 | | | | | | | Above: Johnson Matthey’s new catalyst manufacturing plant in South Korea will begin production during 2007/08. | | | | | |  | | | | | | | Above: Research and development at Davy Process Technology, Stockton-on-Tees, UK. | | | | | | | I am pleased to report that 2006/07 has been another good year for Johnson Matthey. Your company has continued to benefit from its long term commitment to investment in R&D and capital expenditure and its focus on products and technologies that benefit the environment and help to make the most efficient use of increasingly expensive energy resources. Most importantly, the year has also seen us make good progress towards the board’s main objective of delivering superior value to you, our shareholders. During the year the total return to Johnson Matthey shareholders was 16%. Over the seven years to March 2007, whilst the FTSE 100 index fell slightly, Johnson Matthey shares rose by 120%.
 The importance of our long term strategy is well illustrated by a key development that took place this year. The second half of the year saw major growth in our sales of catalysts for heavy duty diesel (HDD) vehicles, a market that has been brought about by tough emissions standards for buses and trucks that came into force in Europe in October 2006 and in the US in January 2007. Our investment in developing HDD catalyst technology, testing and manufacturing infrastructure began in the early 1990s and this long term perspective has ensured that we now have a strong share of this new market.
Your board is fully committed to reporting on Johnson Matthey’s corporate social responsibility (CSR) performance. A review of our CSR performance is presented on in the CSR section of this Annual Report and includes a section entitled ‘Working Towards a Sustainable Future’. Our full CSR report can be found on the company’s website. This spring I attended the group’s annual conference for its senior management team, a major theme of which was sustainability, looking at how we can operate in a more sustainable way and how we can help our customers in a transition towards a more sustainable future. I was struck by the tremendous enthusiasm for sustainability among those attending the conference and was delighted to be able to participate in this part of the company wide process to develop Johnson Matthey’s sustainability strategy.
Every one of us can do our part to move towards a sustainable future. One small change that we are proposing is to amend our Articles of Association to enable us to make full use of the fact that our Annual Report is available electronically on our website. Although we will still continue to send a printed copy to any shareholder who wants it, we expect that there are many who have access to the internet and would prefer to view it online. We estimate that production of our Annual Report generates a remarkable 15 tonnes of carbon dioxide (CO2) every year because of the quantity that we have to print and the size of the report, which has grown as a result of all the regulatory content we are obliged to include. It is also expensive to print. Hopefully we can reduce its environmental impact significantly.
Our non-executive directors play a vital role in the governance of your company. Johnson Matthey has a strong group of independent directors and we are extremely fortunate to have the benefit of their knowledge and many years of experience. Charles Mackay and Mike Dearden will retire from the board at the end of this financial year on 31st March 2008. Their considerable contributions will be reflected in next year’s Annual Report. Meanwhile on 16th April 2007 we announced the appointment of Michael Roney as a non-executive director of the company with effect from 1st June 2007. Mr Roney is currently Chief Executive of Bunzl plc and has many years’ experience of business in Latin America, Asia, Europe, the Middle East and Africa. The appointment of Dorothy Thompson as a non-executive director of the company with effect from 1st September 2007 was announced on 30th May 2007. Mrs Thompson is currently the Chief Executive of Drax Group plc and has a wealth of experience in the energy sector as well as in Asia and Africa. I look forward to their contributions to the work of the board in the years ahead.
During this, my first full year as Chairman of Johnson Matthey I have continued to visit many of the company’s operations around the world. During these visits I never fail to be impressed by the professionalism, commitment and enthusiasm of all the Johnson Matthey people that I meet. This reflects the emphasis that the company places on growing our management talent and developing the skills of staff at all levels of the organisation. The investment that we make in this area is vital to equip your company to meet the challenges of the future and to ensure that we capitalise on the many exciting opportunities before us. Over the last few years we have been making major investments in manufacturing facilities and in developing our global businesses, particularly in Asia. The continuous development of our people will be vitally important to the success of these investments.
On your behalf, I would like to thank all of our people around the world for their hard work and dedication during what has undoubtedly been a good year for your company.
In conclusion, your company is in excellent shape and continues to make good progress towards the delivery of superior shareholder value. We are very well placed to benefit from a number of important growth opportunities over the next few years. I am confident that the company will continue to produce good growth in the years ahead and I look forward to reporting on a successful 2007/08.
Sir John Banham
Chairman
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