FINANCIAL ANALYSIS

Financial Analysis

Table of Content

Financial Analysis3

Introduction3

Strategy and Forward Planning4

Accounting Methods5

Interpretation of Technical Analysis6

Horizontal Analysis6

Trend Analysis7

Vertical Analysis8

Ratio Analysis8

Liquidity8

Performance Ratio Analysis9

Gearing Ratio9

Cash flow10

Non-financial performance indicator10

Service-oriented and competent employees10

Future-oriented innovative spirit11

Questions to Finance Director12

Reason12

Reason13

Reason13

Reason13

Reason14

Reference15

Appendices17

Financial Analysis

Introduction

Johnson Matthey is a speciality chemicals company focused on its core skills in catalysis, precious metals, fine chemicals and process technology.

Johnson Matthey's principal activities are the manufacture of auto catalysts, heavy duty diesel catalysts and pollution control systems, catalysts and components for fuel cells, catalysts and technologies for chemical processes, fine chemicals, chemical catalysts and active pharmaceutical ingredients and the marketing, refining, and fabrication of precious metals (Taal, 2007).

Johnson Matthey has continued to develop its technology for almost 200 years, demonstrating the company's ability to maintain world leadership by adapting constantly to rapidly changing customer needs (Robison, 2007). Rigorous in its own environmental policies, many of Johnson Matthey's products have a major beneficial impact on the environment and enhance the quality of life for millions of people around the world.

Johnson Matthey has operations in over 30 countries and employs around 8,500 people. Its products are sold across the world to a wide range of advanced technology industries (Parker, 2008).

Johnson Matthey has a longstanding international reputation as a leader in the application of precious metals. Precious Metal Products Division is at the heart of these activities focused on the marketing, distribution, fabrication, refining and recycling of precious metals and their products. Our non-automotive businesses however, held up well (McPhail, 2004). For the year as a whole, revenue rose by 5% to £7.8 billion and sales excluding precious metals were up 3% at £1.8 billion. Profit before tax, amortisation of acquired intangibles and restructuring charges was up 1% at £267.9 million.

Strategy and Forward Planning

The strategy of the business, particularly those concerned with protecting the environment and improving energy security, remain firmly in place. Our commitment to investing in R&D remains as strong as ever as it provides the products and technologies that are vital if we are to maintain our world leading market positions and continue to grow our global businesses (Coderre, 2008). Looking forward, your board will continue to support investment in new products to ensure the continued growth of the Johnson Matthey group and progress towards achieving the board's main objective, that of delivering superior value to its shareholders.

The company's strategy is to announce the appointment of Bill Sandford as an executive director of the company. Bill has been with Johnson Matthey for 32 years and is currently Division Director, Precious Metal Products (Chwastiak, 2009). He will join the board with effect from the end of the company's Annual General Meeting on 21st July 2009. We also announced that Larry Pentz had been appointed Executive Director, Environmental Technologies. The group's Emission Control Technologies, Process Technologies and Fuel Cells businesses now all report to Larry.

A key element of the company's strategy has been to maintain a strong balance sheet to ensure that we have sufficient funds to support our investment in R&D and fund organic growth (Chow, ...