Johnson Matthey Stock

So good morning, everyone. Very nice to see you here. I'm Louise Curran, Head of Investor Relations at Johnson Matthey, and a very warm welcome this morning.

Just a little bit of admin before we start, if you could turn your mobiles off or on to silent. And I'll first point you to our cautionary statement on the presentation. I'm very pleased to welcome our CEO, Liam Condon, and Alastair Judge, our CFO. In terms of the agenda this morning, we'll take the usual format.

So Liam will talk through an overview. Alastair will then run you through the financial results before Liam gives a strategic update on the progress this year and also the acquisition of Komatek this morning. And will, of course, leave plenty of time for Q&A, both in the room and then from the webcast as well.

And with that, I'll hand over to Liam.

Great. Thanks a lot, Louise. And a warm welcome, everybody, from my side and of course, to everybody online who's watching and listening in today. A year ago, we presented our new strategy to you about JM becoming a more focused, a more lean and a more cash-generative company. And I'm very pleased today to be able to present the progress that we're making. And as usual, we'll be pretty open as well about where we're facing challenges.

But first, let's come to some of the highlights of what we've announced today. I know there's a lot of moving parts, not easy to digest everything, but there's a lot of progress in here. First thing, the underlying growth at 6% is in line with our previously upgraded guidance. I think that was very important is of course, 14% on a reported basis because we're benefiting from the increase in precious metal prices.

Very strong margin improvement in Clean Air, up to 14.5% his is great progress. Some of you will remember, a few years ago, we were in single digits, now at 14.5% and plenty more room to go here. We achieved run rate breakeven in hydrogen technologies. We told you this is really important for us that we want to run this business in a manner that it's not a drag on the rest of the business. We think there's great growth opportunity in the future here, but it's important for us to run it at breakeven, and we got to run rate breakeven in the final quarter. So that was very important as well.

And we said we're going to generate more cash over 160% more cash year-on-year. That's quite an outcome overall. And that we have to say is despite the fact that, of course, we have faced some challenges. And we told you last year, and we told you at the half year results, the PGMS would be in transition for a while as we upgrade our refineries. And we have had some issues in our refineries, and we're going to talk about those.

Alastair is going to talk about those a little bit later. But what's really important is we're managing those issues, and they do not come at the expense of our guidance. They do not come at the expense of cash and you can see we've delivered on our guidance this year, and we're completely committed to delivering on our guidance for '27, '28, which as we'll talk to later is excluding some of the movements on the portfolio side that we will be talking about as we go through.

Now what's really important for us as we manage that transition with Platinum Group Metals, is our single biggest CapEx investment ever in our new refinery. We're pretty far advanced. Now with this, it's been ongoing for quite a while. It is going to cost more CapEx. Alastair is going to talk about this as well.

But we're very confident now in the time line will be operational next year. And this is really important from an efficiency, from a working capital point of view -- from a sustainability point of view. So this is on track to be operational next year, really important for us.

Catalyst Technologies, I know there's great interest in this. Catalyst Technologies, we are in the final stage now of approval. We only have the Chinese regulatory outstanding. There are no more questions or no more requests for information. The market assessment has been done.

There's no complaints out there. So this is just going through the process, and we are very confident that this will be wrapped up along the time lines that we've indicated and then we will be returning GBP 1 billion to shareholders as promised. And the final piece, bigger news today was the acquisition of Cormetech which is a market leader in SCR catalysts in the U.S. for stationary emission control.

So like we are a market -- global market leader in automotive emission control. Cormetech is a market leader in stationary emission control and is benefiting tremendously from the rapid growth of data centers. because that's where all their growth is coming from, and they're doing emission control for data centers, in essence, cleaning the cloud. So we'll talk about this today in a bit more detail, particularly also because it's breaking those.

Before I hand over to Alastair to take us through the financial details today, just a couple of points about how we're reshaping the group because there is a lot going on. And overall, we've had a strong focus on what we call controlling the controllables.

A lot of this is about managing cost. We have reduced the executive leadership team from 9 to 6. That's a 1/3 reduction. And you can see replications of this throughout the organization, makes us leaner, makes us faster -- very honestly, and I personally think it makes us a lot better.

We've had a significant reduction in corporate function headcount as well. We're just getting much more efficient also using technology to automate a lot more. This is -- we're seeing strong benefits here. We've aligned our incentives to our targets very tightly. 80% of our incentives our OP or cash-focused, 80%.

So basically, what we're saying, what we're committing to is what we're being incentivized on. And I think in times like this, there could be concerns that maybe some of these efforts are maybe not going to reflect well from a customer point of view or from an employee point of view, but actually, quite to the contrary, we have seen a very significant increase in our Net Promoter Score.

Our Net Promoter Score was already very strong. But anything above 40 is a strong Net Promoter Score. It's increased to 47 and the reason for that is we're doing a better job with our customers and helping them tap into value. A lot of our customers are struggling on the margin side, and we're taking a full cost approach and helping them manage their business better.

That's reflecting better back to us than in a perception of how we're doing. And that's why this score is going up. We spoke in the past a lot about improving commercial muscle. That's a reflection of what you can see here. And on the employee side, when you have a lot of change, it is demanding. It's tough, and you need very resilient employees to get through this.

Normally, your engagement score has come down when you're going through lots of change. You can see our engagement score has actually gone up and gone up quite significantly. And this is really a shout out to our employees doing an absolute fantastic job super resilient and highly committed to delivering on the strategy that we have outlined last year.

So that's just a summary of kind of the progress that we're making so far, some of the elements that we're dealing with. And now Alastair is going to take you through the details of the past financial year.

Over to you, Alastair.

So thank you, Liam, and good morning, everyone. I'm pleased to be here to report results for the first time in my new role. For those of you who don't know me, I joined Johnson Matthey as Finance Director for Clean Air. I then became CEO of the Platinum Group Services metal business and more recently, I've been head of strategy.

So this is a business I know well. We delivered a solid performance in '25, '26 with growth in underlying operating profit, margin and cash generation. Our results are on a continued basis, excluding Catalyst Technologies. Sales were down 7%, mainly as a result of soft market conditions in key markets in Clean Air.

Despite this, underlying operating profit was up 14%. Excluding metal prices, underlying operating profit grew 6%, in line with guidance, driven largely by cost efficiencies across the group. Earnings per share increased 16% and to 128.5p, reflecting the higher profit, but also a lower share count following our buyback program in '24,'25.

Free cash flow of GBP 168 million was a material step-up for the prior year as we intensify our focus on cash generation. Net debt increased to GBP 880 million and remains at 1.8x EBITDA. And we are announcing a final dividend of 55p per share, bringing the total dividend to 77p, in line with last year. Looking at the rest of the income statement on an underlying basis.

As mentioned, underlying profit was up 14% at GBP 340 million. Finance charges increased to GBP 69 million as benefits in the prior year did not repeat and effective interest rates increased due to funding mix changes. As a result, underlying profit before tax grew 11% to GBP 271 million. We expect finance charges this year to be broadly in line with '25, '26.

The adjusted underlying tax charge was GBP 55 million, an effective rate of 20.3%. This year, we expect an effective tax rate of 25% to 27%. This mainly reflects the impact of the sale of Catalyst Technologies on our profitability in the U.K. and on the U.K. underlying effective tax rate. On a reported basis, we recognized impairment and restructuring charges of GBP 192 million.

The impairments largely relates to the slowdown in the fuel cell and electrolyzer markets. We have recalibrated our growth expectations in hydrogen technologies. And as a result, we have fully impaired the remaining GBP 88 million of fixed assets in this business alongside GBP 33 million of related assets in PGMS services. We also recognized smaller impairments relating to the closure of our China refinery in PGM Services and consolidation of our manufacturing footprint in Clean Air.

Restructuring charges of GBP 57 million reflect the actions we're taking to streamline our processes and rightsize our group. Turning now to each business. Overall sales in Clean Air decreased 7%. Light-duty diesel sales were down 5%, driven by Europe, which saw further penetration of battery electric vehicles and gasoline hybrids.

Our performance in light-duty gasoline was impacted by market share losses, largely due to the phaseout of platforms in Europe and a weaker platform mix in China. But we've made good progress winning new hybrid business in gasoline, and Liam will talk about that later.

In heavy-duty diesel, sales declined 6% and driven by North America, where the Class 8 truck market was impacted by tariffs and uncertainty around incoming emissions regulation, EPA 27. We expect market demand to recover this year in the U.S. with improved visibility of these rules. Despite lower sales, operating profit grew 12%, and margins increased from 11.5 -- sorry, 11.8% to 14.5% as our focus on cost reduction, including operational excellence and footprint consolidation, feeds through into performance.

This underpins our confidence in margins reaching 16% to 18% in '27, '28. In PGM Services, sales were down 11% and operating profit decreased 20%. Our refining business was impacted by a GBP 48 million operational metal loss, recognized when we completed a stock take at our U.S. refinery in the second half.

This led to the drop in both sales and profit. We conduct stock takes every 2 years. So this loss relates to the full 2-year period since the previous stock take. While it's normal to recognize some losses as part of this process, on this occasion, they were significantly higher, with around half of the increase driven by higher metal prices.

We expect this to come down in the near term as we accelerate our operational excellence initiatives and transform our refining operations. But for prudence, we are still recognizing higher loss provisions this year. Our performance in refining was partly offset by a stronger trading performance supported by higher and more volatile metal prices.

In Hydrogen Technologies, sales grew 18% to GBP 71 million, largely driven by fuel cells, while electrolyzer sales doubled from a low base. We restructured this business at the end of '24, '25, taking out headcount and reducing costs, which led to a smaller operating loss of GBP 19 million.

Importantly, as you heard from Liam, we achieved run rate breakeven in the fourth quarter as guided. We are managing this market in line with market developments, and we'll continue to take out costs while maintaining our long-term growth optionality.

Turning now to cash. On a like-for-like basis, we delivered a cash flow of GBP 168 million, up from GBP 64 million in the prior year. The increase was driven by higher EBITDA as a result of cost reduction as well as lower CapEx and restructuring charges. We delivered cost savings of around GBP 70 million, largely in Clean Air and Corporate. CapEx was GBP 62 million lower than the prior year at GBP 239 million and we continue to make improvements in working capital.

After a strong year in '24, '25, we delivered another inflow of GBP 135 million last year. Once our new PGM refinery is complete, we expect CapEx to come down to around GBP 120 million in '27, '28 below depreciation. In '26,'27, we expect CapEx of around GBP 230 million, an increase on our previous guidance of GBP 140 million.

This is due to higher spend in the new refinery. We told you in November that the fit out of the building had been slower than expected due to industrial action by some of our subcontractors in 2025. The return to normal operations took longer than expected. And while productivity has now increased to target levels, this has impacted our fit out, particularly installation of the pipe work, a complex and largely manual process involving installing 50 kilometers of piping.

We are, therefore, investing in significantly more resource, including running 3 shifts a day and adding in specialist contractors to ensure the refinery is operational in 2027 as planned.

With our recent progress on improving working capital, we have identified additional opportunities which will help offset the increased cost of capital next year. For example, with greater operational excellence and agility in our Clean Air plants, we can now bring down our levels of inventory without impacting customer service or impacting the important Net Promoter Score Liam mentioned earlier.

So this will allow us to deliver further improvement on free cash flow this year from the GBP 168 million towards our target of at least GBP 250 million by '27, '28. Moving on to capital allocation. As you know, we have a disciplined policy with 3 clear priorities. The first is organic investment, where as you have heard, we expect CapEx to come down materially following completion of our new refinery.

Our second priority is to deliver materially enhanced shareholder returns. We have committed to increasing ongoing returns to at least GBP 200 million in respect of '26, '27 and beyond. And we also expect to return GBP 1 billion of net proceeds from the sale of Catalyst Technologies this year, GBP 800 million through a special dividend with share consolidation and the remaining GBP 200 million via share buyback.

Our third priority is inorganic investment. You've already heard from Liam about the acquisition of Cormetech, which brings new capabilities and scale to our Clean Air Solutions business. This acquisition is earnings accretive pre-synergies from year 1 and supports our growth in CapEx generation moving forward.

Liam will talk more about this later. Taking into account this acquisition, together with the sale of Catalyst Technologies and associated shareholder returns, we expect pro forma net debt to EBITDA to remain at around 1.8x at the end of March 2027. But we are committed to our target range of 1 to 1.5x and expect to reach this by the end of March 2029, as we drive operating margins and stronger cash generation.

Turning now to the '26,'27 outlook. Assuming constant currency and metal prices, we expect low to mid-single-digit growth in operating profit, excluding Catalyst Technologies and Cormetech. Looking at each business, we expect Clean Air to deliver good growth in operating profit and further margin improvement driven by efficiencies.

In Hydrogen Technologies, we expect to be at operating profit breakeven. In PGM Services, we anticipate operating profit in line with '25, '26million. as higher loss provisions in our U.S. refinery as well as lower metal recoveries and higher maintenance costs in our existing U.K. refinery will be offset by a reduction in overall operational metal losses in the U.S. If metal prices remain at current levels, we also anticipate a benefit of GBP 25 million to support performance in PGM services.

And assuming constant exchange rates, we expect an adverse impact of GBP 2 million for the group from foreign exchange. Finally, as mentioned, we anticipate further improvement in free cash flow towards our '27,'28 target of at least GBP 250 million. We do not see any material impact from the Middle East in '25, '26.

Our direct exposure to the region, excluding Catalyst Technologies is negligible and our energy costs are well hedged in the short term. However, long-term indirect impacts on demand supply chains and the broader market are difficult to predict given current geopolitical uncertainty, and these are not included in our guidance.

So to conclude, we delivered a solid performance in '25, '26 with growth in operating margin, profit and cash generation. We continue to focus on driving cost efficiencies, lowering CapEx and and managing our working capital, and we plan to deliver a return to shareholders of at least GBP 200 million in respect of '26, '27 and beyond. With that, I will hand back to Liam.

Great. Thanks a lot, Alastair. So we're leaving the past financial year, and I'm now going to go into the go-forward piece, and I'm going to go through our various businesses and take a particular deep dive then on the Cormetech acquisition.

So just a brief reminder for any of you who are new to the story, our strategy is very much about focusing on our core strengths, which is PGMS at the core and the mission control. These are the 2 areas where we are world class. And we have a circular business model.

We manufacture products with precious metals. We recycle them, and we trade the metals on behalf of our customers. That's what makes us strong, really strong positions in Clean Air and PGMs per se. And we have 3 areas of growth within the strategy embedded in the various businesses.

PGM products, new applications beyond the automotive catalyst, hydrogen technologies, components for electrolyzers and fuel cells, and clean air solutions is the piece that we'll talk about in relation to Cormetech today. Now first, if we go to Clean Air, just a brief reminder of where we are the midterm outlook, our target for 27 '28 is at least GBP 2 billion in sales.

What's really important is over 95% of that volume has already been won. So very strong confidence here. You can see from our portfolio, it's actually about 80% diesel and over time, the heavy-duty diesel part which continues to grow for the next 10 years will actually become the strongest component of this portfolio, targeting a 16% to 18% margin for the '27 to '28 frame.

And given where we've landed in the past financial year, we have a very high confidence in achieving that. Now looking at how we're going to maintain our position. We have an exceptionally strong win rate on the diesel side. So we feel very good about maintaining our overall or strengthening our market position there. Our weakness has traditionally been on the light-duty gasoline side, which was deemphasized many years ago.

And because of that, we've been losing market share on platform simply because we weren't focusing in that space. This strategy was recalibrated a few years ago where we decided to focus in on growth areas within light-duty gasoline, not the mass kind of light-duty gasoline which can sometimes from a margin point of view, be unattractive, but really the growth areas with a much more attractive profitability and specifically hybrids.

And in the past year, we've actually won 9 hybrid platforms in Europe, and that represents 25% of the total projected market for '28, '29 in Europe. And that 25% is punching significantly above our weight from a market share point of view. So you can expect a turnaround there in the go-forward hybrid market share off the back of the contracts that we have won in the past 12 months.

Our strategy is really to help our OEMs to have strategic partnerships with select OEMs. We don't work with everybody, the ones that we work with. We work with very closely. And as you saw earlier from the Net Promoter Score, they appreciate working with us. We appreciate working with them. and we run this in a way that there's mutual benefits on both sides.

Looking at the margin, what gives us confidence that this is going to continue to increase going forward. the levers, the drivers behind that margin improvement. Clearly, as the market matures, there's less need for R&D, still need R&D. It's just less than what you would need if you're constantly innovating in that space, less need for SG&A that will continue going forward.

Overall corporate head count will be reduced further as we rightsize the company post the exit of CT with less corporate function headcount, you get less REIT corporate recharges for Clean Air that will automatically benefit the margin as well. And we've been optimizing the manufacturing processes, just running things in a more streamlined manner.

And our footprint consolidation continues. We took out another 2 production lines in the last 12 months. And you recall a few years ago, we had 16 plants and 50 lines. Today, we're down to 11 plants and 20 lines. Target state is probably about 6 plants. So you can see the trajectory, how that evolves, depends on the pace of market evolution. So we're pretty agile here and feel very confident in our ability to reach the 16% to 18% margin.

On PGMs, there's 3 parts to this business, the refining side the product side, and that's between both of them, that's kind of the bulk of the business. But we have a very attractive trading part of the business as well and in times of high volatility that typically will generate relatively more profitability as well.

We're the world's biggest recycler and this is the piece that refining piece is the part that we are upgrading and have been now for a while and upgrading until next year, and that's why we talk about the transitional phase of PGMS because it's really important with the older assets that we're running that we upgrade these to be state-of-the-art, modern, efficient that costs a bit of money.

But again, it doesn't come at the expense of our ability to deliver on our guidance. This is something that we just manage through and the previous targets that we set out, at least GBP 450 million sales, '27, '28, circa 30% operating margin, '27, '28, they remain absolutely in place. They are absolutely what we are targeting and very confident of achieving.

A key part of this and Alastair has spoken to it already, the new PGM refinery. We do hope at some stage, we can take you around there. We're not going to take you anytime soon because we don't want you getting in the way of the people who are installing the pipes because we really want them to stick on schedule now.

We already started early-stage commissioning in March. That was important. We've got about 70% of the equipment already installed, so not on-site installed. We've got almost all the equipment is basically on site already. So this is making really, really good progress.

The piping part is the piece that Alastair alluded to, where it's just complex by nature. But given the amount of resource that we're putting behind it now, we're very confident in the time line that we've outlined. And our plan is to take down the old refinery in the fourth quarter of calendar year next year.

And we will only take down the old refinery when the new refinery is completely up and running. So that gives you kind of a time scale of how we're thinking about when this becomes operational. And we'll start it up stage by stage, metal-by-metal. It won't be just press one button and the whole thing works. We will go through this very methodically. We've got a lot of experience in this, and that's the plan on the new PGM refinery. So on track for next year.

I've showed you on that one slide, we've got the 3 components, and we've spoken in the past a lot about hydrogen technologies. Market is slow still at the moment. So we're managing what we can manage. We're still convinced basically, there will be a strong market for green hydrogen because you cannot decarbonize heavy industry without it.

It's just a question of when will the economics work and when will the market really kick in. So that's taking a while. But we are very well positioned and winning new customers in this space, lot of new projects starting, but they're all still early stage. So this is still a pretty nascent business for us, but we're running at a breakeven. PGM products, we've spoken about extensively before.

You'll probably have seen our latest collaboration with some of the key miners, Valterra, Sibanye Stillwater where, in essence, they are co-funding our research and development to find new applications for PGMs, which is a very exciting development that Liz can talk to a bit more, but a lot going on here. And the piece that we're going to double click on today is Clean Air Solutions because we haven't really spoken about it yet, and we've got a lot to speak about on this one.

So the background here is -- and we've had this a business called Clean Air Solutions, kind of hidden in Clean Air for quite a while, so a couple of years, we've -- or a few years, we've had this business. And this is stationary emission control by and large. So we're the world leader in automotive emission control, so stuff that's moving around.

Stationary is typically used then on power plants, utilities and data centers. And the piece where we have typically played in the past, and this goes back to our heritage is think about us as the kings of diesel engines. And from an emission control point of view, we do the emission control for the diesel engine and the diesel engine is often a backup for a data center.

So data centers are running 24/7. They can never go down. They have to have a backup. So that's a nice niche type space that we've been playing in. The really juicy part of the market is less about the backup. It's more about primary supply. And typically, your primary supply should be coming from the electricity grid. The reality is the electricity grid cannot cope with the demands of AI and the energy demands of AI. And if you're building a new data center today and you want to get connected to the grid, you're going to be told you have to wait 5 to 8 years.

Now you tell a hyperscaler to wait 5 to 8 years, and they'll say, no, I will solve that problem myself. I will build my own micro grid on site and I will do that with a gas turbine engine. And I will generate my own electricity on site. And that is exactly what is happening in the U.S. That's what's driving this market.

So you have a need from the hyperscalers to test and run their models, which requires endless amounts of energy. They can't get enough from the grid. So they're building their own microgrids on-site with gas turbines. And the company that we're going to talk about, Cormetech is basically the market leader in that space for gas turbine emission control. That's why we're so excited about this company. And with that, we can combine primary emission control from an energy generation point of view and backup, and that opens up completely new possibilities as well.

So overall, I hope you can get a sense. This is a quite exciting stuff for us. The really important thing is this is close to home. This is a mission control. This is stuff we've been doing for decades. This SCR selective catalytic reduction technology is something we've been doing as well for decades, but we've been doing it for diesel engines.

Cormetech has been doing it primarily for gas turbines and they have a lot of IP around this. So this is a highly, highly complementary from our point of view. Market is growing rapidly. There's a huge distributed power generation market out there for people who can't rely on the grid.

But the main focus of demand right now, the one that's just going through the roof is, of course, data centers. and it's primarily focused in the U.S. today. But because of desires for AI sovereignty all over the world, you're going to see this replicated throughout the world. So many opportunities in here for us. What we're paying is $360 million. This is approximately a 10x multiple on the 2026 calendar year EBITDA and there is an additional earnout of up to EUR 100 million, which is based on revenue target -- very ambitious revenue targets for '27, '28, which we really hope the Cormetech will achieve, but this is quite a spectacular growth planned in is, of course, subject to customary regulatory approval.

De facto, this is only relevant in the U.S. So in contrast, for example, to the CT deal, where we had to go through 12 different regulatory authorities. This one is only relevant in the U.S. And given the high complementarity of the nature, we expect no issues, and we expect this to be a pretty quick process.

Now I think what I mentioned, we've already been in this space for a while. We've never opened it because very honestly, when you compare with Clean Air, it's say this is too small to talk or had been too small to talk about. So we held back on basically sharing what this Clean Air Solutions piece for JM is so minus Cormetech, just what we do today.

But here, you get a sense of what the dimension of this business is. So in the past year, financial year, already GBP 67 million, close to GBP 70 million, not dollars and an operating profit of GBP 10 million, profit of GBP 10 million. So this is already a highly attractive business. And this same as Comatec, is actually growing really, really fast.

We've recently secured with 2 engine manufacturers in the U.S. We have secured GBP 300 million in sales for the medium term going forward. So there's a great dynamic in this business for JM anyway, that very honestly, we would have spoken about without Cormetech for the first time today. It's just with the combination with Cormetech, this really starts to get critical mass and really starts to get interesting for JM going forward. So this is the shape of the JM part of the business.

The Cormetech part of the business, as I say, I think, primary power generation, emission control for that. And you can see here the last 12 month sales, GBP 104 million in sales, GBP 16 million EBITDA. You can see from the projection for '26, a huge increase in that.

It's GBP 180 million projected in sales for this year and GBP 35 million EBITDA. So you can -- Cormetech has a track record for the last 5 years of very strong growth. So this is compounding and then think about adding this with our piece of the pie, and you get to at least GBP 200 million kind of year-end, like financial year-end, you get to at least EUR 200 million in sales and a margin that is clearly significantly accretive to the JM group margin.

So that kind of puts in context also why we're so excited about this. A lot of long-term relationships for Cormetech's been around since '89. They have a lot of -- their customers are usually returning customers, vast majority of them are returning customers. And they have -- and this is really important, also a recurring element to the sales model.

So if you sell a catalyst for a backup diesel engine, you're probably going to sell it once because the diesel engines are not going to be running all the time. So the catalyst is going to last longer. If you're in the primary power generation market, these things are running 24/7 massive energy loads at some stage, the honeycomb with the catalyst needs to be replaced every few years, like with industrial catalysts -- so you have a recurring sales model.

If you're winning business now, you know in a few years, you're getting that business again and there's a service element to this business. So this is, again, kind of feeds into why we are so excited about this business. We have strong visibility on the growth that's coming. So these are -- there's a contracted order book for $300 million up to '27.

And I think what's important to understand here is typically, you buy the catalyst at the -- more or less at the end of the purchase process. If you think about the purchase process for gas turbine, these are very, very, very big and expensive engines -- t will take -- usually takes -- it will take a while to install them anyway, it takes a while to procure them, it takes a while to install them.

And you don't -- at that point in time where you're buying the gas turbine, you don't buy the catalyst, you buy it rather towards the end because you want the fresh catalyst you might place an order, but you really only purchase at the end.

So these are purchases where we -- the big investment has already been made by somebody. Typically, these are hyperscalers. We're investing all this CapEx and then at the end, you get this sale coming in and then the recurring sale in later years. So you can easily see how you could compound this number. There's a pipeline of $1 billion already visible to us.

And this is all stand-alone. This is -- there's nothing in synergies in here. We think there's a lot of synergies, but this is just Cormetech stand-alone. So great pipeline in there. And this just gives you a picture first time of the combined business, what it would look like. And of course, we'll go into further detail when we have completed the deal.

So after we have completed, we will share more with you and we'll give more guidance on this, but just kind of directionally to let you know what it looks like. You see from a geographic point of view, strong focus in the U.S. Why is that? Because all of this business right now is primarily driven by data centers, and that's where the center of the world is right now.

But that will be replicated throughout the world. So that geographic kind of differentiation will happen over time. But the most attractive also from a value point of view, the highest growth, most attractive market is U.S. that's where we have the strongest lock at the moment.

On the customer side, variety of customers, we're not only serving the data centers. The data center is the fastest growth, highest value opportunity, but it's utilities, it's industrial, it's marine and again, think distributed power generation. You're not getting enough power from the grid, you got to solve it yourself with an on-site solution.

That's what we're solving for here. And then you can see from a tech point of view, we basically cover all angles. We've got the natural gas turbines, diesel engines and natural gas engines, coal power plants. So depending on what fuel is being used, we will offer an emission control solution and these are also -- these engines, typically, the new ones are fuel-agnostic.

If methanol is developed, it is developed, hydrogen is developed. These can run on these fuels as well. And we will also have the emission control solution for that, too. And the key point here is we've got a lot of -- we, as JM, have a lot of IP in this space. Cormetech has a lot of IP in this space. So this is a strong, very strong combined business that will really help solve customers' needs because customers need to solve their nitrogen oxide pollution problems in the data center which is the strength of Cormetech.

They need to also avoid carbon monoxide and volatile organic compounds in the data center, that's core strength of JM. We can do that in one combined offering going forward, which today hasn't been possible to the extent that you would want, particularly in the primary market.

So finally, on this piece, we do see a lot of, of course, financial benefits from this. We see synergies of about EUR 20 million run rate synergies of $20 million by 2030, 70% revenue, 30% cost. Why is that? Where is that? It's really quite easy. Think of, again, come tech gas turbine, they have the SCR catalyst.

We have an oxidation catalyst that whoever is running the data center also needs so we can sell JM products to their customers. Equally, Cormetech is basically only in the U.S. We have a global footprint. We can sell their products to our customers around the world as well. And on top, we can develop a combined offering for new customers. So we think from a synergy point of view, there is lots of room here for us to move forward.

But as Alastair already mentioned, this deal is EPS accretive from the first year even without any synergies. So we think highly attractive, the ROIC will be exceeded within 3 years of completion. And Alastair's already pointed out, we'll be very disciplined on the net leverage going forward and remain very disciplined with strong cash generation, improving the position over time.

So that was basically it, 1 or 2 final points, we have shared with you in the past our overview of milestones. These are commitments beyond just the financial numbers to give you a sense, are we on track or not. We will continue to update you with these.

We think it's important because first and foremost, we've got to run the underlying business as successfully as possible. We're very excited about Cormetech. But Cormetech is an add-on that the fundamental part is running the core business as successfully as possible and having an additional booster with Cormetech but that cannot come at the expense of the core business.

So we're very clear on our priorities here. The good news is we're on track with all of our commitments so far. There are -- have been challenges on the way. But as you've seen from our results today, we're managing those challenges, and we're completely committed to the commitments that we have made to you and to the market with the midterm with a mid-single-digit CAGR in OP underlying CAGR and OP by '27,' 28, the GBP 250 million free cash flow and the GBP 200 million annual returns to shareholders split relatively equally probably between dividends and share buybacks.

That is a firm commitment. That's all without Cormetech and going forward, we'll give further guidance, but you can take that as an absolute firm commitment from us. Nothing changes in that regard. On top, you have the GBP 1 billion returns from the CT sale this year on top of whatever else we're promising here.

And as you can see from the presentation today, we are not just milking the business. We are also reshaping the portfolio to ensure sustainable value creation, not just short and medium term, but also in the long term. So a lot of moving parts. I'm sure you've got lots of questions together with Alastair and my team, we're looking very forward to answering them, but big thanks to you for your attention today, and we can kick off with the Q&A. Thank you.

Thank you, Liam, Alastair, for the presentation. We'll first take questions in the room, and then we'll go to the webcast. And just as a reminder, please state your name and your company when you ask the question. So Alex, will get to you first. Let's wait for the mic. Thank you.

Alex O' Hanlon from Pannure Liberum. Congratulations on a good set of numbers, given all the things you've had to manage and the Cormetech acquisition. Could I start with the Cormetech acquisition? Obviously, it's the big news this morning. You mentioned the $1 billion sales pipeline. Could you give us a bit more color around that, how much of that is with customers that Cormetech already has and already has relationships?

And how confident are you on winning, I guess, your fair share of that? And the next question is just on LDG. You mentioned the good progress that you've made there after the refocus on that business in Clean Air. I guess the question is, what have you done differently that's helped you improve those win rates? Just a bit more color around that.

Yes, sure. Thanks a lot, Alex. So on the pipeline, about 85% of that pipeline is returning sales. So these are customers typically Cormetech has very long-term relationships with our customers. And the current estimate is about 85% is customer -- already established customers as opposed to new customers.

That's how we're thinking about the pipeline from the data that we've seen from due diligence. We will, as we go forward, I can give you more details around that once we've been able to look further deeper into it. But it's a pipeline where there's a high degree of confidence. And this is almost all data center driven. So we're not even tapping into the other potential markets, but the full focus is on data center at this point in time.

On LDG, so the turnaround in hybrid was really started a few years ago with the recalibration to say, actually, we have competitive technology, but we had deemphasized it. We didn't want to -- we can't afford to play everywhere in the LDG space. So it was a very deliberate strategy to say what's going to grow and we considered particularly hybrid to be highly attractive growth rate going forward is like 5% for the next 10 years.

And that's a space where the value of the catalytic converter is the same as an internal combustion engine for us. So it's a much smaller one, but the value is basically the same for us. So it's quite an attractive space to be in. And we basically, with those 9 platforms that we've won, we've started to establish a reputation then in the industry and then it kind of becomes a virtuous circle.

So I think it's the hard work over multiple years now, starting with very good technology competitive, our ability to improve on the PGM loading side, which really helps customers on the cost side. And just reestablishing with customers at a personal humans key account level, the relationship with key OEMs again.

Tristan Lamotte, Deutsche Bank. I was wondering if you could give a little bit more color on the kind of GBP 48 million one-off that pushed down PGMS earnings this year. And I'm just wondering, there are a few kind of temporary filling impacts in PGMS last year. guided this year. And I guess they kind of drop out in FY '28. So what kind of reversion should we expect upwards in FY '28? How should we think about that profile?

Yes. So on the metal losses, first of all, look, I mean, core manufacturing businesses have some metal losses in their system. I think in our refineries, some metal gets trapped through it. So every couple of years, what we do is we close down the plants, and we do a complete count of everything, and we compare the count to the estimates we've made of metal yield. And if there's a difference, we book the loss. So we ran the stock count at the second half of last year and the results showed that the metal yields were lower than we had estimated, which means we had to recognize the loss.

I think within that, there's probably 3 things I'd say, Tristan. And the first is, even at constant volumes, we were going to have a bigger number because metal prices went up so highly in the second half of the year. So on a constant volume basis, that probably doubled the value of the losses. We've also had some sort of challenges with the more variable feeds coming in and some challenges with managing the assets in the U.S.

So that's also led to a higher volume. So they are the causes of it. We've got a very clear program in place in West Deptford taking some of the learnings we've had from the old refinery in the U.K., which is selectively renewing some of the assets and improving the operating processes.

So those will drop off over time. And so we're very confident that as we move forward, the level of yield will get back to more historic norms. But we're taking a prudent view in '27 of assuming that those metal losses continue, and so that will dampen profits in '27 as we've discussed and will leave the profits more or less flat year-on-year.

As we move into '28 and we move through the new refinery in the U.K., and we've resolved the issues in West Deptford , we're very confident of the GBP 450 million guidance at 30% plus operating margins that we've spoken about today. So that will come through as we get through FY '28.

The GBP 450 million is before metal price impact, right?

Yes. So next Yes, yes, that's good. So next year, we're guiding to flat underlying, but with a GBP 25 million upside from metal prices on top of that. And so those metal prices will continue for as long as metal prices remain as high as they are today.

Sebastian Bray of Berenberg Bank. I had a question on common tech, which is the business is quite nice growth outlook. But the 65% EBITDA CAGR mentioned versus [indiscernible] implies that the business was quite close to EBITDA breakeven in that year.

I appreciate 2020 is an unusual year for several reasons. But why historically was the profitability of the business, let's say, low to mid-single-digit EBITDA margins? And what has changed apart from operating leverage? My other question is on the total cost of new PGM refineries. Is this disclosed now? Is it something like GBP 350 million to GBP 400 million net of the incremental GBP 90 million investment?

And finally, Clean Air margins, big step-up, H2 versus H1, I think, over 200 basis points. Is there any reason in terms of phasing of cost savings, why this number doesn't become 18%, 19% plus if the group targets for cost savings can largely be transposed across the Clean Air?

Thanks a lot, Sebastian, and you got a lot in there for one shot. So let's start with Cormetech, and of course, we don't understand that everything that was happening at COMET, s you can imagine in I think the key point is there was a change in management in '22. And basically, there was a refocus of what they were doing.

I think this was more or less a kind of stable, relatively low growth company at that point in time. They saw the opportunity in data centers and focus the business on that, did a much better job of controlling their costs. And that ultimately has led to the significant increase in CAGR.

So I think it was more the '22 to '26 time frame where the jump has been as opposed to '20 and '21, and that was due to new management. I think what's important is there is a very successful management team in there right now. led by a lady called Patricia Martinez, she's the CEO.

That team will continue in charge of running the business, and they are incentivized to stay on with the earn-out and it's in our interest to make them as successful as possible. So we'll be sticking with that team and sticking with those high growth rates going forward is the intent. So that may be on Cormetech and on the PGMS?

Yes. So I think as on PGMS, I think we previously guided to about GBP 350 million. I think GBP 90 million increase in capital guidance this year is primarily around the TCR refinery. So we would expect that to be near GBP 450 million as it's complete. And then on H2 the cleaner margins. So look, Clean Air always has stronger H2 than H1 margins. I think that's what we've seen in the past.

But what we will see is that the growth we saw in both H1 and H2 margins rolling forward as we continue to improve the margins from 14.5% full year this year towards that 16% to 18% range. But there's always an H1, H2 split, partly driven by the volume of business that generally comes through in the second half versus first half.

But we like your challenge. We'll see if we can go for it.

Hello. It's John Campbell with Bank of America. We've got 3 quick questions. Could you maybe be a little bit more specific or give further details on the conditions required for the Cormetech GBP 100 million earn-out. Second of all, when do you expect to have Chinese antitrust approval for Catalyst Technologies, acknowledging that you expect it to still be overall in time?

And third, you've won basically, I guess, new contracts in hybrids and light-duty gasoline. Would you say it's realistic to assume that in the coming years, you might be able to actually outperform maybe the overall underlying volume of production in light-duty gasoline?

Thanks a lot, John. So let me start with Cormetech on the earnout. So we'll go into the contractual details. But in essence, it's a revenue-based earnout for the years, '27, '28. So it's very ambitious targets are hit, which are significantly higher than what's in the plan, then they will achieve that earnout. And that earnout would be paid at the end of 2028 for the previous year and at the end of 2029. So that's kind of the construct that we have.

We think it's in our mutual interest to have that gives a great incentive for management to push harder and go faster. So -- but it's revenue based, and there's lots of kind of conditions in there, as you can imagine, to make sure for both sides, that it's reasonable. On China CT, so nothing has changed on the time line. We have a long stop -- long, long stop date is in August.

There's a first checkpoint in July, and that can be extended into August. So the latest that we would expect approval is in August calendar year 2020 and we remain firmly on track for that at the latest. And on LDG market share over time, I think the confusing thing and it is hard to decipher for the market.

If you look at current stats, we'd be losing market share in light-duty gasoline because of platforms that have been lost several years ago. and we're now winning platforms that come in with the new kind of EPA '27 onwards. So you see that in the market from onwards. That's when you see a turnaround in market share.

So over time -- so what you could expect is there will be probably a slight decline and then gradually pick up with these new hybrid wins that we have on the light-duty gasoline side would be the trajectory to expect.

Just check for any more questions in the room before we move to the webcast. So in terms of the webcast questions, we're back to Cormetech, and the question comes from Chetan Udeshi at JPMorgan and it's about the competitive market dynamics. So I would have thought incumbent auto cat players would also be -- have a good presence in the stationary catalyst market.

The engine players such as Cummins, for example, have their own stationary catalyst business. It feels like this might be a more fragmented marketplace. So how does it compare to the oligopoly nature of cleaner?

Yes, it's a good point. So Cummins as an example, Cummins is actually one of the biggest customers of Clean Air solution of JM to date. We actually do the emission control for a company like Cummins. If you think about SCR catalysts and the competition space, it is typically the companies who are catalyst players. So Umicore, [ Aceram ] those partially BASF will be those types of companies who would be the players in this space. But nobody has a competitive offering like Cormetech for primary emission control in data centers. That's the key differentiation.

And then the second question was back to the catalyst technologies deal. So I know we've touched on that. But the specific question was, do you have a plan B in case that CT approval is not achieved on time?

Well, we're very confident that it will be approved and we have ring-fenced the business. So we've carved out CT. We're running it as a stand-alone business, and we expect to hand it over to Honeywell then once the regulatory closes.

I think from our side, that's so far on the webcast question, so we'll just do a final check in the room before we wrap up. I think that's good. So I think those are all the questions today. So thank you very much, everyone, in the room and also on the web for your interest. And hopefully, we'll see as many of you as possible over the coming weeks and days on the roadshows. So thank you for your attention this morning.

Thanks a lot, folks.

Good morning, everyone. I'm Louise Curran, Head of Investor Relations at Johnson Matthey, and a very warm welcome this morning to our half year results presentation. Thank you, everyone, for coming along to the Andaz today, and welcome to those joining on the webcast as well.

A little bit of admin before we start, if you could please turn your phones off or on to silent. And I'll point your attention to the cautionary statement. I'm very pleased today to welcome Liam Condon, Chief Executive Officer; and Richard Pike, our CFO. In terms of agenda, we'll follow the usual format.

Liam will run you through an overview. Richard will then take you through the financial results, and then Liam will cover our strategic progress in the half. And we'll, of course, leave plenty of time at the end for Q&A, both in the room and then on the webcast.

And with that, I'll hand over to Liam.

and big congratulations to you on your new role. And a big thanks also to your predecessor, Martin Dunwoodie, who've done great work for us. A warm welcome to everybody here in the Andaz Hotel. I'm really happy there's so many people here, so we can get some heat into the room because it was a very cold morning. And a warm welcome to everybody who's joining us online today.

So I'm just going to hit some of the highlights of the half and then talk about some of the key priorities that we're working on that we're going to give you more color on throughout the presentation today. So first of all, I think the standout was the underlying operating performance increasing by 38%, an 11% increase in Clean Air and a 33% increase in Platinum Group Metals. So in the environment we're in, I think, a very strong overall performance and a good indication of the progress we're making here.

Secondly, -- and Richard will talk extensively about this. You will see very good progress on our implementation of our new cash-focused business model. We had a significant cash outflow in the first half of last year. This time around, you will see a -- not a significant, you'll see a significant turnaround and a small inflow. So that's quite a big movement. And there is a lot more to come in the second half and then, of course, in the subsequent years. And the building blocks behind that, Richard is going to talk to you about.

And the third point, which is very important as well, the sale of Catalyst Technologies to Honeywell is on track. We had said that, that will close in the first half, calendar half of '26, and that remains the case. And once we close that deal, as we said, we'll be returning GBP 1.4 billion to shareholders upon closure. A final point I'd make is we did -- we have made some announcements this morning around organizational changes.

And I'm sure we'll -- I'll be talking a little bit about this later on, what the rationale behind that is. I'll make it clear for the purpose of today's presentation, Richard is in his CFO role only. When we get to the Q&A, you can gladly ask him about his motivation for the new role going forward. But first and foremost, it's the CFO role for today's presentation.

So a couple of the top or a few of the top priorities that we have for the next 6 months for the full year and then subsequently and just the progress we're making around that. I've already mentioned the sale of Catalyst Technologies, and we'll unpick that a little bit later on. So what still needs to happen. But here, we're fully on track for that closing in the first half of calendar '26. Second one, we've spoken extensively about our ambition to significantly increase the margin of Clean Air.

And here, you can see, again, very strong progress, a 200 basis point increase in the margin for Clean Air, an increase in absolute profitability. So despite declining volumes, this is a really strong performance and leaves us completely on track for our target of 14% to 15% margin of -- by the full year this year. And with that, on track for our ambition '27-'28 of getting to basically 16% to 18% margin. Very strong performance from Platinum Group Metal Services with 33% increase in underlying operating profit.

This was clearly helped also by Platinum Group Metal pricing, the trading business -- but it's also refining, which has been doing well. And it's also efficiencies, which is where we've simply been running the business more efficiently. So a strong underlying performance here. Our new PGM refinery, which is a huge investment. And I think against the background of the importance of critical minerals, it's hard to underestimate how important this is, both for JM, I think the U.K. and globally.

This is the world's biggest refining plant for platinum group metals that we're building in Royston out beside Cambridge. This is on track to start commissioning in -- by March of 2026. It's a very big capital project. It's about GBP 350 million capital expenditure here. And we do have a small delay of a few months. But because we have our ongoing refinery, our old refinery, our 60-year refinery, still running in parallel, this has no impact on our guidance or our ability to deliver to our customers.

So in the bigger context, it's a smaller delay, but important to flag it, but it's a few months. On Hydrogen Technologies, we are on track. And again, this is now almost end of November. We're very much on track for breaking even by the end -- or have run rate breakeven by March '26. This is something that we had committed to, and we have line of sight of that.

And we're confirming that again today. I think there was some skepticism that we might get there, but we absolutely have line of sight to that. And that's why we are reconfirming that we will break even with that business or have run rate breakeven by March '26. And then the final point, and again, Richard will talk to this extensively, is the significant improvement in free cash flow and the building blocks going forward to give you that confidence that we will be generating GBP 250 million free cash flow going forward on a consistent basis. And what's behind that, Richard will explain.

So they're kind of the highlights. We'll unpick different elements of this as we go through the presentation. But first, I think it would be helpful to go through the detail of the half year results, and then I'll come back and share some more color on these strategic priorities.

And with that, Richard, over to you.

Thanks, Liam. Good morning, everybody. So building on Liam's introduction, just to remind everybody, we've now treated Catalyst Technologies discontinued. So the results that we'll present are excluding CT. Obviously, still a very much an integral part of the group until we affect the sale to Honeywell, but all the numbers in here are talking about essentially the remaining business going forward.

So as Liam said, I think we're really pleased with this in terms of -- against the targets we set out in May, actually, we think we've made really strong progress pretty much across the board against where we said we would focus. So you can see that despite sales being modestly down as a result of primarily Clean Air volume decline, basically, you're seeing strong improvement in underlying operating profit significantly because we're focusing on the things that are within our control. That feeds through to earnings per share.

And to my mind, and I will, as Liam said, spend quite a bit of time on this. I think for me, possibly, despite those headline operating profit numbers, which I think are really quite impressive in the current environment, I think the free cash flow focus in the modest time we've actually started to shift gear on this is moving very well in the right direction.

Our net debt is up. That's primarily because CT had cash outflow in the first half and the dividend. So -- and we've also had a significant stock build in our U.S. refinery because we took it down for a maintenance shut in October. So despite the stock build and despite metal prices being higher, I actually think this is all quite a good news story, and I'll talk about how that's going to play through in the second half.

As a result of which we're maintaining our dividend at 22p per share. In terms of looking at the P&L, I mean, I've just touched on the highlights there. The only real thing I go to draw out is the interest charge you can see is higher year-on-year. That's because we had a couple of one-off nonrecurring items in the prior year. This level of interest charge gives you a feel for the run rate of where interest cost is on an ongoing basis.

Coming down to the businesses.

So in Clean Air, pretty much if you look across the piece in terms of how we're performing. LDD pretty much in line with market. Europe has been difficult for us this year, but pretty much in line. LDG, worse than market. But if you recall, several years ago, we made a shift from gasoline towards diesel to the primary focus. So we came out of a number of those. We've had platforms that were on running off over time, and this is the picture you're seeing that running off.

In more recent times, we had an increased focus primarily towards hybrid. You've seen that in some announcements, but they take a while to come through. So sort of you've got a gap between when we announce something and it's in the numbers. So there's no surprises in here from our point of view. And actually, HDD, we're actually start ahead of the market. So in the area that we consider is likely to continue to grow going forward and where we're strongest in terms of market share and positioning, we're actually doing better than the market as well.

Over and above the sales position, basically, what you can see here is the strong focus on our costs. I said basically the full year, if you looked at our plan to get us from the sort of 12% last year into the mid-teens this year, a lot of that will be about overhead reduction. You can see that coming through in terms of the margin improvement. Also the operational excellence, commercial excellence, those areas are getting more ingrained in the organization.

So I think this gives us a strong belief that actually we're heading towards that 16% to 18% margin range. PGMS, good half. We had a weak first half last year. We have been benefited from higher metal prices this year versus last year. And actually, it's been a more volatile trading environment. So the trading side of our business benefits when it's more volatile. So those things have been through, but pleased there in terms of year-on-year improvement. And there's a lot of focus at the moment. Liam touched on, obviously, the build of our 3CR facility. That's critical for us going forward. We've still got a couple of years of running this old asset.

So focusing on consistency of operations and actually maintaining our assets in a reliable fashion as possible is really key to Liam's point around delivering for our customers. That's where the strong focus is in the side of the business. Hydrogen, as Liam just said, you can see here improvement year-on-year in terms of the run rate. For those eagle eye of you, you'll notice that our losses in the first half of this year are higher than the second half of last year. That's because we have a weighting in terms of when we recognize our revenues, it's second half weighted.

And so we've got line of sight, very clear line of sight in terms of our contractual position with our customers, see what's coming through, hence real confidence about that getting to a breakeven run rate by the end of the year. And as I said, despite actually the profit number being in really good shape, this is probably where I'm most pleased actually in the first half. So you can see, obviously, with a starting point of profit improvement, that's a good starting point for our cash generation. But the really important thing here is that movement in working capital. And these things take a while to bed down.

I talked at the year-end about the fact that actually, there's quite a lot of areas which are not rocket science. But in an organization that's not particularly being cash orientated, some of these things are sort of ingrained processes that need to change. And we've started with payables. I'll come back to that. There's more to do on receivables and inventory. Some of those things take longer. But actually, what you can see here is actually a shift in focus. There's still a lot to do here. This is nowhere near job done.

It's a modest cash inflow in the first half. But given we have circa GBP 200 million of stock build associated with the refinery shutdown in October, and we've had higher metal prices, I actually think this is really positive because that stock build will unwind in the second half, and we've got ongoing focus in other areas. So to touch on those actions, particularly around the cash side of the to actually replicate the CT profits that sort of lost with the sale, we've said that we need to take a significant amount of overhead out. We used to be a much bigger group.

We still have some overhead that sort of reflects the situation of the legacy of us being a bigger group. We're losing CT, a much more simple group. And actually, our overheads need to reflect that. We're making progress. And a decent chunk of that is on the Clean Air side. We talked about the fact that the most of the difference between the 12% last year and 14% to 15% this year was going to be about overhead reduction. You can see that actually Clean Air is already delivering on that and more to come in the second half. And a similar amount is coming through on the group side of things.

And as Liam will come back to the organizational structure, as we simplify our group structure, simplify the way in which we run things, that will feed through to greater levels of overhead reduction going forward. CapEx, we're still at elevated levels, and that's going to continue through this year and next year, primarily because of 3CR, but also other areas within PGMS infrastructure, which feed into 3CR. And so our target of getting down to GBP 120 million, which is close to depreciation, we're on track for, but you're going to see that higher level of CapEx.

And that's why, to a certain extent, not just that reason, but why it's quite important we're focusing on working capital in the near term because that working capital saving offsets some of that higher CapEx in the next couple of years. If you think about all of this coming together, what we said at the year-end was we'll sell CT, well on track, as Liam said, and he'll come back to that.

Basically Clean Air, get it to 16% to 18% margin, well on track, get 3CR built. Yes, we've had a couple of hiccups, if you like. So we had industrial action with one of our contractors. And that's led to lack of productivity in terms of the people on site. So that pushes out the schedule and so on and so forth.

I think what's been really important since the summer, our team where we changed the number of members, the general contractor and the subcontractor with in distraction have worked really hard to get to a schedule that everybody believes in, the detailed level of work that underpins that, everybody signed off on. Everybody is holding hands and actually intent actually we're really confident about the plan we've got in place.

And if we actually generate the working capital improvements we promised for the next couple of years, that will actually underpin our cash generation while we're still spending more CapEx to then get to a situation of lower CapEx going forward, which underpins why we get to the GBP 250 million of sustainable cash flow from '27, '28. We've talked about this a few times, but just to reiterate on the shareholder return side, on the GBP 1.4 billion that we're returning, I spoke to pretty much every shareholder through the year-end process about where preference was.

I think everybody recognizes that whilst there might be a preference in some areas for share buybacks, it would take us about 6 years to return this through share buybacks. So that's not realistic. So the majority is going to come back through a special dividend with the share consolidation and then the balance going back through share buybacks probably during the course of calendar '26. And then ongoing from '26, '27 onwards, we promised about GBP 200 million of returns from there.

Depending on how the share buybacks play out, share consolidation and so forth, they also determine how many shares we have an issue and things. But I think you're looking at a situation where we'd like to have about 1/3 dividend, 2/3 share buybacks from '26, '27 onwards. And then outlook for the year, my last slide, basically. We're in good shape. We're very much expecting to deliver on our promises for the full year. PGMS will be down year-on-year in the second half.

We've touched on this before. There's low metal recoveries, there's higher maintenance costs given the age of the asset, but nothing different to what we actually said at the year-end. So we feel we're in good shape for the year. We feel we're in good shape in terms of delivering on our '27, '28 targets.

And on that, I'll hand back to Liam to give you a bit more detail. Thank you.

Great. Thanks a lot, Richard. So if we jump in on the strategic topics, the first one, which is top of mind is probably the Catalyst Technology sale. So what still needs to happen on this? Well, we have a binding sales and purchase agreement with Honeywell, which is publicly available, where also what needs to happen is listed in that document. But in essence, it's 2 things. One is the regulatory approvals.

We need regulatory approval in 12 jurisdictions. We have 11 and the 12th is progressing smoothly as planned. So we believe that's very much on track. And then there's the carve-out, which is 2 elements. This is basically the legal reorganizations which is very much on track. And then the transitional service agreements and long-term supply agreements to ensure that customers and employees are looked after, and that's all very much on track as well.

So they are the 2 big elements that need to happen for us to close. And then based on where we are today and the very good collaboration with Honeywell, our expectation is, as we have previously stated, that we will close in the first half calendar of '26. I think it's important to note that the business has been -- had a weaker performance or the CT business had a weaker performance versus prior year, significantly weaker. This is completely market related.

And if we look at it from a market share point of view, the CT business has maintained market share in every key market and in some instances, even improved the overall market share. So the underlying performance from a market point of view is very good. It's just the market is pretty weak right now. We have continued to win new significant new sustainability-related projects. These are typically in the sustainable aviation fuel space. So the pipeline remains very, very robust.

And with that, the growth outlook for that business remains very strong. So that's the overall situation for Catalyst Technologies and the sale to Honeywell, which is very much on track. Now if we go to new JM then without CT, we had outlined previously what we're really doing here is focusing on our core competency of Platinum Group Metals. This is what this company has done for over 200 years.

We would consider ourselves world champions as far as Platinum Group Metals is concerned. We don't think there's anybody who can manufacture, trade and recycle as well as we can, and that's what we're really known for. And we build businesses that typically use Platinum Group Metals, and there are multiple applications. The biggest is, of course, Clean Air, catalytic converters. But within the PGM business, there's many other industries that are served and serviced by the PGM business.

And as we outlined, we have a big opportunity now with a more streamlined group to run the business much more efficiently. To be very honest, we don't -- you don't need a big corporate center if you have 2 businesses that are very closely interlinked with each other, the PGM and the Clean Air business. So -- and I'll explain this a little bit later when we talk about organizational design, there's plenty of opportunities for us here to further streamline how we run the business to be simply more successful in the market.

Now if we go to the first of the big businesses in here. Just a reminder again of our ambition, we said by '27, '28, we want to achieve at least GBP 2 billion in sales and a 16% to 18% margin. You'll recall in 2022, we were at a margin of 8.7%. This half, you can see that we're up to 12.4%. -- so a really significant jump in the last few years. And we have line of sight to the 14% to 15%. And with that, we think from a trajectory point of view, we're very much on track here.

Now if we have a look at how we're doing from a winning point of view, and Richard explained a little bit what's happening in the market. Question is that kind of at least GBP 2 billion, what's the confidence level? Well, at least 90% of that business has already been won. So that, I think, should underpin our confidence in this business. So very strong overall win rates. And what's, I think, been really encouraging recently because we've been focusing on the hybrid space, we've actually started winning business with leading Chinese OEMs who are typically the leading hybrid players.

And if you can win with a Chinese OEM in China, then your -- both your technology and your cost must be really good. And this is not just servicing then the Chinese market. This is also for export to the rest of the world. So this is actually a significant step forward and gives us a lot of confidence in the portfolio and again, our ability to win in this space. Lots of progress on partnerships with our strategic customers.

And the point that I won't elaborate on much this year, but right now, but rather talk about it more extensively at the full year results. We do have a small kind of almost like a start-up business within Clean Air. And I think there's a general perception that Clean Air is maybe sunset industry sunset business. But there are elements that are growing, like, for example, the hybrid business, like, for example, the heavy-duty diesel business. But there's also something what we call Clean Air Solutions, which is using the core emissions technology of Clean Air for nonautomotive type use cases, typically stationary use cases.

And one -- and the example that's mentioned here is we've just won several multiyear contracts for emission control technology for engine systems for data centers. And of course, data centers is a hyper growth area right now. Most of those data centers are fueled by fossil fuels. So they require emission control technology. Otherwise, you're going to have toxic fumes. And that's where our core competence is again.

So this is an area that's growing, and we'll unpick that further at full year. But I just want to highlight, there's -- within Clean Air, there's enough opportunity in here to give us a lot of confidence about the targets that we've set for '27, '28. Now beyond winning commercially, we do continue to drive efficiency. This is really important for us. This is also why our margin has been improving.

There's been a significant reduction in overheads, especially SG&A, some R&D as well. And as we do that and as we're winning business, I think where we're really encouraged is our Net Promoter Score has actually increased significantly. This is almost unheard of that the Net Promoter Score is up 15 points. This means at a point in time where we are improving our profitability, our customers are thinking more highly of us. That's not necessarily to be taken for granted. And it's really a sign of how much value the commercial teams together with the tech teams are adding for our customers. So I think really strong progress here.

And we will continue on the journey of footprint optimization. When we started in '22, we had 50 production lines. We're down to 21 now. And that journey of consolidation between production lines and site consolidation will continue, and it continues at the pace that the market is evolving. The market evolves faster in a certain direction, we can move faster from consolidation or we move slower.

So we just adapt to what's happening in the market. But all of this gives us, again, the strong confidence that we can -- we'll get the margin up to 16% to 18% by '27, '28. So that's Clean Air. If we go to Platinum Group Metals, -- and again, in a world that's very concerned about critical minerals, this is a jewel in the crown, I think, for the U.K., but for -- basically from a global point of view to have the know-how and portfolio and the people that we have for this business, very profitable business that has a big moat around it.

And we've given out the targets, the guidance, GBP 450 million sales by '27, '28 and a circa 30% operating margin. You can see there's 3 parts to this business. In essence, it's producing products, so typically alloys, anything that uses PGMs for multiple different industrial and other applications might be for life science, might be for defense. There's many different use cases, and we produce products often customized for our customers then. We also refine. We're the world's biggest refiner and recycler.

And again, this -- the vast majority of that happens in the U.K. currently with a very old refinery and in future with a brand spanking new refinery, which will be absolutely state-of-the-art. There will be nothing else out there in the world like what we will have then when this is complete, which is relatively soon. And we also have a trading business.

So we buy and sell and manage metals on behalf of our customers. And that's important because this stuff is super valuable. A normal -- an average industrial company doesn't really have the infrastructure from a security and a logistical point of view to actually manage precious metals. We have all of that. And this, again, this is a service component that we offer for our customers. So fantastic business. I mentioned both myself and Richard have mentioned how important the new refinery is.

And we're very -- we're on track now to start commissioning by March of '26. This is really important. Richard already elaborated, there was some industrial action that's cost us a few months. But it means we will still be fully operational within the calendar year '27. And to underpin that confidence about being fully operational, we also have a clear plan to start decommissioning the old refinery within '27 as well.

So by the end of '27, we'll start decommissioning the old refinery. And we always said we would only start decommissioning when we're 100% certain that the new refinery is up and running. And from everything that we can see today, we have complete line of sight of that. As Richard said, we have our best teams on this. Everyone has joined hands. It's got the utmost focus, and we're very confident about the schedule that's in place now. And thankfully, we still have the old refinery to keep supplying customers as long as this one is not up and running, but it will be up and running in calendar '27.

And the old one, we will then start to take down. So that's the overall situation for 3CR, and that's why we're very confident that this will be a big, big benefit for us going forward. Now besides the business, I mentioned earlier on that we have an opportunity to basically streamline how we run the business. And again, if you think about the situation, CT is moving out. With Clean Air and PGMs, we have 2 businesses that are intricately linked through Platinum Group Metals. They all use lots of Platinum Group Metals. We manufacture products.

We also recycle products on behalf of our customers. We manage their metals. So there's a lot of synergy in here. So we gave a lot of thought together with our Board about how we could set ourselves up for success in the future and really accelerate progress. And what we've agreed on is a new streamlined organizational model. So we're moving away from divisions and sectors with individual CEOs. And given that we'll only have 2 businesses that are intricately linked, we're going to move to an operating model where we have one Chief Operating Officer who can ensure that we're tapping into all the synergies across those businesses. And basically, we'll move from 9 people on the Executive Committee down to 6.

And I think this is -- it's a good reflection if you think where our business was and is, it will be a smaller business going forward. So the streamlining should really start at the top. This is a team that's been working together very intensively and very successfully, particularly since this summer on developing the new strategy, the new JM going forward. We have a lot of fun together. And based on kind of how we're all interacting with each other and looking at the strengths of different people, what we've decided is Richard will become the Chief Operating Officer.

And for those of you who are not so familiar with Richard's extensive curriculum vitae, he has a lot of experience running operations in other industrial companies, both on the manufacturing and the recycling side. He's super passionate about operations. He loves getting into the detail. And he wants to make sure that we can deliver on all these cash commitments that we're making. So he wants to be on the front line managing this. So we think this is a great move.

And we're really lucky within JM that we have Alastair Judge, who many of you possibly know. Alastair is the current Head of Strategy and Operations. Alastair used to be the Interim CEO for Clean Air. So he knows Clean Air intricately, and he used to be the CEO for Platinum Group Metals. So there's nobody who kind of knows the business better than Alastair.

What's important is Alastair is also a chartered management accountant. And for the vast majority of his working life, he's worked in financial roles. He was intricately involved in -- together with the entire team in developing the cash-focused business model going forward. So we think it's a great combination to have Alastair as the new CFO, Richard as the COO and then everybody else on the team who's a fantastic team, all working really closely together to deliver on our commitments.

So we're absolutely convinced that this organizational model will help us to accelerate progress, and this is the way we're going. Maybe on that, because we have Anish with us here today in the audience, let me say Anish will be leaving. There was an announcement made today. Anish is taking up a great new role. He'll become Group CEO in another company. And that's a fantastic development. I'm super happy, Anish, for you personally. Anish has really strengthened Clean Air.

And I think the most important thing Anish has done, he's developed a great team. There is a fantastic team within Clean Air. They're all ready to step up and they're all ready to support Richard. So I think this is -- for all of us, it's actually a really good news story. So big thanks to you, Anish, on behalf of everything that you have done for us. What's not on here is CT.

The CT CEO will continue to report to me directly, but this is the new JM going forward. So will not be a member of this executive team and will continue to report to me as long as CT is within JM, which is up until the first half of the calendar year '26. So I hope that's relatively clear. Now this team also is -- has been placing a lot of emphasis on developing the right culture for us to be able to succeed with our commitments.

And just to give you a few data points on how we're doing on that front, this is really important for us that we have a culture that really enables implementation of the strategy and not one that's holding us back. For us and particularly, I think anybody in the process-related industry, what's really important, everything starts with safety. Every meeting starts with a safety moment, really important for us. But it goes deeper at JM when we think about safety, it's about looking after each other. It's about taking pride in your workplace. It's about caring.

And if you're -- I just have a fundamental belief if your safety stats are improving, probably your culture is going in the right direction. It's a sign that people care. It's a sign that they're looking out for each other. It's a sign they're taking more pride in their work. That's really important. And we've seen a significant improvement in our safety stats. We know we still have a long way to go. We need to continuously improve here, but it's important that we're seeing progress, and we are seeing progress here.

Second one, and I've already mentioned Clean Air. It's not just Clean Air, all of our businesses. We've seen a significant improvement in customer satisfaction as measured by Net Promoter Score. Again, 13 points up for JM in total. That's an almost unheard of increase. in a very difficult market environment where everybody is dealing with lots of issues, our customers are thinking much more highly of us because they can see the value that we bring to them.

So -- and this is really important for us that we have the customers front and foremost, we track this rigorously. Third point, data point, also super important, employee engagement, which is typically an early indicator of performance. There's usually a lag between where your engagement is and then how your performance turns out. And typically, when you have lots of change, external change, internal change, your employee engagement will drop typically. We've actually seen -- we've just measured this in October.

We do this every 6 months. And we've seen another good increase in employee engagement. And this is over 80% of all of our employees reply to this survey. So this is a really big population and a good increase in engagement. So again, these are all data points that tell you something is improving and give us confidence that we can continue to drive performance. We've aligned incentives. We never had targets for cash in the past.

We always -- it was always underlying OP and margin where typically and sometimes sales would typically be the KPIs we would use. Now we also have clear targets and incentives for cash so that people have skin in the game for what we have committed to externally. And that, we believe, is also helping us drive performance, which you can see then in the results that we've delivered in the first half. So just a reminder of what you can expect from us by '27, '28, at least mid-single-digit CAGR in pro forma operating profit going forward for which we're very much on track then this year so far.

Annualized free cash flow of at least GBP 250 million and returns, as Richard outlined, returns to shareholders of at least GBP 200 million per annum. So that's what you can expect from us. Tracking progress, as usual, we give some milestones that hopefully enable you beyond the financial reporting just to be able to hold our feet to the fire because we need to do that for ourselves, but we want to be transparent about it. These are the areas that we think matter the most.

And we give you a kind of a traffic light, and we'll do this every half year. And whenever there's any significant change to any of these variables, we will update you. As you can see, everything is on track. We've put the refinery on yellow because we have a few months delay. But again, this has no impact whatsoever on our guidance or our financials because we have the ongoing refinery, which will ensure that our customers continue to be supplied. So that's overall the strategic milestones. We'll continue to update you on that.

And then just in summary, again, we think we've had a good start with the new model, significant increase in profitability, turnaround in cash with lots more to come and the sale of Catalyst Technologies on track. And we believe the organizational changes we're making will actually help us accelerate progress. So we have a lot to do. We have a lot to look forward to.

And now we look forward to your questions. Thank you very much.

So thank you, Liam and Richard, for the presentation. We'll firstly take questions from the room, and then we'll move to questions from the webcast. [Operator Instructions] So Geoff?

It's Geoff Haire from UBS. Just first of all, on the ramp-up cost that you sort of alluded to back in May this year for the new refinery, I think you said it would be about GBP 20 million to GBP 30 million. Could you give us an update on what that would be now that you've got more line of sight as it were to when that refinery is coming online?

Still similar, Geoff. I mean, basically increased maintenance costs, dual running, lower metal and that sort of order. So in terms of what we set out in May, that's still sort of trajectory we're looking at.

Okay. And the second question I just wanted to ask was, and I don't want this to sound shirlish, but obviously, you've done a lot of work on working capital. Why has that not been able to be done before? And also, do you run the risk that you're working your inventory levels are too low for what you need to produce within the business? How do you manage that risk?

Yes. Look, this has been a growth-focused business. Actually, if you look at where over time, the capital has been deployed, where people have been focused in growth. And generally, when you actually focus on growth, you're actually growing working capital. It's not been focused as much on net cash generation. So to be fair to people, when you target a particular way and that's what we focused on, there are other things that you don't focus on. Now whether we should or shouldn't, it's sort of a bit irrelevant because you can't change the past.

What I would say is there is a significant opportunity. [indiscernible] opportunity in payables because we've been paying people too quickly, actually and sometimes ahead of when we actually needed to. There's a significant opportunity in receivables because we've actually been collecting monies too slowly, and we carry far too much inventory. So we're way off a situation where we're potentially driving this to levels that are unsustainable. We actually -- we're only scratching the surface today.

Tristan?

Tristan Lamotte, Deutsche Bank. was wondering a question on PGMS. Could you talk through conditions in -- currently in PGMS and why it would be down in H2? And I'm particularly interested in volumes and feedstock availability. And then linked to that, what kind of PGMS trajectory do you see in the next few years? And is there any change to that trajectory at all with the plant pushout?

We are seeing higher metal prices. So that feeds through in terms of underlying refining performance and to our trading side and that's because of increased volatility in the trading environment, our trading business makes more money when the environment is volatile. So that's benefiting.

On the flip side, we have had one of the large mines in the U.S. that's closed. So therefore, there's been lower volumes on the refining side. But as I've also mentioned, because we're actually in a transition phase through to getting 3 built, we have got dual running costs. We've got lower metal recoveries because we've recovered metal over time. And I mentioned at the full year, we had a very strong second half last year, particularly because of metals and other one-off items.

So once you've had a one-off item, it doesn't necessarily repeat, that means the following year, it will be down. So the fact that we've got higher running costs and lower one-offs is actually feeding into the second half. But it's exactly the same as what we said in the year-end. We said we'd actually dip before we actually came back. So you've got a decline trajectory through to '26, '27 and then recovery from '27, '28 forward as we get the new refinery up and running.

And then -- I'm not sure if that's working. Yes. And then on exceptionals, just generally at a kind of group level, are you expecting that level to stay similar to H1 and H2? And does that come down into next year? Or what kind of trajectory are you seeing on that?

Yes. There's 2 real items Andre on non-underlying items. One is the costs associating with reducing overheads, i.e., losing people. And the other is the ongoing Clean Air footprint consolidation. So as we take lines out and take sites out, the cost of closure. Those costs you can see in the first half in terms of key categories, that will continue in the second half and continue into next year.

And I indicated at the full year that if we're taking around about GBP 100 million of overhead out, that actually you'll be looking at a similar level of costs associated with that as well as Clean Air. So you'll see not exactly like-for-like, but you'll see that sort of overall level across the next couple of years.

I think the next question from Alex.

Congratulations on a strong first half. Alex O'Hanlon from Panmure Liberum. Just a couple of questions from me. The first is kind of on culture. Obviously, going through quite a big transition at the moment. And you pointed to the engagement score being like kind of upticking a little bit. Just kind of interested in kind of what you're doing to manage that culture during quite a big transition and how you are kind of confident that you can keep that high, that engagement score.

Yes. Thanks a lot, Alex. So we've actually spent a lot of time with leadership explaining we need people to be talking to people. When you've got this much change going on, what you don't want to be doing is communicating through slides and just webcast. We need line managers to be talking to their people to be listening to what their concerns are, taking them seriously and then working on an action plan to address those concerns.

So very specifically, one of the elements we track is -- and we can see this from a people management point of view, has there been follow-up related to the engagement survey? Have your actions been -- have your concerns been taken seriously. And we can track literally across the board where it's working, where it's not working and where it's not working well, we then intervene with the line manager and give them support.

And if they're not able to come along with the journey, then, of course, we have to take other consequences. But it's really about strong people leadership, listening to concerns, putting an action plan in place. so that people can see their issues are being dealt with and not some generic 40,000-foot kind of strategic stuff, but the issues that they're dealing with on the front line. So we place a lot of attention on that. I think that's the single biggest issue that we can do.

And the second one would be everything related to safety because people can understand it's really important that everyone can go home safely to their families every day. And the amount of attention we put on that is quite exceptional. We dedicate a whole -- apart from the fact that every meeting starts with safety every time religiously, we dedicate an entire day every year where we shut down everything and just go through a whole raft of safety measures and trainings.

And then we -- throughout the year, we'll have various elements around that as well. So I think it's just walking the talk really and showing people that we care and that with that, they should care too. And I think that's working.

Perfect. The second question was just on the GBP 2 billion of sales for Clean Air in '27, '28. Obviously, you've got kind of 90% of that in orders already, the same as at the full year. I think at the analyst call at the full year, you mentioned that there are tenders out that could even see you get up to 100%.

So I'm just interested in how should we think about that number moving forward? Is it going to be kind of lumpy? Or should it kind of gradually tick up over the next couple of years?

Should the 90% go up to -- yes, yes. Yes, it -- I mean -- I think it's a good one to hand over to Anish just to give a bit of flavor on what kind of contracts we've been winning recently that are not yet in the 90%. So the 90% for sure, increases significantly going forward, but the quality of those wins, I think, is quite exceptional. Maybe, Anish, you can share just some examples of that.

Yes, of course. Good morning, everyone. And I think it's a fantastic question. With me moving on, I can speak more openly, obviously. So there's one recommendation I want to give you when you look at the businesses. 90% of the GBP 2 billion already won is a great number. But to look at the quality behind it is absolutely crucial because when you look to the automotive environment today, not every tender has the same value in the future because you got to make sure that you win with the winners in the right markets.

So let me give you an example with a brand that is clearly going to win in the next 10 years in South America, that's a better tender than maybe with a smaller brand in Europe because it just gives you more run rate, it gives you higher margins, it gives you a longer runway. So when we assess the quality of what we have won, we always look to how long is the contract in which market are we winning? What's the regulations there? How long will combustion engines be surviving in that market? And how is that OEM positioned to be a real winner. So that's the first thing.

And then I can tell you the good situation that you have at GM right now is when you have won 90% already today, the total sales funnel is obviously above 100%. So theoretically, you could make it to even more than the GBP 2 billion. But obviously, you're not going to win everything in the funnel. But I can tell you, we are going to win some stuff in the funnel.

For example, we have just received verbally the confirmation that we've won a huge LDG tender in Europe with a very big OEM, which is going to give us access to 20% of the hybrid market in Europe. That's going to be huge. So when that's confirmed in writing, I'm sure my colleagues, and it's my farewell present to Richard, will talk to you about that, and it's going to uplift that number. So that's how you have to see it.

We'll just check any more questions in the room. Just wait for the microphone. Thank you.

Just a quick question on the -- you mentioned the new contracts for data centers. It might be too early to share, but is there a rough value of those contracts you could share? And I just wondered if that's a new sort of start-up business, does it have any initial margin erosion impact? Or is that one you hit the ground running minutes?

Yes. So we're not sharing the financials now, but we will at full year simply because we want to have a bit more meat on the bones, to be very honest. Although this is a nascent business, it's using the core footprint of Clean Air. So there's no additional investment required in that regard. And this is not something that would be dilutive on the margin.

So it's an area that we think is hyper attractive for us. But we'd simply like to have a bit more -- we'd like to show a fuller picture. And right now, it's more or less saying we're actually, we're winning contracts in this space. Multiyear means 5- to 10-year contracts. And what's kind of behind that from a financial point of view, we'll unpick further full year.

Any more questions in the room? So in which case, we'll move to the webcast. So sticking with PGMS, there's a question from Chetan Udeshi from JPMorgan. I think probably, Liam, you referenced the growing importance of critical metals. Are you seeing any change in customer behavior in terms of how they deal with PGM services? Is this business moving to a long-term take-or-pay contract? Can it reduce the lumpiness in earnings in this business?

Yes. We're both looking who's best to answer. It's a very -- maybe I'll start, Richard, and then you chime in. So de facto, we're not seeing -- and there's various moving parts when you think about PGMs. We're not seeing a significant change in customer behavior because these are precious metals. They've always been precious metals. It's just the focus on them has ramped up considerably. I think going forward, there's a keener awareness of where PGMs are actually sourced from.

So for example, there is an ongoing discussion in the U.S., a very active live discussion that palladium being sourced from Russia should have significant tariffs on it, which is not the -- or should be sanctioned, which is not the case today. There is a body in the U.S. who has found that there has been some dumping going on there. And if that is the case and palladium is then sanctioned, Russian-sourced palladium is sanctioned in the U.S. that will have an impact in the market.

It doesn't impact us because we have -- we do not source any palladium from Russia. That is not the case with all of our competitors. So there is a stronger focus on the source of PGMs going forward. The fact that recycled PGMs have close to zero carbon footprint is something that customers like. They just haven't been willing to pay for it previously. I think as carbon pricing ramps up going forward, that will become more of a topic as well. But the fact though, we don't get a premium because the product is recycled. It's a globally traded product.

There's one price as opposed to a differentiation between a lower zero carbon source of PGMs and something where there's a much stronger carbon footprint. So overall, I think from a contractual point of view, we are having discussions and have been having discussions with customers about a fee-for-service type of a model as opposed to just taking a percentage of the value of whatever it is that we're recycling.

If you move to a fee-for-service model, that would reduce volatility. That's always a commercial negotiation where there's -- it can go either way. Some customers want that type of a service, some don't. So we make it very much customer dependent, but that's the way we think about it. I don't know, Richard, if there's anything to add to that?

Just try not to replicate anything Liam said, but just for anybody who's less familiar with PGMS, the 3 bits of this business. There's a refining operation where we refine our customers' metal. So it's really, really important that they trust what we do that we take their metal and return as much PGM content as is possible. When I was at the PGM week in New York a couple of months ago, I saw 12 of our top 20 customers. That came out really strong. And obviously, we've been in this industry for 200 years.

And the trust in JM, which is fundamentally important. It is -- we are a commodity refiner, so cost per unit is important, but trust in what we do is really important. And I think we stand out there. We have a products business. So we turn PGMs into products. That we do a whole variety of things for our customers. And actually, we're actually, I think, more inventive than others.

Quite often, if we see things go away, we're quite often better at providing solutions than that keeps people coming back. And then we have a trading business where I mentioned both metal price and volatility is quite important. Liam talked a little bit about contractual situation. But if you look at the volatility, to Chetan's question, the volatility of returns is primarily about PGM prices, these commodities. So you can't fully get away from that because of commodity and prices will go up and down. What we can do is smooth things. And so as prices have been at 12-, 13-year highs recently, we have looked to lock in a bit more of next year's and the year after's pricing. But that's -- you can only smooth things.

Taking a hedge is a gamble because at the end of the day, things can go up or down. So we can remove to some degree, some of the volatility, but you can't remove it entirely. What we can do is we can ensure that we've got consistent refining operations and actually ensure we deliver for our customers on time and deliver their promises. But actually, we've got our cost base in the right place to ensure that we're as competitive as anybody else, and then we manage our commercial situation where we smooth that volatility over time. And those are things that we're looking at in the underlying business model.

The next question, sticking with PGM Services is from Adrian Hammond from Standard Bank Securities. Could you please give some color on autocat recycling volumes? Are volumes still subdued? And how does this differ regionally?

Yes, they are still subdued at the end of the day, although the penetration of electric vehicles has slowed, it's still an increasing space. We have seen down. We haven't seen it come back yet. We do expect to see some degree of recovery there, but it's not feeding through in the market just yet.

Yes. And maybe to add to it, I mean, we had been expecting for some time that the U.S. would bounce back from a kind of recycling point of view on the autocat side. And it hasn't -- so far, it hasn't. And there was kind of -- what we were hearing anecdotally was with pricing where it was, there wasn't enough of an incentive to actually encourage more recycling.

With prices where they are now, what we're hearing is the incentive has definitely increased to actually start recycling more. So we've got anecdotal evidence that things are starting to move in the U.S., but we'd like to see it in hard data before we would say it's real.

The next question is on Clean Air from Chetan Udeshi from JPMorgan. Have you seen any shift in Clean Air volume momentum in the current quarter? There were some concerns that there might have been some prebuild in the supply chain ahead of U.S. tariffs.

Do you want -- Anish, do you want to -- here you go.

Very clear answer, no. So there has nothing been like that. Maybe as a little explanation, you know that we are winning our business, as Richard has described perfectly, very long before we actually produce, which is actually an opportunity for us and not a risk. We can talk about pricing excellence in that time with our customers. Lots of topics there where we can uplift the price.

And then the second thing is as we are delivering to Cannes that supply chain is hold very tight. There's opportunities we have taken now on the working capital side. There's more opportunities there for GM in the future. So that's very, very good, organized, very good process and the risk of high inventory builds before certain effects, for example, summer breaks or factories or tariffs or anything has not happened.

Thanks, Anish. The next question now is around Catalyst Technologies from Ella Harvey at Lombard Odier. How does the weaker performance in the segment impact the sale?

Thanks, Ella. So as outlined, the conditions for the sale are related to regulatory approval and to the carve-out, both of which are very much on track. So the market performance is not a condition.

I think that's it in terms of webcast questions. So we'll just do a final check in the room. I think that's good. So thank you very much, everyone, in the room and for your attention on the webcast. And hopefully, we'll see as many of you as possible over the next couple of weeks or so as we do roadshows. Thank you very much.

Thanks a lot, everyone. Thank you.