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Elementis PLC (ELM)

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Tuesday 29 July, 2003

Elementis PLC

Interim Results

Elementis PLC
29 July 2003





PRESS INFORMATION

29 July 2003

ELEMENTIS plc

INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2003

  • Sales £188.7 million (2002: £194.5 million); $303.3 million (2002: $279.8
    million)
  • Operating profit (before goodwill amortisation and exceptionals) £14.5
    million (2002: £14.5 million)
  • Profit before tax, goodwill amortisation and exceptionals £11.4 million
    (2002: £13.3 million)
  • Earnings per share (before goodwill amortisation and exceptionals) 2.0
    pence (2002: 2.4 pence)
  • Operating profit £7.3 million (2002: £8.0 million), profit before tax £5.0
    million (2002: £4.6 million), earnings per share 1.0 pence (2002: 1.0 pence)



Geoff Gaywood, Chief Executive of Elementis plc, said:

'All four Elementis businesses reported improved sales in US dollars in the
first half of 2003, led by the successful integration of the OxyChem chromium
chemicals business and a recovery in our Specialty Rubber business. On
conversion to sterling, however, sales declined 3 per cent to £188.7 million,
reflecting the weaker dollar.

'Higher volumes, further cost reductions and a stronger euro helped offset
higher energy costs and lower chromium chemicals pricing, so that operating
profit before goodwill amortisation and exceptionals has remained steady at
£14.5 million.

'Market conditions were difficult in North America and little improved overall.
The outlook for the second half of the year suggests a marginal improvement in
underlying demand at best.

'Progress in strategic programmes to improve financial performance and generate
growth has continued.  Provided current economic conditions prevail, our full
year operating profit should be in line with expectations.'

- Ends -

An interview with Geoff Gaywood in video/audio format can be viewed on
www.elementis.com and www.cantos.com from 0700 hours GMT.

Enquiries
Elementis plc
Tel: +44 (0)1784 224 212
Geoff Gaywood         Chief Executive
Brian Taylorson       Finance Director
Hilary Reid Evans     Head of Corporate Communications

Brunswick
Tel: +44 (0) 207 404 5959
Andrew Fenwick
Fiona Fong


Chairman's statement

Overview

I am pleased to report that, when measured in US dollars, the operating currency
for the Group, sales increased by 8 per cent to $303.3 million compared to the
first half of 2002.  However, on conversion to sterling, the reporting currency
for the Group, sales declined by 3 per cent to £188.7 million, reflecting the
weakening of the US dollar.

The successful integration of the OxyChem chromium acquisition and a recovery in
Specialty Rubber sales were the primary contributors to sales growth.  All four
businesses reported improved sales from continuing businesses in US dollars
despite little improvement in overall market demand.

Operating profit, before goodwill amortisation and exceptionals was £14.5
million, showing no change on the first half of 2002.  Higher volumes, further
cost reductions and a stronger euro offset higher energy costs and lower
Chromium chemicals pricing.

Chief Executive Geoff Gaywood and his management team have continued their focus
on cost control.  Underlying costs have continued to fall, supported by the
ongoing Six Sigma programme, which  yielded benefits of £0.8 million in the
period.

Currency movements

Exchange rate movements were a significant factor in the period.  The average US
dollar rate was 11 per cent lower against sterling versus the previous period,
while the euro was 7 per cent stronger against sterling.

This had the effect of lowering reported sales in sterling because a larger
percentage of our sales are in US dollars.

However, the lower reported sales were more than offset by currency benefits
from having US and UK based manufacturing facilities.  This resulted in an
overall improvement in operating profit as a result of currency movements.

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 2003, such that they receive
redeemable B shares with a total nominal value of 1.1 pence for each ordinary
share held.  The Board believes that this is appropriate for the business,
taking into account the current trading environment and the stated strategy to
focus on growth.

The issue will be coupled with an offer to redeem the new shares for cash at
their nominal value on 3 November 2003.  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.

A circular providing full details of the issue and redemption of redeemable B
shares will be posted to all ordinary shareholders on 26 September 2003.

Current trading and outlook

Market conditions were difficult in North America and little improved overall,
and the outlook for the second half of the year suggests a marginal improvement
in underlying demand at best.

Progress in strategic programmes to improve financial performance and generate
growth has continued.  Provided current economic conditions prevail our full
year operating profit should be in line with expectations.

Jonathan Fry
Chairman
29 July 2003


Operating review
For the six months to 30 June 2003



Strategic Progress Report

Throughout the first half of 2003, Elementis has continued to implement the
growth strategy for each of its businesses first outlined in the 2001 Annual
Report.

Elementis Specialties is introducing programmes to leverage technology, markets
and acquisitions in order to accelerate growth.  A new approach to innovation,
including the introduction during the first half of 2003 of an external
Innovation Board, is a key element of this strategy.

Elementis Pigments is expanding its highly competitive cost base in Asia Pacific
in order to drive growth, and construction of a new plant in Taicang, China, is
proceeding according to plan.

Elementis Chromium continues to strengthen its market leadership, with the
integration of the OxyChem acquisition delivering an improved global cost
structure.

Specialty Rubber has streamlined its fabrication operations and stabilised its
new manufacturing platform, and is now delivering sales growth.

It is anticipated that implementation of the Group's growth strategy will
include acquisitions that generate synergies within the existing portfolio, with
an emphasis on Elementis Specialties.  Such acquisitions will have to meet the
rigorous capital hurdle rates set by management.  The corporate finance analysis
and execution team is operating in conjunction with the existing,
business-specific, strategic development resources in order to review and action
potential acquisition opportunities.

The implementation process for the Elementis Enterprise Resource Planning (ERP)
system has begun, with the first stage of the programme expected to go live in
late 2003.  The system will reduce costs and improve business processes across
the Group.  The anticipated investment is £13.0 million, of which around £6.0
million will be spent in 2003.  Annualised cost savings of approximately  £3.5
million are expected to result once implementation is completed in mid 2004,
together with additional benefits, including enhanced customer service and
optimised supply chain management.

Following the acquisition of the OxyChem Chromium Chemicals business in December
2002, rationalisation of the Elementis Chromium production facilities was
undertaken.  It is anticipated that this rationalisation will achieve annualised
savings in excess of £15 million, over half of which will be achieved in 2003.

Specialties & Pigments
Elementis Specialties is a world leading producer of rheological additives.

Elementis Pigments is a world leading producer of synthetic iron oxide pigments.

Sales on continuing businesses in US dollars increased by 4 per cent.  In
sterling terms however sales on the same basis declined by 7 per cent to £108.1
million.

Operating profit before goodwill amortisation and exceptionals was £9.7 million
compared to £10.2 million in the first half of 2002.

Sales in US dollars at Elementis Specialties in the first half of 2003 increased
by around 4 per cent when compared to the prior year, but on conversion to
sterling showed a decline of approximately 7 per cent.  Sales to the
construction, personal care and oilfield markets increased significantly.  Sales
to the global coatings market grew modestly.  Europe and Asia Pacific showed
good growth, helped by greater focus and the allocation of additional resource,
while the US market declined.  Trading in North America was below prior year,
reflecting the overall low level of consumer confidence and demand in this
region.

Operating profit before goodwill amortisation and exceptionals at Elementis
Specialties was lower than in the first half of 2002.  Tight control on costs
and savings from Six Sigma programmes partially offset higher energy and raw
material costs and increased Research and Development costs.

The stage gate process, introduced to support accelerated innovation and drive a
sustainable, high rate of growth within Elementis Specialties is now fully
operational.  A number of products identified since the inception of this
programme are currently undergoing commercialisation while further product
opportunities are being progressed through the development process.  A new,
external Innovation Board has also been formed to identify developing
technologies outside, but complementary to, the current organic growth
programmes, and to accelerate the Specialties innovation process.

At Elementis Pigments, despite the difficult North American economic
environment, sales in US dollars were up 4 per cent versus the first half of
2002, after adjustment for businesses sold last year.  In sterling terms however
sales on the same basis were down 7 per cent.

Sales to the coatings and chemicals markets were ahead of the first half of
2002, with higher volumes reported in Europe and Asia, offsetting poor seasonal
demand in the North American market.

Sales into the  construction market marginally increased over 2002 levels
despite weak demand.  Volumes supplied to global markets from the Shenzhen
manufacturing facility in China have continued at record levels, following its
recent expansion.  A world class iron oxide  plant is currently under
construction at Taicang, near Shanghai, China, which will support growth in the
European and Asian markets.  Restructuring of the site at Birtley, UK, is
complete and the site returned to profitability in the first half of 2003.

Operating profit for Elementis Pigments improved significantly over the same
period last year.

Chromium
Elementis Chromium is the world's largest producer of chromium chemicals.

Sales in US dollars increased by around 17 per cent in the first half of 2003
for Elementis Chromium, when compared to the first half of 2002, mainly as a
result of the OxyChem acquisition.  This growth was partially offset by market
price erosion and contraction of demand in the aerospace and steel industries.
In sterling terms sales increased by 5 per cent to £62.4 million.

Operating profit before exceptionals fell to £4.8 million, compared to £5.2
million in the first half of 2002.

Integration of the OxyChem acquisition has been accomplished successsfully, with
no loss of critical personnel or market position.  Incremental sales are around
$50 million on an annualised basis.

Global volume demand for chromium chemicals is estimated by Elementis to have
declined slightly from the first half of 2002, while competition remained
intense.  Overall, Elementis estimates that its global market share on a volume
basis increased by approximately 7 per cent in the first half of 2003.

The operational rationalisation that followed the OxyChem acquisition led to the
transfer of a high proportion of Elementis Chromium's US manufacturing to the
oil fuelled OxyChem plant at Castle Hayne, North Carolina.  The impact of
continuing high US gas prices has therefore largely been avoided.  However,
energy costs still negatively impacted operating profit by £1.2 million versus
the first half of 2002.  Otherwise, fixed and variable costs have continued to
fall, with Six Sigma projects playing a significant role.

On 20 March 2003 the US Environmental Protection Agency (EPA) confirmed the
withdrawal of registration for most residential uses of chromated copper
arsenate (CCA) for wood treatment.  The EPA had previously announced, in
February 2002, that a ban regarding the use of CCA would be effective from 2004.
The March 2003 announcement however has reduced the scope of the ban so that
agricultural fencing and permanent foundations will not now be affected.
Elementis Chromium supplies chromic acid which is used in the manufacture of CCA
and acts primarily as a binding agent.  As previously stated, it is
anticipated that sales of chromium chemicals could be adversely affected by
around 12 per cent in 2004, representing approximately 4.5 per cent of total
Elementis plc sales.

Elementis Chromium did not experience any adverse impact on sales in the first
half of 2003 from this EPA ruling and does not expect its sales in 2003 as a
whole to be materially affected.

Specialty Rubber
Linatex is the leading brand of wet abrasion resistant rubber for materials
handling.

Sales in US dollars increased by 20 per cent.  On conversion to sterling, sales
increased by 8 per cent to £21.2 million in the first half of 2003.  Increased
volumes and the impact of structural cost reductions instigated in 2002 have
driven the business to breakeven, compared to an operating loss of £0.9 million
in the first half of 2002.

Strong sales growth compared to the first half of 2002 has been seen in all
geographic areas, except for South Africa, where the strong rand has disrupted
the mining capital equipment market, and Asia, where the SARS outbreak slowed
business activity. There has been a modest recovery in the mining and
construction markets, but the business improvement has been primarily due to
improved focus and organisation.  The new manufacturing facility in Malaysia is
now producing consistently high quality products, with improved service levels.

Six Sigma

Six Sigma has created a pervasive cost reduction and efficiency improvement
culture and forms an integral part of the manufacturing, commercial and supply
chain processes in Elementis. Over 80 Six Sigma projects have been either
completed or are in progress and have generated net savings totalling in excess
of £4.5 million since inception.  A total of 9 'blackbelts' and 34 'greenbelts'
are currently in place across the organisation.

Health, safety and the environment

Compared to the first half of 2002, lost time accidents (LTAs) for continuing
operations increased from 4 to 6.  However, the nature of the incidents showed a
strongly positive trend in operational safety, and the recordable incident
frequency rate decreased by 22 per cent. Management is confident that an
increased focus on behavioural safety and near miss incident reporting is
leading to performance similar to that of the industry leaders.  Non-compliance
with environmental consents continued on a downward trend, with only 2 incidents
reported in the year to date.

Geoff Gaywood
Chief Executive
29 July 2003



Financial review of operations
for the six months to 30 June 2003
__________________________________________________________________________________________________________________
                                    2003           2003           2003        2002             2002           2002
                                   Sales      Operating      Operating       Sales        Operating      Operating
                                                 profit         profit                       profit         profit
                                                 before          after                       before          after 
                                               goodwill       goodwill                     goodwill       goodwill
                                           amortisation   amortisation                 amortisation   amortisation
                                                    and            and                          and            and
                                           exceptionals   exceptionals                 exceptionals   exceptionals
                                £million       £million       £million    £million         £million       £million
__________________________________________________________________________________________________________________

Specialties & Pigments             108.1            9.7            2.0       119.7             10.2            3.2
Chromium                            62.4            4.8            5.4        59.5              5.2            6.2
Specialty Rubber                    21.2              -          (0.1)        19.7            (0.9)          (1.4)
Inter-group                        (3.0)              -              -       (4.4)                -              -
__________________________________________________________________________________________________________________
                                   188.7           14.5            7.3       194.5             14.5            8.0
__________________________________________________________________________________________________________________



Financial results

Sales for the first half of 2003 decreased by 3 per cent versus the first half
of 2002 to £188.7 million.  Sales on a constant currency basis, after allowing
for discontinued businesses, increased by 4 per cent.

Sales volumes for the period increased by 9 per cent, largely due to the
acquisition of the Oxychem chrome business in December 2002, while overall
prices declined by 3 per cent with most of the decline occurring in Chromium.

Operating profit before goodwill amortisation and exceptionals was unchanged
from the first half of 2002 at £14.5 million.  In addition to the increase in
sales volumes, savings from the Oxychem acquisition and the related
restructuring of the US chrome operations contributed £6.6 million to the first
half of 2003.  Operating profit was also favourably impacted by positive net
currency effects of £2.1 million, Six Sigma savings of £0.8 million and other
cost saving initiatives.  These were offset by an increase in energy costs of
£2.4 million, increased raw material prices in Specialties of £1.0 million and
the fixed costs acquired with the Oxychem business.

Profit before goodwill amortisation, exceptionals and tax was £11.4 million
compared to £13.3 million in the first half of 2002, reflecting higher FRS17
pension costs.

Basic earnings per share before goodwill amortisation and exceptionals was 2.0
pence compared to 2.4 pence in the first half of 2002.

Profit after tax was £4.2 million compared to £4.5 million in the first half of
2002, after charging goodwill amortisation of £6.3 million (2002: £7.0 million)
and exceptional items of £0.1 million (2002: £1.7 million).

Basic earnings per share were 1.0 pence compared to 1.0 pence in the first half
of 2002.

Specialties & Pigments

Sales in Specialties & Pigments were £108.1 million in the first half of 2003,
10 per cent lower than the first half of 2002.  After allowing for discontinued
businesses, sales were 7 per cent lower than in the previous period, and when
also adjusting for constant currencies the reduction was 1 per cent.

Operating profit before goodwill amortisation and exceptionals was £9.7 million
versus £10.2 million in the same period last year.

Sales in Specialties for the first half of 2003 were down by 7 per cent versus
the same period last year.  On a constant currency basis sales were down 3 per
cent.  Volumes were down by 2 per cent and pricing was flat compared to the
first half of 2002.

Operating profit before goodwill amortisation and exceptionals was lower than
the first half of 2002 largely due to the lower sales.  Otherwise higher energy
costs and higher raw material prices were offset by a positive currency impact
and Six Sigma benefits.

Sales in Pigments for the first half of 2003 were down by 14 per cent versus the
same period last year.  After allowing for currency effects and discontinued
businesses, sales were up 1 per cent versus the previous period.  The increase
was driven by higher volumes while pricing was flat.

Operating profit before exceptionals showed a significant improvement over the
first half of 2002.  Higher underlying sales were supplemented by Six Sigma
benefits, the Birtley site restructuring and other cost initiatives, which more
than offset higher energy prices.

Chromium

Sales in Chromium increased by 5 per cent to £62.4 million compared to the first
half of 2002.  On a constant currency basis sales increased by 10 per cent.
Sales volumes increased by 25 per cent, largely due to the acquisition of the
Oxychem business in December 2002.  Average prices fell by 11 per cent with the
largest impact being seen in chromic acid and chrome oxide.

Operating profit before exceptionals for the first half of 2003 was £4.8
million, 8 per cent lower than the same period last year.  The improvement in
sales and savings from the restructuring of our US operations was offset by
higher energy costs of £1.2 million and the fixed costs acquired with the
Oxychem business.  Six Sigma programmes and insurance recoveries also made
positive contribution in the period.  The net currency impact on operating
profit was minimal compared to the first half of 2002.

Specialty Rubber

Sales showed a marked improvement over the first half of 2002 at £21.2 million,
an increase of 8 per cent.  Currency effects were minimal.

Operating profit before exceptionals also showed a significant improvement at
breakeven versus a loss of £0.9 million for the first half of 2002, driven by
the strong growth in sales as well as fixed cost benefits from the restructuring
programme implemented in 2002.

Exceptionals

Net exceptional charges before tax were £0.1 million (2001: £1.7 million)
comprising:

• £0.7 million insurance recovery in Chromium
• £0.8 million profit in respect of property disposals
• £1.6 million of retrenchment costs in relation to the introduction of two 
  shared service centres in conjunction with rolling out a new ERP system in 
  2003 and 2004.

Interest

The Group total interest charge was £3.1 million (2002: £1.2 million).  Interest
on net borrowings amounted to £1.0 million (2002: £1.0 million).  Other interest
comprised the FRS17 charge in respect of pension schemes of £2.0 million (2002:
£0.2 million), £0.5 million to unwind the discount in respect of environmental
provisions and £0.4 million received in respect of tax refunds.  Interest cover,
(the ratio of net interest to profit before interest, goodwill amortisation and
exceptionals) was 4.7 times (2002: 12.1 times).  If based solely on interest in
respect of net borrowings, interest cover was 14.5 times (2002: 14.5 times).

Taxation

The tax charge for the period was £2.9 million (25 per cent) on profit before
goodwill amortisation and exceptionals (2002: £2.6 million (20 per cent).  The
total tax charge also includes a tax credit in relation to goodwill amortisation
of £2.3 million (2002: £2.5 million) and after a charge on exceptionals of £0.2
million (2002: nil), the net charge was £0.8 million (2002: £0.1 million).  Tax
payments were £0.8 million (2002: £1.8 million) and due to the surplus ACT in
the UK and accumulated tax losses in the US, it is expected that the cash tax
paid will be below 10 per cent of profit before tax for a number of years.

Cash flow and balance sheet

The cash flow for the six months to 30 June is summarised below:

                      2003         2002
                      £m           £m
Ebitda                22.2          24.1
Working capital     (25.0)        (11.3)
Provisions paid      (4.7)         (1.7)
Other                (0.7)           2.2
                   ________     ________
Operating            (8.2)          13.3
activities
Capital              (8.7)         (5.0)
expenditure
Property disposals     1.0             -
B shares             (4.8)         (4.7)
Other                (0.1)         (0.7)
                   ________     ________
Change in net debt  (20.8)           2.9
                   ________     ________


The working capital outflow in the first half of 2003 reflected normal seasonal
effects, unusually high creditor levels at the year end and the additional
working capital requirement following the acquisition of the chrome chemicals
business from Oxychem in December 2002.  Inventories increased by £1.7 million
over the half year.  Debtors increased by £13.9 million, whilst creditors
decreased by £9.4 million.

Cash expenditure on fixed assets totalled £8.7 million (2002: £5.0 million) net
of grants received of £nil (2002: £0.7 million), and compares with depreciation
of £7.7 million (2002: £9.6 million).  Major projects included £0.7 million in
respect of a new Pigments plant in Taicang, China and £3.8 million in respect of
the ERP system.  Capital expenditure for the full year, excluding these
projects, is expected to be below depreciation.

The net pension liability, reflected in the balance sheet under FRS17, was £63.8
million at the end of June compared to £63.6 million at the end of December
2002.  The charge against operating profit for pensions and post-retirement
medical benefits in the first half of 2003 was £2.9 million (2002: £2.9
million).

Net borrowings at the end of June were £58.2 million compared to £37.1 million
at June 2002 and £37.4 million at the end of December 2002.  Shareholders' funds
at the half year were £268.3 million compared to £338.3 million at June 2002 and
£275.3 million at the end of December 2002.  Net gearing (the ratio of net
borrowings to shareholders' funds plus net borrowings) was 17.8 per cent
compared to 9.9 per cent at June 2002 and 12.0 per cent at the end of December
2002.

Brian Taylorson
Finance Director
29 July 2003


Consolidated profit & loss account
for the six months to 30 June 2003
____________________________________________________________________________________________________________________
                                                 Before
                                               goodwill                                 2003       2002         2002
                                           amortisation     Goodwill              Six months Six months         Year
                                         & exceptionals amortisation Exceptionals to 30 June to 30 June    to 31 Dec
                                  Note         £million     £million     £million   £million   £million     £million
____________________________________________________________________________________________________________________

Turnover                           2              188.7            -            -      188.7      194.5        364.9
Group operating profit/(loss)

Before goodwill amortisation and exceptionals      14.5            -            -       14.5       14.5         20.4
Goodwill amortisation                                 -        (6.3)            -      (6.3)      (7.0)       (13.5)
Exceptionals                                          -            -        (0.9)      (0.9)        0.5       (44.7)

                                   2               14.5        (6.3)        (0.9)        7.3        8.0       (37.8)
Associates                                            -            -            -          -          -          0.1
____________________________________________________________________________________________________________________
Operating profit/(loss)                            14.5        (6.3)        (0.9)        7.3        8.0       (37.7)
Profit on disposal of properties - continuing         
operations                                            -            -            -          -        1.4          4.8
Profit on disposal of properties - discontinued
operations                                            -            -          0.8        0.8          -          1.4
Loss on disposal of businesses - continuing           
operations                                            -            -            -          -      (2.9)        (2.9)
(Loss)/profit on disposal of business -
discontinued
operations                                            -            -            -          -      (0.7)          1.0
____________________________________________________________________________________________________________________
Profit/(loss) on ordinary activities before        
interest                                           14.5        (6.3)        (0.1)        8.1        5.8       (33.4)
Net interest payable               3              (3.1)            -            -      (3.1)      (1.2)        (0.8)
____________________________________________________________________________________________________________________
Profit/(loss) on ordinary activities before
tax

Before goodwill amortisation and exceptionals      11.4            -            -       11.4       13.3         19.7
Goodwill amortisation                                 -        (6.3)            -      (6.3)      (7.0)       (13.5)
Exceptionals                                          -            -        (0.1)      (0.1)      (1.7)       (40.4)

                                                   11.4        (6.3)        (0.1)        5.0        4.6       (34.2)
Tax on profit/(loss) on ordinary   4              (2.9)          2.3        (0.2)      (0.8)      (0.1)          3.5
activities
____________________________________________________________________________________________________________________
Profit on ordinary activities after                 
tax                                                 8.5        (4.0)        (0.3)        4.2        4.5       (30.7)
Minority interests - equity                           -            -            -          -      (0.1)        (0.1)
____________________________________________________________________________________________________________________
Profit/(loss) for the financial                     
period                                              8.5        (4.0)        (0.3)        4.2        4.4       (30.8)

Basic and diluted earnings/(loss)  5
per share
Earnings/(loss) per ordinary share                                                      1.0p       1.0p     (7.1p)
Earnings per ordinary share before
goodwill amortisation and                          
exceptionals                                       2.0p                                 2.0p       2.4p       3.4p
____________________________________________________________________________________________________________________


Turnover and operating profit in the current financial period are derived from
continuing operations


Consolidated balance sheet
at 30 June 2003
____________________________________________________________________________________________________________________
                                                                                     2003        2002        2002
                                                                                  30 June     30 June      31 Dec
                                                                                 £million    £million    £million
Fixed assets
Goodwill                                                                            177.8       204.7       187.9
Tangible assets                                                                     160.2       182.1       161.9
Investment in associated undertakings                                                 3.4         3.6         3.6
____________________________________________________________________________________________________________________
                                                                                    341.4       390.4       353.4
____________________________________________________________________________________________________________________

Current assets
Stocks                                                                               62.6        56.1        60.8
Debtors                                                                              79.5        81.3        76.6
Cash at bank and in hand                                                             38.0        42.2        44.4
____________________________________________________________________________________________________________________
                                                                                    180.1       179.6       181.8
____________________________________________________________________________________________________________________

Creditors: amounts falling due within one year
Borrowings                                                                          (4.4)       (4.9)       (5.0)
Creditors                                                                          (61.0)      (58.4)      (78.0)
____________________________________________________________________________________________________________________
                                                                                   (65.4)      (63.3)      (83.0)
____________________________________________________________________________________________________________________
Net current assets                                                                  114.7       116.3        98.8
____________________________________________________________________________________________________________________
Total assets less current liabilities                                               456.1       506.7       452.2
____________________________________________________________________________________________________________________
Creditors: amounts falling due after more than one year
Borrowings                                                                         (91.8)      (74.4)      (76.8)
Government grants                                                                   (1.4)       (1.5)       (1.5)
____________________________________________________________________________________________________________________
                                                                                   (93.2)      (75.9)      (78.3)
Provisions for liabilities and charges                                             (28.9)      (32.6)      (33.1)
____________________________________________________________________________________________________________________
                                                                                  (122.1)     (108.5)     (111.4)
____________________________________________________________________________________________________________________
Net assets excluding net pension liability                                          334.0       398.2       340.8
Net pension liability                                                              (63.8)      (58.0)      (63.6)
____________________________________________________________________________________________________________________
Net assets including net pension liability                                          270.2       340.2       277.2
____________________________________________________________________________________________________________________
Capital and reserves
Called up share capital                                                              23.3        23.6        23.4
Share premium                                                                         1.2         1.2         1.2
Capital redemption reserve                                                           57.7        48.0        52.9
Profit and loss account                                                             186.1       265.5       197.8
____________________________________________________________________________________________________________________
Shareholders' funds                                                                 268.3       338.3       275.3
Minority interests                                                                    1.9         1.9         1.9
                                                                                    270.2       340.2       277.2
___________________________________________________________________________________________________________________

Shareholders' funds
Equity                                                                              266.6       336.3       273.5
Non-equity                                                                            1.7         2.0         1.8
____________________________________________________________________________________________________________________
                                                                                    268.3       338.3       275.3
____________________________________________________________________________________________________________________


Cash flow statement
for the six months to 30 June 2003
                                                                                      2003        2002       2002
                                                                                Six months  Six months       Year
                                                                                to 30 June  to 30 June  to 31 Dec
                                                                          Note    £million    £million   £million
____________________________________________________________________________________________________________________

Net cash (outflow)/inflow from operating activities                          6       (8.2)        13.3       38.0
Returns on investments and servicing of finance
Interest received                                                                      1.1         0.4        5.0
Interest paid                                                                        (1.8)       (1.1)      (4.5)
____________________________________________________________________________________________________________________
                                                                                     (0.7)       (0.7)        0.5
Taxation                                                                             (0.8)       (1.8)        1.7
____________________________________________________________________________________________________________________
Capital expenditure and financial investment
Purchase of fixed assets                                                             (8.7)       (5.0)     (16.2)
Disposal of fixed assets                                                               0.3         1.4        0.9
Disposal of properties - exceptional                                                   1.0           -        9.4
____________________________________________________________________________________________________________________
                                                                                     (7.4)       (3.6)      (5.9)
Acquisitions and disposals
Acquisition of businesses in prior periods                                           (0.4)       (1.3)     (28.2)
Disposal of businesses in prior periods                                                  -         1.1        3.5
                                                                                     (0.4)       (0.2)     (24.7)
____________________________________________________________________________________________________________________
Cash outflow/(inflow) before use of liquid resources and financing                  (17.5)         7.0        9.6
Financing
Redemption of B shares                                                               (4.8)       (4.7)      (9.6)
Decrease in borrowings due within one year                                           (0.6)       (0.7)      (0.8)
Increase in borrowings repayable after one year                                       15.6         1.8        7.4
____________________________________________________________________________________________________________________
                                                                                      10.2       (3.6)      (3.0)
Management of liquid resources
Decrease/(increase) in cash deposits                                                   4.1       (8.4)        4.1
(Decrease)/increase in cash                                                          (3.2)       (5.0)       10.7
____________________________________________________________________________________________________________________



Movement in net borrowings
for the six months to 30 June 2003

____________________________________________________________________________________________________________________
                                                                                     2003        2002       2002
                                                                               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)/increase in cash in the period                                           (3.2)       (5.0)       10.7
Increase in borrowings                                                             (15.0)       (1.1)      (6.6)
(Decrease)/increase in liquid resources                                             (4.1)         8.4      (4.1)
____________________________________________________________________________________________________________________
                                                                                   (22.3)         2.3          -
Currency translation differences                                                      1.5         0.6        2.6
____________________________________________________________________________________________________________________
(Increase)/decrease in net borrowings                                              (20.8)         2.9        2.6
Net borrowings at beginning of the financial period                                (37.4)      (40.0)     (40.0)
____________________________________________________________________________________________________________________
Net borrowings at end of the financial period                                      (58.2)      (37.1)     (37.4)
____________________________________________________________________________________________________________________





Statement of total recognised gains and losses
for the six months to 30 June 2003
____________________________________________________________________________________________________________________
                                                                                     2003        2002        2002
                                                                               Six months  Six months        Year
                                                                               to 30 June  to 30 June   to 31 Dec
                                                                                 £million    £million    £million
____________________________________________________________________________________________________________________
Profit for the financial period                                                       4.2         4.4      (30.8)
Actuarial loss on pension and other post retirement schemes                             -      (48.0)      (59.4)
Deferred tax associated with pension and other post retirement schemes                  -        14.6        18.2
Currency translation differences                                                    (6.4)      (10.6)      (25.7)
Taxation on currency translation differences                                            -         1.3         1.5
____________________________________________________________________________________________________________________
Total recognised losses for the financial period                                    (2.2)      (38.3)      (96.2)
____________________________________________________________________________________________________________________
Prior period adjustments                                                                       (19.0)      (19.0)
Total recognised losses                                                                        (57.3)     (115.2)
____________________________________________________________________________________________________________________



Reconciliation of movements in shareholders' funds
for the six months to 30 June 2003
____________________________________________________________________________________________________________________
                                                                                     2003        2002        2002
                                                                               Six months  Six months        Year
                                                                               to 30 June  to 30 June   to 31 Dec
                                                                                 £million    £million    £million
____________________________________________________________________________________________________________________
Profit for the financial period                                                       4.2         4.4      (30.8)
Redemption of redeemable B shares                                                   (4.8)       (4.7)       (9.6)
Goodwill on businesses disposed                                                         -         2.8         2.6
Actuarial loss on pension and other post-retirement schemes                             -      (48.0)      (59.4)
Deferred tax associated with pension and other post-retirement schemes                  -        14.6        18.2
Other recognised gains and losses                                                   (6.4)       (9.3)      (24.2)
____________________________________________________________________________________________________________________
Net decrease in shareholders' funds                                                 (7.0)      (40.2)     (103.2)
At beginning of the financial period                                                275.3       378.5       378.5
____________________________________________________________________________________________________________________
At end of the financial period                                                      268.3       338.3       275.3
____________________________________________________________________________________________________________________




Notes to the financial statements

1.  Accounting policies

Basis of preparation The financial information for the first six months of 2003
and 2002, 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, is presented on the basis of accounting policies set out
in the financial statements of Elementis plc for the year ended 31 December
2002.




2.  Segmental information
____________________________________________________________________________________________________________________
                                         Group turnover                 Group operating profit/(loss)
                                        2003         2002         2002         2003         2002         2002
                                  Six months   Six months         Year   Six months   Six months         Year
                                  to 30 June   to 30 June    to 31 Dec   to 30 June   to 30 June    to 31 Dec
                                    £million     £million     £million     £million     £million     £million
____________________________________________________________________________________________________________________
a) Before goodwill amortisation and
exceptionals
Analysis by activity
Chromium                                62.4         59.5        109.0          4.8          5.2          3.7
Inter-group turnover                   (3.0)        (4.4)        (6.9)            -            -            -
                                        59.4         55.1        102.1          4.8          5.2          3.7
Specialties & Pigments                 108.1        119.7        225.0          9.7         10.2         18.7
Specialty Rubber                        21.2         19.7         37.8            -        (0.9)        (2.0)
____________________________________________________________________________________________________________________
                                       188.7        194.5        364.9         14.5         14.5         20.4
____________________________________________________________________________________________________________________

Analysis by area of operations
North America                          101.2        103.1        191.1         10.6          9.3         12.6
Europe                                  75.7         79.8        151.4          2.9          3.6          5.2
Rest of the World                       11.8         11.6         22.4          1.0          1.6          2.6
____________________________________________________________________________________________________________________
                                       188.7        194.5        364.9         14.5         14.5         20.4
____________________________________________________________________________________________________________________

b) After goodwill amortisation and
exceptionals
Analysis by activity
Chromium                                62.4         59.5        109.0          5.4          6.2       (35.8)
Inter group turnover                   (3.0)        (4.4)        (6.9)            -            -            -
                                        59.4         55.1        102.1          5.4          6.2       (35.8)
Specialties & Pigments                 108.1        119.7        225.0          2.0          3.2          0.7
Specialty Rubber                        21.2         19.7         37.8        (0.1)        (1.4)        (2.7)
____________________________________________________________________________________________________________________
                                       188.7        194.5        364.9          7.3          8.0       (37.8)
____________________________________________________________________________________________________________________

Analysis by area of operations
North America                          101.2        103.1        191.1          4.3          3.4       (39.4)
Europe                                  75.7         79.8        151.4          2.0          3.0        (1.0)
Rest of the World                       11.8         11.6         22.4          1.0          1.6          2.6
____________________________________________________________________________________________________________________
                                       188.7        194.5        364.9          7.3          8.0       (37.8)
____________________________________________________________________________________________________________________





3.  Net interest payable
____________________________________________________________________________________________________________________
                                                                                   2003        2002         2002
                                                                             Six months  Six months         Year
                                                                             to 30 June  to 30 June    to 31 Dec
                                                                               £million    £million     £million
____________________________________________________________________________________________________________________

Interest payable                                                                  (1.7)       (1.5)        (3.4)
Interest receivable                                                                 0.7         0.5          1.5
Pension scheme and post retirement benefits                                       (2.0)       (0.2)          0.1
Discount on environmental provisions                                              (0.5)           -        (1.0)
Other finance income                                                                0.4           -          2.0
____________________________________________________________________________________________________________________
                                                                                  (3.1)       (1.2)        (0.8)
____________________________________________________________________________________________________________________



4.  Taxation

The tax charge of £2.9 million (2002: £2.6 million) is based on an estimated
effective tax rate on profit before goodwill amortisation and exceptionals for
the year to 31 December 2003 of 25 per cent (2002: 20 per cent).  The rate is
lower than the standard UK corporation tax rate primarily due to the utilisation
of losses and surplus ACT. Tax on exceptional charges was £0.2 million (2002:
£nil).



5.  Basic and diluted earnings/(loss) per ordinary share
____________________________________________________________________________________________________________________
                                                                                    2003        2002        2002
                                                                              Six months  Six months        Year
                                                                              to 30 June  to 30 June   to 31 Dec
                                                                                   pence       pence       pence
                                                                               per share   per share   per share
____________________________________________________________________________________________________________________
Basic earnings/(loss) per ordinary share                                             1.0         1.0       (7.1)
Goodwill amortisation net of taxation                                                0.9         1.0         2.0
Exceptionals net of taxation                                                         0.1         0.4         8.5
____________________________________________________________________________________________________________________
Basic earnings per ordinary share before goodwill amortisation and                   2.0         2.4         3.4
exceptionals
____________________________________________________________________________________________________________________


Basic earnings per ordinary share is based on profit for the period of £4.2
million (2002: £4.4 million, year to 31 December 2002: loss of £30.8 million)
and on the weighted average number of ordinary shares in issue during the period
of 431.6 million (2002: 431.6 million, year to 31 December 2002: 431.6 million).
  Basic earnings per ordinary share before goodwill amortisation and
exceptionals is based on earnings of £8.5 million (2002: £10.6 million, year to
31 December 2002: £14.7 million).



Diluted earnings per ordinary share are based on an adjusted weighted average
number of shares of 435.6 million (2002: 434.0 million, year to 31 December
2002: 435.1 million).



6.  Net cash flow from operating activities


____________________________________________________________________________________________________________________
                                                                                    2003        2002        2002
                                                                              Six months  Six months        Year
                                                                              to 30 June  to 30 June   to 31 Dec
                                                                                £million    £million    £million
____________________________________________________________________________________________________________________
Operating profit before goodwill amortisation and exceptionals                      14.5        14.5        20.5
Depreciation (less grants credited)                                                  7.7         9.6        18.3
____________________________________________________________________________________________________________________
Earnings before interest, tax, depreciation and amortisation                        22.2        24.1        38.8
(Increase)/decrease in stocks                                                      (1.7)       (1.1)       (3.0)
(Increase)/decrease in debtors                                                    (13.9)       (9.2)         0.6
(Decrease)/increase in creditors                                                   (9.4)       (1.0)         7.3
Provisions movement                                                                (4.7)       (1.7)       (2.6)
Pension contributions net of current service cost                                  (1.3)         1.2       (3.3)
Other                                                                                0.6         1.0         0.2
____________________________________________________________________________________________________________________
Net cash (outflow)/inflow from operating activities                                (8.2)        13.3        38.0
____________________________________________________________________________________________________________________





7.  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 (now the Rural Payments Agency).
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.




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