Interim results

1
Interim results

• 1 August 2001

2
Jonathan Fry

• Chairman

3
Financial highlights
H1 2001m
H1 2000m
Change
296.7 17.5 15.1 3.0p
288.0 32.2 29.5 5.6p
3 (46) (49) (46)
Sales Operating profit Profit before
tax Earnings per share
before goodwill amortisation and exceptionals
4
Estimated profit bridge

• m
• Operating profit H1 2000 32.2
• Energy costs (7.3)
• US sales (excl. Chemical Distribution) (5.0)
• Chromium restructuring (gross) (2.3)
• Currency 1.6
• Net other (1.7)
• Operating profit H1 2001 17.5

before goodwill amortisation and exceptionals
5
US average monthly gas price
Mbtu
9
8
7
6
5
4
3
2
1
0
Jan 99
Mar
May
Jul
Sep
Nov
Jan 00
Mar
May
Jul
Sep
Nov
Jan 01
Mar
May
Jul
Source US Energy Information Administration
6
Pigments SpecialtiesSales
Up
1
million
119.7
118.7
H1 2000
H1 2001
7
Pigments SpecialtiesSales on constant currency
basis
Down
4
million
114.4
118.7
H1 2000
H1 2001
8
Pigments SpecialtiesOperating profit
Down
33
million
15.6
10.5
H1 2000
H1 2001
before goodwill amortisation and exceptionals
9
Pigments

• Slow North American demand for iron oxide
  pigments for
• coatings
• construction
• chemical applications
• Margins under pressure due to higher US energy
  costs
• Operational improvements at finishing plant in
  China

10
Specialties

• Sales increase due to strong dollar
• sales flat on constant currency basis
• Lower sales to North American coatings market
• Very significant growth in oil market
• Robust European performance
• Rheolate sales maintained

11
Specialties

• Operating profit impacted by
• lower sales
• higher energy costs
• higher raw material costs
• upgrading sales and marketing capability

12
ChromiumSales
Up
4
million
68.2
65.8
H1 2000
H1 2001
13
ChromiumSales on constant currency basis
Down
2
million
65.8
64.3
H1 2000
H1 2001
14
ChromiumOperating profit
Down
65
million
12.0
4.2
H1 2000
H1 2001
15
Chromium

• Adverse energy trend continues
• 5.0 million impact vs. H1 2000
• 2.0 million higher vs. H2 2000
• Average pricing down
• increased Russian competition
• Global demand unchanged vs. H1 2000
• Patchy demand
• strong in chromic oxide for metal alloys
• lower in chrome sulphate for leather tanning

16
Chromium

• Sales volume of up c. 30
• Business process re-engineering project in US
  complete
• headcount down by gt10
• Environmental improvement at Eaglescliffe chromic
  oxide plant
• some capacity unavailable during project

17
Specialty RubberSales
Down
10
million
28.2
25.3
H1 2000
H1 2001
18
Specialty RubberSales on constant currency basis
Down
11
million
28.2
25.0
H1 2000
H1 2001
19
Specialty Rubber

• Sales decline mainly in North America
• West Coast mining production downturn
• exit of unprofitable sales lines
• Strong growth in South Africa and Asia
• European sales disrupted by plane crash and phase
  out of major process technology equipment
  contracts
• Double digit growth for sheet rubber sales

20
Specialty RubberOperating profit
Down
44
million
1.6
0.9
H1 2000
H1 2001
before exceptionals
21
Specialty Rubber

• Headcount reduced by c.80 in half year
• business simplification complete
• Continuous press on schedule for installation by
  end of H2

22
Chemical DistributionSales
Up
11
million
87.3
78.7
H1 2000
H1 2001
23
Chemical DistributionSales on constant currency
basis
Up
3
million
81.3
78.7
H1 2000
H1 2001
24
Chemical DistributionOperating profit
Down
37
million
3.0
1.9
H1 2000
H1 2001
25
Chemical Distribution

• Volume up 5 due to strong weather-related demand
  for rock salt
• Volume down 5 excl. rock salt driven by US
  economy
• Margins down due to increase in energy related
  costs

26
George Fairweather

• Group Finance Director

27
Operating profit
Chromium Pigments Specialties Chemical
Distribution Specialty Rubber
before goodwill amortisation and exceptionals
28
Financial summary
Six months to 30 June
2000m
2001m
Operating profit Interest Goodwill
amortisation Exceptionals Profit before tax Tax
rate Earnings per share
17.5 (2.4) 15.1 (6.9) (5.1) 3.1
14 3.0p
32.2 (2.7) 29.5 (6.4) (2.8) 20.3 5.6p
18

before goodwill amortisation and exceptionals
29
Redeemable B shares

• Actual redeemable B share issue 2.1
  penceNovember 2000
• Proposed redeemable B share issue 2.1
  penceNovember 2001
• Projected ACT recovery 2.3 million

30
Operating cash flow
Six months to 30 June
2000m
2001m
32.2 8.5 (1.0) (14.8) (2.7) (18.5) (4.1) 1
8.1
Operating profit Depreciation Stocks Debtors C
reditors Working capital Other
17.5 9.4 (5.1) (9.5) (6.4) (21.0) (5.5)
0.4
before goodwill amortisation exceptionals
31
Net cash flow
Six months to 30 June
2000m
2001m
18.1 (14.9) 6.1 (1.7) (2.0) (11.9) (0.4)
(6.7) (5.5)
Operating cash flow Capital expenditure Fixed
asset disposals Interest Tax Redemption of B
shares (incl. costs) Other Net cash
outflow Translation
0.4 (7.5) 0.1 (2.8) (4.6) (13.4)
(0.2) (28.0) (2.8)
(12.2)
(30.8)
Net increase in borrowings
32
Balance sheet
At 30 June
2000m
2001m
233.5 195.7 2.1 120.8 (62.5)
(72.5) 417.1
232.5 192.6 1.9 103.5 (71.9) (57.7) 400.9
Goodwill Tangible fixed assets Investments Working
capital Provisions/tax/dividends/interest Net
borrowings Capital reserves
33
Business improvements
34
Business improvements

• Data warehouse live
• web based transaction level data
• Six Sigma launched world wide
• 13 blackbelts trained
• greenbelt training starts by end 2001
• first projects complete in Q3
• LTA frequency improved
• down 42

35
Innovation

• New products launched during H1
• Thixatrol Max - rheological additive for
  solvent based coatings
• LinaCrepeTM - uncured rubber that moulds into
  shape for use in belting, hoses and roller
  covering applications

36
Current trading outlook

• Market conditions continue in line with H1
• Uncertainty over US economy
• Energy cost impact expected to be less severe in
  H2
• Energy cost increase for H2 estimated at 2.5
  million versus H2 2000
• Six Sigma and other business improvement projects
  will provide benefits in H2

37
Strategy

• Explore options to maximise shareholder value
• Short-term trading has to be the immediate focus
• Still plan to make acquisitions if the fit and
  price are right
• Recruitment of new Group Chief Executiveunder
  way
• Business remains strong
• excellent market position
• high calibre team