Financial Highlights
In the year to 31st March 2001 Johnson Matthey's profit before tax and exceptional items rose by 25% to £180.3 million. Earnings per share excluding exceptionals rose by 22% to 58.1 pence.

Sales increased by 53% to £5.9 billion boosted by significantly higher prices for platinum and palladium. Sales excluding the value of precious metals for the continuing businesses rose by 16% to £977 million.

Operating profit rose by 20% to £175.0 million. The group made £5.3 million of net interest income in the period compared with a net charge of £2.4 million last year. This turnaround is a result of the interest earned on the cash received from the sale of Electronic Materials (EMD), which was completed in August 1999.

The board is recommending to shareholders a final dividend of 16.3 pence making a total dividend for the year of 23.3 pence, an increase of 15%. The proposed dividend would be covered 2.5 times by earnings.

Operations
Catalysts & Chemicals Division increased sales by 76% over last year to £1,503 million. This growth reflected increased sales volume and the effect of higher precious metal prices particularly that of palladium. Sales excluding the value of precious metals rose by 14% to £565 million. The division's operating profit rose by 17% to £98.9 million.

The Catalytic Systems business, which encompasses Johnson Matthey's global autocatalyst, heavy duty diesel and stationary source emission control businesses, performed very well, despite the widely publicised fall in vehicle sales in North America in the last five months of our financial year. Overall, global vehicle sales advanced by 1% but the autocatalyst market grew by around 6% benefiting from tightening standards and the geographical spread of regulations to control emissions. Johnson Matthey's global volumes grew 9% in the year as our strong technology and the benefits of our new production process combined to increase our market share. Sales of our market leading CRT™ and other heavy duty diesel products were also well up on last year as the result of increased retrofit activity around the world. This strong progress underlines the future growth opportunity represented by heavy duty diesel as emission standards tighten.

There has been a great deal of activity in our Fuel Cell business, which during the period was organised into a stand alone business unit within the Catalysts & Chemicals Division. A major fuel cell testing and evaluation facility was installed at the Johnson Matthey Technology Centre at Sonning Common and is now fully operational. Good progress was also achieved in fuel cell product design and the development of robust manufacturing processes.

Chemicals also had an excellent year. All parts of the business achieved strong revenue growth. Platinum group metals refining activities experienced strong demand benefiting from both high metal prices and increased intake from primary producers. Catalyst sales to pharmaceutical and chemical customers increased significantly. Sales of precious metal salts and other fine chemicals also grew strongly.

Pharmaceutical Materials achieved good growth in platinum pharmaceuticals, particularly the major anti-cancer drug Carboplatin, which Johnson Matthey manufactures for Bristol Myers Squibb. Chiral methylphenidate, a new product introduced towards the end of the year, achieved good initial sales. As expected, sales of generic methylphenidate declined as a result of increased competition. Overall, operating profit was largely unchanged from last year.

Precious Metals Division's (PMD's) sales climbed by 55% to £4.1 billion, driven by strong demand for platinum group metals and higher prices. Operating profit rose 26% to £57.4 million.

Prices of platinum group metals rose sharply in 2000/01 with the average price for platinum up 42% and palladium 83% higher. For most of the year both metals were in short supply with overall demand for palladium continuing to exceed mine output and the shortfall largely being met from sales of Russian stocks. PMD's marketing and trading operations benefited from strong physical demand and buoyant prices. Its platinum fabrication businesses also achieved good sales growth in the year with strong industrial demand and continued rapid expansion in sales of products for medical devices.

Trading profit from the Gold and Silver business was slightly down despite increased refining sales coming from Asia. The gold price was weak throughout the year and the refining market remains very competitive with pressure on margins. We rationalised our Canadian business in the year to improve profitability. A restructuring charge of £2.6 million has been taken through operating profit.

Colours & Coatings Division increased its sales by 6% to £255 million. Sales of decorative products for the tile and glass industries grew strongly. Operating profit for the division increased by 15% to £32.2 million.

From left to right: Dr Barry Cooper, Dr Pelham Hawker, Chris Clark, Pär Jones and Jim Thoss were presented with the MacRobert Award for engineering innovation at a ceremony held at Buckingham Palace on 30th November 2000

The Structural Ceramics sector, which sells mainly to the tile industry, achieved strong sales growth in Europe and Asia. Margins continue to improve reflecting the benefit of the major investment in modern manufacturing capacity in Spain. The Glass sector also had a successful year with good sales of automotive glass enamels and silver pastes.

Tableware continued to encounter difficult market conditions with sales to UK customers again declining. However operating profit increased as a result of the cost reduction programme undertaken during the year.

Outlook
The group grew strongly last year and our businesses continue to perform well. As a result, we are investing significantly in the development of our technology and also in increased capacity, particularly for Catalysts & Chemicals. We are confident that the current year will again demonstrate the organic growth potential in Johnson Matthey.

Chris Clark
Chief Executive