Chris Clark Chief Executive

The prospects for future growth are very encouraging. We are undertaking a significant investment programme to take advantage of opportunities in the strongly growing autocatalyst market.We have recently announced an investment of £10 million to build a new autocatalyst facility at Royston in the UK to meet the increasing demand in Europe for more technologically advanced catalysts. The new factory will initially have capacity to manufacture 3.5 million catalysts a year. In February 2000 we announced the establishment of a new autocatalyst facility in China which will initially have capacity to produce 0.6 million car catalysts and 1 million motorcycle catalysts. We are doubling the capacity of our very successful Indian business at a new site in Harayana state which will have capacity for 2 million car catalysts and 4 million motorcycle catalysts.

We are also investing in our global manufacturing technology with expenditure of £20 million over the next 3 years. This investment will give Johnson Matthey a significant competitive edge enabling the production of catalysts to the much tighter specifications required for the next generation of clean cars.

In March 2000 Johnson Matthey unveiled its SCRT™ system which represents a major step forward in diesel emission control.This will make heavy duty diesel truck and bus engines as clean as those of the very latest passenger cars. In the next few years much more stringent emission control limits will be introduced for heavy duty diesel engines both in the US and Europe.This new technology will enable manufacturers to meet these new limits within industry cost targets.

New catalyst development is increasing in other areas. In January 2000 we acquired an equity stake in Oy Smoptech Ab as part of a phased acquisition of the company. Smoptech, which is based in Turku, Finland, has developed a range of advanced polymer fibres for use as innovative supports for catalysts and in other chemical process applications in the pharmaceutical and chemical industries. In Pharmaceutical Materials the major capacity expansion at West Deptford in the US is well underway and should be operational during calendar year 2001 to meet anticipated demand arising from new product introductions.

Fuel cells represent a major opportunity for growth with their application in vehicles and in our homes soon to become a reality. It is expected that there will be several thousand fuel cell vehicles on the road by 2005 and industry estimates are that between 600,000 and 1 million fuel cell cars will be produced per year by 2010. Johnson Matthey is the world leader in catalysts and catalysed components for fuel cells. We are investing £12 million in the expansion of our fuel cell development, testing and pilot production facilities both at our Technology Centre at Sonning Common and in the US.

Our technology lead in fuel cells has enabled us to secure an unrivaled list of fuel cell customer partnerships. These include XCELLSIS,VW, General Motors, Siemens, Ballard, IFC, Plug Power and Energy Partners. We recently announced a new collaboration and supply agreement with James Cropper PLC.This represents an important step in the development of high volume manufacturing processes for Johnson Matthey’s Membrane Electrode Assembly (MEA), the key component at the heart of Polymer Electrolyte Membrane (PEM) fuel cells.

Johnson Matthey continues to be the largest fabricator of platinum group metal (pgm) products in the world and has a distribution capability second to none. Our platinum marketing activities support demand for platinum products worldwide which is expected to show continued growth in the coming years. The group is sole marketing agent for Anglo American Platinum Corporation Limited, the world’s leading primary producer of pgms, a relationship which goes back over 70 years. Many of the new uses for pgms have been developed in Johnson Matthey’s own laboratories. We are increasing our investment in this area, which will underpin the continued long term growth of our core Precious Metals Division.

Colours & Coatings Division continues to make excellent progress since we acquired full ownership in February 1998. Return on sales has risen to 11.6%. We expect the return to continue to improve as the benefits of the restructuring programme for Tableware come through. We will be investing £10 million on new production facilities at Castellon in Spain to meet rapid growth in demand from tile manufacturers in southern Europe and around the world. We are also planning to put further investment in our factory in Maastricht, Holland which makes specialised automotive glass enamels and other decorative products for the glass industry.

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