I am pleased to report an operating profit, before goodwill amortisation and exceptionals, on continuing businesses of £20.5 million, an improvement of 63 per cent on 2001. Earnings per share on the same basis increased 17 per cent to 3.4 pence.

This has been accomplished, despite a 7 per cent decline in sales from continuing operations to £364.9 million, by systematic cost management and higher productivity, helped by lower energy costs. While overall volumes have been maintained, lower prices for chromium chemicals and the effect of currency movements caused most of the sales decline.

Operating cash flow was marginally ahead of last year at £38.0 million and net borrowings were reduced by £2.6 million to £37.4 million. This was achieved after taking account of acquisition expenditure of £28.2 million. The Elementis Six Sigma programme has delivered benefits exceeding £3.0 million during 2002, and expectations are that this will continue in 2003. Capital expenditure was down 26 per cent to £12.4 million, excluding £3.8 million expenditure on the Enterprise Resource Planning (ERP) programme, at 68 per cent of depreciation. Exceptional items were £40.4 million mainly attributable to the restructuring charge for the rationalisation of the chromium operations in Corpus Christi, Texas, as previously announced. As a result basic earnings per share, after goodwill amortisation and exceptionals in 2002 was a loss of 7.1 pence (2001: earnings of 1.0 pence).

Safety performance improved modestly in 2002, but not to the satisfaction of the Board or management, and additional emphasis is being given to bring performance up to the level of the industry's leaders. Environmental non-compliances were reduced substantially.

Under the leadership of Chief Executive Geoff Gaywood, 2002 has been a year of strategic action. Good progress has been made in the implementation of the growth strategy outlined in the 2001 Annual Report and further elaborated at the half year.

Three non-core businesses were exited. Investments for growth were made in the new ERP system, in Pigments & Specialties plants in the strategically important Chinese market, and in our Specialties business development capabilities. Structural over-capacity in the chromium industry was addressed through the rationalisation of our US chromium site and the acquisition of the chromium chemicals business of Occidental Chemicals Corporation (OxyChem). I would like to thank Elementis employees for their determined effort in delivering these achievements.

The Board intends to issue further redeemable B shares to ordinary shareholders on the register on 28 April 2003 with a total value of 1.1 pence for each ordinary share held. This compares with 1.0 pence for the comparable issue last year.

Given the uncertain global economic outlook and continuing pressure on chromium chemicals pricing, Elementis nevertheless expects to improve its cost base further and strengthen its market positions.