I am delighted to report that 2000/01 was another successful year for Johnson Matthey with all three of the company's operating divisions performing well and contributing to strong growth in profits. Your company has continued to make excellent progress in delivering shareholder value. This has been reflected in strong growth in earnings per share and dividends as well as the encouraging performance of the company's shares over the last year.

The strategy of refocusing the group on its core activities in catalysts, fine chemicals and precious metals that we announced in late 1998 continues to bear fruit. The year has seen a major increase in our investment in new technology and manufacturing facilities around the world as well as in research and development. A further increase is planned for the current year. This investment is vitally important to maintain our leading market positions and will provide a strong base for continued growth in the years to come. We are also pursuing niche acquisitions to add further to our core businesses. The acquisitions of Shape Memory Applications and Pharm-Eco Laboratories, both in the United States, are excellent examples of this.

Fuel cells continue to be the centre of much attention. Johnson Matthey, through our long commitment to research and development and our strong relationships with automobile manufacturers and the leading developers of fuel cell technology, is in a uniquely strong position to benefit from the growth of this exciting new industry. It is our strategy to be the leading supplier of catalysts and catalysed components for fuel cells. The board is determined to grow this new business.

In November, we were honoured to be awarded the Royal Academy of Engineering MacRobert Award 2000, the UK's most coveted prize for engineering innovation, for Johnson Matthey's Continuously Regenerating Trap (CRT™) which controls pollution from heavy duty diesel vehicles. Sales of the CRT™ have been very encouraging. The award was presented to our Chief Executive, Chris Clark, and the team that led the development and commercialisation of the CRT™ by His Royal Highness Prince Philip, Duke of Edinburgh at a ceremony held at Buckingham Palace on 30th November 2000.

This is the second time that the company has won this prestigious award, one that receives great recognition both in the UK and around the world. It reflects Johnson Matthey's long term commitment to leadership in catalytic emission control technology. It also serves to underline the achievements of our autocatalyst business and the prospects for continued growth arising from the development of new technologies to meet tightening vehicle emission standards worldwide.

Board
During the year the board has continued to oversee the strategic development of the group. We are fortunate to have a strong team of independent directors who bring a wealth of knowledge and experience to the board. I would like to thank them for their skilful, indeed invaluable support over the last year.

People and the Community
I cannot stress too highly the essential role that the people in Johnson Matthey play in your company's continued success. We have a highly professional and dedicated workforce. On behalf of the board, I would like to thank them all for their contribution towards the outstanding progress that the company has made during the year.

The development of tomorrow's management talent, and indeed the development of all the company's employees to enable them to fulfil their full potential, is vital to Johnson Matthey's future. We focus on this objective at all levels of the company. Indeed this is a key responsibility of today's management. The company's Training and Development of People Policy is set out on page 24 of the pdf version of the Annual Report.

Johnson Matthey's key environmental technologies of autocatalysts, heavy duty diesel catalysts and fuel cells will make an increasingly important contribution to the quality of our lives in the years ahead. At the same time we are fully committed to ensuring that all of the company's operations around the world meet our responsibilities to the environment and maintain the highest standards of health and safety. Our corporate Environment, Health and Safety policies and a series of case studies in this area are featured on pages 20 and 21.

Our Charity of the Year programme in support of the National Asthma Campaign concluded at the end of March. A new Charity of the Year programme in support of The National Society for the Prevention of Cruelty to Children (NSPCC) began in April.

Conclusion
The board is delighted with the strong results achieved in 2000/01 and with the excellent progress that the company has made over the last few years in growing its core businesses to add real shareholder value. The company is uniquely well positioned to benefit from its leading market positions and strong technology and is investing in its growth businesses to ensure that their exciting potential is realised.

Michael Miles OBE
Chairman