Business Overview

(in million pounds)

	FY2010	FY2009	Rate of change(%)	Factors
Overall
Net sales	9,984.8	7,839.4	27.4	-
Underlying operating profit	366.2	271.8	34.7	-
Environmental Technologies
Net sales	2,708	2,056	31.7	1)
Underlying operating profit	164.7	120.9	36.2	-

Factors
1) 
Emission Control Technology: ECT
-Emission Control Technologies' sales grew by 25% to 1,218 million pounds. At constant exchange rates, sales were up 23%. Sales of both light duty and heavy duty catalysts grew strongly throughout the year.

<Light Duty Catalyst>
-Sales at the light duty catalyst division, which make up about 72 percent of the emission control technology business, increased 16 percent from the previous year's result to 879 million pounds. Despite the impact of the soaring rare earth prices due to China's export restrictions on these materials, the Company achieved a year-on-year growth thanks to a recovery in sales of diesel engine vehicles in major markets such as North America, China and Europe.

<Heavy Duty Diesel>
-Sales at the heavy-duty diesel technology division totaled 296 million pounds, which represented a 71 percent increase from the previous year's result. The significant improvement was attributable to the new US legislation that came into force in 2010 and has significantly increased the catalyst content per truck. The Company continued to maintain more than 65 percent share of the heavy duty diesel catalyst market.

Plant Closure

-In January 2011, the Company announced ECT had entered into statutory formal consultation with the employees at its Brussels facility regarding the closere of its manufacturing plant. The closure is to address overcapacity in the business' European manufacturing base and will be concluded in the first half of FY2011.

R&D Expenditure

(in million pounds)

	FY2010	FY2009	FY2008
Overall	109.8	91.7	87.6

R&D Structure

-Its group technology centre is a central resource which conducts strategic R&D on behalf of all the Company's businesses. It operates across two sites in the UK (Sonning Common and Billingham) and employs around 200 people. In addition, the group's businesses also have its own dedicated R&D and technical centres around the world which focus on the delivery of shorter term business specific projects.

-More than 1,000 people engage in research and development activities, of which 63 percent work at the environmental technology segment.

-Completed the construction of a new R&D facility in Shanghai.

R&D Policy

-The Company believes major global drivers provide significant opportunities for the Company to grow and develop its existing business areas over the next ten years and that R&D will play an important role in realizing these opportunities. To support this business development, the Group is going to increase its yearly investment in R&D from the current 1 million pounds to 1.35 million pounds.

-In a drive to develop new business areas, the Company is increasing its investment in R&D by up to a further 5 million pounds in support of this work.  

Capital Expenditure

(in million pounds)

	FY2010	FY2009	FY2008
Environmental Technologies	90.1	93.8	160.2
Precious Metal Products	26.1	15.9	14.7
Fine Chemicals & Catalysts	16.0	22.0	23.4
Eliminations	-	-	-
Corporate capital expenditure	5.7	2.7	5.2
Total	137.9	134.4	203.5

Investment Outside UK

Environmental Technologies
<Emission Control Technology>
-Commenced expansion on its autocatalyst plants in India and Malaysia.

-The Company has opened its new 34 million GBP emission control catalyst plant in Macedonia near the Macedonian capital, Skopje, to serve the rapidly growing demand in Europe. The new plant will produce both light duty diesel autocatalysts and selective catalytic reduction (SCR) catalysts for heavy duty diesel vehicles. (From a press release on April 14, 2010)