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Elementis PLC (ELM)

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Monday 27 March, 2006

Elementis PLC

Strategic Review

Elementis PLC
27 March 2006

27 March 2005

                                 Elementis plc
                        Second Phase of Strategic Review

Elementis plc is today announcing the results of the second phase of the Board's
Strategic Review.

In October 2005 the Board, having reviewed the businesses and operations of the
Company, decided to implement a number of changes in order to achieve three key
objectives as follows:

•    Improve the base earnings level of the Company

•    Reduce the volatility of Chromium earnings

•    Focus attention on Specialties, which is the largest and most
     profitable business.

Progress so far

Progress has been made in implementing the actions announced in October to
address the first two of these objectives. The reorganisation of certain
corporate and administrative functions in order to improve base earnings,
together with certain actions announced in the first half of 2005, have been
completed and will lead to a reduction in fixed costs in 2006 versus 2005 of
£11.1 million, with a further £1.9 million in 2007. In Chromium the announced
closure of 50% of capacity in the UK, in order to reduce earnings volatility, is
on course to be completed by around the end of the March 2006, and 60% of the
remaining UK production is being sold under twelve month contracts. The Group
has taken some additional actions to stabilise earnings in 2006 by fixing 40% of
its electricity costs and 60% of its gas costs for the year, and hedging
approximately 80% of its US Dollar and Euro cash flows against sterling.

Focusing attention on Specialties

The third objective is to focus attention on Specialties, and this has been the
main theme of the second phase of the Board's Strategic Review. Specialties,
excluding surfactants which are related to the Servo acquisition, already
generates attractive returns, but going forward the Group believes it can
leverage its' portfolio of rheology modifiers and dispersions, which had sales
of £139.7 million in 2005, to increase sales growth rates without compromising
margins. Opportunities in personal care, low solvent thickeners and plastic
additive niches will be pursued via a refocused R&D group to enhanced medium
term performance.

In the near term Specialties will also benefit from further efficiencies
identified during phase two of the Review. Improvements in manufacturing
efficiencies, as well as reductions in selling and administration costs will
reduce costs in 2007 by a further £2.2 million. When combined with savings
announced in October 2005 and changes in US pension benefits to be implemented
by the end of the first half, the Group will benefit from total cost reductions
of £5.3 million in 2007 compared to 2006.

Current Trading

Trading for the first quarter of 2006 has been satisfactory in all categories,
with the coatings markets showing an improvement over 2005.

Commenting on phase two of the Strategic Review, Edward Bramson, Executive
Chairman said:

'Today's announcement is consistent with our strategy of improving the Group's
long term earnings quality and consistency, and we are confident that the
Specialties business will provide an excellent platform for future growth and
cash flow generation. We are now taking steps to improve 2007 earnings
consistency and we intend to provide further updates on segment performance and
the outlook for trading at the time of our Interim announcement.'

                                    - ENDS -


Elementis plc                                      Tel: +44 (0)1784 227000
Ed Bramson, Chairman
Brian Taylorson, Finance Director

Financial Dynamics                                 Tel: +44 (0)20 7831 3113
Andrew Dowler
Greg Quine

                      This information is provided by RNS
            The company news service from the London Stock Exchange