Our key objectives for 2004 include an acceleration of growth in Elementis Specialties, margin recovery in Elementis Chromium, commissioning of the new Elementis Pigments plant in China, continued strong top line growth in Specialty Rubber and completion of implementation of the Elementis ERP system.

Strategic Progress Report
Our key objectives for 2004 include an acceleration of growth in Elementis Specialties, margin recovery in Elementis Chromium, commissioning of the new Elementis Pigments plant in China, continued strong top line growth in Specialty Rubber and completion of implementation of the Elementis ERP system.

Substantial progress has been made towards all these goals during the first half of 2004. Elementis Specialties has shown an increased rate of sales growth, with market share gains across targeted market sectors. The integration of the recently acquired Sasol Servo B.V. business is in progress and will add further revenue and earnings growth for Elementis Specialties. Elementis Chromium has implemented a price increase programme to offset cost pressures and improve margins. By the end of the first half of 2004 the volume lost due to the de-registration of CCA for residential use had been replaced, albeit in lower margin sectors. Commissioning of the new Elementis Pigments plant will begin in the second half of 2004 and two of our four businesses - Elementis Specialties and Elementis Chromium - have now successfully 'gone live' with the Elementis ERP system. Elementis Specialty Rubber and Elementis Pigments are expected to complete implementation during 2004/5.

Six Sigma benefits during the first half year were £0.8 million. A number of senior Six Sigma practitioners (Black Belts) have continued on temporary assignment to the ERP programme, reducing the savings directly attributable to Six Sigma in the period. Total accumulated benefits from the Six Sigma programme since its introduction in 2001 are in excess of £9.0 million. Six Sigma is a methodology widely used in process industries to increase quality and efficiency by reducing process variability.

Health, safety and the environment have received continued emphasis during the first half of 2004 with the Group's safety record to date showing significant improvement. The Group's Sustainable Development report, first issued this year, has met with widespread approval. Elementis Chromium has won the first ever Chemical Industries Association Sustainable Development Award, with the judges commenting that the Group's Sustainable Development report is considered best practice for the industry.

Chief Executive's strategic and operating review continues on the next page >
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