Continued

18 Financial instruments
Short-term debtors and creditors have been excluded from all the following disclosures, other than the currency risk disclosures. Policies in respect of financial instruments are contained within the treasury section of the financial review.

(a) Cash at bank and in hand

	Group
	2003	2002
	£million	£million
Sterling cash deposits	-	14.5
Cash at bank	23.8	29.9
	23.8	44.4

Sterling cash deposits are placed on the UK money markets at floating bank deposit interest rates for periods of up to three months. Cash at bank is primarily held in sterling and US dollars.

(b) Borrowings

	Group		Company
	2003	2002	2003	2002
	£million	£million	£million	£million
Due within one year:
Bank overdrafts	1.2	0.7	5.3	5.9
Loan notes	3.9	4.3	3.9	4.3
Finance lease liabilities	0.2	-	-	-
	5.3	5.0	9.2	10.2
Due after one year:
Bank borrowings
due between one and two years	-	76.8	-	-
due between two and five years	65.2	-	-	-
Finance leases
due between one and two years	0.2	-	-	-
	65.4	76.8	-	-
	70.7	81.8	9.2	10.2

Bank borrowings are unsecured. Loan notes bear interest at six monthly intervals at one per cent below sterling LIBOR; these are redeemable at par at the option of the holders on any interest payment date, and in any event on 30 April 2005. The Group had undrawn committed facilities available to it at 31 December 2003 of £109.2 million (2002: £174.5 million); these expire in more than two years, and less than five years.

All borrowings at 31 December 2003 and 31 December 2002 were at floating rates. The currency profile of the borrowings was:

	2003	2002
Currency	£million	£million
Sterling	3.9	4.3
US dollar	43.9	55.9
Euro	21.1	19.6
Other	1.8	2.0
	70.7	81.8

The majority of floating rate borrowings are for periods of up to six months and bear interest at the relevant inter bank rates plus a margin.

(c) Fair values and hedges
The fair value of cash at bank and in hand and borrowings for the Group and the Company at 31 December 2003 was approximately equal to the book value at that date. There were no unrecognised gains/(losses) on hedges at the start, end or during the year.

(d) Monetary assets and liabilities
The value of monetary assets and liabilities of the Group not held in functional currencies and not hedged at 31 December was as follows:

				2003
	US dollar £million	Euro £million	Other £million	Total £million
Functional currency
Sterling	4.9	6.1	0.1	11.1
US dollar	-	-	0.5	0.5
Euro	-	-	-	-
Other	1.0	-	-	1.0
	5.9	6.1	0.6	12.6
				2002
	US dollar	Euro	Other	Total
	£million	£million	£million	£million
Functional currency
Sterling	5.2	7.3	0.1	12.6
US dollar	-	-	-	-
Euro	-	-	-	-
Other	2.6	-	-	2.6
	7.8	7.3	0.1	15.2

19 Provisions for liabilities and charges

	Deferred tax		Environmental		Restructuring		Self insurance		Total
	£million		£million		£million		£million		£million
Group
At 1 January 2003	1.9		19.9		6.4		4.9		33.1
Charge/(credit) to profit and loss account	(1.1	)	0.9		2.0		1.0		2.8
Utilised during the year	-		(1.8	)	(6.6	)	(1.2	)	(9.6	)
Currency translation differences	0.1		(1.0	)	(0.2	)	(0.4	)	(1.5	)
At 31 December 2003	0.9		18.0		1.6		4.3		24.8

Environmental provisions relate to chemical manufacturing and distribution sites including certain sites no longer owned by the Group. These provisions have been derived using a discounted cash flow methodology and reflect the extent to which it is probable that expenditure will be incurred over the next 20 years. Restructuring provisions at 31 December 2003 primarily relate to the finance and administration restructure following the introduction of a new enterprise resource planning system. Self insurance provisions at 31 December 2003 represent the aggregate of outstanding claims plus a projection of losses incurred but not reported. Restructuring provisions are expected to be utilised during 2004 and self insurance provisions are expected to be utilised within five years.

Deferred tax provision comprises:

	2003		2002
	£million		£million
Accelerated capital allowances	38.9		39.7
Other timing differences	(38.0	)	(37.8	)
	0.9		1.9

At 31 December 2003 the full amount of surplus ACT previously written off, available for offset against future UK profits, was £21.1 million (2002: £18.7 million) before allowing for amounts set against deferred tax liabilities of £5.3 million (2002: £6.3 million). Deferred tax assets not recognised in respect of tax losses carried forward at 31 December 2003 were £23.2 million (2002: £23.9 million).

Notes to the financial statements continue on the next page >
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