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Homepage Financial Highlights 2006/07 Statements OFR corporate governance Accounts Shareholder Information
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  Directors' Report
 
     
  The directors submit to shareholders their one hundred and sixteenth Annual Report, together with the audited accounts of the group for the year ended 31st March 2007.

Principal Activities
A review of the group’s principal activities and an indication of likely future developments are set out in the Operating and Financial Review and a description of the group’s activities in research and development can be found in the R&D section in the Operating and Financial Review, which are incorporated into this directors’ report by reference.

Business Review
The company is required to set out in this report a fair review of the business of the group during the financial year ended 31st March 2007 and of the position of the group at the end of that financial year and a description of the principal risks and uncertainties facing the group (known as a ‘Business Review’). The information that fulfils the requirements of the Business Review can be found in the following sections of the Operating and Financial Review: Review of Results 2006/07, Operations, Financial Review, Risks and Uncertainties, Resources and Corporate Social Responsibility, which are incorporated into this directors’ report by reference.

Dividends
The interim dividend of 9.9 pence per share (2006 9.1 pence) was paid in February 2007. The directors recommend a final dividend of 23.7 pence per share in respect of the year ended 31st March 2007 (2006 21.0 pence), making a total for the year of 33.6 pence per share (2006 30.1 pence), payable on 7th August 2007 to shareholders on the register at the close of business on 15th June 2007.

A Dividend Reinvestment Plan is in place which allows shareholders to purchase additional shares in the company with their dividend payment. Further information and a mandate can be obtained from Lloyds TSB Registrars whose details are set out on page 104.

Share Capital
The issued share capital of the company at 31st March 2007 was 220,477,283 ordinary shares of £1.00 each including 3,600,000 shares held as treasury shares.

Details of shares allotted during year are set out in note 31 on page 88.

At the 2006 annual general meeting (AGM), shareholders renewed the company’s authority to make market purchases of up to 22,031,543 ordinary shares (representing 10% of the issued share capital of the company (excluding treasury shares) as at 31st May 2006).

During the year the company purchased 3,600,000 of its own ordinary shares (representing 1.63% of the called-up share capital of the company as at 31st March 2007) for an aggregate consideration of £52.6 million. All of the purchased shares are held by the company as treasury shares. Authority to purchase up to 18,431,543 shares remained in place at 31st March 2007. At the forthcoming AGM the board will again seek shareholders’ approval to renew the annual authority for the company to make purchases of its own shares through the market.

Annual General Meeting
The notice of the 2007 annual general meeting of the company to be held on Tuesday 24th July 2007 at 12.00 noon at Merchant Taylors’ Hall, 30 Threadneedle Street, London EC2R 8JB is contained in the AGM circular enclosed with this Annual Report, together with an explanation of the resolutions to be considered at the meeting.

Employee Share Schemes
At 31st March 2007 5,193 current and former employees, representing approximately 67% of employees worldwide, were shareholders in Johnson Matthey through the group’s employee share schemes, which held 3,265,780 shares (1.48% of issued share capital). A total of 795 current and former executives held options over 9,383,762 shares through the company’s executive share option schemes.

Directors
Details of the directors of the company who served throughout the year are shown in the Board of Directors section. In accordance with the provisions for retirement by rotation in the company’s Articles of Association, Mr J N Sheldrick, Mr C D Mackay, Mr M B Dearden and Mr I C Strachan retire by rotation at the forthcoming AGM and, being eligible, offer themselves for re-election. Mr M J Roney, who was appointed to the board as a non-executive director on 1st June 2007, offers himself for election. As announced on 30th May 2007 Mrs D C Thompson has been appointed to the board as a non-executive director with effect from 1st September 2007.

Details of the constitution of the board and its committees are set out in the Corporate Governance section.

Directors’ Interests
Details of directors’ remuneration, service contracts and interests in the shares of the company are set out in the Remuneration Report.

Other than service contracts, no director had any interest in any material contract with any group company at any time during the year.

Substantial Shareholders
Until 19th January 2007 the company maintained a register of substantial shareholdings in accordance with the provisions of section 211 of the Companies Act 1985.

On 20th January 2007 the Companies Act 1985 provisions in respect of substantial shareholdings were repealed and the Disclosure and Transparency Rules of the Financial Services Authority came into force.

As at 31st May 2007, the following information has been disclosed to the company under Rule 5 of the Financial Services Authority’s Disclosure and Transparency Rules in respect of holdings exceeding the 3% notification threshold:
 
     
 
 
Total
voting rights
 
% of total
voting rights (1)
 
 
Lloyds TSB Group plc
16,986,538
7.79%
Prudential plc
16,992,508
7.75%
Ameriprise Financial, Inc
13,815,035
6.27%
BlackRock, Inc
12,637,906
5.76%
Legal & General Group Plc
7,533,784
3.43%
Aviva plc
7,110,210
3.24%
Vanguard Precious Metals and Mining Fund
6,850,000
3.16%
 
 
 
  (1) total voting rights attaching to the issued ordinary share capital of the company (excluding treasury shares).  
     
 

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, subject to the supplier having performed its obligations under the relevant contract. At 31st March 2007, the company’s aggregate level of ‘creditor days’ amounted to 7 days. Creditor days are calculated by dividing the aggregate of the amounts which were outstanding as trade payables 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 £330,000 (2006 £340,000) to charitable organisations worldwide, of which £259,000 (2006 £282,000) was in the UK.

Further details of contributions made by the group worldwide are given in the CSR section and in the Corporate Social Responsibility Report which can be found on the company’s website at www.matthey.com.

It is the policy of the group not to make political donations. During the year to 31st March 2007, no donations were made to EU political organisations (2006 £ nil), no EU political expenditure was incurred (2006 £ nil) and no contributions to political parties outside the EU were made within the meaning of Part XA of the Companies Act 1985 (2006 £ nil).

Directors’ Indemnities
The company has granted indemnities in favour of directors under Deed Polls. These provisions were in force during the year ended 31st March 2007 and remain in force as at the date of this report. Copies of the Deed Polls and the company’s Articles of Association are available for inspection during normal business hours at the company’s registered office and will be available for inspection at the AGM.

Going Concern
The directors have a reasonable expectation that the group has sufficient resources to continue in operational existence for the foreseeable future and have, therefore, adopted the going concern basis in preparing the accounts.

Corporate Governance and Remuneration
The board’s statement on corporate governance matters is given in the Corporate Governace section and its report on directors’ remuneration is set out in the Remuneration Report.

Auditors and Disclosure of Information to Auditors
In accordance with section 385 of the Companies Act 1985, a resolution is to be proposed at the forthcoming AGM for the reappointment of KPMG Audit Plc as auditors of the company and to authorise the directors to determine their remuneration.

So far as each person serving as a director of the company at the date this report is approved is aware, there is no relevant audit information of which the company’s auditors are unaware and each director hereby confirms that he has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company’s auditors are aware of that information.

This report was approved by the Board of Directors on 5th June 2007 and is signed on its behalf by:

Simon Farrant Signature

Simon Farrant
Company Secretary

 
     
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