Johnson Matthey PLC

National Storage Mechanism | Additional information RNS Number : 7629N Johnson Matthey PLC 27 November 2024 Half year results for the six months ended 30th September 2024 27th November 2024 Catalysing the net zero transition to drive sustainable value creation Continued strategic execution and transformation progress �� A resilient performance with underlying operating profit excluding divestments down 4% - in line with our expectations - against a challenging macroeconomic backdrop �� Improved margins in Clean Air and Catalyst Technologies, and on track for targets �� Transformation programme continuing at pace - cumulative cost savings of ��155 million delivered to date and on track to achieve ��200 million by the end of 2024/25 �� Making progress against our strategic milestones: three large scale project wins in Catalyst Technologies' sustainable technologies portfolio and PGM refinery investment on track �� Strong balance sheet - net debt to EBITDA of 1.4 times: focused on driving improved cash �� 250 million share buyback programme - ��205 million completed as at 22nd November 2024 �� Full year outlook maintained, with performance more weighted to the second half driven by greater benefits from transformation and a stronger performance in PGM Services Reported results Underlying results��,�� Half year ended 30th September % change Half year ended 30th September % change % change, ex-divestments��, constant FX rates 2024 2023 2024 2023 Revenue ��m 5,632 6,531 -14 Sales excl. precious metals�� m 1,722 1,967 -12 -3 Operating profit ��m 575 136 +323 156 180 -13 -4 Profit before tax ��m 554 82 +576 133 139 -4 Profit after tax ��m 484 63 +668 104 108 -4 Basic earnings per share pence 266.8 34.7 +669 57.4 59.1 -3 Interim dividend per share pence 22.0 22.0 - Free cash flow ��m 347 78 Cash from operating activities ��m -22 236 Net debt ��m 783 1,044 Liam Condon, Chief Executive Officer, commented: We delivered a resilient performance - in line with our expectations - and have continued to execute on our strategy in the first half, against a challenging macroeconomic backdrop. Our performance was supported by our transformation programme which is progressing well. For the full year, we are maintaining guidance with our confidence in the second half underpinned by further transformation benefits. We are strongly focused on cash generation, with our established businesses driving cash to support the disciplined development of our growth businesses and further shareholder returns. Johnson Matthey has an important role to play in the global transition to net zero and our portfolio means we are well positioned to adapt to the evolving pace of this transition. We continue to secure important project wins in sustainable technologies, whilst building our capability and transforming at pace. Group outlook for the year ending 31st March 2025 maintained For 2024/25, excluding Value Businesses��, we continue to expect at least mid single digit growth in underlying operating performance at constant precious metal prices and constant currency. We expect our improved second half performance to reflect further transformation benefits as well as higher volumes and metal recoveries in PGM Services, where we have good visibility. In Clean Air, in 2024/25, we expect modest growth in operating performance, with continued margin expansion driven by efficiency benefits. For the second half, we expect a sequential improvement in operating performance and margin.�� PGM Services' operating performance in 2024/25 is expected to be broadly stable, with limited impact from precious metal prices. We expect to deliver a significantly stronger second half, driven by higher sales from increased refining volumes, higher metal recoveries and higher product sales, and further efficiencies as we optimise our cost base�� In Catalyst Technologies we expect further strong growth in operating performance in 2024/25, with a mid-teens margin. Following a strong first half performance in Licensing, we expect our second half operating performance to be slightly below the first half.�� In Hydrogen Technologies we now expect lower sales in 2024/25 (previously modest growth). For the full year, despite a lower contribution from sales, we will deliver a significantly lower operating loss as we take further action to reduce costs.�� If PGM (platinum group metal) prices remain at their current level�� for the remainder of 2024/25, we expect an adverse impact of ��3 million to full year operating profit compared with the prior year.�� At current foreign exchange rates��, translational foreign exchange movements for the year ending 31st March 2025 are expected to adversely impact underlying operating profit by c.��10 million. Dividend The board has approved an interim dividend of 22.0 pence per share, maintained at the same level as the prior year (1H 2023/24: 22.0 pence per share). The interim dividend will be paid on 4th February 2025, with an ex-dividend date of 5th December 2024, to shareholders on the register on 6th December 2024. Enquiries: Investor Relations Martin Dunwoodie Louise Curran Chris Wood Director of Investor Relations and Treasury Head of Investor Relations Senior Investor Relations Manager +44 20 7269 8241 +44 20 7269 8235 +44 20 7269 8138 Media Sinead Keller Harry Cameron Group External Relations Director Teneo +44 20 7269 8218 +44 7799 152148 Notes: 1. Unless otherwise stated, sales and operating profit commentary refers to performance at constant exchange rates. Growth at constant rates excludes the translation impact of foreign exchange movements, with 1H 2024/25 results converted at 1H 2023/24 average rates. In 1H 2024/25, the translational impact of exchange rates on group sales and underlying operating profit was an adverse impact of ��29 million and ��5 million respectively. 2. Underlying is before profit or loss on disposal of businesses, amortisation of acquired intangibles, share of profits or losses from non-strategic equity investments, major impairment and restructuring charges and, where relevant, related tax effects. For definitions and reconciliations of other non-GAAP measures, see pages 48 to 53. 3. Divestment of Value Businesses which is now complete. 4. Revenue excluding sales of precious metals to customers and the precious metal content of products sold to customers. 5. Baseline is underlying operating profit excluding Value Businesses (��381 million in 2023/24). 6. Outlook commentary for Clean Air, PGM Services, Catalyst Technologies and Hydrogen Technologies assumes constant precious metal prices and constant currency. 7. Based on average precious metal prices in November 2024 (month to date). 8. A US$100 per troy ounce change in the average annual platinum, palladium and rhodium metal prices each have an impact of approximately ��0.5 million, ��1 million and ��0.5 million respectively on full year 2024/25 underlying operating profit in PGM Services. This assumes no foreign exchange movement. 9. Based on average foreign exchange rates for November 2024 month to date (��:US$ 1.28, ��:�� 1.20, ��:RMB 9.19). Performance summary for the six months ended 30th September 2024 Underlying operating profit - excluding the impact of divestments - declined 4% in the period in a challenging macroeconomic environment. Our performance was supported by continued strong progress in our transformation programme. Average PGM prices have normalised and remained broadly stable in the half, with an adverse impact to underlying operating profit of ��3 million. Clean Air delivered a resilient performance, with operating profit up 2% and margin expanding 80 basis points to 10.4%. Whilst the top line was lower due to market weakness and historic platform losses, benefits from our transformation programme supported profitability. PGM Services' operating profit declined 35% primarily reflecting lower refining volumes, including metal recoveries, and PGM trading profit. Catalyst Technologies' operating profit grew 43% and margins improved 250 basis points to 14.9%, in line with our target of mid-teens by the end of 2024/25. The business benefited from strong Licensing performance, higher volumes in Catalysts, and further efficiencies. Hydrogen Technologies delivered a flat operating loss, despite lower sales. On a reported basis, operating profit increased to ��575 million (1H 2023/24: ��136 million) reflecting a ��484 million profit on disposal, principally Medical Device Components which completed on 1st July 2024. We incurred ��63 million of major impairment and restructuring charges, comprising an impairment charge of ��23 million and restructuring charges of ��40 million. We have a strong balance sheet, with net debt of ��783 million as at 30th September 2024 compared to ��951 million as at 31st March 2024. Net debt to EBITDA was 1.4 times, which was slightly below our target range of 1.5 to 2.0 times. Free cash flow was ��347 million, compared to ��78 million in the first half of the prior year, largely reflecting net proceeds from the disposal of Medical Device Components, partly offset by working capital outflows. Strategic summary Our strategy to catalyse the net zero transition is based around four businesses: Clean Air, PGM Services and our energy transition businesses of Catalyst Technologies and Hydrogen Technologies. We are actively managing Clean Air to drive margin improvement and cash, and PGM Services is expected to deliver strong cash conversion over the medium to long-term. This enables us to develop and grow Catalyst Technologies, positioning us as a global leader in sustainable solutions. In Hydrogen Technologies, we are managing the business in line with the pace of market development. Our portfolio provides a competitive advantage as a trusted partner to support our customers in transitioning their businesses towards a net zero future. We are well positioned to successfully navigate this journey and create significant value for all our stakeholders. As part of our transformation , we are continuing to drive commercial excellence, greater discipline in capital projects and further cost efficiencies across the group. In the first half, we delivered ��35 million cost savings, taking cumulative savings to ��155 million. We are on track to deliver ��200 million by the end of 2024/25, which annualises at more than ��250 million, resulting in further benefits of more than ��50 million in 2025/26. Our aim is to maintain a strong balance sheet with a target level of net debt to EBITDA of 1.5 to 2.0 times. We remain disciplined in our capital allocation: investing for growth and attractive returns, ensuring a reliable dividend and returning excess capital to shareholders. We continue to expect cumulative capital expenditure of up to ��900 million over the three year period to 2026/27. Of this, c.��250 million relates to our new PGM refinery which is due to start commissioning by the end of 2025/26. Once this investment is complete, we expect capital expenditure to reduce. With respect to shareholder returns, on 3rd July 2024 we commenced our ��250 million share buyback programme, following the completion of the sale of Medical Device Components. Going forward, with transformation related cost savings supporting higher margins, capex trending downwards and working capital improvements from our new efficient PGM refinery, we expect greater cash generation. 2025/26 strategic milestones overview We are making good progress against our strategic milestones set out in May 2024: winning customers, building capability and transforming the business. Customers: �� On track to deliver at least ��4.5 billion of cash in the decade to 2030/31�� from Clean Air �� Won 3 additional large scale projects in Catalyst Technologies' sustainable technologies portfolio (2025/26 target: 20) �� Targeting 4 new Hydrogen Technologies partnerships with leading companies by end of 2025/26 Capability: �� On track to start commissioning of new world-class PGM refinery by end of 2025/26 �� Expanded engineering capacity by 22% to serve licensing growth in Catalyst Technologies (2025/26 target: 30%��) Transformation: �� Targeting ICCA (International Council of Chemical Associations) process safety event severity rate of 0.80 by end of 2024/25 (0.88 in 2023/24) �� Targeting employee engagement score of at least 7.4 by end of 2025/26 (7.2 in 2023/24) �� Delivered ��155 million transformation cost savings to date (2024/25 target: ��200 million) �� Implemented JM Global Solutions for cost effective business processes in the UK and US; on track for full implementation by end of 2024/25 �� Targeting 32% reduction in scope 1 and 2 CO2e emissions by end of 2025/26 ( 2019/20 baseline) Group Leadership Team changes Given the progress made over the last two years in simplifying our business, including the completion of our divestment programme, we have streamlined our Group Leadership Team (GLT).�� We now have one GLT lead for both Clean Air and Hydrogen Technologies, providing a more efficient management structure. Anish Taneja, previously Chief Executive, Clean Air is now Chief Executive of Clean Air and Hydrogen Technologies. We have also combined several functions which are central to our transformation under one GLT role, to maximise synergies and ensure the appropriate support for the businesses. Alastair Judge is now Head of Strategy and Operations, having previously been Chief Executive, PGM Services. Louise Melikian, previously Chief Strategy and Corporate Development Officer, succeeds Alastair as Chief Executive of the PGM Services business. Board changes We announced on 1st July 2024 that Stephen Oxley, Chief Financial Officer, had decided to leave JM to pursue another opportunity and would be stepping down from the board no later than 31st March 2025. The process to appoint a successor is proceeding well and the board expects to make an appointment in early 2025, to enable a suitable handover period and orderly transition. A further announcement will be made as appropriate. We recently announced the appointment of Sinead Lynch as an independent Non-Executive Director. This appointment is with effect from 1st January 2025 and Sinead will also become a member of the Remuneration, Nomination and Societal Value Committees. Sinead brings a deep understanding of low carbon energy and sustainability, having spent 30 years in the energy sector at Royal Dutch Shell and BG Group. Following a seven year tenure, Jane Griffiths will step down as Chair of the Societal Value Committee and from the board on 31st December 2024. Rita Forst will succeed Jane as Chair of the Societal Value Committee from 1st January 2025. 1. Cash target from 1st April 2021 to 31st March 2031, pre-tax and post restructuring costs. 2. Baseline: 31st March 2024. 3. All changes were effective from 1st November 2024. Summary of underlying operating results Unless otherwise stated, commentary refers to performance at constant FX rates��. Percentage changes in the tables are calculated on rounded numbers. Sales (�� million) Half year ended 30th September % change % change, constant FX rates 2024 2023 Clean Air 1,165 1,286 -9 -7 PGM Services 207 230 -10 -9 Catalyst Technologies 336 282 +19 +20 Hydrogen Technologies 20 37 -46 -46 Eliminations (42) (58) Sales excluding Value Businesses 1,686 1,777 -5 -3 Value Businesses�� 36 190 -81 -81 Total sales 1,722 1,967 -12 -11 Underlying operating profit (�� million) Half year ended 30th September % change % change, constant FX rates 2024 2023 Clean Air 121 124 -2 +2 PGM Services 51 78 -35 -35 Catalyst Technologies 50 35 +43 +43 Hydrogen Technologies (26) (26) n/a n/a Corporate (42) (45) Underlying operating profit excluding Value Businesses 154 166 -7 -4 Value Businesses�� 2 14 -86 -86 Total underlying operating profit 156 180 -13 -11 Reconciliation of underlying operating profit to operating profit (�� million) Half year ended 30th September 2024 2023 Underlying operating profit 156 180 Profit on disposal of businesses�� 484 - Major impairment and restructuring charges�� (63) (42) Amortisation of acquired intangibles (2) (2) Operating profit 575 136 Notes: 1. Growth at constant rates excludes the translation impact of foreign exchange movements, with 1H 2024/25 results converted at 1H 2023/24 average rates. In 1H 2024/25, the translational impact of exchange rates on group sales and underlying operating profit was an adverse impact of ��29 million and ��5 million respectively. 2. Includes Battery Materials , Battery Systems, Diagnostic Services and Medical Device Components which are all now disposed . 3. For further detail on these items please see page 17. Business reviews Clean Air Resilient performance and improved margin despite a challenging market �� Sales were down 7% reflecting a decline in global vehicle production across both light and heavy duty, as well as the impact of historic platform losses as guided �� Despite lower sales, underlying operating profit increased 2% with margin up 80 basis points to 10.4%, reflecting ongoing operational excellence and transformation benefits Half year ended 30th September % change % change, constant FX rates 2024 2023 �� million �� million Sales Light duty diesel 530 532 - +2 Light duty gasoline 244 280 -13 -11 Heavy duty diesel 391 474 -18 -16 Total sales 1,165 1,286 -9 -7 Underlying operating profit 121 124 -2 +2 Underlying operating profit margin 10.4% 9.6% EBITDA margin 13.6% 12.5% Reported operating profit 101 104 Clean Air provides catalysts for emission control after-treatment systems used in light and heavy duty vehicles powered by internal combustion engines. Market commentary In the half, global vehicle production declined across both light duty and heavy duty. In light duty - following a strong prior period which benefited from improved supply chains - there were declines across all key regions. This reflected a weak macroeconomic environment, particularly in Europe and China, and OEM de-stocking. In heavy duty, production in Europe and China declined as the market normalised following strong demand in the prior year and as a result of the weaker macroeconomic environment. In North America, Class 8 truck production is nearing the bottom of the cycle, with a further decline expected in 2025 before recovery in 2026 ahead of new EPA27 (Environmental Protection Agency) legislation. Performance commentary Sales were down 7%, with declines in light duty gasoline and heavy duty diesel, more than offsetting modest growth in light duty diesel. This reflected a challenging market as well as the impact of historic platform losses as previously guided. Pricing was modestly lower reflecting historic contract commitments, partly mitigated by our focus on commercial excellence. Sales Light duty diesel Light duty diesel sales grew 2%, outperforming the global market that declined due to continued shifts in consumer behaviour towards gasoline, including hybrids which utilise gasoline engines. Our performance largely reflected strong growth in Asia, particularly India and South East Asia, driven by favourable product and customer mix. In Europe, sales were resilient in a declining market driven by higher substrate pricing and favourable mix. In the Americas, we saw modest growth in a slightly declining market as some of our larger customers outperformed the market. Light duty gasoline Light duty gasoline sales were down 11%, underperforming the global market that saw a modest decline. This largely reflects our performance in China where some of our larger customers underperformed the market. In Europe and North America sales underperformed modestly declining markets reflecting the loss of platforms from previous years. Heavy duty diesel Heavy duty diesel sales were down 16%, underperforming the global market that declined modestly. Our performance was mainly driven by Europe where we saw some customer underperformance and lower substrate pricing. In Asia, performance was driven by China where we experienced market share losses and the underperformance of some of our customers. In North America, we slightly underperformed in Class 8 due to the ramp down of a large customer platform. However, this was partly offset by good performance in Class 4-7 and South America. Sales from non-road platforms declined due to softness in agricultural end markets. Underlying operating profit Clean Air delivered a resilient performance as underlying operating profit grew 2% despite challenging market conditions and lower sales. The operating margin expanded 80 basis points to 10.4% reflecting benefits from our continued focus on cost discipline, commercial and operational excellence, and footprint rationalisation. Business update In Clean Air, as emissions legislation tightens globally, we continue to provide world-leading emissions control systems to reduce harmful emissions and support our customers. We are committed to being a lasting partner in this industry driving efficiency and significant cash generation to 2030/31 and beyond. Our focus on efficiency has impr oved operating margins through initiatives across all cost drivers. We continue to drive further improvement and are accelerating the next phase of our transformation, including manufacturing, with a continued focus on driving efficiencies across production sites. Together with our wider efficiency initiatives, we expect these actions to drive margin expansion in the second half and we remain on track to deliver our target of mid-teens margins by 2025/26. We continue to strengthen our commercial muscle to win targeted business. We are leveraging our enhanced customer offering - our leading technology, value-added services and commitment to being a lasting partner for our customers - to drive value-based pricing. In the period our win rates for new platforms remained high, including in light duty gasoline where we are increasingly focused on hybrid and range extender platforms. In Europe, Euro 7 standards will commence from November 2026 for light duty and May 2028 for heavy duty vehicles for new, main category vehicle types (legislation is applied to all main category vehicles 12 months later). In the US, the EPA rules on light and medium duty multi pollutant emission standards, which tackle both CO2 and non-CO2 criteria exhaust emissions, will be applied as a phased in approach from 2027. EPA and CARB (California Air Resources Board) heavy duty low NOx emissions standards, and revised US heavy duty transport CO2 standards also start from 2027. China and India are expected to bring proposals for new on-road vehicle emissions standards, with details estimated to be published in 2025. With the slowdown in global BEV penetration and our focus on driving efficiency, we expect Clean Air to be 'stronger for longer' - delivering at least ��4.5 billion of cash in the decade to 2030/31�� and further cash flow beyond. Notes: 1. Cash target from 1st April 2021 to 31st March 2031, pre-tax and post restructuring costs. PGM Services First half performance impacted by soft end markets �� Sales declined 9% and underlying operating profit was down 35% primarily reflecting lower volumes across refining, including metal recoveries, and market-driven softness in our PGM trading business �� Second half expected to be significantly stronger, with good visibility on higher volumes and cost efficiencies Half year ended 30th September % change % change, constant FX rates 2024 2023 �� million �� million Sales PGM Services 207 230 -10 -9 Underlying operating profit 51 78 -35 -35 Underlying operating profit margin 24.6% 33.9% EBITDA margin 30.9% 40.0% Reported operating profit 26 77 PGM Services is the world's largest recycler of platinum group metals (PGMs). This business is enabling the energy transition through developing new PGM applications and providing circular solutions as demand for scarce critical materials increases. PGM Services provides a strategic service to the group, supporting Clean Air, Catalyst Technologies and Hydrogen Technologies with security of metal supply, and the manufacture of value-add PGM products. Performance commentary Sales In the half, sales were down 9% primarily driven by our refining and trading businesses . In refining, we saw continued softness in the auto scrap recycling market as expected as well as lower metal recoveries linked to the timing of our asset renewal programme and scheduled downtime in our UK refinery . In our products business, sales were broadly flat. Average PGM prices have normalised and remained broadly stable in the period, albeit at a lower absolute level compared to the first half of last year. PGM markets were also subject to soft volumes and lower price volatility, leading to lower sales for our metal trading business. For the second half, we have good visibility of volumes. We have secured an increase in our refining volumes and expect increased metal recoveries. In addition, we expect higher sales from our products business - specifically our pharmaceutical and agrochemicals customers - reflecting normal seasonality. Underlying operating profit Underlying operating profit declined 35% primarily reflecting lower refining volumes, including metal recoveries, and PGM trading profit. The adverse impact from lower average PGM prices was ��3 million in the half. We expect to deliver a significantly stronger second half, driven by higher sales (increased refining volumes, higher metal recoveries and higher product sales) as well as efficiencies as we optimise our cost base. Business update Johnson Matthey is a world leader in PGMs. Our foundational PGM Services business has deep expertise and enables a PGM ecosystem across JM and for our customers. PGMs are critical to many of the world's products, processes and technologies, and with their unique properties they will remain vital in the long-term, well beyond the internal combustion engine. In PGM products, we are developing new, high-value PGM applications, through our world-class R&D expertise and supported by our full-service customer offering. In the period, we further expanded our customer base with new business wins in pharmaceutical and agrochemical products. As the world decarbonises and transitions towards a circular economy, demand for secondary (recycled) PGMs is expected to increase over the medium to long-term. To maintain our position as the world's largest recycler of PGMs, we are investing in our new world-class refinery. This will deliver significant safety, sustainability and efficiency improvements, including a one-off working capital benefit of more than ��250 million. Our investment is on budget and we are on track to start commissioning by the end of 2025/26. Across our business, we are structurally improving our operational efficiency and removing duplication. Beyond our group transformation programme, we have identified a pipeline of opportunities to streamline our operations, optimise our assets and right-size our support functions. Execution of the programme commenced in the first half and we expect to see the benefits progressively coming through in the second half and beyond. With stable PGM prices anticipated, we expect this business to deliver at least low single digit CAGR in operating profit over the medium to long-term, and strong cash conversion. Catalyst Technologies Strong sales and profit growth, and continued momentum in sustainable technologies �� Sales up 20% with double digit growth in Catalysts driven by higher first fill volumes, and strong performance in Licensing where sales more than doubled �� Won three large scale projects in our sustainable technologies portfolio since 1st April 2024, and on track against our strategic milestone �� Underlying operating profit up 43% and margin up 250 basis points driven by a higher contribution from Licensing, increased volumes in Catalysts and efficiency benefits Half year ended 30th September % change % change, constant FX rates 2024 2023 �� million �� million Sales Catalysts 276 254 +9 +10 Licensing 60 28 +114 +114 Total sales 336 282 +19 +20 Underlying operating profit 50 35 +43 +43 Underlying operating profit margin 14.9% 12.4% EBITDA margin 19.0% 16.7% Reported operating profit 48 32 Catalyst Technologies is a key pillar of our strategy as we target high growth, high return opportunities in the decarbonisation of fuels and chemical value chains. We have leading positions in syngas - methanol, ammonia, hydrogen and formaldehyde - and a strong sustainable technologies portfolio. Our revenue streams are licensing process technology and supplying catalysts. Performance commentary Sales Sales were up 20% reflecting double digit growth in Catalysts - which represents the majority of sales - whilst Licensing more than doubled. In particular, we delivered a good performance in China, with higher first fill volumes in Catalysts and growth in our existing Licensing portfolio. We have seen significant new plant builds in China in recent years, partly driven by significant growth across the biodegradable plastics value chain. In sustainable technologies we saw continued momentum, with strong sales growth and large scale project wins. Catalysts: double digit growth driven by first fills In Catalysts, sales increased 10%. Growth was driven by first fills with increased demand as new plants came onstream in China, including one of the world's largest methanol plants. Cyclical recovery in the methanol market also drove higher volumes in refills. These dynamics more than offset a weaker performance in the competitive additives market and a slowdown in formaldehyde following strong demand in the prior year. Licensing: strong growth in both our existing portfolio and sustainable technologies Licensing - which can be lumpy in nature - was up 114% year-on-year, primarily driven by our existing core portfolio. In our sustainable technologies portfolio, sales from low carbon hydrogen and sustainable fuels more than trebled, albeit off a low base. Underlying operating profit Underlying operated profit grew 43% and margin expanded 250 basis points to 14.9%. This was largely driven by a higher contribution from Licensing, increased volumes in Catalysts and efficiency benefits. Business update In Catalyst Technologies, we are growing our existing business alongside new opportunities in low carbon hydrogen, and sustainable fuels and chemicals. Our sustainable technologies portfolio is mainly based on syngas technology where we have market leading positions and a good track record, and will transform the scale and profitability of our business. We have made good progress against our strategic milestone of 20 additional large scale project wins across our sustainable technologies portfolio by the end of 2025/26, with three wins since 1st April 2024: �� A large scale low carbon hydrogen project in Europe (as announced in May) �� A waste-to-methanol project in Europe (as announced in May) �� HIF Global's Paysand�� e-methanol plant in Uruguay (as announced in May) Together with previously announced project wins, we have won 13 large scale projects since 1st April 2022. This includes DG Fuel's first sustainable aviation facility in Louisiana, US, where the project scope was recently increased to incorporate our HyCOgenTM technology, in addition to FT CANSTM technology. When combined, these technologies increase the production yield of synthetic crude from sustainable feedstocks. These 13 projects are worth more than ��350 million in sales over five years, subject to project completion. Our pipeline of sustainable technologies projects remains healthy with over 140 projects, demonstrating the strength of our technology offering and market positioning. To further strengthen our competitive position, we are partnering with market leaders to offer our customers end-to-end integrated solutions. In the period, we announced a blue ammonia partnership with thyssenkrupp Uhde; and a sustainable fuels partnership with Honeywell UOP which builds on our previously announced low carbon hydrogen partnership. To support our Licensing growth, we recently opened new engineering hubs in Manchester, UK, and Mumbai, India. We increased our engineering capacity by 22% in the period (31st March 2024 baseline), tracking well against our target of 30% by the end of 2025/26. To capture growth opportunities in Asia and access critical capabilities to support our global growth ambitions, we have created a business hub in Mumbai alongside our engineering centre. We continue to transform our existing core business. Across our manufacturing operations, we are focused on improving efficiency, including debottlenecking plants. For example, we have restarted production at our expanded formaldehyde catalyst facility. Together with commercial excellence initiatives and procurement savings, this will drive continued margin improvement. In Catalyst Technologies, we are targeting high single digit sales growth in the short-term, accelerating to mid-teens growth over the medium to long-term. With the combination of efficiencies and the mix shift towards Licensing, we are targeting mid-teens margins by the end of 2024/25 and high-teens by the end of 2027/28, with continued accretion beyond. Hydrogen Technologies Slowdown in market development driving lower sales - operating loss flat year-on-year �� Sales of ��20 million, down 46%, due to lower demand following a slowdown in market development and customer de-stocking �� Underlying operating loss flat year-on-year, despite significantly lower sales, reflecting actions taken to reduce the cost base. Continue to expect breakeven by the end of 2025/26 Half year ended 30th September % change % change, constant FX rates 2024 2023 �� million �� million Sales Hydrogen Technologies 20 37 -46 -46 Underlying operating loss (26) (26) - - Underlying operating loss margin n/a n/a Reported operating loss (26) (26) In Hydrogen Technologies, we provide components across the value chain for fuel cells and electrolysers including catalyst coated membranes (CCMs) and membrane electrode assemblies (MEAs). Our ambition is to be the market leader in CCMs, which are the critical performance-defining components at the centre of fuel cells, focusing on PEM (proton exchange membrane) and AEM (anion exchange membrane) electrolysers. Performance commentary Sales In the half, sales were down 46% to ��20 million. We saw lower demand across both fuel cells and electrolysers as the pace of market development slowed and our customers de-stocked. This largely reflects the slowing build-out of supply chains and infrastructure due to a lack of clarity around regulation and incentives. In our operations, we have continued to drive manufacturing excellence, and yields have improved at our UK plant in Swindon from which we serve the vast majority of our customer demand. Underlying operating loss Underlying operating loss of ��26 million, flat year-on-year, despite a lower contribution from sales. As the pace of market development slowed, we took actions to reduce our cost base including restructuring the business, reducing headcount, and slowing our growth investments. Further benefits will come through in the second half as cost savings annualise and we take further action to reduce costs, resulting in a significantly lower operating loss compared to the first half. Business update Hydrogen will play an essential role in the net zero transition. With our leading technology, decades of expertise in fuel cells and deep understanding of PGM catalysis and recycling, Johnson Matthey is well positioned to benefit from this market in the long-term. Currently, the global green hydrogen value chain is in an early stage of development and experiencing challenges as it scales, particularly around total cost of ownership as well as the development of regulation, incentives and infrastructure. This is being reflected in many of our customers' near-term demand forecasts, especially in Europe and the US. In our Hydrogen Technologies business, we are actively managing the pace of investment in line with market development. Given the near-term market challenges, we have significantly reduced our capital expenditure and taken cost control actions, including reducing our headcount materially. Consequently, as previously announced, we continue to delay the start of production for our manufacturing site in the UK (Royston). In addition, we are prioritising our resource to focus on the most important opportunities, and continue to take steps to de-risk the business. We are focused on further diversifying our customer base, targeting four new strategic partnerships with leading companies by the end of 2025/26. We are seeing increasing interest from customers as they recognise the benefits of partnering, and we are progressing opportunities with a number of customers. Against a backdrop of softening demand in the short-term, we now expect lower sales in 2024/25 compared to 2023/24 (previously modest sales growth). However, given the benefits from cost control actions, we will deliver a significantly lower operating loss in 2024/25 and continue to expect breakeven by the end of 2025/26. Corporate Corporate costs were ��42 million, a decrease of ��3 million from the prior period, largely reflecting benefits from transformation. Financial review Research and development (R&D) R&D spend was ��99 million in the half. This was down from ��104 million in the prior period and represents c.5% of sales excluding precious metals. We are reducing our R&D spend in Clean Air and prioritising spend in our growth areas, including our sustainable technologies portfolio in Catalyst Technologies. We are also investing in our digital capabilities to accelerate innovation and provide further insights for our customers. Foreign exchange The calculation of growth at constant rates excludes the impact of foreign exchange movements arising from the translation of overseas subsidiaries' profit into sterling. The group does not hedge the impact of translation effects on the income statement. The principal overseas currencies, which represented 74% of the non-sterling denominated underlying operating profit in the half year ended 30th September 2024, were: Share of 1H 2024/25 non-sterling denominated underlying operating profit Average exchange rate Half year ended 30th September % change 2024 2023 US dollar 18% 1.28 1.26 +2 Euro 49% 1.18 1.16 +2 Chinese renminbi 7% 9.23 8.99 +3 For the half, the impact of exchange rates decreased sales by ��29 million and underlying operating profit by ��5 million. If average exchange rates for November 2024 month to date (��:US$ 1.28, ��:�� 1.20, ��:RMB 9.19) are maintained throughout the remainder of the year ending 31st March 2025, foreign currency translation will have an adverse impact of c.��10 million on underlying operating profit. A one cent change in the average US dollar and a ten fen change in the average rate of the Chinese renminbi each have an impact of approximately ��0.5 million on full year underlying operating profit whilst a one cent change in the average rate of the Euro has approximately a ��1.5 million impact on full year underlying operating profit. Efficiency savings In the half, we delivered ��35 million of savings through our group transformation programme and incurred cash costs of ��35 million. Cumulative benefits from the programme to date are ��155 million. We are on track to deliver ��200 million by the end of 2024/25, which annualises at more than ��250 million, resulting in further benefits of more than ��50 million in 2025/26. On completion of the programme, we will focus on continuous improvement. Total associated costs to deliver the programme are around ��130 million (including ��30 million of capex), all of which are cash. �� million Savings delivered to 30th September 2024 Associated costs incurred to 30th September 2024 Transformation programme 155 110 Items outside underlying operating profit Non-underlying income / (charge) Half year ended 30th September 2024 2023 �� million �� million Profit on disposal of businesses 484 - Major impairment and restructuring charges (63) (42) Amortisation of acquired intangibles (2) (2) Total 419 (44) There was a charge of ��63 million relating to major impairment and restructuring costs, comprising impairment charges of ��23 million and ��40 million of cash restructuring costs. The impairment charge includes a ��17 mil lion impairment following a review of and subsequent changes to our IT operating model completed in June 2024. As a result of the review, certain IT assets have been impaired. The remaining impairment charge is to production related assets in Clean Air as the business continues to consolidate its existing capacity into new and more efficient plants. The restructuring costs were recognised in relation to our transformation programme and the consolidation of our Clean Air manufacturing footprint. The ��484 million profit on disposal of businesses largely relates to the disposal of our Medical Device Components business which completed on 1st July 2024. Finance charges Net finance charges in the period amounted to ��23 million, down from ��41 million in the prior period. The decline of ��18 million largely reflects an ��8 million benefit from hedging instruments and a ��9 million movement relating to interest on tax provisions. Taxation The tax charge on underlying profit before tax for the half year ended 30th September 2024 was ��29 million, an effective underlying tax rate of 21.9%, compared with 22.0% in the first half of 2023/24. The effective tax rate on reported profit for the half year ended 30th September 2024 was 12.4%. This represents a tax charge of ��70 million, compared with ��19 million in the first half of 2023/24. This increase largely reflects higher reported profit which includes the profit on disposal of Medical Device Components. We expect the effective tax rate on underlying profit for the year ending 31st March 2025 to be broadly similar to the first half. Post-employment benefits IFRS - accounting basis At 30th September 2024, the group's net post-employment benefit position, was a surplus of ��144 million. The cost of providing post-employment benefits in the period was ��12 million, up from ��11 million in the same period last year. Capital expenditure Capital expenditure - excluding Value Businesses - was ��170 million in the half, 1.9 times depreciation and amortisation (excluding amortisation of acquired intangibles). In the period, a key project was investment in our new world-class PGM refinery. Strong balance sheet Net debt as at 30th September 2024 was ��783 million, a decrease from ��951 million at 31st March 2024 and ��1,044 million at 30th September 2023. Net debt is ��19 million higher when post tax pension deficits are included. The group's net debt (including post tax pension deficits) to EBITDA was 1.4 times (31st March 2024: 1.6 times, 30th September 2023: 1.7 times), which was slightly below our target range of 1.5 to 2.0 times. We use short-term metal leases as part of our mix of funding for working capital, which are outside the scope of IFRS 16 as they qualify as short-term leases. Precious metal leases amounted to ��197 million as at 30th September 2024 (31st March 2024: ��197 million, 30th September 2023: ��186 million). Free cash flow and working capital Free cash flow was ��347 million in the half (1H 2023/24: ��78 million) largely reflecting net proceeds from the disposal of Medical Device Components, partly offset by working capital outflows mainly due to lower payables. Cash from operating activities was negative ��22 million in the half, compared with ��236 million in the prior period, mainly driven by movements in working capital. Excluding precious metal, average working capital days to 30th September 2024 was in line with the prior period at 57 days. Going concern The group maintains a strong balance sheet with around ��1.6 billion of available cash and undrawn committed facilities. Cash generation was positive during the period, with free cash flow of ��347 million. Net debt has significantly reduced since 31st March 2024 to ��783 million at 30th September 2024. As set out on page 29, the directors have reviewed the base case scenario forecasts for the group and have reasonable expectation that there are no material uncertainties about the group's ability to operate for at least twelve months from the approval date of these half yearly accounts. In arriving at this view, the base case scenario was stress tested to a severe but plausible downside case which assumes lower demand across our markets to account for further disruptions and recession. Additionally, the group considered scenarios including the impact from metal price volatility, a slowdown in China and increase in the amount of metal that we would have to hold. Under all scenarios, the group has sufficient headroom against committed facilities and key financial covenants are not in breach during the going concern period. The directors have assessed various scenario forecasts and reasonably expect no significant uncertainties about the group's ability to operate for at least twelve months from the approval date of these half year accounts, supporting a going concern basis. Risks and uncertainties JM's principal risk landscape continues to be reviewed and updated to reflect our refreshed strategy and the challenges that come from operating within the current global environment and economic climate. JM is committed to improving its risk management approach and insights used to support various business decisions. The group's principal risks are listed below and remain largely as disclosed in our 2024 Annual Report. 1. Market factors, customer demand and margin sustainability - The risk is that we fail to correctly anticipate and/or make the right business decisions to address shifts in demand for our products and services (for example driven by regulation, customer needs, societal expectations) or shifts that lead to margin erosion. Such shifts may impact existing and new products and may create upside opportunity or downside exposure. 2. A significant geopolitical or macroeconomic event impacting JM's operations - JM has a global business footprint in terms of operations, customers and supply chains. There is a risk that we may face disruption in operations, supply chain and/or customer markets due to geopolitical or macroeconomic events (for example from risks such as conflicts, trade disputes, sanctions, pandemics, macroeconomic events or financial crises). 3. Failure to deliver business value from strategic capital projects - The success of our strategy, especially in growth areas, depends on our ability to effectively prioritise and deliver our strategic capital investment pipeline. There is a risk that we will be unable to meet production capacity expectations, breach budgeted costs or lose our competitive position in markets. 4. Development of offerings that do not meet future customer needs - There is a risk that we are unable to develop offerings that are competitive enough to meet our market ambitions and the needs of customers, particularly in highly dynamic and emerging markets. This includes our ability to identify and understand customer expectations, translating this into effective innovation programmes and developing our technologies at industrial production scale. 5. A significant work related EHS incident - The focus of this principal risk, related to environmental, health and safety (EHS) performance, is around catastrophic incidents (for example fire, explosion or toxic gas release) due to process safety or major compliance failure which would threaten our critical operations, product portfolios or our corporate reputation and therefore our 'licence to operate'. 6. Disruption to our supplier ecosystem and the supply of purchased goods and services - As a global business, we are dependent on suppliers worldwide to provide key materials and services. Given the speciality nature of our products, there are limited suppliers who supply certain critical raw materials. If there was significant disruption in their supply, we would be unable to manufacture our products to satisfy customer demand. 7. A low performing culture undermines our strategy - A low-performing culture, characterised by an insufficiently engaged and inclusive workforce, lacking commitment to taking accountability, keeping it simple and driving results could impact our ability to attract and retain key talent and therefore successfully execute our strategy. 8. Breach to precious metal security - There is a risk that we do not have sufficient metal available to meet business demands. Loss or theft due to a failure of metal controls (operations and finance) and/or security management systems associated with the protection of metal may result in financial loss and/or a failure to satisfy our customers, which could reduce our customers' confidence in JM and lead to potential legal action. 9. Failure in one or more of JM's critical operational assets - A critical asset failure may have a material effect on our supply chains, performance, share value and reputation. In addition to the failure of aged assets, we are exposed to the effects of climate change. We understand that more frequent extreme weather events and natural disasters may disrupt our operations and increase our costs. 10. Unsuccessful delivery of key business transformation programmes - JM's transformation is scoped to implement the strategy of catalysing the net zero transition for our customers in energy, chemicals and automotive. There are currently around 25 transformation programmes across group functions and the four core businesses, driving business growth, people growth and efficiency. Failure to successfully deliver these programmes may delay the expected benefits, disrupt services to customers or trigger a loss of key talent. 11. Business failure through cyber-attack or other IT incidents - A failure to adapt our information technology (IT) and operational technology (OT) to changing business requirements, the occurrence of significant disruption to our systems or a major cyber security incident may adversely affect our financial position, harm our reputation and could lead to regulatory penalties or non-compliance with laws. Responsibility statement of the Directors in respect of the half yearly report The half yearly report is the responsibility of the directors. Each of the directors as at the date of this responsibility statement, whose names and functions are set out below, confirms that to the best of their knowledge: �� the condensed consolidated accounts have been prepared in accordance with UK adopted International Accounting Standard (IAS) 34 - 'Interim Financial Reporting'; and �� the interim management report included in the Half-Yearly Report includes a fair review of the information required by: a) DTR 4.2.7R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated accounts; and a description of the principal risks and uncertainties for the remaining six months of the financial year; and b) DTR 4.2.8R of the Financial Conduct Authority's Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the company during that period; and any changes in the related party transactions described in the last annual report that could do so. The names and functions of the directors of Johnson Matthey Plc are as follows: Patrick Thomas Chair of the Board and of the Nomination Committee Liam Condon Chief Executive Officer Stephen Oxley Chief Financial Officer Barbara Jeremiah Senior Independent Non-Executive Director Rita Forst Non-Executive Director Jane Griffiths Non-Executive Director and Chair of Societal Value Committee Xiaozhi Liu Non-Executive Director John O'Higgins Non-Executive Director and Chair of the Remuneration Committee Doug Webb Non-Executive Director and Chair of the Audit Committee The responsibility statement was approved by the Board of Directors on 26th November 2024 and is signed on its behalf by: Patrick Thomas Chair Independent review report to Johnson Matthey Plc Report on the condensed consolidated interim financial statements Our conclusion We have reviewed Johnson Matthey Plc's condensed consolidated interim financial statements (the "interim financial statements") in the half year results of Johnson Matthey Plc for the 6 month period ended 30th September 2024 (the "period"). Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. The interim financial statements comprise: �� the Condensed Consolidated Statement of Financial Position as at 30th September 2024; �� the Condensed Consolidated Income Statement and Condensed Consolidated Statement of Total Comprehensive Income for the period then ended; �� the Condensed Consolidated Statement of Cash Flows for the period then ended; �� the Condensed Consolidated Statement of Changes in Equity for the period then ended; and �� the explanatory notes to the interim financial statements. The interim financial statements included in the half year results of Johnson Matthey Plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. Basis for conclusion We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. We have read the other information contained in the half year results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements. Conclusions relating to going concern Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The half year results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the half year results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the half year results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so. Our responsibility is to express a conclusion on the interim financial statements in the half year results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. PricewaterhouseCoopers LLP Chartered Accountants London 26th November 2024 Condensed Consolidated Income Statement for the six months ended 30th September 2024 Six months ended 30.9.24 30.9.23 Notes �� million �� million Revenue 2, 3 5,632 6,531 Cost of sales (5,223) (6,084) Gross profit 409 447 Distribution costs (54) (62) Administrative expenses (199) (205) Profit on disposal of businesses 4 484 - Amortisation of acquired intangibles 4 (2) (2) Major impairment and restructuring charges 4 (63) (42) Operating profit 4 575 136 Finance costs (72) (71) Investment income 49 30 Share of profits / (losses) of associates 2 (13) Profit before tax 554 82 Tax expense 5 (70) (19) Profit for the period 484 63 pence pence Earnings per ordinary share Basic�� 6 266.8 34.7 Diluted 6 266.4 34.6 Condensed Consolidated Statement of Total Comprehensive Income for the six months ended 30th September 2024 Six months ended 30.9.24 30.9.23 Notes �� million �� million Profit for the period 484 63 Other comprehensive income / (expense) Items that will not be reclassified to the income statement in subsequent years Remeasurements of post-employment benefit assets and liabilities 12 21 (75) Fair value losses on equity investments (1) (3) Tax on items that will not be reclassified to the income statement (4) 19 Total items that will not be reclassified to the income statement 16 (59) Items that may be reclassified to the income statement: Exchange differences on translation of foreign operations (124) (16) Amounts (charged) / credited to hedging reserve (16) 2 Fair value gains / (losses) on net investment hedges 22 (3) Tax on items that may be reclassified to the income statement 4 (1) Total items that may be reclassified to the income statement (in subsequent years) (114) (18) Other comprehensive expense for the period (98) (77) Total comprehensive income / (expense) for the period 386 (14) Condensed Consolidated Statement of Financial Position as at 30th September 2024 30.9.24 31.3.24 Notes �� million �� million Assets Non-current assets Property, plant and equipment 8 1,485 1,436 Right-of-use assets 44 40 Goodwill 343 353 Other intangible assets 9 278 301 Investments in associates 10 69 71 Investments at fair value through other comprehensive income 40 40 Other receivables 97 104 Cross currency and interest rate swaps 17 - 15 Other financial assets 18 34 Deferred tax assets 128 128 Post-employment benefit net assets 12 182 153 Total non-current assets 2,684 2,675 Current assets Inventories 1,153 1,211 Tax receivable 30 10 Trade and other receivables 1,588 1,718 Cash and cash equivalents 17 621 542 Cross currency and interest rate swaps 17 10 - Other financial assets 49 53 Assets classified as held for sale - 127 Total current assets 3,451 3,661 Total assets 6,135 6,336 Liabilities Current liabilities Trade and other payables (2,070) (2,209) Lease liabilities 17 (8) (8) Taxation liabilities (83) (75) Cash and cash equivalents �� bank overdrafts 17 (15) (12) Borrowings and related swaps 17 (254) (110) Other financial liabilities (21) (11) Provisions (60) (63) Liabilities classified as held for sale - (35) Total current liabilities (2,511) (2,523) Non-current liabilities Borrowings and related swaps 17 (1,100) (1,339) Lease liabilities 17 (27) (24) Deferred tax liabilities (3) (2) Cross currency and interest rate swaps 17 (10) (10) Employee benefit obligations 12 (41) (39) Provisions (21) (17) Trade and other payables (2) (2) Total non-current liabilities (1,204) (1,433) Total liabilities (3,715) (3,956) Net assets 2,420 2,380 Equity Share capital 207 215 Share premium 148 148 Treasury shares (12) (17) Other reserves (71) 36 Retained earnings 2,148 1,998 Total equity 2,420 2,380 Condensed Consolidated Statement of Cash Flows for the six months ended 30th September 2024 Six months ended 30.9.24 30.9.23 Notes �� million �� million Cash flows from operating activities Profit before tax 554 82 Adjustments for: ��Share of (profits) / losses of associates (2) 13 ��Profit on disposal of businesses 11 (484) - Depreciation 68 72 Amortisation 28 23 Impairment losses 23 - Profit on sale of non-current assets (1) - ��Share-based payments 5 7 ��Decrease in inventories 43 169 ��Decrease in receivables 116 113 ��Decrease in payables (307) (217) ��Increase in provisions 2 6 ��Contributions in excess of employee benefit obligations charge (2) (5) ��Changes in fair value of financial instruments 12 (17) ��Net finance costs 23 41 Disposal costs (16) - Income tax paid (84) (51) Net cash (outflow) / inflow from operating activities (22) 236 Cash flows from investing activities Interest received 44 19 Purchases of property, plant and equipment (150) (125) Purchases of intangible assets (21) (33) Government grant income received - 1 Proceeds from sale of businesses 578 39 Net cash inflow / (outflow) from investing activities 451 (99) Cash flows from financing activities Purchase of treasury shares (123) - Proceeds from borrowings 19 2 Repayment of borrowings (66) (151) Dividends paid to equity shareholders 7 (101) (101) Interest paid (77) (53) Principal element of lease payments (5) (6) Net cash outflow from financing activities (353) (309) Change in cash and cash equivalents 76 (172) Exchange differences on cash and cash equivalents - (3) Cash and cash equivalents at beginning of year 530 637 Cash and cash equivalents at end of period 17 606 462 Cash and deposits 165 193 Money market funds 456 300 Bank overdrafts (15) (31) Cash and cash equivalents 17 606 462 Condensed Consolidated Statement of Changes in Equity for the six months ended 30th September 2024 Share Share Treasury Other Retained Total capital premium shares reserves earnings equity �� million �� million �� million �� million �� million �� million At 1st April 2023 215 148 (19) 118 2,077 2,539 Total comprehensive (expense) / income for the period - - - (21) 7 (14) Dividends paid (note 7) - - - - (101) (101) Share-based payments - - - - 12 12 Cost of shares transferred to employees - - - - (3) (3) At 30th September 2023 215 148 (19) 97 1,992 2,433 Total comprehensive (expense) / income for the period - - - (61) 51 (10) Dividends paid (note 7) - - - - (40) (40) Share-based payments - - - - 5 5 Cost of shares transferred to employees - - 2 - (10) (8) At 31st March 2024 215 148 (17) 36 1,998 2,380 Total comprehensive (expense) / income for the period - - - (115) 501 386 Dividends paid (note 7) - - - - (101) (101) Purchase of treasury shares (note 7) (8) - - 8 (251) (251) Share-based payments - - - - 9 9 Cost of shares transferred to employees - - 5 - (8) (3) At 30th September 2024 207 148 (12) (71) 2,148 2,420 1 Basis of preparation and statement of compliance These condensed consolidated interim financial statements for the half-year reporting period ended 30th September 2024 (the 'condensed consolidated accounts') have been prepared in accordance with UK-adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the UK's Financial Conduct Authority. The accounting policies, estimates and judgements applied in the condensed consolidated accounts are consistent with the accounting policies, estimates and judgements applied by the group in its consolidated accounts as at, and for the year ended, 31st March 2024, with the exception of the adoption of amended accounting policies and standards as explained below. These condensed consolidated accounts do not constitute statutory accounts within the meaning of Section 435 of the Companies Act 2006. They do not include all of the notes of the type normally included in an annual financial report. Accordingly, the condensed consolidated accounts should be read in conjunction with the annual report for the year ended 31st March 2024, which has been prepared in accordance with UK-adopted International Accounting Standards (IAS) and with the requirements of the Companies Act 2006. Information in respect of the year ended 31st March 2024 is derived from the company's statutory accounts for that year which have been delivered to the Registrar of Companies. The auditor's report on those statutory accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying its report and did not contain any statement under Section 498 (2) or Section 498 (3) of the Companies Act 2006. The condensed consolidated accounts are unaudited but have been reviewed by the auditors. They were approved by the board of directors on 26th November 2024. Going concern The directors have reviewed the base case scenario, and the severe but plausible downside case scenario and have reasonable expectation that there are no material uncertainties that cast doubt about the group's ability to continue operating for at least twelve months from the date of approving these half-yearly accounts. As at 30th September 2024, the group maintains a strong balance sheet with around ��1.6 billion of available cash and undrawn committed facilities. Cash generation was positive during the period with free cash flow of ��347 million. Net debt has reduced by ��168 million since 31st March 2024 to ��783 million, driven by proceeds from disposals. Net debt (including post tax pension deficits) to underlying EBITDA, was below our target range at 1.4 times. While inflation has been decreasing and interest rates have started to fall, significant headwinds remain due to ongoing global auto sector weakness, persistent geopolitical tensions and political uncertainty in the US. Despite these challenges, the group demonstrated resilience during the period, with underlying operating profit (excluding the impact of divestments) only modestly down. For the purposes of assessing going concern, we have revisited our financial projections using the latest forecasts for our base case scenario. The base case scenario was stress tested to a severe but plausible downside case which reflects lower demand across our markets to account for significant disruption from external factors and a deep recession. Additionally, the group considered scenarios including the impact from metal price volatility and increases in the amount of metal that we would have to hold, along with a slowdown in operations in China. We have also considered the impact of a refinery shutdown for a prolonged period. Whilst the combined impact would reduce profitability and EBITDA against our latest forecast, our balance sheet would remain strong. 1 Basis of preparation and statement of compliance (continued) Going concern (continued) The group has a robust funding position comprising a range of long-term debt and a ��1 billion five year committed revolving credit facility maturing in March 2027 which was entirely undrawn at 30th September 2024. There was ��456 million of cash held in money market funds. Of the existing loans, around ��340 million of term debt matures in the period to December 2025. In October 2024, the group refinanced around ��300 million of term debt with a US Private Placement issuance, with funds scheduled for drawdown in December 2024. We have excluded this refinancing from our going concern modelling. As a long time, highly rated issuer in the US private placement market, the group expects to be able to access additional funding in its existing markets should it need to. The group also has a number of additional sources of funding available including uncommitted lease facilities that support precious metal funding. Whilst we would fully expect to be able to utilise the metal lease facilities, they are excluded from our going concern modelling. Under all scenarios above, the group has sufficient headroom against committed facilities and key financial covenants are not in breach during the going concern period. There remain risks to the group including more extreme economic outcomes. Against these, the group has a range of levers which it could utilise to protect headroom including reducing capital expenditure and future dividend distributions. The directors are therefore of the opinion that the group has adequate resources to fund its operations for at least twelve months from the date of approving these half year accounts and so determine that it is appropriate to prepare the accounts on a going concern basis. Non-GAAP measures The group uses various measures to manage its business which are not defined by generally accepted accounting principles (GAAP). The group's management believes these measures provide valuable additional information to users of the accounts in understanding the group's performance. The group's non-GAAP measures are defined and reconciled to GAAP measures in note 17. Amended standards adopted by the group The IASB has issued the following amendments, which have been endorsed by the UK Endorsement Board, for annual periods beginning on or after 1st January 2024: - Amendments to IAS 1, Presentation of Financial Statements; - Amendments to IFRS 16, Leases; - Amendments to IAS 7, Statement of Cash Flows and IFRS 7, Financial Instruments: Disclosures relating to Supplier Finance Arrangements The new or amended standards and interpretations above that are effective for the year ended 31st March 2025 have not had a material impact on the group. The group has not early adopted any standard, amendment or interpretation that was issued but is not yet effective. 2 Segmental information Revenue, sales and underlying operating profit by business Clean Air - provides catalysts for emission control after-treatment systems used in light and heavy duty vehicles powered by internal combustion engines. PGM Services - enables the energy transition through providing circular solutions as demand for scarce critical materials increases. Provides a strategic service to the group, supporting the other segments with security of metal supply, and manufactures value-add PGM products. Catalyst Technologies - licenses process technology and supplies catalysts to the chemical and energy sectors, enabling the decarbonisation of fuels and chemical value chains. Hydrogen Technologies - provides components across the value chain for fuel cells and electrolysers including catalyst coated membranes and membrane electrode assemblies. Value Businesses - a portfolio of businesses managed to drive shareholder value from activities considered to be non-core to the group. The disposal of the Value Businesses portfolio concluded during the period, with Battery Systems (sold on 30th April 2024), Medical Device Components (sold on 1st July 2024) and the land and buildings of our previous Battery Materials business in Poland (sold on 24th July 2024). Refer to note 11 for further details. Additionally, included in our prior period comparatives is Diagnostic Services (sold on 29th September 2023). The Group Leadership Team (the chief operating decision maker as defined by IFRS 8, Operating Segments) monitors the results of these operating businesses to assess performance and make decisions about the allocation of resources. Each operating business is represented by a member of the Group Leadership Team. These operating businesses represent the group's reportable segments and their principal activities are described on pages 18 to 25 of the 2024 Annual Report. The performance of the group's operating businesses is assessed on sales and underlying operating profit (see note 17). Sales between segments are made at market prices, taking into account the volumes involved. 2 Segmental information (continued) Six months ended 30th September 2024 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Corporate Eliminations Total �� million �� million �� million �� million �� million �� million �� million �� million Revenue from external customers 2,013 3,199 346 24 50 - - 5,632 Inter-segment revenue - 776 9 - - - (785) - Revenue 2,013 3,975 355 24 50 - (785) 5,632 External sales 1 1,165 173 328 20 36 - - 1,722 Inter-segment sales - 34 8 - - - (42) - Sales 1 1,165 207 336 20 36 - (42) 1,722 Underlying operating profit 1 121 51 50 (26) 2 (42) - 156 Six months ended 30th September 2023 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Corporate Eliminations Total �� million �� million �� million �� million �� million �� million �� million �� million Revenue from external customers 2,768 3,169 308 45 241 - - 6,531 Inter-segment revenue - 1,364 11 - - - (1,375) - Revenue 2,768 4,533 319 45 241 - (1,375) 6,531 External sales 1 1,286 182 272 37 190 - - 1,967 Inter-segment sales - 48 10 - - - (58) - Sales 1 1,286 230 282 37 190 - (58) 1,967 Underlying operating profit 1 124 78 35 (26) 14 (45) - 180 1 Sales and underlying operating profit are non-GAAP measures (see note 17 for reconciliation to GAAP measures). Sales excludes the sale of precious metals. Underlying operating profit excludes profit or loss on disposal of businesses, amortisation of acquired intangibles and major impairment and restructuring charges. 2 Segmental information (continued) Net assets by business At 30th September 2024 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Corporate Total �� million �� million �� million �� million �� million �� million �� million Segmental net assets 1,440 140 783 270 6 312 2,951 Net debt (see note 17) (783) Post-employment benefit net assets and liabilities 141 Deferred tax net assets 125 Provisions and non-current other payables (83) Investments in associates 69 Net assets 2,420 At 31st March 2024 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Corporate Total �� million �� million �� million �� million �� million �� million �� million Segmental net assets 1,351 38 718 271 178 449 3,005 Net debt (see note 17) (946) Post-employment benefit net assets and liabilities 114 Deferred tax net assets 126 Provisions and non-current other payables (82) Investments in associates 71 Net assets held for sale 92 Net assets 2,380 3 Revenue Products and services The group's principal products and services by operating business and sub-business are disclosed in the table below, together with information regarding performance obligations and revenue recognition. Revenue is recognised by the group as contractual performance obligations to customers are completed. Sub-business Primary industry Principal products and services Performance obligations Revenue recognition Clean Air Light Duty Catalysts Automotive Catalysts for cars and other light duty vehicles Point in time On despatch or delivery Heavy Duty Catalysts Automotive Catalysts for trucks, buses and non-road equipment Point in time On despatch or delivery PGM Services Platinum Group Metal Services Various Platinum Group Metal refining and recycling services Over time Based on output Platinum Group Metal trading Point in time On receipt of payment Other precious metal products Point in time On despatch or delivery Platinum Group Metal chemical, industrial products and catalyst Point in time On despatch or delivery Catalyst Technologies Catalysts Chemicals / oil and gas / sustainable fuels Speciality catalysts and additives Point in time On despatch or delivery Licensing Chemicals / oil and gas / sustainable fuels Process technology licences and engineering design services Over time / point in time1 Based on costs incurred or at a point in time1 Hydrogen Technologies Fuel Cells Technology Various Fuel cell catalyst coated membranes Point in time On despatch or delivery Electrolysis Technology Various Electrolyser catalyst coated membrane Point in time On despatch or delivery Value Businesses Other Markets (excluding Diagnostic Services) Various Precious metal pastes and enamels, battery systems and products found in devices used in medical procedures Point in time On despatch or delivery Diagnostic Services Oil and gas Detection, diagnostic and measurement solutions Over time Based on costs incurred 1 Revenue recognition depends on whether the licence is distinct in the context of the contract. Metal revenue : Metal revenue relates to the sales of precious metals to customers, either in pure form or contained within a product. Metal revenue arises in each of the reportable segments in the group. Metal revenue is affected by fluctuations in the market prices of precious metals and, in many cases, the value of precious metals is passed directly on to customers. Given the high value of these metals this makes up a significant proportion of revenue 3 Revenue (continued) Revenue from external customers by principal products and services Six months ended 30th September 2024 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Total �� million �� million �� million �� million �� million �� million Metal 848 3,026 18 4 14 3,910 Heavy Duty Catalysts 364 - - - - 364 Light Duty Catalysts 774 - - - - 774 Platinum Group Metal Services - 173 - - - 173 Catalyst Technologies - - 328 - - 328 Fuel Cells Technology - - - 20 - 20 Battery Systems - - - - 15 15 Medical Device Components - - - - 21 21 Other 27 - - - - 27 Revenue 2,013 3,199 346 24 50 5,632 Six months ended 30th September 2023 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Total �� million �� million �� million �� million �� million �� million Metal 1,482 2,987 36 8 51 4,564 Heavy Duty Catalysts 454 - - - - 454 Light Duty Catalysts 812 - - - - 812 Platinum Group Metal Services - 182 - - - 182 Catalyst Technologies - - 272 - - 272 Fuel Cells Technology - - - 37 - 37 Battery Systems - - - - 106 106 Diagnostic Services - - - - 37 37 Medical Device Components - - - - 45 45 Other 20 - - - 2 22 Revenue Revenue 2,768 3,169 308 45 241 6,531 The contract receivables balance at 30th September 2024 is ��38 million (31st March 2024: ��56 million). 3 Revenue (continued) Revenue from external customers by point in time and over time performance obligations Six months ended 30th September 2024 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Total �� million �� million �� million �� million �� million �� million Revenue recognised at a point in time 2,013 3,106 290 24 47 5,480 Revenue recognised over time - 93 56 - 3 152 Revenue 2,013 3,199 346 24 50 5,632 Six months ended 30th September 2023 Clean PGM Catalyst Hydrogen Value Air Services Technologies Technologies Businesses Total �� million �� million �� million �� million �� million �� million Revenue recognised at a point in time 2,768 3,081 255 45 213 6,362 Revenue recognised over time - 88 53 - 28 169 Revenue 2,768 3,169 308 45 241 6,531 4 Operating profit Six months ended 30.9.24 30.9.23 �� million �� million Operating profit is arrived at after charging / (crediting): Research and development expenditure charged to the income statement 99 104 Less: External funding received - from governments (8) (7) Net research and development expenditure charged to the income statement 91 97 Depreciation of: Property, plant and equipment 64 66 Right-of-use assets 4 6 Depreciation 68 72 Amortisation of: Acquired intangibles 2 2 Other intangible assets 26 21 Amortisation 28 23 Profit on disposal of businesses (note 11) (484) - Property, plant and equipment 5 - Other intangible assets 17 - Inventories 1 2 Trade and other receivables - 10 Impairment losses 23 12 Restructuring charges 40 30 Major impairment and restructuring charges 63 42 Profit on disposal of businesses On 30th April 2024, the group completed the sale of Battery Systems, on 1st July 2024, the group completed the sale of its Medical Device Components business. On 24th July 2024, the group completed the sale of the land and buildings from our legacy Battery Materials business in Poland, see note 11. Major impairment and restructuring charges Major impairment and restructuring charges are shown separately on the face of the income statement and excluded from underlying operating profit, see note 17. Major impairments - the group's impairment charge of ��23 million includes a ��17 million impairment to the group's intangible assets following a review of and subsequent changes to our IT operating model completed in June 2024. As a result of the review, certain IT assets have been impaired. The remaining impairment charge is to production related assets in Clean Air as the business continues to consolidate its existing capacity into new and more efficient plants. Major restructuring - the group's transformation programme was launched in May 2022 and was designed to drive increased competitiveness, improved execution capability and create financial headroom to facilitate further investment in high growth areas. Restructuring charges of ��40 million have been recognised of which ��19 million relates to Johnson Matthey Global Solutions, IT transformation and running the transformation programme, with ��9 million other redundancy and implementation costs. The remaining ��12 million charge is related to Clean Air's ongoing plant consolidation initiatives, of which the majority is redundancy and exit costs. 5 Tax expense The charge for taxation at the half year ended 30th September 2024 is ��70 million (1H 2023/24: ��19 million), an effective tax rate of 12.4%. The tax charge on underlying profit before tax was ��29 million, an effective tax rate of 21.9%, similar to the 22.0% in the half year ended 30th September 2023. The group is within the scope of the OECD Pillar Two model rules. The group is in scope by virtue of the parent company being tax resident in the UK. Pillar Two legislation has been enacted in the UK, as well as several other territories where the group operates, and became effective for the group from the start of this financial period. The group applies the exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two model rules, as provided in the amendments to IAS 12 issued in May 2023. Under the legislation, the group is liable to pay a top-up tax for the difference between its Global Anti-Base Erosion ('GloBE') effective tax rate per jurisdiction and the 15% minimum rate. We have undertaken an assessment of the group's potential to additional taxes under Pillar 2 and conclude that, for the year ended 31st March 2025, the group is expected to meet the exemptions in the Transitional Country by Country Reporting ('CbCR') safe harbours in all tax jurisdictions in which it operates, except for Bermuda and North Macedonia. Income tax expense recognised in the consolidated statement of profit and loss for the six months ended 30th September 2024 includes ��1 million related to Pillar 2 income taxes. The group will keep the position under review for future periods. We continue to monitor potential impacts as further guidance is published, as territories implement legislation to enact the rules, and as territories increase their domestic Corporate Tax rate in response to the OECD Pillar 2 rules. 6 Earnings per ordinary share Six months ended 30.9.24 30.9.23 pence pence Basic 266.8 34.7 Diluted 266.4 34.6 Earnings per ordinary share have been calculated by dividing profit for the period by the weighted average number of shares in issue during the period. Six months ended Weighted average number of shares in issue 30.9.24 30.9.23 Basic 181,728,079 183,213,834 Dilution for long term incentive plans 273,281 907,731 Diluted 182,001,360 184,121,565 7 Dividends An interim dividend of 22.00 pence per ordinary share has been proposed by the board which will be paid on the 4th February 2025 to shareholders on the register at the close of business on 6th December 2024. The estimated amount to be paid is ��38 million (1H 2023/24: ��40 million) and has not been recognised in these accounts. Six months ended 30.9.24 30.9.23 �� million �� million 2022/23 final ordinary dividend paid �� 55.00 pence per share - 101 2023/24 final ordinary dividend paid �� 55.00 pence per share 101 - Total dividends 101 101 On 3rd July 2024, the company announced its intention to conduct a share buyback programme for up to a maximum consideration of ��250 million. The first tranche of the share buyback programme of up to ��125 million commenced on 3rd July 2024 and completed on 23rd September 2024. On 24th September 2024, the company commenced the second tranche of up to ��125 million, which will end no later than 24th January 2025. As at 30th September 2024, the company purchased 7,628,978 shares at a cost of ��123 million. The residual balance of ��127 million has been recognised within trade and other payables as at 30th September 2024. 8 Property, plant and equipment Assets in Freehold land Leasehold Plant and the course of and buildings improvements machinery construction Total �� million �� million �� million �� million �� million Cost At 1st April 2024 591 23 2,143 515 3,272 Additions - - 6 143 149 Transfers from assets in the course of construction 1 - 29 (30) - Disposals - - (3) - (3) Exchange adjustments (15) (1) (51) (5) (72) At 30th September 2024 577 22 2,124 623 3,346 Accumulated depreciation and impairment At 1st April 2024 290 12 1,522 12 1,836 Charge for the period 7 1 56 - 64 Impairment losses - - 5 1 6 Disposals - - (3) - (3) Exchange adjustments (6) (1) (35) - (42) At 30th September 2024 291 12 1,545 13 1,861 Carrying amount at 30th September 2024 286 10 579 610 1,485 Carrying amount at 1st April 2024 301 11 621 503 1,436 9 Other intangible assets Customer contracts and relationships Computer software Patents trademarks and licences Acquired research and technology Development expenditure Total �� million �� million �� million �� million �� million �� million Cost At 1st April 2024 103 536 32 30 134 835 Additions - 21 - - - 21 Exchange adjustments (2) (1) (1) (1) - (5) At 30th September 2024 101 556 31 29 134 851 Accumulated amortisation and impairment At 1st April 2024 91 252 28 30 133 534 Charge for the period 2 25 1 - - 28 Impairment losses (note 4) - 17 - - - 17 Exchange adjustments (2) (1) (2) (1) - (6) At 30th September 2024 91 293 27 29 133 573 Carrying amount at 30th September 2024 10 263 4 - 1 278 Carrying amount at 1st April 2024 12 284 4 - 1 301 10 Investments in associates As part of the disposal of our Health business, we received ��75 million in the form of shares which constitutes approximately 30% equity interest in the re-branded business (Veranova). The group determined that it has significant influence and therefore has equity accounted this stake as an investment in associate. Associates �� million At 1st April 2024 71 Group's share of profits for the period 2 Exchange adjustments (4) At 30th September 2024 69 11 Disposals Medical Device Components On 1st July 2024, the group completed the sale of its Medical Device Components business for an enterprise value of ��555 million (��559 million on a debt free basis after working capital adjustments). The business was disclosed as a disposal group held for sale as at 31st March 2024. Battery Systems On 30th April 2024, the group completed the sale of its Battery Systems business for an enterprise value of ��14 million (��21 million on a debt free basis after working capital adjustments). The business was disclosed as a disposal group held for sale as at 31st March 2024. Battery Materials Poland On 24th July 2024, the group completed the sale of the land and buildings of our previous Battery Materials business in Poland for ��26 million. This was disclosed as assets held for sale as at 31st March 2024. 2024 2023 Medical Device Components Other disposals Total Total 30th September �� million �� million �� million �� million Proceeds Cash consideration 555 30 585 47 Cash and cash equivalents disposed (10) - (10) (3) Net cash consideration 545 30 575 44 Disposal costs paid (11) (5) (16) (2) Net cash inflow 534 25 559 42 Assets and liabilities disposed Non-current assets Property, plant and equipment 24 25 49 10 Right-of-use assets 4 - 4 9 Goodwill 3 - 3 - Current assets Inventories 8 20 28 5 Trade and other receivables 18 20 38 32 Cash and cash equivalents 10 - 10 3 Deferred tax - 3 3 3 Current liabilities Trade and other payables (6) (20) (26) (9) Current income tax liabilities (1) (1) (2) - Lease liabilities (4) - (4) - Non-current liabilities Lease liabilities - (1) (1) (11) Provisions (1) (1) (2) - Net assets disposed 55 45 100 42 11 Disposals (continued) 2024 2023 Medical Device Components Other disposals Total Total 30th September �� million �� million �� million �� million Cash consideration 555 30 585 47 Deferred consideration - 17 17 4 Working capital adjustments at time of disposal 4 - 4 4 Less: carrying amount of net assets sold (55) (45) (100) (42) Less: disposal costs (16) (8) (24) (8) Cumulative currency translation gain recycled from other comprehensive income - 2 2 (1) Profit recognised in the income statement 488 (4) 484 4 Disposal proceeds During the period we received ��3 million of proceeds relating to the Diagnostic Services disposal in the prior year. This was recognised within profit on disposal in the prior year. 12 Post-employment benefits Background The group operates a number of post-employment benefit plans around the world, the forms and benefits of which vary with conditions and practices in the countries concerned. The major defined benefit plans are pension plans and post-retirement medical plans in the UK and the US. Financial assumptions The financial assumptions for the major plans are as follows: 30.9.24 31.3.24 UK plan US plans UK plan US plans % % % % First year's rate of increase in salaries 3.40 - 3.50 - Ultimate rate of increase in salaries 3.40 - 3.50 - Rate of increase in pensions in payment 2.80 - 2.90 - Discount rate 5.10 4.90 4.90 5.20 Inflation - 2.20 - 2.20 ��- UK Retail Prices Index (RPI) 3.00 - 3.10 - ��- UK Consumer Prices Index (CPI) 2.65 - 2.75 - Current medical benefits cost trend rate 8.95 - 8.95 - Ultimate medical benefits cost trend rate 5.40 - 5.40 - The financial assumptions for the other plans are reviewed and updated annually. Financial information Movements in the net post-employment benefit assets and liabilities, including reimbursement rights, were: UK UK UK post- US post- pension - pension - retirement retirement legacy cash balance medical US medical section section benefits pensions benefits Other Total �� million �� million �� million �� million �� million �� million �� million At 1st April 2024 115 35 (6) 2 (10) (19) 117 Current service cost - in operating profit - (9) - - - - (9) Administrative expenses - in operating profit (2) - - (1) - - (3) Interest 3 1 - - - - 4 Remeasurements 21 4 - (4) - - 21 Company contributions - 12 - 1 - - 13 Exchange - - - 1 - - 1 At 30th September 2024 137 43 (6) (1) (10) (19) 144 12 Post-employment benefits (continued) Financial information (continued) The post-employment benefit assets and liabilities are included in the balance sheet as follows: 30.9.24 30.9.24 31.3.24 31.3.24 Post- Post- employment Employee employment Employee benefit benefit net benefit benefit net net assets obligations net assets obligations �� million �� million �� million �� million UK pension - legacy section 137 - 115 - UK pension - cash balance section 43 - 35 - UK post-retirement medical benefits - (6) - (6) US pensions - (1) 2 - US post-retirement medical benefits - (10) - (10) Other 2 (21) 1 (20) Total post-employment plans 182 (38) 153 (36) Other long-term employee benefits (3) (3) Total long-term employee benefit obligations (41) (39) 13 Fair values Fair value hierarchy Fair values are measured using a hierarchy where the inputs are: �� Level 1 �� quoted prices in active markets for identical assets or liabilities. �� Level 2 �� not level 1 but are observable for that asset or liability either directly or indirectly. �� Level 3 �� not based on observable market data (unobservable). Fair value of financial instruments Certain of the group's financial instruments are held at fair value. The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the balance sheet date. The fair value of forward foreign exchange contracts, interest rate swaps, forward precious metal price contracts and currency swaps is estimated by discounting the future contractual cash flows using forward exchange rates, interest rates and prices at the balance sheet date. The fair value of trade and other receivables measured at fair value is the face value of the receivable less the estimated costs of converting the receivable into cash. The fair value of money market funds is calculated by multiplying the net asset value per share by the investment held at the balance sheet date. There were no transfers of any financial instrument between the levels of the fair value hierarchy during the current or prior periods. 13 Fair values (continued) Fair value 30.9.24 31.3.24 hierarchy �� million �� million level Financial instruments measured at fair value Non-current Investments at fair value through other comprehensive income1 40 40 1 Cross currency and interest rate swaps - assets - 15 2 Other financial assets2 18 34 2 Cross currency and interest rate swaps - liabilities (10) (10) 2 Borrowings and related swaps - (3) 2 Current Trade receivables3 156 178 2 Other receivables4 1 3 2 Cash and cash equivalents - money market funds 456 334 2 Cash and cash equivalents - cash and deposits 5 12 2 Cross currency and interest rate swaps 10 - 2 Other financial assets2 49 53 2 Other financial liabilities2 (21) (11) 2 Fair value 30.9.24 31.3.24 hierarchy �� million �� million level Financial instruments not measured at fair value Non-current Borrowings and related swaps (1,100) (1,336) - Lease liabilities (27) (24) - Other receivables 55 60 - Trade and other payables (2) (2) - Current Amounts receivable under precious metal sale and repurchase agreements 358 398 - Amounts payable under precious metal sale and repurchase agreements (719) (797) - Cash and cash equivalents - cash and deposits 160 196 - Cash and cash equivalents - bank overdrafts (15) (12) - Borrowings and related swaps (254) (110) - Lease liabilities (8) (8) - Trade and other receivables 833 926 - Trade and other payables (1,210) (1,235) - 1 Investments at fair value through other comprehensive income are quoted bonds purchased to fund pension deficit (��36 million) and an investment held at fair value through other comprehensive income (��4 million). 2 Other financial assets includes forward foreign exchange contracts (��14 million), forward precious metal price contracts (��51 million) and currency swaps (��2 million). Other financial liabilities includes forward foreign exchange contracts (��7 million) and currency swaps (��14 million). 3 Trade receivables held in a part of the group with a business model to hold trade receivables for collection or sale. The remainder of the group operates a hold to collect business model and receives the face value, plus relevant interest, of its trade receivables from the counterparty without otherwise exchanging or disposing of such instruments. 4 Other receivables with cash flows that do not represent solely the payment of principal and interest. 13 Fair values (continued) The fair value of financial instruments, excluding accrued interest, is approximately equal to book value except for: 30.9.24 31.3.24 Carrying Fair Carrying Fair amount value amount value �� million �� million �� million �� million US Dollar Bonds 2025, 2027, 2028, 2029 and 2030 (477) (455) (507) (474) Euro Bonds 2025, 2028, 2030 and 2032 (340) (319) (348) (320) Sterling Bonds 2024, 2025 and 2029 (80) (74) (145) (137) KfW US Dollar Loan 2024 (37) (37) (40) (38) The fair values are calculated using level 2 inputs by discounting future cash flows to net present values using appropriate market interest rates prevailing at the period end. 14 Precious metal leases At 30th September 2024, precious metal leases were ��197 million at closing prices (31st March 2024: ��197 million). Precious metal leases do not fall under the scope of IFRS 16. 15 Transactions with related parties There have been no material changes in related party relationships in the six months ended 30th September 2024. During the half year ended 30th September 2024, the group had sales with associates totalling ��2 million (1H 2023/24: ��11 million). The amounts owed by Veranova were ��1 million at 30th September 2024 (1H 2023/24: ��nil). No other related party transactions have occurred which have materially affected the financial position or performance of the group during the period. 16 Contingent liabilities The group is involved in various disputes and claims which arise from time to time in the course of its business including, for example, in relation to commercial matters, product quality or liability, employee matters and tax audits. The group is also involved from time to time in the course of its business in legal proceedings and actions, engagement with regulatory authorities and in dispute resolution processes. These are reviewed on a regular basis and, where possible, an estimate is made of the potential financial impact on the group. In appropriate cases a provision is recognised based on advice, best estimates and management judgement. Where it is too early to determine the likely outcome of these matters, no provision is made. Whilst the group cannot predict the outcome of any current or future such matters with any certainty, it currently believes the likelihood of any material liabilities to be low, and that such liabilities, if any, will not have a material adverse effect on its consolidated income, financial position or cash flows. Following the sale of its Health business in May 2022, the purchaser of the Health business, Veranova Bidco LP, has issued a claim against the group in connection with: i) certain alleged representations said to have been made during the course of the negotiation of the sale and purchase agreement dated 16th December 2021 ("SPA"); and, ii) certain warranties given in the SPA at the time of signing. Having reviewed the claim with its advisers, the group is of the opinion that it has a defensible position in respect of these allegations and is vigorously defending its position. The outcome of the legal proceedings relating to this matter is not certain, since the issues of liability and quantum will be for determination by the court at trial. Accordingly, the group is unable to make a reliable estimate of the possible financial impact at this stage, if any. 17 Non-GAAP measures The group uses various measures to manage its business which are not defined by generally accepted accounting principles (GAAP). The group's management believes these measures provide valuable additional information to users of the accounts in understanding the group's performance. Certain of these measures are financial Key Performance Indicators which measure progress against our strategy. All non-GAAP measures are on a continuing operations basis. 17 Non-GAAP measures (continued) Definitions Measure Definition Purpose Sales1 Revenue excluding sales of precious metals to customers and the precious metal content of products sold to customers. Provides a better measure of the growth of the group as revenue can be heavily distorted by year on year fluctuations in the market prices of precious metals and, in many cases, the value of precious metals is passed directly on to customers. Underlying operating profit2 Operating profit excluding non-underlying items. Provides a measure of operating profitability that is comparable over time. Underlying operating profit margin1,2 Underlying operating profit divided by sales. Provides a measure of how we convert our sales into underlying operating profit and the efficiency of our business. Underlying profit before tax2 Profit before tax excluding non-underlying items. Provides a measure of profitability that is comparable over time. Underlying profit for the year2 Profit for the year excluding non-underlying items and related tax effects. Provides a measure of profitability that is comparable over time. Underlying earnings per share1,2 Underlying profit for the year divided by the weighted average number of shares in issue. Our principal measure used to assess the overall profitability of the group. Return on capital employed (ROCE)1,3 Annualised underlying operating profit divided by the average equity plus average net debt. The average is calculated using the opening balance for the financial year and the closing balance. Provides a measure of the group's efficiency in allocating the capital under its control to profitable investments. Average working capital days (excluding precious metals)1 Monthly average of non-precious metal related inventories, trade and other receivables and trade and other payables (including any classified as held for sale) divided by sales for the last three months multiplied by 90 days. Provides a measure of efficiency in the business with lower days driving higher returns and a healthier liquidity position for the group. Free cash flow Net cash flow from operating activities after net interest paid, net purchases of non-current assets and investments, proceeds from disposal of businesses, dividends received from joint ventures and associates and the principal element of lease payments. Provides a measure of the cash the group generates through its operations, less capital expenditure. Net debt (including post tax pension deficits) to underlying EBITDA Net debt, including post tax pension deficits and quoted bonds purchased to fund the UK pension (excluded when the UK pension plan is in surplus) divided by underlying EBITDA for the same period. Provides a measure of the group's ability to repay its debt. The group has a long-term target of net debt (including post tax pension deficits) to underlying EBITDA of between 1.5 and 2.0 times, although in any given year it may fall outside this range depending on future plans. 1 Key Performance Indicator. 2 Underlying profit measures are before profit or loss on disposal of businesses, amortisation of acquired intangibles, major impairment and restructuring charges, share of profits or losses from non-strategic equity investments and, where relevant, related tax effects. These items have been excluded by management as they are not deemed to be relevant to an understanding of the underlying performance of the business. 3 Return on capital employed is a new key performance indicator in the half year accounts. This was included as a performance measure in the 2024 Performance Share Plan award. Inclusion of this measure incentives delivery of the transformation programme across JM and aligns with investor focus on our ability to return value on investments. 17 Non-GAAP measures (continued) Reconciliations to GAAP measures Sales See note 2. Underlying profit measures Operating Profit Tax Profit for profit before tax expense the period Six months ended 30th September 2024 �� million �� million �� million �� million Underlying 156 133 (29) 104 Amortisation of acquired intangibles (2) (2) - (2) Profit on disposal of businesses1 484 484 (70) 414 Major impairment and restructuring charges1 (63) (63) 15 (48) Share of profits of associates - 2 - 2 Change in non-underlying tax provisions - - 14 14 Reported 575 554 (70) 484 1 For further detail please see note 4. Operating Profit Tax Profit for profit before tax expense the period Six months ended 30th September 2023 �� million �� million �� million �� million Underlying 180 139 (31) 108 Amortisation of acquired intangibles (2) (2) - (2) Profit on disposal of businesses - - (3) (3) Major impairment and restructuring charges (42) (42) 13 (29) Share of losses of associates - (13) 2 (11) Reported 136 82 (19) 63 Underlying earnings per share Six months ended 30.9.24 30.9.23 Underlying profit for the period (�� million) 104 108 Weighted average number of shares in issue (million) 181.7 183.2 Underlying earnings per share (pence) 57.4 59.1 17 Non-GAAP measures (continued) Return on Capital Employed (ROCE) Six months Year Six months ended ended ended 30.9.24 31.3.24 30.9.23 �� million �� million �� million Underlying operating profit for this period 156 410 180 Underlying operating profit for prior year 410 - 465 Less: Underlying operating profit for prior first half (180) - (222) Annualised underlying operating profit 386 410 423 Average net debt 867 987 1,034 Average equity 2,400 2,459 2,486 Average capital employed 3,267 3,446 3,520 ROCE 11.8% 11.9% 12.0% Average working capital days (excluding precious metals) Six months Year Six months ended ended ended 30.9.24 31.3.24 30.9.23 �� million �� million �� million Inventories 1,153 1,211 1,517 Trade and other receivables 1,588 1,718 1,759 Trade and other payables (2,070) (2,209) (2,263) 671 720 1,013 Working capital balances classified as held for sale - 44 - Total working capital 671 764 1,013 Less: Precious metal working capital (163) (174) (371) Working capital (excluding precious metals) 508 590 642 Average working capital days (excluding precious metals) 57 60 57 Free cash flow Six months ended 30.9.24 30.9.23 �� million �� million Net cash (outflow) / inflow from operating activities (22) 236 Interest received 44 19 Interest paid (77) (53) Purchases of property, plant and equipment (150) (125) Purchases of intangible assets (21) (33) Government grant income - 1 Proceeds from sale of businesses 578 39 Principal element of lease payments (5) (6) Free cash flow 347 78 17 Non-GAAP measures (continued) Net debt (including post tax pension deficits) to underlying EBITDA 30.9.24 31.3.24 30.9.23 �� million �� million �� million Cash and deposits 165 208 193 Money market funds 456 334 300 Bank overdrafts (15) (12) (31) Cash and cash equivalents 606 530 462 Cross currency and interest rate swaps - current assets 10 - - Cross currency and interest rate swaps - non-current assets - 15 19 Cross currency and interest rate swaps - non-current liabilities (10) (10) (16) Borrowings and related swaps - current (254) (110) (71) Borrowings and related swaps - non-current (1,100) (1,339) (1,398) Lease liabilities - current (8) (8) (9) Lease liabilities - non-current (27) (24) (31) Lease liabilities - current - transferred to liabilities classified as held for sale - (1) - Lease liabilities - non-current - transferred to liabilities classified as held for sale - (4) - Net debt (783) (951) (1,044) Increase / (decrease) in cash and cash equivalents 76 (102) (172) Less: Decrease in borrowings 47 150 149 Less: Principal element of lease payments 5 11 6 Decrease / (increase) in net debt resulting from cash flows 128 59 (17) New leases, remeasurements and modifications (9) (11) (7) Other lease movements (3) 1 - Disposal of businesses 5 11 10 Exchange differences on net debt 43 13 2 Other non-cash movements 4 (1) (9) Movement in net debt 168 72 (21) Net debt at beginning of year (951) (1,023) (1,023) Net debt at end of year (783) (951) (1,044) Net debt (783) (951) (1,044) Add: Pension deficits (22) (22) (21) Add: Related deferred tax 3 3 3 Net debt (including post tax pension deficits) (802) (970) (1,062) Underlying EBITDA for this period 250 273 Underlying EBITDA for prior year 598 647 Less: Underlying EBITDA for prior half year (273) (309) Annualised underlying EBITDA 575 598 611 Net debt (including post tax pension deficits) to underlying EBITDA 1.4 1.6 1.7 17 Non-GAAP measures (continued) 30.9.24 31.3.24 30.9.23 �� million �� million �� million Underlying EBITDA 250 598 273 Depreciation and amortisation (96) (192) (95) Profit / (loss) on disposal of businesses 484 (9) - Major impairment and restructuring charges (63) (148) (42) Finance costs (72) (146) (71) Finance income 49 64 30 Share of profits / (losses) of associates 2 (3) (13) Income tax expense (70) (56) (19) Profit for the period 484 108 63 2024 27th November Announcement of results for the half year ending 30th September 2024 5th December Ex dividend date 6th December Interim dividend record date 2025 4th February Payment of interim dividend 22nd May Announcement of results for the year ending 31st March 2025 17th July 134th Annual General Meeting (AGM) Cautionary Statement This announcement contains forward looking statements that are subject to risk factors associated with, amongst other things, the economic and business circumstances occurring from time to time in the countries and businesses in which the group operates. It is believed that the expectations reflected in this announcement are reasonable but they may be affected by a wide range of variables which could cause actual results to differ materially from those currently anticipated. Johnson Matthey Plc Registered Office: 5th Floor, 25 Farringdon Street, London EC4A 4AB Telephone: +44 (0) 20 7269 8400 Fax: +44 (0) 20 7269 8433 Internet address: www.matthey.com E-mail: [email protected] Registered in England �� Number 33774 LEI code: 2138001AVBSD1HSC6Z10 Registrars Equiniti, Aspect House, Spencer Road, Lancing, West Sussex BN99 6DA Telephone: 0371 384 2344 (in the UK) * +44 (0) 121 415 7047 (outside the UK) Internet address: www.shareview.co.uk * Lines are open 8.30am to 5.30pm Monday to Friday excluding public holidays in England and Wales. This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com. RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our Privacy Policy. END IR QKABBCBDDPDB

AI Terminal

4899_ir_2024-11-27_f72a20bb-3772-465a-a7ad-344fc888b9f5.html

More from Johnson Matthey PLC

Talk to a Data Expert