For Release at 7.00 am Wednesday 23^rd November 2005

Interim Results for the six months ended 30^th September 2005

On track for good growth for the year

Summary Results

	Half Year to 30^thSeptember		%	%
	2005	2004	change	underlying growth*
Revenue Sales excluding precious metals Profit before tax Total earnings per share Dividend per share	£2,283m £637m £106.4m 35.2p 9.1p	£2,461m £586m £88.3m 25.8p 8.7p	-7 +9 +20 +36 +5	-7 +9 +3 +5 +5

* excluding restructuring and disposal costs in 2004

· Sales revenue down 7% reflecting lower precious metal trading volume. Sales excluding precious metals up 9%

· Profit before tax up 20% at £106.4 million. Underlying growth of 3% excluding restructuring costs in 2004

· Total earnings per share up 36% at 35.2 pence. Underlying growth of 5% excluding restructuring and disposal costs in 2004. Interim dividend increased by 5% to 9.1 pence

· Impact of exchange translation slightly favourable

· Strong operating cash flow. Net cash inflow of £18.5 million after £11.9 million net cash cost of share purchases

Divisional Performance

Operating Profit

	Half Year to 30^th September		%
£m	2005	2004*	change
Catalysts	65.2	61.2	+7
Precious Metal Products	30.6	27.5	+11
Pharmaceutical Materials	16.2	21.1	-23
Ceramics	10.8	9.2	+17
Corporate	(8.3)	(8.2)
Operating Profit	114.5	110.8	+3

* excluding restructuring costs in 2004

Business Prospects

· Good growth in Environmental Catalysts and Technologies expected in the second half of the year benefiting from the strength of the diesel catalyst market in Europe and good growth in Asia

· Additional capital expenditure on new capacity to manufacture heavy duty diesel (HDD) catalysts and catalysed soot filters (CSFs) planned for the second half of 2005/06

· Further expansion planned in Asia including a new facility to manufacture autocatalysts in Korea

· High oil price supports growth in Process Catalysts and Technologies with increased demand for catalysts for hydrogen production and purification

· Precious Metal Products to benefit from continued good growth in manufactured products and the firm platinum price

· Pharmaceutical Materials’ profits expected to improve in the second half of the year with stronger sales in the US

· Ceramics’ encouraging performance should continue in the second half of 2005/06 with good cash generation

Commenting on the results, Neil Carson, Chief Executive of Johnson Matthey said:

“In the first half good growth in Catalysts, Precious Metal Products and Ceramics has more than compensated for the shortfall in Pharmaceutical Materials caused mainly by the expiry of the carboplatin patent. Our cash performance has also been good.

The outlook for the second half is for increased top-line growth driven by the launch of new products for heavy and light duty diesel vehicles, and growth in Asia.”

Enquiries:

Ian Godwin	Director, IR and Corporate Communications	020 7269 8410
John Sheldrick	Group Finance Director	020 7269 8438
Howard Lee	The HeadLand Consultancy	020 7036 0369
Ella Tekdag	The HeadLand Consultancy	020 7036 0316
www.matthey.com

Report to Shareholders

Introduction

Johnson Matthey’s performance in the first half of 2005/06 was encouraging. Total earnings per share were up 36%. Excluding restructuring and disposal costs included in last year’s figures the underlying growth in earnings per share was 5%. The mix of profits in the first half was as expected at the time of our results in June with good increases in Catalysts, Precious Metal Products and Ceramics but a decline in Pharmaceutical Materials.

This is the first time Johnson Matthey has reported its results under International Financial Reporting Standards (IFRS). The impact of the transition from UK GAAP to IFRS was set out in our Report and Accounts for 2005, and is shown in note 12 on the interim accounts included in this report.

Review of Results

Revenue fell by 7% in the half year to £2,283 million, largely as a result of reduced activity on precious metal trading compared with the first half of 2004/05. Sales excluding the value of precious metals rose by 9% reflecting good underlying growth in Catalysts Division and increased non precious metal material costs, some of which are a pass through for Johnson Matthey.

Operating profit increased by 3% (excluding restructuring costs in 2004) to £114.5 million. Exchange translation was slightly favourable increasing profits by £0.7 million compared with last year. Interest rose by £0.5 million, largely as a result of the increase in short term interest rates in the US. Profit before tax was 20% up on last year at £106.4 million. Excluding restructuring costs in 2004 the underlying increase in profit before tax was 3%.

Underlying earnings per share rose by 5% to 35.2 pence benefiting from a slightly more favourable average tax rate than last year and the accretive effect of share buy-backs. Including restructuring and disposal costs in 2004 total earnings per share rose by 36%.

Dividend

The interim dividend has been increased by 5% to 9.1 pence, in line with the growth in earnings per share excluding restructuring and disposal costs.

Operations

Catalysts Division’s sales rose by 19% to £675 million, partly as a result of higher prices for platinum and rhodium. Excluding the value of precious metals, sales rose by 14% to £375 million. The division’s operating profit increased by 7% to £65.2 million.

Environmental Catalysts and Technologies (ECT) was ahead of last year with good growth in Europe and Asia more than offsetting a further decline in North America. Results in Europe were boosted by early sales of heavy duty diesel (HDD) catalysts to original equipment manufacturers and sales of catalysed soot filters (CSFs) for light duty diesel vehicles.

In the six month period to 30^th September 2005 global light duty vehicle sales increased by 4.9%. Car production in this period rose by 2.9% as inventory levels were reduced particularly in North America and Asia. Nearly all the growth in production came in Asia, with Europe slightly ahead and North America unchanged. Diesel vehicles continued to take an increasing share of the European market.

Light Vehicle Sales and Production

		Half year to 30^th September
		2005 millions	2004 millions	change %
North America Europe Asia Global	Sales Production Sales Production Sales Production Sales Production	10.7 7.8 9.3 10.2 7.2 10.9 32.3 31.7	10.3 7.8 9.1 10.1 6.5 10.2 30.8 30.8	3.9% 0.0% 2.2% 1.0% 10.8% 6.9% 4.9% 2.9%
Source: Global Insight

New emission control standards for HDD vehicles came into force in Europe in October 2005 for new models. Johnson Matthey is supplying several of the leading original equipment manufacturers with products to meet this legislation. The major growth in the market will occur in October 2006 when all new HDD vehicles sold in Europe will need to meet the new standards. In North America similar legislation comes into force in January 2007.

We are seeing increasing demand from many of the leading car companies in Europe for CSFs to remove particles from diesel exhaust emissions. Although legislation requiring such emission control devices does not come into force until 2010 many manufacturers plan to fit these devices much earlier. We have commissioned a new factory in Royston to manufacture these products and are planning to put in additional capacity in the second half of the year.

We have brought forward investment at several of our major facilities around the world to manufacture HDD catalysts given the high level of orders we are seeing. Overall, we plan to spend an additional £30 million on capital expenditure in the second half of this year compared with our original plans to create the additional capacity required for HDD catalysts and CSFs.

Our business in Asia is performing very well. Over the next decade we expect that most of the growth in world car production will take place in the Asian region. In the current financial year we have achieved strong volume growth in China and Japan. In early September we announced plans to build a new autocatalyst factory in Gyeonggi province in Korea where we plan to manufacture catalysts for both diesel and petrol powered vehicles.

Process Catalysts and Technologies (PCT) achieved good growth in sales and profits in the half year. The Ammonia, Methanol, Oil and Gas (AMOG) business was well ahead of 2004 with strong demand for catalysts for hydrogen production and purification. Sales of edible oil catalysts were also ahead of last year but catalyst sales to the polymer market declined. The high oil price is encouraging development of synthetic liquid products from natural gas and coal, which will underpin PCT’s catalyst growth in the medium term.

The division’s Research Chemicals business has successfully integrated the operations of Lancaster Synthesis which was acquired last year. A new catalogue has been issued in North America covering the whole range of products sold by the business. The catalogue will be launched for the rest of the world later this financial year which should provide a further boost to growth.

Our Fuel Cells business has continued to make good progress on developing Membrane Electrode Assembly (MEA) technology for the automotive market. Rising oil prices and fuel shortages together with concerns about the impact of global warming have increased demand for fuel cell technology. One consequence has been renewed interest in the use of phosphoric acid (PAFC) fuel cells for stationary applications. Johnson Matthey has well established technology for components for PAFC fuel cells and is collaborating with fuel cell manufacturers on new product development in this area. Another recent development is the emergence of prototype direct methanol fuel cells used as chargers for mobile phones or power sources for laptops. The future development of this new market is still uncertain but Johnson Matthey is collaborating with a number of major electronics companies to supply catalysts and MEAs for their fuel cell development programmes.

Precious Metal Products Division’s sales fell by 16% to £1,460 million reflecting more subdued precious metal trading activity. Sales excluding the value of precious metals grew by 4%. Operating profit increased by 11% to £30.6 million.

Most of the growth in operating profit was generated by the manufacturing businesses. Colour Technologies, which was transferred into the division following the restructuring of the former Colours & Coatings Division, achieved good growth in profits benefiting from cost reductions undertaken last year and good sales of automotive glass enamels. Similarly the division’s gold businesses benefited from the closure of the UK bullion refinery (which had been loss making) and the transfer of some of its business to our North American refineries. The platinum group metal (pgm) fabrication businesses also achieved good growth with increasing sales to the industrial sector and strong demand for medical device components.

Pgm refining has been transferred from Catalysts into Precious Metal Products Division. We are successfully implementing the plan announced last June to restructure the business in the UK and reduce the quantity of precious metals held in the refinery. Since inception of the programme more than £20 million has been released which has been used to fund share buy-backs.

The platinum marketing businesses experienced mixed trading conditions. The platinum market continued to expand and the price remained firm. Palladium was very subdued whereas rhodium was buoyant, reflecting the different supply – demand balances for these metals.

Demand for platinum is expected to rise by 2% in 2005. Increased purchases from the automobile, glass and electronics industries have largely been offset by lower sales of platinum jewellery, where the high platinum price dampened demand. The average price of platinum in the first half of Johnson Matthey’s financial year rose to $883 per ounce, up 5% compared to the same period last year.

In contrast, the price of palladium fell by 21% to $189 per ounce despite total demand growing by an estimated 6% in 2005. The most significant increase in usage has come from China where sales of palladium jewellery rose by 71% to 1.2 million ounces, capturing market share from gold and platinum. Demand from other sectors, including the automobile market, has remained fairly stable. Despite the strong growth in Chinese jewellery, supply will exceed demand in 2005, although the market will be much closer to balance than in recent years.

The price of rhodium rose sharply to average $1,901 per ounce in our first half, almost double the price in the same period last year. Demand grew faster than supplies and, with the market already in deficit from 2004, the price was both buoyant and volatile.

Pharmaceutical Materials Division’s sales fell by 13% to £58 million. The fall in sales reflected reduced income from carboplatin, which went off patent in October 2004, and lower revenues from contract research. Operating profit fell by 23% to £16.2 million.

The division’s European businesses performed well in the half year. The fall in revenues and profits all occurred in the United States. Part of the drop related to the phasing of sales over the year. Our active pharmaceutical ingredient (API) manufacturing business in the US, which is based in West Deptford, NJ, makes a number of high margin products which are sold in batches and can cause profits to be “lumpy”. With a number of sales falling into the second half of the year, we expect the contribution from this business for the second six months to be higher than the first. In addition, prospects for the new product launches planned for calendar 2006 remain encouraging.

Macfarlan Smith, which is based in Edinburgh, UK and manufactures controlled drugs for sale to generic pharmaceutical companies, performed well in the period. Sales and profits were both ahead of last year with good growth in low volume, high potency products (mainly analgesics) where new capacity has recently been installed. A major expansion programme is also underway to increase capacity to manufacture specialist opiates (oxycodone, hydromorphone and buprenorphine) where demand is growing rapidly. This facility will be completed by the end of the current financial year.

Ceramics Division is shown as a stand alone business for the first time following the restructuring of our Colours & Coatings Division. That restructuring included the sale of our Pigments and Dispersions business, transfer of the Colour Technologies business to Precious Metal Products Division and closure or consolidation of a number of smaller manufacturing units.

The net impact has been to significantly reduce the cost base which has improved operating profit and margins. Ceramics Division has also successfully grown its sales this year by 11% to £90 million. Operating profit rose by 17% to £10.8 million.

The division is headquartered in Spain and is a global supplier of decorative materials to the ceramic industries, particularly tile manufacturing. Sales were strong in China, where the tile market continues to grow rapidly. The division is realising the benefits of the investments made in recent years to position it as one of the lowest cost global producers. With capital expenditure below depreciation in the half year the division was highly cash generative.

Finance

Exchange rates

The main impact of exchange rate movements on the group’s results comes from the translation of foreign subsidiaries’ profits into sterling. The group’s largest overseas investment is in the USA. The average rate for the US dollar for the six months to 30^th September 2005 was $1.820/£ which was slightly worse than the average rate for the first half of last year of $1.814/£. However, a number of other currencies strengthened against sterling compared with the first half of last year including the euro which averaged €1.468/£ compared with €1.494/£ last year. The South African Rand was virtually unchanged at R11.74/£. Overall, the impact of currency movements was slightly favourable increasing group operating profit by £0.7 million compared with the first half of last year.

Interest

In the six months to 30^th September 2005 the group’s interest charge increased by £0.5 million to £7.7 million. Average interest rates for floating rate US dollars rose by about 2% compared with the first half of last year which more than offset the benefit of lower average borrowings.

Taxation

The group’s tax charge increased by £4.7 million to £31.1 million. The rise reflects the

tax relief on the restructuring costs included in last year’s results. On an underlying basis the average tax rate improved by 0.8% to 29.2%. We also reached agreement with the Inland Revenue in the UK on several years’ tax assessments which resulted in a repayment of tax in the half year which benefited the group’s cash flow. That amount had already been recognised in current tax so there was no impact on earnings.

Cash Flow

Johnson Matthey’s net cash flow from operating activities was very strong at £126.5 million which is an increase of £35.4 million compared with the first half of last year. Under the new IFRS rules net cash flow from operating activities includes taxation which benefited from the settlement in the UK. Working capital increased by £28.7 million despite the inventory reduction in pgm refining, largely as a result of the dramatic increase in the rhodium price and the increased prices of some other materials.

The cash outflow on capital expenditure in the half year was £44.9 million which was 1.3 times depreciation. Including capitalised development costs and investments the cash outflow on capital investment was £48.4 million. We are planning to invest more on capital expenditure in the second half of the year including £30 million of additional expenditure on production capacity for CSFs and HDD catalysts. For the year as a whole we now expect to spend at a rate of 1.8 times depreciation.

We purchased £8.0 million of Johnson Matthey shares in the first half. The net cash outflow on share purchases was £11.9 million including the cash cost of purchases made at the end of March 2005 where payment fell into the current financial year. Despite this outflow the group still generated a net cash inflow of £18.5 million. After taking into account the effect of exchange translation on foreign currency borrowings net debt fell by £8.8 million to £361.4 million and gearing (net debt / equity) fell by 2.7% to 37.0%.

In the second half of the year we plan to complete our previously announced programme of share buy-backs by purchasing a further £17 million of shares. We intend to use future cash generation either to fund share buy-backs or to finance bolt on acquisitions.

Outlook

The outlook for the year as a whole remains very much the same as we set out in our annual report. Following an encouraging first half we are expecting good growth for the year.

Catalysts Division is well positioned to benefit from growth in diesel emission control products including CSFs and HDD catalysts. We also expect to see further growth in Asia so that overall ECT is expected to achieve about 10% growth in operating profit in the second half of the year. PCT is also expected to achieve good growth in the second half.

Precious Metal Products Division achieved good growth in operating profit in the first half of the year. We do not expect the second half to be quite so strong but the division is still expected to be ahead of last year for the second six months.

Pharmaceutical Materials Division is expected to achieve higher profits in the second half than the first with stronger sales in the US. Ceramics Division’s second half is expected to be similar to the first with continued good cash generation.

The outlook for the group remains very encouraging. We are well positioned to benefit from the emergence of a number of new markets driven by environmental concerns and high energy prices. We are increasing our investment in R&D to ensure we have leading technology to meet these new market opportunities.

Consolidated Income Statement
for the six months ended 30th September 2005
					Six months ended		Year ended
					30.9.05	30.9.04	31.3.05
				Notes	£ million	£ million	£ million
Revenue				2	2,282.9	2,460.6	4,626.2
Cost of goods sold					(2,088.2)	(2,267.1)	(4,246.4)
Gross profit					194.7	193.5	379.8
Operating expenses					(80.2)	(82.7)	(163.2)
Restructuring costs					-	(15.4)	(36.7)
Operating profit				2,3	114.5	95.4	179.9
Interest payable					(15.7)	(13.4)	(32.2)
Interest receivable					8.0	6.2	19.2
Share of (loss) / profit of associates					(0.4)	0.1	0.5
Profit before tax					106.4	88.3	167.4
Income tax expense				4	(31.1)	(26.4)	(46.5)
Profit for the period from continuing operations					75.3	61.9	120.9
Loss for the period from discontinued operations					-	(6.3)	(6.4)
Profit for the period					75.3	55.6	114.5
Attributable to:
Equity holders of the parent company					75.7	56.0	115.5
Minority interest					(0.4)	(0.4)	(1.0)
					75.3	55.6	114.5
					pence	pence	pence
Earnings per ordinary share attributable to the equity holders of the parent company
	Continuing operations
		Basic		5	35.2	28.7	56.1
		Diluted		5	35.1	28.6	56.0
	Total
		Basic		5	35.2	25.8	53.2
		Diluted		5	35.1	25.7	53.1
Consolidated Balance Sheet
as at 30th September 2005
					30.9.05	30.9.04	31.3.05
			Notes		£ million	£ million	£ million
Assets
Non-current assets
Property, plant and equipment					610.3	573.9	593.0
Goodwill					378.7	376.6	375.1
Other intangible assets					29.7	26.0	27.4
Investments in associates					4.4	4.4	4.8
Deferred income tax assets					2.2	11.0	2.0
Available-for-sale investments					2.2	1.9	1.9
Post-employment benefits net assets					49.6	47.2	45.2
Total non-current assets					1,077.1	1,041.0	1,049.4
Current assets
Inventories					344.2	327.9	307.3
Current income tax assets					0.5	1.4	2.2
Trade and other receivables					406.5	346.9	363.4
Available-for-sale investments					0.1	1.3	0.6
Cash and deposits			9		113.8	97.0	78.7
Other financial assets					4.0	-	-
Other current assets					7.1	7.1	7.1
Total current assets					876.2	781.6	759.3
Total assets					1,953.3	1,822.6	1,808.7
Liabilities
Current liabilities
Trade and other payables					(325.0)	(286.2)	(294.3)
Current income tax liabilities					(51.5)	(32.5)	(12.3)
Borrowings and finance leases			9		(90.9)	(32.5)	(36.8)
Other financial liabilities					(10.0)	-	-
Short term provisions					(11.8)	(22.5)	(26.5)
Total current liabilities					(489.2)	(373.7)	(369.9)
Non-current liabilities
Borrowings, finance leases and related swaps			9		(384.3)	(427.7)	(411.5)
Deferred income tax liabilities					(45.1)	(44.5)	(44.6)
Employee benefits obligations					(53.1)	(43.7)	(48.2)
Long term provisions					(3.0)	(5.1)	(3.9)
Trade and other payables					(0.8)	(0.7)	(0.7)
Total non-current liabilities					(486.3)	(521.7)	(508.9)
Total liabilities					(975.5)	(895.4)	(878.8)
Net assets					977.8	927.2	929.9
Equity
Share capital					219.8	220.8	219.5
Share premium					141.5	138.0	139.8
Shares held in employee share ownership trusts					(45.7)	(28.8)	(37.7)
Other reserves					6.3	4.4	6.3
Retained earnings					648.9	584.3	594.5
					970.8	918.7	922.4
Minority interest					7.0	8.5	7.5
Total equity			8		977.8	927.2	929.9

Consolidated Cash Flow Statement
for the six months ended 30th September 2005
			Six months ended		Year ended
			30.9.05	30.9.04	31.3.05
		Notes	£ million	£ million	£ million
Cash flows from operating activities
Profit before tax			106.4	88.3	167.4
Adjustments for:
	Share of loss / (profit) in associates		0.4	(0.1)	(0.5)
	Discontinued operations		-	0.4	0.4
	Depreciation, amortisation and profit on sale of non-current assets and investments		33.2	32.7	66.1
	Share-based payments		2.1	1.4	2.8
	Changes in working capital and provisions		(28.7)	(6.6)	(12.5)
	Changes in fair value of financial instruments		(1.0)	-	-
	Net interest		7.7	7.2	13.0
Income tax received / (paid)			6.4	(32.2)	(52.9)
Net cash inflow from operating activities			126.5	91.1	183.8
Cash flows from investing activities
Dividends received from associates			0.1	0.1	0.2
Purchases of non-current assets and investments			(48.4)	(38.3)	(96.3)
Proceeds from sale of non-current assets and investments			1.9	1.3	4.1
Purchases of businesses and minority interest			(1.1)	(3.1)	(4.0)
Net proceeds from sale of business			-	24.4	23.3
Net cash outflow from investing activities			(47.5)	(15.6)	(72.7)
Cash flows from financing activities
Net purchase of own shares			(11.9)	1.1	(16.1)
Proceeds from / (repayment of) borrowings and finance leases			14.0	(29.1)	(50.6)
Dividends paid to equity holders of the parent company		6	(40.9)	(39.5)	(58.4)
Dividends paid to minority shareholders			-	-	(0.2)
Interest paid			(15.6)	(12.3)	(32.1)
Interest received			7.9	5.6	19.2
Net cash outflow from financing			(46.5)	(74.2)	(138.2)
Increase / (decrease) in cash and cash equivalents in the period			32.5	1.3	(27.1)
Exchange differences on cash and cash equivalents			4.8	1.6	0.1
Cash and cash equivalents at beginning of period			64.0	91.0	91.0
Cash and cash equivalents at end of period		9	101.3	93.9	64.0
Reconciliation to net debt
Increase / (decrease) in cash and cash equivalents in the period			32.5	1.3	(27.1)
(Proceeds from) / repayment of borrowings and finance leases			(14.0)	29.1	50.6
Change in net debt resulting from cash flows			18.5	30.4	23.5
Exchange differences on net debt			(9.7)	0.9	1.4
Movement in net debt in period			8.8	31.3	24.9
Net debt at beginning of period (after adjustment to opening position for IAS 39)		10	(370.2)	(394.5)	(394.5)
Net debt at end of period		9	(361.4)	(363.2)	(369.6)

Consolidated Statement of Recognised Income and Expense
for the six months ended 30th September 2005
			Six months ended		Year ended
			30.9.05	30.9.04	31.3.05
		Notes	£ million	£ million	£ million
Currency translation differences on foreign currency net investments and
	related loans		19.6	4.3	(2.0)
Fair value gain on available-for-sale investments transferred to profit on sale			(0.8)	-	-
Cash flow hedges			(1.8)	-	-
Actuarial loss on post-employment benefits assets and liabilities			-	-	(16.1)
Tax on above items taken directly to or transferred from equity			(4.3)	(1.4)	5.8
Net income recognised directly in equity			12.7	2.9	(12.3)
Profit for the period			75.3	55.6	114.5
Total recognised income and expense relating to the period			88.0	58.5	102.2
IFRS transition adjustment for financial instruments		10	2.7	-	-
Total recognised income and expense for the period			90.7	58.5	102.2
Attributable to:
Equity holders of the parent company			91.1	58.9	103.2
Minority interest			(0.4)	(0.4)	(1.0)
			90.7	58.5	102.2

Notes on the Accounts
for the six months ended 30th September 2005
1	Basis of preparation
	Following a European Union Regulation issued in 2002, with effect from 1st April 2005 the group is reporting its
	results in accordance with International Financial Reporting Standards (IFRS) as expected to be adopted by the
	European Union and so in its annual report and accounts for the year ending 31st March 2006 all its financial
	information will be presented under IFRS. Previous accounts were prepared under UK Generally Accepted Accounting
	Principles (UK GAAP) and reconciliations converting the group's results from UK GAAP to IFRS for the six months ended
	30th September 2004, the year ended 31st March 2005 and 1st April 2004 (the date of transition) balance sheet are
	presented in note 12.
	The interim accounts were approved by the Board of Directors on 22nd November 2005, and are unaudited but have been
	reviewed by the auditors. They do not constitute statutory accounts, but have been prepared on a basis consistent with the
	group's anticipated IFRS accounting policies which it expects to follow in its annual report and accounts for the year
	ending 31st March 2006. These accounting policies are set out on pages 28 to 31.
	These policies are consistent with all IFRS and Standing Interpretations Committee (SIC) and International Financial
	Reporting Interpretations Committee (IFRIC) interpretations currently issued by the International Accounting Standards
	Board (IASB) effective for 2005/06 reporting and adopted by the European Union. In addition, the IASB has issued an
	amendment to International Accounting Standard (IAS) 19 - 'Employee Benefits' in December 2004 which permits the full
	recognition of actuarial gains or losses that occur in the year outside the income statement in a similar way to FRS 17
	under UK GAAP. Johnson Matthey has assumed that this amendment will be endorsed by the European Union and so
	has decided to adopt it in 2005/06 and has prepared these accounts on that basis. Johnson Matthey has also taken
	advantage of the exemption allowed under IFRS 1 not to restate comparative information in its accounts for the year
	ending 31st March 2006 to comply with IAS 32 - ‘Financial Instruments: Disclosure and Presentation’, IAS 39 -
	‘Financial Instruments: Recognition and Measurement’ and IFRS 4 - ‘Insurance Contracts’. Note 10 details the
	adjustment to the balance sheet at 1st April 2005 for the implementation of these standards. Since 1st April 2005, the
	group has used hedge accounting for interest rate and foreign currency instruments that meet the relevant hedging
	relationship criteria.
	The IASB is still issuing standards and interpretations which Johnson Matthey may decide to adopt in 2005/06 and so
	there may be further adjustments to the accounting policies and comparative information.
	Information in respect of the year ended 31st March 2005 is derived from the unaudited IFRS information published in
	the annual report and accounts for that year updated for minor changes to deferred income tax. Statutory accounts for the
	year ended 31st March 2005, which were prepared under UK GAAP, have been delivered to the Registrar of Companies.
	The auditors' report on those statutory accounts was unqualified and did not contain any statement under 237(2) and
	237(3) of the Companies Act 1985.
	As described in the notes on the IFRS restatement (unaudited) in the annual report and accounts for the year ended
	31st March 2005, when the group presents its segmental results for the year ending 31st March 2006 they will be
	different to those shown in the statutory accounts for the year ended 31st March 2005. Colour Technologies, which
	formed part of Colours & Coatings Division, will be transferred to Precious Metal Products Division. Ceramics, which
	comprised the remaining part of Colours & Coatings Division still owned by Johnson Matthey, will be shown as a
	separate segment. Platinum group metal refining, which was part of Catalysts Division, will also be transferred to
	Precious Metal Products Division. The segmental information in note 2 reflects the new divisional structure.

Notes on the Accounts
for the six months ended 30th September 2005
2	Segmental information by business segment
			Precious Metal	Pharmaceutical
		Catalysts	Products	Materials	Ceramics	Total
		£ million	£ million	£ million	£ million	£ million
	Six months ended 30th September 2005
	Sales to external customers	675.1	1,460.0	57.9	89.9	2,282.9
	External sales excluding precious metals	375.2	117.4	54.8	89.9	637.3
	Segment result	65.2	30.6	16.2	10.8	122.8
	Unallocated corporate expenses					(8.3)
	Operating profit					114.5
	Six months ended 30th September 2004
	Sales to external customers	569.6	1,743.3	66.4	81.3	2,460.6
	External sales excluding precious metals	328.7	113.3	62.8	81.3	586.1
	Segment result before one-off items	61.2	27.5	21.1	9.2	119.0
	Restructuring costs	(3.0)	(12.4)	-	-	(15.4)
	Segment result	58.2	15.1	21.1	9.2	103.6
	Unallocated corporate expenses					(8.2)
	Operating profit					95.4
	Year ended 31st March 2005
	Sales to external customers	1,157.2	3,171.0	131.8	166.2	4,626.2
	External sales excluding precious metals	672.1	224.8	124.6	166.2	1,187.7
	Segment result before one-off items	122.5	52.0	39.8	18.8	233.1
	Restructuring costs	(3.0)	(30.0)	-	(3.7)	(36.7)
	Segment result	119.5	22.0	39.8	15.1	196.4
	Unallocated corporate expenses					(16.5)
	Operating profit					179.9
3	Effect of exchange rate changes on translation of foreign subsidiaries' operating profits
				Six months ended		Year ended
	Average exchange rates used for translation of results of foreign operations			30.9.05	30.9.04	31.3.05
	US dollar / £			1.82	1.81	1.85
	Euro / £			1.47	1.49	1.47
	South African rand / £			11.74	11.75	11.53
	The main impact of exchange rate movements on the group's operating profit comes from the translation of foreign
	subsidiaries' profits into sterling. The one significant exception is the South African rand where the translational impact
	is more than offset by the impact of movements in the rand on operating margins. Consequently the analysis below
	excludes the translational impact of the rand.
				Six months ended 30.9.05
				At this	At last
				year's rates	year's rates	Effect
				£ million	£ million	£ million
	Catalysts			65.2	65.1	0.1
	Precious Metal Products			30.6	30.3	0.3
	Pharmaceutical Materials			16.2	16.2	-
	Ceramics			10.8	10.5	0.3
	Unallocated corporate expenses			(8.3)	(8.3)	-
	Operating profit			114.5	113.8	0.7

Notes on the Accounts
for the six months ended 30th September 2005
4	Income tax expense
		Six months ended		Year ended
		30.9.05	30.9.04	31.3.05
		£ million	£ million	£ million
	United Kingdom	(14.3)	(7.8)	(9.0)
	Overseas	(16.8)	(18.6)	(37.5)
		(31.1)	(26.4)	(46.5)
	The group's share of associated undertakings' taxation for the six months ended 30th September 2005 was £ nil
	(six months ended 30th September 2004 £ nil, year ended 31st March 2005 £ nil).
5	Earnings per ordinary share
	The calculation of earnings per ordinary share is based on a weighted average of 215,043,409 shares in issue (six
	months ended 30th September 2004 - 217,102,673 shares, year ended 31st March 2005 - 217,005,241 shares). The
	calculation of diluted earnings per ordinary share is based on the weighted average number of shares in issue adjusted
	by the dilutive outstanding share options and long term incentive plan. These adjustments give rise to an increase in
	the weighted average number of shares in issue of 447,034 (six months ended 30th September 2004 - 365,583 shares,
	year ended 31st March 2005 - 497,097 shares).
	Earnings per ordinary share before one-off items are calculated as follows:
		Six months ended		Year ended
		30.9.05	30.9.04	31.3.05
		£ million	£ million	£ million
	Profit for the period attributable to equity holders of the parent company	75.7	56.0	115.5
	Loss for the period from discontinued operations	-	6.3	6.4
	Restructuring costs	-	15.4	36.7
	Tax thereon	-	(4.7)	(13.3)
	Profit excluding one-off items	75.7	73.0	145.3
		pence	pence	pence
	Basic EPS before one-off items	35.2	33.6	67.0
6	Dividends
	An interim dividend of 9.1 pence per ordinary share will be paid on 1st February 2006 to shareholders on the register at
	the close of business on 2nd December 2005. In accordance with IFRS accounting requirements this dividend has
	not been recognised in these accounts.
		Six months ended		Year ended
		30.9.05	30.9.04	31.3.05
		£ million	£ million	£ million
	2003/04 final ordinary dividend paid - 18.2 pence per share	-	39.5	39.5
	2004/05 interim ordinary dividend paid - 8.7 pence per share	-	-	18.9
	2004/05 final ordinary dividend paid - 19.0 pence per share	40.9	-	-
		40.9	39.5	58.4
7	Share purchases
	During September 2005 the employee share ownership trusts (ESOTs) purchased a further 693,000 shares at a cost of
	£8.0 million. In April 2005 the ESOTs paid £5.9 million for 590,000 shares which had been purchased in the last week of
	March 2005.

Notes on the Accounts
for the six months ended 30th September 2005
8	Changes in equity
		Six months ended		Year ended
		30.9.05	30.9.04	31.3.05
		£ million	£ million	£ million
	Equity at end of prior period	929.9	906.0	906.0
	IFRS transition adjustment for financial instruments (note 10)	2.7	-	-
	Equity at beginning of period	932.6	906.0	906.0
	Total recognised income and expense relating to the period	88.0	58.5	102.2
	Dividends paid to equity holders of the parent company	(40.9)	(39.5)	(58.4)
	Dividends payable to minority interest	(0.2)	(0.2)	(0.5)
	Purchase of minority interest	-	(0.4)	(0.4)
	New share capital subscribed	2.0	1.1	3.2
	Purchase of own shares	-	-	(16.3)
	Purchase of shares for ESOTs	(8.0)	-	(8.9)
	Share-based payments	2.1	1.4	2.8
	Tax on items taken directly to or transferred from equity	2.2	0.3	0.2
	Equity at end of period	977.8	927.2	929.9
9	Net debt
		Six months ended		Year ended
		30.9.05	30.9.04	31.3.05
		£ million	£ million	£ million
	Cash and deposits	113.8	97.0	78.7
	Bank overdrafts	(12.5)	(3.1)	(14.7)
	Cash and cash equivalents	101.3	93.9	64.0
	Current other borrowings and finance leases	(78.4)	(29.4)	(22.1)
	Non-current borrowings, finance leases and related swaps	(384.3)	(427.7)	(411.5)
	Net debt	(361.4)	(363.2)	(369.6)
10	IFRS transition adjustment for financial instruments
	The adjustment to the balance sheet at 1st April 2005 for the implementation of IAS 32, IAS 39 and IFRS 4 is as follows:
				£ million
	Current available-for-sale investments			0.9
	Other financial assets			4.4
	Current trade and other payables			(0.4)
	Other financial liabilities			(0.5)
	Non-current borrowings, finance leases and related swaps			(0.6)
	Deferred income tax liabilities			(1.1)
	Net assets			2.7
	Other reserves			2.1
	Retained earnings			0.6
	Total equity			2.7

Notes on the Accounts
for the six months ended 30th September 2005
11	Precious metal operating leases
	The group leases precious metals from banks for specified periods (typically a few months) and for which the group
	pays a fee. These arrangements are classified as operating leases. The group holds sufficient precious metal inventories
	to meet all the obligations under these lease arrangements as they fall due. At 30th September 2005 precious metal
	leases were £127.8 million (30th September 2004 £132.2 million, 31st March 2005 £102.1 million).
12	Reconciliations from UK GAAP to IFRS
	Reconciliations of profit before tax and net assets
				Six months ended	Year ended
				30.9.04	31.3.05
			Explanation	£ million	£ million
	Profit before tax under UK GAAP			62.0	131.0
		Discontinued operations	a	14.9	14.9
		Goodwill amortisation	b	10.6	20.9
		Goodwill amortisation on associates	b	-	0.1
		Development capitalised in the period	c	2.4	5.4
		Amortisation of capitalised development	c	(0.6)	(1.1)
		Share options and long term incentive plan	d	(1.9)	(4.1)
		Employee benefits	e	0.9	0.3
	Profit before tax under IFRS			88.3	167.4
				30.9.04	31.3.05	01.04.04
				£ million	£ million	£ million
	Net assets under UK GAAP			901.2	868.7	871.6
		Goodwill amortisation	b	10.6	20.9	-
		Goodwill amortisation on associates	b	-	0.1	-
		Net capitalised development	c	13.0	15.5	11.2
		Bid value adjustment for post-employment schemes' assets	e	(1.4)	(2.0)	(1.4)
		Additional accruals for other short term and long term employee benefits	e	(3.1)	(3.5)	(3.8)
		Deferred tax adjustments	g	(12.0)	(10.7)	(11.1)
		Dividends	h	18.9	40.9	39.5
	Net assets under IFRS			927.2	929.9	906.0
	Explanation of major differences between UK GAAP and IFRS
	a)	Under IFRS 5 - 'Non-current Assets Held for Sale and Discontinued Operations' the post tax profit of discontinued
		operations and the post tax loss on disposal of those operations have been disclosed as a single amount towards the
		bottom of the income statement. Also, under IFRS 1 - 'First-time Adoption of International Financial Reporting
		Standards' goodwill recognised under previous GAAP as a deduction from equity is not transferred to the income
		statement on disposal of the subsidiary.
	b)	Under IFRS 3 - 'Business Combinations' amortisation of goodwill is no longer required but instead annual
		impairment reviews have to be performed. Johnson Matthey has elected to take advantage of the exemption allowed
		under IFRS 1 not to recalculate goodwill for all business combinations. Therefore the group has not adjusted
		its carrying amount of goodwill at 1st April 2004 (the group's date of transition) from that previously disclosed under
		UK GAAP. The main adjustment to goodwill on the balance sheet is to reverse all amortisation charged since
		1st April 2004.

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Explanation of major differences between UK GAAP and IFRS (continued)
	c)	Under IAS 38 - 'Intangible Assets' the group has to capitalise all development expenditure which meet the recognition
		criteria laid down in the standard and then amortise the asset over its useful life once it is available for use. Under
		UK GAAP Johnson Matthey did not capitalise any development expenditure. Under IFRS, assets have been
		recognised in Catalysts Division for some development expenditure on heavy duty diesel catalysts and fuel cell
		components. The group believes that all other development expenditure is for incremental improvements to existing
		processes or for projects in an early stage of development and so no assets have been recognised.
		In addition, under IAS 38 any capitalised software that is not an integral part of the related hardware is reclassified from
		property, plant and equipment to intangible assets.
	d)	Under IFRS 2 - 'Share-based Payment' the group has to recognise a charge to income in respect of the fair value of
		outstanding share options granted to employees and shares allocated to employees under the long term incentive
		plan after 7th November 2002. The fair value has been calculated using an adjusted Black-Scholes options valuation
		model and is charged to income over the relevant vesting periods, adjusted to reflect actual and expected levels of
		vesting.
	e)	As Johnson Matthey had already adopted FRS 17, the recent UK GAAP standard for post-retirement benefits, the only
		adjustments needed for post-employment benefits under IAS 19 - 'Employee Benefits' are to put the net return on
		retirement benefits assets and liabilities into operating profit, to change the market value of the pension schemes'
		assets from mid-market value to bid value on the balance sheet and to move the deferred tax balances on the
		net post-employment assets / obligations to deferred tax.
		The other adjustments under IAS 19 are to accrue for paid annual leave and other short and long term employee
		benefits.
	f)	Under IAS 28 - 'Investments in Associates' the group's share of the profit of its associates is shown on a post tax basis,
		unlike UK GAAP where the group's share of the operating profit of its associates was shown and the group's share of
		its associates' interest and tax were shown in interest and income tax expense respectively.
	g)	Under IAS 12 - 'Income Taxes' the group is providing for deferred tax on capital gains rolled over, capital gains on
		intra group loans and capital losses which it did not provide for under UK GAAP. Other adjustments are to provide for
		deferred tax on the other IFRS accounting changes. Also, IAS 12 does not allow the offset of tax assets and liabilities
		and so the group has grossed up its current tax assets and liabilities and its deferred tax assets and liabilities.
	h)	Under IAS 10 - 'Events After the Balance Sheet Date' dividends declared after the balance sheet date are not
		recognised as a liability on the balance sheet.
	i)	Under IAS 17 - 'Leases' the group's precious metal leases are categorised as operating leases and so they, and the
		related inventory, are removed from the balance sheet and reported as a note on the accounts.
	j)	There are a number of other reclassifications on the balance sheet mainly to separate out current and non-current
		assets and liabilities in accordance with IAS 1 - 'Presentation of Financial Statements'.

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Reconciliation of consolidated balance sheet as at 1st April 2004
				IFRS
			UK GAAP	adjustments	IFRS
		Explanation	£ million	£ million	£ million
	Assets
	Non-current assets
	Property, plant and equipment	c	608.1	(11.9)	596.2
	Goodwill		377.1	-	377.1
	Other intangible assets	c	-	23.1	23.1
	Investments in associates		4.6	-	4.6
	Deferred income tax assets	g	5.4	6.9	12.3
	Available-for-sale investments		0.9	-	0.9
	Post-employment benefits net assets	e	31.5	11.6	43.1
	Total non-current assets		1,027.6	29.7	1,057.3
	Current assets
	Inventories	i, j	417.3	(134.5)	282.8
	Current income tax assets	g	-	0.9	0.9
	Trade and other receivables		382.0	-	382.0
	Available-for-sale investments		1.6	-	1.6
	Cash and deposits		106.5	-	106.5
	Other current assets	j	-	7.1	7.1
	Total current assets		907.4	(126.5)	780.9
	Total assets		1,935.0	(96.8)	1,838.2
	Liabilities
	Current liabilities
	Trade and other payables	e, h	(316.6)	36.7	(279.9)
	Precious metal leases	i	(127.4)	127.4	-
	Current income tax liabilities	g	(42.3)	(0.9)	(43.2)
	Borrowings and finance leases		(46.5)	-	(46.5)
	Short term provisions	j	-	(20.3)	(20.3)
	Total current liabilities		(532.8)	142.9	(389.9)
	Non-current liabilities
	Borrowings and finance leases		(454.5)	-	(454.5)
	Deferred income tax liabilities	e, g	(20.4)	(21.2)	(41.6)
	Employee benefits obligations	e, j	(28.0)	(12.5)	(40.5)
	Long term provisions	j	(27.0)	22.0	(5.0)
	Trade and other payables		(0.7)	-	(0.7)
	Total non-current liabilities		(530.6)	(11.7)	(542.3)
	Total liabilities		(1,063.4)	131.2	(932.2)
	Net assets		871.6	34.4	906.0
	Equity
	Share capital		220.6	-	220.6
	Share premium		137.1	-	137.1
	Shares held in employee share ownership trusts		(28.8)	-	(28.8)
	Other reserves		4.4	-	4.4
	Retained earnings		528.9	34.4	563.3
			862.2	34.4	896.6
	Minority interest		9.4	-	9.4
	Total equity		871.6	34.4	906.0

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Reconciliation of consolidated income statement for the period ended 30th September 2004
				IFRS adjustments
				Discontinued
			UK GAAP	operations	Associates	Other	IFRS
		Explanation	£ million	£ million	£ million	£ million	£ million
	Revenue		2,472.9	(12.3)	-	-	2,460.6
	Cost of materials sold		(2,084.9)	4.7	-	-	(2,080.2)
	Net revenues		388.0	(7.6)	-	-	380.4
	Other cost of sales	c, e	(197.6)	5.5	-	5.2	(186.9)
	Gross profit		190.4	(2.1)	-	5.2	193.5
	Distribution costs	e	(42.0)	1.0	-	0.7	(40.3)
	Administrative expenses	d, e	(42.6)	0.7	-	(0.5)	(42.4)
	Goodwill amortisation	b	(10.6)	0.1	-	10.5	-
	Restructuring costs		(15.4)	-	-	-	(15.4)
	Loss on sale of discontinued operations	a	(15.3)	15.3	-	-	-
	Operating profit		64.5	15.0	-	15.9	95.4
	Net interest	f	(7.4)	-	0.2	-	(7.2)
	Net return on retirement benefits assets and liabilities	e	4.6	-	-	(4.6)	-
	Share of profit of associates	b, f	0.3	-	(0.2)	-	0.1
	Profit before tax		62.0	15.0	-	11.3	88.3
	Income tax expense	g	(22.3)	(2.9)	-	(1.2)	(26.4)
	Profit for the period from continuing operations		39.7	12.1	-	10.1	61.9
	Loss for the period from discontinued operations	a	-	(6.3)	-	-	(6.3)
	Profit for the period		39.7	5.8	-	10.1	55.6
	Attributable to:
	Equity holders of the parent company		40.2	5.8	-	10.0	56.0
	Minority interest	c	(0.5)	-	-	0.1	(0.4)
			39.7	5.8	-	10.1	55.6

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Reconciliation of consolidated balance sheet as at 30th September 2004
				IFRS
			UK GAAP	adjustments	IFRS
		Explanation	£ million	£ million	£ million
	Assets
	Non-current assets
	Property, plant and equipment	c	586.7	(12.8)	573.9
	Goodwill	b	366.2	10.4	376.6
	Other intangible assets	c	-	26.0	26.0
	Investments in associates		4.4	-	4.4
	Deferred income tax assets	g	3.6	7.4	11.0
	Available-for-sale investments		1.9	-	1.9
	Post-employment benefits net assets	e	34.4	12.8	47.2
	Total non-current assets		997.2	43.8	1,041.0
	Current assets
	Inventories	i, j	467.2	(139.3)	327.9
	Current income tax assets	g	-	1.4	1.4
	Trade and other receivables		346.9	-	346.9
	Available-for-sale investments		1.3	-	1.3
	Cash and deposits		97.0	-	97.0
	Other current assets	j	-	7.1	7.1
	Total current assets		912.4	(130.8)	781.6
	Total assets		1,909.6	(87.0)	1,822.6
	Liabilities
	Current liabilities
	Trade and other payables	e, h	(303.2)	17.0	(286.2)
	Precious metal leases	i	(132.2)	132.2	-
	Current income tax liabilities	g	(31.1)	(1.4)	(32.5)
	Borrowings and finance leases		(32.5)	-	(32.5)
	Short term provisions	j	-	(22.5)	(22.5)
	Total current liabilities		(499.0)	125.3	(373.7)
	Non-current liabilities
	Borrowings and finance leases		(427.7)	-	(427.7)
	Deferred income tax liabilities	e, g	(21.4)	(23.1)	(44.5)
	Employee benefits obligations	e, j	(30.1)	(13.6)	(43.7)
	Long term provisions	j	(29.5)	24.4	(5.1)
	Trade and other payables		(0.7)	-	(0.7)
	Total non-current liabilities		(509.4)	(12.3)	(521.7)
	Total liabilities		(1,008.4)	113.0	(895.4)
	Net assets		901.2	26.0	927.2
	Equity
	Share capital		220.8	-	220.8
	Share premium		138.0	-	138.0
	Shares held in employee share ownership trusts		(28.8)	-	(28.8)
	Other reserves		4.4	-	4.4
	Retained earnings		558.4	25.9	584.3
			892.8	25.9	918.7
	Minority interest	c	8.4	0.1	8.5
	Total equity		901.2	26.0	927.2

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Reconciliation of consolidated income statement for the year ended 31st March 2005
				IFRS adjustments
				Discontinued
			UK GAAP	operations	Associates	Other	IFRS
		Explanation	£ million	£ million	£ million	£ million	£ million
	Revenue		4,638.5	(12.3)	-	-	4,626.2
	Cost of materials sold		(3,878.5)	4.7	-	-	(3,873.8)
	Net revenues		760.0	(7.6)	-	-	752.4
	Other cost of sales	c, e	(389.0)	5.5	-	10.9	(372.6)
	Gross profit		371.0	(2.1)	-	10.9	379.8
	Distribution costs	e	(84.1)	1.0	-	1.6	(81.5)
	Administrative expenses	d, e	(79.6)	0.7	-	(2.8)	(81.7)
	Goodwill amortisation	b	(21.0)	0.1	-	20.9	-
	Restructuring costs		(36.7)	-	-	-	(36.7)
	Loss on sale of discontinued operations	a	(15.2)	15.2	-	-	-
	Operating profit		134.4	14.9	-	30.6	179.9
	Net interest	f	(13.3)	-	0.3	-	(13.0)
	Net return on retirement benefits assets and liabilities	e	9.2	-	-	(9.2)	-
	Share of profit of associates	b, f	0.7	-	(0.3)	0.1	0.5
	Profit before tax		131.0	14.9	-	21.5	167.4
	Income tax expense	g	(44.0)	(2.7)	-	0.2	(46.5)
	Profit for the year from continuing operations		87.0	12.2	-	21.7	120.9
	Loss for the year from discontinued operations	a	-	(6.4)	-	-	(6.4)
	Profit for the year		87.0	5.8	-	21.7	114.5
	Attributable to:
	Equity holders of the parent company		88.2	5.8	-	21.5	115.5
	Minority interest	c	(1.2)	-	-	0.2	(1.0)
			87.0	5.8	-	21.7	114.5

Notes on the Accounts
for the six months ended 30th September 2005
12	Reconciliations from UK GAAP to IFRS (continued)
	Reconciliation of consolidated balance sheet as at 31st March 2005
				IFRS
			UK GAAP	adjustments	IFRS
		Explanation	£ million	£ million	£ million
	Assets
	Non-current assets
	Property, plant and equipment	c	604.9	(11.9)	593.0
	Goodwill	b	354.2	20.9	375.1
	Other intangible assets	c	-	27.4	27.4
	Investments in associates	b	4.7	0.1	4.8
	Deferred income tax assets	g	0.8	1.2	2.0
	Available-for-sale investments		1.9	-	1.9
	Post-employment benefits net assets	e	33.5	11.7	45.2
	Total non-current assets		1,000.0	49.4	1,049.4
	Current assets
	Inventories	i, j	416.5	(109.2)	307.3
	Current income tax assets	g	-	2.2	2.2
	Trade and other receivables		363.4	-	363.4
	Available-for-sale investments		0.6	-	0.6
	Cash and deposits		78.7	-	78.7
	Other current assets	j	-	7.1	7.1
	Total current assets		859.2	(99.9)	759.3
	Total assets		1,859.2	(50.5)	1,808.7
	Liabilities
	Current liabilities
	Trade and other payables	e, h	(332.8)	38.5	(294.3)
	Precious metal leases	i	(102.1)	102.1	-
	Current income tax liabilities	g	(10.1)	(2.2)	(12.3)
	Borrowings and finance leases		(36.8)	-	(36.8)
	Short term provisions	j	-	(26.5)	(26.5)
	Total current liabilities		(481.8)	111.9	(369.9)
	Non-current liabilities
	Borrowings and finance leases		(411.5)	-	(411.5)
	Deferred income tax liabilities	e, g	(29.7)	(14.9)	(44.6)
	Employee benefits obligations	e, j	(34.6)	(13.6)	(48.2)
	Long term provisions	j	(32.2)	28.3	(3.9)
	Trade and other payables		(0.7)	-	(0.7)
	Total non-current liabilities		(508.7)	(0.2)	(508.9)
	Total liabilities		(990.5)	111.7	(878.8)
	Net assets		868.7	61.2	929.9
	Equity
	Share capital		219.5	-	219.5
	Share premium		139.8	-	139.8
	Shares held in employee share ownership trusts		(37.7)	-	(37.7)
	Other reserves		6.3	-	6.3
	Retained earnings		533.5	61.0	594.5
			861.4	61.0	922.4
	Minority interest	c	7.3	0.2	7.5
	Total equity		868.7	61.2	929.9

Independent Review Report

by KPMG Audit Plc to Johnson Matthey Plc

Introduction

We have been engaged by the company to review the financial information set out on pages 12 to 26 and we have read the

other information contained in the interim report and considered whether it contains any apparent misstatements or

material inconsistencies with the financial information.

This report is made solely to the company in accordance with the terms of our engagement to assist the company in meeting

the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might

state to the company those matters we are required to state to it in this report and for no other purpose. To the fullest

extent permitted by law, we do not accept or assume responsibility to anyone other than the company for our review work,

for this report, or for the conclusions we have reached.

Directors' responsibilities

The interim report, including the financial information contained therein, is the responsibility of and has been approved by

the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules which

require that the accounting policies and presentation applied to the interim figures should be consistent with those

applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed.

As disclosed in note 1 on the accounts, the next annual accounts of the group will be prepared in accordance with IFRS

as adopted for use by the European Union.

The accounting policies that have been adopted in preparing the financial information are consistent with those that the

directors currently intend to use in the next annual accounts. There is, however, a possibility that the directors may

determine that some changes to these policies are necessary when preparing the full annual accounts for the first time in

accordance with those IFRS as adopted for use by the European Union. This is because, as disclosed in note 1 the directors

have anticipated that certain standards, which have yet to be formally adopted for use in the European Union, will be so

adopted in time to be applicable to the next annual accounts.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin 1999/4 - 'Review of Interim Financial

Information', issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making

enquiries of group management and applying analytical procedures to the financial information and underlying financial

data and, based thereon, assessing whether accounting policies and presentation have been consistently applied unless

otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards

and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the

financial information.

Review conclusion

On the basis of our review we are not aware of any material modifications that should be made to the financial information as

presented for the six months ended 30th September 2005.

KPMG Audit Plc

Chartered Accountants

London

22nd November 2005

	Accounting policies
	for the year ending 31st March 2006
	These accounting policies are expected to be applied by the group in its consolidated accounts for the year ending
	31st March 2006 as described in note 1.
	Basis of accounting
	The accounts are prepared in accordance with International Financial Reporting Standards (IFRS) and interpretations issued
	by the International Financial Reporting Interpretations Committee (IFRIC) or the Standing Interpretations Committee (SIC)
	and adopted by the European Union. They are prepared on the historical cost basis, except for certain assets and liabilities
	which are measured at fair value as explained below.
	Basis of consolidation
	The consolidated accounts comprise the accounts of the parent company and its subsidiaries, including employee share
	ownership trusts, and include the group’s interest in associates.
	Entities over which the group has the ability to exercise control are accounted for as subsidiaries. Entities that are not
	subsidiaries or joint ventures but where the group has significant influence (i.e. the power to participate in the financial and
	operating policy decisions) are accounted for as associates.
	The results and assets and liabilities of associates are included in the consolidated accounts using the equity method of
	accounting.
	The results of businesses acquired or disposed of in the year are consolidated from or up to the effective date of acquisition
	or disposal respectively. The net assets of businesses acquired are incorporated in the consolidated accounts at their fair
	values at the date of acquisition.
	Transactions and balances between subsidiaries are eliminated. No profit is taken on transactions between subsidiaries
	and the group’s share of profits on transactions with associates is also eliminated.
	Revenue
	Revenue comprises all sales of goods and rendering of services at the fair value of consideration received or receivable after
	the deduction of any trade discounts and excluding sales taxes. Revenue is recognised when it can be measured reliably and
	the significant risks and rewards of ownership are transferred to the customer. With the sale of goods this generally occurs
	when the goods are despatched or made available to the customer, except for sale of consignment products located at
	customers’ premises where revenue is recognised on notification that the product has been used. With the rendering of
	services revenue is generally recognised by reference to the stage of completion as measured by the proportion that costs
	incurred to date bear to the estimated total costs.
	Foreign currencies
	Foreign currency transactions are recorded in local currency at the exchange rate at the date of transaction. Foreign currency
	monetary assets and liabilities are retranslated into local currency at the exchange rate at the balance sheet date.
	Income statements and cash flows of overseas subsidiaries and associates are translated into sterling at the average rates
	for the year. Balance sheets of overseas subsidiaries and associates, including related goodwill, are translated into sterling
	at the exchange rates at the balance sheet date.
	Exchange differences arising on the translation of the net investment in overseas subsidiaries and associates, less
	exchange differences arising on related foreign currency financial instruments which hedge the group’s net investment in
	these operations, are taken to a separate component of equity. Other exchange differences are taken to operating profit.
	Research and development
	Research expenditure is charged to the income statement in the year incurred.
	Development expenditure is charged to the income statement in the year incurred unless it meets the recognition criteria for
	capitalisation. When the recognition criteria have been met any further development expenditure is capitalised as an
	intangible asset.
Accounting policies
for the year ending 31st March 2006
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any provisions for impairment. Finance
costs are not capitalised.
Depreciation is provided using the straight line method to write off the cost less estimated residual value over the useful life
of the asset. The estimated useful lives vary according to the class of asset, but are typically: leasehold property 30 years
(or the life of the lease if shorter); freehold buildings 30 years; and plant and equipment 4 to 10 years. Freehold land is not
depreciated.
Goodwill
Goodwill arises on the acquisition of a business when the fair value of the consideration given exceeds the fair value
attributed to the net assets acquired. It is subject to annual impairment reviews.
The group has taken advantage of the exemption allowed under IFRS 1 and so goodwill arising on acquisitions made before
1st April 2004 is included at the carrying amount at that date less any subsequent impairments. Up to 31st March 1998
goodwill was eliminated against reserves.
Intangible assets
Intangible assets are stated at cost less any accumulated amortisation and any provision for impairment. They are amortised
using the straight line method over their useful lives from the time they are first available for use. The estimated useful lives
are generally 3 to 8 years for capitalised software and 4 to 8 years for capitalised development currently being amortised.
Intangible assets which are not yet being amortised are subject to annual impairment reviews.
Leases
Leases are classified as finance leases whenever they transfer substantially all the risks and rewards of ownership to the
group. The assets are included in property, plant and equipment or capitalised software and the capital elements of the
leasing commitments are shown as obligations under finance leases. The assets are depreciated on a basis consistent with
similar owned assets or the lease term if shorter. The interest element of the lease rental is included in the income statement.
All other leases are classified as operating leases and the rentals payable are expensed on a straight line basis over the
lease term.
Grants
Grants related to assets are included in deferred income and released to the income statement in equal instalments over the
expected useful lives of the related assets.
Grants related to income are generally deducted in reporting the related expense.
Precious metal inventories
Inventories of gold, silver and platinum group metals are valued according to the source from which the metal is obtained.
Metal which has been purchased and committed to future sales to customers or hedged in metal markets is valued at the
price at which it is contractually committed or hedged, adjusted for unexpired contango or backwardation. Other precious
metal inventories owned by the group, which are unhedged, are valued at the lower of cost and net realisable value using the
weighted average cost formula.
Other inventories
Non precious metal inventories are valued at the lower of cost, including attributable overheads, and net realisable value.
Except where costs are specifically identified, the first-in, first-out or weighted average cost formulae are used to value
inventories.

Accounting policies
for the year ending 31st March 2006
Derivative financial instruments
The group uses derivative financial instruments, in particular forward currency contracts and currency swaps, to manage the
financial risks associated with the group’s underlying business activities and the financing of those activities. The group
does not undertake any trading activity in derivative financial instruments.
Derivative financial instruments are measured at their fair value. Derivative financial instruments may be designated at
inception as fair value hedges, cash flow hedges or net investment hedges if appropriate.
Changes in the fair value of any derivative financial instruments that are not designated as or are not determined to be
effective hedges are recognised immediately in the income statement.
Changes in the fair value of derivative financial instruments designated as fair value hedges are recognised in the income
statement, together with the related changes in the fair value of the hedged asset or liability.
Changes in the fair value of derivative financial instruments designated as cash flow hedges are recognised in equity. If the
hedged item results in the recognition of a non-financial asset or liability, the amount recognised in equity is transferred out of
equity and included in the initial carrying amount of the asset or liability. Otherwise, the amount recognised in equity is
transferred to the income statement in the same period that the hedged item is recognised in the income statement.
Hedges of net investments in foreign operations are accounted for in a similar way to cash flow hedges.
Other financial instruments
All other financial instruments are initially recognised at fair value plus transaction costs. Subsequent measurement is as
follows:
•	Unhedged borrowings are measured at amortised cost.
•	Available-for-sale investments are measured at fair value with changes in fair value recognised directly in equity. On
	disposal of the investment the amount recognised in equity will be transferred to the income statement.
•	All other financial assets and liabilities, including short term receivables and payables, are measured at amortised cost
	less any impairment provision.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand, including short term deposits with a maturity date of three
months or less from the date of acquisition. The group routinely utilises short term bank overdraft facilities, which are
repayable on demand, as an integral part of its cash management policy and so they are included as a component of cash
and cash equivalents in the cash flow statement. Offset arrangements across group businesses have been applied to arrive
at the net cash and overdraft figures.
Taxation
Current and deferred tax are recognised in the income statement, except when they relate to items recognised directly in
equity when the related tax is also recognised in equity.
Current tax is the amount of income tax expected to be paid in respect of the taxable profits using the tax rates that have been
enacted or substantively enacted at the balance sheet date.
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets
and liabilities and their carrying amount in the balance sheet. It is provided using the tax rates that are expected to apply in the
period when the asset or liability is settled, based on tax rates that have been enacted or substantively enacted at the balance
sheet date.
Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the
temporary differences can be utilised. No deferred tax asset or liability is recognised in respect of temporary differences
associated with investments in subsidiaries, branches and associates where the group is able to control the timing of the
reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Accounting policies
for the year ending 31st March 2006
Pensions and other post-employment benefits
The group operates a number of contributory and non-contributory plans, mainly of the defined benefit type, which require
contributions to be made to separately administered funds.
The costs of the defined contribution plans are charged to the income statement as they fall due.
For defined benefit plans, the group recognises the net assets or liabilities of the schemes in the balance sheet. Obligations
are measured at present value using the projected unit credit method and a discount rate reflecting yields on high quality
corporate bonds. Assets are measured at their fair value at the balance sheet date. The changes in scheme assets and
liabilities, based on actuarial advice, are recognised as follows:
•	The current service cost is spread over the period during which benefit is expected to be derived from the employees’
	services based on the most recent actuarial valuation and is deducted in arriving at operating profit.
•	The interest cost, based on the discount rate at the beginning of the year and the present value of the defined benefit
	obligation during the year, is included in operating profit.
•	The expected return on plan assets, based on market expectations at the beginning of the year for returns over the entire life
	of the related obligation and amended for changes in the fair value of plan assets as a result of contributions paid in and
	benefits paid out, is included in operating profit.
•	Actuarial gains and losses, representing differences between the expected return and actual return on plan assets,
	differences between actuarial assumptions underlying the plan liabilities and actual experience during the year, and
	changes in actuarial assumptions, are recognised in the statement of recognised income and expense in the year they
	occur.
•	Past service costs are spread evenly over the period in which the increases in benefit vest and are deducted in arriving at
	operating profit. If an increase in benefits vests immediately, the cost is recognised immediately.
•	Gains or losses arising from settlements or curtailments are included in operating profit.
Contingencies and provisions
Provisions are recognised when the group has a present obligation as a result of a past event and a reliable estimate can be
made of a probable adverse outcome, for example for warranties, environmental claims and rationalisations.
Share-based payments and employee share ownership trusts (ESOTs)
The fair value of outstanding share options granted to employees and shares allocated to employees under the long term
incentive plan after 7th November 2002 is calculated using an adjusted Black-Scholes options valuation model and the
resulting cost is charged to the income statement over the relevant vesting periods, adjusted to reflect actual and expected
levels of vesting.
The group provides finance to the ESOTs to purchase company shares on the open market. Costs of running the ESOTs are
charged to the income statement. The cost of shares held by the ESOTs are deducted in arriving at equity until they vest
unconditionally in employees.

Financial Calendar

2005

30th November

Ex dividend date

2nd December

Interim ordinary dividend record date

2006

1st February

Payment of interim dividend on ordinary shares

1st June

Announcement of results for the year ending 31st March 2006

25th July

115th Annual General Meeting

Cautionary Statement

This announcement contains forward looking statements that are subject to risk factors associated with, amongst other things, the economic

and business circumstances occurring from time to time in the countries and sectors in which the group operates. It is believed that the

expectations reflected in this announcement are reasonable but they may be affected by a wide range of variables which could cause actual

results to differ materially from those currently anticipated.

Johnson Matthey Public Limited Company

Registered Office: 2-4 Cockspur Street, Trafalgar Square, London SW1Y 5BQ

Telephone: 020 7269 8400

Internet address: www.matthey.com

E-mail: jmpr@matthey.com

Registered in England - Number 33774

Registrars

Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA

Telephone: 0870 600 3970

Internet address: www.shareview.co.uk