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Elementis PLC (ELM)

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Wednesday 01 August, 2001

Elementis PLC

Interim Results

Elementis PLC
1 August 2001


1 August 2001
ELEMENTIS plc


INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2001

*  Sales £296.7 million (2000: £288.0 million)
*  Operating profit £17.5 million* (2000: £32.2 million*)
*  Profit before tax £15.1 million* (2000: £29.5 million*)
*  Earnings per share 3.0 pence* (2000: 5.6 pence*)

* before goodwill amortisation and exceptionals

Jonathan Fry, Chairman of Elementis plc, said:

'The half year results reflect the tough global economic climate emanating
from the US.  As previously indicated, these conditions, combined with
substantially higher energy costs, have resulted in a sharp fall in operating
profit.  The outlook for the US economy, and the resulting impact on the
global economy, is the most significant factor in determining short-term
prospects for the Group.

'Our immediate focus is on managing the short-term trading position.
Nevertheless, we continue to explore options to maximise shareholder value
including the evaluation of acquisition opportunities against the Group's
strict criteria of price and fit with our major businesses.'



Enquiries

Elementis                                                020 7398 1400
Jonathan Fry            Chairman                         
George Fairweather      Group Finance Director           
Anna Passey             Head of Corporate Communications 
Brunswick                                                020 7404 5959
Andrew Fenwick                                           
Rupert Young                                             


Overview and financial results
The half year results reflect the tough global economic climate emanating from
the US.  As previously indicated, these conditions, combined with
substantially higher energy costs, have resulted in a sharp fall in operating
profit.

Sales increased in sterling terms by 3 per cent on the first half of 2000,
reflecting the strengthening of the US dollar.  On a constant currency basis,
sales declined by a similar amount. Excluding Chemical Distribution, sales on
a constant currency basis in North America declined by 9 per cent.

Operating profit before goodwill amortisation and exceptionals was £17.5
million, compared to £32.2 million in the first half and £31.2 million in the
second half of 2000.  On a constant currency basis, the impact on operating
profit of the sales decline in North America, excluding Chemical Distribution,
was approximately £5 million.  Higher energy costs adversely impacted
operating profit by £7.3 million versus the first half of 2000 on a comparable
basis.  Currency transaction and translation effects favourably impacted
operating profit before goodwill amortisation and exceptionals by
approximately £1.6 million compared to the first half of 2000.

Profit before goodwill amortisation, exceptionals and tax was £15.1 million
compared to £29.5 million in the first half of 2000 and £28.9 million in the
second half.  Basic earnings per share before goodwill amortisation and
exceptionals was 3.0 pence (2000: 5.6 pence).

Net exceptional charges before tax were £5.1 million (2000: £2.8 million) of
which £4.6 million comprised costs incurred in preparing and marketing the
Company for sale.  Net cash inflow from operating activities was £0.4 million
(2000: £18.1 million).  Net borrowings at the end of June were £72.5 million
(2000: £57.7 million).


Dividends and issue of redeemable B shares
The Board has not declared an interim ordinary dividend. Instead, it will
continue with the programme, started in 2000, of issuing and redeeming
redeemable B shares.  The Board intends to issue further redeemable B shares
to ordinary shareholders on the register on 29 October 2001, such that they
receive redeemable B shares with a total nominal value of 2.1 pence for each
ordinary share held; this is the same as the comparable issue last year.  The
issue will be coupled with an offer to redeem the new shares for cash at their
nominal value on 2 November 2001.  A further offer will also be made to
existing holders of redeemable B shares to redeem these shares for cash at
their nominal value on the same date.

By not paying an interim dividend on ordinary shares, Elementis estimates that
it will be able to recover £2.3 million of advance corporation tax previously
paid.

A circular providing full details of the issue and redemption of redeemable B
shares will be posted to all ordinary shareholders on 28 September 2001.


The Board
In July, Lyndon Cole resigned, by mutual consent, as Group Chief Executive.
The process to seek a new Chief Executive is underway but it is too early to
give a timescale for the appointment.  Jonathan Fry has temporarily become
Executive Chairman until the new appointment is made.


Strategy
Following the announcement in May that Elementis had terminated discussions
with potential purchasers, the Board continues to explore options to maximise
shareholder value.

The current difficult economic conditions, particularly weak demand and high
energy costs in the US, necessitate our immediate focus on managing the short-
term trading position.  Nevertheless, we continue to seek and evaluate
acquisition opportunities against the Group's strict criteria of price and fit
with our major businesses.


Current trading and outlook
Market conditions continue to be in line with those in the first half.  The
outlook for the US economy, and the resulting impact on the global economy, is
the most significant factor in determining short-term prospects for the Group.

Energy costs in the second half remain an issue although the impact is
expected to be less severe than in the first half of 2001.

We currently estimate that the Group's energy costs in the second half will
increase by around £2.5 million versus the second half of 2000 on a comparable
basis.

Benefits from ongoing business improvement projects should be increasingly
apparent as the year progresses, particularly when the first phase of Six
Sigma projects are completed.

Review of operations
for the six months to 30 June 2001

                                 2001                   2000
                            Sales   Operating      Sales  Operating
                                      profit*               profit*
                         £million    £million   £million   £million
                                 
Chromium                    68.2         4.2       65.8       12.0
Pigments & Specialties     119.7        10.5      118.7       15.6
Chemical Distribution       87.3         1.9       78.7        3.0
Specialty Rubber            25.3         0.9       28.2        1.6
Inter-group                 (3.8)          -       (3.4)         -
                        _________   _________  _________  _________
                           296.7         17.5     288.0       32.2
                        _________   _________  _________  _________
                                                                   
*before goodwill amortisation and exceptionals


Chromium
Operating profit was £4.2 million, compared to £12.0 million in the first half
of 2000, on sales up 4 per cent to £68.2 million.  On a constant currency
basis, sales decreased by approximately 2 per cent with volume down by 3 per
cent.

Global demand for chromium chemicals is estimated by Elementis to be around
the same as in the first half of 2000.  Strong demand for chromic oxide, for
use in metal alloys, was offset by lower US demand for pigmentary applications
and lower demand for chrome sulphate for use in leather tanning, particularly
in the UK.

Sales volume of chromic acid continued to grow, based on the success of the
superior handling properties of our CA21 chromic acid product.  Sales volume
of CA21 increased by just under 30 per cent compared to the first half of
2000.  Sales volumes of other product categories were lower.  Average pricing
in currency of invoice was also down, reflecting increased competition from
Russia.

Higher energy costs adversely impacted operating profit by £5.0 million versus
the first half of 2000 on a comparable basis.

These costs were also £2.0 million higher than in the second half of last
year.

Early in 2001, headcount reduced by more than 10 per cent as a result of a
business process re-engineering exercise at Corpus Christi, Texas.  The one-
off cost of £2.3 million will largely be recouped over the balance of the
year.

A new gas cleaning system for the chromic oxide plant at Eaglescliffe, UK was
commissioned in the first quarter costing £2.6 million.  This will further
enhance the business's environmental performance standards.  Some production
capacity of chromic oxide for use in metal alloys was unavailable during the
period as a result of the project.


Pigments & Specialties
Operating profit before goodwill amortisation and exceptionals was £10.5
million compared to £15.6 million in the first half of 2000, on sales up 1 per
cent to £119.7 million.  On a constant currency basis sales decreased by
approximately 4 per cent.

At Elementis Pigments, sales and operating profit before exceptionals
decreased, mainly as a result of slow overall demand for iron oxide pigments
for coatings, construction and chemicals applications in North America;
profitability of zinc products, carboxylates and catalysts was also lower.
Sales of construction grade Ferrispec granular product increased
significantly.

Margins were under pressure largely as a result of higher US energy costs.
Additional production equipment was installed at the Shenzhen facility in
China, further enhancing the business's operating capabilities.

At Elementis Specialties, sales in the first half of 2001 increased as a
result of the stronger US dollar.  On a constant currency basis, sales were at
a similar level.  Lower sales for coatings applications, particularly in North
America, were offset by very significant growth in rheological additives sales
for the oil exploration market, wet process organoclays being particularly
successful.  Sales into the inks market were unchanged. Overall European
trading remained relatively robust compared to North America and Asia.
Rheolate sales volumes for aqueous coatings applications were maintained at
the same level as the first half of last year.

Operating profit before goodwill amortisation and exceptionals was lower than
in the first half of 2000, primarily as a result of higher energy and
quarternary amine costs not recouped through pricing and expenditure on
upgrading sales and marketing capabilities, including e-commerce.

Thixatrol Max, a new thixotrope rheological additive, was launched in Europe
during the period.  This is targeted at solvent based coatings applications.


Chemical Distribution
Operating profit was £1.9 million, compared to £3.0 million in the first half
of 2000, on sales up 11 per cent to £87.3 million.  On a constant currency
basis, sales increased by approximately 3 per cent.

Volume grew by 5 per cent due to strong weather-related demand for rock salt
in the northeast of America.  Excluding rock salt, volume decreased by 5 per
cent, primarily as a result of the slow-down in the US economy.

Margins narrowed due to difficulties in recovering increased purchase costs
through higher pricing; these increases were primarily energy related.  Fixed
costs remained tightly controlled.


Specialty Rubber
Operating profit before exceptionals was £0.9 million, compared to £1.6
million in the first half of 2000, on sales down 10 per cent to £25.3 million.

The sales decline occurred primarily in North America.  This was due to output
reductions by West Coast mining customers because of high energy costs, and
the exit of unprofitable sales lines.  Strong sales growth was achieved in
South Africa and Asia.  Sales in Europe were impacted by disruption caused by
the aircraft crash at the Yateley, UK, facility last December and by the
decision taken early in the year not to pursue major new process technology
equipment contracts.

Rubber sheet sales recorded double digit growth, reflecting the business's
increased focus on the core Linatex rubber brand.  In May, a new product,
LinaCrepe, was launched.  This form of uncured rubber can be moulded into
shape and is particularly suitable for belting, hoses and roller covering
applications.

The programme announced 18 months ago to refocus and simplify the Linatex
business was completed in February 2001 with the closure of the final site in
Montreal.  Over the course of the half year, headcount reduced by 81.

The £4.0 million continuous rubber sheet press is on schedule to be installed
in Malaysia by the end of 2001, to reduce operating costs and further enable
Linatex sheet to be produced within tighter thickness tolerances for new
applications and with enhanced bonding capabilities.


Six Sigma
Six Sigma business improvement methodology has now been launched across the
Group.  The 13 'blackbelt' team leaders completed their training in July and
training for the next level participants is planned for later in the year.
The first phase of Six Sigma projects cover manufacturing and logistics and
will be completed in the third quarter.


Health, safety and the environment
Compared to the first half of 2000, lost time accident frequency reduced by 42
per cent due to the increased focus on safety and the introduction of a new
incident investigation reporting system which identifies the root causes of
reportable incidents and 'near misses'.  Non-compliance with environmental
consents rose from 11 to 18 in the first half of 2001.  Each of these is
thoroughly investigated and the Board is committed to reversing this position.


Exceptionals
Exceptional charges before tax were £5.1 million, comprising £4.6 million of
costs incurred in preparing and marketing the Company for sale and £0.5
million of additional inventory write downs relating to the Specialty Rubber
restructuring completed in the first half of the year.  This compared to £2.8
million of net exceptional charges in the first half of 2000.


Cash flow and balance sheet
Net cash inflow from operating activities was £0.4 million, compared to £18.1
million in the first half of 2000, the decrease being largely a result of
lower operating profit.

Working capital outflow was £21.0 million, compared to £18.5 million in the
first half of 2000.  Inventories increased by £5.1 million over the half year.
Programmes are now in place to reverse this trend in the second half.  Debtors
increased by £9.5 million, most of which is the normal seasonal effect with
trade debtor days increasing by 3 days.  Creditors decreased by £6.4 million,
trade creditor days reducing by 5 days partially due to a change in source of
a significant raw material.

Cash expenditure on fixed assets totalled £7.5 million (2000: £14.9 million),
compared with depreciation of £9.4 million.  Major projects were the Elementis
Chromium oxide gas cleaning plant and the Linatex continuous sheet press.
Capital expenditure for the full year is still likely to be modestly ahead of
depreciation.

Net borrowings at the end of June were £72.5 million compared to £41.7 million
at the end of December 2000.  Shareholders' funds at the half year were £414.5
million compared to £411.2 million at the end of December 2000.

Consolidated profit & loss account
for the six months to 30 June 2001
                                                                             
                          Before                        2001     2000        
                        goodwill                         Six      Six    2000
                    amortisation                      months   months    Year
                               &    Goodwill  Excep-   to 30    to 30   to 31
                    exceptionals amortisation tionals    June     June    Dec
                               £            £       £       £        £      £
              Note      million      million million million  million million
                                                                             
Turnover -                                                            
continuing                                                            
operations      3        296.7             -      -   296.7    288.0  573.8     
                                                
                   ____________  ___________ _______ _______  _______ ______
Group                                                                  
operating
profit
____________________________________________________________________________
Before                                                                 
goodwill                                                               
amortisation                                                           
and                                                                   
exceptionals              17.5            -       -    17.5     32.2   63.4
Goodwill                                                               
amortisation                 -         (6.9)      -    (6.9)    (6.4) (13.3)
Exceptionals                 -            -    (5.1)   (5.1)    (2.8)  (3.0)
___________________________________________________________________________
                3         17.5         (6.9)   (5.1)    5.5     23.0   47.1
Associates -                                                           
continuing                                                             
operations                   -            -       -       -        -    0.1
                   ____________  ___________ _______ _______  _______ ______
Operating                                                              
profit -                                                               
continuing                                                             
operations                17.5         (6.9)   (5.1)    5.5     23.0   47.2
                                                                       
Net interest                                                           
payable                   (2.4)           -       -    (2.4)    (2.7)  (5.1)
                   ____________  ___________ _______ _______  ______  ______
Profit on                                                             
ordinary
activities
before tax
___________________________________________________________________________
Before                                                                 
goodwill                                                               
amortisation                                                           
and                                                                   
exceptionals              15.1            -       -    15.1    29.5    58.4
Goodwill                                                               
amortisation                 -         (6.9)      -    (6.9)   (6.4)  (13.3)
Exceptionals                 -            -    (5.1)   (5.1)   (2.8)   (3.0)
___________________________________________________________________________
                           15.1         (6.9)   (5.1)    3.1    20.3    42.1
                                                                       
Tax on profit                                                         
on ordinary                                                           
activities    4            (2.1)          -        -    (2.1)   (5.1)   (7.8)   
                                                    
              
                   ____________  ___________ _______ _______  ______  ______
Profit on                                                              
ordinary                                                               
activities                                                             
after tax                  13.0         (6.9)   (5.1)    1.0    15.2    34.3
Minority                                                               
interests -                                                            
equity                     (0.1)           -       -    (0.1)   (0.1)   (0.1)
                    ____________  ___________ _______ _______  ______  ______
Profit for                                                             
the financial                                                          
period                    12.9         (6.9)   (5.1)    0.9    15.1    34.2     
                                       
                          
Dividends -                                                           
non-equity                   -            -       -       -       -    (0.1)
                   ____________  ___________ _______ _______  ______  ______
Amount                                                                 
transferred                                                           
to reserves               12.9         (6.9)   (5.1)    0.9    15.1    34.1
                    ____________  ___________ _______ _______  _______ _______
                                                                      
Earnings per  5
ordinary      
share
Basic and                                                              
diluted                                                 0.2p   3.5p     7.9p
Basic before                                                           
goodwill                                                              
amortisation                                                          
and                                                                   
exceptionals                                            3.0p   5.6p    11.6p
Diluted                                                                 
before                                                                 
goodwill                                                               
amortisation                                                           
and                                                                    
exceptionals                                            3.0p   5.6p    11.5p
                                                     
                                                                       
 
Consolidated balance sheet
at 30 June 2001
                                                  2001      2000       2000
                                               30 June   30 June     31 Dec
                                              £million  £million   £million
                                                                       
Fixed assets                                                      
Goodwill                                       233.5     232.5      228.8
Tangible assets                                195.7     192.6      192.1
Investment in associated undertakings            2.1       1.9        2.0
                                             ________  ________   ________
                                               431.3     427.0      422.9
                                             ________  ________   ________
Current assets                                                    
Stocks                                          84.6      75.5       76.7
Debtors                                        118.6     117.3      109.2
Cash at bank and in hand                        28.3      72.6       51.2
                                             ________  ________   ________
                                               231.5     265.4      237.1
                                             ________  ________   ________
Creditors: amounts falling due within one                         
year
Borrowings                                      12.1       9.3        7.3
Creditors                                       99.6     111.5      106.2
                                             ________  ________   ________
                                               111.7     120.8      113.5
                                             ________  ________   ________
Net current assets                             119.8     144.6      123.6
                                             ________  ________   ________
Total assets less current liabilities          551.1     571.6      546.5
                                             ________  ________   ________
Creditors: amounts falling due after more                         
than one year                                                     
Borrowings                                      88.7     121.0       85.6
Government grants                                0.6       0.7        0.6
                                             ________  ________   ________
                                                89.3     121.7       86.2
Provisions for liabilities and charges          44.7      49.0       46.6
                                             ________  ________   ________
                                               134.0     170.7      132.8
                                             ________  ________   ________
                                                                  
                                               417.1     400.9      413.7
                                             ________  ________   ________
                                                                  
Capital and reserves
                                                                  
Called up share capital                         24.4      23.3       23.6
Share premium                                    1.1       1.1        1.1
Capital redemption reserve                      33.8      11.6       20.4
Profit and loss account                        355.2     362.4      366.1
                                             ________  ________   ________
Shareholders' funds                            414.5     398.4      411.2
Minority interests                               2.6       2.5        2.5
                                             ________  ________   ________
                                               417.1     400.9      413.7
                                             ________  ________   ________
                                                                  
Shareholders' funds
Equity                                         411.7     396.7      409.2
Non-equity                                       2.8       1.7        2.0
                                             ________  ________   ________
                                               414.5     398.4      411.2
                                             ________  ________   ________
                                                                  
Net borrowings                                 (72.5)    (57.7)     (41.7)
                                             ________  ________   ________
                                                                  

Cash flow statement
for the six months to 30 June 2001
                                                 2001       2000      2000
                                                  Six        Six          
                                               months     months          
                                                to 30      to 30      Year
                                                 June       June to 31 Dec
                                       Note  £million   £million  £million
                                                                          
Net cash inflow from operating                                   
activities                                        0.4     18.1       58.4
Returns on investments and servicing                             
of finance
Interest received                                 3.7      4.4        9.3
Interest paid                                    (6.5)    (6.1)     (14.4)
Taxation                                         (4.6)    (2.0)      (4.5)
Capital expenditure and financial                                
investment
Purchase of fixed assets                         (7.5)   (14.9)     (22.1)

Disposal of fixed assets                          0.1      6.1        6.7

Acquisitions and disposals                                       
Disposal of businesses in prior                                  
Years                                            (0.2)    (0.4)      (1.0)
                                             _________ ________  _________
Cash (outflow)/inflow before use of                              
liquid resources and financing                  (14.6)     5.2       32.4
                                                                 
Financing and management of liquid                               
resources                                6       10.7     (6.4)     (35.7)
                                             _________ ________  _________
Decrease in cash                         7       (3.9)    (1.2)      (3.3)
                                             _________ ________  _________
                                                                 


Reconciliation of operating profit to net cash inflow from operating
activities for the six months to 30 June 2001
                                                 2001       2000     2000
                                                  Six        Six         
                                               months     months     Year
                                                to 30      to 30    to 31
                                                 June       June      Dec
                                             £million   £million £million
                                                                         
Operating profit                                  5.5     23.0      47.2
Goodwill amortisation                             6.9      6.4      13.3
Depreciation (less grants credited)               9.4      8.5      17.3
Share of profits of associated                                   
undertakings                                        -        -      (0.1)
Profit on disposal of fixed assets                  -     (0.2)        -
Exceptionals in operating profit                  5.1      2.8       3.0
Cash outflow on exceptionals                     (4.3)    (2.2)     (3.9)
Increase in stocks                               (5.1)    (1.0)     (1.8)
Increase in debtors                              (9.5)   (14.8)     (8.4)
Decrease in creditors                            (6.4)    (2.7)     (2.2)
Decrease in provisions                           (1.2)    (1.7)     (6.0)
                                             _________ ________  ________
Net cash inflow from operating                                   
activities                                        0.4     18.1      58.4
                                             _________ ________  ________
                                                                 


Statement of total recognised gains and losses
for the six months to 30 June 2001
                                                 2001       2000      2000
                                                  Six        Six          
                                               months     months      Year
                                                to 30      to 30     to 31
                                                 June       June       Dec
                                             £million   £million  £million
                                                                     
Profit for the financial period                 0.9       15.1      34.2
Currency translation differences               17.1       16.5      19.4
Taxation on currency translation                                 
differences on foreign currency                                  
borrowings                                     (1.3)      (1.7)     (2.0)
                                             ________  ________  ________
Total recognised gains for the                                   
financial period                               16.7       29.9      51.6
                                             ________  ________  ________
                                                                 

Reconciliation of movements in shareholders' funds
for the six months to 30 June 2001
                                                 2001       2000      2000
                                                  Six        Six          
                                               months     months      Year
                                                to 30      to 30     to 31
                                                 June       June       Dec
                                             £million   £million  £million
                                                                          
Profit for the financial period                  0.9      15.1      34.2
Dividends - redeemable B shares                    -         -      (0.1)
                                             ________  ________  ________
Amounts transferred to reserves                  0.9      15.1      34.1

Redemption of redeemable B shares                                
(including issue costs)                        (13.4)    (11.9)    (20.7)
Currency translation differences                17.1      16.5      19.4
Taxation on currency translation                                 
differences on foreign currency                                  
borrowings                                      (1.3)     (1.7)     (2.0)
                                             ________  ________  ________
Net increase in shareholders' funds              3.3      18.0      30.8
At beginning of the financial period           411.2     380.4     380.4        
         
                                               
                                             ________  ________  ________
At end of the financial period                 414.5     398.4     411.2
                                             ________  ________  ________
                                                                 


Notes to the financial statements
1  Accounting policies
Basis of preparation.   The financial information for the first six months of
2001 and 2000, which is unaudited but has been reviewed by the Company's
auditors, does not constitute statutory accounts within the meaning of section
240 of the Companies Act 1985 and it is presented on the basis of accounting
policies set out in the financial statements of Elementis plc for the year
ended 31 December 2000.

2  Exchange rates
For the six months to 30 June 2001, the average sterling exchange rate was
$1.44 and Euros 1.61  (2000: $1.57 and Euros 1.64, year to 31 December 2000:
$1.52 and Euros 1.64).  The sterling exchange rate at 30 June 2001 was $1.41
and Euros 1.66 (2000:$1.51 and Euros 1.58, 31 December 2000: $1.49 and Euros
1.59).

3  Segmental information
                       Group turnover           Group operating profit
                    2001      2000      2000      2001      2000      2000
                     Six       Six         .       Six       Six          
                  months    months      Year    months    months      Year
                   to 30     to 30     to 31     to 30     to 30     to 31
                    June      June       Dec      June      June       Dec
                £million  £million  £million  £million  £million  £million
                                                                  
Analysis by                                                       
activity
Chromium                                                          
Before                                                            
exceptionals       68.2      65.8     131.7       4.2      12.0      23.7
Inter-group                                                       
turnover           (3.8)     (3.4)     (6.9)        -         -         -
Exceptionals          -         -         -         -         -       0.7
                ________  ________  ________  ________  ________  ________
                                
                   64.4      62.4     124.8       4.2      12.0      24.4
                ________  ________  ________  ________  ________  ________
                
Pigments &                                                        
Specialties
Before                                                                
goodwill                                                             
amortisation                                                         
and                                                                   
exceptionals      119.7     118.7     234.9      10.5      15.6      31.1
Goodwill                                                          
amortisation          -         -         -      (6.9)     (6.4)    (13.3)
Exceptionals          -         -         -         -      (1.4)     (1.4)
                ________  ________  ________  ________  ________  ________
                                                        
                  119.7     118.7     234.9       3.6       7.8      16.4
                ________  ________  ________  ________  ________  ________
                
Chemical                                                          
Distribution       87.3      78.7     160.0       1.9       3.0       6.0
                ________  ________  ________  ________  ________  ________
                
Specialty                                                         
Rubber
Before                                                            
exceptionals       25.3      28.2      54.1       0.9       1.6       2.6
Exceptionals          -         -         -      (0.5)     (1.4)     (2.3)
                ________  ________  ________  ________  ________  ________
                                
                   25.3      28.2      54.1       0.4       0.2       0.3
                ________  ________  ________  ________  ________  ________
                
Group                                                             
exceptionals          -         -         -      (4.6)        -         -
                ________  ________  ________  ________  ________  ________
                
Total                                                             
Before                                                            
goodwill                                                          
amortisation                                                      
and                                                               
exceptionals      296.7     288.0     573.8      17.5      32.2      63.4
Goodwill                                                          
amortisation          -         -         -      (6.9)     (6.4)    (13.3)
Exceptionals          -         -         -      (5.1)     (2.8)     (3.0)
                ________  ________  ________  ________  ________  ________
                
                  296.7     288.0     573.8       5.5      23.0      47.1
                ________  ________  ________  ________  ________  ________
                
                                                                  

Group turnover and operating profit are derived from continuing operations.
Group exceptionals comprise costs incurred in preparing and marketing the
Company for sale.


                        Group turnover          Group operating profit
                    2001      2000      2000      2001      2000      2000
                     Six       Six                 Six       Six          
                  months    months      Year    months    months      Year
                   to 30     to 30     to 31     to 30     to 30     to 31
                    June      June       Dec      June      June       Dec
                £million  £million  £million  £million  £million  £million
                                                                  
Analysis by                                                       
area of
operations
North America     200.5     194.5     389.0       6.2      17.6      33.4
Europe             84.7      83.1     163.4      (1.1)      4.6      12.2
Rest of the                                                       
World              11.5      10.4      21.4       0.4       0.8       1.5
                ________  ________  ________  ________  ________  ________
                
                  296.7     288.0     573.8       5.5      23.0      47.1
                ________  ________  ________  ________  ________  ________
                
                                                                  

                                                  2001      2000      2000
                                                   Six       Six          
                                                months    months      Year
                                                 to 30     to 30     to 31
                                                  June      June       Dec
                                              £million  £million  £million
                                                                          
Group turnover analysed by geographical                           
markets
North America                                    191.5     183.7     368.3
Europe                                            72.4      72.9     143.0
Rest of World                                     32.8      31.4      62.5
                                              ________  ________  ________
                                                 296.7     288.0     573.8
                                              ________  ________  ________
                                                                  

4  Taxation
The tax charge of £2.1 million (2000: £5.3 million) is based on an estimated
effective tax rate on profit before goodwill amortisation and exceptionals for
the year to 31 December 2001 of 14 per cent (2000: 18 per cent).  The rate is
lower than the standard UK corporation tax rate for a number of reasons
including tax relief on purchased US goodwill and the utilisation of surplus
ACT.  Tax on exceptional charges was £nil million (2000: £0.2 million credit).

5  Earnings per ordinary share
                                                  2001      2000      2000
                                                   Six       Six          
                                                months    months      Year
                                                 to 30     to 30     to 31
                                                  June      June       Dec
                                                 pence     pence     pence
                                                   per       per       per
                                                 share     share     share
                                                                          
Basic earnings per ordinary share                  0.2       3.5       7.9
Goodwill amortisation                              1.6       1.5       3.1
Exceptionals net of taxation                       1.2       0.6       0.6
                                              ________  ________  ________
Basic earnings per ordinary share before                                  
goodwill amortisation and exceptionals             3.0       5.6      11.6
                                              ________  ________  ________
                                                                          

Basic earnings per ordinary share are based on profit for the period of £0.9
million (2000: £15.1 million, year to 31 December 2000: £34.1 million) and on
the weighted average number of ordinary shares in issue during the period of
431.5 million (2000: 431.5 million, year to 31 December 2000: 431.5 million).
Basic earnings per ordinary share before goodwill amortisation and
exceptionals are based on earnings of £12.9 million (2000: £24.1 million, year
to 31 December 2000: £50.0 million).

Diluted earnings per ordinary share are based on an adjusted weighted average
number of shares of 435.0 million (2000: 433.5 million, year to 31 December
2000: 434.1 million).


6  Financing and management of liquid resources
                                               2001        2000        2000
                                         Six months  Six months        Year
                                         to 30 June  to 30 June   to 31 Dec
                                           £million    £million    £million
                                                                           
Redemption of B shares (including issue                          
costs)                                       (13.4)      (11.9)      (20.7)
Increase/(decrease) in net borrowings         24.1         5.5       (15.0)
                                         __________  __________  __________
                                              10.7        (6.4)      (35.7)
                                         __________  __________  __________
                                        
                                                                 

Redeemable B shares, of nominal value £14.2 million, were issued for nil
consideration during the period (2000: £13.3 million; year to 31 December 2000
£22.4 million).

7  Reconciliation of net cash flow to movement in net borrowings
                                               2001        2000        2000
                                         Six months  Six months        Year
                                         to 30 June  to 30 June   to 31 Dec
                                           £million    £million    £million
                                                                           
Change in net borrowings resulting from                          
cash flows:
Decrease in cash in the period                (3.9)       (1.2)      (3.3)
(Increase)/decrease in borrowings             (5.0)        0.7       40.4
Decrease in liquid resources                 (19.1)       (6.2)     (25.4)
                                         __________  __________  _________
                                             (28.0)       (6.7)      11.7
Currency translation differences              (2.8)       (5.5)      (7.9)
                                         __________  __________  _________
(Increase)/decrease in net borrowings        (30.8)      (12.2)       3.8
Net borrowings at beginning of the                               
financial period                             (41.7)      (45.5)     (45.5)
                                         __________  __________  _________
Net borrowings at end of the financial                           
period                                       (72.5)      (57.7)     (41.7)
                                         __________  __________  _________
                                                                 

8  Contingent liabilities
The Group was notified of a potential warranty claim in 1998, under the
contract for the sale of Pauls Malt Limited, relating to export refunds from
the Intervention Board for Agricultural Produce.  Should such a claim
materialise, this will be vigorously defended and, in any event, in the
opinion of the directors, this will not have a significant effect on the
financial position of the Group.

Independent review report to Elementis plc

Introduction

We have been instructed by the Company to review the financial information for
the six months ended 30 June 2001, comprising the consolidated profit and loss
account, balance sheet, cash flow statement, statement of total recognised
gains and losses, reconciliation of movements in shareholders' funds and
related notes.  We have read the other information contained in the Interim
Report for any apparent misstatements or material inconsistencies with the
financial information.

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 of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual financial
statements except where any changes, and the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board.  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 the accounting policies and presentation have been
consistently applied unless otherwise disclosed.  A review excludes audit
procedures such as tests of controls and verification of assets, liabilities
and transactions.  It is substantially less in scope than an audit performed
in accordance with United Kingdom 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 30 June 2001.


PricewaterhouseCoopers, London
Chartered Accountants
1 August 2001