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Johnson Matthey

Presentation of Results for the year ended 31 st March 2000 8 th June 2000. Johnson Matthey. Johnson Matthey. Johnson Matthey. Overview. Continuing businesses’ profits up 17% EMD sold for US$655 million Profit before tax up 10% to £143.8 million

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Johnson Matthey

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  1. Presentation of Results for the year ended 31st March 2000 8th June 2000 Johnson Matthey Johnson Matthey

  2. Johnson Matthey

  3. Overview • Continuing businesses’ profits up 17% • EMD sold for US$655 million • Profit before tax up 10% to £143.8 million • Double digit growth in all three divisions • Earnings and dividend up 7%

  4. Strategy • Strategy successfully implemented • Investment for growth • Fuel Cells • Refocusing Colours & Coatings

  5. Johnson Matthey

  6. Summary Results 2000 1999 £m £m % Turnover – Continuing3,769 2,963 +27 Op. Profit – Continuing 146.5 125.0 +17 – Discontinued (0.3) 22.1 Interest (2.4)(15.9) Profit before tax* 143.8 131.2 +10 EPS* 47.5p 44.3p +7 EPS 51.4p 49.3p +4 Dividend 20.3p 19.0p +7 * Excluding exceptionals

  7. Operating Profit Continuing 2000 1999 2000 at 1999 rates £m £m % £m % Catalysts & Chemicals 84.8 74.2 +14 83.6 +13 Precious Metals 45.4 37.3 +22 44.9 +20 Colours & Coatings 27.9 25.1 +11 29.2 +16 Corporate (11.6) (11.6) (11.5) 146.5 125.0 +17 146.2 +17

  8. Return on Sales Sales ROS 2000 1999 Growth 2000 1999 £m £m % % % Catalysts & Chemicals 856 677 +26 9.9 11.0 Precious Metals 2,672 2,041 +31 1.7 1.8 Colours & Coatings 241 244 -1 11.6 10.3 3,769 2,963 +27 3.9 4.2

  9. Return Excl. Precious Metals Sales excl. PM’s ROS 2000 1999 Growth 2000 1999 £m £m % % % Catalysts & Chemicals 494 408 +21 17.2 18.2 Precious Metals 114 96 +18 40.0 38.8 Colours & Coatings 234 240 -2 11.9 10.5 841 744 +13 17.4 16.8

  10. Geographical SplitOperating Profit - Continuing 2000 £146.5m 1999 £125.0m 9.2 16.2 3.6 8.8 52.2 58.1 69.3 54.1 Asia Europe Rest of World North America

  11. Interest 2000 2000 2000 1999 1H 2H £m £m £m £m Financial (4.1) 3.9 (0.2) (14.6) Gold & Silver leases (1.1) (1.1) (2.2) (1.3) (5.2) 2.8 (2.4) (15.9) Full Year

  12. Exceptional Items £m Rationalisation cost of Tableware (9.8) Profit on sale of Electronics 28.5 Loss on sale of Organic Pigments (6.2) Profit on disposal of surplus properties 1.1 13.6 Goodwill amortisation (0.2) 13.4

  13. Taxation 2000 1999 £m £m Underlying tax 40.4 35.8 Tax on rationalisation costs (2.9) - Tax on sale of EMD 9.9 - Tax on sale of Org. Pigments (2.1) - ACT saving on FIDs - (3.9) 45.3 31.9 Average tax rate 29% 23% Underlying tax rate 28% 27%

  14. Return on Investment 2000 1999 £m £m Operating profit 146.2 147.1 Average assets: Equity and minorities 657 521 Cumulative goodwill 109 171 Net (cash) / borrowings 28 223 Total investment 794 915 Pre-tax ROA - continuing 24.2% n/a - total 18.4% 16.1% Post-tax ROA 13.2% 11.7% Economic value added £32m £16m

  15. Free Cash Flow Continuing EMD TOTAL 2000 2000 2000 £m £m £m Operating profit 136.1 0.1 136.2 Depreciation and amortisation 38.0 8.6 46.6 Working capital / other (54.5) 2.0 (52.5) Cash flow from operations119.6 10.7 130.3 Interest / tax / dividends (72.2) (5.9) (78.1) Capital expenditure (gross) (63.4) (11.4) (74.8) Sale of fixed assets 8.4 0.7 9.1 Free cash flow(7.6) (5.9) (13.5)

  16. Net Cash Flow Continuing EMD TOTAL 2000 2000 2000 £m £m £m Free cash flow(7.6) (5.9) (13.5) Acquisitions (0.1) (2.8) (2.9) Disposals 0.8 400.9 401.7 Shares issued 8.0 - 8.0 Net cash flow1.1 392.2 393.3 Exchange (5.9) Movement in debt387.4

  17. Gearing Mar 00 Mar 99 £m £m Net (cash) / debt(166) 222 Equity and minorities760 559 Capital employed594 781 Gearingn/a 40% Interest cover61x 9x

  18. Catalysts & Chemicals Division £m £m +26% +14% 1000 100 800 80 856 84.8 600 74.2 60 677 400 40 200 20 0 0 1999 2000 1999 2000 Sales Operating Profit

  19. Autocatalysts • Volumes up 11% - tighter legislation - strong car sales • Investing in capacity and technology • Well placed in developing markets • Progress with Heavy Duty Diesel

  20. 1970 2010 75 80 85 90 95 00 05 Major Changes in Emissions Legislation Europe Euro IV Euro III Euro “V” (HDD) Euro II Euro I Euro IV (HDD) Euro III (HDD) Tier 2 USA CAL. HDD Tier 1 Fed 75 and amendments to CAA Tier 1 LEV II (CAL.) Tier 1 Fed 75 Fed 75 US HDD LEV I (CAL.) Fed 75 US HDD

  21. “I am very excited about fuel cells. I believe they’re going to be a significant part of our industry a lot sooner than many people think. I think that it’s possible that they could displace the internal combustion engine as the dominant source of power for consumer vehicles within my lifetime.” William Clay Ford Jr, Chairman, Ford Motor Company

  22. Fuel Cells • £12 million being invested in development and testing capability • Customer collaborations on plan • Securing supply base • Fuel Reformer developed for residential market

  23. Chemicals • PGM refining strong on back of higher prices • High throughput screening adding value for customers • Expansion of process catalyst manufacturing • Smoptech acquisition

  24. Pharmaceutical Materials • Methylphenidate prices hit by competition • Strong performance from carboplatin and organics • Good progress on new products • New facility under way

  25. Precious Metals Division £m £m +31% +22% 3000 50 2500 45.4 40 2,672 2000 37.3 2,041 30 1500 20 1000 10 500 0 0 1999 2000 1999 2000 Sales Operating Profit

  26. Precious Metals Division • Strong demand for pgms • 50% growth in China jewellery • Robust prices • Good growth in fabricated products • Outlook strengthening further with uncertainty over palladium availability • Gold satisfactory in difficult markets

  27. Platinum & Palladium Prices $/oz 900 800 700 600 500 400 300 200 100 0 Platinum Palladium April 1997 April 1998 April 1999 April 2000

  28. Colours & Coatings Division £m £m -1% +11% 300 30 27.9 250 25 244 25.1 241 200 20 150 15 100 10 50 5 0 0 1999 2000 1999 2000 Sales Operating Profit

  29. Colours & Coatings Division • Underlying sales growth • Margins up to 12% • Focus on growth businesses • Investment in Spain • Expansion of facilities at Maastricht • Exit from organic pigments complete

  30. Colours & Coatings DivisionRationalisation Update • Spent £5.2 million out of £10 million provision • Headcount reduced by 113 • Singapore and Milan operations closed • Closure of Burslem underway • Annual savings of £2.8 million already secured • Savings of £4 million in current year and £7 million p.a. thereafter

  31. e - Commerce • Longstanding internet presence • Catalogue sales in US • Expanding into Europe this year • e-Procurement project • Developments in car industry

  32. Outlook • Prospects for growth very encouraging • Investing in new technology and new facilities • Acquisition opportunities

  33. Johnson Matthey

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