Autocatalysts
The autocatalyst business had a good year. While the South American, ASEAN and Japanese markets were depressed, car sales in its major markets of Europe and America were strong, growing by 7% and 3% respectively. This growth, reinforced by tighter emissions standards which are resulting in more catalysts per vehicle coupled with the continuing popularity of sport utility vehicles in the US, enabled the business to increase its worldwide unit sales by 13%.

The group's Australian autocatalyst facility, which supplied European customers under an export credit scheme, was closed at the end of 1998 following the effective ending of the scheme. These sales will in future be sourced from JM's plants in South Africa, which has strong export credit incentives, Brussels and Malaysia. In February 1999 production commenced in a new facility near Delhi, India. This plant will provide autocatalysts for India's growing car and motorcycle markets. In early February 1999 Johnson Matthey acquired the business of Watson Engineering Testing Development Inc. in Detroit. This facility will further enhance JM's service to its US customers and is being expanded to become the group's North American heavy duty diesel development centre. Sales of heavy duty diesel catalysts continued to make good progress in both Europe and the United States during the year and will be further enhanced by legislation due to come into effect in the US in 2002 and in Europe in 2005. Motor industry interest in fuel cells has accelerated over the last year with announcements by many leading car companies that they will be selling fuel cell powered vehicles within the next five years. Johnson Matthey made major advances during the year both in developing fuel cell technology and in establishing its position in the fuel cell engine supply chain. In late October the company announced a long term agreement with Ballard Power Systems, Inc. to supply catalysts and electrodes for their fuel cells. An agreement was concluded in March with dbb Fuel Cell Engines GmbH to supply catalysts and gas clean up components for their fuel cell engines.

Pharmaceutical Materials
The Pharmaceutical Materials business achieved substantial growth in both sales and operating profit during the year. Sales of organic pharmaceuticals more than doubled over the prior year, led by a successful first full year of methylphenidate sales to Schein Pharmaceutical, Inc. as well as by strong sales of fentanyl, sufentanil and hydrocodone. Sales and royalty income from the important platinum based anti-cancer drugs, carboplatin and cisplatin, remained strong, with no decision as yet on legal challenges to the US cisplatin patent. Significant progress was made in new product development for several important new customers with additional generic products as well as a promising Phase III drug well advanced toward commercialisation. In support of this strong product pipeline, the business has continued to invest in manufacturing capacity, which has more than doubled since last year and plans for further expansion are well advanced. AnorMED Inc., which was established in 1996 via a spin-off of Johnson Matthey's biomedical research activities, completed a successful initial public offering on the Toronto Stock Exchange in March. Johnson Matthey owns 18.5% of the floated company.

Chemicals
The Chemicals business had a very successful year, led by its core platinum group metal (pgm) chemicals and refining businesses in North America and Europe. PGM refining from both primary and secondary sources was particularly buoyant. The process catalyst business, which supplies heterogeneous and homogeneous catalysts to the pharmaceutical, agrochemical, automotive, speciality and fine chemicals sectors, continued to make good progress. Significant investments were made during the year in the construction of a homogeneous catalyst facility and in extending the product range. Chiral catalysis, used in the manufacture of single isomer drugs, is a growing area for homogeneous catalysts. The business has invested in ligand technology for these catalysts and in high throughput screening methods necessary for rapid evaluation of both homogeneous and heterogeneous catalysts. The research chemicals business in North America continued to perform well.