Borrowings and finance leases

9

 

(90.9)

 

(32.5)

 

(36.8)

Other financial liabilities

 

 

(10.0)

 

- 

 

-  

Short term provisions

 

 

(11.8)

 

(22.5)

 

(26.5)

Total current liabilities

 

 

(489.2)

 

(373.7)

 

(369.9)

 

 

 

 

 

 

 

Non-current liabilities

 

 

 

 

 

 

Borrowings, finance leases and related swaps

9

 

(384.3)

 

(427.7)

 

(411.5)

Deferred income tax liabilities

 

 

(45.1)

 

(44.5)

 

(44.6)

Employee benefits obligations

 

 

(53.1)

 

(43.7)

 

(48.2)

Long term provisions

 

 

(3.0)

 

(5.1)

 

(3.9)

Trade and other payables

 

 

(0.8)

 

(0.7)

 

(0.7)

Total non-current liabilities

 

 

(486.3)

 

(521.7)

 

(508.9)

Total liabilities

 

 

(975.5)

 

(895.4)

 

(878.8)

Net assets

 

 

977.8

 

927.2

 

929.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

Share capital

 

 

219.8

 

220.8

 

219.5

Share premium

 

 

141.5

 

138.0

 

139.8

Shares held in employee share ownership trusts

 

 

(45.7)

 

(28.8)

 

(37.7)

Other reserves

 

 

6.3

 

4.4

 

6.3

Retained earnings

 

 

648.9

 

584.3

 

594.5

 

 

 

 

970.8

 

918.7

 

922.4

Minority interest

 

 

7.0

 

8.5

 

7.5

Total equity

8

 

977.8

 

927.2

 

929.9

 

 

 

 

 

 

 

 

 

Consolidated Cash Flow Statement

 

 

 

 

 

 

 

for the six months ended 30th September 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Year ended

 

 

30.9.05

 

30.9.04

 

31.3.05

 

Notes

 

£ million

 

£ million

 

£ million

 

 

 

 

 

 

 

 

Cash flows from operating activities

 

 

 

 

 

 

Profit before tax

 

106.4

 

88.3

 

167.4

Adjustments for:

 

 

 

 

 

 

Share of loss / (profit) in associates

 

0.4

 

(0.1)

 

(0.5)

 

Discontinued operations

 

- 

 

0.4

 

0.4

 

Depreciation, amortisation and profit on sale of non-current assets and investments

33.2

 

32.7

 

66.1

 

Share-based payments

 

2.1

 

1.4

 

2.8

 

Changes in working capital and provisions

 

(28.7)

 

(6.6)

 

(12.5)

 

Changes in fair value of financial instruments

 

(1.0)

 

- 

 

- 

 

Net interest

 

7.7

 

7.2

 

13.0

Income tax received / (paid)

 

 

6.4

 

(32.2)

 

(52.9)

Net cash inflow from operating activities

 

 

126.5

 

91.1

 

183.8

 

 

 

 

 

 

 

 

Cash flows from investing activities

 

 

 

 

 

 

Dividends received from associates

 

 

0.1

 

0.1

 

0.2

Purchases of non-current assets and investments

 

 

(48.4)

 

(38.3)

 

(96.3)

Proceeds from sale of non-current assets and investments

 

 

1.9

 

1.3

 

4.1

Purchases of businesses and minority interest

 

 

(1.1)

 

(3.1)

 

(4.0)

Net proceeds from sale of business

 

 

- 

 

24.4

 

23.3

Net cash outflow from investing activities

 

 

(47.5)

 

(15.6)

 

(72.7)

 

 

 

 

 

 

 

 

Cash flows from financing activities

 

 

 

 

 

 

Net purchase of own shares

 

 

(11.9)

 

1.1

 

(16.1)

Proceeds from / (repayment of) borrowings and finance leases

 

 

14.0

 

(29.1)

 

(50.6)

Dividends paid to equity holders of the parent company

6

 

(40.9)

 

(39.5)

 

(58.4)

Dividends paid to minority shareholders

 

 

- 

 

- 

 

(0.2)

Interest paid

 

 

(15.6)

 

(12.3)

 

(32.1)

Interest received

 

 

7.9

 

5.6

 

19.2

Net cash outflow from financing

 

 

(46.5)

 

(74.2)

 

(138.2)

 

 

 

 

 

 

 

 

Increase / (decrease) in cash and cash equivalents in the period

 

 

32.5

 

1.3

 

(27.1)

Exchange differences on cash and cash equivalents

 

 

4.8

 

1.6

 

0.1

Cash and cash equivalents at beginning of period

 

 

64.0

 

91.0

 

91.0

Cash and cash equivalents at end of period

9

 

101.3

 

93.9

 

64.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to net debt

 

 

 

 

 

 

 

Increase / (decrease) in cash and cash equivalents in the period

 

 

32.5

 

1.3

 

(27.1)

(Proceeds from) / repayment of borrowings and finance leases

 

 

(14.0)

 

29.1

 

50.6

Change in net debt resulting from cash flows

 

 

18.5

 

30.4

 

23.5

Exchange differences on net debt

 

 

(9.7)

 

0.9

 

1.4

Movement in net debt in period

 

 

8.8

 

31.3

 

24.9

Net debt at beginning of period (after adjustment to opening position for IAS 39)

10

 

(370.2)

 

(394.5)

 

(394.5)

Net debt at end of period

9

 

(361.4)

 

(363.2)

 

(369.6)

 

 

 

 

 

 

 

 

 

 

 

 

Consolidated Statement of Recognised Income and Expense

for the six months ended 30th September 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six months ended

Year ended

 

30.9.05

 

30.9.04

 

31.3.05

 

Notes

 

£ million

 

£ million

 

£ million

 

 

 

 

Currency translation differences on foreign currency net investments and

 

 

 

 

 

 

 

 

related loans

 

 

19.6

 

4.3

 

(2.0)

Fair value gain on available-for-sale investments transferred to profit on sale

 

 

(0.8)

 

- 

 

- 

Cash flow hedges

 

 

(1.8)

 

- 

 

- 

Actuarial loss on post-employment benefits assets and liabilities

 

 

- 

 

- 

 

(16.1)

Tax on above items taken directly to or transferred from equity

 

 

(4.3)

 

(1.4)

 

5.8

Net income recognised directly in equity

 

 

12.7

 

2.9

 

(12.3)

Profit for the period

 

 

75.3

 

55.6

 

114.5

Total recognised income and expense relating to the period

 

 

88.0

 

58.5

 

102.2

IFRS transition adjustment for financial instruments

10

 

2.7

 

- 

 

- 

Total recognised income and expense for the period

 

 

90.7

 

58.5

 

102.2

 

 

 

 

 

Attributable to:

 

 

 

 

Equity holders of the parent company

 

 

91.1

 

58.9

 

103.2

Minority interest

 

 

(0.4)

 

(0.4)

 

(1.0)

 

 

 

90.7

 

58.5

 

102.2

 

 

 

 

 

 

 

Notes on the Accounts

 

 

 

 

 

 

 

 

for the six months ended 30th September 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

Basis of preparation

 

 

 

 

 

 

 

 

Following a European Union Regulation issued in 2002, with effect from 1st April 2005 the group is reporting its

 

 

results in accordance with International Financial Reporting Standards (IFRS) as expected to be adopted by the

 

 

European Union and so in its annual report and accounts for the year ending 31st March 2006 all its financial

 

 

 

information will be presented under IFRS.  Previous accounts were prepared under UK Generally Accepted Accounting

 

 

Principles (UK GAAP) and reconciliations converting the group's results from UK GAAP to IFRS for the six months ended

 

 

30th September 2004, the year ended 31st March 2005 and 1st April 2004 (the date of transition) balance sheet are

 

 

presented in note 12.

 

 

 

 

 

 

 

The interim accounts were approved by the Board of Directors on 22nd November 2005, and are unaudited but have been

 

reviewed by the auditors. They do not constitute statutory accounts, but have been prepared on a basis consistent with the

 

group's anticipated IFRS accounting policies which it expects to follow in its annual report and accounts for the year

 

 

ending 31st March 2006. These accounting policies are set out on pages 28 to 31.

 

 

 

 

 

 

 

These policies are consistent with all IFRS and Standing Interpretations Committee (SIC) and International Financial

 

 

Reporting Interpretations Committee (IFRIC) interpretations currently issued by the International Accounting Standards

 

 

Board (IASB) effective for 2005/06 reporting and adopted by the European Union. In addition, the IASB has issued an

 

 

amendment to International Accounting Standard (IAS) 19 - 'Employee Benefits' in December 2004 which permits the full

 

 

recognition of actuarial gains or losses that occur in the year outside the income statement in a similar way to FRS 17

 

 

under UK GAAP. Johnson Matthey has assumed that this amendment will be endorsed by the European Union and so

 

 

has decided to adopt it in 2005/06 and has prepared these accounts on that basis. Johnson Matthey has also taken

 

 

advantage of the exemption allowed under IFRS 1 not to restate comparative information in its accounts for the year

 

 

ending 31st March 2006 to comply with IAS 32 - ‘Financial Instruments: Disclosure and Presentation’, IAS 39 -

 

 

 

‘Financial Instruments: Recognition and Measurement’ and IFRS 4 - ‘Insurance Contracts’. Note 10 details the

 

 

 

adjustment to the balance sheet at 1st April 2005 for the implementation of these standards. Since 1st April 2005, the

 

 

group has used hedge accounting for interest rate and foreign currency instruments that meet the relevant hedging

 

 

relationship criteria.

 

 

 

 

 

 

 

The IASB is still issuing standards and interpretations which Johnson Matthey may decide to adopt in 2005/06 and so

 

 

there may be further adjustments to the accounting policies and comparative information.

 

 

 

 

 

 

 

Information in respect of the year ended 31st March 2005 is derived from the unaudited IFRS information published in

 

 

the annual report and accounts for that year updated for minor changes to deferred income tax. Statutory accounts for the

 

 

year ended 31st March 2005, which were prepared under UK GAAP, have been delivered to the Registrar of Companies.

 

 

The auditors' report on those statutory accounts was unqualified and did not contain any statement under 237(2) and

 

 

237(3) of the Companies Act 1985.