Johnson Matthey PLC Johnson Matthey business update (0785E)
February 07 2018 - 1:00AM
UK Regulatory
TIDMJMAT
RNS Number : 0785E
Johnson Matthey PLC
07 February 2018
Johnson Matthey business update
Johnson Matthey today provides an update on two business
matters: the settlement of the contract dispute lawsuit reported as
a contingent liability in November 2017; and the positive impact of
US tax legislation on the group.
Settlement of after treatment contract lawsuit
As announced on 21(st) November 2017, a group company, Johnson
Matthey Inc. (JMI), had been made a defendant to a contract dispute
lawsuit alongside a supplier to an automotive OEM in the United
States. The dispute related to a component supplied by the group.
We reported a contingent liability in relation to the lawsuit in
the announcement of our half year results for the six months ended
30(th) September 2017.
Today we announce that the lawsuit against JMI has been settled
on mutually acceptable terms with no admission of fault. Under this
settlement agreement, Johnson Matthey will recognise a charge of
GBP50 million in connection with resolution of the lawsuit. This
charge will be excluded from underlying operating profit for the
year ending 31(st) March 2018.
Positive impact of US tax legislation on Johnson Matthey
We note the approval of the US Tax Cuts and Jobs Act, which
became generally effective 1(st) January 2018, and expect to be
positively impacted by these changes.
The lowering of the US corporate tax rate leads to a revaluation
of our US deferred tax liabilities, which we estimate will result
in a GBP30 million one-off non-cash benefit in the income tax
expense line in the income statement for the year ending 31(st)
March 2018. This will be excluded from the tax on underlying
profit.
For the current financial year to 31(st) March 2018, we
anticipate no change to the effective tax rate on underlying
profit. We continue to expect this to be around 18%. Looking
forward to the financial year ending 31(st) March 2019 and beyond
we expect these changes will reduce the effective tax rate on
underlying profit by around two percentage points. We continue to
work through the full impact and will give more detail in our
preliminary announcement for the year ending 31(st) March 2018.
Outlook
Our outlook for the year ending 31(st) March 2018 remains
unchanged.
Enquiries:
Analysts and investors:
Martin Dunwoodie +44 (0)20 7269 8241
Simon McGough +44 (0)20 7269 8235
Katharine Burrow +44 (0)20 7269 8444
Media:
Sally Jones +44 (0)20 7269 8407
This information is provided by RNS
The company news service from the London Stock Exchange
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