Chairman's Statement.

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I am very pleased to report that, despite facing the most difficult economic conditions for many decades, Johnson Matthey performed well in 2009/10. The group produced underlying earnings per share that were only 4% lower than those in 2008/09, which, it should be remembered, was a record year for us.

Our strategy served us well during the downturn. The board, executive management team and employees at all levels of the company faced the challenges posed by extremely turbulent conditions in some of our key markets, especially in the western automotive markets, and took prompt and decisive action to reduce costs. However, this was done without sacrificing the future growth potential of our business. Whilst capital expenditure was significantly reduced, we continued our investment in new, highly efficient manufacturing capacity to make automotive emission control catalysts in Europe and the United States and a new plant in China to make catalysts to control emissions of oxides of nitrogen, or NOx, from coal fired power stations in that country. We also completed a facility in the UK to manufacture Apico, our revolutionary new methanol synthesis catalyst which was launched during the year and provides major performance benefits to customers worldwide.

The investment that we make in research and development is vital to the success of our company. It provides the high technology products and manufacturing processes that enable us to maintain market leadership and underpins the future growth of our businesses. Despite the difficult market conditions that we have faced over the last few years we have not cut our R&D spend, indeed we have continued to increase it. We are increasingly focusing our R&D efforts on developing new products that will help our customers to improve their resource efficiency, reduce energy consumption and waste and make their businesses more sustainable. Apico, which was developed in house by our world class scientists, will help to deliver many of these sustainability benefits to our customers in the methanol industry and is a great example of the crucial importance of R&D and innovation to our business.

As I visit Johnson Matthey businesses around the world I continue to be impressed by the commitment and enthusiasm of employees at all levels for Sustainability 2017, our group wide programme to make ours a more sustainable business by the year 2017, the two hundredth anniversary of the company’s foundation. We have set ourselves some very challenging targets but given the commitment of our people and the spirit of innovation that is evident throughout the group, I feel confident that Sustainability 2017 will be a great success. Further details of our progress towards Sustainability 2017 are summarised in the Sustainability section and are presented in full in the group’s Sustainability Report which will be published on our website in July.

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