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Annual Report and Accounts 2022

A vision for a cleaner, healthier world

Contents

Strategic report

2022 Summary performance Chair's statement

Chief Executive's statement and strategic review Our business model

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Catalysing the net zero transition

Our purpose and vision

Realising our vision

Market review

Chief Financial Officer's review

Financial performance review

Key performance indicators

Engaging with our stakeholders

Sustainability

Products and services

Operations

People

Taskforce for Climate-related Financial Disclosures Risk report

Going concern and Viability

Non-Financial Information and section 172 statement

Governance

Chair's introduction

Board at a glance

Board of Directors

Our governance structure

Corporate governance report

Board activities

Section 172 statement

Board and committee effectiveness

Societal Value Committee report

Nomination Committee report

Audit Committee report

Remuneration Committee report

Directors' report

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Johnson Matthey's vision is for a world that is cleaner and healthier, today and for future generations. Our contribution to that world is based on the transformative power of platinum group metal (PGM) chemistry, where our 200-year history gives us a unique advantage.

Drawing on that expertise in PGM chemistry, catalysis and process design, we create technologies and processes that help power our customers' products - principally in the automotive, chemicals and energy markets. It's this expertise that has helped remove harmful emissions from vehicles for almost 50 years and is now enabling the rapid commercialisation and scale-up of low- and zero-carbon technologies - like sustainable fuels and green hydrogen - to catalyse the world's transition to net zero.

Our position as the world's largest recycler of secondary PGMs means we also have a distinctive role in the circular economy, ensuring our businesses and customers have access to a reliable, sustainable supply of these scarce precious resources.

Following our announcement on

26th May 2022, we have changed the name of our Group Management Committee to the Group Leadership Team (GLT). Given this change, this report refers to the GLT throughout.

In addition, we may also refer to our Efficient Natural Resources business throughout this report as we report against it for the financial year. Going forward, this will be reported as our PGM Services and Catalyst Technologies businesses.

Responsibilities of directors

Financial statements

Other information

Front Cover: Paul Wright, Principal Researcher, working at our syngas generation rig in Chilton, UK.

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Cautionary statement

The Strategic report and certain other sections of this annual report contain forward looking statements that are subject to risk factors associated with, among 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 these statements 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.

2022 Summary performance

Financial performance

Revenue	Sales	Operating profit	Underlying operating profit
£16,025bn	£3,778m	£255m	£553m
4%	3%	-17%	17%
2020/21: £15,435bn	2020/21: £3,685m	2020/21: £309m	2020/21: £473m
(Loss) / earnings per share	Underlying earnings per share	Ordinary dividend per share1	Free cash flow
-52.6p	213.2p	77.0p	£221m
N/A as loss this year	26%	10%	-25%
2020/21: 106.5p	2020/21: 168.9p	2020/21: 70.0p	2020/21: £295m2

Non-financial performance

Products and services		Operations		People
Sales contributing	Gross R&D spend	Scope 1 and 2	Upstream Scope 3	Total recordable	Diversity and
to four priority	contributing to four	GHG emissions	GHG emissions	injury and	inclusion
UN SDGs	priority UN SDGs		(purchased goods	illness rate
			and services)
83.8%	88.1%	399,906	3.01m	0.59	27%
2020/21: 84.7%	2020/21: 87.3%	CO2 tonnes equivalent	CO2 tonnes equivalent	2020/21: 0.55	women across all
		2020/21: 385,4553	2020/21: 2.85 million		management levels
		CO2 tonnes equivalent	CO2 tonnes equivalent		2020/21: 27%
1. The board recommends a final dividend for the year ended 31st March 2022 of 55.0 pence per ordinary share	2. Restated to exclude Health.
of 11049/53, which if approved, will be paid on 2nd August 2022 to all ordinary shareholders on the register at the	3. Restated from the prior year, please see page 215 for more information.
close of business on 10th June 2022. An interim dividend of 22.0 pence was paid on 1st February 2022.

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Johnson Matthey | Annual Report and Accounts 2022	1

Chair's statement

"This has been a very challenging year for Johnson Matthey and our shareholders. We took important and necessary strategic decisions with regard to the business portfolio, with the exit from Battery Materials and divestment of Health. I know many of our stakeholders were very disappointed, but these were essential actions to enable us to focus on attractive, high-growth opportunities that have a vital role to play in the acceleration towards net zero.

I, the rest of the board and the executive team are determined that we will restore value to our shareholders."

Welcoming our new

Chief Executive

Looking ahead, Johnson Matthey has a strong foundation from which to build, and we have delivered a robust set of underlying results in the year. I am delighted to welcome our new Chief Executive, Liam Condon, who joined JM in March 2022, following Robert MacLeod's decision to retire. Liam brings with him natural commercial acumen and a talent for building relationships and partnerships, and the board and I are pleased that he has settled in so quickly, and has already injected pace and commercial thinking into JM to drive a more performance-oriented culture. We have been impressed with the progress he and his leadership team have made in a few short months during their review of our strategy.

Liam shares the outcome of that review in his statement on pages 4 to 9, so I won't repeat everything he says, but instead share a few high-level observations.

JM has world-class scientific skills, great technology and incredibly talented people. That hasn't changed. But what became clear during the board's discussions with Liam and

the Group Leadership Team (GLT) is that some of our historical portfolio choices - like Battery Materials and Health - were never a logical fit. That's because they were not borne out of JM's foundation: our expertise in platinum group metal (PGM) chemistry, catalysis and process design.

The review has, therefore, underlined the need to strengthen our commercial focus to ensure that we concentrate on the technologies and markets where

we have the greatest strength and competitive advantage.

This is important because the technologies that the world needs to decarbonise rely on PGMs, which means JM has a huge opportunity to help accelerate the journey to net zero. But to do that, we must transform our culture, becoming a simpler, more agile organisation in order to drive that commercial focus into everything we do.

It takes a lot of work to review a company's strategy - and some tough conversations

• but I speak for the whole board when I say that we have enjoyed working with Liam and his team during this process, and fully endorse the revised strategy Liam has proposed.

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Johnson Matthey | Annual Report and Accounts 2022

Chair's statement continued

Exiting Battery Materials and Health to protect JM's future

In many ways, our decisions to exit Battery Materials and Health were the forerunners for this strategic work. These weren't decisions we took lightly but they were the right ones for JM's future.

The battery materials sector is changing more quickly than we anticipated, with car manufacturers looking for the cheapest technology. So while some of our automotive customers have told me that we were making market-leading components, we were unable to sell them at the right price. The more the board and GLT looked at the numbers, the clearer it became that JM would need to invest billions to keep up. In time, this would have compromised our ability to develop our other growth businesses.

I have spoken to a lot of shareholders this year and I know that some are frustrated by the decision. I share their disappointment, but given the battery material market's rapid commoditisation, we moved quickly to avoid further investment. Since then, Nano One, a clean technology innovator in battery materials, has agreed to acquire 100% of the shares of Johnson Matthey Battery Materials Canada, while we have also agreed to sell part of the Battery Materials business to EV Metals Group, a global battery chemicals and technology business. As well as £50 million cash,

JM will receive a minority equity stake in EV Metals Group.

In Health, meanwhile, we were disappointed by the reduced sale price we received, but it reflects the fact that the business was hit by a series of external

factors, including pricing pressure and shortages in supply and labour. However, we have retained a c. 30% minority stake. I am heartened by those investors who believe JM is now a stronger investment proposition.

A robust set of results despite a challenging year

It's worth noting that this decision has had minimal impact on our underlying financial performance this year. In fact, I am pleased to report that JM has delivered another robust set of full-year results, in line with market expectations.

This is a great achievement and I would like to thank Robert for his steady leadership during an incredibly volatile year that has included COVID-19-related supply chain disruption, and rising inflation.

The external landscape has, of course, become even more challenging given the tragic events that have unfolded since Russia invaded Ukraine in February 2022. Russia's actions are a violation of international law, specifically the sovereignty of an independent country, and JM continues to stand united with Ukraine. We are not doing any new business in Russia and Belarus for the time being and have suspended production operations in Russia indefinitely. We have also set up a fund to help our Ukrainian employees working in Poland access money to cover accommodation and living costs for family and friends seeking refuge. And we have looked after our Russian employees, continuing to pay them during this time.

JM has navigated this uncertainty well. Russia represents around 1% of 2021/22 group sales, and, thanks to our position as

the world's leading recycler of secondary PGMs, we have a highly diversified supply of metal. Russia supplies a significant quantity of the world's precious metals, particularly palladium. And although companies adjusted quickly to meet international sanctions, those sanctions have made an already scarce resource harder to buy.

We also successfully executed our

£200 million share buyback this year and completed the sale of our Advanced Glass Technologies business. Like Health, this is an excellent business in its own right, but does not fit naturally in our more focused portfolio.

As a result of all this, we are pleased to announce a dividend of 77 pence this year. This reflects the strength of our balance sheet and capital allocation priorities.

A new energy to help accelerate net zero

JM's continued financial strength will be essential as we look to the future. We will need to combine that strength with our new commercial focus and more efficient culture in order to execute our strategy.

But we'll also need to draw on certain aspects that have helped make this 200-year-old company so special, such as our values and purpose. Throughout its history, JM has shown that it can pivot its focus, while staying true to what matters most: using its science and engineering skills to do the right thing. Now we must pivot again to help the world accelerate towards net zero. Our planet is already feeling the effects of climate change, and we have a duty to get more of our products and services, such as technologies that help make sustainable aviation fuels, into the market more quickly.

It is a duty that I know everyone at JM shares, having had the privilege once again to talk to employees, as part of the board's ongoing commitment to employee engagement. JM has worked hard in the past couple of years to set out its sustainability agenda, including committing to net zero by 2040. And it has taken further steps this year to increase its engagement, including a new board-level Societal Value Committee.

You can read more about the Committee's remit from page 98, but I welcome the move and believe it will strengthen our governance and help JM meet its sustainability commitments.

A clear path to the future

Navigating change is never easy. But JM is a resilient company built on great technology, talented people and enormous integrity.

This, allied with a new commercial focus, led by Liam and his team, gives me great confidence that we have an exciting, prosperous future ahead of us. This future is firmly focused on investing in the technologies where we have the greatest strength and competitive advantage to help decarbonise society as fast as possible - and the board and I look forward to supporting Liam and his team in pursuing this future to restore and drive value creation for our shareholders and wider stakeholders.

Patrick Thomas

Chair

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