Continued

In order to emphasise the long term nature of the Performance Share Plan, participants may only sell enough shares to cover their liability for income tax arising on the exercise of an option within the two year period following the date of the exercise of that option.

The Company's Employee Share Ownership Trust (ESOT) was established in 1995 and has purchased shares in the Company to meet the exercise of some of the options outstanding under the Performance Share Plan. At 31 December 2003, the ESOT held 670,729 shares with a market value of £0.2 million. The right to dividends on ordinary shares owned by the ESOT has been waived.

No further options are to be granted under the Performance Share Plan.

1987 and 1998 Executive Share Option Schemes
The 1987 Executive Share Option Scheme (the "1987 Scheme") and the 1998 approved and unapproved Executive Share Option Schemes (the "1998 Scheme") which replaced the 1987 Scheme, are discretionary option schemes under which senior management below Board level were granted options to purchase shares in the Company. The option price at which options may be exercised is the average market price over the five working days preceding the grant and there is no discount. Options are capable of exercise after three years and within ten years of the date of grant; those granted since 1995 are subject to earnings per share performance targets.

2003 Executive Share Option Scheme
The 2003 Executive Share Option Scheme (the "2003 Scheme") was approved at the 2003 AGM.

The 2003 Scheme has replaced the 1998 Scheme and reflects current guidelines issued by institutional investors and current market practice. Following the adoption of the 2003 Scheme, no further awards will be made under the 1998 Scheme or the Performance Share Plan. Existing awards will, however, continue to be exercisable.

The key points of the 2003 Scheme are as follows:

• options will be granted with an exercise price per share based on the Company's share price immediately before the date of grant

• the shares valued at the date of grant under options granted to an executive in any financial year will not normally exceed 1.5 times basic salary

• conditions attached to the exercise ability of options granted in 2003 to executive directors and other members of the management team were based partly on the Company's earnings per share growth relative to inflation, and partly on the Company's total shareholder return relative to the initial comparator group comprising national and international chemical companies used in the Performance Share Plan.The following targets applied to executive directors and other members of the management team.

Proportion of option grant exercisable as multiplier of base salary	EPS / TSR split	Performance criteria to be met for options to be exercisable
0.0 to 0.7	50% EPS	Annual average EPS growth of 4% + RPI
	50% TSR	TSR at median
0.71 to 1.5	50% EPS	Annual average EPS growth of 4.1% + RPI to 10% + RPI (straight line vesting)
	50% TSR	Median to upper quartile (straight line vesting)

Directors' remuneration report continues on the next page >
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