Principal Activities
The group’s principal activities are summarised on page 11.

Dividends
The interim dividend of 6.1 pence per share, up 0.4 pence, was paid in February 2000. A final dividend of 14.2 pence per share, up 0.9 pence, is being proposed to shareholders as Resolution 2 at the Annual General Meeting (AGM), making a total for the year of 20.3 pence, an increase of 7% over last year. Dividends for the year total £44.3 million.

Share Capital
Allotments of ordinary shares of £1 each of the company were made during the year as set out in note 24 on page 61 [see PDF version of this report].

In accordance with the resolution approved by shareholders at the 1999 Annual General Meeting, the company’s share capital was reduced on 17th September 1999, by the cancellation of the 450,000 5% (prior to 6th April 1999, 3.5%) cumulative preference shares (300,000 of which had been issued) and the nominal value (£0.3 million) repaid to the shareholders.

The board has decided to seek shareholders’ approval to renew the authority for the company to make purchases of its own ordinary shares through the market. Johnson Matthey has no present intention to exercise this authority and would only do so in circumstances where the directors believe that it would result in an increase in earnings per share and is in the best interests of the shareholders generally.

The resolutions relating to the company’s share capital to be proposed at the AGM are set out in the circular enclosed with this annual report.

Employment Policies
It is the policy of the group to train and develop employees at all levels so that group objectives can be met. We recruit, train and manage our employees regardless of sex, ethnic origin or religion. Employees who become disabled and disabled people are offered employment consistent with their capabilities. Close attention under the direction of the Management Development and Remuneration Committee is given to the group’s recruitment and training procedures as well as career development to meet current and future group requirements. The group’s Training and Development of People policy is set out on page 24.

Johnson Matthey recognises the importance of effective employee communications. Information and comment is exchanged with employees through the company’s in-house magazine, regular news bulletins, presentations to staff and team briefings.

45% of employees worldwide are shareholders in Johnson Matthey through the group’s employee share schemes, which held 2,639,638 shares (1.19% of ordinary share capital) at 31st May 2000. A total of 677 current and former directors and employees hold options over 5,274,164 shares through the company’s executive share option schemes. A total of 882,466 shares have been allocated to directors and key executives under the long term incentive plan.

Directors
Details of the directors of the company are shown on pages 22 and 23. Mr N A P Carson and Mr D W Morgan, appointed to the board on 1st August 1999, offer themselves for election at the forthcoming AGM. In accordance with the company’s Articles of Association, Mr D G Titcombe (who is employed on a service contract subject to two years’ notice), Mr H M P Miles (Chairman) and Mr P F Retief retire by rotation and, being eligible, offer themselves for re-election at the AGM. Mr G D Wells, who was a director throughout the financial year, will retire from the board on 31st July 2000. Directors interests in the company’s shares are detailed in the Remuneration Report on pages 30 to 37[see PDF version of this report].

Directors’ Material Interests in Contracts
Other than service contracts, no director had any material interest in any contract of significance with any group company at any time during the year.

Substantial Shareholdings
The company has been advised of the following notifiable interests in its ordinary share capital as at 31st May 2000:

Schroder Investment Management Ltd	17.33%
Fidelity Investments	7.22%

The directors are not aware of any other notifiable holdings of 3% or more of the ordinary share capital of the company.

Auditor
In accordance with section 384 of the Companies Act 1985, a resolution is to be proposed at the forthcoming AGM for the reappointment of KPMG Audit Plc as auditor of the company.

Policy on Payment of Commercial Debts
The group’s policy in relation to the payment of all suppliers (set out in its Group Control Manual, which is distributed to all group operations) is that payment should be made within the credit terms agreed with the supplier. At 31st March 2000, the company’s aggregate level of "creditor days" amounted to 6 days. Creditor days are calculated by dividing the aggregate of the amount which were owed to trade creditors at the end of the year by the aggregate of the amounts the company was invoiced by suppliers during the year and multiplying by 365 to express the ratio as a number of days.

Donations
During the year the group donated £208,000 (1999 £267,000) to charitable organisations, of which £168,000 (1999 £198,000) was in the UK.There were no political donations made in the year (1999 £ nil).

This report was approved by the directors on 6th June 2000 and is signed on their behalf by: