All three of the division's businesses had a good year. Autocatalysts achieved good growth in operating profits as the result of both strong car sales and tighter emission standards in its major markets in Europe and North America. Unit sales worldwide were 13% ahead of last year due to the increased numbers of catalysts per vehicle required to meet new standards and the continued popularity of large sport utility vehicles in the US. The introduction of new high technology catalysts, which provide important benefits to customers, has enabled the business to protect its margins.

Pharmaceutical Materials had an excellent year led by strong growth in organics. The business benefited from a very successful first full year of methylphenidate sales to Schein Pharmaceutical, Inc. but also saw good growth in other products. We have also embarked on a programme of expansion of our manufacturing facility in the USA. New competitors entered the methylphenidate market during the fourth quarter and revenues from this product may decline somewhat in the current year but any shortfall should be offset by new product introductions. The Chemicals business also had a successful year led by good growth in sales of platinum group metal chemicals and refining services. Some additional costs were incurred in developing new ranges of catalysts for the pharmaceutical and chemical industries which should benefit future results.

Precious Metals Division's sales were down 3% at £2,041.3 million as a result of lower levels of activity in the Gold business in the Far East in the second half of the year. Operating profits were 12% up at £37.3 million. The Platinum business had a good year benefiting from higher platinum group metal prices and strong demand for both physical metal and fabricated products. After a strong first half, the Gold business saw lower levels of dishoarding and a softening of demand for bullion products in the Far East. Nevertheless, the primary gold refining business remained strong achieving solid growth in its profits.

Electronic Materials Division held on to share in its major markets and sales were only 5% down at £414.7 million. However, the adverse conditions in the global semiconductor markets depressed margins which resulted in operating profits being down 45% to £22.1 million. The division has been reorganised into two sub-divisions: Wafer Fabrication Materials which serves the "front end" (chip production) of the semiconductor manufacturing process, and Interconnect Products and Services which encompasses Assembly Products, Laminate Products and Semiconductor Packages all of which feed into the "back end" of the overall process where chips are packaged and final products assembled.

Wafer Fabrication Materials, comprising the division's sputtering targets and high purity metals businesses, was affected by customer destocking and price competition for much of the year. However, there were early signs of a recovery in the final quarter and order books improved. In Interconnect Products and Services Semiconductor Packages had a good year. Demand for packages was strong but margins were reduced due to Japanese competitors who enjoyed a currency advantage. Assembly Products was impacted by a decline in demand for its thermal management and die attach products due to the downturn in Asia and the rapid shift towards lower cost personal computers. Laminate Products maintained full order books throughout the year but price competition, mainly from Asia, adversely impacted profits. The introduction of new high density interconnect technology, in which the business has a leading position, will enable it to significantly improve margins going forward.

Colours & Coatings Division's sales fell by 8% (for the business as a whole) to £250.5 million reflecting lower material costs for zircon sand and reduced demand for tableware products in the UK. Operating profits on the same basis were 56% up at £24.8 million chiefly as a result of cost cutting initiatives undertaken since Johnson Matthey acquired full ownership of the business in February 1998. The glass, pigments and tile sectors all achieved double digit growth in profits. Sales of glass enamels to the automotive industry and pigments and dispersions to the paint industry were particularly strong. Tableware was down reflecting the continued decline in the major market in Staffordshire.

Outlook
We have made good progress on our strategy announced last November to change the focus of the group's activities. Electronic Materials has been established as a stand alone entity and we expect to make a further announcement on its future within the next few months. There are excellent opportunities in all Johnson Matthey's core businesses. New product developments and rigorous attention to costs will provide the group with a firm basis for future growth.