Financial results
Sales for the first half of 2003 decreased by 3 per cent versus the first half of 2002 to £188.7 million. Sales on a constant currency basis, after allowing for discontinued businesses, increased by 4 per cent.

Sales volumes for the period increased by 9 per cent, largely due to the acquisition of the OxyChem chrome business in December 2002, while overall prices declined by 3 per cent with most of the decline occurring in Chromium.

Operating profit before goodwill amortisation and exceptionals was unchanged from the first half of 2002 at £14.5 million. In addition to the increase in sales volumes, savings from the OxyChem acquisition and the related restructuring of the US chrome operations contributed £6.6 million to the first half of 2003. Operating profit was also favourably impacted by positive net currency effects of £2.1 million, Six Sigma savings of £0.8 million and other cost saving initiatives. These were offset by an increase in energy costs of £2.4 million, increased raw material prices in Specialties of £1.0 million and the fixed costs acquired with the OxyChem business.

Profit before goodwill amortisation, exceptionals and tax was £11.4 million compared to £13.3 million in the first half of 2002, reflecting higher FRS17 pension costs.

Basic earnings per share before goodwill amortisation and exceptionals was 2.0 pence compared to 2.4 pence in the first half of 2002.

Profit after tax was £4.2 million compared to £4.5 million in the first half of 2002, after charging goodwill amortisation of £6.3 million (2002: £7.0 million) and exceptional items of £0.1 million (2002: £1.7 million).

Basic earnings per share were 1.0 pence compared to 1.0 pence in the first half of 2002.

Specialties & Pigments
Sales in Specialties & Pigments were £108.1 million in the first half of 2003, 10 per cent lower than the first half of 2002. After allowing for discontinued businesses, sales were 7 per cent lower than in the previous period, and when also adjusting for constant currencies the reduction was 1 per cent.

Operating profit before goodwill amortisation and exceptionals was £9.7 million versus £10.2 million in the same period last year.

Sales in Specialties for the first half of 2003 were down by 7 per cent versus the same period last year. On a constant currency basis sales were down 3 per cent. Volumes were down by 2 per cent and pricing was flat compared to the first half of 2002.

Operating profit before goodwill amortisation and exceptionals was lower than the first half of 2002 largely due to the lower sales. Otherwise higher energy costs and higher raw material prices were offset by a positive currency impact and Six Sigma benefits.

Sales in Pigments for the first half of 2003 were down by 14 per cent versus the same period last year. After allowing for currency effects and discontinued businesses, sales were up 1 per cent versus the previous period. The increase was driven by higher volumes while pricing was flat.

Operating profit before exceptionals showed a significant improvement over the first half of 2002. Higher underlying sales were supplemented by Six Sigma benefits, the Birtley site restructuring and other cost initiatives, which more than offset higher energy prices.

Chromium
Sales in Chromium increased by 5 per cent to £62.4 million compared to the first half of 2002. On a constant currency basis sales increased by 10 per cent. Sales volumes increased by 25 per cent, largely due to the acquisition of the OxyChem business in December 2002. Average prices fell by 11 per cent with the largest impact being seen in chromic acid and chromic oxide.

Operating profit before exceptionals for the first half of 2003 was £4.8 million, 8 per cent lower than the same period last year. The improvement in sales and savings from the restructuring of our US operations was offset by higher energy costs of £1.2 million and the fixed costs acquired with the OxyChem business. Six Sigma programmes and insurance recoveries also made positive contributions in the period. The net currency impact on operating profit was minimal compared to the first half of 2002.

Specialty Rubber
Sales showed a marked improvement over the first half of 2002 at £21.2 million, an increase of 8 per cent. Currency effects were minimal.

Operating profit before exceptionals also showed a significant improvement at breakeven versus a loss of £0.9 million for the first half of 2002, driven by the strong growth in sales as well as fixed cost benefits from the restructuring programme implemented in 2002.

Divisional highlights
for the six months to 30 June 2003

	Sales £million	2003 Operating profit before goodwill amortisation & exceptionals £million	Operating profit after goodwill amortisation & exceptionals £million	Sales £million	2002 Operating profit before goodwill amortisation & exceptionals £million	Operating profit after goodwill amortisation & exceptionals £million
Specialties & Pigments	108.1	9.7	2.0	119.7	10.2	3.2
Chromium	62.4	4.8	5.4	59.5	5.2	6.2
Specialty Rubber	21.2	–	(0.1)	19.7	(0.9)	(1.4)
Inter-group	(3.0)	–	–	(4.4)	–	–
	188.7	14.5	7.3	194.5	14.5	8.0