Notes to the interim financial statements

1 General information
The comparative figures for the year ended 31 December 2004 are not the Company’s statutory accounts for that financial year. Those accounts, which were prepared under UK Generally Accepted Accounting Practices, have been reported on by the Company’s auditor and delivered to the Registrar of Companies. The auditor’s report was unqualified and did not contain statements under section 237 (2) or (3) of the Companies Act 1985.

2 Accounting policies
Statement of compliance The consolidated interim financial statements of the Company comprise the Company and its subsidiaries (the “Group”) and the Group’s interest in associates. European Union (EU) law requires that the next annual consolidated financial statements of the Company, for the year ending 31 December 2005, be prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the EU (“adopted IFRS”). This interim financial information has been prepared on the basis of the recognition and measurement requirements of IFRS in issue that either are endorsed by the EU and effective at 30 June 2005 or are expected to be endorsed and effective at 31 December 2005, the Group’s first annual reporting date at which it is required to use adopted IFRSs. Based on these adopted and unadopted IFRSs, the directors have made assumptions about the accounting policies expected to be applied,which are as set out below,when the first annual IFRS financial statements are prepared for the year ending 31 December 2005.

In particular, the directors have assumed that the following IFRS issued by the International Accounting Standards Board will be adopted by the EU in sufficient time that it will be available for use in the annual IFRS financial statements for the year ending 31 December 2005:

Amendment to International Accounting Standard IAS 19 Employee Benefits: Acturial Gains and Losses, Group Plans and Disclosures

In addition, the adopted IFRSs that will be effective in the annual financial statements for the year ending 31 December 2005 are still subject to change and to additional interpretations and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period will be determined finally only when the annual financial statements are prepared for the year ending 31 December 2005.

An explanation of how the transition to IFRS has affected the reported financial position, financial performance and cash flows of the Group was published by the Company on 31 March 2005 and is available on its website at www.elementis.com.

Notes to the interim financial statements continues on the next page >
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