Chief Executive's Statement.

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2009/10 was a challenging year for Johnson Matthey but I am pleased to say that we rose to those challenges and the group performed well. Revenue was flat at £7.8 billion and sales excluding precious metals were 5% up at £1.9 billion. Underlying profit before tax was 5% down at £254.1 million.

The year started in the depths of a global recession which certainly impacted our first half. However, the economic climate gradually improved throughout our second half aided by government efforts to stimulate the economy, particularly through various car scrappage schemes, and continued Chinese investment in the development of their energy resources and infrastructure. As a result, the year ended with a very creditable result, with underlying profit before tax only 5% down on 2008/09, which had been a record year for us. I would like to pay tribute to our management team who, despite being exposed to unprecedentedly volatile and difficult market conditions, stepped up to the many challenges that they faced in their businesses and produced such good results. We very quickly went from a situation where many of our businesses were running hard to keep up with strongly growing demand for their products to one of rapid and dramatic market contraction. It is to their great credit that they took the right decisions, quickly and efficiently. They did this without being told to do so, something that I believe reflects a great strength in Johnson Matthey.

Given the economic backdrop, our Environmental Technologies Division performed well in 2009/10. Its Emission Control Technologies (ECT) business was hit quite hard at a relatively early stage of the recession as a result of plummeting vehicle production, especially in North America, Europe and Japan. However, its light duty business came back steadily throughout the second half of the year aided by the scrappage schemes and also by dramatic growth of demand in China.

ECT is now well placed to continue to benefit from ongoing recovery with a lower cost base and two new highly efficient and low cost manufacturing facilities. The first of these is in Macedonia to supply catalysts for both light and heavy duty vehicles in Europe and the second in western Pennsylvania, USA to supply heavy duty diesel catalysts to meet the US 2010 legislation that came into force on 1st January this year. We now have a total of 14 emission control catalyst manufacturing facilities around the world.

Our Process Technologies business continued to perform well throughout 2009/10 with strong growth in its sales to ammonia and methanol markets which more than offset a decline in sales to oil refineries, which suffered a fall in demand for transportation fuels due to the economic downturn. During the year the business launched Apico, a new highly advanced methanol synthesis catalyst which brings a number of important benefits to our customers around the world. We are confident that it will make a major contribution to Process Technologies’ growth in 2010/11 and for many years ahead.

Our Fuel Cells business continued to increase its sales despite the impact that the recession had on several of its smaller customers and the outlook for this year is encouraging.

Precious Metal Products Division was impacted by lower prices and subdued demand for platinum group metals, especially in the first half of the financial year. However the division’s performance improved in the latter part of the year. Its manufacturing businesses, including our platinum group metals refining business, were slower to feel the effects of the recession than our ECT business and were also slower to begin to emerge from it. However, their performance showed signs of improvement towards the end of the year. By contrast, our gold and silver refining business had a very strong year driven by the high gold price and buoyant demand for investment bars.

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