Operating profit before goodwill amortisation and exceptionals was £31.1 million, a year on year increase of 9 per cent, on sales up 5 per cent to £234.9 million. Operating profit before goodwill amortisation and exceptionals in the second half of 2000 was £15.5 million, up 8 per cent on the second half of 1999.

Elementis Pigments
At Elementis Pigments, sales and operating profit before exceptionals both increased. This reflects strong growth of iron oxide sales into the construction market, including granular products, and the benefits of the major restructuring and upgrading programme, partially offset by lower profits on zinc products for the depressed UK market.

Success in marketing higher value added iron oxide pigments continues, with double digit sales growth into the toners and catalysts markets. New product launches during the year include the specialty zinc derivative Decelox™ for use in plastics.

During the first half of the year, the restructuring programme in the UK was completed with the consolidation of the Northampton distribution and administration centre into Birtley, the closure of the anhydrous aluminium chloride production facility at Birtley and the consolidation of the small pigments manufacturing facility in Toronto, Canada into the recently upgraded facility at Easton, US.

Elementis Specialties
At Elementis Specialties, sales and operating profit before goodwill amortisation and exceptionals were similarly both up on 1999, despite the impact of currency. Strong sales growth was achieved in the oil exploration drilling, inks and personal care markets; oil exploration drilling benefited from a continuing market recovery.

In the year, water based additives for coatings grew by around 9 per cent against 1999 and Rheolate® sales increased by 10 per cent. Rheological additives sales growth slowed in the second half of the year. Sales grew in most geographical regions, with sales to Japan more than 50 per cent higher than that achieved in 1999, reflecting the direct and technical sales presence established in May 1999. Performance in Europe was hindered by the relative weakness of the euro.

Key new products launched during 2000:

• Rheolate® 450: a thickener for vinyl acrylic based interior house paints that imparts high film build and good sag and levelling properties
• EA-2734: a pumpable organoclay compound for printing ink developed in response to increasing industry automation
• EA-2947: a heat-resistant organoclay compound for oil drilling fluids used in deep water drilling

The number of customers evaluating zinc oxide products for personal care applications increased significantly over the year. Elementis Specialties has also developed powder derivatives of zinc oxide for use in personal care applications and other products for UV protection in clear wood coatings. A plastic nanocomposite additive, which utilises proprietary clay modification technology, is currently on trial with customers.

In June, the £2.0 million Rheolate® production facility for water based coatings in Livingston, Scotland was completed and commissioned; this enables Elementis Specialties to meet growing worldwide demand for these technically innovative products. Capacity was also increased at Livingston to replace the small high cost production unit in Germany which closed in late 1999.

Costs in Pigments & Specialties reduced by £1.5 million on an annualised basis over the first half of the year, in line with previously announced targets; exceptional restructuring costs were £1.4 million as previously announced.

The ratio of trade working capital to sales increased from 19 per cent at the end of 1999 to 21 per cent at the end of 2000, primarily as a result of higher inventory levels; action is being taken to reverse this trend.

Ferrispec GC™ (granular crystals) from Elementis Pigments is a free flowing, low density granular pigment, used in architectural concrete applications.				Drawdown tests play a vital role in ensuring quality control for Elementis Specialties’ coatings customers.