Annual Report and Accounts 2019

Innovation. Growth. Efficiency.

What's inside this report

How we impact HYHU\GD\ life

Page 04

How we innovate

Page 14

For more information

www.elementis.com/investors

01 Strategic report

01 Elementis today
01 2019 highlights
02 Our business at a glance
04 Discover Elementis
06 Chairman's statement
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12 Our market environment
14 Our strategy
20 Business model
22 Key performance indicators
24 Sustainability at a glance
26 Sustainability
33 Our people
36 Section 172 statement
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38 Finance report
44 Operating review
48 Risk management
50 Principal risks and uncertainties
53 Viability and going concern statement

54 Corporate Governance

54 Chairman's Corporate Governance statement
55 Board of Directors
58 Executive Leadership team
60 Corporate Governance report
60 Board leadership
63 Engaging our workforce
-
64 Company purpose and culture 65 Board activities
68 Engaging with our stakeholders
70 Board evaluation
71 Diversity
72 Nomination Committee report
75 Audit Committee report
78 Relations with shareholders
79 Directors' remuneration report
96 Directors' report
98 Directors' responsibilities
99 Financial statements
99 Independent auditor's report
107 Consolidated income statement
107 Consolidated statement of comprehensive income 108 Consolidated balance sheet
109 Consolidated statement of changes in equity
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111 Notes to the consolidated ƮQDQFLDOVWDWHPHQWV
162 Parent Company balance sheet
163 Parent Company statement of changes LQ{HTXLW\
1RWHVWRWKHFRPSDQ\ƮQDQFLDO statements of Elementis plc
171 Shareholder Information
171 Alternative performance measures and XQDXGLWHGSURIRUPD{LQIRUPDWLRQ
174 Five year record
175 Shareholder services
176 Corporate information
Ibc Glossary

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*(OHPHQWLVLVDJOREDOVSHFLDOW\ FKHPLFDOVFRPSDQ{RSHUDWLQJ DFURVV{ƮYHEXVLQHVVVHJPHQWV Personal Care, Coatings, Talc, &KURPLXPDQG(QHUJ*

To our customers we deliver Enhanced Performance Through Applied Innovation; our products make our FXVWRPHUVo{IRUPXODWLRQVORRNIHHODQGSHUIRUPDWWKHLUEHVW

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Operational highlights

,QZHUHVSRQGHGWRDFKDOOHQJLQJGHPDQGHQYLURQPHQWZLWK DFOHDUVHOIKHOSDJHQGDDQGWKHGHOLYHU\RIFRVWVDYLQJVQHZ business wins and new product launches.

Strategic highlights

,QZHFRPSOHWHGRXU&RDWLQJVWUDQVIRUPDWLRQSURJUDPPH WKH{LQWHJUDWLRQRI7DOFDQGODXQFKHGDQHZUDQJHRIVNLQFDUH LQJUHGLHQWV,Q1RYHPEHUZHKHOGD&DSLWDO0DUNHWV'D\ WR{XSGDWHVWDNHKROGHUVRQRXU,QQRYDWLRQ*URZWKDQG(ƱFLHQF\ DJHQGDDQGPHGLXPWHUPƮQDQFLDOREMHFWLYHV

¹ Continuing operations

² After adjusting items – see Note 5

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⁴ See Note 28

Corporate governance

Helping customers respond WRWKHLUELJJHVWFKDOOHQJHV

Revenue

Adjusted RSHUDWLQJSURƮW

Our purpose

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We are collaborative industrial innovators; developing ORQJWHUPSDUWQHUVKLSVZLWKRXUFXVWRPHUVLQQRYDWLQJ DW{SDFHWRNHHSWKHPDWWKHIRUHIURQWRIWKHLUPDUNHWV Combining our access to unique natural resources with RXU{XQPDWFKHGUKHRORJ\DQGWHFKQRORJLFDOH[SHUWLVHZH responsibly transform raw materials into ingredients with FUXFLDOSURGXFWEHQHƮWV

This enables our customers and their industries to solve their product performance and sustainability challenges.

Overview We are a leading global supplier of rheology PRGLƮHUVEDVHGRQQDWXUDODQGV\QWKHWLF LQJUHGLHQWVDQGDQWLSHUVSLUDQWDFWLYHVWR personal care manufacturers. Our products help make skin creams smooth and antiperspirants work.

:HVXSSO\RXUUKHRORJ\PRGLƮHUVDQG selected additives to industrial and decorative coatings manufacturers. Our products help make industrial coatings last longer and decorative coatings apply evenly and with enhanced stain resistance.

Sales \$195m \$320m \$GMXVWHGRSHUDWLQJSURƮW \$43m \$48m

Read more on page 44 Read more on page 45

Read more on page 46 Read more on page 47 Read more on page 47

\$26m \$18m \$4m

Strategic report

Corporate governance

Financial statements

Shareholder information

The world RI{(OHPHQWLV

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Bathroom

ÊÝåîÅëêàåðåëêáîFANCOR® natural oils help condition and repair damaged hair
ÕñêïßîááêBENTONE GEL® and BENTONE HYDROCLAY™ helps improve sunscreen application and boost SPF
ÃêðåìáîïìåîÝêðHigh performance ANTIPERSPIRANT ACTIVES help keep you fresher for longer
ÐÝåèÒëèåïäBENTONE® organoclays make nail polish apply smoothly and evenly
! ÃêðÝßåàïElementis ANTACID ACTIVES help ease the discomfort of stomach indigestion
" ÈÝÞîåßÕëâðáêáîRHEOCLEAN® UKHRORJ\PRGLƮHUVPDNHWRZHOV softer for longer
# Ceramics BENTONE® hectorite FOD\SURYLGHVH[FHOOHQWưRZRI ceramics to create mirror-like gloss and smoothness
\$ Tiles THIXATROL® helps bind large tiles to a surface faster and for longer
% Tiles FINNTALC enables the creation of large yet structurally VWDEOHZDOOWLOHV
Mirror FINNTALC in the coating of your mirror protects the silver for longer
Toilet Paper FINNTALC prevents formation of sticky impurities in paper making
Toilet Seat Our PLUSTALC increases the durability of your toilet seat
Shower Head CHROMIC ACID provides metallic shine, corrosion UHVLVWDQFHDQGHQKDQFHGZHDU
Towel Rack CHROMIC ACID provides metallic shine, corrosion UHVLVWDQFHDQGHQKDQFHGZHDU
! Green Tiles CHROME OXIDE provides vivid colour pigmentation IRUJUHHQEURZQDQGEODFNWLOHV

Living room

Magazines BENTONE® provides H[FHOOHQWưRZLQSXEOLFDWLRQLQNVIRU the high gloss pictures and sharp letter printing
Leather Cushions RHEOLATE® thickeners provide the required ưRZWRDSSO\ưH[LEOHDQG transparent leather coatings
Wall Paint RHEOLATE® thickeners ensure premium paints apply HYHQO\VPRRWKO\DQGZLWK
complete cover Cabinet RHEOLATE® thickeners ensure excellent paint coverage
and durability for furniture cabinets ! Flooring FINNTALC improves the SULQWDELOLW\RI\RXUODPLQDWHưRRULQJ so you can enjoy more designs
" Clock Frame PLUSTALC increases the strength and durability of your clock frame
# Telephone FINNTALC strengthens plastic parts so your telephone can be made lighter
\$ Chewing Gum TALC helps make FKHZLQJJXPVRIW
% Flatscreen FINNTALC ensures the dimensional stability of your large TV frame
Wine Bottle CHROME OXIDE provides a vivid green colour and prevents product spoilage from UV rays
Leather Sofa CHROME SULPHATE preserves and strengthens leather, making it softer for longer

Bedroom

ÈÝßáÏÝïçBENTONE HYDROCLAY™ keeps your skin healthy, silky and smooth
ÎåìïðåßçBENTONE GEL® makes OLSVWLFNVSRSZLWKFRORXU
ÕçåêÅîáÝéBENTONE® LUXE delivers moisture to your daily skin care routine
ÈÝßåÝèÏÝçáñìBENTONE HYDROCLAY™ suspends colours evenly throughout makeup
! Leather Seat RHEOLATE® thickeners provide the required ưRZWRDSSO\ưH[LEOHDQG transparent leather coatings

1 2 3 4

" Concrete Wall DAPRO® defoamers remove trapped air and ensure a smooth concrete ZDOOFRYHULQJ
# Magazines BENTONE® provides H[FHOOHQWưRZLQSXEOLFDWLRQLQNV for high gloss pictures and sharp letter printing
\$ Mobile Phone 6835(\$'ZHWWLQJ agents help protective coatings FOLQJWRGLƱFXOWWRFRDWSODVWLFV

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increases the strength of your smart speaker frame
Chrome Handles CHROMIC ACID provides metallic shine, enhanced FRUURVLRQDQGZHDUUHVLVWDQFH

Leather Headboard CHROME SULPHATE preserves and strengthens leather, making it softer for longer
Chrome Lamp CHROMIC ACID provides metallic shine, enhanced FRUURVLRQDQGZHDUUHVLVWDQFH

Kitchen

Kitchen Floor BENTONE® thickeners create a smooth concrete levelling surface for tiles, carpets or parquet
Wall Paint Our BENTONE® HD clay ensures premium paints apply evenly, smoothly and provide complete cover, in one coat
Tiles BENAQUA® spray dried hectorite clay prevents sagging of ZDOOWLOHV
Kitchen Cabinet RHEOLATE® thickeners create a uniform and high TXDOLW\ƮQLVKRQNLWFKHQFDELQHWV
! ÙÝèèÒÝåêðFINNTALC ensures that \RXUNLWFKHQZDOOSDLQWLVZDVKDEOH DQGVWDLQVFDQEHZLSHGRƬ
" Paper Cup FINNTALC replaces plastic as a barrier coating, making paper cups environmentally friendly and biodegradable
# Olive Oil MICROTALC improves the yield and clarity of extra virgin olive oil
\$ Kitchen Paper FINNTALC prevents formation of sticky impurities in paper making
% Kitchen Furniture FINNTALC in the edge protection of your kitchen furniture supports durability
Washing Machine PLUSTALC HQVXUHVWKDW\RXUZDVKLQJ machine parts can resist damage by detergents
Refrigerator SODIUM DICHROMATE helps refrigerant coils ZLWKVWDQGFRUURVLRQ
Steel Kettle CHROME SULPHATE makes your kettle shine, provides corrosion resistance and eases cleaning procedures
Sink Tap CHROMIC ACID provides metallic shine, enhanced corrosion DQGZHDUUHVLVWDQFH
Detergent SODIUM SULPHATE is used for enhancing performance of clothing detergents
! Natural Gas for cooking BENTONE® KHFWRULWHDOORZVIRUPRUH HƱFLHQWGLVFRYHU\DQGH[WUDFWLRQRI natural gas

Chairman's statement

A culture for success

Dear Shareholders

Despite a challenging demand HQYLURQPHQW{LQPDQ\RIRXUPDUNHWVZH have continued to make strategic progress. The development of our recently launched ,QQRYDWLRQ*URZWKDQG(ƱFLHQF\VWUDWHJ\ LVDQH[FLWLQJQH[WVWHSIRU(OHPHQWLVFOHDUO\ articulating how we aim to achieve our medium term ambitions.

Business and markets

,QZHH[SHULHQFHGDFKDOOHQJLQJ macroeconomic environment characterised by weak demand. This was particularly the case in our two most cyclically exposed EXVLQHVVHV&KURPLXPDQG(QHUJ\ZKHUH SHUIRUPDQFHGHFOLQHG%\FRQWUDVWWKH7DOF UHVXOWIROORZLQJWKHDFTXLVLWLRQRI0RQGRLQ ODWHZDVSDUWLFXODUO\HQFRXUDJLQJLQ the context of soft automotive demand for long life plastics.

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2YHUWKHODVWWKUHH\HDUVZHKDYHPDGH VLJQLƮFDQWSURJUHVVLQWUDQVIRUPLQJ (OHPHQWLVoSRUWIROLRPDQDJHPHQWDQG culture; repositioning the Group as a premium performance additives business with advantaged positions in growing PDUNHWV,Q1RYHPEHUZHKHOGD Capital Markets Day for analysts and investors to outline the next phase of our development.

,QQRYDWLRQ*URZWKDQG(ƱFLHQF\DUH the pillars of our new strategic agenda. Execution of our priorities in these areas will address our customers' most challenging problems while driving sustained value creation. Now with the right platform in SODFHZHDUHH[FLWHGDERXWWKHSRWHQWLDODW Elementis for material growth opportunities DQGPDUJLQLPSURYHPHQWDORQJVLGHVWURQJ cash generation. You can read more on our strategy and plans in the CEO's review and on pages 8 to 11.

Balance sheet

A hallmark of Elementis is strong cash JHQHUDWLRQ,QWKLVZDVQRGLƬHUHQW with net cash generation of \$44m despite RQHRƬFDVKLWHPVRIPLQWKHƮUVWKDOI thereby reducing net debt from \$498m at the end of 2018 to \$454m at the end of 2019.

Looking forward our priorities are clear: LQYHVWPHQWWRGULYHRUJDQLFJURZWKD progressive dividend for shareholders DQG{GHEWUHGXFWLRQ

In the medium term we plan to rapidly de-lever the Group and have the objective to reduce leverage to under 1.5x net debt/ EBITDA. This will be delivered through WKHH[HFXWLRQRIRXUVWUDWHJLFSULRULWLHV operating cash conversion in excess of RIRSHUDWLQJSURƮWVDQGGLVFLSOLQHG capital allocation.

Dividend

7KLV\HDUWKH%RDUGLVUHFRPPHQGLQJDWRWDO ordinary dividend of 8.55 cents per share (2018: 8.40 cents per share† UHưHFWLQJRXU FRQƮGHQFHLQWKH*URXSoVEXVLQHVVPRGHO DQGDELOLW\WRJHQHUDWHFDVKLWVPHGLXP term prospects and the levels of investment UHTXLUHGWRGHOLYHURXU,QQRYDWLRQ*URZWK DQG(ƱFLHQF\REMHFWLYHV

7KHƮQDOGLYLGHQGZLOOEHSDLGRQ0D\ 2020 in pounds sterling at an exchange rate of £1.00:\$1.2925 (equivalent to a sterling amount of 4.4487 pence per share) to shareholders on the register at 1 May 2020. The Board declared an interim dividend at the time of the Interim Results announcement of 2.80 cents per share (2018: 2.70 cents† ).

Governance and Board

\$VD%RDUGZHVHWRXWWRGHOLYHUWKH KLJKHVW{VWDQGDUGVRIFRUSRUDWHJRYHUQDQFH transparency and integrity. Board chemistry LVH[FHOOHQWZLWKFDQGRXUPXWXDOUHVSHFW and collective commitment providing a KHDOWK\G\QDPLFIRUGHEDWHFKDOOHQJH DQG{GHFLVLRQPDNLQJ

Board succession planning is key to SUHVHUYLQJWKLVSRVLWLRQDQGWRWKDWHQGZH were pleased to appoint John O'Higgins as incoming Senior Independent Director who joined the Board on the 4 February 2020. -RKQZLOOUHSODFH1LFN6DOPRQWRZKRPZH will say goodbye at the forthcoming AGM. Nick joined the Board in 2014 and leaves with our sincere thanks for his outstanding contribution and wise counsel.

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\$VRXUEXVLQHVVJURZVLWLVLPSRUWDQWWR GHYHORSFRQVLVWHQWDQG{HƱFLHQWZRUNLQJ practices across our teams.

2XUYDOXHVs6DIHW\6ROXWLRQV\$PELWLRQ Respect and Team – are core to our high performance culture. In 2019, we focused RQIXUWKHU{HPEHGGLQJRXUYDOXHVWR HQVXUHWKH\DUHUHưHFWHGLQ{HYHU\WKLQJ we do.

'XULQJWKH\HDURYHURIRXUHPSOR\HHVDWWHQGHGZRUNVKRSVDFURVV ORFDWLRQVWRGLVFXVVRXUYDOXHVDQGFRQVLGHUKRZWKH\LQưXHQFHRXUGD\ WRGD\LQWHUDFWLRQVZLWKFROOHDJXHVFXVWRPHUVDQGWKHFRPPXQLW\

Our values are embedded in all aspects of our communications. ,QWHUQDOQHZVOHWWHUVWRZQKDOOPHHWLQJVDQGRXUUHFHQWO\ODXQFKHG employee engagement and safety surveys all reinforce our core values.

%HKDYLRXUWKDWLVUHưHFWLYHRIRXUFRUHYDOXHVLVDFWLYHO\HQFRXUDJHG Alignment with our performance management and reward systems all encourage values-centric behaviours.

Stakeholder engagement

Alongside supporting and empowering our SHRSOHZHKDYHFRQWLQXHGWRHQVXUHWKDWZH understand and consider the views of all our key stakeholders.

\$V&KDLUPDQ,FRQWLQXHWRYLVLWVLWHVDFURVV the world and hold open town hall sessions with the employees as a matter of course. Similar events are conducted when all Board members attend operational sites as part RIWKH%RDUGoVDQQXDOSURJUDPPH,Q ZHKHOGVXFKPHHWLQJVLQWKH1HWKHUODQGV Finland and China.

'XULQJWKH\HDU6DQGUD%RVVZDV DSSRLQWHG{'HVLJQDWHG1RQ([HFXWLYH Director for engagement with the Company's workforce. Sandra is already involved with the Company's approach to investing in and rewarding our workforce in her capacity as a member of the Remuneration Committee.

To learn more about our workforce engagement activities during the year please see page 63.

A culture for success

7KHFXOWXUHDW(OHPHQWLVLVRSHQDQGLQFOXVLYH where people enjoy working together. We place huge importance on creating a culture of doing what's right and speaking out if things are not. This is supported by DVWURQJVHWRIYDOXHVs6DIHW\6ROXWLRQV \$PELWLRQ5HVSHFWDQG7HDP,QZH have further embedded these values through RXUHPSOR\HHFRPPXQLFDWLRQVSHUIRUPDQFH management systems and training opportunities. To learn about our values LQ{DFWLRQSOHDVHUHIHUWRSDJH

7KLV\HDUPDFURHFRQRPLFFRQGLWLRQVKDYH been challenging. The Group has nonetheless delivered resilient operating margins and strong underlying cash generation. On behalf RIWKH%RDUG,ZRXOGOLNHWRWKDQNHDFKDQG every employee for their commitment.

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,Q(OHPHQWLVGHOLYHUHGSURJUHVV LQWKH{IDFHRIWRXJKPDFURHFRQRPLF FRQGLWLRQV/RRNLQJDKHDGZKLOHJOREDO PDUNHWFRQGLWLRQVUHPDLQFKDOOHQJLQJZH continue to invest for the future and are FRQƮGHQWWKDWRXUVWUDWHJLFSULRULWLHVRI ,QQRYDWLRQ*URZWKDQG(ƱFLHQF\ZLOOGHOLYHU further progress in 2020 and beyond.

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Chairman

g 5HEDVHGIRUHƬHFWVRIWKH5LJKWV,VVXHsVHH Note 29

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" Our strategic pillars of Innovation, Growth and (ƱFLHQF\DUHGHVLJQHGWR deliver our medium term SHUIRUPDQFHREMHFWLYHV RID{SURƮWPDUJLQ 90% plus operating cash FRQYHUVLRQDQGƮQDQFLDO leverage under 1.5x EBITDA."

(OHPHQWLVKDVFKDQJHGVLJQLƮFDQWO\ over the last three years. We have exited GLVDGYDQWDJHGFDSLWDOLQWHQVLYHEXVLQHVVHV and added new operations that provide scope for better growth and returns. &RPELQHGZLWKDVLJQLƮFDQWUHVHWWLQJRI KRZZHUXQRXUEXVLQHVVZHQRZKDYHD solid platform to create value by delivering ,QQRYDWLRQ*URZWKDQG(ƱFLHQF\

Before turning to our medium term DPELWLRQV,ZRXOGOLNHWRUHYLHZ

Performance

7KLVZDVD\HDURIGLVDSSRLQWLQJƮQDQFLDO SHUIRUPDQFHGULYHQE\ZHDNPDUNHW GHPDQG{FRQGLWLRQV&RDWLQJVZDV impacted by weaker industrial production DQGGHVWRFNLQJ3HUVRQDO&DUHVDZ growth in Cosmetics but competitive SUHVVXUHVLQ\$3\$FWLYHVZKLOH7DOFKDGD UREXVWSHUIRUPDQFHLQRXUƮUVWIXOO\HDURI RZQHUVKLS5HVXOWVLQ&KURPLXPDQG(QHUJ\ RXUWZRPRUHF\FOLFDOO\H[SRVHGEXVLQHVVHV were impacted by weak industrial production and lower drilling activity respectively. Further details on each business segment's performance can be found on pages {WR

Elementis is a highly cash generative business and our working capital and capital expenditure initiatives aim to improve this VWLOOIXUWKHU,QRXURSHUDWLQJFDVK conversion¹ZDVVWURQJDWDQGDVD result our net cash generation was \$44m. Net debt reduced from \$498m at the end RIWRPUHSUHVHQWLQJDOHYHUDJH ratio²RI[(%,7'\$/RRNLQJIRUZDUG ZHVHHDFOHDUGHOHYHUDJLQJSURƮOHIRUWKH Group as a result of strong underlying cash generation and the impact of our cash focused strategic initiatives.

¹ See alternative performance measures RQ{SDJH{ ² See unaudited pro forma information
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#### high margin activities in Personal Care, Coatings and Talc. These premium performance additive businesses have enduring competitive advantages centred on DFFHVVWRGLƬHUHQWLDWHGUHVRXUFHVXQLTXHWHFKQRORJ\

Transformed portfolio

and market leading formulation capabilities.

The fundamentals of our business are strong. We have a transformed portfolio that is focused on high quality,

Investment case

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Safety remains our top priority – we will never EHVDWLVƮHGXQOHVVHYHU\HPSOR\HHLVVDIH RIWKHWLPH,Q,DPSOHDVHGWR UHSRUWZHKDGDJRRGOHYHORISHUIRUPDQFH relative to both the industry and our medium WHUPWUDFNUHFRUGZLWKVHYHQUHFRUGDEOH injuries (2016-18 average: 11) and a total recordable incident rate of 0.48 (2016-18 DYHUDJHXSPDUJLQDOO\IURPWKHORZHVW level ever achieved at Elementis in 2018. This robust level of performance was driven by investments made in recent years to reduce operational risks and enhanced safety leadership training to develop RXUVDIHW\FXOWXUH*RLQJIRUZDUGZHZLOO FRQWLQXHWRIRFXVRQ{LPSURYLQJWKLVUHFRUG still further.

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Within a wider consideration of how we GREXVLQHVVVXVWDLQDELOLW\LVDFRUHYDOXH DW(OHPHQWLV7KLVLVUHưHFWHGLQERWKKRZ ZHUXQRXURSHUDWLRQVDQGWKHEHQHƮWV our products bring to customers and wider society.

We are committed to reducing the energy intensity of our operations and we are proud WKDWRXURQJRLQJHƬRUWVLQWKLVDUHDDUH externally recognised. We were delighted to receive in 2019 a silver rating under the (FR9DGLVSURJUDPPHZKLFKSODFHVXVLQ the top 5% in the manufacturing sector for our sustainable supply chain within global manufacturing.

The green credentials of our products are also foremost in our mind. In Personal &DUHRXUFOD\EDVHGSURGXFWVRƬHUDQ attractive natural alternative to customers DQGDUHYHULƮHGDJDLQVWULJRURXVWKLUGSDUW\ VWDQGDUGVVXFKDV,62&26026DQG (FRODEHO,Q&RDWLQJVRXUWHFKQRORJLHV enable the creation of more environmentally friendly waterborne industrial products and LQ7DOFRXUDGGLWLYHVVXSSRUWYHKLFOHOLJKW weighting and the subsequent reduction in greenhouse gas emissions. We enable our customers to enhance the sustainability credentials of their products and we are excited to be part of progress in this area. Going forward we will continue to take actions that ensure the sustainability of ERWK{RXURSHUDWLRQVDQGSURGXFWVLPSURYH

People

Our Chairman has written of the open and LQFOXVLYHFXOWXUHWKDWZHVHHNDW(OHPHQWLV and the importance of doing what is right. 2XUSHRSOHDQGWKHFXOWXUHWKDWWKH\ HPERG\DUHDWWKHFHQWUHRIRXUVXFFHVV

Material growth opportunities

These premium performance additive businesses are H[SRVHGWRVLJQLƮFDQWVWUXFWXUDOJURZWKRSSRUWXQLWLHV ZKLFK(OHPHQWLVLVZHOOSRVLWLRQHGWRFDSWXUH ,Q3HUVRQDO&DUHWKHJURZWKRISUHPLXPFRVPHWLFV in Asia, natural skin care ingredients and AP Actives are clear opportunities for our unique hectorite clay DQGWHFKQRORJ\SODWIRUPV9HKLFOHOLJKWZHLJKWLQJ emission regulations and reduced single use plastic FRQVXPSWLRQZLOOGULYHVWURQJVXVWDLQDEOHGHPDQGIRU RXU7DOFLQJUHGLHQWV,Q&RDWLQJVWKHUHDUHFOHDUJURZWK RSSRUWXQLWLHVLQSUHPLXPGHFRUDWLYHZDWHUERUQH industrial additives and adhesives & sealants.

Innovation focus

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Elementis is a global leader in performance-driven additives that help create innovative solutions for our customers. Leveraging our capabilities in rheology, VXUIDFHFKHPLVWU\DQGIRUPXODWLRQZHKHOSFXVWRPHUV respond to their biggest challenges through deep partnerships, ongoing technical support and consistent quality, service and delivery. This focus on market OHDGLQJLQQRYDWLRQZLOOGULYHRXUJURZWK

Strong cash generation

Strong cash generation is a hallmark of Elementis. /RRNLQJIRUZDUGZHWDUJHWRSHUDWLQJFDVKFRQYHUVLRQ RIDWOHDVWVXSSRUWHGE\ZRUNLQJFDSLWDOVDYLQJV and capital expenditure discipline. The execution of RXUPHGLXPWHUP,QQRYDWLRQ*URZWKDQG(ƱFLHQF\ SULRULWLHVFRPELQHGZLWKVWURQJFDVKJHQHUDWLRQ ZLOOIDFLOLWDWHVXVWDLQHGUHLQYHVWPHQWIRUJURZWKD SURJUHVVLYHGLYLGHQGDQGDFOHDUGHOHYHUDJLQJSURƮOH Our medium term leverage objective is under 1.5x (%,7'\$ZLWKIXUWKHUUHGXFWLRQWKHUHDIWHU

&KLHI([HFXWLYH2ƱFHUoVVWUDWHJLFUHYLHZFRQWLQXHG

,Q1RYHPEHUZHKHOGD&DSLWDO Markets Day in London outlining our strategic priorities and medium term performance objectives

We are very fortunate to have developed a deeply experienced and highly committed leadership team. This year I am pleased WRZHOFRPH-RH/XSLD6WHYH5LGJHDQG Ajeeth Enjeti to that team. Joe has more than 30 years of experience in R&D roles and joins Elementis from BASF Corporation. Steve has a career of more than 25 years in the chemicals industry and joins Elementis from FMC Corporation as SVP Global Supply Chain. Ajeeth joined us as part of the Talc acquisition and has assumed the role of SVP 6WUDWHJ\DQG7UDQVIRUPDWLRQUHSODFLQJWKH recently retired Danny Hughes.

Talc integration

The acquisition of Talc closed on 23 October DQGMXVWRYHURQH\HDUODWHU,DP pleased to say that integration is complete. All key individuals within the Talc business are now part of Elementis and are working at pace to execute our strategic priorities. )XQFWLRQVVXFKDV,7ƮQDQFHDQGVXSSO\ chain are all integrated into the global (OHPHQWLVWHDPVVKDULQJH[SHUWLVHDQG ZRUNLQJLQKDUPRQ\7RJHWKHUZHPDGH good progress in 2019 on delivering the bulk of our planned \$2m in cost synergies WKURXJKVDYLQJVLQDUHDVVXFKDVPDUNHWLQJ IT and supply chain.

Our sales teams are also fully integrated. This is most relevant for Coatings and Personal Care where we are on track for delivery of \$20-25m of revenue synergies by 2023. We now have more than 30 new distributors carrying our Talc products in WKH\$PHULFDVDQG\$VLDDQGVLJQLƮFDQWQHZ business opportunities in the pipeline. This is great progress and I am very excited about the future of Talc within Elementis.

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\$VUHưHFWHGE\WKH7DOFDFTXLVLWLRQZH KDYHPDGHVLJQLƮFDQWSURJUHVVRYHUWKH last three years transforming our portfolio and re-positioning Elementis as a premium performance additives company with an advantaged position in growing markets.

3HUVRQDO&DUH&RDWLQJVDQG7DOFQRZ represent over 80% of Elementis' earnings and are true premium performance additive businesses. In each we transform DGYDQWDJHGUHVRXUFHVVXFKDVKHFWRULWH DQGWDOFLQWRKLJKYDOXHLQJUHGLHQWVXVLQJ our distinctive technology and formulation H[SHUWLVH7DNHQWRJHWKHUZKDWZHGR ensures that our customers' end products perform better. This is what we mean when we speak about Enhanced Performance Through Applied Innovation.

2XUVWUDWHJLFSLOODUVRI,QQRYDWLRQ*URZWKDQG (ƱFLHQF\DUHGHVLJQHGWRGHOLYHURXUPHGLXP term performance objectives for the Group. On pages 14 to 19 we explain further and give examples of our strategy in action.

With strong positions in attractive markets we see clear growth and margin improvement RSSRUWXQLWLHVDQGH[SHFWWRGHOLYHUVWURQJ sustainable returns. Linked to our strategic framework are clear medium term Group performance objectives. These include:

\$GMXVWHGRSHUDWLQJSURƮWPDUJLQRI
Operating cash conversion of at least 90% per annum
Financial leverage of under 1.5x net debt/ EBITDA

We are excited about the potential at Elementis for material growth opportunities and margin improvement alongside strong cash generation.

COVID-19

As the COVID-19 virus situation has developed we have been assessing the impact on our employees and our business WRHQVXUHWKDWERWKDUHHƬHFWLYHO\VXSSRUWHG and managed. Our production sites and VDOHVRƱFHVLQ&KLQDKDYHUHRSHQHG DQGDOO(OHPHQWLVVWDƬDUHVDIHDQGZHOO China represents approximately 15% of RXU*URXSVDOHVLVKRPHWRWKUHHRXWRIRXU 22 manufacturing plants and is a limited part RIRXUJOREDOVXSSO\FKDLQ+RZHYHUWKHUH LV{SRWHQWLDOIRUVRPHGLVUXSWLRQWRFXVWRPHU demand and we will continue to monitor WKH{LPSDFWDVDSSURSULDWH

Outlook

:HKDYHIRFXVHG(OHPHQWLVRQKLJKTXDOLW\ KLJKPDUJLQDFWLYLWLHVLQ3HUVRQDO&DUH &RDWLQJVDQG7DOFDQGUHPDLQIRFXVHG RQ{WKHH[HFXWLRQRIRXUVWUDWHJLFSULRULWLHV

The fundamentals of our business remain VWURQJ,QWKHVKRUWWHUPJLYHQWKH FKDOOHQJLQJPDUNHWEDFNGURSDQGWKH XQFHUWDLQW\DURXQG&29,'ZHUHPDLQ cautious on the 2020 outlook with stable SHUIRUPDQFHH[SHFWHGVXSSRUWHGE\WKH delivery of cost savings and new business opportunities. Overall progress in Personal &DUH&RDWLQJVDQG7DOFLVH[SHFWHGWREH RƬVHWE\FKDOOHQJLQJPDUNHWFRQGLWLRQV in Chromium.

Paul Waterman CEO

Corporate governance

Q&A with our CEO

4+RZZRXOG\RXHYDOXDWH(OHPHQWLVo performance in 2019?

A:'LVDSSRLQWLQJLQWHUPVRIRXWFRPHVEXWVROLGLQWKHFRQWH[W of the weak demand conditions we faced. The more cyclically exposed parts of the portfolio such as Chromium and Energy saw the most adverse conditions. We focused on self-help actions to optimise our performance. The delivery of \$10m of cost VDYLQJVQHZSURGXFWODXQFKHVDQGPRIQHZEXVLQHVV opportunities means we achieved a 14% operating margin. :HFDQKRZHYHUSHUIRUPPXFKEHWWHU,DPFRQƮGHQWWKDW WKH{H[HFXWLRQRIRXU,QQRYDWLRQ*URZWKDQG(ƱFLHQF\DJHQGD ZLOOUHVXOWLQPDUJLQLPSURYHPHQWVWURQJFDVKJHQHUDWLRQDQG ƮQDQFLDOGHOHYHUDJLQJ

4:KDWGR\RXPHDQE\n,QQRYDWLRQo DQG{ZKDWLVWRFRPH"

A: ,QQRYDWLRQLVDWWKHKHDUWRIZKDWZHGR,QZHGHOLYHUHG 13 new products to our customers. These include new hectorite based products for skin care and several new Coatings additives such as Supread® wetting agents that are becoming standard in waterborne systems. They all improve the performance of our customers' products.

%\GHOLYHULQJGLVWLQFWLYHDQGPDWHULDOLQQRYDWLRQWRRXUFXVWRPHUV LQDVSHHG\PDQQHUZHZLOOFRQWLQXHWREHDPDUNHWOHDGHUDQG drive growth. We ask where we can make our customers' products SHUIRUPEHWWHUEHPRUHHƱFLHQWDQGEHPRUHVXVWDLQDEOH ,QQRYDWLRQH[FHOOHQFHLVFULWLFDOIRUDQ\FKHPLFDOVFRPSDQ\DQG IRUXVWDUJHWHGLQQRYDWLRQGULYHVERWKJURZWKDQGHƱFLHQF\

4+RZZRXOG\RXFKDUDFWHULVHWKH SHUIRUPDQFHRIWKH\$3\$FWLYHVEXVLQHVV"

A: As a result of the acquisition we have a Personal Care business RIVFDOHHQJDJHGLQWKHGLVWULEXWLRQRIFRPSOHPHQWDU\SURGXFWV to new and existing customers around the world. The short term ƮQDQFLDOSHUIRUPDQFHKDVEHHQVRPHZKDWGLVDSSRLQWLQJGXHWR UDZPDWHULDOLQưDWLRQDQGWUDGHZDUUHODWHGWDULƬV/RRNLQJIRUZDUG ZHDUHFRQƮGHQWRIPXFKLPSURYHGSHUIRUPDQFH7KHUDPSXS of a new manufacturing site in India in 2020 and the roll out of our DWWUDFWLYHLQQRYDWLRQSLSHOLQHZLOOHQDEOHXVDVWKHJOREDOPDUNHW DQGWHFKQRORJ\OHDGHUWRFRVWHƬHFWLYHO\VHUYHWKLVJURZLQJ global end market.

4:KDWDUH\RXUVXVWDLQDELOLW\SULRULWLHV"

A: Our priorities are twofold. We are focused on ensuring our operations have limited impact on the environment and our FRPPXQLWLHV6HFRQGZHVWULYHWRHQVXUHWKDWRXUSURGXFWVKHOS our customers address their sustainability needs. Let me give you a couple of examples. Our unique Coatings additives are helping to reduce the level of harmful VOCs found in industrial coatings DQGRXUWDOFDGGLWLYHVDUHPDNLQJSODVWLFVOLJKWHUDQGVWURQJHU thus helping to reduce vehicle emissions. Enhanced Performance 7KURXJK\$SSOLHG,QQRYDWLRQLV{DERXWPDNLQJSURGXFWVWKDWDUH EHWWHUPRUHHƱFLHQW{DQGFUXFLDOO\JUHHQHU

4\$UHWKHUHPRUHDFTXLVLWLRQV in the pipeline?

A: We are completely focused on business delivery and investors should not anticipate any material acquisitions. )ROORZLQJWKHGLVSRVDORIGLVDGYDQWDJHGQRQFRUHDFWLYLWLHV VXFKDV6XUIDFWDQWVDQG3LJPHQWVDQGWKHDFTXLVLWLRQVRI\$3 \$FWLYHVDQG7DOFZHQRZKDYHDSRUWIROLRWKDWLVEHWWHUSRVLWLRQHG IRUJURZWK2XU,QQRYDWLRQ*URZWKDQG(ƱFLHQF\DJHQGDLV focused on leveraging this portfolio to deliver our medium term SHUIRUPDQFHREMHFWLYHVRIPDUJLQLPSURYHPHQWFDVKFRQYHUVLRQ DQGƮQDQFLDOGHOHYHUDJLQJ

4:KDWDUHWKHULVNVWR\RXUVWUDWHJ\ implementation?

A:\$IXUWKHUVLJQLƮFDQWPDUNHWGRZQWXUQZRXOGOLPLWWKHVSHHGDW which we can deliver our medium term performance objectives. 7KLVLVKRZHYHUEH\RQGRXUGLUHFWLQưXHQFHVRZHFDQRQO\ VHHNWRPLWLJDWHLWVLPSDFWE\HQVXULQJZHDUHDVHƱFLHQWDQG agile as possible. As a specialty chemicals business the single biggest risk we face is not running our operations in a safe and UHOLDEOHPDQQHU\$VDUHVXOWHQVXULQJDOORIRXUHPSOR\HHVJR KRPHVDIHO\DWWKHHQGRIHDFKGD\LVDQGZLOOFRQWLQXHWREH RXU{PRVW{LPSRUWDQWSULRULW\

Responding to a changing world

Our unique ingredients deliver crucial product EHQHƮWV)RULQVWDQFH our Bentone® additive range helps make colour cosmetics brighter for longer

We have over 90 expert VFLHQWLVWVZRUNLQJDW eight locations around WKHZRUOGSDUWQHULQJ ZLWKRXUFXVWRPHUV to solve their product performance and sustainability challenges

Trend

Demographics

Global population is set to increase by 2 billion in the next \HDUVWRELOOLRQSHRSOH

Most of this increase will be in the developing world where high birth rates will drive further urbanisation and investment in infrastructure.

,QDGGLWLRQDQH[SDQGLQJ middle class is expected to gain :HVWHUQOHYHOVRIFRQVXPHULVP generating new markets for products that improve living standards.

Premiumisation

Premiumisation is bridging the gap between luxury and mass market to give all consumers access to unique or innovative products that promise more.

Premium is not just about price. It is the promise of exceptional TXDOLW\DQGH[SHULHQFHIXHOOLQJ WKHJURZWKRIXQLTXHYDOXH added products.

Consumers are willing to pay premium prices on value added SURGXFWVZLWKUHDOEHQHƮWV \$VDUHVXOWWKHSUHPLXP segment is experiencing strong JURZWKRXWSDFLQJWRWDOFDWHJRU\ sales in many markets.

6XVWDLQDELOLW

The continuing accumulation of greenhouse gases is described as the main cause of global warming. Rising sea levels and an increase in the frequency of extreme weather are associated consequences of this trend.

%RWKDƬHFWIRRGDQGZDWHU supply just when the growing global population needs it PRVWEULQJLQJLQFUHDVHG international pressure to UHVWULFW{FOLPDWHFKDQJH

7KLVDORQJZLWKHYHU more scarce natural UHVRXUFHVPHDQVDJURZLQJ GHPDQGIRULQQRYDWLYH sustainable products.

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In an ever more connected ZRUOGFXVWRPHUVDQG employees want more transparency from the organisations that serve DQG{HPSOR\WKHP

Organisations of all kinds must HVWDEOLVKDQGPDLQWDLQWUXVW as the basis for successful collaboration and innovation.

Increasing demand for industrial and decorative coatings
Rising penetration of personal care products such as colour cosmetics and skin creams
Increased demand for consumer goods that require our additives
Demand for higher quality products • Demand for products with 'feel good'
characteristics • Demand for 'natural' ingredients
Demand for innovative sustainable products
- Move towards natural or naturally derived ingredients
- Pressure to minimise social and environmental impact along the supply chain
Consistent and transparent communication of activities throughout the value chain
Clear evidence of ethical and social considerations in decision making
Open and frequent consultation with all stakeholders
New markets for natural and synthetic additives that improve the performance of consumer products
Opportunities to innovate and serve local market needs
More demand for hectorite and talc based ingredients
Opportunities to increase the penetration of our high performance technology solutions
Increased opportunities for our natural hectorite and talc based ingredients
Demand for our technology solutions that lower customers' environmental footprint
Reduce the environmental footprint RI{RXUVXSSO\FKDLQ
Help customers make informed decisions through the provision RI{FOHDUVFLHQWLƮFHYLGHQFH
Improved reporting and disclosure RI{FRUSRUDWHDFWLYLWLHV
Integration of talc based additives into RXUJOREDOVXSSO\FKDLQLPSURYLQJRXU ability to sell talc in Asia and Americas
Capital investment in manufacturing assets in Asia to reduce supply chain length and bring our products closer to customers
Launched new hectorite clay based products (Bentone® Luxe and Bentone Hydroclay™) focused on the skin care market
New Rheolate® HX rheology series delivering one coat hide and stain resistance for premium decorative coatings
Increased share of 'distinctive' products within our innovation pipeline
Investment in our hectorite and talc production network
The launch of new additives that help create industrial coatings with fewer VOCs
Support for sustainable farmers of ingredients such as palm oil and meadowfoam seed oil
Combination of Global Technology and Product Stewardship teams
Creation of Sustainability Council working towards lowering our carbon footprint and reducing waste

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Investment in digital platforms including a new company website
Comprehensive employee engagement consultation with results to be shared on a periodic basis
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What this means for our industry

Our opportunities

Innovation 1

Innovation is at the heart of what ZH{GR:HDUHDJOREDOOHDGHULQ performance-driven additives WKDW{FUHDWHLQQRYDWLYHVROXWLRQV IRU{RXU{FXVWRPHUV

/HYHUDJLQJRXUFDSDELOLWLHVLQUKHRORJ\VXUIDFHFKHPLVWU\DQG IRUPXODWLRQZHKHOSFXVWRPHUVLPSURYHWKHLUSURGXFWVUHVSRQGLQJ WRWKHLUELJJHVWFKDOOHQJHVWKURXJKGHHSSDUWQHUVKLSVRQJRLQJ WHFKQLFDOVXSSRUWDQGFRQVLVWHQWTXDOLW\VHUYLFHDQGGHOLYHU\ This focus on market leading innovation drives our business DQG{RXUJURZWK

2XULQQRYDWLRQSULRULWLHVDUHWKUHHIROG)LUVWZHZDQWWRGHOLYHU distinctive new technologies that provide improved performance DQGORZHURSHUDWLRQFRVWVZKLOHDWWKHVDPHWLPHHQKDQFLQJRXU FXVWRPHUVoVXVWDLQDELOLW\$WWKHHQGRIRIRXUSURGXFW portfolio delivered against these innovation priorities.

6HFRQGZHDUHIRFXVHGRQPDWHULDOLQQRYDWLRQFKDOOHQJHVWKDWIDFH not just our customers but also the industries in which we operate. )RUH[DPSOHXVLQJPRUHQDWXUDOLQJUHGLHQWVLQ3HUVRQDO&DUHDQG fewer VOCs in Coatings. This ensures our resources are directed to WKHELJJHVWPRVWLPSDFWIXORSSRUWXQLWLHV7RGD\ZHDUHVSHQGLQJ 35% of our R&D budget on our top 10 projects versus 20% in 2016.

/DVWO\ZHDUHLQFUHDVLQJRXUVSHHGRILQQRYDWLRQ%\IRFXVLQJRQIDVW SURWRW\SLQJSURRIRIFRQFHSWWHFKQLTXHVDQGWHFKQRORJ\WUDQVIHU DFURVVRXUGLƬHUHQWVHJPHQWVRXUWLPHIURPFRQFHSWWRPDUNHWKDV drastically decreased from 2.5 years in 2016 to 1.5 years today.

How do we judge success in innovation? Our aim is to increase the UHYHQXHZHJHQHUDWHIURPLQQRYDWLRQIRUH[DPSOHE\GULYLQJWKH proportion of distinctive products in our portfolio from 45% today to 60% in 2025. And we want more new products. While we have been GRLQJEHWWHULQUHFHQW\HDUVRXUXOWLPDWHJRDOLVIRURIRXUVDOHV to come from new or protected products.

,QQRYDWLRQH[FHOOHQFHLVFULWLFDOIRUDQ\ FKHPLFDOVFRPSDQ\7DUJHWHGLQQRYDWLRQ GULYHVERWKJURZWKDQG{HƱFLHQF

Top

Elementis' additive WHFKQRORJ{KHOSVWRGHOLYHU more environmentally friendly ZDWHUEDVHGIRUPXODWLRQVIRU industrial coatings.

Bottom

When a biofuel producer in Thailand faced an excess foaming problem, Elementis ZDVDEOHWRUDSLGO\FUHDWHDQHZ defoamer solution

Our ultimate goal is for 15% of our revenue WRFRPHIURPQHZRU protected products.

Innovation in action

Cutting edge premium skin care

In Personal Care, we create LQJUHGLHQWVEDVHGRQRXUXQLTXH KHFWRULWHFOD\VVRXUFHGIURPRXU PLQHLQ&DOLIRUQLDWKHRQO\RQH RILWVW\SHLQWKHZRUOG

From this advantaged starting SRLQWZHDSSO\RXUWHFKQRORJ\ H[SHUWLVHWRGHOLYHUXQLTXH solutions to our customers around the world.

*Our main focus in Personal &DUH{DUHUKHRORJ\PRGLƮHUV products that control the dispersion and suspension RI{SLJPHQWVSURYLGHưRZ TXDOLWLHVIRUHQKDQFHGVHQVRU\ performance and skin-feel, and IRUPXODWLRQVWDELOLW*

What this means IRURXUEXVLQHVV

Kate Watermann *OREDO7HFKQLFDO6HUYLFHV0DQDJHU 3HUVRQDO&DUH\$SSOLFDWLRQV&RORJQH*HUPDQ\

The drive for Innovation in Personal Care hasn't changed – what's changed is our focus, RXU{VSHHGRIUHVSRQVHDQG RXU{FOLHQWUHODWLRQVKLSV

p,oYHEHHQDW(OHPHQWLVIRUQHDUO\HDUVZRUNLQJZLWK 5 'RXUFRPPHUFLDOWHDPVDQGRXUFXVWRPHUV,KDYH UHVHDUFKVFLHQWLVWVLQWKH86*HUPDQ\DQG%UD]LODQG customers around the world. My job is to demonstrate what our products can do in roadshows and technical ZRUNVKRSVDQGKHOSRXUFXVWRPHUVGHYHORSWKHLURZQ unique applications.

"We work in really close collaboration with our customers. 7KH\DSSURDFKXVZLWKVSHFLƮFUHTXLUHPHQWVEXWZHDOVR develop products in anticipation of market trends – more QDWXUDOSURGXFWVIRUH[DPSOH

"Our skin care development has been spectacular. Makeup is such a visual and sensory thing – our new SURGXFWV%HQWRQH+\GURFOD\vDQG%HQWRQH/X[HDUH FOHDQDQGQDWXUDODQGHQDEOHVLON\VPRRWKDSSOLFDWLRQ ZLWK{EHWWHUFRORXU\$GGHGWRWKDWWKH\VWDELOLVHIRUPXODWLRQV ZLWKDFWLYHLQJUHGLHQWVOLNHVXQSURWHFWLRQDJHQWV

,QXQGHURQH\HDUVLQFHODXQFKWKHFXVWRPHUUHDFWLRQV KDYHEHHQMXVWLQFUHGLEOH:HoYHDOUHDG\KDGVLJQLƮFDQW orders – and one customer even asked us to stop doing demonstrations so they could patent and launch their products ahead of the competition! We couldn't stop SURPRWLRQVEXWWKLVKDVOHGWRDQHZSDUWQHUVKLSLQ innovation with the customer."

&RORXUFRVPHWLFVVXFKDVPDVFDUDDQGOLSVWLFNVKDYHWRGDWHEHHQ WKHSULPHDSSOLFDWLRQRIRXUUKHRORJ\PRGLƮHUVLQ3HUVRQDO&DUH ,QWKLVDUHDZHKDYHDFKLHYHGVLJQLƮFDQWVXFFHVVZLWKDYHUDJH DQQXDOVDOHVJURZWKRYHUWKHODVWVHYHQ\HDUVGULYHQE\VWURQJ FRQVXPHUGHPDQGIRUSUHPLXPQDWXUDOLQJUHGLHQWV

,QZHHQWHUHGWKHVNLQFDUHVHFWRUDODUJHDQGIDVWJURZWKSDUW RIWKH3HUVRQDO&DUHPDUNHW,Q\$SULOZHODXQFKHGWZRQHZKHFWRULWH EDVHGSURGXFWV%HQWRQH/X[HDQG%HQWRQH+\GURFOD\vWDUJHWLQJ the premium skin care market. Hectorite is well suited for use in skin FDUHLWLVQDWXUDOZDWHUVROXEOHOLJKWLQFRORXUDQGGHOLYHUVH[FHOOHQW skin feel.

Bentone Hydroclay™ enables the creation of innovative and elegant sensory experiences. These clays are of the highest quality and purity. Their uniqueness lies in their ability not only to thicken water but also in the silky texture that they impart during and after application.

2XUVHFRQGSURGXFW%HQWRQH/X[HLVDQHPXOVLI\LQJJHOWKDW facilitates the creation of exceptional skin care formulas with the ability to create a variety of textures with one single emulsifying LQJUHGLHQW)RUPXODWLQJưH[LELOLW\H[FHSWLRQDOHPXOVLƮFDWLRQ properties and rheological control make Bentone® Luxe ideal for both innovative skin care and colour cosmetics.

The customer reaction to these unique products has exceeded our expectations. We have received a record number of requests for samples and formulation support prototypes. One customer has DOUHDG\LQWURGXFHGWKUHHQHZSURGXFWVEDVHGRQWKLVWHFKQRORJ\ just six months after its initial introduction. We are partnering with a number of other customers to create a novel material that can be used as one core technology for many of their future developments.

*LYHQWKHIDQWDVWLFPDUNHWUHDFWLRQWRGDWHZHDUHFRQƮGHQW these products will help us deliver up to \$10m of extra sales in the medium term.

At our Capital Markets Day in November, investors had the opportunity to make a skin cream using Bentone® Luxe

Our hectorite based ingredients help to create skin creams that have great touch and feel

2XUVWUDWHJ\FRQWLQXHG

Growth 2

In our transformed portfolio, over 80% of earnings are now generated E\3HUVRQDO&DUH&RDWLQJVDQG7DOF

7KHYDOXHFKDLQVDFURVVWKHVHVHJPHQWVDUHVLPLODUWUDQVIRUPLQJ advantaged and long life hectorite and talc resources into high value DGGLWLYHVYLDGLVWLQFWLYHSURFHVVLQJDQGIRUPXODWLRQH[SHUWLVHDVZHOO as consistent product quality and high levels of customer support.

,QDGGLWLRQWRWKHLUHQGXULQJFRPSHWLWLYHDGYDQWDJHVWKHUHDUHFOHDU growth opportunities for these premium performance additive EXVLQHVVHVVXSSRUWHGE\VWUXFWXUDOPHJDWUHQGV

:LWKLQ3HUVRQDO&DUHWKHUHDUHPDMRURSSRUWXQLWLHVLQFRVPHWLFV Despite 25% average annual sales growth in Asia over the last four \HDUVZHDUHUHODWLYHO\XQGHUZHLJKWZLWKWKHUHJLRQUHSUHVHQWLQJ DURXQGRIVDOHV7RGULYHIXUWKHUJURZWKZHDUHGRXEOLQJWKH VL]HRIRXU\$VLDVDOHVWHDPEXLOGLQJGHGLFDWHGWHFKQLFDOVXSSRUW DQGIRFXVLQJRXULQQRYDWLRQHƬRUWVRQORFDOPDUNHWQHHGV6NLQFDUH LVDQHZDQGDWWUDFWLYHPDUNHWIRURXUQDWXUDOLQJUHGLHQWVDQGLQ DQWLSHUVSLUDQWDFWLYHVHPHUJLQJPDUNHWJURZWKDQGLQFUHDVLQJ product performance requirements will drive growth. We are well positioned to capture these opportunities and grow Personal Care UHYHQXHZHOODERYH*'3OHYHOVZLWKKLJKDQGVWDEOHRSHUDWLQJSURƮW margins over the medium term.

There are clear growth opportunities IRU{WKHVHSUHPLXPSHUIRUPDQFHDGGLWLYH EXVLQHVVHVVXSSRUWHGE\VWUXFWXUDO PHJD{WUHQGV

Talc has been successfully integrated into Elementis and we are now WKHVHFRQGELJJHVWJOREDOSOD\HUVHUYLQJJURZLQJKLJKHQGLQGXVWULDO applications. We are well positioned to expand market share outside Europe and address the opportunities presented by global mega WUHQGV9HKLFOHOLJKWZHLJKWLQJHPLVVLRQUHJXODWLRQVDQGUHGXFHG single use plastics consumption are expected to drive strong VXVWDLQDEOHGHPDQGIRURXU7DOFLQJUHGLHQWV7KHUHLVDOVRVLJQLƮFDQW revenue synergy potential (on track for \$20-25m by 2023) leveraging RXUJOREDOUHDFKFXVWRPHUUHODWLRQVKLSVDQGLQQRYDWLRQH[SHUWLVH \$VDUHVXOWRYHUWKHPHGLXPWHUPZHH[SHFWWRJURZ7DOFUHYHQXH ZHOODERYH*'3ZLWKDQLPSURYLQJRSHUDWLQJSURƮWPDUJLQ

,Q&RDWLQJVZHDUHDOHDGLQJVXSSOLHURIKLJKYDOXHSUHPLXP DGGLWLYHVFULWLFDOWRSHUIRUPDQFH2XU&RDWLQJVWUDQVIRUPDWLRQ SURJUDPPHKDVFUHDWHGDQLQWHJUDWHGVLPSOHUDQGPRUHFXVWRPHU FHQWULFRUJDQLVDWLRQEULQJLQJPDUJLQLPSURYHPHQWDQGIRFXVHG SURƮWDEOHJURZWK:HVHHFOHDUJURZWKRSSRUWXQLWLHVIRURXUXQLTXH LQJUHGLHQWVLQSUHPLXPGHFRUDWLYHZDWHUERUQHLQGXVWULDODGGLWLYHV DQGDGKHVLYHV VHDODQWV\$VDUHVXOWLQ&RDWLQJVZHDUHWDUJHWLQJ *'3RUJDQLFUHYHQXHJURZWKRYHUWKHPHGLXPWHUPZLWKDQ LPSURYLQJRSHUDWLQJSURƮWPDUJLQ

Talc provides functional advantages like enhanced corrosion resistance for marine coatings and improved durability for decorative coatings

Growth in action

7DOFJOREDO expansion

7DOFLVDJOREDOPDUNHWZRUWK DSSUR[LPDWHO\ELOOLRQDQG we are the second largest SOD\HUZLWKDSSUR[LPDWHO\DQ JOREDOPDUNHWVKDUHXS IURP{WKUHH\HDUVDJR

&XVWRPHUVLQFUHDVLQJO\GHPDQG KLJKVSHFLƮFDWLRQSURGXFWVQRW VLPSO\RQDORFDOEDVLVEXWRQD JOREDOVFDOH

As part of Elementis, there LV{SRWHQWLDOWRH[SDQG7DOFoV geographic presence and market share.

What this means IRURXUEXVLQHVV

:HQG\/L \$VLD6DOHV'LUHFWRU7DOF%HLMLQJ&KLQD

:LWK(OHPHQWLVoJOREDOVFDOH DQG{QHWZRUNFDSDELOLWLHVLQ China, Japan, South Korea DQG{DFURVV6RXWK(DVW\$VLD Talc's market opportunities DUH{LPPHQVH

p,MRLQHG7DOFLQ3HUVRQDOO\,ZDVDELWXQFHUWDLQZKHQ (OHPHQWLVDFTXLUHGWKHEXVLQHVV%XWQRZ,IHHOUHDOO\JRRG WKHFRPELQDWLRQPDNHVXVPXFKVWURQJHUHVSHFLDOO\LQ DUHDVVXFKDVFRDWLQJVZKHUHWKHUHDUHUHDOV\QHUJLHV

p(OHPHQWLVJLYHVSHRSOHWKHIUHHGRPWRGRWKHLUMREV VXSSRUWV\RXDQGHQFRXUDJHVZRUNLQJWRJHWKHUVRRXU cultures match perfectly.

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"We have a full range of talc products addressing all the needs of the highest end long life plastics markets– that's FORVHWRDPHWULFWRQ\$VLDQPDUNHW

"The market for technical ceramics in Asia is also large. 'XHWRVWULFWHQYLURQPHQWDOFRQWUROVGHPDQGIRUKLJK TXDOLW\WDOFRQHRIWKHNH\UDZPDWHULDOVLVJURZLQJIDVW

"We achieved close to 50% growth in 2019 in China and ,{DP{VXUHZHFDQNHHSJURZLQJRYHUWKHPHGLXPWHUPq

2XU7DOFUHVRXUFHVORFDWHGLQ)LQODQGRULJLQDOO\SUHGRPLQDQWO\ VHUYHGQHDUE\SDSHUPDUNHWVDQGRXUJHRJUDSKLFDOIRFXVFHQWUHG RQ(XURSH,QGHHGWRGD(XURSHVWLOODFFRXQWVIRUPRUHWKDQ RIRXUWDOFDGGLWLYHVUHYHQXH+RZHYHUDVWKH7DOFEXVLQHVV has invested and increased its ability to serve high value added DSSOLFDWLRQVVXFKDVSODVWLFVFRDWLQJVDQGOLIHVFLHQFHVVRLWV DELOLW{WRVHOODURXQGWKHZRUOGKDVULVHQ

7KHUHLVQRZDPDWHULDORSSRUWXQLW\ WR{IXUWKHU{JOREDOLVHDQGDFFHOHUDWHRXU DPELWLRQVE\OHYHUDJLQJ(OHPHQWLVoJOREDO DVVHWEDVHPDUNHWLQJDQGGLVWULEXWLRQ FDSDELOLWLHVDQGWHFKQLFDOH[SHUWLVH

,QORQJOLIHSODVWLFVVXFKDVEXPSHUVPRXOGLQJVDQGWULPVWDOF helps the light weighting of vehicles and thus reduces vehicle emissions. Today an average 14kg of talc is used in every vehicle. This is expected to rise to around 16kg by 2023. Our strategy is to VHUYHWKLVJURZWKDQGJDLQPDUNHWVKDUH)LUVWZHJDLQTXDOLƮFDWLRQ into a multinational's global headquarters by winning on quality and consistency. After demonstrating our product quality and customer VHUYLFHZHWKHQJURZLQWRWKHJOREDOQHWZRUNRIWKDWEXVLQHVV This strategy has served us very well to date as we have expanded our share in long life plastics from 4% in 2015 to 7% today. As part RI{(OHPHQWLVZHVHHWKLVRQO\DFFHOHUDWLQJ

,Q&RDWLQJVWDOFSURYLGHVIXQFWLRQDODGYDQWDJHVVXFKDVFRUURVLRQ resistance for marine coatings and durability in decorative coatings. Elementis brings a strong global presence to Talc and a great position in Coatings. We now have 30 existing coatings distributors selling WDOFDGGLWLYHVDQGDVWURQJSLSHOLQHRIQHZEXVLQHVVRSSRUWXQLWLHV LQFOXGLQJLQWKH\$PHULFDVDQG\$VLD\$VDUHVXOWZHVHHPRI revenue synergies for delivery by 2023.

7DOFLVWKHVRIWHVWNQRZQPLQHUDODOOQDWXUDOFKHPLFDOO\LQHUWDQG ZDWHUUHSHOOHQWVRLWLVZHOOVXLWHGIRUXVHLQDUHDVVXFKDVIRRGDQG EHYHUDJHSKDUPDFHXWLFDOVDQGFRVPHWLFV:KLOHWKLVLVFXUUHQWO\D VPDOOEXVLQHVVIRURXU7DOFRSHUDWLRQVWKHUHLVVFRSHWRJURZDQG globalise. Talc is now fully integrated into the Elementis Personal Care innovation and sales organisations and we are making SURJUHVV{WRZDUGVPRIV\QHUJLHVE\

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A focus on premium performance additives… …with a strong platform for growth

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*We know where and how we ZDQW{WR{JURZ(ƱFLHQF\DQG VLPSOLƮFDWLRQ{ZLOOHQVXUHWKDW ZH{JHQHUDWHJURZWKDWWKHORZHVW operating cost. To this end, we are targeting a \$15m reduction in our FRVWEDVHE*

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:HKDYHUHGHVLJQHGDQGVWUHDPOLQHGRXUJOREDOVWUXFWXUHWRƮWRXU changed portfolio. Bigger spans and fewer layers promote faster GHFLVLRQPDNLQJDQGDPRUHHƱFLHQWH[HFXWLRQ,QDGGLWLRQZH have aligned job levels on a global basis as part of our approach to VWDQGDUGLVHNH\SURFHVVHVLQFOXGLQJWKRVHUHODWHGWR+5,7ƮQDQFH procurement and logistics across geographies. These steps have resulted in a lower headcount of approximately 100 full-time employees. Our organisational redesign is nearing completion and will result in \$5m of full-year savings.

\$IXUWKHUPRIHƱFLHQF\JDLQVLVH[SHFWHGWRFRPHIURPRXU global supply chain. Our new Indian manufacturing facility will ORZHURXUPDQXIDFWXULQJFRVWVLQFUHDVHRXUSUR[LPLW\WRJURZWK PDUNHWVDQGFUHDWHDWDULƬQHXWUDOVWDUWLQJSRLQWIRURXU\$3\$FWLYHV RSHUDWLRQV,QDGGLWLRQZHDUHDOLJQLQJRXUJOREDOFDSDFLWLHVZLWK our volumes. This consolidation exercise will improve our supply chain planning and inventory control. And a strategic review of procurement spend within our current organisation has opened up possibilities of savings in areas such as transportation and logistics.

\$NH\HQDEOHURIRXUHƱFLHQF\DQGVLPSOLƮFDWLRQGULYHLVRXUGLJLWDO LPSOHPHQWDWLRQSURJUDPPH+HUHZHDUHPDNLQJELJFKDQJHV +LVWRULFDOO\ZHKDGDYDULHW\RIGLƬHUHQW,7V\VWHPVSDUWO\DUHưHFWLRQ RIDGLVSHUVHGVHWRIEXVLQHVVHVDQGIXQFWLRQDODFWLYLW\7RGD\ZH have adopted some best-in-class and standardised applications DFURVVWKH*URXSWKDWJLYHXVWKHDELOLW\WRRSHUDWHPRUHHƱFLHQWO\ DQGHƬHFWLYHO\DQGVHUYHRXUFXVWRPHUVEHWWHU

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Digital

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Digital transformation is a NH{HQDEOHURIRXU,QQRYDWLRQ *URZWKDQG(ƱFLHQF\ programme.

The right infrastructure and applications will make it easier IRUFXVWRPHUVWRGREXVLQHVV ZLWKXVDQGHQDEOHIDVWHUDQG EHWWHUH[HFXWLRQ

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David Zhou *OREDO6XSSO\&KDLQ'LUHFWRU1HZ-HUVH\86\$

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"I started as a Supply Chain Manager with Elementis in China nearly 12 years ago – before moving to the US in 2017 to head up our global supply chain management digitisation programme.

"The focus of the programme has been reducing our working capital requirements whilst improving customer VHUYLFHOHYHOV8VLQJ'HPDQWUDZHKDYHPRYHGWR DFRQVLVWHQWJOREDODSSURDFKWRVDOHVIRUHFDVWLQJ GHPDQGSODQQLQJLQYHQWRU\FRQWURODQGRUGHUIXOƮOPHQW ,WoVDQDQDO\WLFDOVWDWLVWLFDODQGGDWDEDVHGDSSURDFKWR business management.

"And it works. A US\$23m reduction in working capital since /DVW\HDUGLUHFWFXVWRPHUGHOLYHULHVn2Q7LPHDQG,Q )XOOoH[FHHGHGIRUWKHƮUVWWLPH

"What's next? It doesn't stop! Talc and Chromium have to complete their programmes – then we will concentrate on a better interface to communicate across all elements of the VXSSO\FKDLQUHGXFLQJOHDGWLPHVDQGFXWWLQJVXUSOXVVWRFN still further."

,QZHUROOHGRXWWKH6DOHVIRUFHFXVWRPHUUHODWLRQVKLS management system across all our segments on a global basis. The platform enables the systematic management of our relationships with existing and potential customers through FRQWDFWPDQDJHPHQWVDOHVPDQDJHPHQWSURGXFWLYLW\DQGPRUH 2QHH[DPSOHRIWKHWDQJLEOHEHQHƮWVWKHV\VWHPFDQJHQHUDWHLV ZLWKLQWKHDUHDRIQHZEXVLQHVVLGHQWLƮFDWLRQ'XHWRV\VWHPDWLF digital tracking of new opportunities by market and geography our new business pipeline is up over 20% in 2019 and the pipeline for 2020 to 2023 is encouraging.

:KLOHZLWQHVVHGVLJQLƮFDQWLPSURYHPHQWLQRXUDELOLW\WR LGHQWLI\FXVWRPHUVWKHQH[WVWHSLVWRLPSURYHKRZZHRSWLPLVHWKH customer journey. Our website and digital tool-set are commerce UHDG\$VDUHVXOWRIWKHXSJUDGHVLQZHQRZKDYHDPRGHUQ and digitally capable site. Future integration of this system with platforms such as Salesforce will enable us to manage the entire OHDGWRRUGHUIXOƮOPHQWF\FOHLQDVHDPOHVVZD\IRURƲLQHDQG online customers. This will result in improved customer journeys DQGPRUHHƱFLHQWUHVSRQVHVDQGZLOOKHOSXVFDSWXUHRXUEHVW growth opportunities.

'HPDQWUDSDUWRIWKH2UDFOHVXLWHRIWRROVLVDFRUQHUVWRQHRI RXUHƬRUWVWRGHOLYHUPRIZRUNLQJFDSLWDOVDYLQJVE\ 7KHV\VWHPHQDEOHVRXUVXSSO\FKDLQWRWULDQJXODWHPDUNHWGHPDQG supply restrictions and customer commitments to optimise our RSHUDWLRQVDQGWKHUHE\RXUZRUNLQJFDSLWDO,QWKHV\VWHP delivered \$10m of purely inventory related savings. Further integration with our new business data from Salesforce will improve our forecasting ability and generate further working capital savings.

Leveraging the rich customer data created by Salesforce is a IXUWKHU{VWHSRIRXUGLJLWDOWUDQVIRUPDWLRQ,QZHH[SHFWWRUROO out analytical tools such as Tableau. These applications will provide RXUVDOHVIRUFHFKDQQHOWHDPDQGH[HFXWLYHVZLWKVHFXUHXSWR GDWHFXVWRPLVHGYLHZVRIFXVWRPHUGDWD

With 22 manufacturing locations and thousands of customers across the ZRUOGZHDUHIRFXVHG on delivery of further HƱFLHQFLHVLQRXU JOREDO{VXSSO\FKDLQ

Our enhanced demand planning capabilities HQVXUHZHFDQ meet our customer needs in a timely and HƱFLHQWPDQQHU

Delivering value for all our stakeholders

People

Our engaged and skilled workforce DUHIRFXVHGRQLQQRYDWLRQFXVWRPHU FROODERUDWLRQDQGVHUYLFHDQG delivery of our strategy in a safe DQG{UHVSRQVLEOHPDQQHU

Capital

We operate within a disciplined capital allocation framework that allows us WRLQYHVWLQJURZWKSURGXFWLYLW\DQG maintenance to support delivery of our strategy.

Relationships

We build and maintain close long term UHODWLRQVKLSVZLWKFXVWRPHUVVXSSOLHUV and other stakeholders; centred on trust and collaboration.

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Our global manufacturing footprint allows us to deliver our high value innovation solutions to customers in DOO{JHRJUDSKLHV6DIHW\LVIXOO\DOLJQHG WR{RSHUDWLRQDOSHUIRUPDQFH

Assets

We own and operate the world's largest known source of high quality rheology grade hectorite clay and four talc mines with high quality long duration talc resources. We are the only domestic producer of chromium chemicals in 1RUWK\$PHULFDDQGRXUXQLTXHGHOLYHU\ V\VWHPJHQHUDWHVVLJQLƮFDQWVDIHW\ EHQHƮWVIRUFXVWRPHUV

Expertise

2XUSHRSOHDUHH[SHUWVLQWKHLUƮHOGV From innovation to operations and product stewardship we have experts who enable us to deliver unique and superior product formulations to a ZLGH{UDQJHRIHQGPDUNHWV

Inputs What we do and how we do it

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7KURXJKRXULQQRYDWLRQRSHUDWLRQVDQGVDOHVDQGPDUNHWLQJ expertise we create high value additives that make our FXVWRPHUVoIRUPXODWLRQVORRNIHHODQGSHUIRUPDWWKHLUEHVW and enable distinctiveness in the market – Enhanced Performance Through Applied Innovation.

Financial statements

Value creation

Shareholders

Strong balance sheet and cash generation delivering sustainable returns to shareholders

\$49m

Dividends paid in 2019

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Creating and maintaining rewarding careers for our total global workforce RIFLVFULWLFDOIRUWKHGHOLYHU\ RI{RXUVWUDWHJ\

\$122m

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Customers

Providing value enhancing products and building relationships with our customers ensures we are better placed to solve their biggest challenges

\$874m

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Suppliers

We value our supplier relationships DQG{WDNHDORQJWHUPVWUDWHJLFDSSURDFK to mutual value creation

700+ 1XPEHURIUDZPDWHULDOV

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Innovation

Innovation is at the heart of what we do. Leveraging our capabilities in the science RI{UKHRORJ\VXUIDFHFKHPLVWU\DQG IRUPXODWLRQZHKHOSFXVWRPHUVUHVSRQG WR{WKHLUELJJHVWFKDOOHQJHVWKURXJKGHHS partnerships. We deliver performance HQKDQFLQJDGGLWLYHVRQJRLQJWHFKQLFDO support and consistent service quality.

Operations

Across the globe we operate high performance production networks. 7KH{VRXUFLQJRIUDZPDWHULDOVLQFOXGLQJ RXU{XQLTXHFOD\VDQGWDOFUHVRXUFHV SURGXFWLRQTXDOLW\FRQWURODQGORJLVWLFV DUH{GULYHQE\RXUH[SHULHQFHGRSHUDWLRQDO WHDPVZKRDUH{FRQWLQXRXVO\RSWLPLVLQJ RXU{SURGXFWLRQQHWZRUNV

Sales & Marketing

Our customer facing teams build deep and meaningful relationships with our partners which means we are the supplier of choice for the leading companies in the industries WKDWZHVHUYH,QDGGLWLRQRXUWHDPV constantly monitor market developments to ensure our formulations meet the requirements not only of our customers EXW{WKHHQGXVHUVRIWKHLUSURGXFWV

Measuring our performance

	1.1 0.48 0.22 2019 2018 2017	2 1 – 2019 2018 2017	– – – 20191 2018 2017 ̝7KHUHZHUHQRHQYLURQPHQW incidents in 2019.	22% 15% 15% 2019 2018 2017
KPI	7RWDOUHFRUGDEOH incident rate (TRIR)	Lost time accidents (LTA)	Environmental impact	ROCE
'HƮQLWLRQ	We use the US Occupational Safety and Health Administration 26+\$GHƮQLWLRQIRU recordable injuries and illnesses. TRIR is the total number of recordable incidents multiplied E{GLYLGHGE\ total hours worked by all employees during the year.	LTA is an injury or illness that requires more than three days away from work not including the day of incident.	We record and categorise environmental incidents into tiers based on severity or actions taken by regulatory authorities. Tier 3 incidents are those that have a VLJQLƮFDQWLPSDFWRQWKH environment and require reporting to an external authority and where enforcement action is likely. Tier 2 incidents have a minor impact and require QRWLƮFDWLRQEXWDUHOLNHO\ to result in minimal action by the authorities.	52&(LVGHƮQHGDV RSHUDWLQJSURƮWDIWHU adjusting items divided by operating capital HPSOR\HGH[SUHVVHG as a percentage. Operating capital employed comprises Ʈ[HGDVVHWVH[FOXGLQJ JRRGZLOOZRUNLQJFDSLWDO and operating provisions. Operating provisions include self insurance and environmental provisions but exclude retirement EHQHƮWREOLJDWLRQV
Performance	Further information can be found on page 29.	Further information can be found on page 29.	Further information can be found on page 29.
Remuneration linkage	1RQƮQDQFLDOWDUJHWV within the Executive Directors' annual bonus structure typically include individual objectives relating to safety performance.	1RQƮQDQFLDOWDUJHWV within the Executive Directors' annual bonus structure typically include individual objectives relating to safety performance.	1RQƮQDQFLDOWDUJHWV ZLWKLQ{WKH([HFXWLYH Directors' annual bonus structure typically include individual objectives relating to environmental performance.	ROCE is an underpin condition for the Long Term Incentive Plan. ROCE including goodwill was 8% (2018: 8%).
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\$\HDURI achievement

UN Global Compact delivered our ƮUVWFRPPXQLFDWLRQRQSURJUHVV

EcoVadis Silver rating

Top 5% of silver rating in manufacturing sector

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Our talc and polymeric SURGXFWV{UHGXFHWKHZHLJKW of automotive components thereby reducing the carbon IRRWSULQWRI{WRGD\nVDXWRPRELOHV Meadowfoam® seed oil comes from family farmers who use intelligent crop rotation and natural resource management. This results in a superior product WKDWLVUHQHZDEOHVXVWDLQDEOH and supports local communities.

,Q0LOZDXNHHZHLQFUHDVHGWKH number of Fish Hotels tenfold which resulted in more and ELJJHUƮVKLQDQDUHDWKDWZDV GHYRLGRIƮVKDIHZ\HDUVDJR

Many products are derived from natural and renewable sources. Many cosmetic ingredients have received COSMOS natural approval. We support RSPO and use sustainable sources of palm oil to protect rainforests and biodiversity.

Over \$25m invested in HSE and maintenance capital expenditure.

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Paul Waterman CEO

" Elementis is committed WRFUHDWHDVXVWDLQDEOH future world through our innovative products, our dedication to reduce the HƬHFWVRIPDQXIDFWXULQJ on the environment and our FRUHYDOXHVWREHLQJDVDIH HWKLFDOHQYLURQPHQWDOO\ DQGVRFLDOO\UHVSRQVLEOH FRPSDQ\q

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Respect and care for our environment and our communities are core values at Elementis. It drives everything we do as part of our ongoing contributions to VXVWDLQDEOHSURGXFWVSUDFWLFHVDQGSROLFLHV Our behaviours impact the people who work IRUXVDVZHOODVWKHZLGHUHQYLURQPHQW

Our Code of Conduct and Company YDOXHV{XQGHUSLQRXUFRPPLWPHQWWRSHRSOH and the communities where we operate. This focus ensures safe and proper working FRQGLWLRQVKLJKHWKLFDOEHKDYLRXUVDQG business integrity.

Safety is a core value at Elementis. 7KHVDIHW\RIRXUHPSOR\HHVWKH HQYLURQPHQWWKHFRPPXQLWLHVLQZKLFK we operate and our products is one of our top priorities. Our goal is to maintain a world-class HSE programme that delivers H[FHOOHQFHLQ+6(ZKLOHIRFXVLQJRQ ]HURKDUP

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,QZHHVWDEOLVKHGWKH(OHPHQWLV Sustainability Council (ESC) to provide OHDGHUVKLSRYHUVLJKWDQGFRRUGLQDWLRQ for all Elementis' sustainability and social UHVSRQVLELOLW\SROLFLHVSURJUDPPHV and goals.

The ESC is comprised of:

SVP Global Supply Chain and Manufacturing
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Group Company Secretary
'LUHFWRU*OREDO3URGXFW6WHZDUGVKLS and Sustainability

The ESC reports directly to the CEO who LQWXUQUHSRUWVRQHQYLURQPHQWDOVRFLDO governance and sustainability matters WR{WKH%RDUG

We recognise that the development and maturity of our sustainability programme is a journey. The primary focus of the ESC during 2019 has been to assess and evaluate potential sustainability metrics DQG{SURJUDPPHVWRGHPRQVWUDWHRXU continuing commitment to sustainability.

We are proud to participate in and receive external recognition for our sustainability HƬRUWVZKLFKLQFOXGH(FR9DGLV&DUERQ 'LVFORVXUH3URMHFW)76(*RRGDQG Roundtable for Sustainable Palm Oil (RSPO). We are an active signatory to the UN Global Compact and submitted our inaugural communication on progress during the year.

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We expect to publicly announce WKHVHPHWULFVGXULQJWKHƮUVWKDOIRI ,Q{DGGLWLRQWKH(6&KDVEHHQ focused on aligning these targets and our Company values with the 81{6XVWDLQDEOH{'HYHORSPHQW*RDOV

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We are committed to making sure our products will not harm people or the HQYLURQPHQWGXULQJPDQXIDFWXUHXVHDQG disposal. To support the highest levels of SURGXFWVDIHW\DQGUHJXODWRU\FRPSOLDQFH we have a comprehensive product safety and product stewardship processes in SODFHWRHQVXUHWKDWDQ\KD]DUGUHODWLQJ to our products are fully understood and communicated to our customers. Any risks are managed to minimise potential impacts to people and the environment.

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Our products are sold in compliance with all applicable local and country ODZV{DQGUHJXODWLRQV

Innovation

We constantly strive to use our expertise and capability to create innovative products that meet the changing expectations and needs of our customers. Our customers UHO\RQXVWRSURGXFHKLJKTXDOLW\KLJK performance and environmentally friendly products which enable them to manufacture with an emphasis on sustainability in their own operations.

)RUH[DPSOHWKHSURGXFWLRQRIHWKDQROIURP SODQWVVXFK{DVVXJDUFDQHRUFRUQLVDQ attractive alternative to conventional fossil fuels. A critical challenge for such bioethanol producers is to reduce excessive foaming during the fermentation process.

When a biofuel producer in Thailand was unable to secure a solution from its existing VXSSOLHUIRUDQH[FHVVLYHIRDPLQJSUREOHP Elementis rose to the challenge. Our team immediately assessed the severity of the VLWXDWLRQDQGRƬHUHGDTXLFNVROXWLRQ :LWKLQOHVVWKDQWKUHHZHHNV(OHPHQWLV launched a new defoamer (DAPRO® DF7169) and shipped 100kg to the customer for production trial. Improvements in production HƱFLHQFLHVZHUHLPPHGLDWHO\DFKLHYHGDW WKLVIDFLOLW\OHDGLQJWRLQFUHDVHGRXWSXW SURƮWDELOLW\DQGHQGXVHUVDWLVIDFWLRQ without compromising the high standards RITXDOLW\VDIHW\DQGHQYLURQPHQWDO compliance during the fermentation process. Trials with other bio-ethanol producers are showing very positive results.

'XULQJZHLPSOHPHQWHGD nVXVWDLQDELOLW\LQGH[oLQRXULQQRYDWLRQ process to emphasise the importance of developing new products that are either natural or manufactured using renewable UHVRXUFHVKDYHORZHQHUJ\UHTXLUHPHQWV in their use and minimise our customers' carbon footprint.

Climate change

We acknowledge climate change is likely to have an impact on our business as we operate on a global basis. We have started to analyse climate related risks relating to our operations and we intend to address this more formally as we embark on our journey to being able to disclose climate-related ƮQDQFLDOLPSDFW&XUUHQWO\ZHGLVFORVH RXUHQYLURQPHQWDOVRFLDODQGJRYHUQDQFH performance through the Carbon Disclosure Project (CDP) climate change programme which considers risks and opportunities of climate related issues from the world's largest companies.

We note that the UK Government has set a target to bring all greenhouse gas emissions WRQHW]HURE\DQGZHDUHFXUUHQWO\ considering how best we can contribute to this target in respect of our UK operations.

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As a demonstration of our commitment WRWKHHQYLURQPHQWORFDOVLWHVSHFLƮF programmes are in place to replace GLVSRVDEOHSDSHUSURGXFWVSODVWLFXWHQVLOV and non-recyclable consumables at all our locations. At our management headquarters LQ6FL3DUN1HZ-HUVH\YROXQWHHUVODXQFKHG a recycling initiative to collect and recycle XVHGEHDXW\SURGXFWSDFNDJLQJSODVWLF ZDWHUERWWOHFDSVEDWWHULHVDQGRWKHUKDUG WRUHF\FOHRƱFHVXSSOLHV

Water consumption

Water scarcity is a global issue. We operate mostly in locations where this is not an LPPHGLDWHLVVXHQHYHUWKHOHVVZHUHFRJQLVH the need to conserve water and keep up to date with developments relating to water supply risks. Water consumption is minimised where possible by treatment and recycling. Consumption is related WRSURGXFWLRQRXWSXWSURGXFWPL[SODQW utilisation and cleaning activities. Our new site in India is being constructed to recycle and reuse 100% of the water it consumes. Zero liquid discharge is being built into the site design with only solid waste being taken away.

Waste

As part of our ongoing commitment to the HQYLURQPHQWZHVHHNWRUHGXFHWKHTXDQWLW\ RIDOOW\SHVRIZDVWH7KHƮUVWFRQFHUQLVWR reduce the amount of waste that is classed DVKD]DUGRXV%H\RQGWKDWQRQKD]DUGRXV waste is minimised and recycled.

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We consume energy from several VRXUFHVHOHFWULFLW\ERWKZLQGDQGVRODU VWHDPQDWXUDOJDV/3*ELRPDVVDQG RLODWPDQXIDFWXULQJVLWHVRƱFHVDQG laboratories. Energy consumption varies with production volumes and product mix. Further information on energy consumption can be found below.

Palm oil

Our membership of the Roundtable on Sustainable Palm Oil (RSPO) means Elementis is committed to protecting and conserving the rich biodiversity found in tropical palm forests by using palm oil

sourced from sustainable palm plantations that are responsible and responsive to the LVVXHVRIVRLOGHJUDGDWLRQELRGLYHUVLW\ORFDO SHRSOHDQGODQGULJKWV(OHPHQWLVLVFHUWLƮHG under the RSPO for our organoclay and bentone gels product range.

6XSSRUWLQJIDPLO\IDUPVDQG ORFDO{JURZHUV

0HDGRZIRDPVHHGRLOIRXQGLQPDQ\ FRVPHWLFVFRPHVGLUHFWO\IURPD FRPPXQLW\RIIDPLO\IDUPHUVLQ2UHJRQ USA. These farmers use intelligent crop rotation and natural resource management as part of their farmer-driven stewardship practices. This results in a superior cosmetic LQJUHGLHQWWKDWLVUHQHZDEOHVXVWDLQDEOH and supports local families.

%LRGLYHUVLW

:HEHOLHYHWKDWWKHYDULHW\RIOLIHVKRXOG be protected insofar as it is reasonably practicable by reducing or avoiding the LPSDFWRQDQGSRWHQWLDOIRUGDPDJHWR VHQVLWLYHVSHFLHVKDELWDWVDQGHFRV\VWHPV as a direct or indirect result of our operations and activities.

([DPSOHVRIRXUHƬRUWVDQGVSHFLƮF action plans implemented to enhance biodiversity include:

Seedlings for native species trees have EHHQSODQWHGDWRXU3DOPLWDO%UD]LODQGRXU 7DORMD,QGLDIDFLOLWLHV
\$IHQFHEDUULHULQVWDOOHGDWRXU+HFWRULWH PLQHLQ&DOLIRUQLDSURWHFWVWKHKDELWDWRI WKHGHVHUWWRUWRLVHZKLFKLVDSURWHFWHG species. If a tortoise makes its way beyond WKHEDUULHUZHZRUNZLWKDFHUWLƮHG biologist to return them to their habitat.
Monitoring and compliance with environmental permits and good ecological practice ensure that permitted GLVFKDUJHVIURPRXU&KDUOHVWRQ:HVW 9LUJLQLDIDFLOLW\GRQRWDƬHFWIUHVKZDWHU PXVVHOVZKLFKDUHDSURWHFWHGVSHFLHV that reside in the Kanawha River.
2XU&KURPLXPEXVLQHVVLQ&DVWOH+D\QH 1RUWK&DUROLQDKDVPDLQWDLQHGDODUJH fenced area of undeveloped land (130 KHFWDUHVDGMDFHQWWRWKHVLWHZKLFKZLOO remain forested to provide a haven for wildlife to inhabit.
\$WWZRVLWHV0LOZDXNHH:LVFRQVLQ DQG\$QML&KLQDUHWDLQLQJZDOOVKDYH been constructed to prevent silt and residual clay from being washed into WKH{DGMDFHQWULYHUV

		2019		2018
	\$EVROXWH nV	Per tonne of production	Absolute nV	Per tonne of production
Energy consumed (GJ)	4,553	5.58		14.7

+HDOWKVDIHW\ and environment

Highlights

New Group HSE policy

Elementis HSE Council launched

HSE culture assessment tool launched

Over \$25m invested in HSE and maintenance related capital expenditure

2YHUKRXUVRI+6(WUDLQLQJ completed every year

reduction in total Scope 1 and Scope 2 GHG emissions

We place great emphasis on protecting people and operating responsibly. 2XU+HDOWK6DIHW\DQG(QYLURQPHQW+6( programmes provide the basis of how ZHGHYHORSPDQXIDFWXUHDQGGLVWULEXWH our products around the world. This is founded on management systems and LQWHUQDOSURFHGXUHVWKDWGHƮQHRXU UHJXODWRU\REOLJDWLRQVWKHLQGXVWU\EHVW SUDFWLFHVWKDWZHHPSOR\ULVNPDQDJHPHQW and the various programmes that drive continuous improvement.

,QZHXSGDWHGRXU(OHPHQWLV+6( policy and circulated to all employees. The new policy represents our objective to maintain a world class HSE programme that delivers excellence in HSE performance and drives continuous improvement.

All employees and contractors are given training to understand their roles and responsibilities to ensure compliance with our safe work procedures and we conduct regular audits to determine policy compliance.

:HFRQVXOWZLWKDQGLQYROYHRXUHPSOR\HHV in the development and implementation of our HSE programmes and initiatives.

To assist us in identifying ways to improve our HSE culture we have developed an HSE culture assessment tool. This tool

allows the sites to conduct a year over year assessment on improvements on HSE culture. The tool consists of over 35 TXHVWLRQVSHUWDLQLQJWRDFFRXQWDELOLW\ FRPPLWPHQWUHVSRQVLELOLW\DQG employee participation.

The results of the survey provide insight RQDUHDVRIIRFXVIRU{HDFK\HDUDQGWKHVH HOHPHQWVDUHLQFOXGHGLQ{VLWHDQQXDO improvement plans.

'XULQJZHODXQFKHGWKH(OHPHQWLV +6(&RXQFLODQHZIRUXPWRGLVFXVV+6( matters. The mission of the council is to create a community that promotes HSE H[FHOOHQFHNQRZOHGJHDQGHQJDJHPHQW that drives continuous improvement in performance and culture. The council includes members from the HSE and operations community and meets monthly to exchange ideas and discuss HSE related issues in an open and transparent environment so we can learn from what is working and where we can do better.

To ensure that all of our manufacturing site leaders are aware of their roles and responsibilities in championing HSE at their facilities we implemented a Site Leader HSE Review Panel. Within 120 days of their date RIKLUHRUSURPRWLRQ6LWH/HDGHUVZLOODSSHDU before a review panel to demonstrate a thorough understanding of their site's UHJXODWRU\REOLJDWLRQVSHUPLWFRQGLWLRQV SURFHVVKD]DUGVLQMXU\ LQFLGHQWKLVWRU\ and all other aspects of HSE related to the safe operation of their facilities. Current site leaders will cycle through the review process every three years.

*OREDO+6(SURJUDPPHV

Continuous improvements

For the second year in a row we held our annual Summer Safety Challenge where all RSHUDWLRQVLQFOXGLQJ5 'ODEVDUHH[SHFWHG WRSDUWLFLSDWH2QWKH0RQGD\RIHDFKZHHN two employees are paired together and VHUYHDVHDFKRWKHUoVn6DIHW\%XGG\n\$WWKH beginning of each shift the Safety Buddies will meet and discuss their assigned tasks IRUWKHGD\ZKHUHWKH\LGHQWLI\WKHKD]DUGV ULVNVQHHGHGFRQWUROVDQGKRZWKH\SODQ to keep safety in mind throughout the day. Each pair of employees completes a log sheet and submits to their supervisors. There is no prescribed pattern for pairing VDIHW\EXGGLHVHJVDODU\ KRXUO\ RSHUDWLRQV ODEPDLQWHQDQFH IURQWRƱFH etc. Each week a new pairing will be made.

Investment in HSE

,QRYHUPZDVLQYHVWHGLQ+6( DQG{PDLQWHQDQFHUHODWHGFDSLWDOH[SHQGLWXUH SURMHFWVUHSUHVHQWLQJDURXQGRIRXU total capital expenditure. These investments include an ongoing programme of PDLQWHQDQFHQHZLQYHVWPHQWVLQDLUTXDOLW\ improvements through installation of a new Dryer bag house at St. Louis and a new Regenerative Thermal Oxidiser (RTO) at our 6RQJMLDQJ&KLQDIDFLOLW\:HPDGHUDLOFDU and track safety improvements at our Castle +D\QH1&DQG'DNRWD&LW\1(IDFLOLWLHV and we made several process safety LPSURYHPHQWVDWRXU9XRQRV)LQODQGIDFLOLW\

In addition to capital expenditure investments we ensure that our employees are properly trained to understand their roles and responsibilities to safely operate our IDFLOLWLHV:HSURYLGHRYHUKRXUVRI HSE and compliance training every year.

Our performance

,QZHXQIRUWXQDWHO\H[SHULHQFHGDVOLJKW increase in the number of recordable injuries compared to 2018. We incurred seven recordable injuries in 2019 with one of those being a lost time injury greater than three days of lost time.

In order to understand the basis for why these incidents were occurring we implemented a new root cause analysis technique to ensure we had a complete understanding of why incidents occurred and what we can do to prevent them from happening again. We share these learnings via Safety Alerts and discuss in depth during the monthly HSE Council. All Corrective and Preventative \$FWLRQV&\$3\$VLGHQWLƮHGGXULQJWKH investigation and root cause analysis are entered into our HSE information database and tracked to completion.

VDIHW\SHUIRUPDQFH

We use the US Occupational Safety and +HDOWK\$GPLQLVWUDWLRQ26+\$GHƮQLWLRQV IRU5HFRUGDEOH,QMXULHVDQG,OOQHVVHV WKH5HSRUWLQJRI,QMXULHV'LVHDVHVDQG Dangerous Occurrences Regulations 2013 IRU/RVW7LPH\$FFLGHQWV/7\$DQG7RWDO Recordable Incident Rate (TRIR) as a means for benchmarking performance.

	2019	2018	2017
TRIR (incidents per
KRXUVZRUNHG	0.48	0.22	1.10

Environmental impact

We record and categorise environmental incidents into tiers based on the severity or actions taken by regulatory authorities. Tier 3 incidents are those that have an impact on the environment and require reporting to an external authority and where enforcement action is likely. Tier 2 incidents KDYHDPLQRULPSDFWDQGUHTXLUHQRWLƮFDWLRQ but are likely to result in minimal or no action E\WKHDXWKRULWLHV,QZHPDLQWDLQHGD high level of environmental performance as there were no Tier 2 or Tier 3 incidents (2018: ]HUR7LHU]HUR7LHU

Greenhouse gas (GHG) emissions

Carbon dioxide derived from natural gas combustion is the principal GHG attributed to our operations. Other GHG emissions arising from our operations include those from chemical reactions in production SURFHVVHVZDVWHZDWHUWUHDWPHQWDQG carbon dioxide used for process cooling. Our data includes all operating sites and SULQFLSDORƱFHV6PDOORƱFHORFDWLRQVDUH excluded as the level of carbon dioxide equivalent (CO2e) emissions from these RƱFHVGRQRWPDNHDPDWHULDOFRQWULEXWLRQ

)RUWRWDO6FRSHDQGHPLVVLRQV decreased overall by 32% directly DWWULEXWDEOHWRWKHIXOO\HDUEHQHƮWRI GLYHVWPHQWVRIIRUPHU*URXSVLWHV LQFUHDVHGHQHUJ\HƱFLHQFLHVRIWKH7DOF sites and ongoing sustainability initiatives.

'XULQJHQHUJ\HƱFLHQF\DFWLRQV across the Group included:

Upgrading of mills used in our Talc operations resulting in 50% energy savings and 90% CO2 emissions savings
New warehousing in central US to seek consolidation of truckloads resulting in less trucks on the road
Zero liquid discharge system for all water on site relating to our new India plant currently under construction
New generations of additives using plant based additives which reduce the energy requirement during paint manufacturing process using lower temperatures
New Martinsville facility installation of new condensers
Castle Hayne transition from three kilns to two kilns driving utilisation and HQHUJ\HƱFLHQF\

We see additional opportunities to move towards more renewable energy sources for some sites in 2020. We have projects underway evaluating the implementation of both solar and wind energy for our sites. ,QDGGLWLRQHDFKPDQXIDFWXULQJVLWHKDV been challenged to identify projects that may reduce their carbon footprint.

Corporate governance

Financial statements

Shareholder information

Greenhouse gas emissions

GHG emissions are calculated from energy purchased and process calculations. Energy units are converted into CO2HXVLQJWKHRƱFLDO GDWDSURYLGHGE\WKH8.'HSDUWPHQWIRU(QYLURQPHQW)RRGDQG5XUDO\$ƬDLUV'HIUD

3OHDVHQRWHWKDW6FRSHDQGHPLVVLRQVDQGWKHLQWHQVLW\UDWLRVDUHVXEMHFWWRYDULDWLRQVGXHWRFKDQJHVLQWKHPL[RISURGXFWV PDQXIDFWXUHGYROXPHVSRUWIROLRDQGHQHUJ\HƱFLHQF\LPSURYHPHQWV

			Base year
	2019	2018	2013
6FRSHCombustion of fuel and operation facilities (tonnes CO2e)	170,811
6FRSH(OHFWULFLW\KHDWVWHDPDQGFRROLQJSXUFKDVHGIRURZQXVHWRQQHV&22e)	57,930
7RWDO
Scope 1 and 2 (tonnes CO2e)	228,741
,QWHQVLW\UDWLR
(tonnes CO2e/tonne production)	0.28	0.89	0.77
6XSSOHPHQWDU\LQWHQVLW\UDWLR
(kg CO2e/kWh energy consumed)	0.18	0.22	0.27
2XWRIVFRSH
Biofuel (tonnes CO2e)	4,676		0

CO2e values were derived using Defra published factors (2019).

Note: Scope 1 and 2 CO2HHPLVVLRQVVKRZVLJQLƮFDQWUHGXFWLRQVDVDUHVXOWRIDQXPEHURIVXVWDLQDELOLW\LQLWLDWLYHVLQYHVWPHQWVDQGIXOO\HDUEHQHƮWRI divestment of certain CO2e intensive sites.

In accordance with The Companies (Directors' Report) and Limited Liability Partnerships (Energy and Carbon Report) Regulations 2018 ZKLFKFDPHLQWRIRUFHRQ\$SULOWKHWDEOHEHORZVWDWHVRXU8.HQHUJ\XVDJH

	2019
6FRSHCombustion of fuel and operation facilities (tonnes CO2e)	7,534
6FRSH(OHFWULFLW\KHDWVWHDPDQGFRROLQJSXUFKDVHGIRURZQXVHWRQQHV&22e)	924
7RWDO
Scope 1 and 2 (tonnes CO2e)	8,458

,QWHQVLW\UDWLR

(tonnes Co2e/tonne production) 0.43

'XULQJRXU/LYLQJVWRQVLWHFRPSOHWHGWKUHHHQHUJ\HƱFLHQF\SURMHFWV/('OLJKWLQJUHSODFLQJDOOưXRUHVFHQWOLJKWRQVLWHDQGLQ RƱFHVLQVWDOODWLRQRIDQH[WUDFWLRQIDQDQGDKLJKVSHHGUROOHUGRRUWRUHGXFHKHDWORVV,QWRWDOWKHVHLQLWLDWLYHVDPRXQWHGWRDWRWDO FDSLWDOLQYHVWPHQWRI~GHOLYHULQJSHUDQQXPFRVWVDYLQJVRI~UHGXFWLRQLQHQHUJ\XVDJHRINZKDQGUHGXFWLRQ LQ{FDUERQHPLVVLRQVRINJ&22.

2XUVXSSO\FKDLQ

Highlights

As a global Group we seek to maximise HƱFLHQFLHVDQGV\QHUJLHVDFURVV our business

500+

suppliers

700+

raw materials

manufacturing locations

customers and local distributors

Procurement excellence is a key strategic driver for our success. We employ a IXQFWLRQDOOHGRUJDQLVDWLRQVWUXFWXUH ZLWKFDWHJRU\VSHFLƮFH[SHUWLVHORFDWHG around the world. We are aligned with the businesses to leverage our spend delivering continuous total cost improvement and supply risk mitigation.

,QZHDFKLHYHGPRUHWKDQPLQ procurement related cost savings through cooperative strategic management of RXUVXSSOLHUVDQGIRFXVHGHƬRUWVWR ULJKWVL]HRXUUHTXLUHPHQW:HFRQWLQXHG to de-risk our raw materials through the development of additional sources of supply for critical raw material and improved demand planning which allowed us to better UHDFW{WR{PDUNHWFKDQJHV

Our Code of Conduct upholds our commitment to high ethical standards of fairness and respect in all business dealings LQFOXGLQJZLWKFXVWRPHUVVXSSOLHUVDQG distributors. Our Purchasing Code of 3UDFWLFHUHưHFWVWKHUHTXLUHPHQWVRIWKH86 California Transparency in Supply Chains Act of 2010 and the UK Modern Slavery Act 2015. Training is provided to employees on sustainable supply chain management which includes prevention of modern slavery DQGIDLUEXVLQHVVGHDOLQJVZLWKFXVWRPHUV suppliers and distributors. We assess and require our key and large suppliers and potential suppliers to ensure conformity DQGFRQVLVWHQF\ZLWKRXUSROLFLHVLQFOXGLQJ compliance with international labour laws and the absence of slavery and human WUDƱFNLQJ7KLVLQFOXGHVWKHXVHRI questionnaires which are assessed by our procurement team. If a supplier is found to be in breach of international labour laws and standards that seek to prohibit slavery DQGKXPDQWUDƱFNLQJZHZLOOWHUPLQDWHRXU agreement with them immediately

3URGXFWVWHZDUGVKLSVXVWDLQDELOLW\ DQG{FRPSOLDQFH

Successful product stewardship involves constant communication with suppliers and customers at all levels. We partner with key suppliers and customers for faster to market solutions for our products. We surveyed our top 80% of suppliers regarding their sustainability programmes and will use this to improve our performance.

We expect the people in our supply chain to be treated fairly and their human rights respected. We strive for the highest ethical VWDQGDUGVKROGLQJRXUVXSSOLHUVDQG partners to the same criteria.

GDPR

We require that suppliers and service providers treat personal information in line with applicable laws and regulations. :KHUHDSSOLFDEOHZHKDYHFRQFOXGHG agreements to safeguard the personal GDWDRIRXUHPSOR\HHVDQGFXVWRPHUV We conduct reviews into the service providers' ability to comply with data protection laws and require that incidents which may have an impact on Elementis WR{EHUHSRUWHGWRXVZLWKRXWXQGXHGHOD\

7UDGHDQGWDULƬLPSDFWV

Following US and Chinese trade negotiations and the UK's withdrawal IURP{WKH(8ZHKDYHWDNHQDSURDFWLYHDQG collaborative approach internally and with RXUFXVWRPHUVDQGVXSSOLHUV,QVRPHFDVHV we have built inventories to mitigate supply ULVNVDQGZKHUHDSSURSULDWHZHKDYHVKLIWHG certain production to new locations to PLQLPLVHWKH{FRVWRIQHZWDULƬV

3D\PHQWWHUPV

We work collaboratively with our suppliers to enable us to deliver value to the business and are committed to paying our suppliers on time. Our standard payment terms for suppliers are net 60 days from receipt of goods and services.

7D[WUDQVSDUHQF

On an annual basis we develop and publish RXUWD[VWUDWHJ\VWDWHPHQWLQOLQHZLWKWKH UHTXLUHPHQWVRISDUDJUDSK6FKHGXOH )LQDQFH\$FW:HDLPIRUDSURDFWLYH open and transparent relationship with all relevant tax authorities in order to facilitate meeting our statutory and legislative obligations. The tax strategy statement LV{DSSURYHGE\WKH%RDUGDQGLVDYDLODEOH RQ{RXUZHEVLWHZZZHOHPHQWLVFRP

Corporate governance

Financial statements

6XVWDLQDELOLW\FRQWLQXHG

Our supply chain continued

Our mines

(OHPHQWLVRSHUDWHVƮYHPLQHVZKLFK provide us with a clear source of competitive advantage.

Hectorite mine
Location:	&DOLIRUQLD86
Markets served: 3HUVRQDO&DUH	Coatings and Energy
Resource life	+50 years

We own the only commercially viable high quality rheology grade hectorite PLQHLQWKHZRUOGWKLVFRPELQHGZLWK manufacturing know how enables us to supply high value functional additives globally.

Talc mines

Location:	Four operating mines in Finland
	Markets served: /RQJOLIHSODVWLFV FRDWLQJVOLIH sciences and paper
Resource life:	+90 years

These specialty talc mines in Finland are within one of only two known deposits of scale in Europe. As a result of optimised upstream and downstream logistics from plants in )LQODQGDQGWKH1HWKHUODQGVZHDUH in a position to serve dynamic end markets globally.

+XPDQULJKWVDQGPRGHUQVODYHU

Our Code of Conduct details our commitment to human rights and covers EULEHU\DQGFRUUXSWLRQFRQGXFWLQJEXVLQHVV ZLWKUHVSHFWLQWHJULW\DQGHTXDOLW\DQG managing personal activities and interests. Our approach is guided by international FRQYHQWLRQVDQGVWDQGDUGVLQFOXGLQJWKH United Nations (UN) Universal Declaration of Human Rights and the UN Guiding Principles on Business and Human Rights as well as the International Labour Organisation's Declaration on Fundamental Principles and Rights at Work. We prohibit the use of child and forced labour and are committed to the principles of equality of treatment and non-discrimination. With our supply chain partners we undertake ongoing risk assessments and due diligence processes WR{PRQLWRUFRPSOLDQFH

Full details on our approach to preventing modern slavery across our business can be found within our Modern Slavery Statement published on our website at www.elementis.com.

%ULEHU\DQGFRUUXSWLRQ

:HKDYHD]HURWROHUDQFHSROLF\IRUEULEHU\ and corruption. Our Code of Conduct includes bribery and corruption and is further supported by an anti-corruption policy. Reporting procedures are in place supported by processes to prevent retaliation against any employees who communicate good faith concerns relating to business conduct. Employees receive regular training on antibribery and corruption.

Speak up reports

,QWKHUHZHUHDWRWDORIVSHDNXS reports (2018: 2). All of these reports were investigated fully and closed during the year.

We regard the increase in reports as a positive sign that our employees have greater awareness and understanding of the EHQHƮWVRIVSHDNLQJXSDQGWKDWDOOFRQFHUQV raised are valued and investigations will be taken seriously.

Concern raised	Number of cases
Bribery and corruption	–
%XVLQHVVDQGƮQDQFLDOUHSRUWLQJ	–
Business integrity	–
Competition /anti-trust	–
&RQƮGHQWLDOLQIRUPDWLRQDQG
intellectual property	–
&RQưLFWRILQWHUHVW	–
Discrimination or harassment	2
(QYLURQPHQWKHDOWKDQGVDIHW\	1
Other or general enquiry	1

Our initiatives

Assets

Optimise underperforming sites
Sale of non-core assets
Asset optimisation
Product optimisation

Process optimisation

Automisation across operations
Driving utilisation
3URFHVVVLPSOLƮFDWLRQ

Cost

+LJKHUHƱFLHQF\HTXLSPHQW
Materials delivery
Equipment reliability

Our people

Highlights

2UJDQLVDWLRQDOFDSDELOLW

Completion of a full organisational UHYLHZORRNLQJDWVSDQVOD\HUVDQG reporting relationships to create a PRUHHƱFLHQWDQGHƬHFWLYHVWUXFWXUH
Piloting e-learning for our sales teams to build commercial capability

Operational excellence

Global Data Protection Compliance/ *'35SROLFLHVSURFHVVHVDQG procedures embedded further into the organisation with validated progress via internal audit.
The acquired Talc business integrated into HR systems plus the addition of compensation planning and mid-year performance review modules

Culture and values

Values were rolled out throughout the organisation through workshops. They were embedded into performance management and an employee engagement survey which was launched in October 2019 as an anniversary based dynamic survey
Designated Non-Executive Director for workforce engagement appointed and programme of engagement established. Further information can be found on page 63.

We believe in a culture driven by strong values and an environment that promotes VDIHW\DFFRXQWDELOLW\DQGKLJKSHUIRUPDQFH \$VRXUJUHDWHVWDVVHWSHRSOHDQGWKHWHDPV they work within drive the success of the EXVLQHVVGHOLYHULQJYDOXHWRFXVWRPHUV shareholders and the communities we LPSDFW:HSULGHRXUVHOYHVLQWKHLQQRYDWLYH agile way we respond to ever changing needs of stakeholders worldwide.

2XUSHRSOHVWUDWHJ

We focus on three core areas: Organisational capability; Operational H[FHOOHQFHDQG&XOWXUHDQGYDOXHVPDNLQJ VLJQLƮFDQWSURJUHVVLQ2XUYDOXHV inform the way we act and behave and JXLGH{RXUGHFLVLRQVRQDGDLO\EDVLV

Culture and values

Safety is at the heart of everything we do and in conjunction with the other values at the forefront of every decision we make and DFWLRQ{ZHWDNH

This culture is driven by our values which we continue to embed in the organisation. Through the employee survey we will gain further insight into how we can strengthen their adoption globally.

7KURXJKRXWZHUDQZRUNVKRSV on our values across the organisation.

Employee locations as of 31 December Total employees 1,342

6DIHW\ Solutions \$PELWLRQ Respect Team

Employees embraced these sessions and used them to discuss the values and how well we live them within the organisation. )URPWKHVHJURXSVZHOHDUQWRIDQXPEHU RIFRQFHUQVDURXQGFDUHHUGHYHORSPHQW internal communication and collaboration between departments. These concern areas were actively discussed at a local level with a number of new forums put in place. \$WDQHQWHUSULVHOHYHOZHLQFRUSRUDWHG these areas into the employee engagement survey to enable a better understanding to be developed. We ensured the new website provided material useful for both internal and external stakeholders and committed to launching an intranet in 2020.

Gender Diversity

ϻ Male

Corporate governance

Financial statements

Shareholder information

Priorities for 2020

Utilise the insight from the employee survey to continue to embed the values and drive engagement across the organisation
Embed the new reward and job structures with processes built LQWR{+5V\VWHPV
Support segment organic growth through focused people plans which continue to build capability
Support the start-up of the India 3ODQWEXLOGLQJWKHFDSDELOLW\WKHULJKW culture and embedding the values
Advance the digital footprint through IXUWKHULPSURYHPHQWRIHOHPHQWLVFRP HR systems and the introduction of a basic intranet
Development of a People Dashboard/ Scorecard

Business conducts and ethics

Our Code of Conduct sets out the standards of conduct expected from everyone who works for Elementis. Our Code is aligned ZLWKDSSOLFDEOHODZVDQG{UHJXODWLRQVDVZHOO as our values.

To help employees understand and adopt WKHVHYDOXHVSULQFLSOHVDQGVWDQGDUGV LQWKHLUGDLO\ZRUNOLIHLQIRUPDWLRQDQG training are supported by comprehensive whistleblowing procedures and an antiretaliation policy.

The Code is translated from English into VL[RWKHUODQJXDJHV%UD]LOLDQ3RUWXJXHVH 'XWFK)LQQLVK*HUPDQ&KLQHVHVLPSOLƮHG and Chinese traditional) and supported with interactive online training to help employees stay up to date with their responsibilities. All new employees are required to undertake training on the Code and refresher training is every two years.

7KH&RGHFRYHUVWKHIROORZLQJ

Fair dealing
&RQƮGHQWLDOLW\DQGSULYDF\
Record keeping
Communications
Trade practices and competition compliance
Insider trading and fair disclosure
Bribery and other corrupt practices
Product liability
International business dealings
Political contributions and activities • 0DLQWDLQLQJDVDIHKHDOWK\DQG
DƱUPDWLYHZRUNSODFH
Equal opportunities • Anti-harassment
2ƬHQVLYHPDWHULDOV
Alcohol and drugs
&RQưLFWVRILQWHUHVW
Gifts and hospitality
Theft and misuse of Company assets
Corporate opportunities
Intellectual property and network use
Integrity and security

'LYHUVLW\DQGLQFOXVLRQ

Diversity of our people and the inclusive nature of our culture is intrinsic to better business decisions. We continue to make appointments based upon merit and seek to leverage our global footprint to reap the EHQHƮWVRIDGLYHUVHWDOHQWSRRO2XU+5 policies including Equal Opportunities and Dignity at Work and Recruitment and 6HOHFWLRQXQGHUVFRUHRXUFRPPLWPHQW to providing equal opportunities in HPSOR\PHQWVWULYLQJWRHQVXUHWKDWWKH work environment is free of harassment and bullying and that everyone is treated with dignity and respect. Regular training is provided to employees during the course RI{WKHLUHPSOR\PHQW

:KLVWOHEORZLQJ

:HSURYLGH\$OHUWOLQHDKRXUDQRQ\PRXV multi-lingual phone reporting service for employees to report any potential violations of our Code of Conduct. Reports are duly investigated promptly and action is taken as appropriate. The Audit Committee and Board have oversight of whistleblowing matters.

(PSOR\HHFRPPXQLFDWLRQV DQG{HQJDJHPHQW

The Company is committed to employee engagement throughout the business. Employees are kept informed of the SHUIRUPDQFHDQGVWUDWHJ\RIWKH*URXS HSE matters and other employee initiatives through regular email bulletins and townhall meetings take place at each of our sites.

'XULQJWKH\HDUWKH&RPSDQ\ODXQFKHGLWV employee engagement survey as a method to gather insight from employees. To ensure that the Board take into account the views of WKHZRUNIRUFHWKH%RDUGDSSRLQWHG6DQGUD Boss as the Designated Non-Executive Director for workforce engagement and further information on Sandra's role can EH{IRXQGRQSDJH

Building stronger teams

We support the continuous development of our people in enhancing their skills and providing the tools they need to be successful in their roles. Our focus is on building capability through a long term DSSURDFKWRGHYHORSPHQWDQGHƬHFWLYH organisational design. Our global leaders are building functional capability with teams aligned across our business segments. We continue to look at how we build high SHUIRUPLQJWHDPVZKHWKHUORFDOUHJLRQDO global or virtual. A number of our employees have participated in external development programmes in 2019 and we will continue WR{H[SDQGWKLVLQWKHIXWXUH

People drive performance

Through our people management processes our employees learn about WKHVWUDWHJ\SULRULWLHVDQGJRDOVRIRXU &RPSDQ\EXVLQHVVHVDQGIXQFWLRQV This promotes an environment of accountability and performance to achieve clear goals each year. Annual and mid-year performance discussions enable managers DQGHPSOR\HHVWRUHYLHZWKHLUSURJUHVVJLYH and receive feedback and ensure clarity and alignment of goals.

Performance is recognised through a robust reward philosophy. Our advanced compensation and performance management processes build performance into both annual merit review and individual bonus outcomes. We also provide opportunities to give one time awards IRU{H[FHSWLRQDOSHUIRUPDQFH

+5V\VWHPVDQGSURFHVVHV

7KURXJKDFOHDUSHRSOHVWUDWHJ\ZHKDYH invested in creating and enhancing critical HR systems and processes including talent UHYLHZVDQGSHUIRUPDQFHFDOLEUDWLRQ building capability within our automated HR V\VWHPZKHUHDSSURSULDWHVWDQGDUGLVLQJ SROLFLHVDQGSURFHVVHVJOREDOO\DQG utilising reporting and analytics for better decision making.

Life saving rules

All employees are responsible and authorised to stop any work that is unsafe or does not comply with our Life Saving Rules.

Sarah Bissland Plant Manager – Livingston, 8QLWHG{.LQJGRP

Fresh from college graduation with a FKHPLVWU\GHJUHHLQKDQG6DUDK%LVVODQG was excited to join Elementis Global in October 2010 as a QC Technician. She chose chemistry because 1) she loves it and 2) she believed the degree provided PDQ\FDUHHURSSRUWXQLWLHV6LQFHWKHQ her successive roles have taken her from the laboratory to her recent promotion to Plant Manager. She credits her mentors along the way for their support to develop a cross-functional skill set.

As she plays a pivotal role in the company's VXFFHVVKHUORQJWHUPYLVLRQIRUWKH Livingston plant is built on continuous LPSURYHPHQWHƬHFWLYHPDQXIDFWXULQJ and innovative approaches all anchored LQWHDPZRUNH[FHOOHQFHVDIHW\ and sustainability.

Her personal leadership philosophy is to be approachable and give everyone a YRLFH6KHSODQVWRnSD\LWIRUZDUGoWRRWKHU employees helping to mentor them and she encourages more women to seek out leadership roles at Elementis.

Jojanneke Bron Plant Manager – Amsterdam, 7KH{1HWKHUODQGV

Jojanneke Bron has always wanted WRKHOSRWKHUVDQGPDNHDGLƬHUHQFH )URPD\RXQJDJHVKHOHDUQHGDUHVSHFW for the world we live in. This established a foundation and interest in studying health. She found her vocation at the world-renowned Wageningen University {5HVHDUFKIXVLQJKHUORYHIRUPHGLFLQH with food technology.

Upon joining Elementis as a Plant Manager LQ1RYHPEHUVKHNQHZVKHIRXQGD culture that shares her beliefs. She feels a positive energy at Elementis as everyone understands the importance of their contributions and strives to innovate.

\$VDZRPDQUXQQLQJDSURGXFWLRQSODQW Jojanneke is grateful for the valuable coaching from her father and her mentors. The best advice she received was to trust in her abilities and her own path. She shares this same guidance with her team to unlock their inherent potential.

Jojanneke and her family love the outdoors and being active. She devotes much of her spare time cheering on her sons in their sports activities and volunteering with the local soccer club. She also enjoys tending WRKHUYHJHWDEOHJDUGHQZDWFKLQJOLIHFRPH from the earth and being present to the peacefulness. There are so many parallels in JDUGHQLQJPDQDJLQJDWHDPDQGFUHDWLQJD EHWWHUZRUOGsQXUWXULQJFDUHDQGHPRWLRQ 6WD\LQJIRFXVHGPDNHVJRRG{WKLQJVKDSSHQ

Suzanne Matuszewski 'LUHFWRUOREDO Stewardship and 6XVWDLQDELOLW*

-RLQLQJ(OHPHQWLVLQ-DQXDU\6X]DQQH 0DWXV]HZVNLIHHOVSULYLOHJHGWRSXWKHU lifelong passion for sustainability into action. As Director Global Stewardship and 6XVWDLQDELOLW\VKHoVXVLQJKHUEDFNJURXQG LQ{ELRORJ\FKHPLVWU\DQGSK\VLFVWRFUHDWH D{EHWWHUZRUOG

)URPDQHDUO\DJHKHUFDUHHUZDVGULYHQ E\KHUSDVVLRQIRUVXVWDLQDELOLW\7RGD\ she feels empowered at Elementis to GHYHORSPRUHHƱFLHQWZD\VRIXWLOLVLQJ environmentally friendly chemical engineering. While she subscribes

WR{DOO{(OHPHQWLVo9DOXHVWKHVWURQJHVW connection is for Respect – especially as it applies to communities and the environment.

Her vision for the Stewardship and Sustainability team is to be more LQWHJUDWHG{LQWR{WKHHQWLUHOLIHF\FOHRI product development. She believes her team's formula for success will further EHQHƮWFXVWRPHUVDQGFRQVXPHUV

+XLELQ=KDR Vice President of Coatings, \$VLDDQG{&RXQWU\ President, China

Bringing 30 years of experience with several multi-national chemical specialty FRPSDQLHV+XLELQ=KDRMRLQHG(OHPHQWLV in March 2019 as Vice President of Coatings Asia and General Manager of China Operations. With a bright and curious PLQGIURPDYHU\RXQJDJHVFLHQFH competitions fueled his love of science. It is no surprise that Huibin has dedicated his life's work to chemistry. He chose an emerging discipline in the 1990s known as polymer science for his major while at Fu Dan University – a prestigious research XQLYHUVLW\LQ6KDQJKDL&KLQD

We need chemistry and chemicals for everything. That's why it is so important to Huibin to be a champion of discoveries for sustainable solutions that add value to Elementis' customers.

He credits his mother for being his most LQưXHQWLDOPHQWRUWHDFKLQJKLPJRRGYDOXHV WRGRWKHULJKWWKLQJDQGVWDQGVWURQJ HYHQWKURXJKDGYHUVLW\$VDPDQDJHU Huibin taps into those values to create his team's chemistry – supporting their ideas DQGOLVWHQLQJWRWKHFKDOOHQJHVWKH\IDFH HQFRXUDJLQJLQQRYDWLRQDQGVDIHW\DQG driving them to develop the best possible solutions. Chemistry is everywhere.

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GDPR Refresher

Global Anti-Corruption and Bribery
Preventing Sexual Harassment – New York and California
Anti-Harassment Training – US
Model Code of Conduct for Third Party Suppliers
Global Financial Fraud Prevention
Diversity and Inclusion
Information security
Sustainable supply chain management

Section 172 statement

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The Board acknowledges that there is D{OHJDOUHTXLUHPHQWIRUWKH&RPSDQ\WR report on how the Board and its Committees have considered the requirements of s.172 of the Companies Act 2006 in their decision making.

A director of a company must act in the ZD\KHFRQVLGHUVLQJRRGIDLWKZRXOGEH most likely to promote the success of the FRPSDQ\IRUWKHEHQHƮWRILWVPHPEHUVDVD ZKROHDQGLQGRLQJVRKDYHUHJDUGDPRQJVW other matters) to the following factors:

The likely consequences of any decision in WKHORQJWHUP
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The desirability of the company maintaining a reputation for high standards RIEXVLQHVVFRQGXFWDQG
The need to act fairly as between members of the company

The requirements of s.172 are not new to the Board. Supported by the Group Company 6HFUHWDU\WKH%RDUGUHYLHZHGLWVGHFLVLRQ making processes to ensure that there was appropriate focus on stakeholders. \$VDUHVXOWDWHPSODWHZDVGHYHORSHGWR DVVLVWWKH%RDUGPDQDJHPHQWRUDQ\RQH tasked with preparation of board materials to fully consider stakeholders in all matters UHTXLULQJGHFLVLRQPDNLQJLQFOXGLQJ strategic decisions. All board decisions are recorded in the minutes for each meeting.

It is expected that the embedding of this new process will enable a greater understanding DQGDSSUHFLDWLRQRIGLUHFWRUVnGXWLHVEHORZ %RDUGOHYHO\$W%RDUGOHYHOWKLVSURFHVVZLOO continue to bring stakeholders views to the fore in board deliberations and discussions.

\$OOVLJQLƮFDQWVWUDWHJLFGHFLVLRQVUHWXUQWR WKH%RDUGIRUUHYLHZSHULRGLFDOO\DVD{PHDQV at a later date as a means to measure the success.

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3 year strategic plan and annual operating plan
Supply chain optimisation programme
Capital markets strategy • Board diversity policy and
succession plans • Modern slavery transparency statement
Tax strategy

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'XULQJWKH\HDUWKH%RDUGZDVDVNHGWR FRQVLGHUDQGDSSURYHDVLJQLƮFDQWFDSLWDO investment relating to the India plant.

The Board considered each of the relevant stakeholder groups and the economic business case during its discussion. +DYLQJGXHUHJDUGIRUWKHHQYLURQPHQW the Board considered the design and FRQƮJXUDWLRQRIWKHSODQW7KH%RDUG considered potential risks relating to any delays associated with regulatory and RSHUDWLRQDOSHUPLWVUHVRXUFLQJSODQV DQG{FRPSHWLWRUDFWLYLW\

)XUWKHUWKDWWKHGLYHUVLW\VNLOOVDQG background of the Board proved valuable during the discussion as a number of directors were able to bring their direct experience of having operated in India.

The Board considered that the investment will continue to form part of the Company's ongoing strategic plans including; 3 year SODQDQQXDOSODQDQGRQJRLQJLQYHVWRU and customer communications over the medium term.

Shareholders, dividends DQG{FDSLWDO{DOORFDWLRQ

The Board aims to understand the views of its shareholders and always to act in their best interests.

As part of the Company's capital allocation SROLF\WKH%RDUGDGRSWHGDGLYLGHQGSROLF\ in 2018 with the intention to pay progressive RUGLQDU\GLYLGHQGVQRUPDOO\ZLWKDGLYLGHQG cover of at least two times adjusted earnings. The expectation is that interim dividends represent one third of the prior IXOO{\HDUGLYLGHQG

Subject to maintaining balance sheet ưH[LELOLW\DQGVWUHQJWKLQWKHFRQWH[WRIWKH &RPSDQ\oVLQYHVWPHQWSODQVDGGLWLRQDO returns to shareholders will be considered where net debt is structurally below one times earnings (EBITDA).

During the year and prior to making a decision to pay interim and full year GLYLGHQGVWKH%RDUGFRQVLGHUHGWKH FXUUHQWSHUIRUPDQFHRIWKHEXVLQHVV the Company's annual and 3 year plans LQFOXGLQJFDSLWDOH[SHQGLWXUHQHW GHEWSRVLWLRQFDVKJHQHUDWLRQVKRUW DQGPHGLXP{WHUPIRUHFDVWVDYDLODEOH GLVWULEXWDEOHUHVHUYHVFRYHQDQWWHVWV IRU{QHWGHEW(%,7'\$DQGLQWHUHVWFRYHU

The Board considers shareholder YLHZV{DV{SDUWRIUHJXODUERDUGPHHWLQJV broker feedback and ongoing shareholder dialogue and concluded that the declaration of interim and full year dividends were VXVWDLQDEOHDQGLQGLFDWHGFRQƮGHQFHLQ the medium term. The Company's dividend policy is underpinned by its going concern and viability statement which can be found on page 53.

Business relationships – China GLVWULEXWLRQDJUHHPHQW

'XULQJWKH\HDUWKH%RDUGFRQVLGHUHG DQGDSSURYHGDVLJQLƮFDQWGLVWULEXWLRQ agreement in China which was expected to reduce supply chain complexity and serve as DSODWIRUPIRUJURZWK'XULQJWKHGLVFXVVLRQ the Board considered its reputation for maintaining high standards of business conduct with regard to compliance VWDQGDUGVDQGDSSURSULDWHWUDLQLQJWUDQVLWLRQ risks and ongoing relationship management.

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During the year the Board appointed Sandra Boss as the Designated Non-Executive Director for workforce engagement as a direct response to the UK Corporate Governance Code enabling the workforce voice in Board matters. The Board also received updates on the implementation RIDQRUJDQLVDWLRQDOUHYLHZWDOHQWDQG VXFFHVVLRQSODQVDQGODXQFKRIWKHƮUVW employee engagement survey.

Further information on stakeholder HQJDJHPHQWFDQEHIRXQGRQSDJHV DQG

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5HSRUWLQJUHTXLUHPHQW	Policies and standards ZKLFK{JRYHUQ{RXU{DSSURDFK	:KHUHWRƮQGWKHLQIRUPDWLRQ LQ{WKH{\$QQXDO5HSRUW
Environmental matters	• Code of Conduct • +HDOWK6DIHW\DQG(QYLURQPHQWDOSROLF\	• Sustainability on page 26 • Health and safety and environment RQ{SDJH{
(PSOR\HHV	• +HDOWK6DIHW\DQG(QYLURQPHQWDOSROLF\ • Code of Conduct • Life saving rules • Data protection and privacy policies • Equality and diversity policies • Whistleblowing policies	• Health and safety and environment RQ{SDJH • Our people on page 33 • Supply chain on page 31
Human rights	• Code of Conduct • Equality and diversity policies • Data protection and privacy policies • Purchasing Code of Practice • Modern slavery statement	• Our people on page 33 • Supply chain on page 31
6RFLDODQG&RPPXQLW\PDWWHUV	• Code of Conduct • :KLOVWZHGRQRWKDYHVSHFLƮFSROLF\RQ social/community matters we engage directly with our communities wherever we operate.	• Our people on page 33
\$QWLFRUUXSWLRQDQGDQWLEULEHU\	• Code of Conduct • Anti-corruption policy • Anti-trust policy (global competition) • Purchasing Code of Practice	• Our people on page 33 • Supply chain on page 31

\$VUHTXLUHGXQGHU6HFWLRQ&\$DQG&%RIWKH&RPSDQLHV\$FWWKHWDEOHDERYHLQFOXGHVUHIHUHQFHVWRQRQƮQDQFLDO matters in our Strategic report.

5HIHUHQFHWRRXUSROLFLHVGXHGLOLJHQFHSURFHVVHVDQGLQIRUPDWLRQRQKRZZHDUHSHUIRUPLQJRQWKHVHDUHDVDUHFRQWDLQHG WKURXJKRXWWKH6WUDWHJLFUHSRUW,QIRUPDWLRQRQRXUSULQFLSDOULVNVFDQEHIRXQGRQSDJHVWRLQIRUPDWLRQRQRXUQRQƮQDQFLDO NH{SHUIRUPDQFHLQGLFDWRUVFDQEHIRXQGRQSDJHDQGDGHVFULSWLRQRIRXUEXVLQHVVPRGHOFDQEHIRXQGRQSDJH

Elementis has established a cross functional Compliance team (ECT) that meets on a quarterly basis to consider compliance WUDLQLQJQHHGVDQGLPSURYHPHQWVDVVLJQWUDLQLQJFRXUVHVWRDOODQGVHOHFWHGJURXSVRIHPSOR\HHVDQGPRQLWRUWUDLQLQJFRPSOHWLRQ UDWHV7KH{(&7FRQVLGHUVSRVVLEOHLPSURYHPHQWVDQGPDNHVUHFRPPHQGDWLRQVRQLGHQWLI\LQJDQGPLWLJDWLQJFRPSOLDQFHULVNVIRU the Company.

Finance report

A challenging PDUNHWEDFNGURS

Ralph Hewins &KLHI)LQDQFH2ƱFHU

SURYLGHGDFKDOOHQJLQJPDUNHWEDFN GURSEXWRXUQHWFDVKJHQHUDWLRQUHPDLQHG VWURQJGULYHQE\ZRUNLQJFDSLWDOUHGXFWLRQV and capital expenditure discipline.

Group results

,QUHYHQXHIURPFRQWLQXLQJRSHUDWLRQVURVHWRPDVDQ H[WUDWHQPRQWKVFRQWULEXWLRQIURPWKH7DOFEXVLQHVVRƬVHWGHFOLQHV LQ3HUVRQDO&DUH&RDWLQJV&KURPLXPDQG(QHUJ\5HYHQXHLQWKH 3HUVRQDO&DUHVHJPHQWGHFOLQHGRQDQRUJDQLFEDVLV
ZLWK JURZWKLQ&RVPHWLFVRƬVHWE\ZHDNHUSHUIRUPDQFHLQ\$3DFWLYHV as we grew volumes ahead of the start-up of the India plant in 2020. ,Q&RDWLQJVUHYHQXHGHFOLQHGRQDQRUJDQLFEDVLV
GULYHQE\ ZHDNHQGPDUNHWGHPDQGFXVWRPHUGHVWRFNLQJDQGWKHLPSDFWRI RXUSRUWIROLRVLPSOLƮFDWLRQDFWLRQV5HYHQXHLQ&KURPLXPGHFUHDVHG E\GXHWRZHDNJOREDOLQGXVWULDOGHPDQGDQGSULFLQJSDUWLFXODUO\ in the second half. Energy revenue declined by 14% on a constant currency basis as a result of lower drilling activity in North America.

2SHUDWLQJSURƮWURVHWRPGXHWRWKHLQFUHDVHLQUHSRUWHG revenue and a reduction in adjusting items. Adjusted operating SURƮWIURPFRQWLQXLQJRSHUDWLRQVGHFOLQHGIURPPLQ WRPDGHFUHDVHRI7KLVZDVGULYHQE\GHFOLQHVLQRXU PRVWF\FOLFDOO\H[SRVHGEXVLQHVVHVRI&KURPLXPDQG(QHUJ\DORQJ ZLWKFRPSHWLWLYHFKDOOHQJHVLQ\$3DFWLYHV5HSRUWHGSURƮWDIWHUWD[ increased from \$41.4m in 2018 to \$46.4m in 2019 as lower adjusted RSHUDWLQJSURƮWDQGKLJKHULQWHUHVWH[SHQVHVZHUHRƬVHWE\ORZHU adjusting items.

Revenue

	2019	2018
	\$m	\$m	Change
Personal Care	195.0	210.3	-7%
Coatings	320.1	362.2	-12%
Talc	150.7	21.5	601%
Chromium	171.0	184.3	-7%
Energy	46.6	54.9	-15%
Inter-segment	(9.8)	(11.0)	-11%
Revenue from continuing operations	873.6	822.2	6%
Discontinued operations – Surfactants	–	4.8	-100%
Total revenue from continuing and discontinued operationsƫ	873.6	827.0	6%

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	2019			2018
	Operating SURƮW \$m	Adjusting items \$m	Adjusted operating SURƮW \$mƵ	Operating SURƮW \$m	Adjusting items \$m	Adjusted operating SURƮW \$mƵ
Personal Care	29.1	13.6	42.7	40.4	11.8	52.2
Coatings	43.7	4.6	48.3	57.6	(5.1)	52.5
Talc	19.9	5.8	25.7	(0.2)	4.1	3.9
Chromium	12.6	5.6	18.2	15.8	17.2	33.0
Energy	3.8	–	3.8	7.1	–	7.1
Central costs	(8.2)	(7.5)	(15.7)	(35.8)	19.7	(16.1)
2SHUDWLQJSURƮWIURPFRQWLQXLQJRSHUDWLRQV	100.9	22.1	123.0	84.9	47.7	132.6
Discontinued operations – Surfactants	–	–	–	(10.4)	9.8	(0.6)
2SHUDWLQJSURƮWIURPFRQWLQXLQJDQGGLVFRQWLQXHGRSHUDWLRQVƫ	100.9	22.1	123.0	74.5	57.5	132.0

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Group performance – Revenue

	Revenue 2018 \$m	(ƬHFWRI exchange rates \$m	Impact of M&A‡ \$m	(Decrease)/ increase 2019 \$m	Revenue 2019 \$m
Personal Care	210.3	(6.1)	(0.7)	(8.5)	195.0
Coatings	362.2	(11.3)	(4.0)	(26.8)	320.1
Talc	21.5	(9.2)	136.9	1.5	150.7
Chromium	184.3	–	–	(13.3)	171.0
Energy	54.9	(0.4)	–	(7.9)	46.6
Inter-segment	(11.0)	–	–	1.2	(9.8)
Revenue from continuing operations	822.2	(27.0)	132.2	(53.8)	873.6
Revenue from discontinued operations	4.8	–	(4.8)	–	–
Total revenue from continuing and discontinued operations	827.0	(27.0)	127.4	(53.8)	873.6

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	Operating SURƮW 2018Ƶ \$m	(ƬHFWRI exchange rates \$m	Impact of M&A‡ \$m	(Decrease)/ increase 2019 \$m	Operating SURƮW 2019Ƶ \$m
Personal Care	52.2	(1.0)	(0.1)	(8.4)	42.7
Coatings	52.5	(2.6)	2.5	(4.1)	48.3
Talc	3.9	(1.5)	20.7	2.6	25.7
Chromium	33.0	–	–	(14.8)	18.2
Energy	7.1	(0.1)	–	(3.2)	3.8
Central costs	(16.1)	–	–	0.4	(15.7)
\$GMXVWHGRSHUDWLQJSURƮWIURPFRQWLQXLQJRSHUDWLRQV	132.6	(5.2)	23.1	(27.5)	123.0
Discontinued operations – Surfactants	(0.6)	–	0.6	–	–
7RWDODGMXVWHGRSHUDWLQJSURƮWIURPFRQWLQXLQJDQGGLVFRQWLQXHGRSHUDWLRQV	132.0	(5.2)	23.7	(27.5)	123.0

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‡ M&A impact includes Coatings and Personal Care portfolio elimination following Delden asset sales and the acquisition of Talc

Adjusting items

,QDGGLWLRQWRWKHVWDWXWRU\UHVXOWVWKH*URXSXVHVDOWHUQDWLYHSHUIRUPDQFHPHDVXUHVVXFKDVDGMXVWHGRSHUDWLQJSURƮWDQGDGMXVWHG GLOXWHG{HDUQLQJVSHUVKDUHWRSURYLGHDGGLWLRQDOXVHIXODQDO\VLVRIWKHSHUIRUPDQFHRIWKHEXVLQHVV7KH%RDUGFRQVLGHUVWKHVHQRQ GAAP measures as an alternative way to measure the Group's performance so it is comparable to the prior year. Adjusting items in 2019 UHVXOWHGLQDFKDUJHRIPEHIRUHWD[DGHFUHDVHRIPDJDLQVWODVW\HDU7KHNH\FDWHJRULHVRIDGMXVWLQJLWHPVDUHVXPPDULVHG EHORZ)RUPRUHLQIRUPDWLRQRQDGMXVWLQJLWHPVDQGWKH*URXSoVSROLF\IRUDGMXVWLQJLWHPVSOHDVHVHH1RWHDQG1RWH{WRWKHƮQDQFLDO statements respectively.

	Personal					Central
	Care	Coatings	Talc	Chromium	Energy	costs	Total
Credit/(charge)	\$m	\$m	\$m	\$m	\$m	\$m	\$m
Restructuring	(0.7)	(2.6)	(0.2)	(0.1)	–	(1.5)	(5.1)
Business transformation	(1.6)	(0.5)	–	(0.4)	–	–	(2.5)
Environmental provisions	–	–	–	(4.9)	–	–	(4.9)
Amortisation of intangibles arising on acquisition	(11.3)	(1.5)	(5.6)	(0.2)	–	–	(18.6)
Release of contingent consideration	–	–	–	–	–	9.0	9.0
7RWDOFKDUJHWRRSHUDWLQJSURƮW	(13.6)	(4.6)	(5.8)	(5.6)	–	7.5	(22.1)
Sale of Dental plant	(9.0)	–	–	–	–	–	(9.0)
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Mark to market of derivatives	–	–	–	–	–	(1.4)	(1.4)
Total	(22.6)	(4.6)	(5.8)	(5.6)	–	6.1	(32.5)

Restructuring

,QUHVWUXFWXULQJFRVWVUHODWHSUHGRPLQDQWO\WRWKH RUJDQLVDWLRQDOHƱFLHQF\SURJUDPPHZKLFKKDVHOLPLQDWHGGXSOLFDWH UROHVUHGXFHGPDQDJHPHQWOD\HUVDQGLQFUHDVHGVSDQVRIFRQWURO LQRUGHUWRUHDOLVHFRVWVDYLQJVDQGHƱFLHQFLHVDFURVVWKH*URXS \$VLQUHVWUXFWXULQJDOVRLQFOXGHVWKH,)56FRVWRIEX\RXWV associated with the CEO and CFO's appointments in 2016.

Business transformation

,QZHLQLWLDWHGDSURJUDPPHWRUHYLHZDQGRSWLPLVHRXUVXSSO\ FKDLQDQGPDQXIDFWXULQJIRRWSULQWDFURVVRXU&RDWLQJV3HUVRQDO &DUH(QHUJ\DQG&KURPLXPEXVLQHVVHV&RVWVLQFXUUHGLQ related to exiting supply contracts and consulting fees incurred to enhance our operating model.

Environmental provisions

The Group's environmental provision is calculated on a discounted FDVKưRZEDVLVUHưHFWLQJWKHWLPHSHULRGRYHUZKLFKVSHQGLQJLV estimated to take place. A change in discount rates has increased the liability by \$4.9m in the year. As these costs relate to nonoperational facilities they are classed as adjusting items.

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Amortisation of \$18.6m (2018: \$15.0m) represents the charge in respect of the Group's acquired intangible assets. As in previous \HDUVWKHVHDUHLQFOXGHGLQDGMXVWLQJLWHPVLQRUGHUWRSUHVHQWD PRUHUHưHFWLYHYLHZRIWKH*URXSoVRYHUDOOSHUIRUPDQFHDQGWKHNH\ business drivers that underpin it.

Release of contingent consideration

An assessment of the potential payments to be made under the earnout mechanism in relation to the Talc acquisition has led to the release of \$9.0m.

Sale of Dental plant

The loss on the exit of a non-core plant (part of the Dental business) has been treated as an adjusting item in 2019.

Mark to market of derivatives

7KHPRYHPHQWVLQWKHPDUNWRPDUNHWYDOXDWLRQRIƮQDQFLDO instruments which are not in hedging relationships do not form part of the underlying performance of the business and thus are treated as adjusting items.

Hedging

&DVKưRZKHGJHVDUHXVHGDVSDUWRIDSURJUDPPHWRPDQDJHRXU exposure to interest rate risk particularly associated with USD and (85LQWHUHVWSD\PHQWV,QLQWHUHVWUDWHPRYHPHQWVZHUHVXFK that the net impact of these hedge transactions was a credit to net ƮQDQFHFRVWVRIPFUHGLWRIP

Central costs

&HQWUDOFRVWVDUHWKRVHFRVWVWKDWDUHQRWLGHQWLƮDEOHDVH[SHQVHV of a particular business and comprise expenditures of the Board RI'LUHFWRUVDQGFRUSRUDWHKHDGRƱFH,QFHQWUDOFRVWVRI \$15.7m were broadly similar to the \$16.1m of central costs for the previous year.

Other expenses

Other expenses are administration costs incurred and paid by WKH*URXSoVSHQVLRQVFKHPHVZKLFKUHODWHSULPDULO\WRIRUPHU HPSOR\HHVRIOHJDF\EXVLQHVVHVDQGZHUHPLQFRPSDUHG to \$1.6m in the previous year.

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	2019 \$m	2018 \$m
Finance income	0.4	0.3
Finance cost of borrowings	(23.7)	(16.8)
	(23.3)	(16.5)
1HWSHQVLRQƮQDQFHFRVWV	(0.5)	(0.4)
Discount unwind on provisions	(2.4)	(1.0)
Fair value movement on derivatives	(1.4)	–
Interest on lease liabilities	(1.8)	–
1HWƮQDQFHFRVWV	(29.4)	(17.9)

1HWƮQDQFHFRVWVIRUZHUHPDQLQFUHDVHRIP on last year. The increase was primarily due to the acquisition of 0RQGRFRPSOHWHGLQ2FWREHUZKLFKZDVSDUWIXQGHGE\DQ increase in borrowings. Finance costs comprise interest payable RQERUURZLQJVFDOFXODWHGXVLQJWKHHƬHFWLYHLQWHUHVWUDWHPHWKRG IDFLOLW\DUUDQJHPHQWIHHVWKHXQZLQGLQJRIGLVFRXQWVRQWKH*URXSoV HQYLURQPHQWDOSURYLVLRQVIDLUYDOXHPRYHPHQWRQGHULYDWLYHVDQG LQWHUHVWFKDUJHGRQOHDVHOLDELOLWLHV3HQVLRQƮQDQFHFRVWVZKLFKDUH a function of discount rates under IAS 19 and the value of schemes' GHƮFLWRUVXUSOXVSRVLWLRQVZHUHEURDGO\FRQVLVWHQWLQDWP compared to \$0.4m in 2018. The discount unwind on provisions relates to the annual time value of the Group's environmental provisions which are calculated on a discounted basis. The increase to the environmental provision in 2018 has resulted in a higher discount unwind in 2019.

Taxation Tax charge

ู้

		2019 (ƬHFWLYH rate		2018 (ƬHFWLYH rate
	\$m	%	\$m	%
Reported tax charge	14.6	23.9	15.6	23.9
Adjusting items	6.1	–	8.8	–
After adjusting items	20.7	22.1	24.4	21.6

The Group incurred a tax charge of \$20.7m (2018 \$24.4m) on DGMXVWHGSURƮWEHIRUHWD[H[FOXGLQJGLVFRQWLQXHGRSHUDWLRQV UHVXOWLQJLQDQHƬHFWLYHWD[UDWHRI7KH*URXSoV HƬHFWLYHWD[UDWHLQLVEURDGO\LQOLQHZLWKWKDWZKLFKZRXOG be expected given the geographic mix of territories in which the *URXSRSHUDWHVDQGIROORZLQJWKHZLGHVSUHDGLPSOHPHQWDWLRQ RIWKH2(&'oV%DVH(URVLRQDQG3URƮW6KLIWLQJn%(3VoLQLWLDWLYHV Tax on adjusting items primarily relates to the amortisation of intangible assets.

Earnings per share

1RWHWRWKHn&RQVROLGDWHGƮQDQFLDOVWDWHPHQWVoVHWVRXWDQXPEHU of calculations of earnings per share. To better understand the XQGHUO\LQJSHUIRUPDQFHRIWKH*URXSHDUQLQJVSHUVKDUHUHSRUWHG XQGHU,)56LVDGMXVWHGIRULWHPVFODVVLƮHGDVDGMXVWLQJDQGLQFOXGHV SURƮWVIURPERWKFRQWLQXLQJDQGGLVFRQWLQXHGRSHUDWLRQV

Adjusted diluted earnings per share was 12.4 centsƝ for 2019 compared to 16.9 cents^ƝLQWKHSUHYLRXV\HDUDGHFUHDVHRI GXHWRORZHUSURƮWKLJKHUQHWƮQDQFHFRVWVDVZHOODVWKHLQFUHDVHG weighted average number of shares following the rights issue in October 2018. Basic earnings per share before adjusting items was 8.0 cents Ɲcompared to 7.9 centsƝ in 2018. Adjusting items increased basic earnings per share by 4.6 centsƝ in 2019 (9.1 centsƝ in 2018).

1RWHWRWKH*URXSƮQDQFLDOVWDWHPHQWVSURYLGHVGLVFORVXUH of earnings per share calculations both including and excluding WKHHƬHFWVRIDGMXVWLQJLWHPVDQGWKHSRWHQWLDOGLOXWLYHHƬHFWVRI outstanding and exercisable options.

'LVWULEXWLRQVWRVKDUHKROGHUV

'XULQJWKH*URXSSDLGDƮQDOGLYLGHQGLQUHVSHFWRI the year ended 31 December 2018 of 5.70 cents per share (2018: 5.58 cents† ). An interim dividend of 2.80 cents per share (2018: 2.70 cents† ) was paid on 27 September 2019 and the Board LVUHFRPPHQGLQJDƮQDOGLYLGHQGRIFHQWVSHUVKDUHZKLFKZLOO be paid on 29 May 2020. The Board have adopted a dividend policy ZLWKWKHLQWHQWWRGHFODUHSURJUHVVLYHRUGLQDU\GLYLGHQGVQRUPDOO\ with a dividend cover of at least two times adjusted earnings. The expectation is that interim dividends represent one third of the prior full year dividend. Subject to maintaining balance sheet ưH[LELOLW\DQGVWUHQJWKLQWKHFRQWH[WRIWKH&RPSDQ\oVLQYHVWPHQW SODQVDGGLWLRQDOUHWXUQVWRVKDUHKROGHUVZLOOEHFRQVLGHUHG where net debt is structurally below one times earnings (EBITDA). The Company regularly reviews its distributable reserves and makes dividend recapitalisations as and when necessary to ensure it can make all expected dividend payments.

\$GMXVWHGFDVKưRZ

7KHDGMXVWHGFDVKưRZZKLFKH[FOXGHVWKHFDVKHƬHFWRI DGMXVWLQJLWHPVIURPRSHUDWLQJFDVKưRZLVVXPPDULVHGEHORZ \$UHFRQFLOLDWLRQRIVWDWXWRU\RSHUDWLQJSURƮWWR(%,7'\$LVVKRZQ LQ{WKHDOWHUQDWLYHSHUIRUPDQFHPHDVXUHVVHFWLRQRQSDJH

	2019 \$m	2018 \$m
EBITDA 1	174.5	162.9
Change in working capital	33.0	(29.9)
Capital expenditure	(47.3)	(50.8)
Other	(5.4)	(4.5)
\$GMXVWHGRSHUDWLQJFDVKưRZ	154.8	77.7
Pension payments	(1.2)	(1.2)
Interest and tax	(26.8)	(21.2)
Adjusting items	(30.4)	(21.8)
Payment of lease liabilities	(6.0)	(0.3)
)UHHFDVKưRZ	90.4	33.2
Issue of shares	0.1	223.3
Dividends paid	(49.3)	(41.9)
Acquisitions and disposals	(2.1)	(426.7)
&XUUHQF\ưXFWXDWLRQV	4.8	5.1
0RYHPHQWLQQHWGHEW	43.9	(207.0)
Net debt at start of year	(498.1)	(291.1)
Net debt at end of year	(454.2)	(498.1)

(%,7'\$sHDUQLQJVEHIRUHLQWHUHVWWD[DGMXVWLQJLWHPVGHSUHFLDWLRQ and amortisation.

\$GMXVWHGRSHUDWLQJFDVKưRZLQFUHDVHGE\PWRP IRUGXHWRZRUNLQJFDSLWDOLQưRZVRIPUHưHFWLYHRID sustainable improvement in our inventory position following the introduction of digital demand planning tools and a reduction in 12 month proforma revenue. Capital expenditure of \$47.3m was broadly comparable to \$50.8m in 2018.

)UHHFDVKưRZLQFUHDVHGIURPPWRPDVZRUNLQJFDSLWDO LQưRZVPRUHWKDQRƬVHWWKHLQFUHDVHLQDGMXVWLQJLWHPVLQWHUHVW DQGWD[SD\PHQWV\$GMXVWLQJLWHPVRIPLQFOXGHDQHWRXWưRZ of \$19.0m to the previous owners of the Talc business following the successful settlement of an historic tax case in Finland and a further PRXWưRZLQVHWWOHPHQWRIDFRPPHUFLDOGLVSXWHUHODWLQJWRWKH Surfactants business disposed of in 2018. Pension payments in 2019 were in line with the prior year at \$1.2m as the 2018 triennial review of the UK pension scheme concluded that no cash top up payments will be required from Elementis until at least 2021.

:KLOVWQHWGHEWGHFUHDVHGIURPPLQWRPLQD UHGXFWLRQRIPQHWGHEWWRSURIRUPDDGMXVWHG(%,7'\$LQFUHDVHG from 2.5x** in 2018 to 2.7x** in 2019. The increase in leverage is due WRWKHGHFOLQHLQDGMXVWHG(%,7'\$UHưHFWLYHRIORZHUHDUQLQJVLQ 3HUVRQDO&DUH&RDWLQJV&KURPLXPDQG(QHUJ\

Balance Sheet

	2019 \$m	2018 \$m
,QWDQJLEOHƮ[HGDVVHWV	958.1	976.6
7DQJLEOHƮ[HGDVVHWV	513.6	478.2
Working capital	152.2	183.9
Net tax liabilities	(137.9)	(131.6)
3URYLVLRQVDQGUHWLUHPHQWEHQHƮW
obligations	(68.7)	(58.7)
Financial liabilities	(15.1)	(40.3)
Lease liabilities	(46.9)	–
Unamortised syndicate fees	5.1	5.6
Net debt	(454.2)	(498.1)
Total equity	906.2	915.6

Group equity decreased by \$9.4m in 2019 (2018: increase of P,QWDQJLEOHƮ[HGDVVHWVGHFUHDVHGE\PGXHWR \$18.6m amortisation of intangibles arising on acquisition and \$8.6m RIGLVSRVDOVWKDWZHUHSDUWLDOO\RƬVHWE\PRIIRUHLJQH[FKDQJH JDLQV7DQJLEOHƮ[HGDVVHWVLQFUHDVHGE\PZLWKJURVV33( additions of \$48.4m and right of use asset capitalisation of \$48.2m SDUWLDOO\RƬVHWE\GHSUHFLDWLRQRIPDQGGLVSRVDOVRIP

:RUNLQJFDSLWDOFRPSULVHVLQYHQWRULHVWUDGHDQGRWKHUUHFHLYDEOHV trade and other payables and derivatives. Working capital decreased E\PLQPDGHXSRIPVXVWDLQDEOHZRUNLQJFDSLWDO reductions driven by our multi-year improvement programme of ZKLFKWKHEXONUHODWHVWRLQYHQWRU\VDYLQJVUHưHFWLYHRIRXUQHZ digital supply chain management. The additional reduction in ZRUNLQJFDSLWDOUHưHFWVWKHGHFOLQHLQXQGHUO\LQJPRQWKSURIRUPD revenue and working capital management.

1HWWD[OLDELOLWLHVLQFUHDVHGE\PDVWKHWD[FKDUJHRQSURƮWVIRU the year after adjusting items and currency translation adjustments exceeded actual cash tax paid. Movements in provisions and UHWLUHPHQWEHQHƮWREOLJDWLRQVDUHGLVFXVVHGHOVHZKHUHLQWKLVUHSRUW

ROCE (excluding goodwill) has remained stable at 15% with reduced DGMXVWHGRSHUDWLQJSURƮWRƬVHWE\ORZHUZRUNLQJFDSLWDO

The main dollar exchange rates relevant to the Group are set out below.

	Year end	2019 Average	Year end	2018 Average
Pounds sterling	0.75	0.78	0.79	0.75
Euro	0.89	0.89	0.87	0.84

Provisions

The Group records a provision in the balance sheet when it has DSUHVHQWREOLJDWLRQDVDUHVXOWRISDVWHYHQWVZKLFKLVH[SHFWHG WRUHVXOWLQDQRXWưRZRIHFRQRPLFEHQHƮWVLQRUGHUWRVHWWOHWKH obligation. The Group calculates provisions on a discounted basis. \$WWKHHQGRIWKH*URXSKHOGSURYLVLRQVRIP \$48.8m) consisting of environmental provisions of \$44.1m (2018: PVHOILQVXUDQFHSURYLVLRQVRIPPDQG restructuring and other provisions of \$5.3m (2018: \$4.0m).

(QYLURQPHQWDOSURYLVLRQVKDYHLQFUHDVHGE\PLQZLWK \$4.9m taken through adjusting items as a change in the discount UDWHDSSOLHGWRWKHOLDELOLWLHVPRIXQZLQGRIGLVFRXQWLQWKH\HDU RƬVHWE\DPXWLOLVDWLRQ7KHVHOILQVXUDQFHSURYLVLRQUHSUHVHQWV the Group's estimate of its liability arising from retained liabilities under the Group's insurance programme.

Within the restructuring and other provisions categories the majority RIWKHEDODQFHUHODWHVWRWKHRUJDQLVDWLRQDOHƱFLHQF\SURJUDPPH ZKLFKKDVHOLPLQDWHGGXSOLFDWHUROHVUHGXFHGPDQDJHPHQWOD\HUV and increased spans of control in order to realise cost savings and HƱFLHQFLHVDFURVVWKH*URXS

3HQVLRQVDQGRWKHUSRVWUHWLUHPHQWEHQHƮWV

	2019 \$m	2018 \$m
Net (surplus)/liability:
UK	(7.4)	(22.1)
US	15.9	21.3
Other	8.6	10.7
	17.1	9.9

UK plan

7KHODUJHVWRIWKH*URXSoVUHWLUHPHQWSODQVLVWKH8.GHƮQHG EHQHƮW{SHQVLRQVFKHPHn8.6FKHPHoZKLFKDWWKHHQGRI KDG{DVXUSOXVXQGHU,\$6RIPP7KH8. 6FKHPH{LVUHODWLYHO\PDWXUHZLWKDSSUR[LPDWHO\WZRWKLUGVRILWV JURVVOLDELOLWLHVUHSUHVHQWHGE\SHQVLRQVLQSD\PHQWDQGLVFORVHG to new members. Liability adjustments of \$57.7m (2018: \$(45.7)m) which arose due to lower discount rates based on real corporate bond yields outweighed the return on plan assets of \$62.1m (2018: P&RPSDQ\FRQWULEXWLRQVRIQLOPUHưHFWWKH funding agreement reached with the UK Trustees following the 2018 triennial valuation. Under this agreement top up contributions are QR{ORQJHUUHTXLUHGXQWLODWOHDVW

US plan

,QWKH86WKH*URXSUHSRUWVWZRSRVWUHWLUHPHQWSODQVXQGHU,\$6 DGHƮQHGEHQHƮWSHQVLRQSODQZLWKDGHƮFLWYDOXHDWWKHHQGRI RIPPDQGDSRVWUHWLUHPHQWPHGLFDOSODQ with a liability of \$6.0m (2018: \$5.6m). The US pension plans are VPDOOHUWKDQWKH8.SODQDQGLQWKHRYHUDOOGHƮFLWYDOXHRIWKH 86SODQVGHFUHDVHGE\PDVWKHƮQDQFLDOFRVWRIWKHOLDELOLW\ of \$5.0m (2018: \$4.6m) and the actuarial increases in the liability of PPGHFUHDVHZHUHPRUHWKDQRƬVHWE\UHWXUQRQ plan assets of \$21.1m (2018: \$(4.9)m) and employer contributions of \$1.5m (2018: \$1.3m).

Other plans

Other liabilities at 31 December 2019 amounted to \$8.6m (2018: \$10.7m) and relate to pension arrangements for a relatively small QXPEHURIHPSOR\HHVLQ*HUPDQ\FHUWDLQ8.OHJDF\EHQHƮWV and two pension schemes acquired as part of the SummitReheis transaction in 2017.

)LQDQFLDO/LDELOLWLHV

Financial liabilities at 31 December 2019 include \$13.0m of contingent consideration in respect of Mondo (2018: \$21.4m) and \$nil (2018: \$18.9m) in respect of an outstanding historical Mondo tax case in Finland which was settled in the year.

Brexit

'XULQJWKH%RDUGFRQWLQXHGWRPRQLWRUWKHLPSDFWRI%UH[LW amidst a period of political uncertainty. Management remains of the view that the impact on the Group is expected to be of low materiality. We continue to monitor the status of the trading relationship between the EU and the UK. A cross-functional team LV{LQSODFHWRDVVHVVSRWHQWLDOULVNVDQGLPSDFWVVRWKDWZHFDQWDNH appropriate action in relation to our supply chain and customers. Further information on how we have assessed and are mitigating the risks associated with Brexit can be found in the principal risks section of the 2019 Annual Report.

(YHQWVDIWHUWKHEDODQFHVKHHWGDWH

7KHUHZHUHQRVLJQLƮFDQWHYHQWVDIWHUWKHEDODQFHVKHHWGDWH

Ralph Hewins

&KLHI)LQDQFLDO2ƱFHU

4 March 2020

ƫ 7RWDORSHUDWLRQVERWKFRQWLQXLQJDQGGLVFRQWLQXHG
Ƶ \$IWHUDGMXVWLQJLWHPVsVHH1RWH
g 5HEDVHGIRUWKHHƬHFWVRIWKH5LJKWV,VVXHsVHH1RWH
\$GMXVWHGIRU);ZKHUHFRQVWDQWFXUUHQF\UHưHFWVSULRU\HDUUHVXOWV translated at current year exchange rates) and the impact of M&A.
** On a 12 month pro forma basis see pro forma calculations on page 172

Personal care

Emerging market growth DQG{VWUDWHJLF{SURJUHVV{

Marci Brend SVP Global Personal Care

\$195m

UHYHQXHP

\$43m DGMXVWHGRSHUDWLQJSURƮW {P

ZDVD\HDURIPL[HGƮQDQFLDO performance as Cosmetics delivered solid performance while Anti-Perspirant (AP Actives) grew market share.

/RRNLQJIRUZDUGRXUVWUDWHJLFSULRULWLHVDUH IRFXVHGRQLQFUHDVHGSHQHWUDWLRQRI\$VLD new skin care products and AP Actives growth. Successful execution will drive strong organic revenue growth and high and stable returns.

Cosmetics delivered solid performance while AP Actives grew market share.

Financial performance

Personal Care revenue in 2019 was \$195m FRPSDUHGZLWKPLQWKHSULRU\HDUD decline on a reported basis. Excluding the impact of FX and M&A (i.e. on an organic EDVLV
UHYHQXHIHOOE\

2QWKHVDPHEDVLVRXU&RVPHWLFV EXVLQHVVUHYHQXHURVHE\GULYHQE\ steady performance in North America and Europe and strong growth in Asia and Latin America as the penetration of our hectorite clay based products increased. This growth in Cosmetics was more than RƬVHWE\DGHFOLQHLQ\$3\$FWLYHVUHYHQXH :KLOHYROXPHVƮQLVKHGWKH\HDUEURDGO\ưDW RQDVZHJUHZPDUNHWVKDUHLQWKH VHFRQGKDOIRIRQJRLQJFRPSHWLWLYH pressures adversely impacted revenue.

\$GMXVWHGRSHUDWLQJSURƮWGHFOLQHGE\WR PZLWKDGMXVWHGRSHUDWLQJPDUJLQVVROLG DWEXWGRZQIURPLQWKHSULRU year period. This decline was primarily driven by margin pressure in AP Actives due to US WDULƬVRQWKHLPSRUWDWLRQRI]LUFRQLXPDNH\ UDZPDWHULDOIURP&KLQD

2XUVWUDWHJ

Our medium term Personal Care growth strategy is focused on two areas: Cosmetics and AP Actives.

,Q&RVPHWLFVFRQVXPHUVDUHLQFUHDVLQJO\ looking for products that contain clean and QDWXUDOLQJUHGLHQWVSURYLGLQJDSRVLWLYH market environment for our hectorite based Cosmetics business. We are pleased by RXUVXFFHVVWRGDWHKRZHYHULQFUHPHQWDO investment will further increase our ability to develop new customers and enter new geographies and markets.

:HKDYHDJRRGWUDFNUHFRUGLQ\$VLDEXWZLWK the region representing just 20% of our sales we have more to do. To drive us forward ZHDUHGRXEOLQJWKHVL]HRIRXU\$VLDVDOHV WHDPEXLOGLQJGHGLFDWHGUHJLRQDOWHFKQLFDO support and refocusing our innovation HƬRUWVRQGLƬHUHQWLDWHGWHFKQRORJLHVWKDW are aligned with market needs.

Skin care is a large and growing part of the 3HUVRQDO&DUHPDUNHW:KLOHWRGDWHZH KDYHOLWWOHSUHVHQFHLQWKLVPDUNHWKHFWRULWH is well suited for this application and in 2019 we launched two new products targeting this market. Driving further penetration of these products is a key priority for 2020 and beyond.

,Q\$3\$FWLYHVSRSXODWLRQJURZWKDQGULVLQJ incomes will support a growing market for antiperspirants in most Latin and Asian FRXQWULHV7RKHOSFRVWHƬHFWLYHO\VHUYH this growth we are investing approximately \$20m in a new manufacturing facility in India. Focused global key account management and cutting edge innovation will also support our growth ambitions.

We believe that our strategy will enable XVWRGHOLYHURUJDQLFUHYHQXHDERYH*'3 with high and stable margins over the medium term.

* Adjusted for FX (where constant currency UHưHFWVSULRU\HDUUHVXOWVWUDQVODWHGDWFXUUHQW year exchange rates) and the impact of M&A. See page 39.

Sales by market

40%

Sales by region

14%

46%

\$VLD (XURSH \$PHULFDV

Coatings

High value participation

Luc van Ravenstein SVP Global Coatings and Energy

\$320m UHYHQXHP

\$48m DGMXVWHGRSHUDWLQJSURƮW {P

Sales by market

While performance in 2019 was impacted E\DJOREDOVORZGRZQLQLQGXVWULDODFWLYLW\LW is encouraging that our adjusted operating SURƮWPDUJLQVKDYHLPSURYHGDVDUHVXOWRI our transformation programme and selfhelp actions.

Over the medium term we expect margins to further improve as we execute on our strategic growth priorities.

\$GMXVWHGRSHUDWLQJSURƮW margins improved to 15.1% as a result of the transformation programme and self-help actions

Financial performance

Coatings revenue in 2019 was \$320m FRPSDUHGZLWKPLQWKHSULRU\HDU D{GHFOLQHRQDUHSRUWHGEDVLV2QDQ RUJDQLFEDVLV
UHYHQXHIHOOE\GULYHQ E\ZHDNHQGPDUNHWGHPDQGFXVWRPHU destocking and the impact of our portfolio VLPSOLƮFDWLRQDFWLRQV

Asia is the largest region of our Coatings EXVLQHVVUHSUHVHQWLQJDSSUR[LPDWHO\ RIWRWDOVDOHV,QRXUUHYHQXHLQ the region declined by 12% on an organic basis*. This was a result of a material demand slowdown in industrial sectors such as automotive and construction and VLJQLƮFDQWFXVWRPHULQYHQWRU\GHVWRFNLQJ SDUWLFXODUO\LQWKHƮUVWKDOIRIWKH\HDU 0DFURHFRQRPLFZHDNQHVVGULYHQE\WKH &KLQD86WUDGHGLVSXWHVZDVWKHSULPDU\ contributing factor. Revenue also declined LQWKH\$PHULFDVDQG(XURSHUHưHFWLYHRI VXEGXHGPDFURHFRQRPLFIDFWRUVEXWDWD much more modest rate.

2QDQRUJDQLFEDVLV
DGMXVWHGRSHUDWLQJ SURƮWGHFOLQHGE\WRPDVD result of weaker demand conditions. Margins however improved from 14.5% LQWRLQUHưHFWLYHRIWKH impact of our transformation programme DQGWKHEHQHƮWIURPVHOIKHOSDFWLRQVVXFK as cost savings and new business wins.

2XUVWUDWHJ

,QZHFRPSOHWHGRXU&RDWLQJV transformation programme to strengthen RXUDELOLW\WRGHOLYHUSURƮWDEOHJURZWK As a result of improved global key account systems we are closer to our customers. 7KLVLVUHVXOWLQJLQLPSURYHGGLDORJXHPRUH innovation partnerships and increased QHZEXVLQHVVRSSRUWXQLWLHV\$OVRZHKDYH VLPSOLƮHGRXUSURGXFWSRUWIROLRDQGIRUWKH ƮUVWWLPHFUHDWHGRQHLQWHJUDWHGJOREDO &RDWLQJVWHDPPDNLQJXVOHDQHUDQGIDVWHU to respond to customer and industry needs.

Our growth strategy is centred on areas where Elementis' unique technologies and expertise will bring solutions to the key challenges that our customers face. Three areas in which our ingredients will play a critical role are the formulation of premium GHFRUDWLYHFRDWLQJVWKHVZLWFKIURP VROYHQWERUQHWRZDWHUERUQHFRDWLQJVDQG WUHQGVEHQHƮWWLQJDGKHVLYHV VHDODQWV

,QGHFRUDWLYHDSSOLFDWLRQVFRQVXPHUVZDQW products that make their lives easier and GHOLYHUVXVWDLQDELOLW\EHQHƮWV2XU5KHRODWH HX series delivers breakthrough single FRDWSHUIRUPDQFHDVWHSFKDQJHLQVWDLQ resistance and enables VOC free coatings.

,QLQGXVWULDOFRDWLQJVWKHFKDOOHQJHLVWR create new formulations that enable the transition from solvent to waterborne technologies. Through our leadership LQUKHRORJ\QRYHOZDWHUERUQHDGGLWLYHV and strong presence in Asia we are well positioned to deliver this change.

\$QGƮQDOO\K\EULGDGKHVLYHV VHDODQWV are a high growth segment supported by megatrends including light weighting and HQHUJ\HƱFLHQF\UHJXODWLRQV+HUHRXU range of Thixatrol® additives are able to GHOLYHUFXVWRPHUVHQKDQFHGDGKHVLRQ lower energy processing costs and genuine VXVWDLQDELOLW\EHQHƮWVDVWKH\DUHGHULYHG from natural castor wax .

:HDUHZHOOSRVLWLRQHGIRUVXFFHVVDQG execution of our strategic priorities should enable us to deliver revenue growth in excess of GDP and improving operating margins over the medium term.

**Talc *OREDOH[SDQVLRQ**

Christian Kather SVP Global Talc

\$26m DGMXVWHGRSHUDWLQJSURƮW {P

Sales by market

Sales by region

,Q7DOFJUHZDGMXVWHGRSHUDWLQJSURƮW by 11% on a 12 month pro forma* constant FXUUHQF\EDVLVWRPZLWKJRRGJURZWK in industrial talc and the delivery of cost V\QHUJLHVRƬVHWWLQJHQGPDUNHWZHDNQHVV in paper.

As a fully integrated part of the Elementis JOREDORSHUDWLRQVRXUVWUDWHJ\LVWROHYHUDJH this asset base and innovation expertise to further capture market share in new and existing geographies and applications.

\$GMXVWHGRSHUDWLQJSURƮW grew 11% on a pro forma FRQVWDQWFXUUHQF\EDVLV GULYHQE\LQGXVWULDOWDOF JURZWKDQGFRVWV\QHUJ\ GHOLYHU

Financial performance

2QDPRQWKSURIRUPDEDVLV
7DOF revenue in 2019 declined by 5% to \$151m. ([FOXGLQJWKHLPSDFWRI);VSHFLƮFDOO\WKH ZHDNHUHXURDJDLQVWWKH86GROODUUHYHQXH rose 1% on the prior year period with growth LQLQGXVWULDOWDOFRƬVHWE\DGHFOLQHLQVDOHVWR paper markets.

Industrial talc revenue rose by 4% on a pro forma constant currency basis driven by market share gains in technical ceramics DQGFRDWLQJVDVZHJDLQHGQHZFXVWRPHUV and entered new geographies. Sales in \$VLDJUHZLQDVZHSXUVXHGRXU strategy to grow Talc outside our core European market. This growth was partially RƬVHWE\DGHFOLQHLQWDOFGHPDQGIRUXVH LQORQJOLIHSODVWLFVSULPDULO\LQDXWRPRWLYH DSSOLFDWLRQVDVJOREDOFDUSURGXFWLRQ GHFOLQHGE\RQUHưHFWLQJWRXJKHU macroeconomic conditions.

(OVHZKHUH7DOFVDOHVWRWKHSDSHUPDUNHW fell due to a temporary customer production issue and weak market demand for graphic paper. We continue to expect our sales to the paper market to decline in the medium term driven by the ongoing structural shift WR{GLJLWDOPHGLDSODWIRUPV

2QDPRQWKSURIRUPDEDVLV
DGMXVWHG RSHUDWLQJSURƮWURVHE\RQDUHSRUWHG EDVLVDQGRQDFRQVWDQWFXUUHQF\ EDVLVWRPIROORZLQJWKHGHOLYHU\RIQHZ business opportunities and the majority of RXUPFRVWV\QHUJLHV\$VDUHVXOWPDUJLQV rose from 15.5% in 2018 to 17.1% in 2019.

2XUVWUDWHJ

One year after the acquisition of Talc the business is fully integrated into Elementis' global operations. All key individuals KDYHEHHQUHWDLQHGSURFHVVHVDUHIXOO\ embedded and sales teams are fully integrated. We are now working to deliver RXUPHGLXPWHUPVWUDWHJLFDPELWLRQV aiming to generate organic revenue growth DERYH*'3OHYHOVDQGRSHUDWLQJSURƮW margin improvement.

The historic focus of our Talc business has EHHQ(XURSHDQSDSHUPDUNHWVUHưHFWLYH of the location of our deposits in Finland. In recent years we have successfully increased our ability to serve high value industrial applications outside Europe. \$VSDUWRI(OHPHQWLVZHKDYHPDWHULDO opportunities to further globalise and accelerate growth by leveraging the Group's DVVHWEDVHPDUNHWLQJDQGGLVWULEXWLRQ capabilities and technical expertise.

Utilising Elementis' existing presence in coatings and personal care markets should enable us to deliver \$20-25m of revenue synergies by 2023 and generate material YDOXHFUHDWLRQ,QZHPDGHJRRGHDUO\ SURJUHVVLGHQWLI\LQJDSSUR[LPDWHO\PRI new business opportunities. There is scope for further development.

Over the medium term we are also focused on growing and increasing our market share in applications such as long life plastics and catalytic convertors. Demand for both applications is supported by consumer and regulatory needs to reduce vehicle ZHLJKWVDQGHPLVVLRQVDQGLVH[SHFWHGWR exhibit sustained growth. We have a clear strategy to capture this growth and increase RXUVKDUHE\ZLQQLQJRQTXDOLW\FXVWRPHU service and technical support.

* See page 173 for pro forma information.

Resilient Chromium performance LQ{1RUWK{\$PHULFDDQGDFKDOOHQJLQJ GULOOLQJ{HQYLURQPHQWIRU(QHUJ

Eric Waldmann SVP Global Chromium

Chromium \$171m UHYHQXHP

\$18m DGMXVWHGRSHUDWLQJSURƮW {P

Chromium performance in 2019 was impacted by weaker global industrial demand DQGDGHWHULRUDWLRQLQSULFLQJSULPDULO\RXWVLGH RI1RUWK\$PHULFDDVWKH\HDUSURJUHVVHG Our priority is to run our operations in a VDIHDQGUHOLDEOHPDQQHUZKLOHIRFXVLQJ RQ{SHUIRUPDQFHLPSURYHPHQWLQLWLDWLYHV

Performance in our North \$PHULFDQEXVLQHVVZDV UHODWLYHO\UREXVW

Financial performance

Chromium revenue in 2019 was \$171m FRPSDUHGWRPLQWKHSUHYLRXV\HDU a decrease of 7% driven by weak global industrial demand and pricing for chromium chemicals. As a result of weak demand from LQGXVWULDODSSOLFDWLRQVLQFOXGLQJDXWRPRWLYH DQGPDFKLQHU\HQGXVHUVRXUYROXPHV declined by 7% on the prior year period. \$YHUDJHSULFLQJZDVDOVRORZHUSULPDULO\LQWKH VHFRQGKDOIRIWKH\HDUUHưHFWLYHRIZHDNHU JOREDOFKURPLXPLQGXVWU\FDSDFLW\XWLOLVDWLRQ which we estimate fell from approximately 90% in 2018 to around 80% in 2019.

While our North American operations were impacted by the global industrial production VORZGRZQFRPSDUHGWRWKHUHVWRIWKH ZRUOGLWVSHUIRUPDQFHZDVUHODWLYHO\UREXVW protected by our strong market share and GLƬHUHQWLDWHGFXVWRPHUGHOLYHU\V\VWHP 2XWVLGHRI1RUWK\$PHULFDRXUSHUIRUPDQFH was more materially impacted by lower volumes and unit pricing.

\$GMXVWHGRSHUDWLQJSURƮWGHFOLQHGE\ WRPUHưHFWLYHRIWKHLPSDFWRIZHDNHU volumes globally and weaker pricing outside North America.

2XUVWUDWHJ

,Q&KURPLXPZHKDYHDVWURQJFRPSHWLWLYH position as the sole producer in North \$PHULFDZLWKDGLƬHUHQWLDWHGSURGXFW delivery system that materially reduces customer product handling risk. While our EXVLQHVVLVH[SRVHGWRWKHHFRQRPLFF\FOH LQSDUWLFXODURXWVLGH1RUWK\$PHULFDLWLVD high return operation with opportunities for improvement.

Our primary focus is the delivery of safe and reliable operations for our employees and customers. Outside of this there are opportunities to drive improved performance. Priorities include the delivery of cost and ZRUNLQJFDSLWDOJDLQVLQFUHDVHGFXVWRPHU adoption of our fast penetration Waynetan Chrome Sulphate product range and driving our product mix increasingly to high value chromic acid and oxide applications.

Luc van Ravenstein SVP Global Coatings and Energy

*(QHUJ*

\$47m 5HYHQXHP

\$4m DGMXVWHGRSHUDWLQJSURƮWP

,QSHUIRUPDQFHZDVLPSDFWHGE\ORZHU RLOSULFHVDQGDGHFOLQHLQGULOOLQJDFWLYLW\ particularly in North America.

/RRNLQJIRUZDUGJURZWKLQNH\RLOSURGXFLQJ regions outside of North America is a key strategic priority.

5HYHQXHGHFOLQHGE\ WRPUHưHFWLYHRIORZHU GULOOLQJDFWLYLW

Financial performance

Energy revenue in 2019 declined by 14% on a constant currency basis* to \$47m as a result of lower drilling activity. Weaker oil prices and cash constraints for exploration and GLVFRYHU\FRPSDQLHVSDUWLFXODUO\LQ1RUWK \$PHULFDUHVXOWHGLQQRWDEO\ZHDNHUGHPDQG for our products particularly in the second KDOIRIWKH\HDU\$VDUHVXOWUHYHQXHLQ1RUWK America declined by 29% on the prior year period. New business wins in the Middle East DQG&HQWUDO\$VLDDQGJRRGJOREDONH\DFFRXQW SURJUHVVKHOSHGWRSDUWLDOO\RƬVHWWKLV

\$GMXVWHGRSHUDWLQJSURƮWGHFOLQHGE\ WRPUHưHFWLYHRIWKHZHDNGULOOLQJDFWLYLW\ and the associated negative operating leverage impact.

2XUVWUDWHJ

,Q(QHUJ\ZHDUHIRFXVHGRQWKHGHOLYHU\RI GULOOLQJVROXWLRQVWRRLOƮHOGVHUYLFHFRPSDQLHV On a global scale we provide a range of

WHFKQRORJLHVLQFOXGLQJRUJDQRFOD\VVXFKDV RXUGLƬHUHQWLDWHGKHFWRULWHEDVHGVROXWLRQV and synthetic alternatives. These products KHOSGHOLYHUIDVWHUDQGPRUHHƱFLHQWRLODQG gas drilling in the most challenging conditions.

:KLOVWVKRUWWHUPGHPDQGLVLQưXHQFHG E\PDUNHWIDFWRUVVXFKDVWKHRLOSULFHRXU medium term strategic priorities are clear.

Deeper market penetration of key oil SURGXFLQJUHJLRQVLQWKH0LGGOH(DVW5XVVLD Africa and Asia is a priority. This strategy will be executed in tandem with the Group's *OREDO.H\$FFRXQW3URJUDPPHDQG is already delivering results as outlined LQWKHƮQDQFLDOSHUIRUPDQFH Further progress will help diversify our activities outside of North America.

This will be supplemented by an encouraging LQQRYDWLRQSLSHOLQHZLWKVHYHUDOODXQFKHV SODQQHGRYHUWKHQH[WPRQWKVDQGIXUWKHU focus on our cost structure.

* See page 39 for constant currency data

Corporate governance

Financial statements

Shareholder information

Managing our risks and opportunities

Risk management

Elementis faces a number of risks and uncertainties in the ordinary course of its RSHUDWLRQV7KHHƬHFWLYHLGHQWLƮFDWLRQ mitigation and ongoing management of these risks underpins the delivery of strategic objectives. Elementis has an established risk management framework and system of internal controls to support decision making throughout WKH{ƮQDQFLDO\HDU

Risk management systems are intended to mitigate and reduce risk to the lowest extent SRVVLEOHKRZHYHUFRPSOHWHHOLPLQDWLRQRI all risks faced by Elementis is not possible. The risk management processes can only provide reasonable and not absolute assurance against material misstatement or loss.

Risk management framework

The Board has overall responsibility for risk management and sets the Group's SROLFLHVFXOWXUHDQGWRQHRQULVNDVZHOO as providing oversight to management. A risk management framework is in place to LGHQWLI\DVVHVVPLWLJDWHDQGPRQLWRUWKH risks faced.

Board

The Company places the highest priority on SUHYHQWLQJORVVRIOLIHRWKHUKDUPWRSHRSOH DQGWKHHQYLURQPHQWOHJDODQGUHJXODWRU\ breaches and damage to reputation or brand DQGKDVLQSODFH*URXSSROLFLHVSURFHGXUHV DQGJXLGDQFHLQYDULRXVDVSHFWV{RIEXVLQHVV operations and functions in order to help the ELT and employees manage risk in these areas.

Risk culture

Every individual at Elementis has a UHVSRQVLELOLW\WRPDQDJHULVNLUUHVSHFWLYH RI{IXQFWLRQEXVLQHVVRUUROH5LVNDZDUHQHVV exists through decision making processes DQGLVHPEHGGHGLQV\VWHPVSROLFLHV SURFHGXUHVOHDGHUVKLSDQGEHKDYLRXUV DQGVSHFLƮFVWDQGDUGVVXFKDVWKH&RGH of Conduct. All Company employees are responsible for complying with related &RPSDQ\SROLFLHVDQGJXLGDQFHDQGVKDUH responsibility for ensuring that the Company FRQGXFWVLWVEXVLQHVVLQDVDIHODZIXODQG ethical manner.

(YHU\LQGLYLGXDODW(OHPHQWLV KDVDUHVSRQVLELOLW\WR manage risk, irrespective of IXQFWLRQEXVLQHVVRUUROH

Top down

2YHUVLJKW LGHQWLƮFDWLRQ assessment and mitigation of risks at a Group level

Bottom up

,GHQWLƮFDWLRQ assessment and mitigation of risk across operational and functional areas

CEO (supported E\WKH(/7

The Board has overall responsibility for risk management and sets WKH*URXSoVSROLFLHVFXOWXUHDQGWRQHRQULVNDVZHOODVSURYLGLQJ

Supports the Board DQGKDVVSHFLƮF responsibility for PRQLWRULQJƮQDQFLDO reporting as well as the internal and external audit SURJUDPPHVRQH of the primary purposes of which is to provide assurance RQƮQDQFLDO operational and compliance controls. The CEO is responsible for implementing *URXSSROLFLHV risk management SHUIRUPDQFH identifying principal risks and ensuring resources are allocated for HƬHFWLYHULVN management and mitigation.

oversight to management

Audit Committee

ELT

Individual ELT members have responsibility for managing and monitoring risks relevant to their business or function on an ongoing basis.

Operational and supporting functions

'DWDSULYDF\VWHHULQJFRPPLWWHH+6(FRXQFLO0DQXIDFWXULQJ FRXQFLO(&7(6&,QWHUQDODXGLWDQG,QYHVWPHQW&RPPLWPHQW forum

Risk appetite and tolerance

Risk appetite at Elementis is understood as being the amount of risk that the Board is prepared to accept in return for reward or investment return. There is a degree of variability in determining risk appetite which may be based on strategic objectives as well as guidance from management or advisers based on appropriate understanding and analysis of the nature of the risk. The strategic appetite for risk is therefore decided on a case by case basis at Board OHYHOIRUH[DPSOHZLWKUHVSHFWWRDQ\ FRUSRUDWHWUDQVDFWLRQRUVLJQLƮFDQWFDSLWDO H[SHQGLWXUHSURMHFWDQGGHOHJDWHGWRWKH executive team to implement as appropriate. The maximum risk that can be taken before WKH&RPSDQ\H[SHULHQFHVƮQDQFLDOGLVWUHVV LVDOVRGHFLGHGDW%RDUGOHYHODQGPLWLJDWHG DVIDUDVSRVVLEOHE\LQWHUQDOFRQWUROV EXVLQHVVFRQWLQXLW\SODQVLQVXUDQFH ƮQDQFLDOLQVWUXPHQWVDQGFRQWUDFWV

Risk review process

The Board maintains an annual forward planner to ensure that appropriate focus LVJLYHQDWVFKHGXOHGPHHWLQJVWRGLVFXVV UHYLHZDQGPRQLWRUEXVLQHVVSHUIRUPDQFH VWUDWHJLFSULRULWLHVJRYHUQDQFHFRPSOLDQFH and risk matters. This approach enables the Board to engage directly with each of the business units and functional departmental leaders.

Each ELT member is responsible for LGHQWLI\LQJDVVHVVLQJDQGPRQLWRULQJWKHLU respective business and functional risks as well as measuring the impact and likelihood RIWKHULVNWRWKHEXVLQHVV(DFKLGHQWLƮHG ULVNLVFDWHJRULVHGDVVWUDWHJLFFRPPHUFLDO RSHUDWLRQDOƮQDQFLDORUFRPSOLDQFH

2QDQDQQXDOEDVLVWKH(/7UHYLHZV operational risks and the Board carries out a review of the principal risks and uncertainties.

'XULQJWKH\HDUWKHIROORZLQJULVN management activities have been carried out:

Risk management policies and procedures were reviewed and updated
Talc risk register developed and integrated into the Elementis Group Risk Register
Renewal of insurance programme
%RDUGEULHƮQJRQFOLPDWHFKDQJHULVNV and preparation for reporting in line with the recommendations of the Task Force on Climate related Financial Disclosures (TCFD) in 2021

.H\DUHDVRIIRFXVGXULQJWKH\HDU

There have been no fundamental changes to our principal risks and uncertainties during 2019. Global macroeconomic factors VXFKDVLQFUHDVHGSROLWLFDOXQFHUWDLQW\ WUDGHWHQVLRQVEHWZHHQWKH86DQG&KLQD Brexit and customer demand and supply has weighed on the Group during the year. \$JDLQVWWKLVEDFNGURS(OHPHQWLVKDV continued to seek and maximise commercial opportunities in order to optimise the achievement of strategic objectives.

Key movements of principal risks during the year include increased risks relating to Risk numbers 4 and 5 (see graph). The growth expectations for the Group in existing and new territories could be impacted as a result of increasing regulatory compliance or adverse regulatory developments that could lead to product delays or hinder strategic SURJUHVVRYHUDPRQWKKRUL]RQ

Emerging risks

(PHUJLQJULVNVDUHLGHQWLƮHGWKURXJK WKH{ULVN{PDQDJHPHQWIUDPHZRUNDQG ordinary course of business such as monthly performance calls with each EXVLQHVVXQLWDQGIXQFWLRQ(/7DQG%RDUG PHHWLQJVVWHHULQJFRPPLWWHHVDQG customer/market insight.

Brexit

'XULQJWKH%RDUGFRQWLQXHGWRPRQLWRU WKHLPSDFWRI%UH[LWDPLGVWDSHULRG{RI political uncertainty. Management remains of the view that the impact on the Group is expected to be of low materiality. We continue to monitor the status of the trading relationship between the EU and the UK. A cross-functional team is in place to assess potential risks and impacts so that we can take appropriate action in relation WR{RXUVXSSO\FKDLQDQGFXVWRPHUV

Coronavirus (COVID-19)

Management continue to assess the LPSDFW{RIWKHYLUXVRQWKH&RPSDQ\oV operations and businesses. An internal team has been established to ensure the business is able to respond as and when new information is available. Employees are aware and understand how to report and share local insight with management.

Hygiene protocols are in place at each of our manufacturing sites. Travel restrictions are currently in place which will be reviewed as necessary. Each of the business units LVDVVHVVLQJWKHƮQDQFLDOLPSDFWDVWKH situation develops.

2019 Group principal risks (gross impact) Risk trend indicators: + increasing – decreasing = same

High	3 =	2 =	1 =
		5 +	9 =
	6 =	4 +
Impact	8 –	7 =


Low
	Low	Probability/likelihood	High

Our principal risks

1. Uncertain global economic conditions and competitive pressures in the market place (including currency movement).
1. Business interruption as a result of a major event or a natural catastrophe.
1. Business interruption as a result of supply chain failure of key raw materials and/on UG{SDUW\VHUYLFHSURYLVLRQ
1. Increasing regulatory and product stewardship challenges.
1. 0DMRUUHJXODWRU\HQIRUFHPHQWDFWLRQOLWLJDWLRQDQGRURWKHUFODLPVDULVLQJIURP products and/or historical and ongoing operations.
1. Intellectual property and know-how.
1. Portfolio innovation and technology.
1. Talent management and succession planning.
1. ,7&\EHUDQG*'35

Climate change

Awareness and engagement of climate FKDQJHVXVWDLQDELOLW\DQG(6*PDWWHUV are gaining intensity amongst a number of stakeholder groups. Using the TCFD framework to map our physical and transition risks and opportunities will HQDEOH{XVWRDQDO\VHWKHƮQDQFLDOLPSDFW RYHUDPXFKORQJHUWLPHKRUL]RQZLOO be a year of preparation.

\$WSUHVHQWZHHQYLVDJHWKDWFOLPDWHFKDQJH LVQRWDVSHFLƮFULVNFDWHJRU\LQLWVRZQULJKW UDWKHUWKDWLWFRXOGKDYHWKHDELOLW\WRDƬHFW VSHFLƮFSULQFLSDOULVNFDWHJRULHV

Corporate governance

Financial statements

Shareholder information

Principal risks DQG{XQFHUWDLQWLHV

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Description of risks

7KHSHUIRUPDQFHRIWKHVSHFLƮFHQGXVHU PDUNHWVZHVHUYHLVDƬHFWHGE\JHQHUDOHFRQRPLF conditions. Adverse developments that may result in a downturn in general economic conditions or in the industries in which our customers operate PD\LQFOXGHSROLWLFDOXQFHUWDLQW\UHWDOLDWRU\WDULƬV or other disputes between trading partners. Sub-optimal global economic conditions can DƬHFWVDOHVUDZPDWHULDOFRVWVưXFWXDWLRQVLQ IRUHLJQH[FKDQJHUDWHVFDSDFLW\XWLOLVDWLRQDQG cash generation.

Increased competitive pressure in the PDUNHWSODFHFDQUHVXOWLQVLJQLƮFDQWSULFLQJ pressure and loss of market share. The impact of non-delivery of operating plans can lead to market expectations of Group earnings not being met and slower delivery of reported strategic priorities.

Controls and mitigating activities

)LQDQFLDOSHUIRUPDQFHPRQWKO\VDOHVSURƮWDQG FDVKưRZVLVFORVHO\PRQLWRUHGZLWKIXOO\HDU reforecasts updated twice a year and variances investigated and explained
Contingency and cost reduction plans can be implemented in the event of an economic GRZQWXUQWRUHGXFHRSHUDWLQJFRVWVLQFOXGLQJ non-essential capital expenditure items and discretionary spend
Currency hedging action taken as appropriate
Global key account management programme in place to deepen how we work and grow with our largest customers as well as monitoring customer performance and trends
Balanced geographic footprint and supply chain DQGEURDGGLƬHUHQWLDWHGSURGXFWRƬHULQJDFURVV GLƬHUHQWVHFWRUV

Developments

Implementation of cost and operational HƱFLHQF\SODQVWRUHGXFHRSHUDWLQJFRVW including non-essential capital expenditure items and discretionary spend
)RFXVRQSULFLQJPDUJLQPDQDJHPHQWDQGQHZ business opportunities
Maintain operational reliability

Business interruption as a result of a PDMRUHYHQWHJRSHUDWLRQV+6( WUDQVSRUWZRUNSODFHLQFLGHQWFDXVHGE\ V\VWHPIDLOXUHDQGRUKXPDQHUURURUE\ ƮUHVWRUPDQGRUưRRGSDQGHPLFRUD QDWXUDO{FDWDVWURSKH

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Description of risks

The ability of the Group to manage its operations successfully and achieve performance in line with LWVVWUDWHJ\EXVLQHVVSODQVDQGEXGJHWVGHSHQGV RQWKHHƱFLHQWDQGXQLQWHUUXSWHGRSHUDWLRQ RISODQQLQJSURFHVVHVRSHUDWLRQDOGHOLYHU\ capabilities and internal control environment. Production facilities may be subject to planned DQGXQSODQQHGVKXWGRZQVWXUQDURXQGVDQG RXWDJHVLQFOXGLQJQDWXUDOFDWDVWURSKHZHDWKHU FOLPDWHFKDQJHGLVUXSWLRQDVVRFLDWHGZLWK WUDQVSRUWDWLRQXWLOLWLHVDQGGLVWULEXWRUVFRXOG result in increased costs in securing alternate IDFLOLWLHVVLJQLƮFDQWWLPHWRLQFUHDVHSURGXFWLRQRU FXVWRPHUTXDOLƮFDWLRQ

Controls and mitigating activities

3UHYHQWDWLYHPDLQWHQDQFHFULWLFDOVSDUHV process and other safety procedures to mitigate WKHHƬHFWVRIDPDMRULQFLGHQW
Property damage and business interruption insurance coverage
Each site is required to develop a business continuity plan that includes emergency response and business recovery protocols; DQQXDOUHYLHZVSHULRGLFXSGDWHVWUDLQLQJDQG exercising the plan via periodic drills or table top exercises. We verify business continuity compliance through the HSE auditing process.
Business continuity scenario planning overseen by ELT
HSE management programme which includes corporate compliance audits and insurance property surveys
HSE matters reviewed by ELT on a monthly basis

Developments

Hurricane Florence insurance reimbursement
Continued focus on operational reliability
Risk engineering surveys carried out at Talc sites and insurance programme integration
1HZƮQLVKHGJRRGVZDUHKRXVHDW&DVWOH+D\QH to mitigate against potential future climate related events
COVID-19 response plan

Business interruption as a result of VXSSO\FKDLQIDLOXUHRINH\UDZPDWHULDOV DQGRUWKLUGSDUW\VHUYLFHSURYLVLRQ

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Description of risks

The Group is dependent on numerous raw materials from various sources. In the event of a ORQJWHUPVXSSO\GLVUXSWLRQRUPDUNHWYRODWLOLW\LW PD\QRWEHSRVVLEOHWRVHFXUHVXƱFLHQWVXSSOLHV of raw materials from alternative sources on a WLPHO\EDVLVRULQVXƱFLHQWTXDQWLWLHVRUTXDOLWLHV or on commercially reasonable terms. The lead WLPHDQGHƬRUWQHHGHGWRHVWDEOLVKDUHODWLRQVKLS with a new supplier could be lengthy and could UHVXOWLQDGGLWLRQDOFRVWVGLYHUVLRQRIUHVRXUFHV and reduced production yields.

Controls and mitigating activities

3UHYHQWDWLYHPDLQWHQDQFHFULWLFDOVSDUHV process and other safety procedures to mitigate WKHHƬHFWVRIDPDMRULQFLGHQW
Property damage and business interruption insurance coverage
Implement annual review and periodic testing of business continuity plans at all sites
Business continuity scenario planning overseen by ELT
HSE management programme which includes corporate compliance audits and insurance property surveys
HSE reviewed by ELT on a monthly basis

Developments

Supply chain contingency planning to mitigate Brexit and/or other trade related risks continually updated to address changing environment
Strategic supplier relationships for raw materials provided for lower raw material cost
Improved planning process ensured appropriate inventory levels
&RQWLQXHGIRFXVRQTXDOLƮFDWLRQRIQHZVRXUFHV of supply

/LQNWREXVLQHVVPRGHO

In Innovations Op Operations SM Sales and marketing

Change in risk

Increasing ULVNSURƮOH

No change LQULVNSURƮOH

,QFUHDVLQJUHJXODWRU\DQGSURGXFW

stewardship challenges

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Description of risks

Emerging regulations in global markets can lead to hurdles and additional costs to deliver on strategic objectives. Non-compliance and suspected non-compliance could lead to regulatory action. The Group is subject to extensive and evolving risk in multiple jurisdictions.

Controls and mitigating activities

*OREDO3URGXFW6WHZDUGVKLSWHDPRYHUVHHV PDQDJHVDQGPRQLWRUVUHJXODWRU\ developments in various jurisdictions.
Coordination with R&D team to enable a faster speed-to-market of new technologies and applications.
6DIHW\'DWD6KHHWVODEHOVDQGUHJXODWRU\ information is provided for global customers VSHFLƮFWRWKHUHTXLUHPHQWVLQWKHLUMXULVGLFWLRQ Multiple languages are used to communicate these requirements.

IURP{SURGXFWVDQGRUKLVWRULFDODQG ongoing operation

0DMRUUHJXODWRU\HQIRUFHPHQWDFWLRQ OLWLJDWLRQDQGRURWKHUFODLPVDULVLQJ

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Description of risks

LQ\HDU

The global nature of the Group's operations means that the Group is subject to a wide range of OHJLVODWLRQDQGUHJXODWLRQLQFOXGLQJIRUH[DPSOH DQWLEULEHU\DQGDQWLFRPSHWLWLRQOHJLVODWLRQ WD[DWLRQGDWDSULYDF\HPSOR\PHQWDQGLPSRUW export controls.

)DLOXUHWRFRPSO\FDQOHDGWROLWLJDWLRQFODLPV GDPDJHVƮQHVDQGSHQDOWLHV7KH*URXSPD\ be involved in legal proceedings and claims within the ordinary course of business including legacy claims from businesses that have been acquired or disposed of by the Group or ongoing operations.

Adverse results in legal proceedings could result in UHSXWDWLRQDODQGƮQDQFLDOGDPDJHVDQGGLYHUVLRQ of management time and resources.

Controls and mitigating activities

Active compliance and risk management SURJUDPPHVLQSODFHLQFOXGLQJSROLFLHV procedures and training)
Insurance programme and risk transfer strategy LQSODFHWRPLWLJDWHSRWHQWLDOƮQDQFLDOORVVHV
Experienced General Counsel supported by inhouse and external legal teams
Regular reviews of litigation and compliance reports by the Board and the Audit Committee as well as the internal audit programme help HQVXUHWKHVHNH\ULVNVDUHPDQDJHGHƬHFWLYHO\
Business processes are supported by HR policies and the Code of Conduct
Data Protection Steering Committee meets regularly to oversee compliance with applicable data privacy laws

,QWHOOHFWXDOSURSHUW\DQGNQRZKRZ

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Description of risks

Failure to adequately protect and preserve intellectual property and proprietary know how in both existing and new markets could harm our competitive position.

Controls and mitigating activities

Experienced General Counsel supported by inhouse and external legal teams
Employment and computer policies (supported by training) ensure employees are made aware RIWKHLUREOLJDWLRQVUHODWLQJWRFRQƮGHQWLDO information and access controls to protect HR processes in place to ensure new hires undergo appropriate background and reference checks
Trademark and patent watch lists
Litigation and compliance reports reviewed by Audit Committee and Board

Developments

Brexit planning for uninterrupted supply in Europe and UK
6XFFHVVIXOLPSOHPHQWDWLRQRI.RUHD5(\$&+ 7XUNH\5(\$&+DQG5XVVLD5(\$&+
Integration of Talc business into product stewardship programs
Continued expansion of ISO 16128 Natural and &26026SURGXFWRƬHULQJV

Developments

Internal audit of GDPR processes and completeness assessment in the event of a GDPR event
Audit of all policy universe & policy protocols.
Review of internal controls in China and Taiwan and health checks completed relating to the ƮQDQFLDOFRQWUROVZLWKLQWKH7DOFEXVLQHVV

Developments

Freedom to operate practices for all new product innovations
Patent and Intellectual Property disclosures to keep distinction in our new launches
Increased partnerships with key technology OHDGHUVXQGHUFRQƮGHQWLDOLW\DJUHHPHQWV
Monitoring competitive Intellectual Property landscape for our segments
Actively enforcing our proprietary advantages

Corporate governance

Financial statements

Shareholder information

Risk management continued

Principal risks and uncertainties continued

Movement LQ\HDU

Description of risks

The ability of the Group to compete is highly dependent on its ability to meet the changing needs of customers and keep pace with technological innovations and sustainability trends.

New or substitute products and technologies developed by competitors could erode the Group's ability to compete and lead to declines in sales and market share.

Controls and mitigating activities

Global R&D team aims to develop new products and technologies used in an evolving market to meet the changing needs of our sophisticated customers
Collaborative relationships with customers and LQGXVWU\IRUPXODWRUVHQVXUHVRXUHƬRUWVDUH aligned with latest market trends
Innovation stage gate process with systematic prioritisation enables the Group to deliver high value solutions for the market
Hectorite and high quality talc minerals are natural resources enabling the Group to consistently deliver high performance innovation

Developments

13 new product launches in 2019
25 planned for 2020
New KPI's measuring Distinctive Product Innovation sales
"Sustainability" Innovation pipeline
Synergistic combinations of existing technologies
Leveraging Hectorite and Talc backward integration into our pipeline
Market adjacencies expansions

VXFFHVVLRQ{SODQQLQJ

Description of risks

LQ\HDU

The Group operates in highly competitive labour markets and relies upon the expertise and services of talented individuals and teams to succeed. Loss of key people or disruption to teams without timely action could result in a disruption to business operations.

Controls and mitigating activities

Formal talent and succession management programmes in place with individual development goals reviewed
Succession to the ELT reviewed with the Board • Global Talent Director supports the CHRO with
focus on Talent • HR systems functionality for performance management and compensation planning
Formal system for job grading and compensation benchmarking in place supported by external expertise

Developments

Orderly transition of new incumbents to SVP's RI7HFKQRORJ\6XSSO\&KDLQDQG6WUDWHJ\ Transformation completed.
Key talent from Mondo acquisition retained and developed into broader Elementis roles.
Talent and succession planning process reviewed with ELT and updated to include succession to critical Level 3 roles.
Employee experience survey launched to gain feedback on talent and development opportunities

**,7&\EHUDQG*'35**

Description of risks

The Group is expected to increasingly rely on IT V\VWHPVIRULWVLQWHUQDOFRPPXQLFDWLRQVFRQWUROV reporting and relationships with customers and VXSSOLHUV\$VLJQLƮFDQWGLVUXSWLRQFRXOGFDXVH delays to key operations and inability to meet customers' requirements and result in increased RSHUDWLQJFRVWVOHJDOOLDELOLW\DQGUHSXWDWLRQDO GDPDJH,QDGGLWLRQ*'35KDVFUHDWHGDUDQJH of new compliance obligations with increased ƮQDQFLDOSHQDOWLHVIRUQRQFRPSOLDQFH

Controls and mitigating activities

Security controls including policies and SURFHGXUHVVWDƬDZDUHQHVVDQGWUDLQLQJ ULVNPDQDJHPHQWDQGFRPSOLDQFH systems and information management and protection process
5HJXODU,7F\EHUDQG*'35XSGDWHVWRWKH%RDUG
Business continuity and emergency response plans are in place at each of our manufacturing sites
Internal audits are scheduled on a regular basis

Developments

Cyber security maturity workshop carried out
Continued focus on cyber risk and security protocols
GDPR completeness assessment carried out by Internal audit function
Implementation of single-sign on/multifactor authentication

9LDELOLW\DQGJRLQJ concern statement

Going Concern

The Directors have assessed the *URXSDVDJRLQJFRQFHUQKDYLQJJLYHQ FRQVLGHUDWLRQWRIDFWRUVOLNHO\WRDƬHFWLWV IXWXUHSHUIRUPDQFHDQGGHYHORSPHQW WKH*URXSoVƮQDQFLDOSRVLWLRQDQGWKH principal risks and uncertainties facing WKH*URXSLQFOXGLQJWKH*URXSoVH[SRVXUH WRFUHGLWOLTXLGLW\DQGPDUNHWULVNDQGWKH mechanisms for dealing with these risks.

The Group's net debt position at the 2019 year end was \$454.2m. It has access to a syndicated revolving credit facility of \$375m with an expiry date of September 2024 and long term loan facilities of \$200m and €172m which have an expiry GDWH{RI6HSWHPEHU

8QGHUWKLVSULQFLSDOERUURZLQJIDFLOLW\ the Group performs covenant tests for net debt:EBITDA ratio and interest cover. No breaches in the required covenant tests were reported during the year. The Group also uses various short and medium term forecasts to monitor anticipated future compliance and these include stress testing assumptions to identify the headroom on these covenant tests.

7KH'LUHFWRUVDUHVDWLVƮHGWKDW DIWHUFRQVLGHULQJDOORIWKHDERYHLW is appropriate for the Group and the Company to adopt the going concern basis of accounting in preparing these *URXSDQGSDUHQWFRPSDQ\ƮQDQFLDO VWDWHPHQWVDQGWKDWWKHUHDUHQRPDWHULDO uncertainties to the ability of the Group and Company to continue to do so over a period of at least 12 months from the date RIDSSURYDORIWKHƮQDQFLDOVWDWHPHQWV

%XVLQHVV9LDELOLW\ Assessment

The basis of the assessment includes a detailed review of strategic and operating SODQVXQGHUSLQQHGE\RQHDQGWKUHH \HDUƮQDQFLDOIRUHFDVWVLQFOXGLQJSURƮW DQGORVVDQGFDVKưRZV&RQVLGHUDWLRQLV WKHUHIRUHJLYHQWRFDSLWDOH[SHQGLWXUHV LQYHVWPHQWSODQVUHWXUQVWRVKDUHKROGHUV DQGRWKHUƮQDQFLDOFRPPLWPHQWVDV well as to the Company's debt bearing FDSDFLW\LWVƮQDQFLDOUHVRXUFHV ERUURZLQJVDQGWKHDYDLODELOLW\RIƮQDQFH No review of business plans and

ƮQDQFLDOIRUHFDVWVLVFRPSOHWHZLWKRXW a robust assessment of the risks and opportunities in such planning models and the assumptions used. These reviews include consideration and discussion of the materials prepared and presented to the Board by management and its advisers ZKHUHDSSURSULDWHDVZHOODVDGGLWLRQDO information requested by the Board.

The Board's programme of monitoring PDMRUULVNVLVWKHUHIRUHDQLPSRUWDQW component of the business viability assessment. Business and segment growth VFHQDULRVUDWHRIUHWXUQRQLQYHVWPHQWV DVVXPSWLRQVRQJOREDO*'3JURZWKUDWHV UHOHYDQWFXUUHQF\UDWHVFRPPRGLW\SULFHV LQEXVLQHVVSODQVDQGƮQDQFLDOIRUHFDVWV DUHDOOFRQVLGHUHGZLWKVWUHVVWHVWLQJRQ ƮQDQFLDOPRGHOVZKHUHDSSURSULDWH)LQDOO\ DUHYLHZRIOLWLJDWLRQDQGWD[UHSRUWVOHJDO and compliance risks throughout the year and at a formal year end risk review ensures that the viability statement is made with a UHDVRQDEOHGHJUHHRIFRQƮGHQFH

Principal risks

For each principal risk that is deemed to be ERWKSHUPDQHQWDQGKDYHDKLJKLPSDFW a severe but plausible scenario has been considered. In making the business viability statement the Board has reviewed and discussed the overall process undertaken by management and has assessed the RXWFRPHRIWKHVWUHVVWHVWLQJFDUULHG RXWXVLQJWKH*URXSoVWKUHH\HDUƮQDQFLDO forecast as the base case.

7KHWKUHH\HDUƮQDQFLDOIRUHFDVWFRQVLGHUV WKH*URXSoVFDVKưRZVLQWHUHVWFRYHU Net Debt:EBITDA covenant ratio and RWKHUNH\ƮQDQFLDOUDWLRVRYHUWKHSHULRG These metrics are assessed against the Group Risk Register to determine the most LPSDFWIXORQHVWRVWUHVVWHVWDJDLQVWDQG this is carried out to evaluate the potential impact of the Group's principal risks actually occurring. Based on the results of its review DQGDVVHWRXWDERYHWKHGLUHFWRUVKDYHD reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over the three-year period of their assessment.

%XVLQHVV9LDELOLW\ statement

In accordance with the UK Corporate *RYHUQDQFH&RGHSURYLVLRQWKH Directors have reviewed the Group's current position and carried out a robust assessment of the principal risks and uncertainties that might threaten the EXVLQHVVPRGHOIXWXUHSHUIRUPDQFH VROYHQF\DQGOLTXLGLW\RIWKH*URXS LQFOXGLQJUHVLOLHQFHWRVXFKWKUHDWVDQG consider that they have a reasonable expectation that the Group will be able to continue in operation and meet its liabilities as they fall due over a period of at least three years.

A period of three years was chosen as being consistent with the Group's EXVLQHVVDQGƮQDQFLDOSODQQLQJPRGHOV 5 'SODQVDQXPEHURINH\VXSSO\ contracts and external borrowing IDFLOLWLHV,QDGGLWLRQWKUHH\HDUVLVWKH period used for mid-term business planning purposes. Whilst the Directors have no reason to believe that the Group ZLOOQRWEHYLDEOHRYHUDORQJHUSHULRGD three year period allows the Directors to make the viability statement with DUHDVRQDEOHGHJUHHRIFRQƮGHQFH whilst providing shareholders with an appropriate longer term outlook. The Directors' viability assessment of the Group's prospects is based on reviews of annual operating and three \HDUEXVLQHVVSODQVEDQNFRYHQDQW FRPSOLDQFHIRUHFDVWVLQFOXGLQJ VHQVLWLYLWLHVWKH*URXSoVVWUDWHJ\DQG VWUDWHJLFSULRULWLHVSULQFLSDOULVNVDQG how these are managed and mitigated. +RZWKHVHUHYLHZVZHUHFDUULHGRXWWKH principal risks and how they are being managed are more fully described and explained in the Principal Risks and Uncertainties section on pages 50 to WRJHWKHUZLWKUHOHYDQWDVVXPSWLRQV DQGTXDOLƮFDWLRQV

Strategic Report

The Strategic report was approved by the Board of Directors on 4 March 2020 and is signed on its behalf by:

Paul Waterman	Ralph Hewins
CEO	CFO

Corporate governance

Chairman's Corporate Governance Statement

\$QGUHZ'XƬ Chairman

I am pleased to present our Governance report for the year ended 31 December 2019 in accordance with the 2018 UK Corporate Governance Code (the Code). The report on pages 60 to 71 sets out our approach to JRYHUQDQFHRXUNH\DUHDVRIIRFXVGXULQJ WKH\HDURXUZD\VRIZRUNLQJDQGKRZZHDV \RXU%RDUGUHPDLQHƬHFWLYHDVVWHZDUGVRI your company.

%RDUGOHDGHUVKLSDQGHƬHFWLYHQHVV

Together with the support of the Group &RPSDQ\6HFUHWDU\ZHFRQGXFWHGDQ LQWHUQDOUHYLHZRI%RDUGHƬHFWLYHQHVV ,DPGHOLJKWHGWRFRQƮUPWKDW\RXUERDUG UHSUHVHQWVDVWURQJPL[RIVNLOOVH[SHULHQFH diversity and knowledge and that each board member continues to demonstrate DQGHƬHFWLYHO\FRQWULEXWHWRERDUGDƬDLUV Further information relating to the evaluation process and areas for development can be found on page 70.

8QGHUVWDQGLQJRXUEXVLQHVV

'XULQJWKH\HDUWKH%RDUGYLVLWHGRSHUDWLRQV LQ)LQODQG\$PVWHUGDPDQG6KDQJKDL The Board were delighted to visit our Talc VLWHVIRUWKHƮUVWWLPHIROORZLQJWKHDFTXLVLWLRQ in October 2018. The Board were impressed with the quality of the operations at our Finland and Amsterdam sites.

,Q2FWREHUWKH%RDUGYLVLWHGRXU6KDQJKDL site to deepen its understanding of the business in Asia. The Board were keen to meet new management and understand how the marketplace had evolved since WKH{ODVWYLVLWLQ

3XUSRVH&XOWXUH6WUDWHJ\DQG9DOXHV

The Board considered the Code requirements during the year and several discussions took place on the development RIWKHFRPSDQ\oVSXUSRVHKRZWKH Board assess culture and ensures that the strategy and values are appropriate. Further information can be found on page 64.

'LYHUVLW

The Board is committed to actively promoting diversity in its broadest sense and recognises WKHEHQHƮWVWRWKHEXVLQHVVRIEULQJLQJ a variety of perspectives and thought leadership to senior management and Board decisions. We seek to maintain a Board with DZLGHUDQJHRIVNLOOVH[SHUWLVHEDFNJURXQGV and experiences of which ethnicity and gender diversity play a role. In terms of gender EDODQFHZHDUHSURXGWRUHSRUWWKDWZRPHQ represent 37.5% of the Board's composition.

Stakeholder engagement

It is each directors' duty to promote the longterm success of the Company and during WKH\HDUWKH%RDUGFRQVLGHUHGVWDNHKROGHU views in material decision making processes. Further information on how the Board considers and engages with stakeholders can be found on pages 68 and 69.

Workforce engagement

,Q2FWREHUWKH%RDUGDSSURYHG the appointment of Sandra Boss as Designated Non-Executive Director IRU{ZRUNIRUFHHQJDJHPHQW

Sandra reviews and monitors employee insight driven by the employee engagement survey and participates in an engagement programme which includes a variety of engagement channels such as focus JURXSVWRZQKDOOPHHWLQJVDQGHPSOR\HH engagement data. Sandra reports on engagement activities and employee sentiment to the Board and we strongly believe that this adds an additional perspective to board matters when we make decisions that PD\KDYHDVLJQLƮFDQWLPSDFWRQHPSOR\HHV Further information regarding the role and activities planned for 2020 are on page 63.

Succession

'XULQJWKH\HDUDVSDUWRIWKH%RDUGoV RQJRLQJVXFFHVVLRQSODQQLQJSURFHVVHV ZHDQQRXQFHGWKDW1LFN6DOPRQRXU6HQLRU Independent Director would be stepping down from the Board at the 2020 AGM. Following a thorough recruitment process OHGE\WKH1RPLQDWLRQ&RPPLWWHH-RKQ O'Higgins was appointed as a Non-Executive 'LUHFWRUZLWKHƬHFWIURP)HEUXDU\ and will become Senior Independent Director following the AGM. John is currently a nonexecutive director of Johnson Matthey plc and Oxford Nanopore Technologies Limited.

For further information on the recruitment SURFHVVDQG-RKQoVELRJUDSK\SOHDVHUHIHU to pages 73 and 57 respectively.

\$FFRXQWDELOLW

The Board acknowledges its responsibility WRJLYHDIDLUEDODQFHGDQGXQGHUVWDQGDEOH YLHZRIWKHEXVLQHVVoƮQDQFLDOSRVLWLRQ and future prospects. On behalf of the %RDUGDWWKHUHFRPPHQGDWLRQRIWKH \$XGLW{&RPPLWWHHEDVHGRQLWVDVVHVVPHQW GHWDLOHGRQSDJH,FRQƮUPWKDWZHEHOLHYH WKH\$QQXDO5HSRUWSUHVHQWVDIDLU balanced and understandable assessment RIWKH&RPSDQ\oVSRVLWLRQLWVSHUIRUPDQFH and its prospects as well as its business model and strategy.

Annual General Meeting

\$VHYHU,DPJUDWHIXOWR\RXRXU shareholders for your continued support and I look forward to welcoming you at our AGM where you will have the opportunity to meet with the Chairs of the Board Committees and senior management. 7KH\$*0ZLOOEHKHOGRQ:HGQHVGD\WK \$SULODWDPDWWKHRƱFHVRI+HUEHUW 6PLWK)UHHKLOOV//3([FKDQJH+RXVH 3ULPURVH6WUHHW/RQGRQ(&\$(*

\$QGUHZ'XƬ Chairman

Compliance statement

The Financial Reporting Council requires OLVWHGFRPSDQLHVWRGLVFORVHZKHWKHUWKH\ KDYHFRPSOLHGZLWKWKHSURYLVLRQVRIWKH UK Corporate Governance Code (Code) WKURXJKRXWWKHƮQDQFLDO\HDU7KH&RGH provides the standard for corporate governance in the UK.

)RUWKLV\$QQXDO5HSRUWDQG\$FFRXQWVZH DUHUHSRUWLQJLQDFFRUGDQFHZLWKWKH &RGHUHTXLUHPHQWVDQGZHGHVFULEHKRZ ZHKDYHDSSOLHGWKHPDLQSULQFLSOHVDQG FRPSOLHGZLWKWKHSURYLVLRQVIRUWKHZKROH of the year ended 31 December 2019, on RXUZHEVLWHZZZHOHPHQWLVFRP

The Code can be accessed at www.frc.org.uk.

Board of Directors .H\WR&RPPLWWHHPHPEHUVKLS

A Audit Committee

N Nomination Committee

R Remuneration Committee * Chairman of the Committee

\$QGUHZ'XƬ Chairman

Tenure

Andrew joined the Board as a Non-Executive Director and Deputy Chairman on 1 April 2014 and was appointed Non-Executive Chairman in April 2014.

Experience and role

\$QGUHZKDVVLJQLƮFDQWERDUGURRPH[SHULHQFH gained from serving as a director and chairman of DQXPEHURI8.DQGLQWHUQDWLRQDOFRPSDQLHV7KLV FRPELQHGZLWKH[SHULHQFHLQWKHPDQXIDFWXULQJ HQHUJ\DQGXWLOLWLHVVHFWRUVHQDEOHV\$QGUHZWR HƬHFWLYHO\OHDGWKH%RDUGDQGGHOLYHUYDOXHWR shareholders and other stakeholders.

)URPXQWLO\$QGUHZZDVFKLHIH[HFXWLYH RƱFHURIQSRZHUWKHVXFFHVVRUHQWLW\WR,QQRJ\SOF ZKLFKLQZDVGHPHUJHGIURP1DWLRQDO3RZHU UHVWUXFWXUHGDQGWKHQVROGWR5:(WKH*HUPDQ electricity and gas company. He was also a member RIWKH5:(oVH[HFXWLYHFRPPLWWHH%HIRUHWKLVKH spent 16 years at BP in downstream international markets. Andrew was a non-executive director of :ROVHOH\SOFWKHLQWHUQDWLRQDOSOXPELQJDQGEXLOGLQJ PDWHULDOVFRPSDQ\EHWZHHQDQGZKHUH he was also the senior independent director and chairman of the remuneration committee.

Andrew holds a BSc (Honours) degree in Mechanical Engineering and is a Fellow of WKH{(QHUJ\,QVWLWXWH

Paul Waterman CEO

Tenure Paul was appointed CEO on 8 February 2016.

Experience and role

Paul has a proven track record in developing PDUNHWVSURGXFWVDQGRSSRUWXQLWLHVIRUFUHDWLQJ YDOXHEXVLQHVVRSWLPLVDWLRQDQGWUDQVIRUPDWLRQ Paul's global experience provides the skill set required to deliver the Company's strategy and provide inspiring leadership.

3ULRUWRMRLQLQJ(OHPHQWLV3DXOZDVJOREDO&(2 of the BP Lubricants business in 2013 after having overseen the BP Australia/New Zealand GRZQVWUHDPEXVLQHVV,Q3DXOZDVFRXQWU\ president of BP Australia. Prior to this he was CEO RI%3oVJOREDODYLDWLRQLQGXVWULDOPDULQHDQGHQHUJ\ lubricants businesses (2009 to 2010) and CEO of BP Lubricants Americas (2007 to 2009). He joined %3DIWHULWDFTXLUHG%XUPDK&DVWUROLQKDYLQJ joined the latter in 1994 after roles at Reckitt Benckiser and Kraft Foods.

Paul holds a BSc degree in Packaging Engineering from Michigan State University and an MBA in Finance and International Business from New York 8QLYHUVLW\6WHUQ6FKRRORI%XVLQHVV

&RPPLWWHHPHPEHUVKLS

External appointments

–

None

Ralph Hewins CFO

Tenure

Ralph was appointed CFO-Designate and Executive Director on 12 September 2016 and became the Elementis Group CFO on 1 November 2016.

Experience and role

&RPPLWWHHPHPEHUVKLS

External appointments

–

None

Ralph is an accomplished CFO who has a strong WUDFNUHFRUGLQƮQDQFHVWUDWHJ\GHYHORSPHQWDQG implementation and M&A which enables him to SURYLGHHƬHFWLYHƮQDQFLDOOHDGHUVKLSWRXQGHUSLQ the delivery of the Company's strategy.

5DOSKKDGD\HDUFDUHHUZLWK%3ZKHUHKHKHOGD QXPEHURIVLJQLƮFDQWOHDGHUVKLSSRVLWLRQVLQFOXGLQJ UROHVLQƮQDQFLDOPDQDJHPHQWVDOHVDQGPDUNHWLQJ FRUSRUDWHGHYHORSPHQW0 \$VWUDWHJ\DQG SODQQLQJ,Q5DOSKZDV&)2RI%3/XEULFDQWV and served on the board of Castrol India Limited from 2010 until 2016.

Ralph holds an MA degree in Modern History and Economics from the University of Oxford and an MBA from INSEAD.

&RPPLWWHHPHPEHUVKLS N*

External appointments

Non-executive chairman of Severn Trent plc (from July 2010) and chairman of the nominations committee and member of the corporate responsibility committee and remuneration committee. (He will be stepping down from the Severn Trent board in April 2020.)
Non-executive director of UK Government Investments Ltd (UKGI) (from July 2019). UKGI is responsible for the portfolio of over 20 arm's length bodies and for delivering a range of FRUSRUDWHƮQDQFHDGYLFHWRWKH8.JRYHUQPHQW
Member of the CBI President's Committee
Trustee of Macmillan Cancer Support

*1DWLRQDOLW* American

*1DWLRQDOLW* British

Strategic report

Corporate governance

Board of Directors continued

Nick Salmon Senior Independent Director

Tenure

Nick was appointed a Non-Executive Director on 20 October 2014 and became Senior Independent Director on 16 December 2014. He will be stepping down from the Board at the AGM in April 2020.

Experience and role

Nick has extensive experience gained from nonexecutive roles and as an accomplished executive LQVSHFLDOW\FKHPLFDOVXWLOLW\DQGHQJLQHHULQJ sectors. He has been responsible for leading several major restructuring projects and negotiating complex acquisitions and disposals which is highly valuable in Board debates.

Nick was chief executive of Cookson Group plc from July 2004 to December 2012 when Cookson GHPHUJHGWRFUHDWHWZRQHZOLVWHGFRPSDQLHV 9HVXYLXVSOFDQGWKHVSHFLDOW\FKHPLFDOVFRPSDQ\ Alent plc. Nick was formerly executive vicepresident of Alstom S.A. and chief executive of Babcock International Group plc. He held other senior management positions at GEC and GEC Alsthom and the China Light and Power Company. Previous non-executive director roles include 8QLWHG8WLOLWLHVSOFIURPWRZKHUHKH was also senior independent director from 2007 onwards and non-executive director at Interserve plc from 2014 to 2019.

Nick holds a BSc degree in Mechanical Engineering and is a Fellow of the Royal Academy of Engineering.

&RPPLWWHHPHPEHUVKLS \$15

External appointments

*1DWLRQDOLW* British

Independent chairman of South East Water
Limited (from April 2015) • Non-executive director of Scotia Gas Networks Ltd (from March 2019)

Sandra Boss Independent Non-Executive Director and Designated Non-Executive Director for workforce engagement

Tenure

Sandra was appointed a Non-Executive Director on 1 February 2017. Sandra was appointed as Designated Non-Executive Director for workforce engagement in October 2019.

Experience and role

Sandra brings strategic advisory and corporate ƮQDQFHH[SHULHQFHJDLQHGDVDFRQVXOWDQWWR complex global companies on transformational FKDQJH+HUNQRZOHGJHRIƮQDQFLDOJOREDOPDUNHWV DQGHFRQRPLFPDWWHUVDORQJVLGHULVNPDQDJHPHQW in regulated industries provides the Board with valuable insight.

Sandra was a senior partner at McKinsey & Company from 2005 to 2014 (and a partner from ZKHUHVKHVSHFLDOLVHGLQLQYHVWPHQWEDQNLQJ DQGULVNDQGKHOGVHYHUDOVHQLRUPDQDJHPHQW positions in the United Kingdom and the United 6WDWHV\$W0F.LQVH\6DQGUDDFWHGDVDQDGYLVHU WRJOREDOƮQDQFLDOLQVWLWXWLRQVFRUSRUDWHVDQG SXEOLFVHFWRUERGLHVRQDZLGHUDQJHRIVWUDWHJLF operational and policy issues. Sandra has held other non-executive and advisory appointments ZLWKWKH,QVWLWXWHRI,QWHUQDWLRQDO)LQDQFHWKH McKinsey Master Retirement Trust and the Edith Wharton Restoration.

Sandra has a BA degree in American Studies and Economics from Stanford University and an MBA from Harvard Business School.

&RPPLWWHHPHPEHUVKLS \$15

External appointments

External member of the Bank of England's Prudential Regulation Committee (from September 2014) and an independent member of its RTGS/CHAPS board which oversees WKH8.oVKLJKYDOXHSD\PHQWV\VWHPFKDLURI the RTGS/CHAPS board risk committee and member of the RTGS renewal committee
A non-executive director of Enstar Group /LPLWHGIURP1RYHPEHUFKDLUPDQ of the risk committee and a member of the compensation and nominating committees. (She will be stepping down from the Enstar Group Board on 31 March 2020)

*1DWLRQDOLW* British/American

&RPPLWWHHPHPEHUVKLS \$15

External appointments

Non-executive director of the supervisory board RI%LOƮQJHU6(IURP0D\DQGPHPEHURI the audit committee
Non-executive director of AXPO Holding AG (from March 2017)
Non-executive director of PIQUR Therapeutics AG (from May 2019)
Non-executive director of Selecta Group (from January 2020)
1RPLQDWHGDVQRQH[HFXWLYHGLUHFWRURI/RQ]D Group AG (subject to shareholder approval in April 2020)

1DWLRQDOLW\
Austrian

Dorothee Deuring Independent Non-Executive Director

Tenure Dorothee was appointed a Non-Executive

Director on 1 March 2017.

Experience and role

Dorothee provides the Board with valuable insight into the wider European chemicals and LQGXVWULDOVHFWRUVDVZHOODVVHFWRUVSHFLƮF acquisition expertise.

Dorothee manages her own corporate advisory consultancy serving a number of European clients in the pharma/biotech sector. She is active in various industry bodies. Her previous executive roles included managing director and head of Corporate Advisory Group (Europe) at UBS in =XULFK{KHDGRI0 \$FKHPLFDOVDQGKHDOWKFDUH DWD{SULYDWHLQYHVWPHQWEDQNLQ*HUPDQ\DQG DVDVHQLRUH[HFXWLYHLQWKHFRUSRUDWHƮQDQFH department at the Roche Group.

Dorothee holds a master's degree in Chemistry IURPWKH8QLYHUVLWÆ/RXLV3DVWHXU6WUDVERXUJDQG an MBA from INSEAD.

Corporate governance Financial statements

.H\WR&RPPLWWHHPHPEHUVKLS A Audit Committee

N Nomination Committee

R Remuneration Committee

* Chairman of the Committee

Steve Good Independent Non-Executive Director

Tenure

Steve was appointed a Non-Executive Director on 20 October 2014 and became Chairman of the Remuneration Committee in April 2017.

Experience and role

Steve has strong and relevant international H[SHULHQFHLQVSHFLDOW\FKHPLFDOVEXVLQHVVHV manufacturing and diverse industrial markets which enables him to provide guidance and challenge to management. Steve's involvement with remuneration committees in other organisations enables him to provide judgement and demonstrate sound knowledge of topical remuneration matters in his capacity as Remuneration Committee chair.

Steve was chief executive of Low & Bonar plc between September 2009 and September 2014. 3ULRUWRWKDWUROHKHZDVPDQDJLQJGLUHFWRURILWV WHFKQLFDOWH[WLOHVGLYLVLRQGLUHFWRURI QHZEXVLQHVVDQGPDQDJLQJGLUHFWRU of its plastics division (2004-2005). Prior to Low & %RQDUKHVSHQW\HDUVZLWK%73{SOFQRZSDUW of Clariant) in a variety of leadership positions managing international specialty chemicals businesses. Steve has previously served as nonexecutive director and chairman of the remuneration committee of Cape plc (2015-2017) and nonexecutive director of Anglian Water Services and PHPEHURIWKHDXGLWQRPLQDWLRQDQGUHPXQHUDWLRQ committees (2015-2018).

&RPPLWWHHPHPEHUVKLS 5

External appointments

Non-executive chairman of Zotefoams plc (non-executive director from October 2014 and chairman from April 2016) and chairman of the nomination committee and member of the remuneration committee
Non-executive chairman of Devro plc (from June 2019)
Non-executive director of Dialight plc (from June 2018) and member of the nominations committee and remuneration committee (He will be stepping down from the Dialight plc Board on 31 March 2020)
Director of Low & Bonar Pension Trustee Ltd (from July 2018)

1DWLRQDOLW British

\$QQH+\ODQG Independent Non-Executive Director

Tenure

Anne was appointed a Non-Executive Director on 1 June 2013 and became Chairman of the Audit Committee in August 2013.

Experience and role

\$QQHEULQJVVLJQLƮFDQWDQGFXUUHQWƮQDQFLDOLQWHUQDO FRQWUROVDXGLWDQGWD[H[SHUWLVHWRWKH%RDUGZKLFK HQDEOHVKHUWREHHƬHFWLYHLQKHUUROHDV\$XGLW Committee chair. Anne's background with global FRPSDQLHVHQDEOHVKHUWRHƬHFWLYHO\FRQWULEXWHLQ the context of Elementis' existing markets and new business opportunities.

\$QQHLVFXUUHQWO\&)2RI.\PDE*URXS/WGDELR pharmaceutical company funded by the Wellcome Trust and the Bill & Melinda Gates Foundation. 3ULRUWRKHUFXUUHQWH[HFXWLYHUROHVKHZDV&)2DQG company secretary of both BBI Diagnostics Group /WGDQG9HFWXUD*URXSSOF3UHYLRXVVHQLRUƮQDQFH SRVLWLRQVKHOGLQFOXGHGLUHFWRURIFRUSRUDWHƮQDQFH DWWKHWKHQ)76(&HOOWHFK*URXSSOF0HGHYD plc and KPMG.

Anne holds a degree in Business Studies from 7ULQLW\&ROOHJH'XEOLQDQGLVDFKDUWHUHGDFFRXQWDQW (FCA) and a corporate tax adviser (CTA-AITI).

John O'Higgins Independent Non-Executive Director

Tenure

John was appointed a Non-Executive Director on 4 February 2020 and will become Senior Independent Director following the conclusion of the 2020 AGM.

Experience and role

John brings strong strategic and operational experience gained from his CEO role at Spectris SOF-DQXDU\WR6HSWHPEHUOHDGLQJ WKHEXVLQHVVWKURXJKDSHULRGRIVLJQLƮFDQW strategic transformation and development. John's EDFNJURXQGLQJOREDOPDUNHWVFKHPLFDOVDQG manufacturing will enable him to provide valuable knowledge and guidance to the Board.

3ULRUWR6SHFWULVSOF-RKQVSHQW\HDUVDW Honeywell International in a number of senior management roles including Chairman of Honeywell Automation India and President of Automation &RQWUROIRU\$VLD3DFLƮF+LVHDUO\FDUHHUZDV VSHQWDW'DLPOHU%HQ]\$*DVDUHVHDUFK{DQG development engineer.

Previous non-executive director roles include ([LGH7HFKQRORJLHVD86EDVHGVXSSOLHURIEDWWHU\ technology to automotive and industrial users IURP{WR

John holds a master's degree in Mechanical Engineering from Purdue University (USA) and DQ{0%\$IURP,16(\$'

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External appointments

Non-executive director of Clinigen Group plc from January 2018) and chairman of the audit committee
CFO of Kymab Group Ltd (from March 2015)

&RPPLWWHHPHPEHUVKLS \$15

External appointments

Trustee of the Wincott Foundation
Member of the Corporate Advisory Board of Great Ormond Street Hospital Children's Charity
Non-executive director of Oxford Nanopore Technologies
Non-executive director of Johnson Matthey SOFDQGDPHPEHURIWKHDXGLWQRPLQDWLRQDQG remuneration committees

*1DWLRQDOLW* Irish

*1DWLRQDOLW*

Executive Leadership team

1. Paul Waterman CEO

2. Ralph Hewins CFO

Full biography can be found on page 55.

Full biography can be found

on page 55.

3. Luc Van Ravenstein SVP Global Coatings

and Energy

Tenure Joined Elementis in 2012

Based 1HZ-HUVH\86

Experience and role Luc is responsible for leading the Global Coatings and Energy businesses. As the transformation programme in Global Coatings was FRPSOHWHGLQ/XFoVIRFXVLQ 2020 will be to drive the execution of

our growth strategies as laid out in our recent capital markets day. Luc started his career at Elementis leading the Personal Care and Surfactants businesses following leadership positions at specialty

chemicals company Croda.

Luc has an MSc degree in Chemistry and Chemical Engineering and a Professional Doctorate in Engineering from Eindhoven University of Technology.

4. Marci Brand SVP Global Personal Care

Tenure Joined Elementis in 2018

Based 1HZ-HUVH\86

Experience and role

Marci is responsible for the Personal Care business which includes the &RVPHWLFV\$3\$FWLYHVDQG3KDUPD businesses. As SVP Global Personal &DUH0DUFLoVIRFXVLVRQGLUHFWLQJWKH Personal Care sales and marketing teams and driving synergies in the business following the acquisitions of SummitReheis (2017) and 0RQGR{

This role follows her 35 years' experience at BP in marketing and sales leadership roles developing strategic business opportunities LQERWKEXVLQHVVEEDQG b2c environments.

Marci holds a BSc degree in Marketing from Seton Hall University and is a graduate of the Sales and Marketing Executive Programme from the Kellogg School of Business at Northwestern University.

5. Christian Kather SVP Global Talc

Tenure Joined Elementis in 2018

Based

\$PVWHUGDP1HWKHUODQGV

Experience and role

Christian has led the Talc business VLQFHKDYLQJMRLQHG0RQGR in 2010. Following the acquisition of Mondo he is currently focusing on growing the Talc business on a global basis and delivering the integration synergies.

Previously Christian worked as Senior Vice President & General 0DQDJHUDW(YRQLN'HJXVVD&RUSLQ 3DUVLSSDQ\1-7KHUHKHZDVKHDGLQJ the Business Unit Coatings and Additives and was responsible for the global pigment dispersion business. Before that he held a number of senior executive positions with the 'HJXVVD*URXSERWKLQ(XURSHDQG the USA.

He has a business education from Harvard Business School and Insead and a PhD in International Law from WKH8QLYHUVLW\RI0XQVWHU*HUPDQ\

6. Eric Waldmann SVP Global Chromium

Tenure Joined Elementis in 2007

Based

1HZ-HUVH\86

Experience and role Eric is responsible for the leadership of our global Chromium operation which includes the commercial team and strategic sourcing.

Eric has held a number of roles in our &KURPLXPEXVLQHVVPRVWUHFHQWO\ as VP Finance and Sourcing. Prior to MRLQLQJ(OHPHQWLV(ULFoVH[SHULHQFH ZDVIRFXVHGLQWKHDUHDVRIƮQDQFH DFFRXQWLQJPHUJHUVDQGDFTXLVLWLRQV and sourcing.

Eric holds a bachelor's degree in business administration from Bucknell 8QLYHUVLW\DQGDQ0%\$IURP9LOODQRYD University. Eric is a member of the International Chromium Development \$VVRFLDWLRQ,&'\$&RXQFLOZKLFK overseas and sets the strategy for promoting the value and sustainability of chromium and represents the chromium industry worldwide.

7. Steve Ridge

SVP Global Supply Chain & Manufacturing

Tenure Joined Elementis in 2019

Based

1HZ-HUVH\86

Experience and role

Steve brings to Elementis his solid experience in overseeing a global manufacturing and supply chain footprint. With a proven track record of leading international teams and a passion for safety and FRQWLQXRXVLPSURYHPHQW6WHYH drives a strong safety culture and operational excellence across all of Elementis' facilities around the world. 6WHYHLVUHVSRQVLEOHIRUVXSSO\FKDLQ PDQXIDFWXULQJFDSLWDOSURMHFWV SURFXUHPHQWTXDOLW\DQGKHDOWK and safety.

Steve joined Elementis from FMC where he was the global PDQXIDFWXULQJGLUHFWRU3ULRUWR)0& Steve was the global EHS and Operational Excellence Director at Celanese.

Steve earned a master's degree in Chemical Engineering from Texas A&M University and a batchelors degree in Chemistry and Mathematics from Florida Southern College.

8. Joe Lupia

SVP Global Technology

Tenure

Joined Elementis in 2019

Based

1HZ-HUVH\86

Experience and role

Joe joined in 2019 to run Global R&D and Product Stewardship. His former commercial experiences enable him to ensure our innovation pipeline is capable of delivering both WHFKQLFDODQGƮQDQFLDOVXFFHVV Joe is responsible for collaborating with the business leaders to develop new technologies that enhance our customers' product performance as it pertains to the TXDOLW\VXVWDLQDELOLW\DQGHƱFLHQF\ needs of our partners. He is also responsible for product stewardship and sustainability matters.

Joe has 30 years' experience in the chemicals industry and joined us from %\$6)ZKHUHKHKDGPDQ\GLƬHUHQW technical and commercial roles over his 24 year tenure.

Joe has a Ph.D. in Organic Chemistry from Seton Hall University.

9. Ajeeth Enjeti

6936WUDWHJ\ and Transformation

Tenure Joined Elementis in 2018

Based

\$PVWHUGDP1HWKHUODQGV

Experience and role

Ajeeth joined Elementis as part of the Mondo Minerals acquisition and leads the Strategy and Transformation DJHQGDIRUWKH&RPSDQ\3UHYLRXVO\ Ajeeth was COO and a board member of Mondo Minerals (now Elementis 7DOFZKHUHKHZDVSDUWRIWKH leadership team that led the Mondo Minerals transformation into a higher value company.

3ULRUWR0RQGR\$MHHWKZDVDVWUDWHJ\ FRQVXOWDQWZLWK%DLQ &RPSDQ\ overseeing major strategic projects for Fortune 500 corporations. (DUOLHULQKLVFDUHHU\$MHHWKDOVRKHOG various senior commercial roles at multinationals such as PepsiCo and IBM in Asia and the Middle East.

Ajeeth earned his MBA from IMD 6ZLW]HUODQGDQGKROGVDPDVWHUoV degree in Marketing and a bachelor's degree in Electrical Engineering.

10. Chris Shepherd Chief Human 5HVRXUFHV2ƱFHU

Tenure Joined Elementis in 2017

Based /RQGRQ8.

Experience and role

Chris leads the Group Human Resources and Communications function and is responsible for WDOHQWVXFFHVVLRQ+5RSHUDWLRQV reward programmes and internal communications. Chris' focus is on embedding the Company's culture and values throughout the RUJDQLVDWLRQGHYHORSLQJLQWHUQDO talent and standardising our global people processes.

Chris has over 20 years' experience of global human resources gained in a mix of privately held US and UK OLVWHGSOFVZLWKWKHƮUVW\HDUV of his career in manufacturing and supply chain.

Chris holds an MEng in Mechanical Engineering from the University of Liverpool.

11. Walker Allen

General Counsel and Chief &RPSOLDQFH2ƱFHU

Tenure Joined Elementis in 1999

Based

1HZ-HUVH\86

Experience and role

Walker leads the Group's Legal function with global responsibility for all legal matters within the *URXSLQFOXGLQJOLWLJDWLRQ0 \$DQG intellectual property matters. As Chief &RPSOLDQFH2ƱFHU:DONHUoVUHPLW includes oversight of the Group's compliance programme including the development of our Group compliance policies and procedures.

Walker has 25 years' experience as an in house lawyer within global businesses having started his career in private practice in two New York &LW\ODZƮUPV

Walker is a member of the New York Bar and is admitted as in-house counsel in New Jersey.

12. Laura Higgins

Group Company Secretary

Tenure Joined Elementis in 2018

Based /RQGRQ8.

Experience and role

Laura is the Group's Company Secretary and is responsible for providing Board support and advice RQFRUSRUDWHJRYHUQDQFH8. listing obligations and corporate transactions. Laura is also responsible for overall Group risk management processes and the global insurance programme and is a pension trustee.

Laura has held various senior company secretarial positions at public quoted companies including 6N\%ULWYLF%HWIDLUDQG5LR7LQWR

Laura holds a postgraduate diploma in Legal Practice and a BA (Honours) in Law and Legal Studies with History. She is also a Fellow of the Chartered Governance Institute.

Corporate governance

Board leadership

Board meeting attendance during 2019

The attendance of the Directors for eight scheduled Board meetings for the year ended 31 December 2019:

\$QGUHZ'XƬ	100%
Paul Waterman	100%
Ralph Hewins	100%
Sandra Boss	100%
Dorothee Deuring	100%
Steve Good	100%
Anne Hyland	100%
Nick Salmon	100%

Associated documents

The matters reserved for the Board and terms of reference for the Committees can be found on the corporate website: www.elementis.com

%RDUGUROHVDQGUHVSRQVLELOLWLHVRIWKH'LUHFWRUV

The Board has agreed a clear division of responsibilities between the Chairman and the Chief Executive as well as those of the other Directors.

Role	Responsibility
Chairman	• /HDGHUVKLSRIWKH%RDUGVHWWLQJWKHDJHQGDVLQFRQVXOWDWLRQZLWKWKH&(2&)2DQG*URXS Company Secretary • 3URPRWLQJRSHQKRQHVWDQGFRQVWUXFWLYHGHEDWHDQGFKDOOHQJHGXULQJPHHWLQJVDQGJXLGHVWKH&(2 and CFO in delivery of the Company's strategy • Ensuring the Board conforms with the highest standards of corporate governance • Chairs the Nomination Committee and ensures the Board has an appropriate balance of skill and H[SHULHQFHDQGHƬHFWLYHVXFFHVVLRQSODQQLQJLQSODFHDQGOHDGVWKHDQQXDO%RDUGHƬHFWLYHQHVVUHYLHZ • (ƬHFWLYHHQJDJHPHQWDQGFRPPXQLFDWLRQZLWKVKDUHKROGHUVDQGRWKHUVWDNHKROGHUVDQGHQVXULQJWKDW their views are understood by the Board
CEO	• Day-to-day management of the business • Execution of strategy and operational performance • 3URYLGLQJUHJXODUXSGDWHVWRWKH%RDUGRQDOOVLJQLƮFDQWPDWWHUVUHODWLQJWRWKH*URXS • (QVXULQJWKH&RPSDQ\KDVDVWURQJWHDPRIKLJKFDOLEUHH[HFXWLYHVDQGSXWWLQJLQSODFHPDQDJHPHQW succession and development plans
CFO	• 6XSSRUWLQJWKH&(2LQWKHGHOLYHU\RIWKH&RPSDQ\oVVWUDWHJ\DQGƮQDQFLDOSHUIRUPDQFH • /HDGLQJWKH*URXS)LQDQFHIXQFWLRQDQGUHVSRQVLEOHIRUƮQDQFLDOUHSRUWLQJLQYHVWRUUHODWLRQV,7ULVNDQG insurance and tax matters
Senior Independent Director	• \$FWLQJDVDVRXQGLQJERDUGWRWKH&KDLUPDQSURYLGLQJVXSSRUWDQGDGYLFHZKHUHQHFHVVDU\ • Point of contact for shareholders and other stakeholders to discuss matters of concern • Leading the Board on the performance evaluation of the Chairman
Independent Non Executive Directors	• Providing independent oversight objectivity to the Board's deliberations • Using their broad range of experience and expertise to challenge management and aid decision making • 3OD\LQJDOHDGLQJUROHLQWKHHƬHFWLYHQHVVRIWKH%RDUG&RPPLWWHHV
*URXS&RPSDQ\ 6HFUHWDU\	• 6XSSRUWLQJWKH&KDLUPDQLQHQVXULQJWKH%RDUGRSHUDWHVHƱFLHQWO\DQGHƬHFWLYHO\ • Providing the Board with advice on governance developments • Facilitating the Directors' induction programmes and assisting with ongoing training and development • \$VVLVWLQJWKH&KDLUPDQZLWKWKH%RDUGHƬHFWLYHQHVVUHYLHZSURFHVV
Designated Non Executive Director for workforce engagement	• Representing the Board when engaging and communicating with employees and providing communication on any outcomes

Independence of the Non-Executive Directors

Each of the Non-Executive Directors is considered independent in character and judgement. The Chairman was considered LQGHSHQGHQWRQDSSRLQWPHQWDQGWKH%RDUGFRQƮUPVWKDW KHUHPDLQVHƬHFWLYH7KHLQGHSHQGHQFHRI1RQ([HFXWLYH Directors is reviewed annually by the Nomination Committee.

Further information can be found in the Nomination Committee report on pages 72 to 74.

The biographies of the Directors can be found on pages 55 to 57 and details of the membership of each Board Committee FDQEHIRXQGRQSDJHVDQGUHVSHFWLYHO\

&RQưLFWVRILQWHUHVW

7KH%RDUGRSHUDWHVDSROLF\WRLGHQWLI\DQGZKHQDSSURSULDWH PDQDJHDFWXDORUSRWHQWLDOFRQưLFWVRILQWHUHVWWKDWPD\DULVH

Directors are required to seek Board approval for any actual RUSRWHQWLDOFRQưLFWVRILQWHUHVW&RQưLFWVRILQWHUHVWDUH FRQVLGHUHGIRUPDOO\E\WKH%RDUGDWHDFKPHHWLQJDQGDUH NHSW{XQGHUUHYLHZWKURXJKRXWWKH\HDU

5DOSK+HZLQVLVLQUHFHLSWRIDFRQưLFWDXWKRULVDWLRQIURPWKH Company in respect of him acting as a trustee of the Elementis Group Pension Scheme. Further details can be found in the Directors' report on page 96.

Board leadership continued

Directors' insurance and indemnities

The Company maintains Directors' and 2ƱFHUVoOLDELOLW\LQVXUDQFHLQWKHHYHQWRI legal action brought against its Directors.

The Company has also granted indemnities to each of the Directors. These indemnities DUHXQFDSSHGLQDPRXQWLQUHODWLRQWR certain losses and liabilities which they may incur to third parties in the course of acting as a Director of the Company. Neither the indemnity or insurance provides coverage in the event that a Director is proved to have acted fraudulently or dishonestly.

Board training and independent advice

All Directors have access to the advice and services of the Group Company Secretary and may take independent professional DGYLFHDVDSSURSULDWHDWWKHH[SHQVHRI the Company.

Directors are given the opportunity throughout the year to undertake training DQGDWWHQGVHPLQDUVDVQHFHVVDU\WR keep their skills and knowledge up to date. ,QDGGLWLRQWHFKQLFDOEULHƮQJVDUHUHJXODUO\ included in Board and Committee papers.

The Group Company Secretary supports the Chairman in ensuring that the Board and its Committees operate within the governance framework and that communication and LQIRUPDWLRQưRZVZLWKLQWKH%RDUGDQGLWV Committees and between management and 1RQ([HFXWLYH'LUHFWRUVUHPDLQHƬHFWLYH

,QIRUPDWLRQưRZV

The Chairman and the Group Company Secretary ensure that the Directors receive clear and timely information on all relevant matters. Board papers are circulated in a timely manner in advance of the meetings to ensure that there is adequate time for them to be read and to facilitate robust and informed discussion. A fully encrypted electronic Board portal is used to distribute Board and Committee papers and to provide HƱFLHQWGLVWULEXWLRQRIEXVLQHVVXSGDWHV and other resources to the Board.

Board induction

7KH&KDLUPDQZLWKWKHVXSSRUWRIWKH *URXS&RPSDQ\6HFUHWDU\LVUHVSRQVLEOH for preparing and coordinating an appropriate induction programme IRU{QHZO{DSSRLQWHG'LUHFWRUV

The programme may include elements RI{WKHIROORZLQJ

Induction programme

Induction – General Topics

The role of a Director
Board and Committees
Board meetings
5XOHVUHJXODWLRQVDQGJXLGDQFH
Board procedures
Current issues

Induction – Board Committees (as appropriate)

Role and remit of the Committee • Link between the Committee's policy and the Company's strategic objectives
The annual meeting schedule for the Committee
The main business conducted by the Committee

• 1DWXUHRIWKH&RPSDQ\LWVEXVLQHVV

• The Company's main relationships

• The legal requirements relevant to WKH{&RPPLWWHHoVRSHUDWLRQV

Market practice and current trends relevant to the Committee
Current issues

and its markets

Views of investors on matters considered by the Committee and potential areas of focus
Any technical training on key matters

Induction – External Advisers Meetings with:

External auditors
Internal audit function
Remuneration consultants

• 693*OREDO6XSSO\&KDLQ

Manufacturing • General Counsel & Chief &RPSOLDQFH2ƱFHU • Group Company Secretary

Brokers
Lawyers

Induction – Senior Management meetings Meetings with:

CEO
CFO
SVP Global Coatings & Energy
SVP Global Personal Care
SVP Global Chromium
SVP Global Talc
6936WUDWHJ\DQG7UDQVIRUPDWLRQ
&KLHI+52ƱFHU
SVP Technology

Induction – Site visits

• 6FL3DUN1HZ-HUVH\86\$PVWHUGDP1HWKHUODQGV7DOF&DVWOH+D\QH1RUWK &DUROLQD86&KURPLXPDQGRWKHUVDVDJUHHGGXULQJWKHFRXUVHRIWKH\HDU

Shareholder information

Engaging our workforce

Sandra Boss

Non-Executive 'LUHFWRU{DQG Designated Non-Executive Director (DNED) for workforce engagement

Purpose of the role

In line with the requirements of the UK Corporate Governance Code 2018 &RGHWKHUROHRI'HVLJQDWHG1RQ Executive Director (DNED) exists to ensure that the views and concerns of the workforce are brought to the Board and taken into account and are consistent with the Company's values and support its long term sustainable success.

'XULQJWKH\HDU6DQGUD%RVVZDV appointed as the DNED and is expected to:

Understand the concerns of the workforce
Articulate those views and concerns in Board meetings
Ensure the Board takes appropriate steps to evaluate the impact of proposals and developments on the workforce and consider what steps should be taken to mitigate any adverse impact
Feedback to the workforce on steps taken to address concerns or explain why particular steps have not been taken

5HVSRQVLELOLWLHV

To review and monitor insight driven by the engagement survey or other qualitative data (quarterly updates) with WKHVXSSRUWRIWKH&+52*URXS&RPSDQ\ 6HFUHWDU\DQG693*OREDO6XSSO\&KDLQ and Manufacturing (together the DNED Sub Committee)
To actively participate in a programme of workforce engagement which may include a variety of engagement mechanisms/ channels such as focus groups and townhalls
\$VDVWDQGLQJDJHQGDLWHPDWWKH%RDUG the DNED is expected to report on the programme of engagement activity and workforce concerns
The DNED is expected to feedback any concerns regarding remuneration directly to the Remuneration Committee
6XSSRUWHGE\WKH'1('6XE&RPPLWWHH the DNED is expected to prepare appropriate responses to address workforce concerns
6XSSRUWHGE\WKH'1('6XE&RPPLWWHH the DNED is expected to explain how the Code provisions relating to workforce engagement have been met

Activities carried out in 2019

Communicated the appointment of Sandra Boss (DNED) to the wider workforce
Developed workforce engagement plan IRU{
Launch of engagement survey
China focus group following Board site visit to China. The purpose of this activity was to understand sentiment based on local PDQDJHPHQWFKDQJHVRUJDQLVDWLRQDO review and other Values based questions

Activities planned for 2020

Focus groups facilitated across selected sites
Physical attendance by DNED as part of the Board's site visit programme to Castle Hayne and New Jersey
Review of engagement survey data at regular intervals
Workforce engagement reports at Board meetings
DNED communications to workforce in response to insight gained from focus groups and site visits

Further information on workforce HQJDJHPHQWFDQEHIRXQGRQSDJHV 67 and 69.

&RPSDQ\SXUSRVHDQGFXOWXUH

How the Board monitors culture

KPIs

\$QXPEHURIQRQƮQDQFLDO.3,VDUH regularly monitored by the Board which underscore the Company's commitment to minimise the impact of the company's operations on the environment and ensure that safety remains a top priority.

6WUDWHJ

The Board receive strategic updates from each of the business leaders throughout the year which enables a deeper understanding of the Company's strategic ambitions. These updates provide valuable context for the 3 year plan and annual operation plan discussions

(WKLFVZKLVWOHEORZLQJIUDXG DQG{DQWLEULEHU

Our Code of Conduct sets the standard for how we expect our employees to behave. The Audit Committee and the Board receive bi-annual compliance DQGHWKLFVXSGDWHVLQFOXGLQJ whistleblowing reports.

'HƮQLQJSXUSRVH

With the support of the Group Company 6HFUHWDU\WKH%RDUGGLVFXVVHGDQGDJUHHG the Company's purpose.

Our purpose is to achieve sustainable progress across the world through innovative specialty chemical products WKDW{GHOLYHUFOHDQHUDQGEHWWHUSHUIRUPDQFH

We are collaborative industrial innovators; developing long-term partnerships with RXUFXVWRPHUVLQQRYDWLQJDWSDFHWRNHHS them at the forefront of their markets. Combining our access to unique natural resources with our unmatched rheology DQGWHFKQRORJLFDOH[SHUWLVHZHUHVSRQVLEO\ transform raw materials into advantaged ingredients that provide crucial end product EHQHƮWV7KLVHQDEOHVRXUFXVWRPHUV to solve their product performance and sustainability challenges.

Risk management

The Company places the highest SULRULW\RQSUHYHQWLQJORVVRIOLIH other harm to people and the HQYLURQPHQWOHJDODQGUHJXODWRU\ breaches and damage to reputation or brand. The Board receives ULVNPDQDJHPHQWLQVXUDQFHDQG LQWHUQDO{DXGLWUHSRUWV

Stakeholder engagement

'XULQJWKH%RDUGKDVGLUHFWO\ engaged with investors (retail and institutional) and employees. The Board have received updates RQFXVWRPHUVVXSSOLHUVDQG environmental matters.

0DLQWDLQLQJDKHDOWK\FXOWXUH

To ensure that the Company is creating the ULJKWHQYLURQPHQWIRUORQJHUWHUPVXFFHVV a variety of mechanisms are available to PHDVXUHFRPSDQ\FXOWXUHIRUH[DPSOH

Whistleblower reports
HSE updates
Internal and external audit reports
Compliance reports
Engagement survey insight and other HR metrics
Townhall meetings and site visits
Business and functional deep dives

There are also other mechanisms for measuring culture which can be directly OLQNHGWRWKH&RPSDQ\oVYDOXHVVXFKDV

Safety Near misses or process safety incidents
Solutions Number of products RU{FXVWRPHULQQRYDWLRQSURMHFWV
Ambition New business opportunities and market participation
Respect Compliance training and speaking up channels
7HDPs(PSOR\HHHQJDJHPHQWVXUYH\ talent and succession plans

The Board considered how to align the FRPSDQ\oVFXOWXUHZLWKSXUSRVHYDOXHV and strategy.

The process included:

Research of UK specialty chemicals marketplace including competitive advantage
Selected stakeholder interviews to identify and develop company purpose themes
Discussion of a draft overarching purpose statement with a supporting narrative
Company values were established during 2018 following a refresh and engagement with employee focus groups
Strategy is discussed regularly and LQFOXGHVWKH\HDUSODQDQQXDORSHUDWLQJ plan and is formally agreed as part of the Board's annual programme
7KH&RPSDQ\oVYDOXHVRI6DIHW\6ROXWLRQV \$PELWLRQ5HVSHFWDQG7HDPXQGHUSLQWKH behaviours expected to cultivate an open and inclusive culture

Corporate governance

Financial statements

Shareholder information

Board activities

Board activities continued

7KH%RDUGoVIRFXVLQZDVDVIROORZV Innovation, Growth and (ƱFLHQF\VWUDWHJ\ Operational performance Shareholders, stakeholders and governance Finance matters • Talc integration update • Transformation updates for Supply Chain and Coatings • India supply chain investment • Innovation pipeline • Capital Markets Day strategy • 6WUDWHJLFUHYLHZVRI&RDWLQJV 3HUVRQDO&DUH(QHUJ\ Chromium and Talc • China route to market SDUWQHUVKLSDQG\$VLDVSHFLƮF deep dive • Three year plan • Divestment of dental plant • Regular CEO reports (Product 6WHZDUGVKLS,QQRYDWLRQ %XVLQHVV'HYHORSPHQW 3HRSOH&RPPXQLFDWLRQ Safety and Supply Chain priorities) • +HDOWK6DIHW\DQG Environment reports • Group insurance and risk management activities programme • Group risk review including Brexit plans • GDPR and data privacy update • Digital and cyber update • ,QYHVWRUUHODWLRQVUHSRUWV roadshows and other investor meetings and feedback • Corporate broker review • %RDUGHƬHFWLYHQHVVHYDOXDWLRQ • People strategy including WDOHQWPDQDJHPHQW VXFFHVVLRQSODQQLQJYDOXHV and culture • Updates on the revised UK Corporate Governance Code including purpose and culture • Modern Slavery Statement • Litigation and compliance reports • Directors' duties training and UK Corporate Governance Code updates • Updates from Board Committee chairs • Board diversity policy • (PSOR\HHHQJDJHPHQW townhalls and site visits • Designated Non-Executive Director workforce engagement appointment and engagement updates • +HDOWKVDIHW\DQG environment update • Committee terms of reference • Financial performance reports and forecasts • 'LYLGHQGSROLF\GLVWULEXWDEOH reserves and recommendation of payment • Treasury and hedging reports • Financial statements for full and half year and Q1 and Q3 trading statements • Full and half year results presentations • 7D[UHSRUWVWD[VWUDWHJ\DQG updates on EC state aid • Annual operating plan • Review of subsidiary ƮQDQFLQJVWUXFWXUH • Working capital update

India and Shanghai

• &KDLUPDQoVVLWHYLVLWVWR86

The Non-Executive Directors are encouraged to visit Group manufacturing sites to enable them to gain a greater understanding of the Group's activities and to meet people across the business.

June 2019 – Finland and Netherlands

)ROORZLQJWKHDFTXLVLWLRQRIWKH7DOFEXVLQHVVLQ2FWREHU the Board agreed to visit Talc assets in Finland and Netherlands. 5HFRJQLVLQJWKHưRZRIRSHUDWLRQVIURPPLQHWRFXVWRPHUWKH Board was keen to gain and deepen its understanding and to meet 7DOFHPSOR\HHVIRUWKHƮUVWWLPH

,WZDVGHFLGHGWRYLVLWWKH6RWNDPRVLWH)LQODQGƮUVWIROORZHGE\ \$PVWHUGDPWKHIROORZLQJGD\WRPDNHWKHPRVWHƬHFWLYHXVHRI the Board's availability. The Board was unable to visit operations in )LQODQGEHIRUH-XQHDVDUHVXOWRIW\SLFDOIUHH]LQJWHPSHUDWXUHVIRU a large part of the year.

\$WWKH6RWNDPRVLWHWKH7DOFPDQDJHPHQWWHDPSURYLGHGWKH Board with a presentation followed by a visit to the mine and processing facilities. A townhall meeting with employees followed and was held facilitated via a web-link with the Vuonos site with local translation provided. The townhall provided an opportunity IRUWKH%RDUGWR{UHLWHUDWHWKHVWUDWHJLFLPSRUWDQFHRIWKH7DOF business and for employees to engage directly with the Board.

The following day the Board travelled to Amsterdam to visit the processing and warehouse facilities and continue Board discussions which concluded their visit of the Talc operations.

2FWREHUs&KLQD

\$VSDUWRIWKH%RDUGoVPRQWKSODQQHUWKH%RDUGH[SUHVVHG VLJQLƮFDQWLQWHUHVWLQUHWXUQLQJWR6KDQJKDLKDYLQJODVWYLVLWHGLQ 2016. New local management had recently been hired and the Board was keen to meet with the new team and understand the impact of the transition on workplace culture and similarly to deepen their knowledge of local and global economic factors.

The Board was provided with a presentation from the Asia management team and subsequently participated in a tour of WKH6KDQJKDLVLWHZKLFKLQFOXGHGSURFHVVLQJZDUHKRXVLQJDQG technical laboratories. A townhall meeting with employees was facilitated by the management team and was held via a web-link with other sites in Anji (China) and Hsinchu (Taiwan).

&DSLWDO0DUNHWV'D\ 1RYHPEHU

The Company held a Capital Markets Day in November 2019 with over 100 analysts and investors physically attending the event. Other stakeholders were able to participate via a weblink.

)ROORZLQJDSUHVHQWDWLRQRQWKHPHGLXPWHUPVWUDWHJLFSULRULWLHV attendees were invited to participate in three breakout sessions with demonstrations on how Elementis products were meeting LQQRYDWLRQDQGFRQVXPHUWUHQGVIURPWKH3HUVRQDO&DUH&RDWLQJV and Talc businesses. The presentation is available in the Investors section of the corporate website at www.elementis.com.

Engaging with our stakeholders

Section 172 Companies Act 2006	Customers	Investors

The Board acknowledges that there is a legal requirement for the Company to report on how the Board and its Committees have considered the requirements of section 172 of the Companies Act 2006 in their decision making.	How do we listen to our customers? Our customers demand high quality and consistent products which are able to demonstrate superior SHUIRUPDQFHHƱFLHQF\DQG sustainability features. They rely on us to deliver innovation and technical expertise in line with consumer and industrial trends.	How do we listen to our investors? Our investors want to ensure that we continue to grow and deliver VXVWDLQDEOHƮQDQFLDOUHWXUQV Regular investor dialogue throughout the year illustrates themes such as SURƮWDELOLW\GHEWDELOLW\WRFRQWLQXH WRSD\GLYLGHQGV(6*PDWWHUVDQG continued strategic progress.
Section 172 requires directors to DFWLQWKHZD\WKH\FRQVLGHULQJRRG IDLWKZRXOGPRVWOLNHO\SURPRWHWKH success of the company for the EHQHƮWRILWVPHPEHUVDVDZKROH taking into account the factors as outlined in section 172 of the Companies Act 2006.	What matters the most to them? We seek opportunities to collaborate and build long term relationships with our customers to ensure we are able to keep them at the forefront of their industries.	What matters the most to them? To build trust and transparency with existing and prospective investors and SURYLGHVXVWDLQDEOHƮQDQFLDOUHWXUQV
Further information on how the Board considers stakeholder views in its decision making processes can be found on page 36.	How do we respond? We use innovation as a platform for FXVWRPHUHQJDJHPHQWWKURXJK WUDGHVKRZVFRQIHUHQFHVRQJRLQJ customer relationship meetings and WHFKQLFDOnWHDFKLQVoWRGHPRQVWUDWH RXUH[SHUWLVHFDSDELOLW\DQG new products.	How do we respond? We engage with investors through a variety of channels which include meetings and roadshows with institutional investors on a range RI(6*RSHUDWLRQDOƮQDQFLDODQG strategic matters. The Company engages with investors via the Director of Investor Relations or the Group Company Secretary who are available to deal with shareholder queries.

The Board acknowledges that not all VHFWLRQIDFWRUVPD\EHUHOHYDQW KRZHYHULWLVLPSRUWDQWWRIXOO\ consider in its deliberations.	How the Board engages The Board receives annual strategic updates from each of our business segment leaders which include a GHHSHUXQGHUVWDQGLQJRIWKHnYRLFH RI{WKHFXVWRPHUoLQWKHERDUGURRP which includes information on the FRPSHWLWLYHODQGVFDSHWUHQGVDQG customer insight.	How the Board engages The Board receive investor feedback at each of its meetings. The Board also receive investor views from the Company's corporate brokers. \$OOVKDUHKROGHUVLUUHVSHFWLYHRIVL]H of holding) are able to engage with the Board at its annual shareholder PHHWLQJ,QDGGLWLRQWKH&KDLUPDQ meets with institutional investors throughout the course of the year.

(PSOR\HHV	Suppliers	Communities
+RZGRZHOLVWHQWRRXUHPSOR\HHV" We recognise our people are our greatest asset for our success. 'XULQJZHLQWURGXFHGRXU employee engagement survey ZKLFK{ZLOOEHFRPHDQDUHDRIIRFXV IRU{PDQDJHPHQWRQDQRQJRLQJEDVLV	How do we listen to our suppliers? We strive for the highest ethical standards and hold our suppliers DQG{SDUWQHUVWRWKHVDPHVWDQGDUGV	How do we consider our communities? We are committed to minimising the impact of our business operations on the environment. Respect and care for our environment and our communities are core values at Elementis.
What matters the most to them? Employees want to contribute and share in the company's success. Relevant matters include employee SD\DQGEHQHƮWVLQYHVWPHQWLQ WUDLQLQJWDOHQWDQGVXFFHVVLRQ SODQQLQJZRUNLQJFRQGLWLRQVKHDOWK DQGVDIHW\GLYHUVLW\DQGLQFOXVLRQ and sustainability.	What matters the most to them? Our supplier community recognise the value of maintaining long term relationships and that business dealings and practices are fair.	What matters the most? Our behaviours impact the people ZKRZRUNIRUXVDVZHOODVWKHZLGHU environment. Our communities have vested interests in the sustainability RIRXUSURGXFWVDQGRSHUDWLRQV reputation and ethical behaviour.
How do we respond? We engage with employees WKURXJK{DYDULHW\RIFKDQQHOVZKLFK include CEO and business segment FRPPXQLFDWLRQVOLQHPDQDJHU GLDORJXHZKLVWOHEORZLQJVHUYLFHV DQG{UHZDUGPDWWHUV	How do we respond? We engage with our suppliers through RQJRLQJUHODWLRQVKLSPDQDJHPHQW FRPPHUFLDOWHUPVDQGFRQGLWLRQV contract negotiation. We circulate a survey to our top 80% E\YDOXHRIVXSSOLHUVDWWHQGVXSSOLHU conferences and have a Purchasing Code of Practice in place to drive engagement with our suppliers.	How do we respond? :HFRQWULEXWHWRORFDOHFRQRPLHV encourage open dialogue and participate in community related matters such as biodiversity and RWKHU{HQYLURQPHQWDOLQLWLDWLYHV

How the Board engages The Board directly interacts with employees during its ongoing schedule of site visits and townhall meetings. The Board receives a regular updates from the CEO which includes people and organisation related matters. The CHRO annually presents the people strategy which includes talent and succession planning. The DNED for workforce engagement will further drive the Board's understanding of employee matters including culture throughout the organisation.	How the Board engages The Board receive regular updates IURPWKH693*OREDO6XSSO\&KDLQ DQG{0DQXIDFWXULQJDQGIURPHDFK RI{WKHEXVLQHVVOHDGHUV\$VSDUWRI LWV{0DWWHUV5HVHUYHGIRUWKH%RDUG WKH{%RDUGKDVDXWKRULW\WRFRQVLGHU supplier contracts or agreements RYHU{DSDUWLFXODUWKUHVKROGYDOXH	How the Board engages 7KURXJKVLWHYLVLWVWKH%RDUGLVDEOH WR{GHHSHQLWVXQGHUVWDQGLQJRIWKH issues that are most relevant to the communities in which we operate.

Corporate governance

Board evaluation

,QOLQHZLWKWKH8.&RUSRUDWH*RYHUQDQFH&RGHDQH[WHUQDOO\IDFLOLWDWHGUHYLHZRI%RDUGHƬHFWLYHQHVVLVFDUULHGRXWHYHU\WKUHH\HDUV 7KHODVWH[WHUQDOO\IDFLOLWDWHGUHYLHZZDVFDUULHGRXWLQ,QLWZDVDJUHHGWKDWDQLQWHUQDOO\IDFLOLWDWHGUHYLHZZRXOGEHDSSURSULDWH

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Process

\$GLVFXVVLRQLVKHOGE\WKH1RPLQDWLRQ&RPPLWWHHWRFRQVLGHUWKHDSSURDFKDQGSURFHVVIRUHYDOXDWLRQ)ROORZLQJDJUHHPHQWWKH *URXS&RPSDQ\6HFUHWDU\DQGWKH&KDLUPDQRIWKH1RPLQDWLRQ&RPPLWWHHDJUHHWKHWLPHWDEOHSURFHVVDQGUHVRXUFHVUHTXLUHGIRU WKH{HYDOXDWLRQDFWLYLW\

'XULQJWKHSURFHVVZDVGLYLGHGLQWRIRXUVWDJHV

Stage 1	Stage 2	Stage 3	Stage 4
The Group Company Secretary and Chairman agree the format of the evaluation. The internal review is usually carried out by means of an online questionnaire. Directors are invited to give their responses on the individual and collective performances of the Board and its Committees.	If there are any issues UDLVHGWKH*URXS&RPSDQ\ Secretary will reach out to the individual and discuss their concerns or issues. Individual responses are collated into a report prepared by the Company Secretary.	The Group Company Secretary discusses the underlying themes of the evaluation with the Chairman and prepares a formal paper for discussion. The Chairman meets with each Director individually to air any concerns they may have around Board dynamics and operation of Board and &RPPLWWHHHƬHFWLYHQHVV	The report is presented and discussed with the Board. The Board agrees on the areas of development for the forthcoming year.

2019 areas of focus

)ROORZLQJWKH)5&oVJXLGDQFHRQ%RDUGHƬHFWLYHQHVVLQ-XO\WKHLQWHUQDOUHYLHZTXHVWLRQVIRFXVHGRQWKHIROORZLQJWKHPHV

Board leadership and Company purpose
Division of responsibility
&RPSRVLWLRQVXFFHVVLRQDQGHYDOXDWLRQ
\$XGLWULVNDQGLQWHUQDOFRQWURO
Remuneration
Final comments and observations

2019 internal review outcome

Strengths

7KH%RDUGDQGLWV&RPPLWWHHVFRQWLQXHWRSHUIRUPHƬHFWLYHO\
+LJKTXDOLW\RIGHEDWHDQGFKDOOHQJHLQDQLQFOXVLYH
FROODERUDWLYHWUXVWLQJDQGVXSSRUWLYHHQYLURQPHQW • Relationships between Board and Executive Directors are open and constructive
(ƬHFWLYHXQGHUVWDQGLQJRIULVNVDQGLQWHUQDO control environment
Aligned views on priorities and challenges over the next 1-3 years

Focus for 2020

Continue to identify ways of leveraging Non-Executive Directors' expertise
'HHSHQWKH%RDUGoVXQGHUVWDQGLQJRIWKHnFXVWRPHUYRLFHo through business unit deep dives
Continued focus on Board succession planning

'LYHUVLW

Diversity of our people is intrinsic to better business decisions. Appointments are made on merit and we seek to leverage the EHQHƮWVRIWKHZLGHDQGGLYHUVHWDOHQWSRRO

We are dedicated to increasing diversity through our recruitment and talent review processes and creating awareness and understanding of the value of diverse teams at all levels.

Our Directors and ELT have committed to continue to build diverse WHDPVWKDWVXFFHHGWKURXJKDOODVSHFWVRIGLYHUVLW\HJJHQGHUDJH nationality and ways of thinking.

The overview information below is as at 31 December 2019.

'LYHUVLW\RYHUYLHZ

,QDFFRUGDQFHZLWKWKH8.&RUSRUDWH*RYHUQDQFH&RGHWKH&KDLUPDQZDVFRQVLGHUHGWREHLQGHSHQGHQWRQDSSRLQWPHQW

Corporate governance

Nomination Committee report

\$QGUHZ'XƬ Chairman

Nomination Committee

0HPEHUVKLSPHHWLQJV DQG{DWWHQGDQFH
\$QGUHZ'XƬ&KDLU	OOOOO
Sandra Boss	OOOOO
Dorothee Deuring	OOOOO
Steve Good	OOOOO
Anne Hyland	OOOOO
Nick Salmon	OOOOO
John O'Higgins*

* John O'Higgins joined the Committee on 4 February 2020

Role of the Committee

The Committee is responsible for the VWUXFWXUHVL]HDQGFRPSRVLWLRQRIWKH%RDUG ensuring that the Board and Committees KDYHWKHPRVWDSSURSULDWHEDODQFHRIVNLOOV knowledge and experience. This Committee ensures and oversees succession planning and has responsibility for the annual review of the Board.

.H\UHVSRQVLELOLWLHV

5HJXODUO\UHYLHZLQJWKHVWUXFWXUHVL]H diversity and composition of the Board
Ensuring that the Company has the ULJKWOHDGHUVKLSEDODQFHRIVNLOOVDQG experience to deliver the Company's strategy and enable the Board to
HƬHFWLYHO\IXOƮOLWVREOLJDWLRQV • Succession planning for the Board and ELT
Leading on the annual performance evaluation of the Board and its Committees
,GHQWLI\LQJDQGQRPLQDWLQJIRUDSSURYDO RIWKH%RDUGFDQGLGDWHVWRƮOO%RDUG vacancies as and when they arise
Identifying and managing any potential FRQưLFWVRIGLUHFWRUVoLQWHUHVWV

The Committee's terms of reference are available on the Company's website at www.elementis.com.

The Committee is chaired by the &KDLUPDQ{DQGFRPSULVHVDOOWKH1RQ ([HFXWLYH'LUHFWRUVZKRDUHFRQVLGHUHGWR be independent. Members' biographies can be found on pages 55 to 57. The CEO has a standing invitation to attend meetings and external advisers attend where relevant.

Committee members take no part in any discussions concerning their own membership of the Board or appointment as a Chair of a Committee but are involved in the recommendations on Committee membership changes.

Re-appointment of Directors

All Directors are subject to re-election at WKHQH[W\$QQXDO*HQHUDO0HHWLQJ\$*0DV required by the UK Corporate Governance &RGH)ROORZLQJWKHDSSUDLVDOSURFHVVWKH Committee concluded that each of the 'LUHFWRUVFRQWLQXHGWRPDNHDQHƬHFWLYH contribution to the Board and provided VXƱFLHQWWLPHWRWKH&RPSDQ\

,QDFFRUGDQFHZLWKWKH&RGHHDFKRI WKH{'LUHFWRUVZLOOVXEPLWWKHPVHOYHVIRU UHHOHFWLRQDWWKH\$*0ZLWKWKH exception of Nick Salmon who will step GRZQ{DWWKH\$*0

Dear Shareholders

\$V&KDLURIWKH1RPLQDWLRQ&RPPLWWHH I am pleased to present the Nomination Committee report covering the work of the Committee in 2019. This report should be read in conjunction with the separate section on compliance with the UK Corporate Governance Code on page 54.

\$FWLYLWLHVGXULQJWKH\HDU

Annual review of Director's independence DQGFRQưLFWVLQDFFRUGDQFHZLWKWKH Committee's terms of reference
Engagement with Korn Ferry to conduct a search for a new Senior Independent Director
5HYLHZLQJVWUXFWXUHVL]HGLYHUVLW\DQG composition of the Board
Adoption of Diversity policy
Succession planning for the Board and ELT
Ensuring that at least annually the Non-Executive Directors meet without the Executive Directors present
Investor meetings with Chairman of Nomination Committee

NED re-appointments

The re-appointments of Anne Hyland IRUDWKLUGWHUPIURP-XQH6DQGUD Boss (a second term from February 2020) and Dorothee Deuring (a second term from March 2020) were approved and recommended to the Board during the year.

%RDUGHƬHFWLYHQHVV

2QDQDQQXDOEDVLVWKH&KDLUPDQLV responsible for conducting an appraisal with each Non-Executive Director in respect RIWKHLUVNLOOVH[SHULHQFHFRQWULEXWLRQ and time commitment to the Company. The Committee oversees the evaluation process which for 2019 comprised of an internal evaluation. The last externally facilitated review was carried out in 2018 DQG{LWLVDQWLFLSDWHGWKDWWKHQH[WH[WHUQDO review will be conducted in 2021.

)ROORZLQJWKHUHYLHZWKH%RDUGLVVDWLVƮHG that all Directors possess relevant experience and appropriate levels of independence and ƮQDQFLDODQGFRPPHUFLDOH[SHULHQFHDFURVV various industries.

Further information regarding the process can be found on page 70.

Board composition and skills

)ROORZLQJWKHLQWHUQDOHƬHFWLYHQHVVUHYLHZ the Committee considers that the current Board membership has the right balance of FRPPHUFLDODQGJRYHUQDQFHH[SHULHQFH independence and challenge and that the diverse range of skills and experience of WKH'LUHFWRUVSUHYHQWVDQ\LQưXHQFHHLWKHU LQGLYLGXDOO\RUFROOHFWLYHO\RYHUWKH%RDUGoV decision making.

Further information can be found on page 74 with a skills and experience matrix.

Succession planning

As part of the Board's succession SODQQLQJSURFHVVHV1LFN6DOPRQDJUHHG to step down from the Board as Senior Independent Director (SID) at the Company's Annual General Meeting in April 2020. 7KH&RPPLWWHHDSSRLQWHG.RUQ)HUU\ H[WHUQDOVHDUFKFRQVXOWDQWVWRXQGHUWDNH D{VHDUFKIRUVXLWDEOHFDQGLGDWHV

)ROORZLQJDWKRURXJKUHFUXLWPHQWSURFHVV John O'Higgins was appointed as a 1RQ([HFXWLYH'LUHFWRUZLWKHƬHFWIURP 4 February and will become SID following WKH{\$*0RQ\$SULO

Please see page 57 for John's biography.

SID recruitment process

7KH&KDLUPDQRIWKH%RDUGDVVLVWHGE\ the Nomination Committee members and *URXS&RPSDQ\6HFUHWDU\OHGWKHSURFHVV in the search for a new SID.

)ROORZLQJD&RPPLWWHHGLVFXVVLRQDUROH VSHFLƮFDWLRQZDVSUHSDUHGDQGVKDUHG with Korn Ferry. The Committee agreed that the attributes for the candidates should demonstrate:

&XUUHQWSURYHQDQGZHOOUHJDUGHG Independent Director from the broad industrial/manufacturing sector
6LJQLƮFDQWLQWHUQDWLRQDOEXVLQHVV experience in his/her former executive career as either a CEO or Main Board Executive of a complex multinational B2B company
An able strategic thinker who can play a role in Board discussions on Elementis' strategy
'XHUHJDUGWRWKHEHQHƮWVRIDFDQGLGDWH ZLWKGLYHUVLW\LQFOXGLQJJHQGHUVRFLDODQG ethnic backgrounds

Korn Ferry prepared a long list of 13 potential FDQGLGDWHVEDVHGRQWKHUROHVSHFLƮFDWLRQ The Committee duly discussed the merits of each of the candidates and agreed that seven candidates would be shortlisted. 'XULQJWKHVKRUWOLVWLQJSURFHVV.RUQ)HUU\ updated the Committee based on their FRQƮGHQWLDOGLVFXVVLRQVZLWKWKHFDQGLGDWHV regarding their interest for the role. The next stage included candidate meetings with the Chairman of the Board. After each of WKHPHHWLQJVWKH&KDLUPDQSURYLGHGWKH Committee with feedback and evaluation of each of the candidate's experience DQG{VNLOOV

The next step was to identify which candidates would be taken through to the QH[WVWDJHDQGDƮQDOVKRUWOLVWRIFDQGLGDWHV were invited to interviews with the other 1RQ([HFXWLYH'LUHFWRUV([HFXWLYH Directors and Group Company Secretary.

Following the interviews and taking into account; the references of the preferred FDQGLGDWHH[WHUQDOUHVSRQVLELOLWLHVDQG SRWHQWLDOFRQưLFWVWKH&RPPLWWHHDJUHHG to recommend to the Board that John O'Higgins be appointed as a Non-Executive Director on 4 February 2020 and assuming the role of SID at the AGM in April 2020.

0HHWLQJVVXPPDU

April	• Adoption of revised diversity policy
June	• Recommendation for Anne Hyland to be issued with a letter of re-appointment
6HSWHPEHU	• Board succession planning
1RYHPEHU	• Senior Independent Director recruitment update
'HFHPEHU	• 'LVFXVVLRQRIERDUGHƬHFWLYHQHVVRXWFRPHV • Senior Independent Director recruitment update • Recommendations for Sandra Boss and Dorothee Deuring to be issued with letters of re-appointment • Recommendation of revised Terms of Reference • Composition of Board and Committees • 5HYLHZRI'LUHFWRUVoLQGHSHQGHQFHDQGFRQưLFWV

Corporate governance

Financial statements

Corporate governance

Nomination Committee report continued

'LYHUVLW\DQGLQFOXVLRQ

Our approach to diversity and inclusion is set out in the Board's diversity policy which is reviewed annually by the Committee. The diversity policy was revised during the \HDUDFRS\RIZKLFKFDQEHIRXQGRQWKH Company's website at www.elementis.com.

When a new search for a Board member LVXQGHUWDNHQDEULHƮQJLVSUHSDUHGDQG shared with external search consultants to HQVXUHWKDWGLYHUVLW\RIJHQGHUVRFLDODQG ethnic backgrounds and skills is promoted in the selection of candidates.

6LQFHWKH%RDUGFRQWLQXHVWRH[FHHG WKH+DPSWRQ\$OH[DQGHUWDUJHWIRUWKH percentage of women on Boards to reach one third by 2020. It is acknowledged that there is a need to identify and develop the next generation of talent within the Group and processes are in place to ensure the Board has visibility.

Further information can be found on page 71.

\$QGUHZ'XƬ

Chairman Nomination Committee

Looking ahead to 2020

,QWKHFRPLQJ\HDUWKH&RPPLWWHHoV focus will be on:

John O'Higgins induction programme
Focus on succession planning
Review of 2019 evaluation outcomes and planning for 2020 evaluation

	Andrew 'XƬ	Steve Good	Anne +\ODQG	Nick Salmon	Sandra Boss	Dorothee Deuring	John O'Higgins	Paul Waterman	Ralph Hewins
Sector experience
Manufacturing/industrial processing	O	O		O		O	O	O
Specialty chemicals		O		O		O	O
Industry verticals	O	O		O			O	O	O
Commodity chemicals/pharma	O		O			O		O	O
,QYHVWPHQWEDQNLQJFRUSRUDWHƮQDQFH			O		O	O			O
Global markets		O		O		O
1RWIRUSURƮW	O		O		O		O
Professional services			O		O

Geographical experience OLYHG{DQG{ZRUNHGIRUPRQWKV
North America	O	O		O	O			O
Europe (excl UK)	O	O	O	O		O	O		O
\$VLD3DFLƮFLQF,QGLD	O	O	O	O			O	O	O
Functional experience
Pension trustee		O							O
M&A/capital raising	O	O	O	O	O	O	O		O
)LQDQFLDODFFRXQWLQJH[SHUWLVH UHFHQWUHOHYDQW		O	O
Tax/treasury			O
Sales/marketing/customer	O	O					O	O
Strategy/business development	O	O	O	O	O	O	O	O	O
Research/technology/innovation		O	O	O			O	O
Regulated markets	O	O		O	O	O
Regulators/legal					O

Audit committee report

\$QQH+\ODQG Chairman Audit Committee

0HPEHUVKLSPHHWLQJV DQG{DWWHQGDQFH
Anne Hyland \$XGLW{&KDLU	OOO
Sandra Boss	OOO
Dorothee Deuring	OOO
Nick Salmon	OOO
John O'Higgins*

* John O'Higgins joined the Committee on 4 February 2020

5ROHDQGUHVSRQVLELOLWLHV

Monitoring the integrity of the Group's ƮQDQFLDOVWDWHPHQWVƮQDQFLDOUHSRUWLQJ and related statements
Ensuring the appropriateness of DFFRXQWLQJSROLFLHVDQ\FKDQJHVWR WKHVHDQGDQ\VLJQLƮFDQWHVWLPDWHV DQG{MXGJHPHQWVPDGH
5HYLHZLQJWKHHƬHFWLYHQHVVRI LQWHUQDOFRQWUROFRPSOLDQFHDQGULVN management systems (including whistleblowing arrangements)
Overseeing all aspects of the relationship with the internal and external auditors; approving the policy on non-audit VHUYLFHVHƬHFWLYHQHVVRIWKHDXGLW SURFHVVPDNLQJUHFRPPHQGDWLRQVWRWKH Board for their dismissal or changes; and supervising any tender process

7KH&RPPLWWHHoVWHUPVRIUHIHUHQFHZKLFK DUHUHYLHZHGDQGDSSURYHGSHULRGLFDOO\ are available on the Company's website at www.elementis.com.

All members of the Committee are independent Non-Executive Directors. Members' biographies can be found on pages 55 to 57.

7KH&KDLUPDQRIWKH%RDUG&(2&)2 DQG*URXS)LQDQFLDO&RQWUROOHUDORQJVLGH representatives from the external DXGLWRUV'HORLWWHDQGLQWHUQDODXGLWRUV 3Z&KDYHDVWDQGLQJLQYLWDWLRQWRDWWHQG Committee meetings.

As required by the UK Corporate *RYHUQDQFH&RGHWKH%RDUGLVVDWLVƮHG that Anne Hyland has recent and relevant ƮQDQFLDOH[SHULHQFHWRFKDLUWKLV&RPPLWWHH 7KH&RPPLWWHHDVDZKROHKDVWKHƮQDQFLDO and commercial competence to meet its responsibility in an independent and robust manner.

The Chair of the Audit Committee is available to meet with shareholders at the Company's AGM and on request during the course of the year.

0DLQDFWLYLWLHVGXULQJWKH\HDU

The Committee's focus in 2019 has been:

Meetings with both the internal and external auditors to review their NH\ƮQGLQJV
Reviewing the internal control systems and considering the output of internal audit reviews and management's action plans
5HYLHZLQJWKHLQWHJULW\FRQVLVWHQF\DQG key accounting judgements made by management in both the Company's full and half year results
Advising the Board on whether the Annual Report and Accounts preparation process LVIDLUEDODQFHGDQGXQGHUVWDQGDEOH and provides the information necessary to shareholders to assess the Group's SRVLWLRQDQGSHUIRUPDQFHEXVLQHVVPRGHO and strategy
Reviewing the going concern and viability statements and the supporting assumptions and assessments in the Company's Annual Report and Accounts
Ensuring compliance with applicable DFFRXQWLQJVWDQGDUGVPRQLWRULQJ developments in accounting regulations ZKLFKDƬHFWWKH*URXSDQGUHYLHZLQJ appropriateness of accounting policies and practices currently in place
5HYLHZLQJHƬHFWLYHQHVVRIWKHLQWHUQDO DQGH[WHUQDODXGLWRUVWKHLULQGHSHQGHQFH and objectivity and terms and scope of engagement and recommending their reappointments
Overseeing matters relating to tax including the impact of tax rates on the ƮQDQFLDOVWDWHPHQWVDQGDSSURYLQJWKH Company's tax strategy
Litigation and compliance reports for both the full and half year
Considering the material legal risks impacting the Company and the associated provisioning for both the full and half year
Receiving updates on the Code of %XVLQHVV&RQGXFWDQG(WKLFVFRPSOLDQFH training and whistleblowing policies
Technical updates on the 2018 UK Corporate Governance Code and IFRS 16
Reviewing the Group's risk management activities undertaken by each business DUHDDQGDW*URXSOHYHOWRLGHQWLI\DQG assess the Group's principal risks
Monitoring and assessing the Group's insurance arrangements

Audit committee report continued

The report of the Audit Committee for WKHƮQDQFLDO\HDUH[SODLQVKRZLWV responsibilities have been carried out GXULQJ{WKH\HDU

External auditors

Deloitte have served as external auditors for four years. The Committee engages with Deloitte to ensure this key area of oversight is appropriately maintained. The Committee periodically meets privately with the lead audit partner and senior members of the audit team WRGLVFXVVWKHLUZRUNDQGƮQGLQJV1RDUHDVRI VLJQLƮFDQWFRQFHUQKDYHEHHQUDLVHG

Audit of the 2019 Annual Report DQG{\$FFRXQWV

\$WWKHHQGRI'HORLWWHSUHVHQWHG WKHLU{DXGLWSODQIRUWKH\HDUDKHDGZKLFKWKH Committee considered and then approved. 'HORLWWHKLJKOLJKWHGWKHNH\DUHDVRIULVN ZKLFKZHUHSULPDULO\LGHQWLƮHGDVDUHDV of judgement and complexity and were FRQVLVWHQWZLWKWKRVHDUHDVLGHQWLƮHGE\ WKH{&RPPLWWHH\$VSDUWRIWKHDXGLWSURFHVV Deloitte then presented a detailed report of WKHLUDXGLWƮQGLQJVZKLFKZHUHUHYLHZHGDQG discussed. A similar process is undertaken for the half year results.

Auditor rotation and tendering and FRPSHWLWLRQDQGPDUNHWVDXWKRULW\RUGHU – statement of compliance

The Committee carried out an audit tender process in 2015 resulting in the appointment of Deloitte as external auditors in April 2016. Deloitte's re-appointment in 2019 was approved by shareholders at the Company's AGM in April 2019. The year ended 31 December 2019 was the third year for the lead engagement partner Christopher 3RZHOO7KH&RPPLWWHHFRQƮUPVWKDWWKH Company is compliant with the provisions of The Statutory Audit Services for Large Companies market Investigation (mandatory use of Competitive Tender processes and Audit Committee Responsibilities) Order 2014 for the year ended 31 December 2019.

\$XGLWHƬHFWLYHQHVV

To support the Committee in evaluating WKHHƬHFWLYHQHVVRIWKHH[WHUQDODXGLWRUVD questionnaire based evaluation is completed by the Finance team. The data is collated into a score card that can then be used to assess the strengths and weaknesses of the external auditors. Management and the external auditors then address any areas of weakness LQWKHLUUHJXODUUHYLHZPHHWLQJVDQGWKH senior audit partner from Deloitte updates the Committee on how areas of weakness are being addressed.

The Committee also monitors audit HƬHFWLYHQHVVE\UHYLHZLQJWKH\$XGLW4XDOLW\ Inspection reports published by the FRC.

)ROORZLQJWKHUHYLHZWKH&RPPLWWHH considers the auditors' performance to be VDWLVIDFWRU\DQGWKDWWKHDXGLWLVHƬHFWLYHDV measured against their letter of engagement and the scope of services agreed.

Auditor independence

The Committee considers the external auditors' objectivity and independence at least twice a year. It receives reports from Deloitte on its internal quality controls and independence rules and considers carefully the extent of the non-audit services provided by Deloitte.

The Committee is of the view that Deloitte were objective and independent throughout the 2019 audit process notwithstanding the level of non-audit services provided.

Non-audit services

This is further maintained by the Group policy on non-audit services which contains guidance on the types of non-audit work that the external auditors may be considered for.

.H\MXGJHPHQWVDQGDUHDVRIVLJQLƮFDQWIRFXV

7KHIROORZLQJWDEOHVHWVRXWWKHVLJQLƮFDQWPDWWHUVFRQVLGHUHGE\WKH&RPPLWWHHGXULQJWKH\HDULQUHODWLRQWRWKH)LQDQFLDO6WDWHPHQWV Further information on these judgements is detailed in Note 1 of the accounts.

.H\MXGJHPHQW	How the Committee has addressed these matters
Environmental provision	\$SURFHVVFRQVLVWHQWZLWKIRUWKHHYDOXDWLRQRIHQYLURQPHQWDOSURYLVLRQVZDVIROORZHGE\PDQDJHPHQWWKH NH\DUHDRIMXGJHPHQWEHLQJWKHGLVFRXQWUDWHXVHGIRUIXWXUHOLDELOLWLHV,QWKLVGLVFRXQWUDWHZDV7KH Committee considered this discount rate and decided that a revised rate of 1% for the UK and 2% for the US would UHưHFWFXUUHQWPDUNHWDVVHVVPHQWVRIWKHWLPHYDOXHRIPRQH\DQGULVNVVSHFLƮFWRWKHOLDELOLWLHVDQGWKHUHIRUH appropriate for 2019.
Impairment testing of goodwill in relation to WKH{7DOF{&*8	&ULWLFDODFFRXQWLQJHVWLPDWHVDULVHLQGHWHUPLQLQJWKHYDOXHLQXVHIRUWKHJRRGZLOOEDODQFHVWHVWHGZKLFKUHTXLUH DVVHVVPHQWVRIWKHDFKLHYDELOLW\RIEXVLQHVVSODQVDQGWKHUHIRUHIXWXUHFDVKưRZVJURZWKUDWHVEH\RQGWKHSHULRG FRYHUHGE\WKHƮYH\HDUEXVLQHVVSODQVDQGDSSURSULDWHQHVVRIWKHGLVFRXQWUDWHVDSSOLHGWRIXWXUHFDVKưRZV
	\$UHSRUWIURPPDQDJHPHQWZDVGLVFXVVHGVHWWLQJRXWWKHEDVLVIRUWKHDVVXPSWLRQVDQGFRQƮUPDWLRQWKDWWKHFDVK ưRZVXVHGZHUHGHULYHGIURPWKHWKUHH\HDUSODQZKLFKLQWKHLUUROHDVPHPEHUVRIWKH%RDUG&RPPLWWHH members had previously reviewed and approved).
	7KH&RPPLWWHHKDVUHYLHZHGWKHUREXVWQHVVRIWKHLPSDLUPHQWPRGHOFKDOOHQJHGWKHDSSURSULDWHQHVVRIWKHNH\ DVVXPSWLRQVXVHGWRFDOFXODWHYDOXHLQXVHLQFOXGLQJIRUHFDVWVDOHVYROXPHVVHOOLQJSULFHVJURZWKUDWHVXVHGWR H[WUDSRODWHEH\RQGWKHIRUHFDVWSHULRGDQGWKHGLVFRXQWUDWHVDSSOLHGWRWKHUHVXOWLQJFDVKưRZV7KH&RPPLWWHH agreed with management that no impairment was required.
Revenue recognition	The main area of judgement continues to be in relation to recognition of revenue for shipments by sea. The &RPPLWWHHVDWLVƮHGLWVHOIWKDWWKH*URXSKDGDSSURSULDWHO\UHFRJQLVHGUHYHQXHVLQDFFRUGDQFHZLWKWKHLU FRQWUDFWXDOREOLJDWLRQVGXULQJWKHSHULRGSD\LQJSDUWLFXODUDWWHQWLRQWRSHULRGHQGFXWRƬ
Determining lease contract terms with extension options	Following the adoption of IFRS 16 Leases in the year management have exercised judgement in evaluating whether the Group is reasonably certain to exercise options to renew or terminate leases. There are two leases of land and buildings for which the Group has determined that the extension options contained within the lease contracts are reasonably certain to be exercised. As such the periods covered by the extension options have been included in the OHDVHWHUPDQGWKHFDOFXODWLRQRIWKHUHODWHGOHDVHOLDELOLWLHV7KH&RPPLWWHHVDWLVƮHGLWVHOIWKDWWKH*URXSKDGPDGH appropriate judgements concerning the likelihood of exercising extension and termination options of its leases.

Shareholder information

8QGHUWKHSROLF\WKH&)2PD\DSSURYH individual engagements where the fee is up to 15% of the Group's audit fee for the \HDUSURYLGHGWKDWWKHWRWDOQRQDXGLWIHHV in the year do not exceed 50% of that Group audit fee. Decisions above these thresholds must be referred to the Committee for determination.

Non-audit services

	2019	2018
Audit fees (\$m)	1.4	1.4
Assurance related
services (\$m)	0.1	0.1
Non-audit
fees (\$m)	0.0	0.3
Ratio of non
audit fees to
audit fees (%)	0%	21%
Total fees (\$m)	1.5	1.8

Examples of services that the external auditors may and may not be allowed to perform under the policy can be found at www.elementis.com.

%DVHGRQWKH&RPPLWWHHoVUHFRPPHQGDWLRQ the Board is proposing that Deloitte be re-appointed as external auditors to the Company at the AGM in April 2020.

Internal controls and risk PDQDJHPHQW{V\VWHP

The Committee's role is to review the HƬHFWLYHQHVVRIWKHLQWHUQDOFRQWURO compliance and risk management systems which it carries out in support of the Board's IRUPDOUHYLHZRIVLJQLƮFDQWULVNVDQG PDWHULDOFRQWUROVDVVXPPDULVHGLQWKH 5LVN{PDQDJHPHQWUHSRUWRQSDJHVWR

PwC provides an outsourced internal audit function. The Committee considers that the value of internal audit is enhanced by KDYLQJDWKLUGSDUW\SHUIRUPWKLVIXQFWLRQ to support the independent challenge of management and give greater access to expertise and resources than an internal function could provide.

The internal audit plan is based on a review of the Group's key risks which are considered high risk or have not been subject to a recent audit. The 2019 internal audit plan was discussed and agreed between management and PwC ahead of it being considered and subsequently approved E\WKH&RPPLWWHH'XULQJWKHIRFXV IRULQWHUQDODXGLWLQFOXGHG0RQGRƮQDQFLDO controls health check and actions to bring LQOLQHZLWKJURXSFRQWUROV,QGLDLQYHVWPHQW *'35FRPSOHWHQHVVDVVHVVPHQWFRQWUDFW compliance and customer services and pricing. Management reviews the schedule with PwC on a quarterly basis and adapts

during the year to incorporate any new or increased risks which materialise. This is then reviewed and approved by the Committee.

The outcomes of the internal reports are SURYLGHGWRWKH&RPPLWWHHDORQJVLGHDQ\ remedial actions.

Following an evaluation of the services provided by PwC in respect of the internal DXGLWWKH&RPPLWWHHFRQƮUPVWKDWERWKWKH process for determining the internal audit SURJUDPPHDQGWKHSURJUDPPHLWVHOIDUH DSSURSULDWHDQGHƬHFWLYH1RVLJQLƮFDQW internal control failings or weaknesses were reported last year. Set out below is a summary of the key features of the Group's internal controls and risk management system.

Control environment

The Group has policies and procedures that set out the responsibilities of business DQGVLWHPDQDJHPHQWLQFOXGLQJDXWKRULW\ OHYHOVUHSRUWLQJGLVFLSOLQHVDQGUHVSRQVLELOLW\ for risk management and internal control. ,QDGGLWLRQDQQXDOFRPSOLDQFHVWDWHPHQWV RQLQWHUQDOFRQWUROVDUHFHUWLƮHGE\HDFK operating segment.

5LVNLGHQWLƮFDWLRQDQGUHYLHZ

A formal risk review process exists at %RDUGDQG(/7OHYHOVIRUWKHLGHQWLƮFDWLRQ HYDOXDWLRQPLWLJDWLRQDQGRQJRLQJ PRQLWRULQJRIULVNVLQFOXGLQJHPHUJLQJULVNV Further details can be found on pages 50 to 52.

Internal audit programme

An internal audit programme is proposed by PwC in consultation with the CFO and approved by the Committee each \HDUVHWWLQJRXWDSURJUDPPHRIDXGLWV over the course of the next 12 months. The programme covers the monitoring of WKHHƬHFWLYHQHVVRILQWHUQDOFRQWUROVDQGWKH GHVLJQRISURFHVVHVWRWHVWWKHHƬHFWLYHQHVV of controls. As well as conducting audits of RSHUDWLQJIDFLOLWLHVVDOHVRƱFHVDQGWROOLQJ VLWHVRQDWZRWRWKUHH\HDUURWDWLRQDOEDVLV the internal audit programme includes reviews of Group functions and processes.

Controls assurance

The controls assurance framework at Elementis is as follows:

Board leadership supported by an open DQG{WUDQVSDUHQWFXOWXUHRInQRVXUSULVHVo good governance and compliance. This means knowing and understanding the businesses and quality interactions between the Board and the Executive Leadership team (including a regular programme of presentations and reports to
WKH%RDUGDVZHOODVRSHUDWLRQDOVLWHYLVLWV • ,QWHUQDODQGH[WHUQDODXGLWSURJUDPPHV regular litigation and compliance reviews with the General Counsel and Chief &RPSOLDQFH2ƱFHU
DSURJUDPPHRIFRPSOLDQFHDXGLWV UHJXODWRU\LQVSHFWLRQVHQYLURQPHQWDO reviews and property surveys by external specialists
&RGHRI%XVLQHVV&RQGXFWDQG(WKLFVRQ which all employees are given training and DUHUHTXLUHGWRVHOIFHUWLI\FRPSOLDQFHZLWK supplemented by an online compliance WUDLQLQJSURJUDPPHDQDQWLEULEHU\DQG FRUUXSWLRQSROLF\ZKLFKFRQWUDFWRUVDUH DOVRUHTXLUHGWRVLJQXSWRZKLVWOHEORZLQJ arrangements and an anti-retaliation policy

:KLVWOHEORZLQJ

The Group's whistleblowing facility is DFFHVVLEOHRQDEDVLVGD\VRI the year and provides arrangements for an LQGHSHQGHQWVHUYLFHSURYLGHUWRUHFHLYHLQ FRQƮGHQFHUHSRUWVRIEUHDFKHVRIDQ\OHJDO RU&RPSDQ\SROLF\UHTXLUHPHQWVLQFOXGLQJ WKRVHUHODWHGWRDFFRXQWLQJDXGLWLQJ ULVNLQWHUQDOFRQWURODQGUHODWHGPDWWHUV Any such disclosures are reported to the Committee as appropriate.

)DLUEDODQFHGDQGXQGHUVWDQGDEOH

The Committee adopted a similar approach as in previous years to ensure that the Annual 5HSRUWLVIDLUEDODQFHGDQGXQGHUVWDQGDEOH The process was as follows:

An internal Annual Report Team (ART) was set up to manage the process. The ART consisted of members drawn from Group )LQDQFH&RPSDQ\6HFUHWDULDWDQG Investor Relations teams. The ART was responsible for regularly reviewing work and ensuring balanced reporting with appropriate links between key messages and sections of the Annual Report.
The Committee chairman held meetings ZLWKWKHDXGLWSDUWQHUDQGWKH&RPPLWWHH held meetings with the external auditors without management being present.
An audit clearance meeting was held ZLWKWKH&RPPLWWHHFKDLUPDQ&)2DQG members of the Finance team alongside the audit partner and audit team members.
The Committee received updates from management on the Annual Report progress and audit throughout the process as well as from the Company's brokers and other advisers
7KH&RPPLWWHH&KDLUPDQDQG([HFXWLYH Directors reviewed the Annual Report in its ƮQDOVWDJHV

)ROORZLQJWKLVSURFHVVWKH&RPPLWWHH VXSSRUWLQJWKH%RDUGDUHDEOHWRFRQƮUP WKDWWKH\$QQXDO5HSRUWWDNHQDVDZKROH LVIDLUEDODQFHGDQGXQGHUVWDQGDEOHDQG provides the necessary information for VKDUHKROGHUVWRDVVHVVWKH*URXSoVSRVLWLRQ SHUIRUPDQFHEXVLQHVVPRGHODQGVWUDWHJ\

\$QQH+\ODQG

&KDLUPDQ\$XGLW&RPPLWWHH

Relations with shareholders

Board engagement with shareholders

Elementis is committed to delivering long term sustainable returns to its shareholders. 7KH&KDLUPDQLVUHVSRQVLEOHIRUHƬHFWLYH communication with shareholders.

The CEO and CFO are the Company's SULQFLSDOFRQWDFWVIRULQYHVWRUVDQDO\VWV press and other interested stakeholders.

There is a dedicated investor relations programme for current and potential LQYHVWRUVZKLFKLVPDQDJHGE\WKH'LUHFWRU of Investor Relations who reports to the CFO.

The Board receives an investor relations report at each of its meetings outlining recent dialogue with investors and feedback received. Analysts' reports are also made available to the Board. The Chairman DWWHQGVWKHƮQDQFLDOUHVXOWVSUHVHQWDWLRQV where he has the opportunity to meet with those analysts who attend.

The Chairman and Senior Independent Director are available to shareholders to discuss governance and strategy concerns as appropriate. The Chairman meets with shareholders to discuss governance or other matters as appropriate. During these PHHWLQJVLQYHVWRUVDUHLQYLWHGWRPHHWZLWK RWKHUPHPEHUVRIWKH%RDUGIRUH[DPSOH WKH&KDLURIWKH\$XGLW1RPLQDWLRQRU Remuneration Committees.

Shareholder meetings

,Q\$SULOZHKHOGRXUDQQXDOVKDUHKROGHU meeting. The Notice of AGM was posted to shareholders at least 20 days prior to the PHHWLQJ{7KH%RDUGZHOFRPHVDWWHQGDQFH at these meetings and they provide a valuable opportunity to discuss Company matters and interaction with the Board.

We are grateful to those shareholders who were unable to attend but submitted voting instructions via proxy.

\$WWKH\$*0DOOWKHPHPEHUVRIWKH Board attended and the CEO provided a presentation to shareholders outlining the performance of the Company during the SULRUƮQDQFLDO\HDU6KDUHKROGHUVDUHDEOHWR engage directly with the Chairs of the Audit and Remuneration Committees at the AGM.

Each resolution was proposed separately and voting was conducted on a poll taking into account votes cast at the meeting and those submitted via proxy.

Shareholders had the option to vote either for or against a resolution or to withhold their vote.

\$OOSURSRVHGUHVROXWLRQVZHUHSDVVHG with votes in favour ranging from 83.16% to 100%.

)ROORZLQJWKHPHHWLQJWKHYRWLQJUHVXOWV were announced to the London Stock Exchange and published on the Company's corporate website.

&DSLWDO0DUNHWVGD

,Q1RYHPEHUZHKHOGD&DSLWDO Markets Day in London for over 100 analysts and investors to outline the next phase of our development. The event provided stakeholders with the opportunity to be XSGDWHGRQRXUVWUDWHJLFSULRULWLHVPHHW management and see some our products in action. At the events we outlined our medium term performance objectives of:

\$GMXVWHGRSHUDWLQJSURƮWPDUJLQRI
Operating cash conversion of at least 90% per annum
Financial leverage of under 1.5x net debt/ EBITDA

2019 investor relations programme During 2019:

Institutional investors and analysts were invited to attend the Company's full year and half year results presentation in person or via a webcast
2YHUDWWHQGHHVERWKFXUUHQW LQYHVWRUVDQGSRWHQWLDOLQYHVWRUVDWWHQGHG the Capital Markets Day
Over 130 investor meetings
\$WWHQGHGƮYHLQYHVWRUFRQIHUHQFHV
Interim and annual results roadshows • Held ad hoc road shows in Europe and North America

Private investors

The Board is keen to hear the views of our private shareholders and they are HQFRXUDJHGWRXVHRXUVKDUHKROGHUPDLOER[ FRPSDQ\VHFUHWDULDW#HOHPHQWLVFRP for detailed enquiries and to access our website for our Company reports and business information.

6SHFLƮFHQTXLULHVPD\DOVREHDGGUHVVHGWR the Group Company Secretary and sent to WKHUHJLVWHUHGRƱFH

Shareholder tracing programme

,QDVKDUHKROGHUWUDFLQJSURJUDPPH was launched to reduce the number of nJRQHDZD\oVKDUHKROGHUVRQWKHVKDUH register over a period of four years. In total 769 accounts have been closed with a total YDOXHUHWXUQHGRIRYHU~

January	February	March	May	July	November	December
Paris FY 18 results FY 18 UBS small roadshow presentation roadshow and midcap conference Chairman's Governance roadshow	H1 19 results presentation	Berenberg food ingredients	Capital Markets Day	Overseas roadshow in North America
	H1 19	and chemicals
			roadshow	conference	Credit Suisse
					chemicals
					conference
						Berenberg
						european
						conference

Directors' Remuneration Report

Steve Good Chairman Remuneration Committee

&RPPLWWHHPHPEHUV	4
Scheduled meetings	4

Committee PHPEHUV	Scheduled meetings
Steve Good	OOOO
Sandra Boss	OOOO
Dorothee Deuring	OOOO
Nick Salmon	OOOO

* John O'Higgins joined the Committee on 4 February 2020

Dear Shareholder,

As Chair of the Remuneration Committee WKH&RPPLWWHH,DPSOHDVHGWRSUHVHQW the Directors' Remuneration Report for the year ended 31 December 2019. This statement provides a summary of the work completed by the Committee in WKH\HDUWKHNH\GHFLVLRQVWKDWKDYHEHHQ taken and how the Remuneration Policy was implemented. 2019 was a year of continued progress in transforming our portfolio of businesses to reposition the Company as a SUHPLXPSHUIRUPDQFHDGGLWLYHVFRPSDQ\ with advantaged positions in growing markets. This good strategic progress was delivered against a backdrop of challenging macroeconomic conditions in response to which the management team quickly implemented a number of self-help actions WRHQVXUHWKDWƮQDQFLDOSHUIRUPDQFHZRXOG be as robust as possible in the current commercial environment.

)URPD&RPPLWWHHSHUVSHFWLYHZDV a busy year considering remuneration payments in the context of the continued strategic progress but challenging ƮQDQFLDOSHUIRUPDQFHQRWHGDERYH reviewing the implications of the updated 2018 UK Corporate Governance Code and determining the application of our FXUUHQW5HPXQHUDWLRQ3ROLF\IRUWKHƮQDO time in 2020. A new Policy is due to be proposed to shareholders at our 2021 AGM. These factors are covered in the 5HSRUWV{WKDWIROORZ

The Report is set out in three parts:

1. This Annual Statement summarising how the Policy has been implemented and the key decisions the Committee has taken;
1. The Annual Report on Remuneration which provides detail on how we paid Directors during 2019 and how we propose to implement the policy in {DQG
1. A summary of the *5HPXQHUDWLRQ3ROLF* 3ROLF\DVDSSURYHGZLWKRYHU support at the 2018 AGM.

The Report will be presented to shareholders for approval at the AGM on 29 April 2020 and I hope you will vote in support of the resolution.

5HPXQHUDWLRQSROLF

The Remuneration Policy (Policy) promotes sustained performance of the Company and is aligned with shareholder interests with LQFHQWLYHSD\EDVHGRQJURZLQJSURƮWVDQG delivering above average total shareholder return. In line with the business operations as DJOREDOVSHFLDOW\FKHPLFDOVFRPSDQ\RXU Policy is designed with a bias towards long WHUPSHUIRUPDQFH\$VD&RPPLWWHHZHKDYH considered whether the Policy is operating as intended and whether any changes for 2020 were needed in light of the updates to our medium term strategic objectives. The conclusion of the Committee was that WKHFXUUHQWIRFXVRQSURƮWDEOHJURZWKDQG delivering above average total shareholder UHWXUQUHPDLQVDSSURSULDWH+RZHYHULQOLJKW of institutional investors' expectations in UHODWLRQWR([HFXWLYH'LUHFWRUSHQVLRQVWKH Committee has agreed with the Executive Directors that their current pension provision should be reduced and as a result a glide path to align them to the average of the UK workforce by end 2022 has been agreed. This change can be accommodated within our existing Policy.

In advance of a new Policy being presented WRVKDUHKROGHUVDWWKH\$*0WKH Committee will again review the Policy over the course of 2020 to ensure it continues to support the long-term business strategy and takes due account of best practice corporate governance developments.

Corporate governance

Directors' Remuneration Report continued

9DULDEOHUHPXQHUDWLRQRXWFRPHVIRU \$QQXDOERQXV

\$VQRWHGHDUOLHUZDVD\HDURIVWURQJ strategic progress with delivery across a range of objectives set at the start of the year that included completing the integration of Mondo and driving cost synergies across WKH*URXSEXVLQHVVVLPSOLƮFDWLRQZLWKLQ RXU&RDWLQJVEXVLQHVVULJKWVL]LQJRXU R&D capabilities and upgrading our digital WHFKQRORJLHVƮQDQFLDOUHSRUWLQJV\VWHPV DQGLQWHUQDOFRQWUROV:LWKUHJDUGVWRƮQDQFLDO performance in the context of challenging PDFURHFRQRPLFFRQGLWLRQVQRWZLWKVWDQGLQJ strong management self-help actions DQGVWURQJIUHHFDVKưRZJHQHUDWLRQ performance was below the range of targets VHWDWWKHVWDUWRIWKHƮQDQFLDO\HDU

Whilst the performance against individual objectives was strong and resulted in between 80% and 90% of the strategic targets set at the start of the year being DFKLHYHGLQOLJKWRIWKHƮQDQFLDOSHUIRUPDQFH RIWKH&RPSDQ\GXULQJWKH\HDUWKH Committee used its discretion to reduce the bonuses earned based on the targets RULJLQDOO\VHWE\$VDUHVXOWRIWKHDERYH following the Committee undertaking a formal assessment of performance against WKHWDUJHWVDQGWKHQXVLQJLWVGLVFUHWLRQ bonuses were payable in the range of 16.7% WRRIPD[LPXPIRUWKH{([HFXWLYH 'LUHFWRUV)XUWKHUPRUHWRHQVXUHDFRQWLQXHG link between the strong delivery achieved against our strategic goals and shareholder UHWXUQVRIWKHERQXVSD\DEOHZLOOEH deferred into the Company's shares and held for a minimum of two years.

Further details of the targets set for 2019 are disclosed on pages 87 to 90. The Committee continues to provide detailed disclosure IRUQRQƮQDQFLDOWDUJHWVIROORZLQJIHHGEDFN from shareholders.

Long term incentive plan (LTIP)

The 2017 LTIP Awards vest to the extent that EPS growth and TSR performance targets are met over the three years ending on 31 December 2019. As a result of the challenging macroeconomic conditions GXULQJWKHSHUIRUPDQFHSHULRGWKH Company's total shareholder returns over the period was below the median performing company in the FTSE All-Share Index H[FOXGLQJLQYHVWPHQWWUXVWVDQGWKHUHIRUH this portion of the award will not vest.

The threshold EPS target has not been met and this portion of the award will also lapse. \$VDUHVXOWQRQHRIWKHDZDUGZLOOYHVW

The Committee believes that the overall incentive out-turns detailed above are appropriate based on the Company's performance over the whole period and GHPRQVWUDWHVWKDWWKH&RPPLWWHHKDVDQG ZLOOFRQWLQXHWRVHWSHUIRUPDQFHWDUJHWV which it considers to be meaningful and appropriately stretching.

\$SSOLFDWLRQRI5HPXQHUDWLRQ3ROLF\ in 2020

\$VGHWDLOHGDERYHWKHFXUUHQW3ROLF\LV FRQVLGHUHGWREHZRUNLQJHƬHFWLYHO\ZLWK the change to Executive Directors pension DUUDQJHPHQWVWKHRQO\PDWHULDOFKDQJHVWR the current application of Policy for 2020.

The key points to note include:

6DODU\UHYLHZ In line with the average increases awarded to the salaried workforce LQWKH86DQGWKH8.WKHVDODU\RIWKH&(2 ZDVLQFUHDVHGE\WRDQG the CFO's salary was increased by 2.2% WR~7KHVHFKDQJHVDUHHƬHFWLYH IURP{-DQXDU\

DQQXDOERQXV There will be no change to the quantum and as such the CEO will have the opportunity to earn 150% of salary and the CFO 125% of salary.

\$VIRUWKHERQXVZLOOEHEDVHG DJDLQVWDFKDOOHQJLQJUDQJHRIƮQDQFLDO WDUJHWVRQDGMXVWHG*URXSSURƮWEHIRUH tax and 20% on average trade working capital to sales ratio (AWC) on total operations) and EDVHGRQWKHGHOLYHU\RIVSHFLƮFDQG measurable objectives that are related to the Company's strategic priorities.

Summary details of our approach to target setting are detailed on page 84 and full GHWDLOVRIWKHƮQDQFLDOWDUJHWUDQJHVDQGRXU performance against them will be disclosed on a retrospective basis in next year's report. The Committee has discretion to modify the overall amount of bonus payable to ensure it is appropriate.

/7,3\$ZDUGV Awards are expected to be granted at the same levels as in 2019 at 200% of salary for the CEO and 175% of salary for the CFO. In determining the award VL]HVWKH&RPPLWWHHFRQVLGHUHGWKHGHJUHH of stretch in the targets noting both the minimal vesting at the threshold performance levels (which is well below market norms) DQGWKHGHPDQGLQJQDWXUHRIWKHƮQDQFLDO targets set in light of ongoing challenging market conditions.

The primary performance targets will be the same EPS and TSR performance conditions (split 50:50) as operated in 2019.

The range of EPS growth targets will be average annual EPS growth of 3% to 12% p.a. for threshold to maximum vesting which runs from 0% to 100% on a straight line basis. Growth will be measured from the 2019 EPS result to the EPS achieved in 2022. The Committee considers this high growth range to be appropriately stretching in light of the progress made with our Company's strategy after having had regard to current internal planning and external broker forecasts for our future performance in OLJKW{RIFXUUHQWPDUNHWFRQGLWLRQV

TSR will continue to be assessed against the constituents of the FTSE All Share index (excluding investment trusts). Threshold vesting starting at 3.85% for PHGLDQSHUIRUPDQFHLQFUHDVLQJRQD graduated basis with 100% vesting for DFKLHYLQJVWUHWFKWDUJHWVZKLFKIRU765ZLOO require at least upper quartile performance.

The 2020 LTIP awards will also be subject to a return on capital employed underpin. This will require the Committee to consider the vesting result determined based on the application of the EPS and TSR performance conditions in light of the return on capital employed achieved during the three year period ending 31 December 2022 relative to the Board's internal plans over the period. If the Committee does not consider the vesting result appropriate in light of the return RQFDSLWDOHPSOR\HGDFKLHYHGLQWKLVFRQWH[W the underpin enables vesting to be reduced to a more appropriate level.

1RQ([HFXWLYH'LUHFWRUVoIHHV The

&RPPLWWHHIROORZLQJDUHFRPPHQGDWLRQ E\WKH%RDUGDSSURYHGDSROLF\LQWR increase the Chairman's fee and the Non-Executive Directors' basic and any additional role fees annually by the same percentage increase as the average UK salaried workforce for the year being reported. \$VVXFKWKHIHHVKDYHEHHQLQFUHDVHG by 2.2%.

Following the appointment of Sandra Boss as Designated Non-Executive Director for ZRUNIRUFHHQJDJHPHQWIHHVZHUHDJUHHG DW~SHUDQQXP7KHVHIHHVZHUHDOVR increased by 2.2% on 1 January 2020.

Governance developments Changes to Executive Director 3HQVLRQ%HQHƮWV

As a result of the 2018 UK Corporate *RYHUQDQFH&RGHDQGZLGHULQVWLWXWLRQDO investor guidance recommending pension alignment between executives and HPSOR\HHVWKH&RPPLWWHHKDVUHYLHZHG the current Executive Directors' pension SURYLVLRQ7KHFRQFOXVLRQRIWKH&RPPLWWHH with the agreement of the Executive 'LUHFWRUVLVWKDWSHQVLRQEHQHƮWVVKRXOGEH UHGXFHGWRUHưHFWSHQVLRQSURYLVLRQPRUH generally in the UK but also take account of the timing of individual appointments and pension provision at that time. Setting the quantum of Directors' pension with reference to general provision across the Company's UK employees is appropriate given that Executive Director remuneration has been VHWWRUHưHFW8.PDUNHWSUDFWLFHLQWHUPVRI quantum and structure in light of Elementis being Premium Listed on the London Stock Exchange.

The policy the Committee has adopted is as follows in relation to future pension provision:

For incumbent Executive Directors (contribution to a pension scheme or D{FDVKDOWHUQDWLYH

From 1 January 2020: 25%
From 1 December 2020: 24%
From 1 December 2021: 22.5%
From 1 December 2022: 21%

The above rates already include a reduction in the level of pension that can be provided to the Chief Executive with future Company contributions to his contractual US retirement scheme to be limited to circa 5% from 2020 where previously they have been up to circa 8% of salary in addition to his separate entitlement to a 20% of salary cash allowance.

For new Joiners:

• 8% contribution to a pension scheme or a cash alternative

The reduction set out above for Executive Directors will achieve alignment with the average rate of pension currently provided WR8.HPSOR\HHV,WLVUHưHFWLYHRIWKHW\SLFDO individual pension funding rate prevailing at the time of the Executive Directors' appointments i.e. the 21% is set at the current average funding cost and at a rate WKDWUHưHFWHGVWDQGDUGSUDFWLFHDW(OHPHQWLV in the UK at the time of their appointments. 7RSURYLGHIXUWKHUFRQWH[WERWKWKHPHGLDQ and upper quartile employee included in the CEO to all employee pay ratio on page 94 has a pension contribution (as a percentage of salary) in excess of the 21% of salary detailed above. As a Company that has grown through a combination of organic growth and acquisition there are several pension schemes that operate in the UK. 7KHVFKHPHVLQFOXGHERWKGHƮQHGEHQHƮW DQGGHƮQHGFRQWULEXWLRQDUUDQJHPHQWV New joiners to Elementis in the UK are now HOLJLEOHWRMRLQDQRSHQGHƮQHGFRQWULEXWLRQ plan (where the typical Company contribution is 8% of salary) but employees that joined in SULRU\HDUVFRQWLQXHWREHQHƮWIURPIXWXUH DFFUXDORIEHQHƮWVLQWKHLURULJLQDOSHQVLRQ SODQV2QWKLVEDVLVWKHDSSURDFKGHWDLOHG above provides consistency between the Executive Directors and the wider workforce allowing for the timing of their joining service with any new joiner being set at the same pension rate as other new joiners.

&RQWH[WRI'LUHFWRUVoSD\ZLWKLQ WKH{&RPSDQ

Whilst the Group has less than 250 employees in the UK and is therefore not required to report under the gender pay gap UHJXODWLRQVDFRPSUHKHQVLYHJOREDOUHYLHZ of gender pay was completed towards the end of 2018. This looked at all roles globally to determine the equity of pay based upon actual local pay rates and the level of the UROH'XHWRWKHVLJQLƮFDQWQDWXUHRIWKLV ZRUNLWZLOOEHXQGHUWDNHQRQDELHQQLDO basis. Actions were taken in 2019 on a small QXPEHURILQUROHJDSVWKDWZHUHLGHQWLƮHG The Board and the Committee will continue to monitor the situation going forward.

The Group is also not required to provide disclosure of the CEO to all employee pay ratio given the Group has less than 250 HPSOR\HHVLQWKH8.+RZHYHUJLYHQWKH external focus on pay ratios the Committee has included full pay ratio disclosure RQSDJH{7KH&RPPLWWHHQRWHGWKDW the ratio was towards the lower range of those previously disclosed by FTSE 350 companies.

Concluding remarks

The Committee believes that the Policy and our approach to implementation in both 2019 and 2020 are in the best interests of the Company and we hope that you will support the actions the Committee has taken by voting in favour at the 2020 AGM. If you have DQ\FRQFHUQVSOHDVHIHHOIUHHWRFRQWDFW me via the Group Company Secretary at [email protected].

Corporate governance

Directors' Remuneration Report continued

Annual Report on Remuneration (Report)

7KLV5HSRUWGHWDLOVKRZWKH&RPSDQ\oVSROLFLHVDQGSUDFWLFHVRQ'LUHFWRUVoUHPXQHUDWLRQZHUHDSSOLHGLQUHVSHFWRIWKHƮQDQFLDO\HDUHQGHG 'HFHPEHUDQGKRZWKH\ZLOOEHDSSOLHGLQWKHƮQDQFLDO\HDU

A copy of the current remuneration policy is available on the Company's website: www.elementis.com/governance/remuneration-committee

Our measures
Annual Bonus	LTIP
\$GMXVWHG*URXSSURƮWEHIRUHWD[ 50% weighting	(DUQLQJVSHUVKDUH(36 50% weighting
Adjusted average trade working capital WRVDOHVUDWLR\$:& 20% weighting 1RQƮQDQFLDOREMHFWLYHVDOLJQHGZLWK6DIHW\ 6WUDWHJLFLPSOHPHQWDWLRQDQG3HRSOH 30% weighting	5HODWLYH7RWDO6KDUHKROGHU5HWXUQ765 50% weighting ROCE underpin

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			Strategic priorities
	Performance metrics	Innovation	Growth	(ƱFLHQF\
Bonus	)LQDQFLDO
	\$GMXVWHG*URXSSURƮWEHIRUHWD[	O	O	O
	Average trade working capital to sales ratio		O	O
	1RQƮQDQFLDO
	6DIHW\FRPSOLDQFHDQGULVNPDQDJHPHQW	O	O	O
	Strategic implementation	O	O	O
	People	O	O	O
LTIP	EPS (50%)	O	O	O
	Relative TSR versus FTSE All Share (50%)	O	O	O
	Return on operating capital employed (underpin)	O	O	O

Shareholder information

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7KHVHFWLRQEHORZVXPPDULVHVKRZWKH3ROLF\ZDVLPSOHPHQWHGLQWKHƮQDQFLDO\HDUHQGLQJ'HFHPEHU)XUWKHUGHWDLOVDUHSURYLGHG on pages 85 to 91.

Key Policy features	Performance assessment	How we implemented in 2019?
6DODU\ • Increases normally guided by the general increase for the local workforce and/or broader workforce as a whole	Not applicable		Paul Waterman	Ralph Hewins
		2019 salary	~	~
		(TXLYDOHQWWR
		In line with the average increases awarded to the 86DQG8.VDODULHGZRUNIRUFHWKHVDODULHVRIWKH CEO and CFO's salary were both increased by c.3%. 7KHVHFKDQJHVZHUHHƬHFWLYHIURP-DQXDU\

3HQVLRQEHQHƮWVDOOHPSOR\HHVKDUHVFKHPHV • 3HQVLRQ&(2SDUWLFLSDWHVLQ86VSHFLƮFDUUDQJHPHQWV and receives a salary supplement of 20% of salary and CFO receives salary supplement of 25% of salary Not applicable Paul Waterman Ralph Hewins

• %HQHƮWV'LUHFWRUVUHFHLYHPDUNHWFRPSHWLWLYHEHQHƮWV and may participate in all-employee share schemes

(TXLYDOHQWWR

• Implementation in line with the Policy • ,QWKH&(2RSWHGQRWWRSDUWLFLSDWH in any voluntary US supplementary retirement arrangements

Pension ~
~

Paul Waterman	Ralph Hewins

	Paul Waterman	Ralph Hewins
2019 bonus	~	~
% deferred in shares
until Q1 2022	100%	100%

(TXLYDOHQWWR

overall performance
• 50% of bonus earned
deferred into shares for
two years

• Recovery and withholding provisions apply

\$QQXDOERQXV • Performance related scheme which delivers value for achievement against annual targets • Committee may adjust outturn where formulaic assessment is inconsistent with Company's

Opportunity	150% of salary	125% of salary
PBT	\$93.5m vs target of \$146.1m
Payout	0% of maximum
AWC	22.5% vs target of 19.5%
Payout	0% of maximum
1RQƮQDQFLDO	See page 87 to 88
Payout	87% of maximum reduced to 58%	83% of maximum reduced to 56%
	17.3% of	16.7% of
Total	maximum	maximum

Further information can be found on pages 85 to 88.

,QOLJKWRIWKHƮQDQFLDOSHUIRUPDQFHWKH&RPPLWWHH used its discretion to reduce the outcome of the individual portion by 33%. 100% of the bonus payment will be deferred as shares for 2019.

vesting £0 £0

Paul Waterman Ralph Hewins

Long term incentive plan

• Performance measures
EDVHGRQƮQDQFLDODQGRU
relative TSR metrics and
measured over 3 years

2017 LTIP

Committee may adjust outturn where formulaic assessment is inconsistent with Company's overall performance
Holding period applies for two years following vesting
Recovery and withholding provisions apply

Share ownership

guidelines • Build up and maintain a
shareholding equal to 200% of salary

	Paul Waterman	Ralph Hewins
Guideline	200% of salary	200% of salary
	On track	On track
Level	98.9% of salary	56.6% of salary

2017 Award	Average EPS growth	TSR vs FTSE All Share
Weighting	50%	50%
Threshold	3% p.a.	Median
target
Maximum	10% p.a.	Upper quartile
target
Actual	-7.67% p.a.	23rd percentile
Vesting	0%/50%	0%/50%

Further information can be found on pages 90 to 91.

Both the CEO and CFO increased their holdings during the year. Further information can be found on page 91.

Directors' Remuneration Report continued

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7KHVHFWLRQEHORZVXPPDULVHVKRZWKH&RPPLWWHHLQWHQGVWRLPSOHPHQWWKH3ROLF\IRUWKHIRUWKFRPLQJƮQDQFLDO\HDUHQGLQJ 31 December 2020.

Key Policy features	2020 implementation
6DODU\ • Level based on the scope and responsibilities of the role • Increases normally guided by the general increase for the local workforce and/or broader workforce as a whole	• The Committee reviewed salaries and decided to award Paul Waterman and Ralph Hewins each a salary increase as shown in the WDEOHEHORZZKLFKLVFRQVLVWHQWZLWKWKHDYHUDJHLQFUHDVHODVW\HDU for the respective US and UK salaried workforce.
		Paul Waterman	Ralph Hewins

Salary as at 1 January 19		~
Salary as at 1 January 20		~
2020 Increase	(+2%)	(+2.2%)

• Implementation in line with the Policy albeit a change to the proposed application of policy in relation to pension from 2020

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3HQVLRQ&(2SDUWLFLSDWHVLQ86VSHFLƮFDUUDQJHPHQWVDQGUHFHLYHV a salary supplement of 20% of salary and the CFO receives a salary supplement of 25% of salary
As detailed on page 81 it has been agreed that pension provision for the incumbent Directors will be aligned with typical UK pension provision by the end of 2022
Any new Director appointment will have pension set at 8% of salary
%HQHƮWV'LUHFWRUVUHFHLYHPDUNHWFRPSHWLWLYHEHQHƮWVDQGPD\ participate in all-employee share schemes

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Policy maximum of 150% of salary for CEO and 125% of salary for CFO
Performance related scheme which delivers value for achievement against annual targets
Committee may adjust outturn where formulaic assessment is inconsistent with Company's overall performance
50% of bonus earned deferred into shares for two years
Recovery and withholding provisions apply

Link to KPIs

Adjusted Group PBT
AWC
Individual objectives linked to strategic priorities

	Paul Waterman	Ralph Hewins
	150% of	125% of
Opportunity	salary	salary

3HUIRUPDQFHPHWULFV

Adjusted Group PBT: 50%
Average trade working capital to sales ratio: 20%
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The Committee considers that the bonus targets are commercially sensitive and therefore plans to disclose them only on a retrospective basis in next year's Directors' remuneration report.
The range of targets around budgeted performance levels to apply to the 2020 annual bonus remain the same as in 2019 for both WKH\$GMXVWHG*URXS3%7DQG\$:&+RZHYHULQOLJKWRIWKHFXUUHQW HFRQRPLFRXWORRNWKHDEVROXWHOHYHORI\$GMXVWHG*URXS3%7 performance required has been recalibrated versus the 2019 targets to UHưHFWFXUUHQWLQWHUQDOSODQQLQJDQGPDUNHWH[SHFWDWLRQV7KHWDUJHWV are considered similarly challenging to those set in 2019 allowing for current market conditions. Full retrospective disclosure of the actual targets will be included in next year's Directors' Remuneration report.

	Paul Waterman	Ralph Hewins
	200% of	175% of
LTIP Award	salary	salary

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	Weighting	Threshold target	Threshold vesting	Maximum target
EPS growth	50%	3%	0%	12%
Relative TSR vs
FTSE all-share				Upper
index	50%	Median	3.85%	quartile

• The range of EPS targets is considered to be appropriately demanding noting (i) that vesting takes place from 0% (as opposed WRWKHPDUNHWQRUPRIDQGLLLQOLQHZLWKLQVWLWXWLRQDO investor expectations such that the range straddles consensus growth expectations

Long term incentive plan

Policy maximum is 250% of salary
Awards vest to the extent performance conditions are achieved
3HUIRUPDQFHPHDVXUHVEDVHGRQƮQDQFLDODQGRUUHODWLYH765 metrics and measured over three years with a ROCE underpin • Committee may adjust outturn where formulaic assessment is
inconsistent with Company's overall performance
Holding period applies for two years following vesting
Recovery and withholding provisions apply
ROCE underpin introduced for the 2019 awards continues to apply

Link to KPIs

EPS
Relative TSR
ROCE underpin

Key Policy features	2020 implementation
Chair and NED fees • 7RDWWUDFWLQGLYLGXDOVZLWKWKHUHOHYDQWVNLOOVNQRZOHGJHDQG experience that the Board considers necessary in order to maintain DQRSWLPDOPL[WKDWHQVXUHVWKHHƬHFWLYHQHVVRIWKH%RDUGDVD whole in carrying out its duties and responsibilities	• 2020 fees were increased in line with the average for the UK salaried workforce:
		2020	2019	2020 Increase
	Basic fees
	Chairman	£195,055	~	(+2.2%)
	Non-Executive Director	£51,268	~	(+2.2%)
	Additional fees
	Senior Independent Director	£8,908	~	(+2.2%)
	Chair of Audit or
	Remuneration Committee	£8,908	~	(+2.2%)
	Workforce engagement NED	£4,454	~	(+2.2%)

&(2DQG&)25HZDUGV6FHQDULR\$QDO\VLV 7KHEDUFKDUWVEHORZLOOXVWUDWHWKHSRWHQWLDOSD\RSSRUWXQLWLHVIRU([HFXWLYH'LUHFWRUVXQGHUGLƬHUHQWVFHQDULRVIRU

The CEO's remuneration has been converted into pounds sterling using the average 2019 exchange rate of \$1.2764:£1.00.

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On target: the amount receivable assumes performance in which 50% of annual bonus is payable and 50% of LTIP awards vest.

Maximum: the maximum amount receivable should all stretch targets be met and vesting under both the annual bonus scheme and LTIP is :KHQYDOXLQJWKH/7,3DZDUGVXQGHUWKHn2QWDUJHWoDQGn0D[LPXPoVFHQDULRVWKHVHDUHEDVHGRQIDFHYDOXHDVDSHUFHQWDJHRIVDODU\ The LTIPs also relate to awards to be made in 2020 rather than any awards vesting in 2020.

Corporate governance

Corporate governance

Directors' Remuneration Report continued

5HPXQHUDWLRQSD\DEOHWR'LUHFWRUVIRUDXGLWHG

\$OWKRXJKWKH&RPSDQ\UHSRUWVLWVUHVXOWVLQ86GROODUVWKHUHPDLQGHURIWKLVUHSRUWRQUHPXQHUDWLRQLVSUHVHQWHGLQSRXQGVVWHUOLQJEHFDXVH the majority of the Directors are UK based and paid in pounds sterling.

A breakdown of the Directors' emoluments for the year ended 31 December 2019 is set out in the table below.
-------------------------------------------------------------------------------------------------------------	--

	Fixed
Salary/fees	2 %HQHƮWV	Pension	Sub-total	Bonus	LTIP	Sub-total	Total

705	70	152	927	187	–	187	1,114
651	43	183	877	352	–	352
354	25	89	468	75	–	75	543
344	25	86	455	159	–	159	614

191	–	–	191	–	–	–	191
185	–	–	185	–	–	–	185
51	–	–	51	–	–	–	51
49	–	–	49	–	–	–	49
50	–	–	50	–	–	–	50
49	–	–	49	–	–	–	49
59	–	–	59	–	–	–	59
57	–	–	57	–	–	–	57
59	–	–	59	–	–	–	59
57	–	–	57	–	–	–	57
59	–	–	59	–	–	–	59
57	–	–	57	–	–	–	57
1,528	95	241	1,864	262	–	262	2,126
	68	269		511	–	511
						Performance related

1 Paul Waterman is based in the US and paid in US dollars. He received an annual salary of \$899k (2018: \$874k). His pension comprises 20% of his salary DQGHPSOR\HUFRQWULEXWLRQVWRGHƮQHGFRQWULEXWLRQUHWLUHPHQWVFKHPHV)RUHLJQH[FKDQJHUDWHDSSOLHGLVWKHDYHUDJHUDWHRI~ \$1.3413:£1.00).

7D[DEOHEHQHƮWVIRU3DXO:DWHUPDQFRQVLVWRIDFDUDOORZDQFHSULYDWHKHDOWKFDUH~GHQWDOOLIHDVVXUDQFHDFFLGHQWDOGHDWKDQGGLVDEOHPHQWFRYHU DQGORQJWHUPGLVDELOLW\LQVXUDQFH~WD[DGYLFH~DQGFOXEPHPEHUVKLS7KHLQFUHDVHLQEHQHƮWVVKRZQRYHULVODUJHO\GXHWRD SD\PHQWPDGHLQFRQQHFWLRQZLWKUHFHLSWRIWD[DGYLFHWRHQDEOHKLPWRPDNHDSSURSULDWHWD[ƮOLQJVLQERWKWKH8.DQG86DVDUHVXOWRIFRPSDQ\EXVLQHVV WUDYHOUHTXLUHPHQWVGXULQJZKLFKH[FHHGHGWKHQRUPDOEXVLQHVVH[SHFWDWLRQVDJUHHGRQDSSRLQWPHQWDQGJDYHULVHWRWKHQHHGIRUGXDOƮOLQJV 7D[DEOHEHQHƮWVIRU5DOSK+HZLQVFRQVLVWRIDFDUDOORZDQFH~SULYDWHKHDOWKFDUHDQGOLIHDVVXUDQFH

3 Sandra Boss was appointed Designated Non-Executive Director for workforce engagement in October 2019

4 John O'Higgins was appointed on 4 February 2020

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7KLVVHFWLRQVKRZVWKHSHUIRUPDQFHWDUJHWVVHWLQUHVSHFWRIWKHDQQXDOERQXVVFKHPHWKHOHYHORISHUIRUPDQFHDFKLHYHGDQGWKH amount of bonus payable to Directors. The bonus targets were tested against the full year results and the full year bonus payment will be paid in 4)RURIWKHDPRXQWYHVWLQJZLOOEHSDLGLQWKHIRUPRIDVKDUHDZDUGGHIHUUHGIRUWZR\HDUV

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		FY 2019 bonus plan targets					Percentage of salary vesting
Full year bonus	Relative weighting of performance conditions	Threshold	Plan	Stretch	Actual result	Percent of maximum	Paul Waterman CEO	Ralph Hewins CFO
Maximum as % salary							150%	125%
PBT (\$m)	50%	127.8	146.1	160.7	93.5	0%	0%	0%
AWC (%)	20%	21.5	19.5	17.5	22.5	0%	0%	0%
1RQƮQDQFLDO	30%				n/a	n/a	39.0%	31.25%
7RWDOIXOO\HDU	100%						39.0%	31.25%
Post Discretion							26%	20.8%

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Set out below are the challenging 2019 individual strategic objectives and actual performance against them prior to the use of discretion by the Committee to reduce the bonus outcomes. The objectives established and the assessment of performance is shown in the table below. 7KHREMHFWLYHVZHUHFDWHJRULVHGLQWRWKUHHJURXSVs6DIHW\&RPSOLDQFH 5LVN0DQDJHPHQW6WUDWHJLF,PSOHPHQWDWLRQDQG3HRSOH with each group having an equal weighting.

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Measure	Objectives	Performance indicators	Achievements	Summary scoring
6DIHW\FRPSOLDQFHDQG risk management ASSESSMENT All targets exceeded and further investment made in 6DIHW\FXOWXUHDZDUHQHVV and equipment	• Through embedding our Values in the ZD\ZHZRUNFUHDWH DFXOWXUHRI6DIHW\ Compliance and Risk Management	• Reportable Injuries: TRIR – target WKUHVKROGDQGVWUHWFK <0.55 • Environmental Tier 2/3 incidents: WDUJHW7LHULQFLGHQWV WKUHVKROG = 1 Tier 3 and stretch = 0 • /7\$!GD\VWDUJHW WKUHVKROG stretch = 1	• TRIR = 0.48 • Environment Tier2/3 incidents = 0 • LTA > 3 days = 1	10/10
Strategic Implementation Actions to deliver "Pursue Best Growth Opportunities" Strategic Priority ASSESSMENT All targets achieved and overall transformation programme delivered	• Coatings Transformation	• 6LPSOLƮFDWLRQRIWKHSRUWIROLR through targeted reduction of 250- 300 SKU's • ,PSURYHPDUJLQVDQGHƱFLHQF\ through SG&A reduction (run rate target to be agreed Q2)	• 332 reduction in active SKU's in 2019 • \$4m targeted reduction in SG&A achieved with further margin improvement WKURXJKSULFLQJSURGXFW optimisation and channel strategy	8/10
Actions to deliver "Pursue Best Growth Opportunities" Strategic Priority ASSESSMENT Targets achieved	• Talc Integration	• Successful integration of Business • At least \$2m full year run rate cost synergy actions executed	• Business fully integrated as per plan. • \$2m full year run-rate cost synergies delivered with good progress made on revenue synergies
Actions to deliver "Pursue Supply Chain Transformation" Strategic Priority ASSESSMENT Targets partially achieved	• Plan and execute 2019 component of Coatings Manufacturing footprint optimisation	• &DVVLXVSURMHFWEHQHƮWVGHOLYHUHG in full • India Project delivered to plan • Pursue Coatings Manufacturing footprint rationalisation in Asia and the Americas to deliver XWLOLVDWLRQƮ[HGFRVWDQGZRUNLQJ FDSLWDOEHQHƮWV	• Cassius project completed in 2019 with an annual run rate EHQHƮWRIPDFKLHYHG Majority of planned 2019 EHQHƮWDFKLHYHG • 7DORMDVLWHDFTXLUHGSODQ in place and construction started. Savings on track for full delivery • Project re-evaluated into i). Global review of manufacturing footprint and ii). Chromium manufacturing DQGHƱFLHQF\ • &RPELQHGEHQHƮWLQOLQH ZLWKRSHUDWLRQDOHƱFLHQF\ targets for 2022
Innovate for High Margins & Distinctiveness ASSESSMENT Targets partially achieved	• Reset R&D agenda and resourcing	• (VWDEOLVKULJKWVL]HG5 ' 2UJDQLVDWLRQIRUERWKHƬHFWLYHQHVV DQGHƱFLHQF\ • Clarity of product pipeline and subsequent growth potential over VKRUWDQGPHGLXPWHUPKRUL]RQ	• R&D organisation re-aligned WRJURZWKVWUDWHJLHVLQ place Q4 ensuring global reach and local presence • Innovation pipeline re IRFXVHGRQGLVWLQFWLYHQHVV materiality and speed with clear KPI's set

Corporate governance

Financial statements

Shareholder information

Corporate governance

Directors' Remuneration Report continued

Measure	Objectives	Performance indicators	Achievements	Summary scoring
People Actions to deliver "Culture of High Performance" Strategic Priority	• Continued development of the capability and diversity of the	• Building Asian Leadership Capability through the successful appointment and integration of new Senior Leaders in Commercial China and SE	• Critical new hires in place in China and India plus VLJQLƮFDQWFDSDELOLW\ building in Sales territory	8/10
ASSESSMENT	Executive leadership team and level 3	\$VLD)LQDQFHDQG6XSSO\&KDLQ • Succession plans established	WHDPV+5DQG)LQDQFH teams. Commercial Director
Targets partially achieved	(senior) leadership	for ELT and critical level 3 roles to increase our most senior female population to 25% (17% at end 2018) by 2021	India/SE Asia hiring in progress • ELT and Level 3 succession review completed with focus on development of talent. Two female Plant Managers appointed Extended leadership group 23% female at end of December 2019. Senior Leadership at 20% Female

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Objectives • Through embedding our Values in the ZD\ZHZRUNFUHDWH DFXOWXUHRI6DIHW\ Compliance and Risk Management	Performance indicators • Reportable Injuries: TRIR – target WKUHVKROGDQGVWUHWFK <0.55 • Environmental Tier 2/3 incidents: WDUJHW7LHULQFLGHQWV WKUHVKROG = 1 Tier 3 and stretch = 0 • /7\$!GD\VWDUJHW WKUHVKROG stretch = 1	Achievements • TRIR = 0.48 • Environment Tier2/3 incidents = 0 • LTA > 3 days = 1	scoring 10/10




• Talc Integration	• Successful integration of Business • At least \$2m full year run rate cost synergy actions executed	• Business fully integrated as per plan • \$2m full year run-rate cost synergies delivered with	8/10


• Plan and execute 2019 component of Manufacturing	• &DVVLXVSURMHFWEHQHƮWVGHOLYHUHG in full • India Project delivered to plan	• Cassius project completed in 2019 with an annual run rate
		EHQHƮWRIPDFKLHYHG
	and the Americas to deliver XWLOLVDWLRQƮ[HGFRVWDQGZRUNLQJ FDSLWDOEHQHƮWV	EHQHƮWDFKLHYHG • 7DORMDVLWHDFTXLUHGSODQ in place and construction started. Savings on track for full delivery • Project re-evaluated into i) Global review of manufacturing footprint and ii) Chromium manufacturing DQGHƱFLHQF\&RPELQHG EHQHƮWLQOLQHZLWK RSHUDWLRQDOHƱFLHQF\ targets for 2022
	&50DQGHFRPPHUFHSOXV components of BI/MI project • ,PSURYHưDVKUHSRUWLQJWRDOLJQZLWK business segments	• Elementis.com launched in 0D\&50YLD6DOHVIRUFHFRP launched and key in driving NBO's. E-commerce and BI/ MI delayed until 2020
	footprint optimisation	• Pursue Coatings Manufacturing footprint rationalisation in Asia • Digital implementation • 6XFFHVVIXOODXQFKRI(OHPHQWLVFRP	good progress made on revenue synergies Majority of planned 2019 • Flash reporting aligned to new business segments

Corporate governance

Directors' Remuneration Report continued

Measure	Objectives	Performance indicators	Achievements	Summary scoring
Actions to deliver "Culture of High Performance" Strategic Priority ASSESSMENT Targets achieved	• Sustainable working • ,PSURYHHƱFLHQF\RIZRUNLQJ capital reduction capital deployment • Strategic balance • \$12m reduction in 2019 sheet management		• \$11m delivered in 2019 with excellent progress in demand planning and • Clear and appropriate actions taken inventory management to manage risk – interest rate and fx • Euribor hedging in place over €120m of our debt such that approx 50% of debt is now fully interest rate hedged through to Q4 2023. Managed debt split USD/EUR to mirror EBITDA split and reduce fx risk. Extended \$375m RCF by 12 months to reduce risk of all debt maturing in one tranche
People Actions to deliver "Culture of High Performance" Strategic Priority ASSESSMENT Targets partially achieved	• Continue to build the capability of the Finance/ IT organisation	• (ƬHFWLYHWUDQVLWLRQWRQHZ)LQDQFH ,7RUJDQLVDWLRQQHZVWUXFWXUH embedded with particular focus on Asia controls / risk management capability • Build cohesive team with added capability in Performance Management and Digital technology	• New Finance/IT organisation in place as of Q4. Good progress on Asia controls and risk management capability • Performance Management team continuing to develop and enhance capability. Good progress made in building Digital technology understanding	7/10

'LUHFWRUVoVKDUHEDVHGDZDUGV

Determination of 2017 LTIP awards (audited)

8QGHUWKH\$ZDUGDFKLHYLQJWKHWKUHVKROG(36JURZWKWDUJHWSDZRXOGUHVXOWLQRIWKH(36SRUWLRQYHVWLQJDQGDFKLHYLQJWKH threshold TSR target (median rank) would result in 3.85% of the TSR portion vesting. The threshold EPS and TSR targets were not met and these awards will lapse.

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LTIP awards made in 2019 are set out in the table below and are subject to EPS and TSR performance conditions (split 50:50) over the three years to 31 December 2021 as shown in the table below.

Award holder	Type of share award	Grant date	Number of awards	Face value of award at grant (£'000s)1	Percentage that would vest at threshold performance	The end date of the performance period	A summary of performance targets and measures
Paul Waterman Nil cost	(restricted stock unit)	01.04.2019			0% of the award subject WR{WKH(36FRQGLWLRQ and	31.12.2021	Average annual EPS growth of 3% to 12% and
Ralph Hewins	Nil cost option	01.04.2019		620	3.85% of the award subject to the TSR condition		TSR performance of median to upper quartile

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2 Details of deferred bonus and savings based share schemes are shown in the table overleaf.

Sourcing shares for our share plans

Employee share plans comply with the Investment Association's guidelines on dilution which provide that overall issuance of shares under all SODQVVKRXOGQRWH[FHHGDQDPRXQWHTXLYDOHQWWRRIWKH&RPSDQ\oVLVVXHGVKDUHFDSLWDORYHUDQ\WHQ\HDUSHULRGZLWKDIXUWKHUOLPLWDWLRQ RILQDQ\WHQ\HDUSHULRGRQGLVFUHWLRQDU\SODQV%DVHGRQWKHQXPEHURIDZDUGVWKDWUHPDLQRXWVWDQGLQJDVDWWKH\HDUHQGWKH&RPSDQ\oV headroom for all plans is 3.68% and for discretionary plans is 3.11% of issued share capital.

Shareholder information

Directors' scheme interests (audited)

The interests of the persons who were Directors during the year in the issued shares of the Company were:

						Scheme interests
	Interest type	Grant date	Option price (p)	01.01.19(A)	Granted during 2019	Exercised during 2019	Lapsed during 2019	31.12.19	Vested but unexercised share options
Executive Directors
Paul Waterman	LTIP (A)	04.04.2016	–		–	–		–	–
	DSBP (B)	07.03.2017	–		–		–	–	–
	LTIP (A)	03.04.2017	–		–	–	–		–
	DSBP (B)	05.04.2018	–		–	–	–		–
	LTIP (A)	30.04.2018	–		–	–	–		–
	DSBP (B)	06.03.2019	–	–		–	–		–
	LTIP (A)	01.04.2019	–	–		–	–		–
Total scheme interests									Nil
Ralph Hewins	RA (C)	19.09.2016	–		–	–		–	–
	DSBP (B)	07.03.2017	–		–	–	–
	RA (D)	07.03.2017	–		–	–	–
	RA (C)	07.03.2017	–		–	–	–
	LTIP (A)	03.04.2017	–		–	–	–		–
	DSBP (B)	05.04.2018	–		–	–	–		–
	LTIP (A)	30.04.2018	–		–	–	–		–
	SAYE (E)	27.11.2018	163.91		–	–	–		–
	DSBP (B)	06.03.2019	–	–		–	–		–
	LTIP (A)	01.04.2019	–	–		–	–		–
Total scheme interests						0

Notes

\$/7,3DZDUGVDUHVXEMHFWWRSHUIRUPDQFHFRQGLWLRQV7KHVDPHUHODWLYH765SHUIRUPDQFHFRQGLWLRQVDSSO\LQUHVSHFWRIWKHDZDUGVPDGHLQDQG 2019 and the same EPS growth targets apply to all awards (annual growth of 3% to 10%) other than the 2019 award (annual growth of 3% to 12%). These awards ordinarily vest on the third anniversary of the grant date. Full detail of the vesting conditions are set out on page 90.

(B) Conditional share award under the Deferred Share Bonus Plan (DSBP). Structured as restricted stock units for Paul Waterman and nil cost options for Ralph +HZLQV)RU'6%3DZDUGVJUDQWHGLQ0DUFKWKHVKDUHSULFHDWGDWHRIJUDQWZDV~7KHIDFHYDOXHRIDZDUGVDWJUDQWZHUH~DQG~IRU Paul Waterman and Ralph Hewins respectively.

(C) Replacement Awards structured as nil cost options made under standalone arrangements that borrow terms from the LTIP as amended. The 2016 awards lapsed RQ\$SULO,QOLQHZLWKWKHUHPXQHUDWLRQIRUIHLWHGRQOHDYLQJKLVIRUPHUHPSOR\HUWKH\$ZDUGGLGQRWKDYHSHUIRUPDQFHFRQGLWLRQVEXWVKDUHVZHUH required to be held for two years.

(D) Replacement Awards structured as nil cost options made under standalone arrangements that borrow terms from the DSBP as amended.

(E) Options held under the UK SAYE scheme. This is a savings based share option scheme that is not subject to performance conditions. Further details on this VFKHPHLVVKRZQLQ1RWHWRWKHnFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVoRQSDJH

Directors' share interests (audited)

The interests of the Directors (including any connected persons) during the year (and from the year end to 4 March 2020) in the issued shares of the Company were:

	01.01.19	Acquired during 2019	Disposed during 2019	31.12.19	Shareholding level met as at 31.12.19
Executive Directors
Paul Waterman1			0		No1
Ralph Hewins			0		No1
Non-Executive Directors
\$QGUHZ'XƬ		0	0		n/a
Sandra Boss		0	0		n/a
Dorothee Deuring		0	0		n/a
Steve Good		0	0		n/a
Anne Hyland		0	0		n/a
Nick Salmon		0	0		n/a
John O'Higgins2	–	0	0	0	n/a

\$VSHUWKH3ROLF([HFXWLYH'LUHFWRUVDUHH[SHFWHGWREXLOGXSDVKDUHKROGLQJWKDWLVHTXDOLQYDOXHWRRIWKHLUEDVLFDQQXDOVDODULHV6KDUHDZDUGVYHVWLQJ over time will contribute to meeting the shareholder requirement.

2 John O'Higgins joined the Board on 4 February 2020

Corporate governance

Directors' Remuneration Report continued

The market price of ordinary shares at 31 December 2019 was 179 pence (2018: 182.1 pence) and the range during 2019 was 129.8 pence to 179.7 pence (2018: 166.1 pence to 288.8 pence).

\$VDW'HFHPEHUWKH7UXVWHHRIWKH&RPSDQ\oV(PSOR\HH6KDUH2ZQHUVKLS7UXVW(627KHOGVKDUHV \$V([HFXWLYH'LUHFWRUV3DXO:DWHUPDQDQG5DOSK+HZLQVDVSRWHQWLDOEHQHƮFLDULHVXQGHUWKH(627DUHGHHPHGWRKDYHDQLQWHUHVWLQDQ\ shares that become held in the ESOT.

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Paul Waterman received a salary supplement of 20% of his basic salary and participated in US contractual retirement schemes. Further detail can be found in the Policy. The amount shown in the table below represents employer matching contributions and both this and the salary supplement are included in the Directors' emoluments table shown on page 86.

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	'HƮQHGFRQWULEXWLRQSODQV		Salary supplement
	2019 £'000	2018 £'000	2019 £'000	2018 £'000
Paul Waterman	11	58	141	125
Ralph Hewins	QD	n/a	89	86

3D\PHQWVWRSDVW'LUHFWRUVSD\PHQWVIRUORVVRIRƱFHDXGLWHG 7KHUHZHUHQRSD\PHQWVLQWKHƮQDQFLDO\HDU

7RWDOVKDUHKROGHUUHWXUQSHUIRUPDQFHDQGFKDQJHLQ&(2oVSD

7KHJUDSKEHORZLOOXVWUDWHVWKH&RPSDQ\oVWRWDOVKDUHKROGHUUHWXUQIRUWKHWHQ\HDUVHQGHG'HFHPEHUUHODWLYHWRWKH)76(,QGH[ along with a table illustrating the change in CEO pay since 2009. The table also details the varying award vesting rates year on year for the annual bonus scheme and LTIP.

\$VWKH&RPSDQ\oVVKDUHVDUHGHQRPLQDWHGDQGOLVWHGLQSHQFHWKHJUDSKEHORZORRNVDWWKHWRWDOUHWXUQWR'HFHPEHURI~ invested in Elementis on 31 December 2009 compared with that of the total return of £100 invested in the FTSE 250 Index. This index was selected for the purpose of providing a relative comparison of performance because the Company is a member of it.

2010 2011 2012 2013 2014 2015 2016 2017 2018 CEO pay (total remuneration – £'000s) 763 1
	2019
	1,114
Annual bonus payout (% of maximum) 100% 100% 81% 56% 50% 0% 27.5% 93.0% 35.0%	17.3%
LTIP vesting (% of maximum) 0% 100% 100% 100% 65% 0% 91.2%2 91.4%3 0%	0%

1 Includes remuneration for Paul Waterman and David Dutro for the period in which each was CEO during 2016.

2 Relates to Paul Waterman's buy-out awards which vested in March 2017.

3 Relates to Paul Waterman's buy-out awards vesting in March 2018.

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:KLOVW(OHPHQWLVLVQRWUHTXLUHGWRSXEOLVKD&(2WRDOOHPSOR\HHSD\UDWLRJLYHQLWKDVOHVVWKDQ8.HPSOR\HHVYROXQWDU\GLVFORVXUHRIWKH SD\UDWLRLVLQFOXGHGEHORZ,QOLQHZLWKWKHUHOHYDQWOHJLVODWLRQWKHDQDO\VLVKDVEHHQFRPSOHWHGXVLQJ2SWLRQ\$LHDFWXDOWRWDOUHPXQHUDWLRQ earned in 2019 has been used as the basis for comparison). Whilst this is only based upon 68 UK employees there is a good mix of PDQXIDFWXULQJEDVHGHPSOR\HHVFDQGFRUSRUDWH+HDG2ƱFHHPSOR\HHV2SWLRQ\$ZDVXVHGDVLWZDVGHHPHGWKHPRVWDFFXUDWHDQG prevalent amongst recent FTSE 250 disclosures.

7KHUDWLRLVFRPSDUDEOHZLWKWKDWPHDVXUHGLQWHUQDOO\IRUDQGLVFRQVLVWHQWZLWKWKHSD\UHZDUGDQGSURJUHVVLRQSROLFLHVIRUWKHFRPSDQ\oV UK employees taken as a whole.

CEO pay ratio	2019
Method	A
&(26LQJOHƮJXUH	£1,114,000
Upper quartile	15
Median	21
Lower quartile	25

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Upper quartile individual ~ Median individual ~	2019	Salary	Total Pay
			~
			~
Lower quartile individual ~			~

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The table below shows the total remuneration paid across the Group together with the total dividends paid in respect of 2019 and the SUHFHGLQJƮQDQFLDO\HDU

£m	2019	2018	Change
5HPXQHUDWLRQSDLGWRDOOHPSOR\HHVVHHQRWHWRWKH&RQVROLGDWHGƮQDQFLDOVWDWHPHQWV	107.8	100.4	7.4%
Total dividends paid in the year	37.6	30.5	23.3%

1 The amounts for 2019 and 2018 have been converted from dollars into pounds sterling using the average USD/GBP exchange rates for those years. 2 Total remuneration has increased due to the inclusion of the Talc employees balanced by a reduction in headcount through organisational changes and changes in FX rate.

Directors' Remuneration Report continued

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The table below shows the change from 2018 to 2019 of the CEO's pay with regard to the three elements set out below and the corresponding change of these elements across all employees within the Group.

	% Change from 2018 to 20191
	Salaries	%HQHƮWV	Bonus2
CEO pay (total remuneration)	8.2%	62.1%	-46.9%
All employees	15.5%	10.7%	-26.1%

1 All percentages are based on converting relevant local currencies into pounds sterling using the average rates for the respective year.

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7KH\HDURQ\HDUFKDQJHLQLWKH&(2oVEHQHƮWVDUHGULYHQE\FRVWVLQFXUUHGDVUHVXOWRIWD[DGYLFHWRWKH&(2GXHWREHLQJUHTXLUHGWRƮOHWD[HVLQGXDOORFDWLRQV DVDUHVXOWRIWUDYHOUHTXLUHGE\WKH&RPSDQ\DQGLLFKDQJHVLQHPSOR\HHVDODU\EHQHƮWVDQGERQXVDUHGULYHQE\FKDQJHVWRWKHHPSOR\HHSRSXODWLRQDULVLQJDV a result of the Mondo acquisition and movements in exchange rates.

Statement of shareholder voting

The resolution to approve the 2017 Directors' remuneration policy was passed on a poll at the Company's 2018 AGM held on 26 April 2018 and the 2018 Directors' Remuneration Report was passed on a poll at the Company's 2019 AGM held on 30 April 2019. Set out in the table below are the votes cast by proxy in respect of these resolutions.

	Votes for	% For	Votes against	% Against	Votes with-held
2018 Directors' remuneration report (2019 AGM)		89.68		10.32
2017 Directors' remuneration policy (2018 AGM)		99.35		0.65

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Committee composition

7KH&KDLUPDQDQGPHPEHUVRIWKH&RPPLWWHHDUHVKRZQRQSDJHVWRWRJHWKHUZLWKWKHLUELRJUDSKLFDOLQIRUPDWLRQ)RXUPHHWLQJVZHUH held during 2019 and the attendance of Committee members are shown on page 79.

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Terms of reference

A full description of the Committee's terms of reference is available on the Company's website at www.elementis.com.

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The Committee ensure that the Policy promotes sustained performance of the Company and is aligned with shareholder interests with LQFHQWLYHSD\EDVHGRQJURZLQJSURƮWVDQGGHOLYHULQJDERYHDYHUDJHWRWDOVKDUHKROGHUUHWXUQ,QOLQHZLWKWKHEXVLQHVVRSHUDWLRQVDVDJOREDO VSHFLDOW\FKHPLFDOVFRPSDQ\RXU3ROLF\LVGHVLJQHGZLWKDELDVWRZDUGVORQJWHUPSHUIRUPDQFH,QOLQHZLWKWKLVVWUDWHJ\WKHSHUIRUPDQFH PHWULFVDUHVHOHFWHGWRIRFXVRQSURƮWDEOHJURZWKDQGGHOLYHULQJDERYHDYHUDJHWRWDOVKDUHKROGHUUHWXUQV

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Shareholders will be consulted during the Policy review in 2021 in advance of it being presented for approval at the 2022 AGM.

Committee meeting dates	Agenda items
)HEUXDU\	• 2016 LTIP performance outcomes • 2019 LTIP targets / performance conditions and delegating authority to grant the 2019 awards • %RQXVSODQSD\PHQWVGHIHUUHGVKDUHDZDUGVDQGERQXVSODQWDUJHWV • Consideration of 2019 annual bonus targets • ELT salary review and bonus payments • \$SSURYDORIƮQDOGUDIWRI'LUHFWRUVoUHPXQHUDWLRQUHSRUW • Terms of Reference
-XO\	• Corporate governance update • %RQXVSODQsFRQƮUPDWLRQRI*URXSERQXVWDUJHWV • LTIP dividend equivalents • Board expenses policy
'HFHPEHU	• Corporate governance update • Application of Policy in 2020 in light of strategy update (November Capital Markets Day presentation) • 2020 salary reviews for Paul Waterman and Ralph Hewins • Review of performance to date for 2019 annual bonus • Annual bonus design for 2020 • Chairman's fee review

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Evaluation, training and development

2QDQDQQXDOEDVLVWKH&RPPLWWHHoVHƬHFWLYHQHVVLVUHYLHZHGDVSDUWRIWKHHYDOXDWLRQRIWKH%RDUG)ROORZLQJWKHHYDOXDWLRQODVW\HDUWKHUH were no major issues to report.

'XULQJ&RPPLWWHHPHPEHUVZHUHXSGDWHGRQWKHODWHVWGHYHORSPHQWVRQH[HFXWLYHUHPXQHUDWLRQDQGDOOPHPEHUVUHFHLYHGEULHƮQJV IURPWKH*URXS&RPSDQ\6HFUHWDU\DQGWKH&RPPLWWHHoVUHPXQHUDWLRQDGYLVHUVWKURXJKRXWWKH\HDUWRNHHSWKHPXSGDWHGRQWRSLFDOPDWWHUV and developments relating to executive remuneration.

Remuneration advisers

.RUQ)HUU\ZHUHDSSRLQWHGH[WHUQDODGYLVHUVWRWKH&RPPLWWHHZLWKHƬHFWIURP\$SULO7KH&RPPLWWHHLVVDWLVƮHGWKDWWKHUHZDVQRRYHU reliance on Korn Ferry and that advice received was independent and objective. Korn Ferry are a member of the Remuneration Consultants *URXSDQGYROXQWDULO\RSHUDWHXQGHUWKH&RGHRI&RQGXFW)HHVSDLGWR.RUQ)HUU\IRUUHPXQHUDWLRQDGYLVRU\VHUYLFHVLQZHUH~ (excluding VAT) and were charged on a time and materials basis.

,QDGGLWLRQWRWKHUHPXQHUDWLRQDGYLVRU\VHUYLFHVSURYLGHGE.RUQ)HUU\RWKHUWHDPVDOVRSURYLGHGDVVLVWDQFHZLWKWKHUHFUXLWPHQWRI6WHYH Ridge and John O'Higgins and advice on the new sales incentive plan. There are no other connections with the Company that may impact the independence of the remuneration advice received given the nature of the other services provided and the internal protocols at Korn Ferry.

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The sections of the Annual Report on Remuneration that are required to be audited by law are as follows: Remuneration payable to Directors for DQG5HWLUHPHQWEHQHƮWVDQGWDEOHVKHDGHG\$QQXDO/7,3DZDUGVJUDQWHGLQWKH\HDU'LUHFWRUVoVFKHPHLQWHUHVWV'LUHFWRUVoVKDUHLQWHUHVWV DQG'LUHFWRUVoUHWLUHPHQWEHQHƮWV

Steve Good

&KDLUPDQ5HPXQHUDWLRQ&RPPLWWHH 4 March 2020

Directors' report

DIRECTORS' REPORT

Additional disclosures

7KH'LUHFWRUVSUHVHQWWKHLUUHSRUWDQGWKHDXGLWHGƮQDQFLDO statements of the Company and the Group for the year ended 31 December 2019.

Information required to be disclosed in the Directors' report may EH{IRXQGEHORZDQGLQWKHIROORZLQJVHFWLRQVRIWKH\$QQXDO5HSRUW DQG\$FFRXQWVLQDFFRUGDQFHZLWKWKH&RPSDQLHV\$FWDQG WKH{/LVWLQJ5XOH5RIWKH)LQDQFLDO&RQGXFW\$XWKRULW\

Business model	Pages 20 to 21
,QQRYDWLRQ*URZWK (ƱFLHQF\VWUDWHJ\	Pages 14 to 19
Dividend	Page 41
Results	Pages 38 to 43
Financial assets and liabilities	Page 134
Financial instruments	Page 134
Principal risks	Pages 50 to 52
R&D activities	Pages 14 to 15
People	Pages 33 to 35
Greenhouse gas emissions	Page 30
Going concern	Page 53
Viability statement	Page 53
Long term incentive plans	Pages 153 to 155

DIRECTORS

Directors

The current Directors and their biographical details are detailed on pages 55 to 57. Nick Salmon will be stepping down from his role as Senior Independent Director at the AGM on 29 April 2020. John O'Higgins was appointed Non-Executive Director on 4 February 2020 and will be become Senior Independent Director after the AGM. Further information regarding the SID recruitment process can be found on page 73.

Appointment and replacement of directors

The Articles give the Directors power to appoint and replace 'LUHFWRUV8QGHUWKHWHUPVRIUHIHUHQFHRIWKH1RPLQDWLRQ&RPPLWWHH appointments are recommended by the Nomination Committee for approval by the Board. In line with the UK Corporate Governance &RGHWKH\$UWLFOHVDOVRUHTXLUH'LUHFWRUVWRUHWLUHDQGVXEPLW WKHPVHOYHVIRUHOHFWLRQDWWKHƮUVWDQQXDOJHQHUDOPHHWLQJp\$*0q following appointment and to retire at each subsequent AGM and to submit themselves for re-election at the following AGM. The service contracts of the Executive Directors and letters of appointment of the Non-Executive Directors are available for inspection at the Company's UHJLVWHUHGRƱFH

Directors' interests

Details of the Directors' interests in shares can be found in the Directors' remuneration report on pages 90 and 91.

Directors' Powers

The Directors' powers are conferred on them by UK legislation and by the Company's Articles of Association (Articles). The Articles may only be amended by special resolution of the Company at general meeting of its shareholders.

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5DOSK+HZLQVLVLQUHFHLSWRIDFRQưLFWDXWKRULVDWLRQIURPWKH Company in respect of him acting as a trustee of the Elementis *URXS{3HQVLRQ6FKHPH

7KHFRQưLFWDXWKRULVDWLRQHQDEOHV5DOSK+HZLQVWRFRQWLQXHWRDFWDV a trustee notwithstanding that this role could give rise to a situation LQZKLFKWKHUHLVDFRQưLFWRILQWHUHVW7KH%RDUGFRQVLGHUVWKDWLWLV DSSURSULDWHIRUWKHWUXVWHHVRIWKH8.SHQVLRQVFKHPHWREHQHƮW IURPWKHƮQDQFLDOH[SHUWLVHRIWKH&)2DQGWKDWKLVFRQWULEXWLRQ at trustees' meetings demonstrates the Board's commitment WRVXSSRUWLQJWKH8.SHQVLRQVFKHPH7KH%RDUGoVFRQưLFW DXWKRULVDWLRQLVVXEMHFWWRDQQXDOUHYLHZDQGXQGHUWKHWHUPVRI WKHFRQưLFWUHVROXWLRQUHFLSURFDOSURYLVLRQVKDYHEHHQSXWLQSODFH ZLWKDYLHZWRVDIHJXDUGLQJLQIRUPDWLRQWKDWLVFRQƮGHQWLDOWRWKH *URXSDVZHOODVWRWKHWUXVWHHV:HUHDFRQưLFWRILQWHUHVWWRDULVH Ralph Hewins is required to excuse himself from reading the relevant papers and absent himself from participating in relevant discussions. Procedures are in place to ensure compliance with the Companies Act 2006. These procedures have been complied with during the \HDU'HWDLOVRIDQ\QHZFRQưLFWVRUSRWHQWLDOFRQưLFWPDWWHUVDUH submitted to the Board for consideration and where appropriate are DSSURYHG\$XWKRULVHGFRQưLFWVDQGSRWHQWLDOFRQưLFWPDWWHUVDUH reviewed on an annual basis.

Directors' indemnities

In addition to the indemnity granted by the Company to Directors in UHVSHFWRIWKHLUOLDELOLWLHVLQFXUUHGDVDUHVXOWRIWKHLURƱFHD'LUHFWRUVo DQG2ƱFHUVoOLDELOLW\LQVXUDQFHSROLF\LVPDLQWDLQHGWKURXJKRXWWKH year. Neither the indemnity nor the insurance provides cover in the event that a Director has proven to have acted dishonestly or fraudulently. Similar arrangements also exist for Directors appointed to Group subsidiary entities.

Share capital

\$VDW'HFHPEHUWKH&RPSDQ\oVLVVXHGVKDUHFDSLWDOZDV RUGLQDU\VKDUHVRI~SHQFHLQLVVXHZKLFKFDUULHV voting rights of one vote per share. All of the Company's issued shares are fully paid up and rank equally in all respects. The rights DWWDFKHGWRWKHVKDUHVLQDGGLWLRQWRWKRVHFRQIHUUHGRQWKHLUKROGHUV E\ODZDUHVHWRXWLQWKH&RPSDQ\oV\$UWLFOHV

From time to time the ESOT holds shares in the Company for the purposes of various share incentive plans and the rights DWWDFKLQJWRWKHPDUHH[HUFLVHGE\LQGHSHQGHQWWUXVWHHVZKRPD\ take into account any recommendation by the Company. As at 'HFHPEHUWKH(627KHOGVKDUHVLQWKH&RPSDQ\ \$GLYLGHQGZDLYHULVLQSODFHLQUHVSHFWRIDOOVKDUHV that may become held by the Trust.

Further details of the authorised and issued share capital during the ƮQDQFLDO\HDUDUHSURYLGHGLQQRWHWRWKHDFFRXQWVRQSDJH

Purchase of shares

The Board has the power conferred on it by shareholders to purchase its own shares and is seeking renewal of that power at the forthcoming AGM within the limits set out in the Notice of Meeting.

6DYHDV\RXHDUQVFKHPHV

The UK savings-related share option scheme was launched in August 2016 and matured on 1 October 2019. The US savings-related share option scheme was launched in September 2017 and matured on 7 September 2019.

All permanent employees who had completed at least six months' continuous service were invited to participate and make monthly savings contributions over a period of either two years for US SDUWLFLSDQWVDQGWKUHHRUƮYH\HDUVIRU8.SDUWLFLSDQWV\$WWKHHQGRI WKHVDYLQJVWHUPpPDWXULW\GDWHqSDUWLFLSDQWVDUHJLYHQWKHFKRLFH RIWDNLQJWKHLUPRQH\EDFNRUWRSXUFKDVHVKDUHVDWDGLVFRXQW of the market price set at the date of invitation and have six months in which to exercise their options.

6XEVWDQWLDOVKDUHKROGHUV

\$VDW'HFHPEHUDQG0DUFKWKHIROORZLQJLQWHUHVWV in voting rights over the issued share capital of the Company had EHHQQRWLƮHG

	Ordinary shares	Percentage of issued share capital
APG Asset Management N.V.		9.99
\$PHULSULVH)LQDQFLDO,QFDQGLWVJURXS		9.98
FMR LLC		8.89
Aberdeen Asset Managers Limited		4.97
Schroders plc		4.91
AXA Investment Managers S.A.		4.05
%ODFN5RFN,QF	Below 5%	Below 5%

EMPLOYEES

(PSOR\PHQWSROLFLHVDQGHTXDORSSRUWXQLWLHV

Elementis policies seek to create a workplace that has an open DWPRVSKHUHRIWUXVWKRQHVW\DQGUHVSHFW+DUDVVPHQWRU GLVFULPLQDWLRQRIDQ\NLQGEDVHGRQUDFHFRORXUUHOLJLRQJHQGHU DJHQDWLRQDORULJLQFLWL]HQVKLSPHQWDORUSK\VLFDOGLVDELOLWLHVVH[XDO RULHQWDWLRQYHWHUDQVWDWXVRUDQ\RWKHUVLPLODUO\SURWHFWHGVWDWXVLV QRWWROHUDWHG7KLVSULQFLSOHDSSOLHVWRDOODVSHFWVRIHPSOR\PHQW LQFOXGLQJUHFUXLWPHQWDQGVHOHFWLRQWUDLQLQJDQGGHYHORSPHQW promotion and retirement.

Employees are free to join a trade union or participate in collective bargaining arrangements.

It is also Group policy for employees who have a disability to UHDVRQDEO\DFFRPPRGDWHWKHPZKHUHSUDFWLFDEOHDQGWRSURYLGH WUDLQLQJFDUHHUGHYHORSPHQWDQGSURPRWLRQDVDSSURSULDWH

It is Group policy not to discriminate on the basis of any unlawful criteria and its practices include the prohibition on the use of child or forced labour.

Elementis supports the wider fundamental human rights of its HPSOR\HHVZRUOGZLGHDVZHOODVWKRVHRIRXUFXVWRPHUVDQG VXSSOLHUVDQGIXUWKHUGHWDLOVDUHVHWRXWRQSDJHVWR

(PSOR\HHFRPPXQLFDWLRQVDQGLQYROYHPHQW

The Company is committed to employee involvement throughout the business. Further information regarding employee engagement can be found on page 34 and 63.

ADDITIONAL INFORMATION

*RLQJFRQFHUQDQGYLDELOLW\VWDWHPHQW

The Directors consider that the Group and the Company have adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in SUHSDULQJWKHƮQDQFLDOVWDWHPHQWV7KH&RGHUHTXLUHVWKH'LUHFWRUVWR assess and report on the prospects of the Group over a longer period. This longer term viability statement is set out on page 53.

6LJQLƮFDQWDJUHHPHQWVsFKDQJHRIFRQWURO

7KHUHDUHIHZVLJQLƮFDQWDJUHHPHQWVZKLFKWKH&RPSDQ\LVSDUW\WR WKDWWDNHHƬHFWDOWHURUWHUPLQDWHLQWKHHYHQWRIFKDQJHRIFRQWURO of the Company. The Company is a guarantor under the Group's \$200m and €172m long term loans and \$375m revolving credit IDFLOLW\DQGLQWKHHYHQWRIDFKDQJHRIFRQWURODQ\OHQGHUDPRQJWKH IDFLOLW\V\QGLFDWHRIZKLFKWKHUHDUHZLWKFRPPLWPHQWVUDQJLQJ

IURPPWRPPD\ZLWKGUDZIURPWKHIDFLOLW\DQGWKDWOHQGHUoV participation in any loans drawn down are required to be repaid.

The rules of the Company's various share incentive schemes set out the consequences of a change of control of the Company on the rights of the participants under those schemes. Under the rules RIWKHUHVSHFWLYHVFKHPHVSDUWLFLSDQWVZRXOGJHQHUDOO\EHDEOH WRH[HUFLVHWKHLURSWLRQVRQDFKDQJHRIFRQWUROSURYLGHGWKDWWKH UHOHYDQWSHUIRUPDQFHFRQGLWLRQVKDYHEHHQVDWLVƮHGDQGZKHUH UHOHYDQWRSWLRQVDUHQRWH[FKDQJHGIRUQHZRSWLRQVJUDQWHGE\DQ acquiring company.

Auditors

'HORLWWH//3KDYHLQGLFDWHGWKHLUZLOOLQJQHVVWRUHPDLQLQRƱFHDVRXU DXGLWRUVDQGIROORZLQJUHFRPPHQGDWLRQE\WKH\$XGLW&RPPLWWHHD resolution regarding their re-appointment will be included within the Notice of Meeting for the 2020 AGM.

7KH'LUHFWRUVFRQƮUPWKDWVRIDUDVWKH\DUHDZDUHWKHUHLVQR relevant audit information of which the Company's auditors are unaware and each Director has taken all steps they are ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Annual General Meeting

The 2020 AGM will be held at 9.00am on Wednesday 29 April 2020 at WKHRƱFHVRI+HUEHUW6PLWK)UHHKLOOV//3([FKDQJH+RXVH3ULPURVH 6WUHHW/RQGRQ(&\$(*'HWDLOVRIWKHUHVROXWLRQVWREHSURSRVHG at the AGM are set out in the Notice of AGM which has been sent to shareholders and is available on the Elementis corporate website: www.elementis.com

Political donations

The Group made no political donations during the year (2018: nil).

Branches

\$VDJOREDO*URXS(OHPHQWLVoLQWHUHVWVDQGDFWLYLWLHVDUHKHOGRU RSHUDWHGWKURXJKVXEVLGLDULHVEUDQFKHVMRLQWDUUDQJHPHQWVRU DVVRFLDWHVZKLFKDUHHVWDEOLVKHGLQDQGVXEMHFWWRWKHODZVDQG UHJXODWLRQVRIPDQ\GLƬHUHQWMXULVGLFWLRQV

Other information

,QIRUPDWLRQDERXWƮQDQFLDOULVNPDQDJHPHQWDQGH[SRVXUHWR ƮQDQFLDOPDUNHWULVNVDUHVHWRXWLQ1RWHWRWKHƮQDQFLDOVWDWHPHQWV on pages 139 to 142.

(YHQWVDIWHUWKHEDODQFHVKHHWGDWH

7KHUHZHUHQRVLJQLƮFDQWHYHQWVDIWHUWKHEDODQFHVKHHWGDWH

On behalf of the Board.

Laura Higgins

Group Company Secretary 4 March 2020

'LUHFWRUVoUHVSRQVLELOLWLHV

6WDWHPHQWRI'LUHFWRUVoUHVSRQVLELOLWLHVLQUHVSHFWRIWKH\$QQXDO Report and Financial Statements

The Directors are responsible for preparing the Annual Report DQGWKHƮQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWKDSSOLFDEOHODZ and regulations.

&RPSDQ\ODZUHTXLUHVWKH'LUHFWRUVWRSUHSDUHVXFKƮQDQFLDO VWDWHPHQWVIRUHDFKƮQDQFLDO\HDU8QGHUWKDWODZWKH'LUHFWRUVDUH UHTXLUHGWRSUHSDUHWKH*URXSƮQDQFLDOVWDWHPHQWVLQDFFRUGDQFH with International Financial Reporting Standards (IFRSs) as adopted by the European Union and Article 4 of the IAS Regulation and have DOVRFKRVHQWRSUHSDUHWKHSDUHQW&RPSDQ\ƮQDQFLDOVWDWHPHQWV in accordance with Financial Reporting Standard 101 Reduced Disclosure Framework.

8QGHUFRPSDQ\ODZWKH'LUHFWRUVPXVWQRWDSSURYHWKHƮQDQFLDO VWDWHPHQWVXQOHVVWKH\DUHVDWLVƮHGWKDWWKH\JLYHDWUXHDQGIDLUYLHZ RIWKHVWDWHRIDƬDLUVRIWKH&RPSDQ\DQGRIWKHSURƮWRUORVVRIWKH Company for that period.

,QSUHSDULQJWKHSDUHQW&RPSDQ\ƮQDQFLDOVWDWHPHQWVWKHGLUHFWRUV are required to:

select suitable accounting policies and then apply them consistently;
make judgments and accounting estimates that are reasonable and prudent;
state whether Financial Reporting Standard 101 Reduced 'LVFORVXUH)UDPHZRUNKDVEHHQIROORZHGVXEMHFWWRDQ\PDWHULDO GHSDUWXUHVGLVFORVHGDQGH[SODLQHGLQWKHƮQDQFLDOVWDWHPHQWVDQG
SUHSDUHWKHƮQDQFLDOVWDWHPHQWVRQWKHJRLQJFRQFHUQEDVLVXQOHVV it is inappropriate to presume that the Company will continue in business.

,QSUHSDULQJWKH*URXSƮQDQFLDOVWDWHPHQWV,QWHUQDWLRQDO\$FFRXQWLQJ Standard 1 requires that Directors:

properly select and apply accounting policies;
SUHVHQWLQIRUPDWLRQLQFOXGLQJDFFRXQWLQJSROLFLHVLQD PDQQHUWKDWSURYLGHVUHOHYDQWUHOLDEOHFRPSDUDEOHDQG understandable information;
SURYLGHDGGLWLRQDOGLVFORVXUHVZKHQFRPSOLDQFHZLWKWKHVSHFLƮF UHTXLUHPHQWVLQ,)56VDUHLQVXƱFLHQWWRHQDEOHXVHUVWRXQGHUVWDQG WKHLPSDFWRISDUWLFXODUWUDQVDFWLRQVRWKHUHYHQWVDQGFRQGLWLRQV RQWKHHQWLW\oVƮQDQFLDOSRVLWLRQDQGƮQDQFLDOSHUIRUPDQFHDQG
make an assessment of the Company's ability to continue as a going concern.

The Directors are responsible for keeping adequate accounting UHFRUGVWKDWDUHVXƱFLHQWWRVKRZDQGH[SODLQWKH&RPSDQ\oV transactions and disclose with reasonable accuracy at any time the ƮQDQFLDOSRVLWLRQRIWKHFRPSDQ\DQGHQDEOHWKHPWRHQVXUHWKDWWKH ƮQDQFLDOVWDWHPHQWVFRPSO\ZLWKWKH&RPSDQLHV\$FW7KH\DUH also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for the maintenance and integrity of WKHFRUSRUDWHDQGƮQDQFLDOLQIRUPDWLRQLQFOXGHGRQWKHFRPSDQ\oV website. Legislation in the United Kingdom governing the preparation DQGGLVVHPLQDWLRQRIƮQDQFLDOVWDWHPHQWVPD\GLƬHUIURPOHJLVODWLRQ in other jurisdictions.

'LUHFWRUVoUHVSRQVLELOLW\VWDWHPHQW

:HFRQƮUPWKDWWRWKHEHVWRIRXUNQRZOHGJH

WKHƮQDQFLDOVWDWHPHQWVSUHSDUHGLQDFFRUGDQFHZLWKWKHUHOHYDQW ƮQDQFLDOUHSRUWLQJIUDPHZRUNJLYHDWUXHDQGIDLUYLHZRIWKHDVVHWV OLDELOLWLHVƮQDQFLDOSRVLWLRQDQGSURƮWRUORVVRIWKH&RPSDQ\DQGWKH undertakings included in the consolidation taken as a whole;
the strategic report includes a fair review of the development and performance of the business and the position of the Company and WKHXQGHUWDNLQJVLQFOXGHGLQWKHFRQVROLGDWLRQWDNHQDVDZKROH together with a description of the principal risks and uncertainties that they face; and
WKH\$QQXDO5HSRUWDQGƮQDQFLDOVWDWHPHQWVWDNHQDVDZKROHDUH IDLUEDODQFHGDQGXQGHUVWDQGDEOHDQGSURYLGHWKHLQIRUPDWLRQ necessary for shareholders to assess the Company's position and SHUIRUPDQFHEXVLQHVVPRGHODQGVWUDWHJ\

This responsibility statement was approved by the Board of Directors on 4 March 2020 and is signed on its behalf by.

Paul Waterman	Ralph Hewins
CEO	CFO

Independent auditor's report WRWKHPHPEHUVRI(OHPHQWLVSOF

5HSRUWRQWKHDXGLWRIWKHƮQDQFLDOVWDWHPHQWV

1. Opinion

In our opinion:

WKHƮQDQFLDOVWDWHPHQWVRI(OHPHQWLVSOFWKHnSDUHQWFRPSDQ\oDQGLWVVXEVLGLDULHVWKHnJURXSoJLYHDWUXHDQGIDLUYLHZRIWKHVWDWHRIWKH JURXSoVDQGRIWKHSDUHQWFRPSDQ\oVDƬDLUVDVDW'HFHPEHUDQGRIWKHJURXSoVSURƮWIRUWKH\HDUWKHQHQGHG
WKHJURXSƮQDQFLDOVWDWHPHQWVKDYHEHHQSURSHUO\SUHSDUHGLQDFFRUGDQFHZLWK,QWHUQDWLRQDO)LQDQFLDO5HSRUWLQJ6WDQGDUGV,)56VDV adopted by the European Union;
WKHSDUHQWFRPSDQ\ƮQDQFLDOVWDWHPHQWVKDYHEHHQSURSHUO\SUHSDUHGLQDFFRUGDQFHZLWK8QLWHG.LQJGRP*HQHUDOO\$FFHSWHG\$FFRXQWLQJ 3UDFWLFHLQFOXGLQJ)LQDQFLDO5HSRUWLQJ6WDQGDUGp5HGXFHG'LVFORVXUH)UDPHZRUNDQG
WKHƮQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGLQDFFRUGDQFHZLWKWKHUHTXLUHPHQWVRIWKH&RPSDQLHV\$FWDQGDVUHJDUGVWKHJURXS ƮQDQFLDOVWDWHPHQWV\$UWLFOHRIWKH,\$65HJXODWLRQ

:HKDYHDXGLWHGWKHƮQDQFLDOVWDWHPHQWVZKLFKFRPSULVH

the consolidated income statement;
the consolidated statement of comprehensive income;
the consolidated balance sheet;
the consolidated statement of changes in equity;
WKHFRQVROLGDWHGFDVKưRZVWDWHPHQW
the consolidated Financial Statement related notes 1 to 34;
the parent company balance sheet;
the parent company statement of changes in equity; and
the parent company statutory accounts related notes 1 to 12.

7KHƮQDQFLDOUHSRUWLQJIUDPHZRUNWKDWKDVEHHQDSSOLHGLQWKHSUHSDUDWLRQRIWKHJURXSƮQDQFLDOVWDWHPHQWVLVDSSOLFDEOHODZDQG,)56VDV DGRSWHGE\WKH(XURSHDQ8QLRQ7KHƮQDQFLDOUHSRUWLQJIUDPHZRUNWKDWKDVEHHQDSSOLHGLQWKHSUHSDUDWLRQRIWKHSDUHQWFRPSDQ\ƮQDQFLDO VWDWHPHQWVLVDSSOLFDEOHODZDQG8QLWHG.LQJGRP\$FFRXQWLQJ6WDQGDUGVLQFOXGLQJ)56p5HGXFHG'LVFORVXUH)UDPHZRUNq8QLWHG.LQJGRP Generally Accepted Accounting Practice).

2 Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under WKRVHVWDQGDUGVDUHIXUWKHUGHVFULEHGLQWKHDXGLWRUoVUHVSRQVLELOLWLHVIRUWKHDXGLWRIWKHƮQDQFLDOVWDWHPHQWVVHFWLRQRIRXUUHSRUW

We are independent of the group and the parent company in accordance with the ethical requirements that are relevant to our audit of the ƮQDQFLDOVWDWHPHQWVLQWKH8.LQFOXGLQJWKH)LQDQFLDO5HSRUWLQJ&RXQFLOoVWKHn)5&oVo(WKLFDO6WDQGDUGDVDSSOLHGWROLVWHGSXEOLFLQWHUHVW HQWLWLHVDQGZHKDYHIXOƮOOHGRXURWKHUHWKLFDOUHVSRQVLELOLWLHVLQDFFRUGDQFHZLWKWKHVHUHTXLUHPHQWV:HFRQƮUPWKDWWKHQRQDXGLWVHUYLFHV prohibited by the FRC's Ethical Standard were not provided to the group or the parent company.

:HEHOLHYHWKDWWKHDXGLWHYLGHQFHZHKDYHREWDLQHGLVVXƱFLHQWDQGDSSURSULDWHWRSURYLGHDEDVLVIRURXURSLQLRQ

.H\DXGLWPDWWHUV	7KHNH\DXGLWPDWWHUVWKDWZHLGHQWLƮHGLQWKHFXUUHQW\HDUZHUH
	• Impairment of goodwill and intangible assets in relation to the Talc CGU; • Revenue recognition; and • Environmental provision.
0DWHULDOLW\	7KHPDWHULDOLW\WKDWZHXVHGIRUWKHJURXSƮQDQFLDOVWDWHPHQWVZDVPLOOLRQPLOOLRQ ZKLFKHTXDWHVWRRISURƮWEHIRUHWD[DGMXVWHGIRUWKHVDOHRIRSHUDWLRQVUHVWUXFWXULQJDQGEXVLQHVV WUDQVIRUPDWLRQFRVWVWKHUHOHDVHRIFRQWLQJHQWFRQVLGHUDWLRQDQGRWKHUDGMXVWLQJLWHPV
Scoping	We have performed full scope audits of six components which contribute 89% of the Group's revenue and RIWKH*URXSoVSURƮWEHIRUHWD[
6LJQLƮFDQWFKDQJHVLQRXU approach	:HKDYHLQFOXGHGDNH\DXGLWPDWWHULQUHODWLRQWRJRRGZLOOLPSDLUPHQWRIWKH7DOF&*8JLYHQWKDWWKH headroom for this segment is low compared to the total carrying value.
	We no longer consider the acquisition accounting for Mondo Minerals Holdings B.V. to be a key audit matter as the acquisition accounting was completed in 2018.

6XPPDU\RIRXUDXGLWDSSURDFK

Independent auditor's report continued

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4.1 Going concern

:HKDYHUHYLHZHGWKHGLUHFWRUVoVWDWHPHQWLQQRWHWRWKHƮQDQFLDOVWDWHPHQWVDERXWZKHWKHUWKH\ considered it appropriate to adopt the going concern basis of accounting in preparing them and their LGHQWLƮFDWLRQRIDQ\PDWHULDOXQFHUWDLQWLHVWRWKHJURXSoVDQGFRPSDQ\oVDELOLW\WRFRQWLQXHWRGRVRRYHUD SHULRGRIDWOHDVWWZHOYHPRQWKVIURPWKHGDWHRIDSSURYDORIWKHƮQDQFLDOVWDWHPHQWV

:HFRQVLGHUHGDVSDUWRIRXUULVNDVVHVVPHQWWKHQDWXUHRIWKHJURXSLWVEXVLQHVVPRGHODQGUHODWHG ULVNVLQFOXGLQJZKHUHUHOHYDQWWKHLPSDFWRI%UH[LWWKHUHTXLUHPHQWVRIWKHDSSOLFDEOHƮQDQFLDOUHSRUWLQJ framework and the system of internal control. We evaluated the directors' assessment of the group's DELOLW\WRFRQWLQXHDVDJRLQJFRQFHUQLQFOXGLQJFKDOOHQJLQJWKHXQGHUO\LQJGDWDDQGNH\DVVXPSWLRQV XVHGWRPDNHWKHDVVHVVPHQWDQGHYDOXDWHGWKHGLUHFWRUVoSODQVIRUIXWXUHDFWLRQVLQUHODWLRQWRWKHLU going concern assessment.

We are required to state whether we have anything material to add or draw attention to in relation to that statement required by Listing Rule 9.8.6R(3) and report if the statement is materially inconsistent with our knowledge obtained in the audit.

3ULQFLSDOULVNVDQGYLDELOLW\VWDWHPHQW

Based solely on reading the directors' statements and considering whether they were consistent with the NQRZOHGJHZHREWDLQHGLQWKHFRXUVHRIWKHDXGLWLQFOXGLQJWKHNQRZOHGJHREWDLQHGLQWKHHYDOXDWLRQRI WKHGLUHFWRUVoDVVHVVPHQWRIWKHJURXSoVDQGWKHFRPSDQ\oVDELOLW\WRFRQWLQXHDVDJRLQJFRQFHUQZHDUH required to state whether we have anything material to add or draw attention to in relation to:

WKHGLVFORVXUHVRQSDJHVWRWKDWGHVFULEHWKHSULQFLSDOULVNVSURFHGXUHVWRLGHQWLI\HPHUJLQJULVNV and an explanation of how these are being managed or mitigated;
WKHGLUHFWRUVoFRQƮUPDWLRQRQSDJHWKDWWKH\KDYHFDUULHGRXWDUREXVWDVVHVVPHQWRIWKHSULQFLSDO DQGHPHUJLQJULVNVIDFLQJWKHJURXSLQFOXGLQJWKRVHWKDWZRXOGWKUHDWHQLWVEXVLQHVVPRGHOIXWXUH SHUIRUPDQFHVROYHQF\RUOLTXLGLW\RU
WKHGLUHFWRUVoH[SODQDWLRQRQSDJHDVWRKRZWKH\KDYHDVVHVVHGWKHSURVSHFWVRIWKHJURXSRYHU ZKDWSHULRGWKH\KDYHGRQHVRDQGZK\WKH\FRQVLGHUWKDWSHULRGWREHDSSURSULDWHDQGWKHLUVWDWHPHQW as to whether they have a reasonable expectation that the group will be able to continue in operation and PHHWLWVOLDELOLWLHVDVWKH\IDOOGXHRYHUWKHSHULRGRIWKHLUDVVHVVPHQWLQFOXGLQJDQ\UHODWHGGLVFORVXUHV GUDZLQJDWWHQWLRQWRDQ\QHFHVVDU\TXDOLƮFDWLRQVRUDVVXPSWLRQV

We are also required to report whether the directors' statement relating to the prospects of the group required by Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.

*RLQJFRQFHUQLVWKHEDVLVRI SUHSDUDWLRQRIWKHƮQDQFLDO statements that assumes an HQWLW\ZLOOUHPDLQLQRSHUDWLRQ for a period of at least 12 months from the date of DSSURYDORIWKHƮQDQFLDO statements.

:HFRQƮUPWKDWZHKDYH QRWKLQJPDWHULDOWRUHSRUWDGG or draw attention to in respect of these matters.

9LDELOLW\PHDQVWKHDELOLW\RI the group to continue over the time horizon considered DSSURSULDWHE\WKHGLUHFWRUV

:HFRQƮUPWKDWZHKDYH QRWKLQJPDWHULDOWRUHSRUWDGG or draw attention to in respect of these matters.

.H\DXGLWPDWWHUVDUHWKRVHPDWWHUVWKDWLQRXUSURIHVVLRQDOMXGJHPHQWZHUHRIPRVWVLJQLƮFDQFHLQRXUDXGLWRIWKHƮQDQFLDOVWDWHPHQWVRI WKHFXUUHQWSHULRGDQGLQFOXGHWKHPRVWVLJQLƮFDQWDVVHVVHGULVNVRIPDWHULDOPLVVWDWHPHQWZKHWKHURUQRWGXHWRIUDXGWKDWZHLGHQWLƮHG 7KHVHPDWWHUVLQFOXGHGWKRVHZKLFKKDGWKHJUHDWHVWHƬHFWRQWKHRYHUDOODXGLWVWUDWHJ\WKHDOORFDWLRQRIUHVRXUFHVLQWKHDXGLWDQGGLUHFWLQJ WKHHƬRUWVRIWKHHQJDJHPHQWWHDP

7KHVHPDWWHUVZHUHDGGUHVVHGLQWKHFRQWH[WRIRXUDXGLWRIWKHƮQDQFLDOVWDWHPHQWVDVDZKROHDQGLQIRUPLQJRXURSLQLRQWKHUHRQDQGZHGR not provide a separate opinion on these matters.

,PSDLUPHQWRIJRRGZLOODQGLQWDQJLEOHDVVHWVLQUHODWLRQWRWKH7DOF&*8
.H\DXGLWPDWWHUGHVFULSWLRQ	The group holds \$200.5 million of goodwill and \$88 million of intangible assets arising from the acquisition of Mondo Holdings B.V. in 2018. In accordance with IAS PDQDJHPHQWLVUHTXLUHGWRSHUIRUPDQDQQXDODVVHVVPHQWRILPSDLUPHQWRIWKH URXSoVFDVKJHQHUDWLQJXQLWV&8VDVGHVFULEHGLQQRWHZKLFKZDVSHUIRUPHG DVDW2FWREHU7KLVUHTXLUHVMXGJHPHQWLQUHODWLRQWRWKHNH\DVVXPSWLRQV LQFOXGLQJWKHIXWXUHFDVKưRZVRIHDFK&8ZKLFKDUHXVHGWRGHWHUPLQHWKHYDOXH LQXVH:HLGHQWLƮHGWKH7DOF&8DVEHLQJPRVWVHQVLWLYHWRYDULDWLRQVLQIXWXUH IRUHFDVWFDVKưRZVJLYHQWKHGHFUHDVHGSHUIRUPDQFHLQWKH\HDUDQGZHKDYH IXUWKHULGHQWLƮHGWKHVDOHVYROXPHDVVXPSWLRQVLQWKHVKRUWWHUPFDVKưRZVDV D{NH{DXGLWPDWWHU
	Management has highlighted impairment of goodwill as a key source of estimation uncertainty in note 1 and provided disclosure on the sensitivity of this CGU to UHDVRQDEO\SRVVLEOHFKDQJHVLQNH\DVVXPSWLRQVLQQRWH7KHVHVLJQLƮFDQW judgement areas are also referred to within the Audit Committee report on page 76.
How the scope of our audit responded WR{WKH{NH{DXGLWPDWWHU	Our procedures included: • Understanding and challenging the key assumptions underpinning management's IRUHFDVWVDOHVYROXPHLQFUHDVHVDQGHYDOXDWLQJWKHVLJQLƮFDQFHRIERWK corroboratory and contradictory information by reference to recent actual performance and available third party evidence; • Performing independent sensitivity analysis on the impairment model; • Assessing the growth rate against independent assumptions presented by industry analysts; and • Reviewing the appropriateness and completeness of the related disclosures.
.H\REVHUYDWLRQV	Management's assumptions regarding the value in use are reasonable but contain a degree of optimism. We concur with management's conclusion that no impairment LVUHTXLUHGKRZHYHUWKHUHDUHUHDVRQDEO\SRVVLEOHVFHQDULRVZKLFKFRXOGUHVXOWLQ an impairment.
	We consider the disclosure in the judgements and estimates section of note 1 provided concerning the impairment of assets in the Talc CGU together with the reasonable possible change sensitivity provided in note 10 to be reasonable.

Corporate Governance

Independent auditor's report continued

5.2. Revenue recognition
.H\DXGLWPDWWHUGHVFULSWLRQ	During the year ended 31 December 2019 the group earned revenue of \$873.6 million related to the sale of specialty chemicals (31 December 2018: \$822.2 million). \$WWKH\HDUHQGWKHUHDUHYDU\LQJDGMXVWPHQWVUHTXLUHGIRUJRRGVZKLFKKDYHEHHQ GHVSDWFKHGEXWZKLFKKDYHQRWPHWWKHGHƮQLWLRQIRUWUDQVIHUULQJFRQWURORIWKH goods to the customer in line with IFRS 15. Management has determined the point DWZKLFKFRQWUROSDVVHVEDVHGRQGLƬHUHQWVKLSSLQJWHUPVDQGWKHNH\MXGJHPHQW in the calculation relates to the assumptions around the delivery times to this point. The Group trades globally and a change in the number of days assumed for these VKLSPHQWVFDQKDYHDPDWHULDOLPSDFWRQWKHFXWRƬDGMXVWPHQW*LYHQWKHOHYHORI PDQDJHPHQWoVMXGJHPHQWLQYROYHGZHLGHQWLƮHGWKLVNH\DXGLWPDWWHUDVDSRWHQWLDO fraud risk.
	The accounting policy is described in note 1 where this is also included as a critical DFFRXQWLQJMXGJHPHQW7KHVHVLJQLƮFDQWMXGJHPHQWDUHDVDUHDOVRUHIHUUHGWRZLWKLQ the Audit Committee report on page 76.
How the scope of our audit responded	Our procedures included:
WR{WKH{NH{DXGLWPDWWHU{	• 5HYLHZLQJDQGDVVHVVLQJFRPPHUFLDODUUDQJHPHQWVFRYHULQJVKLSPHQWVWR GHWHUPLQHWKHSRLQWDWZKLFKWKHSHUIRUPDQFHREOLJDWLRQLVPHWIRUGLƬHUHQW shipment arrangements and agreements with customers; • Selecting a sample of international shipments made pre-year end for time periods varying by destination port and therefore transit time for shipments and agreed WKHVHWRFXVWRPHURUGHUVKLSPHQWDQGLQYRLFHGHWDLOVFDVKUHFHLSWVDQGJRRGV receipt notes; • Performing substantive procedures to test the assumptions management used in WKHLUFXWRƬFDOFXODWLRQIRUUHDVRQDEOHQHVVDQGFRQVLVWHQF\DQG • Substantively tested a sample of post year end credit notes by tracing to supporting information to determine if revenue was inappropriately recognised in the year.
.H\REVHUYDWLRQV	)URPWKHZRUNSHUIRUPHGZHKDYHQRWHGQRPDWHULDOPLVVWDWHPHQWVDQGKDYH FRQFOXGHGWKDWPDQDJHPHQWKDVFRPSOHWHGDSSURSULDWHFXWRƬDGMXVWPHQWVDWWKH year end to take into account those sales where control has not transferred.
5.3 Environmental provision
.H\DXGLWPDWWHUGHVFULSWLRQ	,QOLQHZLWKRWKHUFRPSDQLHVZLWKLQFKHPLFDOLQGXVWU(OHPHQWLVKROGVSURYLVLRQVIRU WKHPRQLWRULQJDQGUHPHGLDWLRQRIDQXPEHURIRSHUDWLQJDQGOHJDF\VLWHVLQFOXGLQJ WKRVHVROGRƬRUQRORQJHULQXVH,QDFFRUGDQFHZLWKWKH(OHPHQWLVoHQYLURQPHQWDO SURYLVLRQSROLF\DSURYLVLRQLVUHFRJQLVHGIRUWKHUHVWRUDWLRQRIFRQWDPLQDWHGODQG \$VDW'HFHPEHU(OHPHQWLVKDVUHFRJQLVHGDSURYLVLRQPLOOLRQ 'HFHPEHUPLOOLRQDJDLQVWWKHOLDELOLWLHVRIZKLFKWKHPDMRULW\DUHKHOG DJDLQVWWZRVLWHVEHLQJWKH8.&KURPLXPVLWHDW(DJOHVFOLƬHDQGWKH86&KURPLXP
	site at Corpus Christi. There is uncertainty in this provision relating to the estimated future cash expenditure to remediate the two sites and discount rate applied in the calculation given the long WLPHKRUL]RQRI\HDUVRYHUZKLFKFRVWVIRUWKHVHWZRVLWHVDUHDQWLFLSDWHGVPDOO FKDQJHVLQDQQXDOFDVKRXWưRZVFDQKDYHDVLJQLƮFDQWFXPXODWLYHLPSDFWRQWKH WRWDOSURYLVLRQUHTXLUHG7KHFDVKưRZLVHVWLPDWHGDQGFDOFXODWHGE\PDQDJHPHQW DQGH[WHUQDOHQYLURQPHQWDOFRQVXOWDQWV7KHVHFDVKưRZVDUHWKHQGLVFRXQWHGDWWKH management determined discount rate. Due to the judgemental and material nature RIHVWLPDWLRQRIVXFKIRUHFDVWVSHQGLQJZHKDYHFRQVLGHUHGWKHYDOXDWLRQRIWKH provision on these two sites to be a key audit matter. 7KH*URXSoVDFFRXQWLQJSROLF\LVLQFOXGHGZLWKLQQRWHWRWKHFRQVROLGDWHGƮQDQFLDO statements where this is also included as a critical accounting judgement. There is additional disclosure included within note 15. The Audit Committee discussion is included on page 76.

Shareholder Information

	relation to environmental remediation and monitoring appear reasonable.

2XUDSSOLFDWLRQRIPDWHULDOLW\
0DWHULDOLW\
	:HGHƮQHPDWHULDOLW\DVWKHPDJQLWXGHRIPLVVWDWHPHQWLQWKHƮQDQFLDOVWDWHPHQWVWKDWPDNHVLWSUREDEOHWKDWWKHHFRQRPLFGHFLVLRQVRID
evaluating the results of our work.	UHDVRQDEO\NQRZOHGJHDEOHSHUVRQZRXOGEHFKDQJHGRULQưXHQFHG:HXVHPDWHULDOLW\ERWKLQSODQQLQJWKHVFRSHRIRXUDXGLWZRUNDQGLQ

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	*URXSƮQDQFLDOVWDWHPHQWV	3DUHQW&RPSDQ\ƮQDQFLDOVWDWHPHQWV
0DWHULDOLW\	\$3.7 million (2018: \$5.3 million)	\$1.5 million (2018: \$2.1 million)
Basis for GHWHUPLQLQJPDWHULDOLW\	Materiality was set on the basis of 5% of SURƮWEHIRUHWD[DGMXVWHGIRUWKHVDOHRIRSHUDWLRQV UHVWUXFWXULQJDQGEXVLQHVVWUDQVIRUPDWLRQFRVWV release of contingent consideration and other adjusting items. The movement in materiality year on \HDULVGXHWRWKHGHFUHDVHGSURƮWRIWKHJURXSLQWKH current year.	A factor of 3% of net assets was used capped to an appropriate component materiality 40% (2018: 40%) of Group materiality.
Rationale for the EHQFKPDUNDSSOLHG	:HKDYHXVHGDGMXVWHGSURƮWEHIRUHWD[DVZH consider this to be a key performance measure for the Group. This metric is important to users of the ƮQDQFLDOVWDWHPHQWVLQYHVWRUVDQGDQDO\VWVEHLQJ the key users for a listed entity) because it portrays the performance of the business and hence its ability to pay a return on investment to the investors and also has substantial prominence in the Annual Report. Our rationale for excluding certain items is WKDWWKHVHDUHRQHRƬFRVWVDQGDUHURXWLQHO\DGGHG back by analysts in analysing company performance.	We have used net assets in determining materiality as we believe this is an appropriate basis for materiality DVLWUHưHFWVWKHQDWXUHRIWKHSDUHQWFRPSDQ\ as a holding company and its contribution to the Group performance.

Our procedures included:

FRQVXOWDQWVSUHSDUHGWKHFDVKưRZIRUHFDVWV

the inputs to supporting documentation;

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.H\REVHUYDWLRQV \$VDUHVXOWRIRXUZRUNZHKDYHFRQFOXGHGWKDWWKHSURYLVLRQVKHOGE(OHPHQWLVLQ

DVVXPSWLRQVDQGLQSXWVWRWKHIRUHFDVWFDVKưRZV

managers at relevant locations;

• Holding discussion with management and the Group's external environmental FRQVXOWDQWVRQWKHLGHQWLƮHGHQYLURQPHQWDOLVVXHVWRFRQƮUPRXUXQGHUVWDQGLQJ of the current situation and the process by which management and the external

• Assessing the appropriateness of forecast of individual cost categories on each VLJQLƮFDQWVLWHVHOHFWHGIRUFRPSOHWHQHVVWHVWLQJWKURXJKGLVFXVVLRQVZLWKVLWH

• Working with our internal valuation experts to challenge the appropriateness of the discount rates applied by comparison to our own internal benchmark data; • &KDOOHQJLQJWKHNH\DVVXPSWLRQVDQGLQSXWVWRWKHIRUHFDVWFDVKưRZVDQGDJUHHLQJ

• Working with our internal environmental consultants to challenge the completeness RIWKHFRVWFDWHJRULHVLQFOXGHGZLWKLQWKHIRUHFDVWFDVKưRZVDQGDVVHVVLQJWKHNH\

• 5HYLHZLQJWKHSUHYLRXVHVWLPDWHVPDGHRIH[SHFWHGFDVKRXWưRZVWRDFWXDOFDVK

RXWưRZVWRGHWHUPLQHWKHUHDVRQDEOHQHVVRIWKHSURMHFWVSHQGDQG • Performing searches of external databases to determine completeness of the

3HUIRUPDQFHPDWHULDOLW

How the scope of our audit responded

WR{WKH{NH{DXGLWPDWWHU

:HVHWSHUIRUPDQFHPDWHULDOLW\DWDOHYHOORZHUWKDQPDWHULDOLW\WRUHGXFHWKHSUREDELOLW\WKDWLQDJJUHJDWHXQFRUUHFWHGDQGXQGHWHFWHG PLVVWDWHPHQWVH[FHHGWKHPDWHULDOLW\IRUWKHƮQDQFLDOVWDWHPHQWVDVDZKROH*URXSSHUIRUPDQFHPDWHULDOLW\ZDVVHWDWRIJURXS PDWHULDOLW\IRUWKHDXGLW,QGHWHUPLQLQJSHUIRUPDQFHPDWHULDOLW\ZHFRQVLGHUHGRXUDVVHVVPHQWRIWKHFRQWUROHQYLURQPHQW WKHYROXPHDQGQDWXUHRIPLVVWDWHPHQWVLGHQWLƮHGLQSUHYLRXV\HDUVDQGWKHGHYHORSPHQWVLQWKHEXVLQHVVGXULQJWKH\HDU

6.3. Error reporting threshold

:HDJUHHGZLWKWKH\$XGLW&RPPLWWHHWKDWZHZRXOGUHSRUWWRWKH&RPPLWWHHDOODXGLWGLƬHUHQFHVLQH[FHVVRIDV ZHOODVGLƬHUHQFHVEHORZWKDWWKUHVKROGWKDWLQRXUYLHZZDUUDQWHGUHSRUWLQJRQTXDOLWDWLYHJURXQGV:HDOVRUHSRUWWRWKH\$XGLW&RPPLWWHHRQ GLVFORVXUHPDWWHUVWKDWZHLGHQWLƮHGZKHQDVVHVVLQJWKHRYHUDOOSUHVHQWDWLRQRIWKHƮQDQFLDOVWDWHPHQWV

Independent auditor's report continued

7. An overview of the scope of our audit

,GHQWLƮFDWLRQDQGVFRSLQJRIFRPSRQHQWV

2XU*URXSDXGLWZDVVFRSHGE\REWDLQLQJDQXQGHUVWDQGLQJRIWKH*URXSDQGLWVHQYLURQPHQWLQFOXGLQJ*URXSZLGHFRQWUROVDQGDVVHVVLQJWKH risks of material misstatement at the Group level.

7KHUHDUHVL[FRPSRQHQWVIRUWKH\HDUHQGRIZKLFKWKUHHDUHVLJQLƮFDQWWRWKH*URXS

the Specialty products operations in the US;
the Specialty products operations in the UK;
WKH6SHFLDOW\SURGXFWVRSHUDWLRQVLQ7DLZDQLQFOXGLQJWKH&KLQHVHRSHUDWLRQV
the Chromium operations in the US;
the Chromium operations in the UK; and
the Talc operation in Netherlands and Finland.

7KHVHVL[ORFDWLRQVZHUHVXEMHFWWRIXOOVFRSHDXGLWVZKLFKZHUHSHUIRUPHGE\ORFDOFRPSRQHQWDXGLWRUVXQGHUWKHGLUHFWLRQDQGVXSHUYLVLRQ RIWKH*URXSDXGLWWHDPH[FHSWWKH6SHFLDOLW\8.DQG&KURPLXP8.RSHUDWLRQVZKHUHWKH*URXSDXGLWWHDPSHUIRUPHGWKHDXGLWZLWKRXWWKH involvement of a component team.

Our audit work on the six components was executed at levels of performance materiality applicable to each individual entity which were lower than Group materiality and ranged from \$1.6 million to \$1.3 million (2018: \$2.6 million to \$1.5 million).

The in-scope locations represent the principal business units within the Group's operating divisions and account for 89% (2018: 86%) of the *URXSoVUHYHQXHDQGRIWKH*URXSoVSURƮWEHIRUHWD[

\$WWKHSDUHQWHQWLW\OHYHOZHDOVRWHVWHGWKHFRQVROLGDWLRQSURFHVVDQGFDUULHGRXWDQDO\WLFDOSURFHGXUHVWRFRQƮUPRXUFRQFOXVLRQWKDWWKHUH ZHUHQRVLJQLƮFDQWULVNVRIPDWHULDOPLVVWDWHPHQWRIWKHDJJUHJDWHGƮQDQFLDOLQIRUPDWLRQRIWKHUHPDLQLQJFRPSRQHQWVQRWVXEMHFWWRDXGLWRU DXGLWRIVSHFLƮHGDFFRXQWEDODQFHV7KHSDUHQWFRPSDQ\LVORFDWHGLQWKH8.DQGLVDXGLWHGGLUHFWO\E\WKH*URXSDXGLWWHDP

7.2. Working with other auditors

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8. Other information

7KHGLUHFWRUVDUHUHVSRQVLEOHIRUWKHRWKHULQIRUPDWLRQ7KHRWKHULQIRUPDWLRQFRPSULVHVWKHLQIRUPDWLRQLQFOXGHGLQWKHDQQXDOUHSRUWRWKHU WKDQWKHƮQDQFLDOVWDWHPHQWVDQGRXUDXGLWRUoVUHSRUWWKHUHRQ

2XURSLQLRQRQWKHƮQDQFLDOVWDWHPHQWVGRHVQRWFRYHUWKHRWKHULQIRUPDWLRQDQGH[FHSWWRWKHH[WHQWRWKHUZLVHH[SOLFLWO\VWDWHGLQRXUUHSRUW we do not express any form of assurance conclusion thereon.

,QFRQQHFWLRQZLWKRXUDXGLWRIWKHƮQDQFLDOVWDWHPHQWVRXUUHVSRQVLELOLW\LVWRUHDGWKHRWKHULQIRUPDWLRQDQGLQGRLQJVRFRQVLGHUZKHWKHU WKHRWKHULQIRUPDWLRQLVPDWHULDOO\LQFRQVLVWHQWZLWKWKHƮQDQFLDOVWDWHPHQWVRURXUNQRZOHGJHREWDLQHGLQWKHDXGLWRURWKHUZLVHDSSHDUVWREH materially misstated.

,IZHLGHQWLI\VXFKPDWHULDOLQFRQVLVWHQFLHVRUDSSDUHQWPDWHULDOPLVVWDWHPHQWVZHDUHUHTXLUHGWRGHWHUPLQHZKHWKHUWKHUHLVDPDWHULDO PLVVWDWHPHQWLQWKHƮQDQFLDOVWDWHPHQWVRUDPDWHULDOPLVVWDWHPHQWRIWKHRWKHULQIRUPDWLRQ,IEDVHGRQWKHZRUNZHKDYHSHUIRUPHGZH FRQFOXGHWKDWWKHUHLVDPDWHULDOPLVVWDWHPHQWRIWKLVRWKHULQIRUPDWLRQZHDUHUHTXLUHGWRUHSRUWWKDWIDFW

,QWKLVFRQWH[WPDWWHUVWKDWZHDUHVSHFLƮFDOO\UHTXLUHGWRUHSRUWWR\RXDVXQFRUUHFWHGPDWHULDOPLVVWDWHPHQWVRIWKHRWKHULQIRUPDWLRQLQFOXGH where we conclude that:

)DLUEDODQFHGDQGXQGHUVWDQGDEOHsWKHVWDWHPHQWJLYHQE\WKHGLUHFWRUVWKDWWKH\FRQVLGHUWKHDQQXDOUHSRUWDQGƮQDQFLDOVWDWHPHQWV WDNHQDVDZKROHLVIDLUEDODQFHGDQGXQGHUVWDQGDEOHDQGSURYLGHVWKHLQIRUPDWLRQQHFHVVDU\IRUVKDUHKROGHUVWRDVVHVVWKHJURXSoVSRVLWLRQ DQGSHUIRUPDQFHEXVLQHVVPRGHODQGVWUDWHJ\LVPDWHULDOO\LQFRQVLVWHQWZLWKRXUNQRZOHGJHREWDLQHGLQWKHDXGLWRU
Audit committee reporting the section describing the work of the audit committee does not appropriately address matters communicated by us to the audit committee; or
Directors' statement of compliance with the UK Corporate Governance Code the parts of the directors' statement required under WKH/LVWLQJ5XOHVUHODWLQJWRWKHFRPSDQ\oVFRPSOLDQFHZLWKWKH8.&RUSRUDWH*RYHUQDQFH&RGHFRQWDLQLQJSURYLVLRQVVSHFLƮHGIRUUHYLHZ by the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate Governance Code.

We have nothing to report in respect of these matters.

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,QSUHSDULQJWKHƮQDQFLDOVWDWHPHQWVWKHGLUHFWRUVDUHUHVSRQVLEOHIRUDVVHVVLQJWKHJURXSoVDQGWKHSDUHQWFRPSDQ\oVDELOLW\WRFRQWLQXHDVD JRLQJFRQFHUQGLVFORVLQJDVDSSOLFDEOHPDWWHUVUHODWHGWRJRLQJFRQFHUQDQGXVLQJWKHJRLQJFRQFHUQEDVLVRIDFFRXQWLQJXQOHVVWKHGLUHFWRUV HLWKHULQWHQGWROLTXLGDWHWKHJURXSRUWKHSDUHQWFRPSDQ\RUWRFHDVHRSHUDWLRQVRUKDYHQRUHDOLVWLFDOWHUQDWLYHEXWWRGRVR

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2XUREMHFWLYHVDUHWRREWDLQUHDVRQDEOHDVVXUDQFHDERXWZKHWKHUWKHƮQDQFLDOVWDWHPHQWVDVDZKROHDUHIUHHIURPPDWHULDOPLVVWDWHPHQW ZKHWKHUGXHWRIUDXGRUHUURUDQGWRLVVXHDQDXGLWRUoVUHSRUWWKDWLQFOXGHVRXURSLQLRQ5HDVRQDEOHDVVXUDQFHLVDKLJKOHYHORIDVVXUDQFH but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. 0LVVWDWHPHQWVFDQDULVHIURPIUDXGRUHUURUDQGDUHFRQVLGHUHGPDWHULDOLILQGLYLGXDOO\RULQWKHDJJUHJDWHWKH\FRXOGUHDVRQDEO\EHH[SHFWHGWR LQưXHQFHWKHHFRQRPLFGHFLVLRQVRIXVHUVWDNHQRQWKHEDVLVRIWKHVHƮQDQFLDOVWDWHPHQWV

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the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations; and
GLVFXVVLQJDPRQJWKHHQJDJHPHQWWHDPLQFOXGLQJFRPSRQHQWDXGLWWHDPVDQGLQYROYLQJUHOHYDQWLQWHUQDOVSHFLDOLVWVLQFOXGLQJWD[SHQVLRQV DQG,7VSHFLDOLVWVUHJDUGLQJKRZDQGZKHUHIUDXGPLJKWRFFXULQWKHƮQDQFLDOVWDWHPHQWVDQGDQ\SRWHQWLDOLQGLFDWRUVRIIUDXG

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:HDOVRREWDLQHGDQXQGHUVWDQGLQJRIWKHOHJDODQGUHJXODWRU\IUDPHZRUNVWKDWWKHJURXSRSHUDWHVLQIRFXVLQJRQSURYLVLRQVRIWKRVHODZV DQGUHJXODWLRQVWKDWKDGDGLUHFWHƬHFWRQWKHGHWHUPLQDWLRQRIPDWHULDODPRXQWVDQGGLVFORVXUHVLQWKHƮQDQFLDOVWDWHPHQWV7KHNH\ODZVDQG UHJXODWLRQVZHFRQVLGHUHGLQWKLVFRQWH[WLQFOXGHGWKH8.&RPSDQLHV\$FW/LVWLQJ5XOHVSHQVLRQVOHJLVODWLRQWD[OHJLVODWLRQ

,QDGGLWLRQZHFRQVLGHUHGSURYLVLRQVRIRWKHUODZVDQGUHJXODWLRQVWKDWGRQRWKDYHDGLUHFWHƬHFWRQWKHƮQDQFLDOVWDWHPHQWVEXWFRPSOLDQFH with which may be fundamental to the group's ability to operate or to avoid a material penalty. These included environmental regulations.

\$XGLWUHVSRQVHWRULVNVLGHQWLƮHG

\$VDUHVXOWRISHUIRUPLQJWKHDERYHZHLGHQWLƮHGUHYHQXHUHFRJQLWLRQDQGHQYLURQPHQWDOSURYLVLRQDVNH\DXGLWPDWWHUVUHODWHGWRWKHSRWHQWLDO risk of fraud or non-compliance with laws and regulations. The key audit matters section of our report explains the matters in more detail and DOVRGHVFULEHVWKHVSHFLƮFSURFHGXUHVZHSHUIRUPHGLQUHVSRQVHWRWKRVHNH\DXGLWPDWWHUV

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UHYLHZLQJWKHƮQDQFLDOVWDWHPHQWGLVFORVXUHVDQGWHVWLQJWRVXSSRUWLQJGRFXPHQWDWLRQWRDVVHVVFRPSOLDQFHZLWKSURYLVLRQVRIUHOHYDQWODZV DQGUHJXODWLRQVGHVFULEHGDVKDYLQJDGLUHFWHƬHFWRQWKHƮQDQFLDOVWDWHPHQWV
HQTXLULQJRIPDQDJHPHQWWKHDXGLWFRPPLWWHHDQGLQKRXVHOHJDOFRXQVHOFRQFHUQLQJDFWXDODQGSRWHQWLDOOLWLJDWLRQDQGFODLPV
performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement due to fraud;
UHDGLQJPLQXWHVRIPHHWLQJVRIWKRVHFKDUJHGZLWKJRYHUQDQFHUHYLHZLQJLQWHUQDODXGLWUHSRUWVDQGUHYLHZLQJFRUUHVSRQGHQFHZLWK +05&{DQG
LQDGGUHVVLQJWKHULVNRIIUDXGWKURXJKPDQDJHPHQWRYHUULGHRIFRQWUROVWHVWLQJWKHDSSURSULDWHQHVVRIMRXUQDOHQWULHVDQGRWKHUDGMXVWPHQWV assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating the business UDWLRQDOHRIDQ\VLJQLƮFDQWWUDQVDFWLRQVWKDWDUHXQXVXDORURXWVLGHWKHQRUPDOFRXUVHRIEXVLQHVV

Independent auditor's report continued

:HDOVRFRPPXQLFDWHGUHOHYDQWLGHQWLƮHGODZVDQGUHJXODWLRQVDQGSRWHQWLDOIUDXGULVNVWRDOOHQJDJHPHQWWHDPPHPEHUVLQFOXGLQJLQWHUQDO VSHFLDOLVWVDQGVLJQLƮFDQWFRPSRQHQWDXGLWWHDPVDQGUHPDLQHGDOHUWWRDQ\LQGLFDWLRQVRIIUDXGRUQRQFRPSOLDQFHZLWKODZVDQGUHJXODWLRQV throughout the audit.

5HSRUWRQRWKHUOHJDODQGUHJXODWRU\UHTXLUHPHQWV

2SLQLRQVRQRWKHUPDWWHUVSUHVFULEHGE\WKH&RPSDQLHV\$FW

In our opinion the part of the directors' remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006.

,QRXURSLQLRQEDVHGRQWKHZRUNXQGHUWDNHQLQWKHFRXUVHRIWKHDXGLW

WKHLQIRUPDWLRQJLYHQLQWKHVWUDWHJLFUHSRUWDQGWKHGLUHFWRUVoUHSRUWIRUWKHƮQDQFLDO\HDUIRUZKLFKWKHƮQDQFLDOVWDWHPHQWVDUHSUHSDUHGLV FRQVLVWHQWZLWKWKHƮQDQFLDOVWDWHPHQWVDQG
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.

,QWKHOLJKWRIWKHNQRZOHGJHDQGXQGHUVWDQGLQJRIWKHJURXSDQGWKHSDUHQWFRPSDQ\DQGWKHLUHQYLURQPHQWREWDLQHGLQWKHFRXUVHRIWKHDXGLW ZHKDYHQRWLGHQWLƮHGDQ\PDWHULDOPLVVWDWHPHQWVLQWKHVWUDWHJLFUHSRUWRUWKHGLUHFWRUVoUHSRUW

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8QGHUWKH&RPSDQLHV\$FWZHDUHUHTXLUHGWRUHSRUWWR\RXLILQRXURSLQLRQ

we have not received all the information and explanations we require for our audit; or
DGHTXDWHDFFRXQWLQJUHFRUGVKDYHQRWEHHQNHSWE\WKHSDUHQWFRPSDQ\RUUHWXUQVDGHTXDWHIRURXUDXGLWKDYHQRWEHHQUHFHLYHGIURP branches not visited by us; or
WKHSDUHQWFRPSDQ\ƮQDQFLDOVWDWHPHQWVDUHQRWLQDJUHHPHQWZLWKWKHDFFRXQWLQJUHFRUGVDQGUHWXUQV
We have nothing to report in respect of these matters.

13.2. Directors' remuneration

Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of directors' remuneration have not been made or the part of the directors' remuneration report to be audited is not in agreement with the accounting records and returns.

We have nothing to report in respect of these matters.

14. Other matters

14.1. Auditor tenure

)ROORZLQJWKHUHFRPPHQGDWLRQRIWKHDXGLWFRPPLWWHHZHZHUHDSSRLQWHGE\WKH%RDUGRQ\$SULOWRDXGLWWKHƮQDQFLDOVWDWHPHQWV IRUWKH\HDUHQGLQJ'HFHPEHUDQGVXEVHTXHQWƮQDQFLDOSHULRGV7KHSHULRGRIWRWDOXQLQWHUUXSWHGHQJDJHPHQWLQFOXGLQJSUHYLRXV UHQHZDOVDQGUHDSSRLQWPHQWVRIWKHƮUPLVIRXU\HDUVFRYHULQJWKH\HDUVHQGLQJ'HFHPEHUWR'HFHPEHU

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Our audit opinion is consistent with the additional report to the audit committee we are required to provide in accordance with ISAs (UK).

15. Use of our report

7KLVUHSRUWLVPDGHVROHO\WRWKHFRPSDQ\oVPHPEHUVDVDERG\LQDFFRUGDQFHZLWK&KDSWHURI3DUWRIWKH&RPSDQLHV\$FW Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an DXGLWRUoVUHSRUWDQGIRUQRRWKHUSXUSRVH7RWKHIXOOHVWH[WHQWSHUPLWWHGE\ODZZHGRQRWDFFHSWRUDVVXPHUHVSRQVLELOLW\WRDQ\RQHRWKHUWKDQ WKH{FRPSDQ\DQGWKHFRPSDQ\oVPHPEHUVDVDERG\IRURXUDXGLWZRUNIRUWKLVUHSRUWRUIRUWKHRSLQLRQVZHKDYHIRUPHG

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For and on behalf of Deloitte LLP Statutory Auditor /RQGRQ8QLWHG.LQJGRP 4 March 2020

Consolidated income statement

For the year ended 31 December 2019

		2019	2018
	Note	\$m	\$m
Revenue	2	873.6	822.2
Cost of sales		(552.2)	(516.6)
*URVVSURƮW		321.4	305.6
Distribution costs		(127.3)	(111.6)
Administrative expenses		(93.2)	(109.1)
2SHUDWLQJSURƮW	2	100.9	84.9
Loss on disposal	33	(9.0)	–
Other expenses1	25	(1.5)	(1.6)
Finance income	3	0.4	0.3
Finance costs	4	(29.8)	(18.2)
3URƮWEHIRUHLQFRPHWD[		61.0	65.4
Tax	6	(14.6)	(15.6)
3URƮWIURPFRQWLQXLQJRSHUDWLRQV		46.4	49.8
Loss from discontinued operations	33	–	(8.4)
3URƮWIRUWKH\HDU		46.4	41.4
Attributable to:
Equity holders of the parent		46.4	41.4
Earnings per share
From continuing operations
Basic (cents)	9	8.0	9.5
Diluted (cents)	9	7.9	9.5
From continuing and discontinued operations
Basic (cents)	9	8.0	7.9
Diluted (cents)	9	7.9	7.9

1 Other expenses comprise administration expenses for the Group's pension schemes.

Consolidated statement of comprehensive income

For the year ended 31 December 2019

	2019 \$m	2018 \$m
3URƮWIRUWKH\HDU	46.4	41.4
2WKHUFRPSUHKHQVLYHLQFRPH
,WHPVWKDWZLOOQRWEHUHFODVVLƮHGVXEVHTXHQWO\WRSURƮWDQGORVV
5HPHDVXUHPHQWVRIUHWLUHPHQWEHQHƮWREOLJDWLRQV	(11.1)	5.3
'HIHUUHGWD[DVVRFLDWHGZLWKUHWLUHPHQWEHQHƮWREOLJDWLRQV	1.3	0.7
,WHPVWKDWPD\EHUHFODVVLƮHGVXEVHTXHQWO\WRSURƮWDQGORVV
([FKDQJHGLƬHUHQFHVRQWUDQVODWLRQRIIRUHLJQRSHUDWLRQV	(23.9)	0.5
(ƬHFWLYHSRUWLRQRIFKDQJHLQIDLUYDOXHRIQHWLQYHVWPHQWKHGJH	27.5	(20.5)
Recycling of deferred foreign exchange losses on disposal	0.4	4.2
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHRIFDVKưRZKHGJHV	(2.8)	1.4
)DLUYDOXHRIFDVKưRZKHGJHVWUDQVIHUUHGWRLQFRPHVWDWHPHQW	–	(0.1)
([FKDQJHGLƬHUHQFHVRQWUDQVODWLRQRIVKDUHRSWLRQVUHVHUYHV	2.7	(0.4)
Other comprehensive income	(5.9)	(8.9)
Total comprehensive income for the year	40.5	32.5
Attributable to:
Equity holders of the parent	40.5	32.5
Total comprehensive income for the year	40.5	32.5

&RQVROLGDWHGEDODQFHVKHHW

As at 31 December 2019

			Restated1	Restated2
		2019 'HFHPEHU	2018 31 December	2017 31 December
	Note	\$m	\$m	\$m
Non-current assets
Goodwill and other intangible assets	10	958.1	976.6	717.2
3URSHUW\SODQWDQGHTXLSPHQW	11	513.6	478.2	219.5
ACT recoverable	16	4.8	9.8	16.2
Deferred tax assets	16	28.2	24.4	0.2
1HWUHWLUHPHQWEHQHƮWVXUSOXV	25	7.4	22.1	21.9
Total non-current assets		1,512.1		975.0
Current assets
Inventories	12	168.7	188.7	143.6
Trade and other receivables	13	117.9	133.8	119.3
Derivatives	21	0.1	2.0	0.9
Current tax assets		2.5	3.0	4.3
Cash and cash equivalents	20	103.9	96.1	55.0
Total current assets		393.1	423.6	323.1
\$VVHWVFODVVLƮHGDVKHOGIRUVDOH		–	–	58.2
Total assets		1,905.2
&XUUHQWOLDELOLWLHV
Bank overdrafts and loans	19	(2.2)	(2.8)	(2.7)
Trade and other payables	14	(134.5)	(140.6)	(117.7)
Financial liabilities	21	(2.1)	(0.1)	–
Current tax liabilities		(23.2)	(17.1)	(14.1)
Lease liabilities	24	(7.1)	–	–
Provisions	15	(6.4)	(7.3)	(10.8)
7RWDOFXUUHQWOLDELOLWLHV		(175.5)	(167.9)	(145.3)
1RQFXUUHQWOLDELOLWLHV
Loans and borrowings	21	(550.8)	(585.8)	(338.1)
5HWLUHPHQWEHQHƮWREOLJDWLRQV	25	(24.5)	(32.0)	(32.4)
Deferred tax liabilities	16	(150.2)	(151.7)	(93.4)
Lease liabilities	24	(39.8)	–	–
Provisions	15	(45.2)	(41.5)	(21.9)
Financial liabilities	21	(13.0)	(40.2)	–
7RWDOQRQFXUUHQWOLDELOLWLHV		(823.5)	(851.2)	(485.8)
/LDELOLWLHVFODVVLƮHGDVKHOGIRUVDOH		–	–	(22.9)
7RWDOOLDELOLWLHV		(999.0)		(654.0)
Net assets		906.2	915.6	702.3
(TXLW\
Share capital	17	52.1	52.1	44.4
Share premium		237.7	237.6	21.9
Other reserves	18	91.1	85.5	99.0
Retained earnings		525.3	540.4	537.0
7RWDOHTXLW\DWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQW		906.2	915.6	702.3
7RWDOHTXLW\		906.2	915.6	702.3

1 'HFHPEHUEDODQFHVKHHWKDVEHHQUHVWDWHGWRVKRZWKH8.SHQVLRQVXUSOXVRIPZLWKLQQRQFXUUHQWDVVHWVDQGWRRƬVHWXQDPRUWLVHGV\QGLFDWH fees of \$5.6m against the borrowings to which they relate within non-current liabilities. See Note 34.

2 'HFHPEHUEDODQFHVKHHWKDVEHHQUHVWDWHGWRVKRZWKH8.SHQVLRQVXUSOXVRIPZLWKLQQRQFXUUHQWDVVHWVDQGWRRƬVHWXQDPRUWLVHGV\QGLFDWH fees of \$5.3m against the borrowings to which they relate within non-current liabilities. See Note 34.

7KHƮQDQFLDOVWDWHPHQWVRQSDJHVWRZHUHDSSURYHGE\WKH%RDUGRQ0DUFKDQGVLJQHGRQLWVEHKDOIE\

Paul Waterman	Ralph Hewins
CEO	CFO

\$Çèáéáêðåïìèß̟_̟\$QQXDO5HSRUWDQG\$FFRXQWV

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For the year ended 31 December 2019

	Share capital	Share premium	Translation reserve	Hedging reserve	Other reserves	Retained earnings	Total equity
	\$m 44.4	\$m 21.9	\$m (57.2)	\$m (6.9)	\$m 163.1	\$m 537.0	\$m 702.3
%DODQFHDW-DQXDU\ Impact following adoption of IFRS 15	–	–	–	–	–	(0.9)	(0.9)
	44.4	21.9	(57.2)	(6.9)	163.1	536.1	701.4
5HYLVHGDW-DQXDU\ Comprehensive income
3URƮWIRUWKH\HDU	–	–	–	–	–	41.4	41.4
Other comprehensive income:
([FKDQJHGLƬHUHQFHV	–	–	(20.0)	–	(0.4)	–	(20.4)
Recycling of deferred foreign exchange losses RQ{GLVSRVDO	–	–	4.2	–	–	–	4.2
)DLUYDOXHRIFDVKưRZKHGJHVWUDQVIHUUHGWR{WKH{LQFRPH statement	–	–	–	(0.1)	–	–	(0.1)
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHRIFDVKưRZ
hedges	–	–	–	1.4	–	–	1.4
5HPHDVXUHPHQWVRIUHWLUHPHQWEHQHƮWREOLJDWLRQV	–	–	–	–	–	5.3	5.3
'HIHUUHGWD[DGMXVWPHQWRQSHQVLRQVFKHPH{GHƮFLW	–	–	–	–	–	0.7	0.7
Transfer	–	–	–	–	(1.5)	1.5	–
Total other comprehensive income	–	–	(15.8)	1.3	(1.9)	7.5	(8.9)
Total comprehensive income	–	–	(15.8)	1.3	(1.9)	48.9	32.5
Transactions with owners:
Purchase of own shares	–	–	–	–	–	(0.3)	(0.3)
Issue of shares by the Company1	7.7	215.7	–	–	–	–	223.4
Share based payments	–	–	–	–	2.9	–	2.9
Deferred tax on share based payments recognised
within equity	–	–	–	–	–	(2.4)	(2.4)
Dividends paid	–	–	–	–	–	(41.9)	(41.9)
Total transactions with owners	7.7	215.7	–	–	2.9	(44.6)	181.7
%DODQFHDW'HFHPEHU	52.1	237.6	(73.0)	(5.6)	164.1	540.4	915.6

%DODQFHDW-DQXDU\	52.1	237.6	(73.0)	(5.6)	164.1	540.4	915.6
Impact following adoption of IFRS 16	–	–	–	–	–	(4.0)	(4.0)
5HYLVHGDW-DQXDU\	52.1	237.6	(73.0)	(5.6)	164.1	536.4	911.6
Comprehensive income
3URƮWIRUWKH\HDU	–	–	–	–	–	46.4	46.4
Other comprehensive income:
([FKDQJHGLƬHUHQFHV	–	–	3.6	–	2.7	–	6.3
Recycling of deferred foreign exchange losses RQ{GLVSRVDO	–	–	0.4	–	–	–	0.4
)DLUYDOXHRIFDVKưRZKHGJHVWUDQVIHUUHGWRWKHLQFRPH
statement	–	–	–	–	–	–	–
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHRIFDVKưRZ hedges	–	–	–	(2.8)	–	–	(2.8)
5HPHDVXUHPHQWVRIUHWLUHPHQWEHQHƮWREOLJDWLRQV	–	–	–	–	–	(11.1)	(11.1)
'HIHUUHGWD[DGMXVWPHQWRQSHQVLRQVFKHPH{GHƮFLW	–	–	–	–	–	1.3	1.3
Transfer	–	–	–	–	(1.3)	1.3	–
Total other comprehensive income	–	–	4.0	(2.8)	1.4	(8.5)	(5.9)
Total comprehensive income	–	–	4.0	(2.8)	1.4	37.9	40.5
Transactions with owners:
Issue of shares by the Company	–	0.1	–	–	–	–	0.1
Share based payments	–	–	–	–	3.0	–	3.0
Deferred tax on share based payments recognised within equity	–	–	–	–	–	0.3	0.3
Dividends paid	–	–	–	–	–	(49.3)	(49.3)
Total transactions with owners	–	0.1	–	–	3.0	(49.0)	(45.9)
%DODQFHDW'HFHPEHU	52.1	237.7	(69.0)	(8.4)	168.5	525.3	906.2

1 The Rights Issue raised gross proceeds of \$232.7m. The total amount capitalised to share capital and share premium was \$222.2m (\$232.7m less issuance costs of \$10.5m).

Financial statements

&RQVROLGDWHGFDVKưRZVWDWHPHQW

For the year ended 31 December 2019

	Note	2019 \$m	2018 \$m
2SHUDWLQJDFWLYLWLHV
3URƮWIRUWKH\HDU		46.4	41.4
Adjustments for:
Other expenses		1.5	1.6
Finance income	3	(0.4)	(0.2)
Finance costs	4	29.8	18.2
Tax charge	6	14.6	13.6
Depreciation and amortisation	7	70.1	45.9
(Decrease)/increase in provisions	15	(27.8)	9.2
Pension payments net of current service cost	25	(1.2)	1.9
Share based payments	26	3.0	2.8
/RVVSURƮWRQGLVSRVDORIEXVLQHVV	33	9.0	(12.1)
2SHUDWLQJFDVKưRZEHIRUHPRYHPHQWLQZRUNLQJFDSLWDO		145.0	122.3
Decrease/(increase) in inventories		18.6	(24.6)
Decrease/(increase) in trade and other receivables		15.5	(2.8)
(Decrease)/increase in trade and other payables		(8.5)	10.6
Cash generated by operations		170.6	105.5
Income taxes paid		(2.2)	(6.9)
Interest paid	4	(25.0)	(14.3)
1HWFDVKưRZIURPRSHUDWLQJDFWLYLWLHV		143.4	84.3
,QYHVWLQJDFWLYLWLHV
Interest received	3	0.4	–
'LVSRVDORISURSHUW\SODQWDQGHTXLSPHQW		0.8	0.6
3XUFKDVHRISURSHUW\SODQWDQGHTXLSPHQW		(47.7)	(50.0)
Purchase of business net of cash acquired	32	–	(484.7)
Disposal of business	33	(2.1)	58.0
Acquisition of intangible assets		(0.4)	(1.4)
1HWFDVKưRZIURPLQYHVWLQJDFWLYLWLHV		(49.0)	(477.5)
)LQDQFLQJDFWLYLWLHV
Issue of shares by the Company and the ESOT net of issue costs		0.1	223.3
Dividends paid	29	(49.3)	(41.9)
Purchase of shares by the ESOT		–	(0.3)
Proceeds on issue of new debt		–	554.7
Net movement on existing debt		(30.4)	(296.7)
Payment of lease liabilities		(6.0)	–
1HWFDVKXVHGLQƮQDQFLQJDFWLYLWLHV		(85.6)	439.1
1HWLQFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV		8.8	45.9
Cash and cash equivalents at 1 January		96.1	55.0
Foreign exchange on cash and cash equivalents		(1.0)	(4.8)
&DVKDQGFDVKHTXLYDOHQWVDW'HFHPEHU	20	103.9	96.1

Strategic Report

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWV

For the year ended 31 December 2019

̝\$FFRXQWLQJSROLFLHV

Elementis plc is a public company limited by shares incorporated and domiciled in England and is the parent company of the Group. 7KHDGGUHVVRILWVUHJLVWHUHGRƱFHLV&DUROLQH+RXVH+LJK +ROERUQ/RQGRQ:&9';7KH*URXSƮQDQFLDOVWDWHPHQWV have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by WKH(8nDGRSWHG,)56o7KH&RPSDQ\KDVHOHFWHGWRSUHSDUHLWV SDUHQWFRPSDQ\ƮQDQFLDOVWDWHPHQWVLQDFFRUGDQFHZLWK)56 7KHVHDUH{SUHVHQWHGRQSDJHVWR

Basis of preparation

7KHƮQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGRQWKHKLVWRULFDOFRVW EDVLVH[FHSWWKDWGHULYDWLYHƮQDQFLDOLQVWUXPHQWVDUHVWDWHGDWWKHLU fair value. Non-current assets held for sale are stated at the lower of carrying amount and fair value less costs to sell. The preparation RIƮQDQFLDOVWDWHPHQWVUHTXLUHVWKHDSSOLFDWLRQRIHVWLPDWHVDQG MXGJHPHQWVWKDWDƬHFWWKHUHSRUWHGDPRXQWVRIDVVHWVDQGOLDELOLWLHV revenues and costs and related disclosures at the balance sheet date. The Group's accounting policies have been updated following the adoption of a number of new standards and amendments to VWDQGDUGVWKDWKDYHEHHQLVVXHGDQGDUHQRZHƬHFWLYHIRUWKH*URXS

7KHƮQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGRQDJRLQJFRQFHUQ basis. The rationale for adopting this basis is discussed in the Directors' report on page 97.

5HSRUWLQJFXUUHQF

As a consequence of the majority of the Group's sales and earnings RULJLQDWLQJLQ86GROODUVRU86GROODUOLQNHGFXUUHQFLHVWKH*URXSKDV chosen the US dollar as its presentational currency. This aligns the *URXSoVH[WHUQDOUHSRUWLQJZLWKWKHSURƮOHRIWKH*URXSDVZHOODVZLWK internal management reporting. The functional currency of the parent is pounds sterling.

&ULWLFDODFFRXQWLQJMXGJHPHQWVDQGNH\VRXUFHVRI HVWLPDWLRQ{XQFHUWDLQW

:KHQDSSO\LQJWKH*URXSoVDFFRXQWLQJSROLFLHVPDQDJHPHQWPXVW make a number of key judgements on the application of applicable accounting standards and estimates and assumptions concerning the carrying amounts of assets and liabilities that are not readily apparent from other sources. These estimates and judgements DUHEDVHGRQIDFWRUVFRQVLGHUHGWREHUHOHYDQWLQFOXGLQJKLVWRULFDO H[SHULHQFHZKLFKPD\GLƬHUVLJQLƮFDQWO\IURPWKHDFWXDORXWFRPH The key assumptions concerning the future and other key sources of HVWLPDWLRQXQFHUWDLQW\WKDWKDYHDVLJQLƮFDQWULVNRIFDXVLQJDPDWHULDO DGMXVWPHQWWRWKHDPRXQWVUHFRJQLVHGLQWKHƮQDQFLDOVWDWHPHQWV within the next year are discussed below. The development of the estimates and disclosures related to each of these matters has been discussed by the Audit Committee.

Critical accounting judgements

7KHIROORZLQJDUHWKHFULWLFDOMXGJHPHQWVDSDUWIURPWKRVHLQYROYLQJ HVWLPDWLRQVZKLFKDUHGHDOWZLWKVHSDUDWHO\EHORZWKDWWKH'LUHFWRUV have made in the process of applying the Group's accounting policies DQGWKDWKDYHWKHPRVWVLJQLƮFDQWHƬHFWRQWKHDPRXQWVUHFRJQLVHG LQWKHƮQDQFLDOVWDWHPHQWV:KHUHUHOHYDQWDQGSUDFWLFDEOHVHQVLWLYLW\ analyses are disclosed in the relevant notes to demonstrate the impact of changes in estimates or assumptions used.

D̝5HYHQXHUHFRJQLWLRQ

Judgement is exercised over how to determine the timing of revenue recognition for orders where the agreed terms are delivery to the destination point. The Group has compiled shipping estimates based on the destination country which are used to inform the timing of revenue recognition. In compiling these estimates management have used past experience and carrier standard shipping estimates to inform their decision making.

E̝'HWHUPLQLQJWKHOHDVHWHUPRIFRQWUDFWVZLWK H[WHQVLRQ{RSWLRQV

The Group determines the lease term as the non-cancellable term of WKHOHDVHWRJHWKHUZLWKDQ\SHULRGVFRYHUHGE\DQRSWLRQWRH[WHQG the lease if it is reasonably certain to be exercised.

The Group applies judgement in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate a OHDVH7KDWLVLWFRQVLGHUVDOOUHOHYDQWIDFWRUVWKDWFUHDWHDQHFRQRPLF incentive for it to exercise either the renewal or termination. After the FRPPHQFHPHQWGDWHWKH*URXSUHDVVHVVHVWKHOHDVHWHUPLIWKHUH LVDVLJQLƮFDQWHYHQWRUFKDQJHLQFLUFXPVWDQFHVWKDWLVZLWKLQLWV FRQWURODQGDƬHFWVLWVDELOLW\WRH[HUFLVHRUQRWWRH[HUFLVHWKHRSWLRQ WRUHQHZRUWRWHUPLQDWHHJFRQVWUXFWLRQRIVLJQLƮFDQWOHDVHKROG LPSURYHPHQWVRUVLJQLƮFDQWFXVWRPLVDWLRQWRWKHOHDVHGDVVHW

There are two leases of land and buildings for which the Group has determined that the extension options contained within the lease contracts are reasonably certain to be exercised. As such the periods covered by the extension options have been included in the lease term and the calculation of the related lease liabilities.

.H\VRXUFHVRIHVWLPDWLRQXQFHUWDLQW

7KHNH\DVVXPSWLRQVFRQFHUQLQJWKHIXWXUHDQGRWKHUNH\VRXUFHV of estimation uncertainty at the reporting period that may have a VLJQLƮFDQWULVNRIFDXVLQJDPDWHULDOPLVVWDWHPHQWWRWKHFDUU\LQJ DPRXQWVRIDVVHWVDQGOLDELOLWLHVZLWKLQWKHQH[WƮQDQFLDO\HDUDUH discussed below.

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$FFRXQWLQJSROLFLHVcontinued

D̝(QYLURQPHQWDOSURYLVLRQV

Provisions for environmental restoration are recognised where: the Group has a present legal or constructive obligation as a result of past HYHQWVLWLVSUREDEOHWKDWDQRXWưRZRIUHVRXUFHVZLOOEHUHTXLUHGWR settle the obligation; and the amount can be estimated reliably.

Environmental provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a SUHWD[GLVFRXQWUDWHWKDWUHưHFWVFXUUHQWPDUNHWDVVHVVPHQWVRIWKH WLPHYDOXHRIPRQH\DQGWKHULVNVVSHFLƮFWRWKHREOLJDWLRQ'XHWRWKH ORQJWLPHKRUL]RQVRYHUZKLFKFRVWVDUHDQWLFLSDWHGVPDOOFKDQJHV LQUHFXUULQJDQQXDOFDVKRXWưRZVFDQKDYHDVLJQLƮFDQWFXPXODWLYH impact on the total provision required. Further details of these provisions and a sensitivity assessment are given in Note 15.

E̝9DOXDWLRQRIDGHƮQHGEHQHƮWSHQVLRQREOLJDWLRQ

7KHNH\HVWLPDWHVPDGHLQUHODWLRQWRGHƮQHGEHQHƮWSHQVLRQVUHODWH to the discount rate used to determine the present value of future EHQHƮWVDQGWKHUDWHRILQưDWLRQDSSOLHGWRSODQDVVHWV)XUWKHUGHWDLOV on pensions and a sensitivity analysis are given in Note 25.

F̝,PSDLUPHQWWHVWLQJRIJRRGZLOO

Each year the Group carries out impairment tests of goodwill which require estimates to be made of the value in use of its cash generating units. These value in use calculations are dependent on estimates of IXWXUHFDVKưRZVORQJWHUPJURZWKUDWHVDQGDSSURSULDWHGLVFRXQW UDWHVWREHDSSOLHGWRIXWXUHFDVKưRZV)XUWKHUGHWDLOVRQWKHVH estimates and sensitivities of the carrying value of goodwill to these estimates are provided in Note 10.

Basis of consolidation

7KHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVLQFOXGHWKHƮQDQFLDO statements of the Company and its subsidiaries for the year.

Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group LVH[SRVHGWRRUKDVULJKWVWRYDULDEOHUHWXUQVIURPLWVLQYROYHPHQW ZLWKWKHHQWLW\DQGKDVWKHDELOLW\WRDƬHFWWKRVHUHWXUQVWKURXJKLWV power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date on which that control ceases.

The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of DVXEVLGLDU\LVWKHIDLUYDOXHRIWKHDVVHWVWUDQVIHUUHGWKHOLDELOLWLHV LQFXUUHGWRWKHIRUPHURZQHUVRIWKHDFTXLUHHDQGWKHHTXLW\ interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent FRQVLGHUDWLRQDUUDQJHPHQW,GHQWLƮDEOHDVVHWVDFTXLUHGDQGOLDELOLWLHV and contingent liabilities assumed in a business combination are measured initially at their fair value at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an DFTXLVLWLRQE\DFTXLVLWLRQEDVLVHLWKHUDWIDLUYDOXHRUDWWKHQRQ controlling interest's proportionate share of the recognised amounts RIWKHDFTXLUHHoVLGHQWLƮDEOHQHWDVVHWV

Acquisition costs are accounted for as an expense in the period incurred.

Intragroup balances and any unrealised gains and losses or income DQGH[SHQVHVDULVLQJIURPLQWUDJURXSWUDQVDFWLRQVDUHHOLPLQDWHGLQ SUHSDULQJWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWV8QUHDOLVHGORVVHV DUHHOLPLQDWHGLQWKHVDPHZD\DVXQUHDOLVHGJDLQVEXWRQO\WRWKH extent that there is no evidence of impairment.

A full list of the Group's subsidiaries is shown in Note 6 of the parent FRPSDQ\ƮQDQFLDOVWDWHPHQWV

Changes in accounting policies

The accounting policies adopted are consistent with those of the SUHYLRXVƮQDQFLDO\HDUH[FHSWIRUWKHDGRSWLRQRI,)56/HDVHV

Initial adoption of IFRS 16 Leases

,)56VXSHUVHGHV,\$6/HDVHV,)5,&'HWHUPLQLQJZKHWKHUDQ \$UUDQJHPHQWFRQWDLQVD/HDVH6,&2SHUDWLQJ/HDVHV,QFHQWLYHV and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the UHFRJQLWLRQPHDVXUHPHQWSUHVHQWDWLRQDQGGLVFORVXUHRIOHDVHVDQG requires lessees to recognise most leases on the balance sheet.

Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or ƮQDQFHOHDVHVXVLQJVLPLODUSULQFLSOHVDVLQ,\$67KHUHIRUH,)56 did not have an impact for leases where the Group is the lessor.

7KH*URXSDGRSWHG,)56XVLQJWKHPRGLƮHGUHWURVSHFWLYH approach on transition with the date of initial application of 1 January 8QGHUWKLVPHWKRGWKHVWDQGDUGLVDSSOLHGUHWURVSHFWLYHO\ ZLWKWKHFXPXODWLYHHƬHFWRILQLWLDOO\DSSO\LQJWKHVWDQGDUG recognised at the date of initial application as permitted under the transitional provisions.

\$WWUDQVLWLRQIRUOHDVHVFODVVLƮHGDVRSHUDWLQJOHDVHVXQGHU,\$6 lease liabilities were measured at the present value of the remaining OHDVHSD\PHQWVGLVFRXQWHGDWWKH*URXSoVLQFUHPHQWDOERUURZLQJUDWH as at 1 January 2019. Right of use assets were measured at either:

their carrying amount as if IFRS 16 had been applied since the OHDVHFRPPHQFHPHQWGDWHGLVFRXQWHGDWWKH*URXSoVLQFUHPHQWDO borrowing rate as at 1 January 2019. The Group has applied this methodology to some of its property leases.
DQDPRXQWHTXDOWRWKHOHDVHOLDELOLW\DGMXVWHGE\WKHDPRXQWRIDQ\ prepaid or accrued lease payments. This has been applied to the PDMRULW\RIWKH*URXSoVOHDVHVFRPSULVLQJOHDVHVRISURSHUW\PRWRU YHKLFOHVƮ[WXUHVDQGƮWWLQJVDQGLWHPVRISODQWDQGHTXLSPHQW

7KHLPSDFWRIWKHDGRSWLRQRI,)56RQWKHFRQVROLGDWHGƮQDQFLDO statements is shown in Note 24.

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D̝)RUHLJQFXUUHQF\WUDQVDFWLRQV

Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the foreign exchange rate ruling at WKDWGDWH)RUHLJQH[FKDQJHGLƬHUHQFHVDULVLQJRQWUDQVODWLRQDUH recognised in the income statement. Non -monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated at exchange rates ruling at the dates the fair value was determined.

E̝)LQDQFLDOVWDWHPHQWVRIIRUHLJQRSHUDWLRQV

7KHDVVHWVDQGOLDELOLWLHVRIIRUHLJQRSHUDWLRQVLQFOXGLQJJRRGZLOO DQGIDLUYDOXHDGMXVWPHQWVDULVLQJRQFRQVROLGDWLRQDUHWUDQVODWHGDW exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at the average rates of H[FKDQJHUXOLQJIRUWKHUHOHYDQWSHULRG([FKDQJHGLƬHUHQFHVDULVLQJ since 1 January 2004 on translation are taken to the translation reserve. They are recognised in the income statement upon disposal of the foreign operation. The Group may hedge a portion of the translation of its overseas net assets through US dollar and euro ERUURZLQJV)URP-DQXDU\WKH*URXSKDVHOHFWHGWRDSSO\ net investment hedge accounting for these transactions where SRVVLEOH:KHUHKHGJLQJLVDSSOLHGWKHHƬHFWLYHSRUWLRQRIWKHJDLQRU loss on an instrument used to hedge a net investment is recognised LQHTXLW\$Q\LQHƬHFWLYHSRUWLRQRIWKHKHGJHLVUHFRJQLVHGLQWKH income statement.

3URSHUW\SODQWDQGHTXLSPHQW

,WHPVRISURSHUW\SODQWDQGHTXLSPHQWDUHVWDWHGDWFRVWOHVV accumulated depreciation and impairment losses. Freehold land is not depreciated. Leasehold property is depreciated over the period RIWKHOHDVH)UHHKROGEXLOGLQJVSODQWDQGPDFKLQHU\Ʈ[WXUHVƮWWLQJV and equipment are depreciated over their estimated useful lives on DVWUDLJKWOLQHEDVLV'HSUHFLDWLRQPHWKRGVXVHIXOOLYHVDQGUHVLGXDO values are assessed at the reporting date. No depreciation is charged on assets under construction until the asset is brought into use.

Depreciation is charged on a straight-line basis over the estimated useful economic lives of the assets as follows:

Buildings	10 – 50 years
Plant and machinery	2 – 20 years
)L[WXUHVƮWWLQJVDQGHTXLSPHQW	2 – 20 years
Right of use assets	Shorter of the useful economic
	life of the asset and the
	lease term

7KHFRVWRIUHSODFLQJSDUWRIDQLWHPRISURSHUW\SODQWDQGHTXLSPHQW is recognised in the carrying amount of the item if it is probable that WKHIXWXUHHFRQRPLFEHQHƮWVHPERGLHGZLWKLQLWZLOOưRZWRWKH*URXS and its cost can be measured reliably. The costs of the day-to-day VHUYLFLQJRISURSHUW\SODQWDQGHTXLSPHQWDUHUHFRJQLVHGLQWKH income statement as incurred.

Management regularly considers whether there are any indications RILPSDLUPHQWWRFDUU\LQJYDOXHVRISURSHUW\SODQWDQGHTXLSPHQW ,PSDLUPHQWUHYLHZVDUHEDVHGRQULVNDGMXVWHGGLVFRXQWHGFDVKưRZ SURMHFWLRQV6LJQLƮFDQWMXGJHPHQWLVDSSOLHGWRWKHDVVXPSWLRQV XQGHUO\LQJWKHVHSURMHFWLRQVZKLFKLQFOXGHHVWLPDWHGGLVFRXQWUDWHV JURZWKUDWHVIXWXUHVHOOLQJSULFHVDQGGLUHFWFRVWV&KDQJHVWRWKHVH DVVXPSWLRQVFRXOGKDYHDPDWHULDOLPSDFWRQWKHƮQDQFLDOSRVLWLRQRI the Group and on the result for the year.

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*RRGZLOODULVHVRQWKHDFTXLVLWLRQRIVXEVLGLDULHVDQGLWUHSUHVHQWV WKHH[FHVVRIWKHFRQVLGHUDWLRQWUDQVIHUUHGWKHDPRXQWRIDQ\ non-controlling interest in the acquiree and the acquisition-date fair value of any previous equity interest in the acquiree over the fair value RIWKHLGHQWLƮDEOHQHWDVVHWVDFTXLUHG,IWKHWRWDORIFRQVLGHUDWLRQ WUDQVIHUUHGQRQFRQWUROOLQJLQWHUHVWUHFRJQLVHGDQGSUHYLRXVO\KHOG interest measured at fair value is less than the fair value of the net DVVHWVRIWKHVXEVLGLDU\DFTXLUHGLQWKHFDVHRIDEDUJDLQSXUFKDVH WKHGLƬHUHQFHLVUHFRJQLVHGGLUHFWO\LQWKHLQFRPHVWDWHPHQW

E̝5HVHDUFKDQGGHYHORSPHQW

Expenditure on pure research is recognised in the income VWDWHPHQWDVDQH[SHQVHDVLQFXUUHG8QGHU,\$6H[SHQGLWXUHRQ GHYHORSPHQWZKHUHUHVHDUFKƮQGLQJVDUHDSSOLHGWRDSODQRUGHVLJQ for the production of new or substantially improved products and processes is capitalised if the product or process will give rise to IXWXUHHFRQRPLFEHQHƮWVDQGZKHUHWKHFRVWRIWKHFDSLWDOLVHGDVVHW can be measured reliably. Expenditure capitalised is stated as the cost RIPDWHULDOVGLUHFWODERXUDQGDQDSSURSULDWHSURSRUWLRQRIRYHUKHDGV OHVVDFFXPXODWHGDPRUWLVDWLRQ7KHOHQJWKRIGHYHORSPHQWOLIHF\FOHV broad nature of much of the research undertaken and uncertainty until a late stage as to ultimate commercial viability of a potential product can mean that the measurement criteria of IAS 38 regarding WKHSUREDELOLW\RIIXWXUHHFRQRPLFEHQHƮWVDQGWKHUHOLDELOLW\RI DOORFDWLQJFRVWVPD\QRWEHPHWLQZKLFKFDVHH[SHQGLWXUHLV expensed as incurred.

F̝&XVWRPHUUHODWLRQVKLSVDQGRWKHULQWDQJLEOHDVVHWV

Customer relationships and other intangible assets are stated at cost RUZKHQDULVLQJLQDEXVLQHVVFRPELQDWLRQHVWLPDWHGIDLUYDOXHOHVV accumulated amortisation.

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Amortisation is charged to the income statement on a straight line basis over the estimated useful lives of intangible assets WKURXJKWKHDGPLQLVWUDWLYHH[SHQVHVOLQHLWHPXQOHVVVXFKOLYHV DUHLQGHƮQLWH*RRGZLOOLVV\VWHPDWLFDOO\WHVWHGIRULPSDLUPHQWHDFK \HDU2WKHULQWDQJLEOHDVVHWVFRPSULVLQJFXVWRPHUOLVWVFXVWRPHU UHODWLRQVKLSVPDQXIDFWXULQJSURFHVVHVDQGSURFHGXUHVWUDGHPDUNV non-compete clauses and patents are amortised over their estimated useful lives which range from 5 to 24 years.

Corporate Governance

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$FFRXQWLQJSROLFLHVcontinued

,PSDLUPHQWRIQRQFXUUHQWQRQƮQDQFLDODVVHWV

The carrying amount of non-current assets other than deferred tax is compared to the asset's recoverable amount at each balance sheet GDWHZKHUHWKHUHLVDQLQGLFDWLRQRILPSDLUPHQW)RUJRRGZLOODVVHWV WKDWKDYHDQLQGHƮQLWHXVHIXOOLIHDQGLQWDQJLEOHDVVHWVWKDWDUHQRW \HWDYDLODEOHIRUXVHWKHUHFRYHUDEOHDPRXQWLVHVWLPDWHGDWHDFK balance sheet date.

Each year the Group carries out impairment tests of its goodwill DQGRWKHULQGHƮQLWHOLIHLQWDQJLEOHDVVHWVZKLFKUHTXLUHVDQHVWLPDWH to be made of the value in use of its cash generating units (CGUs). These value in use calculations are dependent on estimates of future FDVKưRZVDQGORQJWHUPJURZWKUDWHVRIWKH&*8V)XUWKHUGHWDLOVRI these estimates are given in Note 10.

An impairment loss is recognised whenever the carrying amount of an asset or its CGU exceeds its recoverable amount. Impairment losses are recognised in the income statement. Impairment losses UHFRJQLVHGLQUHVSHFWRI&*8VDUHDOORFDWHGƮUVWWRUHGXFHWKH carrying amount of any goodwill allocated to CGUs and then to reduce the carrying amount of the other assets in the unit on a pro-rata basis. \$&*8LVWKHVPDOOHVWLGHQWLƮDEOHJURXSRIDVVHWVWKDWJHQHUDWHVFDVK LQưRZVWKDWDUHODUJHO\LQGHSHQGHQWRIWKHFDVKLQưRZVIURPRWKHU assets or groups of assets.

The recoverable amount is the greater of their fair value less costs to VHOODQGYDOXHLQXVH,QDVVHVVLQJYDOXHLQXVHWKHHVWLPDWHGIXWXUH FDVKưRZVDUHGLVFRXQWHGWRWKHLUSUHVHQWYDOXHXVLQJDSUHWD[ GLVFRXQWUDWHWKDWUHưHFWVFXUUHQWPDUNHWDVVHVVPHQWVRIWKHWLPH YDOXHRIPRQH\DQGWKHULVNVVSHFLƮFWRWKHDVVHWV)RUDQDVVHWWKDW GRHVQRWJHQHUDWHODUJHO\LQGHSHQGHQWFDVKLQưRZVWKHUHFRYHUDEOH amount is determined for the CGU to which the asset belongs.

,PSDLUPHQWRIƮQDQFLDODVVHWVsH[SHFWHGFUHGLWORVVHV

7KH*URXSDSSOLHVWKH,)56VLPSOLƮHGDSSURDFKWRPHDVXULQJ expected credit losses which uses a lifetime expected loss allowance for all trade receivables.

7RPHDVXUHWKHH[SHFWHGFUHGLWORVVHVWUDGHUHFHLYDEOHVKDYHEHHQ grouped based on shared credit risk characteristics and the days past GXH7KHH[SHFWHGORVVUDWHVDUHEDVHGRQSD\PHQWSURƮOHVDQGWKH corresponding historical credit losses experienced. The historical loss UDWHVDUHDGMXVWHGWRUHưHFWFXUUHQWDQGIRUZDUGORRNLQJLQIRUPDWLRQ LQUHODWLRQWRPDFURHFRQRPLFIDFWRUVWKDWFRXOGDƬHFWWKHDELOLW\RI customers to settle receivables.

7KH*URXSXVXDOO\FRQVLGHUVDƮQDQFLDODVVHWLQGHIDXOWZKHQ FRQWUDFWXDOSD\PHQWVDUHGD\VSDVWGXH,QFHUWDLQFDVHVWKH *URXSPD\DOVRFRQVLGHUDƮQDQFLDODVVHWWREHLQGHIDXOWZKHQ internal or external information indicates that the Group is unlikely to receive the outstanding contractual amounts in full before taking into DFFRXQWDQ\FUHGLWHQKDQFHPHQWVKHOGE\WKH*URXS\$ƮQDQFLDODVVHW LVZULWWHQRƬZKHQWKHUHLVQRUHDVRQDEOHH[SHFWDWLRQRIUHFRYHULQJ WKHFRQWUDFWXDOFDVKưRZV

Inventories

Inventories are stated at the lower of cost and net realisable value. 1HWUHDOLVDEOHYDOXHLVWKHHVWLPDWHGVHOOLQJSULFHOHVVHVWLPDWHG FRVWVRIFRPSOHWLRQDQGVHOOLQJH[SHQVHV&RVWZKLFKLVEDVHGRQD ZHLJKWHGDYHUDJHLQFOXGHVH[SHQGLWXUHLQFXUUHGLQDFTXLULQJVWRFN and bringing it to its existing location and condition. In the case of PDQXIDFWXUHGLQYHQWRULHVDQGZRUNLQSURJUHVVFRVWLQFOXGHVDQ DSSURSULDWHVKDUHRIRYHUKHDGVDWWULEXWDEOHWRPDQXIDFWXUHEDVHGRQ normal operating capacity.

7UDGHUHFHLYDEOHV

Trade receivables are due for payment within one year and are thus FODVVLƮHGDVFXUUHQW7KH\DUHQRQLQWHUHVWEHDULQJDQGDUHVWDWHG DWWKHLUQRPLQDODPRXQWZKLFKLVWKHRULJLQDOLQYRLFHGDPRXQWOHVV allowance for expected future credit losses. Estimates of future expected credit losses are informed by historical experience and PDQDJHPHQWoVH[SHFWDWLRQVRIIXWXUHHFRQRPLFIDFWRUVIXUWKHU information on expected credit loss impairment is given in the LPSDLUPHQWRIƮQDQFLDODVVHWVDFFRXQWLQJSROLF\,QGLYLGXDOWUDGH UHFHLYDEOHVDUHZULWWHQRƬZKHQPDQDJHPHQWGHHPWKHPWREHQR longer collectable.

Non-current assets held for sale and discontinued operations

A non-current asset or a group of assets containing a non-current DVVHWDGLVSRVDOJURXSLVFODVVLƮHGDVKHOGIRUVDOHLILWVFDUU\LQJ amount will be recovered principally through sale rather than through FRQWLQXLQJXVHLWLVDYDLODEOHIRULPPHGLDWHVDOHDQGVDOHZLWKLQ RQH\HDULVKLJKO\SUREDEOH2QLQLWLDOFODVVLƮFDWLRQDVKHOGIRUVDOH non-current assets and disposal groups are measured at the lower of previous carrying amount and fair value less costs to sell with any DGMXVWPHQWVWDNHQWRSURƮWRUORVV7KHVDPHDSSOLHVWRJDLQVDQG losses on subsequent remeasurement.

A discontinued operation is a component of the Group's business that represents a separate major line of business or geographic area of operations or is a subsidiary acquired exclusively with a view to UHVDOHWKDWKDVEHHQGLVSRVHGRIKDVEHHQDEDQGRQHGRUWKDWPHHWV WKHFULWHULDWREHFODVVLƮHGDVKHOGIRUVDOH

&DVKDQGFDVKHTXLYDOHQWV

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash HTXLYDOHQWVIRUWKHSXUSRVHRIWKHVWDWHPHQWRIFDVKưRZV

Leases

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A lease liability is recognised when the Group obtains control of the right-of-use asset that is the subject of the lease. The lease liability LVVXEVHTXHQWO\PHDVXUHGXVLQJWKHHƬHFWLYHLQWHUHVWPHWKRGZLWK LQWHUHVWFKDUJHGWRƮQDQFHFRVWV5LJKWRIXVHDVVHWVDUHJHQHUDOO\ depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis. If the group is reasonably certain to H[HUFLVHDSXUFKDVHRSWLRQWKHULJKWRIXVHDVVHWLVGHSUHFLDWHGRYHU the underlying asset's useful life.

\$WLQFHSWLRQWKH*URXSHYDOXDWHVZKHWKHULWLVUHDVRQDEO\FHUWDLQ that any option to extend a lease term will be exercised or likewise whether any option to terminate the lease will be exercised. The Group continues to evaluate the likelihood of exercising such options throughout the initial lease term. When the Group is committed to H[WHQGLQJRUWHUPLQDWLQJWKHOHDVHKDYLQJFRQVLGHUHGWKHDOWHUQDWLYH RSWLRQVDYDLODEOHDQGZKHUHDSSURSULDWHOHVVRUFRQVHQWWRWKH H[WHQVLRQRUWHUPLQDWLRQKDVEHHQREWDLQHGWKH*URXSZLOOFRQVLGHU the option to be reasonably certain to be exercised. When an option LVUHDVRQDEO\FHUWDLQWREHH[HUFLVHGWKHULJKWRIXVHDVVHWDQGOHDVH OLDELOLWLHVUHFRJQLVHGDUHDGMXVWHGWRUHưHFWWKHH[WHQGHGRUFXUWDLOHG lease term.

/HDVHVZKLFKDWLQFHSWLRQKDYHDWHUPRIOHVVWKDQPRQWKVRU UHODWHWRORZYDOXHDVVHWVDUHQRWUHFRJQLVHGRQEDODQFHVKHHW Payments made under such leases are recognised as an expense in the income statement on a straight-line basis over the period of the lease.

\$FFRXQWLQJSROLF\DSSOLHGXSXQWLO'HFHPEHU

Leases which result in the Group receiving substantially all of the ULVNVDQGUHZDUGVRIRZQHUVKLSRIDQDVVHWDUHWUHDWHGDVƮQDQFH OHDVHV\$QDVVHWKHOGXQGHUDƮQDQFHOHDVHLVUHFRUGHGLQWKHEDODQFH sheet and depreciated over the shorter of its estimated useful life DQGWKHOHDVHWHUP)XWXUHLQVWDOPHQWVQHWRIƮQDQFHFKDUJHVDUH included within borrowings. Minimum lease payments are apportioned EHWZHHQWKHƮQDQFHFKDUJHZKLFKLVDOORFDWHGWRHDFKSHULRG to produce a constant periodic rate of interest on the remaining liability and charged to the income statement and reduction of the outstanding liability. Rental costs arising from operating leases are charged on a straight line basis over the period of the lease.

Borrowings

Borrowings are initially measured at cost (which is equal to the fair YDOXHDWLQFHSWLRQDQGDUHVXEVHTXHQWO\PHDVXUHGDWDPRUWLVHGFRVW XVLQJWKHHƬHFWLYHLQWHUHVWUDWHPHWKRG\$Q\GLƬHUHQFHEHWZHHQWKH SURFHHGVQHWRIWUDQVDFWLRQFRVWVDQGWKHVHWWOHPHQWRUUHGHPSWLRQ of borrowings is recognised over the terms of the borrowings using WKHHƬHFWLYHLQWHUHVWUDWHPHWKRG

7UDGHSD\DEOHV

Trade payables are non-interest bearing borrowings and are initially measured at fair value and subsequently carried at amortised cost.

Provisions

A provision is recognised in the balance sheet when the Group has a SUHVHQWOHJDORUFRQVWUXFWLYHREOLJDWLRQDVDUHVXOWRIDSDVWHYHQWDQG LWLVSUREDEOHWKDWDQRXWưRZRIHFRQRPLFEHQHƮWVZLOOEHUHTXLUHGWR VHWWOHWKHREOLJDWLRQ,IWKHHƬHFWLVPDWHULDOSURYLVLRQVDUHGHWHUPLQHG E\GLVFRXQWLQJWKHH[SHFWHGIXWXUHFDVKưRZVDWDSUHWD[UDWHWKDW UHưHFWVFXUUHQWPDUNHWDVVHVVPHQWVRIWKHWLPHYDOXHRIPRQH\DQG ZKHUHDSSURSULDWHWKHULVNVVSHFLƮFWRWKHOLDELOLW\

A provision for restructuring is recognised when the Group KDVDSSURYHGDGHWDLOHGDQGIRUPDOUHVWUXFWXULQJSODQDQGWKH restructuring has either commenced or has been announced publicly. In accordance with the Group's environmental policy and applicable OHJDOUHTXLUHPHQWVDSURYLVLRQIRUVLWHUHVWRUDWLRQLQUHVSHFWRI contaminated land is recognised when the land is contaminated. 3URYLVLRQVIRUHQYLURQPHQWDOLVVXHVDUHMXGJHPHQWDOE\WKHLUQDWXUH SDUWLFXODUO\ZKHQFRQVLGHULQJWKHVL]HDQGWLPLQJRIUHPHGLDWLRQ VSHQGLQJDQGPRUHGLƱFXOWWRHVWLPDWHZKHQWKH\UHODWHWRVLWHVQR longer directly controlled by the Group.

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,QUHVSHFWRIWKH*URXSoVGHƮQHGEHQHƮWVFKHPHVWKH*URXSoVQHW REOLJDWLRQLQUHVSHFWRIGHƮQHGEHQHƮWSHQVLRQSODQVLVFDOFXODWHGE\ HVWLPDWLQJWKHDPRXQWRIIXWXUHEHQHƮWWKDWHPSOR\HHVKDYHHDUQHG LQUHWXUQIRUWKHLUVHUYLFHLQWKHFXUUHQWDQGSULRUSHULRGVWKDWEHQHƮW LVGLVFRXQWHGWRGHWHUPLQHLWVSUHVHQWYDOXHDQGWKHIDLUYDOXHRIDQ\ plan assets is deducted. The liability discount rate is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the terms of the Group's obligations. Pension and SRVWUHWLUHPHQWOLDELOLWLHVDUHFDOFXODWHGE\TXDOLƮHGDFWXDULHVXVLQJ the projected unit credit method. Following the introduction of the UHYLVHG,\$6(PSOR\HH%HQHƮWVVWDQGDUGWKHQHWLQWHUHVWRQWKH GHƮQHGEHQHƮWOLDELOLW\FRQVLVWVRIWKHLQWHUHVWFRVWRQWKHGHƮQHG EHQHƮWREOLJDWLRQDQGWKHLQWHUHVWLQFRPHRQSODQDVVHWVERWK calculated by reference to the discount rate used to measure the GHƮQHGEHQHƮWREOLJDWLRQDWWKHVWDUWRIWKHSHULRG

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$FFRXQWLQJSROLFLHVcontinued

The Group recognises actuarial gains and losses in the period in which they occur through the statement of comprehensive LQFRPH7KH*URXSDOVRRSHUDWHVDVPDOOQXPEHURIGHƮQHG contribution schemes and the contributions payable during the \HDUDUHUHFRJQLVHGDVLQFXUUHG'XHWRWKHVL]HRIWKH*URXSoV SHQVLRQVFKHPHDVVHWVDQGOLDELOLWLHVUHODWLYHO\VPDOOFKDQJHVLQWKH DVVXPSWLRQVFDQKDYHDVLJQLƮFDQWLPSDFWRQWKHH[SHQVHUHFRUGHG in the income statement and on the pension liability recorded in the balance sheet.

Share capital

Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity. :KHQVKDUHFDSLWDOUHFRJQLVHGDVHTXLW\LVUHSXUFKDVHGWKHDPRXQW RIWKHFRQVLGHUDWLRQSDLGLQFOXGLQJGLUHFWO\DWWULEXWDEOHFRVWVLV recognised as a deduction from equity. Shares repurchased by the &RPSDQ\DUHFODVVLƮHGDVWUHDVXU\VKDUHVDQGDUHSUHVHQWHGDVD deduction from total equity.

'HULYDWLYHƮQDQFLDOLQVWUXPHQWV

7KH*URXSXVHVGHULYDWLYHƮQDQFLDOLQVWUXPHQWVVXFKDVIRUZDUG FXUUHQF\FRQWUDFWVLQWHUHVWUDWHVZDSVDQGFRPPRGLW\VZDS FRQWUDFWVWRKHGJHLWVIRUHLJQFXUUHQF\ULVNVLQWHUHVWUDWHULVNVDQG FRPPRGLW\SULFHULVNVUHVSHFWLYHO\7KH*URXSGRHVQRWKROGRU LVVXHGHULYDWLYHƮQDQFLDOLQVWUXPHQWVIRUWUDGLQJSXUSRVHV+RZHYHU derivatives that do not qualify for hedge accounting are accounted for as trading instruments. Due to the requirement to assess the HƬHFWLYHQHVVRIKHGJLQJLQVWUXPHQWVFKDQJHVLQPDUNHWFRQGLWLRQV can result in the recognition of unrealised gains or losses on hedging instruments in the income statement.

'HULYDWLYHƮQDQFLDOLQVWUXPHQWVDUHUHFRJQLVHGLQLWLDOO\DWIDLUYDOXHDQG are shown within derivatives if they are in an asset position or within ƮQDQFLDOOLDELOLWLHVLIWKH\DUHLQDOLDELOLW\SRVLWLRQ7KHJDLQRUORVVRQ remeasurement to fair value is recognised immediately in the income VWDWHPHQW+RZHYHUZKHUHGHULYDWLYHVTXDOLI\IRUKHGJHDFFRXQWLQJ recognition of any resultant gain or loss depends on the nature of the item being hedged.

D̝&DVKưRZKHGJHV

:KHUHDGHULYDWLYHƮQDQFLDOLQVWUXPHQWLVGHVLJQDWHGDVDKHGJHRI WKHYDULDELOLW\LQFDVKưRZVRIDUHFRJQLVHGDVVHWRUOLDELOLW\RUDKLJKO\ SUREDEOHIRUHFDVWWUDQVDFWLRQWKHHƬHFWLYHSDUWRIDQ\JDLQRUORVV RQWKHGHULYDWLYHƮQDQFLDOLQVWUXPHQWLVUHFRJQLVHGGLUHFWO\LQWKH KHGJLQJUHVHUYH\$Q\LQHƬHFWLYHSRUWLRQRIWKHKHGJHLVUHFRJQLVHG immediately in the income statement.

Amounts previously recognised in other comprehensive income DQGDFFXPXODWHGLQHTXLW\DUHUHFODVVLƮHGWRSURƮWDQGORVVLQWKH SHULRGVZKHQWKHKHGJHGLWHPLVUHFRJQLVHGLQSURƮWRUORVVLQWKH same line of the income statement as the recognised hedged item. +RZHYHUZKHQWKHIRUHFDVWWUDQVDFWLRQWKDWLVKHGJHGUHVXOWVLQWKH UHFRJQLWLRQRIDQRQƮQDQFLDODVVHWWKHJDLQVRUORVVHVSUHYLRXVO\ accumulated in equity are transferred from equity and included in the LQLWLDOPHDVXUHPHQWRIWKHFRVWRIWKHQRQƮQDQFLDODVVHW

E̝)DLUYDOXHKHGJHV

:KHUHDGHULYDWLYHƮQDQFLDOLQVWUXPHQWLVGHVLJQDWHGDVDKHGJH of the variability in a fair value of a recognised asset or liability or an XQUHFRJQLVHGƮUPFRPPLWPHQWDOOFKDQJHVLQWKHIDLUYDOXHRIWKH derivative are recognised immediately in the income statement.

The carrying value of the hedged item is adjusted by the change in fair value that is attributable to the risk being hedged (even if it is normally carried at amortised cost) and any gains or losses on remeasurement are recognised immediately in the income statement (even if those gains would normally be recognised directly in reserves).

F̝+HGJHVRIDQHWLQYHVWPHQWLQDIRUHLJQRSHUDWLRQ

The Group designates the foreign exchange gain or loss on a proportion of the Group's Euro and US dollar denominated borrowings as a hedge of the Group's net investment in foreign operations. As such the foreign exchange gain or loss on those borrowings is recognised in other comprehensive income and accumulated in equity until such time as the operations are disposed of at which point WKHFRUUHVSRQGLQJDPRXQWVDUHUHF\FOHGWRSURƮWRUORVV

7HUPLQDWLRQEHQHƮWV

7HUPLQDWLRQEHQHƮWVDUHUHFRJQLVHGDVDQH[SHQVHZKHQWKH*URXS LVGHPRQVWUDEO\FRPPLWWHGZLWKRXWUHDOLVWLFSRVVLELOLW\RIZLWKGUDZDO to a formal detailed plan to terminate employment before the normal UHWLUHPHQWGDWH7HUPLQDWLRQEHQHƮWVIRUYROXQWDU\UHGXQGDQFLHVDUH UHFRJQLVHGLIWKH*URXSKDVPDGHDQRƬHUHQFRXUDJLQJYROXQWDU\ UHGXQGDQF\LWLVSUREDEOHWKDWWKHRƬHUZLOOEHDFFHSWHGDQGWKH number of acceptances can be estimated reliably.

Revenue

Revenue is recognised upon transfer of promised goods to FXVWRPHUVWKHSHUIRUPDQFHREOLJDWLRQLQDQDPRXQWWKDWUHưHFWV the consideration the Company expects to receive in exchange for WKRVHJRRGV7KLVPD\RFFXUGHSHQGLQJRQWKHLQGLYLGXDOFXVWRPHU UHODWLRQVKLSZKHQWKHSURGXFWKDVEHHQWUDQVIHUUHGWRDIUHLJKWFDUULHU ZKHQWKHFXVWRPHUKDVUHFHLYHGWKHSURGXFWRUIRUFRQVLJQPHQW VWRFNKHOGDWFXVWRPHUVoSUHPLVHVZKHQXVDJHUHSRUWVIRUWKH relevant period have been compiled.

All revenue is from contracts with customers and pertains to the sale RIVSHFLDOW\FKHPLFDOVSURGXFWVVHOOLQJSULFHVDUHDJUHHGLQDGYDQFH and hence are directly observable.

7KH*URXSoVSD\PHQWWHUPVRƬHUHGWRFXVWRPHUVDUHZLWKLQD certain number of days of receipt of invoice and standard contracts GRQRWLQFOXGHDVLJQLƮFDQWƮQDQFLQJFRPSRQHQW7KH*URXSGRHV not expect to have any contracts where the period between the transfer of the promised goods to the customer and payment by the FXVWRPHUH[FHHGVRQH\HDU\$VDFRQVHTXHQFHWKH*URXSGRHVQRW adjust any of the transaction prices for the time value of money.

3URYLVLRQVIRUUHWXUQVWUDGHGLVFRXQWVDQGUHEDWHVDUHUHFRJQLVHGDVD reduction in revenue at the later of when revenue is recognised for the transfer of the related goods and the entity pays or promises to pay the consideration. The promise to pay rebates is contractually agreed in advance and thus the point of transferring the goods to the customer is deemed to be the later of the two circumstances. Rebates and discounts are estimated using historical data and experiences with the customers. Returns from customers are negligible.

2SHUDWLQJSURƮW

2SHUDWLQJSURƮWLQFOXGHVQHWSURƮWVUHDOLVHGRQWKHVDOHRIWDQJLEOH Ʈ[HGDVVHWVFXUUHQWDQGORQJWHUPDVVHWVDQGOLDELOLWLHVEXWH[FOXGHV gains and losses on the disposal of businesses.

Other expenses

Other expenses are administration costs incurred and paid by the *URXSoVSHQVLRQVFKHPHVZKLFKUHODWHSULPDULO\WRIRUPHUHPSOR\HHV of legacy businesses.

)LQDQFHLQFRPHDQGƮQDQFHFRVWV

Finance income comprises interest income on funds invested and FKDQJHVLQWKHIDLUYDOXHRIƮQDQFLDOLQVWUXPHQWVDWIDLUYDOXHWDNHQWR WKHLQFRPHVWDWHPHQW,QWHUHVWLQFRPHLVUHFRJQLVHGDVLWDFFUXHV XVLQJWKHHƬHFWLYHLQWHUHVWPHWKRG

)LQDQFHFRVWVFRPSULVHLQWHUHVWH[SHQVHRQERUURZLQJVOHDVH OLDELOLWLHVXQZLQGLQJRIWKHGLVFRXQWRQSURYLVLRQVGLYLGHQGVRQ SUHIHUHQFHVKDUHVFODVVLƮHGDVGHEWIRUHLJQFXUUHQF\JDLQVORVVHV DQGFKDQJHVLQWKHYDOXHRIƮQDQFLDOLQVWUXPHQWVDWIDLUYDOXHWDNHQ to the income statement. All borrowing costs are recognised in the LQFRPHVWDWHPHQWXVLQJWKHHƬHFWLYHLQWHUHVWPHWKRG

Taxation

,QFRPHWD[RQWKHSURƮWRUORVVIRUWKH\HDUFRPSULVHVFXUUHQWDQG deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity or in other comprehensive income. Current tax is the expected WD[SD\DEOHRQWKHWD[DEOHLQFRPHIRUWKH\HDUXVLQJWD[UDWHV HQDFWHGRUVXEVWDQWLYHO\HQDFWHGDWWKHEDODQFHVKHHWGDWHDQGDQ\ adjustment to tax payable in respect of previous years.

A deferred tax asset is recognised only to the extent that it is SUREDEOHWKDWIXWXUHWD[DEOHSURƮWVZLOOEHDYDLODEOHDJDLQVWZKLFK the asset can be utilised. Deferred tax is provided on temporary GLƬHUHQFHVEHWZHHQWKHFDUU\LQJDPRXQWVRIDVVHWVDQGOLDELOLWLHV IRUƮQDQFLDOUHSRUWLQJSXUSRVHVDQGWKHDPRXQWVXVHGIRUWD[DWLRQ SXUSRVHV7KHIROORZLQJWHPSRUDU\GLƬHUHQFHVDUHQRWSURYLGHGIRU the initial recognition of goodwill; the initial recognition of assets or OLDELOLWLHVWKDWDƬHFWQHLWKHUDFFRXQWLQJQRUWD[DEOHSURƮWRWKHUWKDQ LQDEXVLQHVVFRPELQDWLRQDQGGLƬHUHQFHVUHODWLQJWRLQYHVWPHQWV in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the FDUU\LQJDPRXQWRIDVVHWVDQGOLDELOLWLHVXVLQJWD[UDWHVHQDFWHGRU substantively enacted at the balance sheet date. Deferred tax assets are reduced to the extent that it is no longer probable that the related WD[EHQHƮWZLOOEHUHDOLVHG

The Group is required to estimate the income tax in each of the jurisdictions in which it operates. This requires an estimation of current tax liability together with an assessment of the temporary GLƬHUHQFHVZKLFKDULVHDVDFRQVHTXHQFHRIGLƬHUHQWDFFRXQWLQJ and tax treatments. The Group operates in a number of countries in the world and is subject to many tax jurisdictions and rules. As a FRQVHTXHQFHWKH*URXSLVVXEMHFWWRWD[DXGLWVZKLFKE\WKHLU nature are often complex and can require several years to conclude. Management's judgement is required to determine the total provision for income tax. Amounts are accrued based on management's LQWHUSUHWDWLRQRIFRXQWU\VSHFLƮFWD[ODZDQGOLNHOLKRRGRIVHWWOHPHQW +RZHYHUWKHDFWXDOWD[OLDELOLWLHVFRXOGGLƬHUIURPWKHSRVLWLRQDQG in such events an adjustment would be required in the subsequent SHULRGZKLFKFRXOGKDYHDPDWHULDOLPSDFW7D[EHQHƮWVDUHQRW recognised unless it is probable that the tax positions are sustainable. 2QFHFRQVLGHUHGWREHSUREDEOHPDQDJHPHQWUHYLHZVHDFKPDWHULDO WD[EHQHƮWWRDVVHVVZKHWKHUDSURYLVLRQVKRXOGEHWDNHQDJDLQVWIXOO UHFRJQLWLRQRIWKHEHQHƮWRQWKHEDVLVRISRWHQWLDOVHWWOHPHQWWKURXJK negotiation. This evaluation requires judgements to be made including the forecast of future taxable income.

6KDUHEDVHGSD\PHQWV

7KHIDLUYDOXHRIHTXLW\VHWWOHGVKDUHRSWLRQVFDVKVHWWOHGVKDGRZ options and LTIP awards granted to employees is recognised as an expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employees become unconditionally entitled to the options/awards. The fair value of the options/ awards granted is measured using a ELQRPLDOPRGHOWDNLQJLQWRDFFRXQWWKHWHUPVDQGFRQGLWLRQVXSRQ which the options/ awards were granted. The amount recognised DVDQHPSOR\HHH[SHQVHLVDGMXVWHGWRUHưHFWWKHDFWXDOQXPEHURI share options/awards that vest except where forfeiture is only due to share prices not achieving the threshold for vesting.

2ZQVKDUHVKHOGE(PSOR\HH6KDUH2ZQHUVKLS7UXVW(627

Transactions of the Group sponsored ESOT are included in the FRQVROLGDWHGƮQDQFLDOVWDWHPHQWV,QSDUWLFXODUWKH(627oVSXUFKDVHV of shares in the Company are charged directly to equity.

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$FFRXQWLQJSROLFLHVcontinued

Alternative performance measures

,QWKHDQDO\VLVRIWKH*URXSoVRSHUDWLQJUHVXOWVHDUQLQJVSHUVKDUHDQG FDVKưRZVLQIRUPDWLRQLVSUHVHQWHGWRSURYLGHUHDGHUVZLWKDGGLWLRQDO performance indicators that are prepared on a non-statutory basis. This presentation is regularly reviewed by management to identify items that are unusual and other items relevant to an understanding of the Group's performance and long term trends with reference to their materiality and nature. This additional information is not XQLIRUPO\GHƮQHGE\DOOFRPSDQLHVDQGPD\QRWEHFRPSDUDEOHZLWK similarly titled measures and disclosures by other organisations. The non-statutory disclosures should not be viewed in isolation or as an alternative to the equivalent statutory measure. Information for separate presentation is considered as follows:

0DWHULDOFRVWVRUUHYHUVDOVDULVLQJIURPDVLJQLƮFDQWUHVWUXFWXULQJRI the Group's operations are presented separately
Disposal of entities or investments in associates or joint ventures or impairment of related assets are presented separately
2WKHUPDWWHUVDULVLQJGXHWRWKH*URXSoVDFTXLVLWLRQVXFKDV DGMXVWPHQWVWRFRQWLQJHQWFRQVLGHUDWLRQSD\PHQWRIUHWHQWLRQ ERQXVHVDFTXLVLWLRQFRVWVDQGIDLUYDOXHDGMXVWPHQWVIRUDFTXLUHG assets made in accordance with IFRS 13 are separately disclosed in aggregate
,IDFKDQJHLQDQDFFRXQWLQJHVWLPDWHIRUSURYLVLRQVLQFOXGLQJ HQYLURQPHQWDOSURYLVLRQVUHVXOWVLQDPDWHULDOJDLQRUORVVWKDWLV presented separately
Other items the Directors may deem to be unusual as a result of WKHLUVL]HDQGRUQDWXUH

Adoption of new and revised standards

,QWKHFXUUHQW\HDUWKH*URXSKDVDSSOLHGDQXPEHURIDPHQGPHQWV to IFRSs issued by the International Accounting Standards Board ,\$6%WKDWDUHPDQGDWRULO\HƬHFWLYHIRUDFFRXQWLQJSHULRGVWKDWEHJLQ RQRUDIWHU-DQXDU\:LWKWKHH[FHSWLRQRI,)56/HDVHV their adoption has not had any material impact on the disclosures or RQWKHDPRXQWVUHSRUWHGLQWKHVHƮQDQFLDOVWDWHPHQWV

IFRS 16 Leases
IFRIC 23 Uncertainty over Income Tax Treatments
Prepayment Features with Negative Compensation (Amendments to IFRS 9)
Long-term Interests in Associates and Joint Ventures (Amendments to IAS 28)
3ODQ\$PHQGPHQW&XUWDLOPHQWRU6HWWOHPHQW\$PHQGPHQWVWR IAS 19)
Annual Improvements to IFRSs 2015–2017 Cycle (Amendments to ,)56,)56,\$6DQG,\$6

1HZDQGUHYLVHG,)56VLQLVVXHEXWQRW\HWHƬHFWLYH

\$WWKHGDWHRIDXWKRULVDWLRQRIWKHVHƮQDQFLDOVWDWHPHQWVWKH*URXS has not applied the following new and revised international accounting standards (IAS/IFRSs) and interpretations (IFRICs) that have been LVVXHGEXWDUHQRWHƬHFWLYHIRUSHULRGVVWDUWLQJRQ-DQXDU\ EXWZLOOEHHƬHFWLYHIRUODWHUSHULRGV

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E{WKH(8	(ƬHFWLYHGDWH
IFRS 17 Insurance Contracts	1 January 2021
\$PHQGPHQWVWR,)56,\$6DQG,)56
Interest Rate Benchmark Reform (issued on
26 September 2019)	1 January 2020
Amendments to IFRS 3 Business Combinations
(issued on 22 October 2018)	1 January 2020
\$PHQGPHQWVWR,\$6DQG,\$6'HƮQLWLRQRI
Material (issued October 2018)	1 January 2020

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Business segments

The Group has determined its operating segments on the basis of WKRVHXVHGIRUPDQDJHPHQWLQWHUQDOUHSRUWLQJSXUSRVHVDQGWKH allocation of strategic resources. In accordance with the provisions RI,)56WKH*URXSoVFKLHIRSHUDWLQJGHFLVLRQPDNHULVWKH%RDUGRI Directors. Following a review in December 2017 of the application RI,)562SHUDWLQJ6HJPHQWVWKH*URXSKDVGHFLGHGWKDWIURP -DQXDU\WKHVHJPHQWVZLWKLQFRQWLQXLQJRSHUDWLRQVWKDWVKRXOG be disclosed are as follows with the addition of the Talc segment as the result of the acquisition of Mondo Minerals BV in October 2018:

Personal Care
Coatings
Talc
Chromium
Energy

7KHƮYHUHSRUWDEOHVHJPHQWV3HUVRQDO&DUH&RDWLQJV7DOF&KURPLXP and Energy each have distinct product groupings and separate PDQDJHPHQWVWUXFWXUHV6HJPHQWUHVXOWVDVVHWVDQGOLDELOLWLHVLQFOXGH items directly attributable to a segment and those that may be reasonably allocated from corporate activities. Presentation of the segmental results is on a basis consistent with those used for reporting Group results. The principal activities of the reportable segments are as follows:

Personal Care

3URGXFWLRQRIUKHRORJLFDOPRGLƮHUVDQGFRPSRXQGHGSURGXFWV LQFOXGLQJDFWLYHLQJUHGLHQWVIRU\$3GHRGRUDQWVIRUVXSSO\WRSHUVRQDO care manufacturers.

Coatings

3URGXFWLRQRIUKHRORJLFDOPRGLƮHUVDQGDGGLWLYHVIRUGHFRUDWLYHDQG industrial coatings.

Talc

3URGXFWLRQDQGVXSSO\RIWDOFIRUXVHLQSODVWLFVFRDWLQJVWHFKQLFDO ceramics and the paper sectors.

Chromium

Production of chromium chemicals.

(QHUJ

3URGXFWLRQRIUKHRORJLFDOPRGLƮHUVDQGDGGLWLYHVIRURLODQGJDV drilling and stimulation activities.

Inter-segment pricing is set at a level that equates to the manufacturing cost of the product plus a commercially appropriate mark up.

Unallocated items and those relating to corporate functions such as tax and treasury are presented in the tables overleaf as central costs.

6HJPHQWDODQDO\VLVIRUWKH\HDUHQGHG'HFHPEHU

	2019
	Personal Care \$m	Coatings \$m	Talc \$m	Chromium \$m	(QHUJ\ \$m	Segment totals \$m	Central costs \$m	Total operations \$m
Revenue	195.0	320.1	150.7	171.0	46.6	883.4	–	883.4
Internal revenue	–	–	–	(9.8)	–	(9.8)	–	(9.8)
Revenue from external customers	195.0	320.1	150.7	161.2	46.6	873.6	–	873.6
\$GMXVWHGRSHUDWLQJSURƮW	42.7	48.3	25.7	18.2	3.8	138.7	(15.7)	123.0
Adjusting items	(13.6)	(4.6)	(5.8)	(5.6)	–	(29.6)	7.5	(22.1)
3URƮWORVVEHIRUHLQWHUHVW	29.1	43.7	19.9	12.6	3.8	109.1	(8.2)	100.9
Loss on disposal	(9.0)	–	–	–	–	(9.0)	–	(9.0)
Other expenses	–	–	–	–	–	–	(1.5)	(1.5)
Finance income	–	–	–	–	–	–	0.4	0.4
Finance expense	–	–	–	–	–	–	(29.8)	(29.8)
Taxation – after adjusting items	–	–	–	–	–	–	(20.7)	(20.7)
Taxation – on adjusting items	–	–	–	–	–	–	6.1	6.1
3URƮWIRUWKH\HDU	20.1	43.7	19.9	12.6	3.8	100.1	(53.7)	46.4

	2019
	Personal Care, Coatings and (QHUJ\1 \$m	Talc \$m	Chromium \$m	Segment totals \$m	Central \$m	Total operations \$m
Fixed assets	708.8	330.3	82.6	1,121.7	350.0	1,471.7
Inventories	88.9	19.0	60.8	168.7	–	168.7
Trade and other receivables	70.1	21.5	19.3	110.9	7.0	117.9
ACT recoverable	–	–	–	–	4.8	4.8
Derivatives	–	–	–	–	0.1	0.1
Tax assets	–	–	–	–	30.7	30.7
1HWUHWLUHPHQWEHQHƮWVXUSOXV	–	–	–	–	7.4	7.4
Cash and cash equivalents	–	–	–	–	103.9	103.9
Segment assets	867.8	370.8	162.7	1,401.3	503.9	1,905.2
Trade and other payables	(72.3)	(20.0)	(27.0)	(119.3)	(15.2)	(134.5)
Operating provisions	(2.3)	(4.4)	(20.9)	(27.6)	(24.0)	(51.6)
Lease liabilities	(31.1)	(13.4)	(1.1)	(45.6)	(1.3)	(46.9)
Bank overdrafts and loans	–	–	–	–	(553.0)	(553.0)
Current tax liabilities	–	–	–	–	(23.2)	(23.2)
5HWLUHPHQWEHQHƮWREOLJDWLRQV	–	–	–	–	(24.5)	(24.5)
Deferred tax liabilities	–	–	–	–	(150.2)	(150.2)
Financial liabilities	–	–	–	–	(15.1)	(15.1)
6HJPHQWOLDELOLWLHV	(105.7)	(37.8)	(49.0)	(192.5)	(806.5)	(999.0)
Net assets	762.1	333.0	113.7	1,208.8	(302.6)	906.2
Capital additions	21.1	14.4	11.6	47.1	4.1	51.2
Depreciation and amortisation	(33.6)	(24.6)	(9.8)	(68.0)	(2.1)	(70.1)

¹ 'XHWRWKHVKDUHGQDWXUHRIWKHSURGXFWLRQIDFLOLWLHVIRUWKH3HUVRQDO&DUH&RDWLQJVDQG(QHUJ\VHJPHQWVDVSOLWRIDVVHWVDQGOLDELOLWLHVE\VHJPHQWLVQRW DYDLODEOHDQGWKHFRVWWRGHWHUPLQHVXFKDVSOLWZRXOGEHSURKLELWLYHWKHUHIRUHDVVHWVDQGOLDELOLWLHVDUHVKRZQLQDJJUHJDWHIRUWKHVHVHJPHQWV̞

*\$QDO\VLVE\JHRJUDSK*

2019	North America \$m	United Kingdom \$m	Rest of Europe \$m	Rest of the World \$m	Total \$m
Revenue from external customers	285.2	29.4	250.7	308.3	873.6
Fixed assets	810.1	240.4	357.8	63.4	1,471.7
Capital additions	25.5	1.3	16.7	7.7	51.2
Depreciation and amortisation	(33.4)	(1.6)	(31.6)	(3.5)	(70.1)

Revenue is based on the location of the customer. The Group's largest customer accounts for 3.1% of revenue (\$27.2m).

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG For the year ended 31 December 2019

̝2SHUDWLQJVHJPHQWVcontinued

6HJPHQWDODQDO\VLVIRUWKH\HDUHQGHG'HFHPEHU

	2018
	Personal Care \$m	Coatings \$m	Talc \$m	Chromium \$m	Energy \$m	Segment totals \$m	Central costs \$m	Total of continuing operations \$m	Discontinued operations \$m	Total operations \$m
Revenue	210.3	362.2	21.5	184.3	54.9	833.2	–	833.2	4.8	838.0
Internal revenue	–	–	–	(11.0)	–	(11.0)	–	(11.0)	–	(11.0)
Revenue from external customers	210.3	362.2	21.5	173.3	54.9	822.2	–	822.2	4.8	827.0
\$GMXVWHGRSHUDWLQJSURƮW	52.2	52.5	3.9	33.0	7.1	148.7	(16.1)	132.6	(0.6)	132.0
Adjusting items	(11.8)	5.1	(4.1)	(17.2)	–	(28.0)	(19.7)	(47.7)	(9.8)	(57.5)
3URƮWORVVEHIRUHLQWHUHVW	40.4	57.6	(0.2)	15.8	7.1	120.7	(35.8)	84.9	(10.4)	74.5
Other expenses	–	–	–	–	–	–	(1.6)	(1.6)	–	(1.6)
Finance income	–	–	–	–	–	–	0.3	0.3	–	0.3
Finance expense	–	–	–	–	–	–	(18.2)	(18.2)	–	(18.2)
Taxation – after adjusting items	–	–	–	–	–	–	(24.4)	(24.4)	0.3	(24.1)
Taxation – on adjusting items	–	–	–	–	–	–	8.8	8.8	1.7	10.5
3URƮWIRUWKH\HDU	40.4	57.6	(0.2)	15.8	7.1	120.7	(70.9)	49.8	(8.4)	41.4

		2018
	Personal &DUH Coatings and Energy1 \$m	Talc \$m	Chromium \$m	Segment totals \$m	Central2 \$m	Total operations \$m
Fixed assets	710.6	331.3	79.5		333.4
Inventories	106.1	24.2	58.4	188.7	–	188.7
Trade and other receivables	78.4	19.3	30.7	128.4	5.4	133.8
ACT recoverable	–	–	–	–	9.8	9.8
Derivatives	–	–	–	–	2.0	2.0
Tax assets	–	–	–	–	27.4	27.4
1HWUHWLUHPHQWEHQHƮWVXUSOXV	–	–	–	–	22.1	22.1
Cash and cash equivalents	–	–	–	–	96.1	96.1
Segment assets	895.1	374.8	168.6		496.2
Trade and other payables	(77.0)	(18.6)	(30.4)	(126.0)	(14.6)	(140.6)
Operating provisions	(1.5)	(4.9)	(21.6)	(28.0)	(20.8)	(48.8)
Bank overdrafts and loans	–	–	–	–	(588.6)	(588.6)
Current tax liabilities	–	–	–	–	(17.1)	(17.1)
5HWLUHPHQWEHQHƮWREOLJDWLRQV	–	–	–	–	(32.0)	(32.0)
Deferred tax liabilities	–	–	–	–	(151.7)	(151.7)
Financial liabilities	–	–	–	–	(40.3)	(40.3)
6HJPHQWOLDELOLWLHV	(78.5)	(23.5)	(52.0)	(154.0)	(865.1)
Net assets	816.6	351.3	116.6		(368.9)	915.6
Capital additions	29.8	6.8	12.9	49.5	1.8	51.3
Depreciation and amortisation	(30.5)	(4.9)	(8.4)	(43.8)	(1.4)	(45.2)

¹ 'XHWRWKHVKDUHGQDWXUHRIWKHSURGXFWLRQIDFLOLWLHVIRUWKH3HUVRQDO&DUH&RDWLQJVDQG(QHUJ\VHJPHQWVDVSOLWRIDVVHWVDQGOLDELOLWLHVE\VHJPHQWLVQRW

available and the cost to determine such a split would be prohibitive therefore assets and liabilities are shown in aggregate for these segments.

² 5HVWDWHGWRVKRZWKH8.SHQVLRQVXUSOXVRIPZLWKLQQRQFXUUHQWDVVHWVDQGWRRƬVHWXQDPRUWLVHGV\QGLFDWHIHHVRIPDJDLQVWWKHERUURZLQJVWR which they relate within non-current liabilities.

2018	North America \$m	United Kingdom \$m	Rest of Europe \$m	Rest of the World \$m	Discontinued operations \$m	Total \$m
Revenue from external customers	290.3	32.1	201.1	298.7	4.8	827.0
Fixed assets	790.8	230.1	373.1	60.8	–
Capital additions	32.6	2.0	3.4	8.1	0.8	46.9
Depreciation and amortisation	(28.7)	(1.5)	(11.0)	(4.0)	(0.7)	(45.9)

Revenue is based on the location of the customer.

̝)LQDQFHLQFRPH

	2019	2018
	\$m	\$m
Interest on bank deposits	0.4	0.3

̝)LQDQFHFRVWV

	2019 \$m	2018 \$m
Interest on bank loans	23.7	16.8
Pension and other post retirement liabilities	0.5	0.4
Unwind of discount on provisions	2.4	1.0
Fair value movement on derivatives	1.4	–
Interest on lease liabilities	1.8	–
	29.8	18.2

̝\$GMXVWLQJLWHPV

	2019 \$m	Adjusting items on discontinued operations \$m	2019 Total \$m	2018 \$m	Adjusting items on discontinued operations \$m	2018 Total \$m
Restructuring	5.1	–	5.1	0.2	–	0.2
Business transformation	2.5	–	2.5	5.6	–	5.6
Environmental provisions
Increase in provisions due to additional
UHPHGLDWLRQZRUNLGHQWLƮHG	–	–	–	16.5	–	16.5
Increase in provisions due to change in discount rate	4.9	–	4.9	–	–	–
Costs related to acquisition activities	–	–	–	16.5	–	16.5
Uplift due to fair value of Talc inventory	–	–	–	2.9	–	2.9
Sale of Jersey City site	–	–	–	(12.7)	–	(12.7)
Sale of Surfactants business	–	–	–	0.5	–	0.5
Amortisation of intangibles arising on acquisition	18.6	–	18.6	15.0	–	15.0
GMP Pension	–	–	–	3.2	–	3.2
Surfactants commercial settlement	–	–	–	–	9.8	9.8
Release of contingent consideration	(9.0)	–	(9.0)	–	–	–
	22.1	–	22.1	47.7	9.8	57.5
Sale of Dental plant	9.0	–	9.0	–	–	–
0DUNWRPDUNHWRIGHULYDWLYHƮQDQFLDOLQVWUXPHQWV	1.4	–	1.4	–	–	–
Tax credit in relation to adjusting items	(6.1)	–	(6.1)	(11.5)	(1.7)	(13.2)
Tax arising on the restructuring of our German operations	–	–	–	2.7	–	2.7
	26.4	–	26.4	38.9	8.1	47.0

Corporate Governance

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$GMXVWLQJLWHPVcontinued

\$QXPEHURILWHPVKDYHEHHQUHFRUGHGXQGHUnDGMXVWLQJLWHPVoLQE\YLUWXHRIWKHLUVL]HDQGRURQHWLPHQDWXUHLQOLQHZLWKRXUDFFRXQWLQJ SROLF\LQ1RWHLQRUGHUWRSURYLGHDGGLWLRQDOXVHIXODQDO\VLVRIWKH*URXSoVUHVXOWV7KHQHWLPSDFWRIWKHVHLWHPVRQWKH*URXSSURƮWEHIRUHWD[ IRUWKH\HDULVDGHELWRIPP7KHLWHPVIDOOLQWRDQXPEHURIFDWHJRULHVDVVXPPDULVHGEHORZ

Restructurings,QUHVWUXFWXULQJFRVWVUHODWHSUHGRPLQDQWO\WRWKHRUJDQLVDWLRQDOHƱFLHQF\SURJUDPPHZKLFKKDVHOLPLQDWHGGXSOLFDWH UROHVUHGXFHGPDQDJHPHQWOD\HUVDQGLQFUHDVHGVSDQVRIFRQWUROLQRUGHUWRUHDOLVHFRVWVDYLQJVDQGHƱFLHQFLHVDFURVVWKH*URXS\$VLQ restructuring also includes the IFRS 2 cost of buyouts associated with the CEO and CFO's appointments in 2016.

Business transformation – In 2019 we initiated a programme to review and optimise our supply chain and manufacturing footprint across our &RDWLQJV3HUVRQDO&DUH(QHUJ\DQG&KURPLXPEXVLQHVVHV&RVWVLQFXUUHGLQUHODWHGWRH[LWLQJVXSSO\FRQWUDFWVDQGFRQVXOWLQJIHHV incurred to design our target operating model. In 2018 a programme to transform the Coatings segment had been implemented focusing on UHHQJLQHHULQJRXUDSSURDFKWRPDUNHWVGLUHFWYVGLVWULEXWRURXUXQGHUO\LQJDVVHWEDVHDQGRXUSURGXFWRƬHULQJVLQRUGHUWROHYHUDJHRXU international networks and key account management.

,QFUHDVHLQHQYLURQPHQWDOSURYLVLRQVGXHWRDGGLWLRQDOUHPHGLDWLRQZRUNLGHQWLƮHG – assessments at the end of 2018 had resulted in an increased provision required at a number of our legacy sites. As these costs relate to non-operational facilities they are classed as adjusting items.

Increase in environmental provisions due to change in discount rate – The Group's environmental provision is calculated on a discounted FDVKưRZEDVLVUHưHFWLQJWKHWLPHSHULRGRYHUZKLFKVSHQGLQJLVHVWLPDWHGWRWDNHSODFH\$FKDQJHLQGLVFRXQWUDWHVKDVLQFUHDVHGWKHOLDELOLW\ by \$4.9m in the year. As these costs relate to non-operational facilities they are classed as adjusting items.

&RVWVUHODWLQJWRDFTXLVLWLRQDFWLYLWLHVsWKHVHZHUHRQHRƬFRVWVSUHGRPLQDQWO\DVVRFLDWHGZLWKWKHDFTXLVLWLRQRI7DOFLQsSULPDULO\ WKHZULWHRƬRIWKHVHWXSFRVWVRIWKHSUHYLRXVƮQDQFLQJIDFLOLW\QRZUHSODFHGE\DQHZDUUDQJHPHQWEDQNDQGODZ\HUVIHHVDQGUHWHQWLRQ bonuses for Talc employees.

*8SOLIWGXHWRIDLUYDOXHRI7DOFLQYHQWRU*sLQDFFRUGDQFHZLWK,)56LQYHQWRU\KHOGZLWKLQ7DOFZDVUHYDOXHGWRIDLUYDOXHRQDFTXLVLWLRQ UHSUHVHQWLQJDQXSOLIWRIPRYHUWKHERRNYDOXH\$VDOO7DOFVWRFNWRZKLFKWKLVXSOLIWUHODWHVZDVVROGE\'HFHPEHUWKHDGGLWLRQDO expense recognised in cost of sales due to this fair value uplift was classed as an adjusting item in 2018.

6DOHRI-HUVH\&LW\VLWH – In 2018 Elementis disposed of a legacy site in Jersey City. The proceeds on disposal less costs to dispose have EHHQWUHDWHGDVDQDGMXVWLQJLWHPGXHWRWKHLUVL]HDQGRQHRƬQDWXUH

6DOHRI6XUIDFWDQWVEXVLQHVVGLVSRVDOFRVWV – The loss on sale of the assets and business has been treated as an adjusting item in 2018.

\$PRUWLVDWLRQRILQWDQJLEOHVDULVLQJRQDFTXLVLWLRQsWKHVHFRVWVDUHH[FOXGHGIURPRSHUDWLQJSURƮWWRSURYLGHUHDGHUVRIWKHDFFRXQWVZLWK additional useful analysis of the performance of the business. In 2019 and 2018 this line item includes amortisation on intangibles acquired as part of the Mondo acquisition completed in October 2018.

GMP PensionsRQ2FWREHUWKH+LJK&RXUWUXOHGRQWKH/OR\GV%DQN*XDUDQWHHG0LQLPXP3HQVLRQLQHTXDOLWLHVFDVH,QUHVSRQVHWR this our actuaries have included a past service cost of \$3.2m for the estimated costs arising from the judgement.

Surfactants commercial settlement – these are costs incurred in settlement of a commercial dispute relating to the Surfactants business disposed of in 2018.

Release of contingent consideration – An assessment of the potential payments to be made under the earnout mechanism in relation to the Talc acquisition have led to the release of \$9.0m.

Sale of Dental plant – The loss on the exit of a non-core plant (part of the Dental business) has been treated as an adjusting item in 2019.

Mark to market of derivativess7KHPRYHPHQWVLQWKHPDUNWRPDUNHWYDOXDWLRQRIƮQDQFLDOLQVWUXPHQWVZKLFKDUHQRWLQKHGJLQJ relationships do not form part of the underlying performance of the business and thus are treated as adjusting items.

Tax on adjusting items – this is the net impact of tax relating to the adjusting items listed above.

Tax arising on the restructuring of our German operations – during 2018 an internal restructuring exercise was undertaken in order to RSWLPLVHWKHRSHUDWLRQDOHƱFLHQF\RIWKH*URXS7KLVUHVWUXFWXULQJUHVXOWHGLQDRQHRƬWD[FKDUJH

7RVXSSRUWFRPSDUDELOLW\ZLWKWKHƮQDQFLDOVWDWHPHQWVDVSUHVHQWHGLQWKHUHFRQFLOLDWLRQWRWKHDGMXVWHGFRQVROLGDWHGLQFRPHVWDWHPHQW is shown below.

3URƮWDQG 3URƮWDQG 2019 2019 loss after loss after Adjusting adjusting adjusting 3URƮWDQG loss on items on items on items continuing continuing continuing on total operations operations operations operations \$m \$m \$m \$m Revenue 873.6 – 873.6 873.6 Cost of sales (552.2) – (552.2) (552.2) 321.4 – 321.4 321.4 *URVVSURƮW Distribution costs (127.3) – (127.3) (127.3) Administrative expenses (93.2) 22.1 (71.1) (71.1) 100.9 22.1 123.0 123.0 2SHUDWLQJSURƮW Loss on disposal (9.0) 9.0 – – Other expenses (1.5) – (1.5) (1.5) Finance income 0.4 – 0.4 0.4 Finance costs (29.8) 1.4 (28.4) (28.4) 61.0 32.5 93.5 93.5 3URƮWEHIRUHLQFRPHWD[ Tax (14.6) (6.1) (20.7) (20.7) 46.4 26.4 72.8 72.8 3URƮWIRUWKH\HDU Attributable to: Equity holders of the parent 46.4 26.4 72.8 72.8 Earnings per share Basic (cents) 8.0 4.6 12.6 12.6 Diluted (cents) 7.9 4.5 12.4 12.4		2019	2019

	2018 3URƮWDQGORVV on continuing operations \$m	2018 Adjusting items on continuing operations \$m	2018 3URƮWDQGORVV after adjusting items on continuing operations \$m	2018 3URƮWDQG loss on discontinued operations \$m	2018 Adjusting items on discontinued operations \$m	2018 3URƮWDQG loss after adjusting items on discontinued operations \$m	2018 3URƮWDQGORVV after adjusting items on total operations \$m
Revenue	822.2	–	822.2	4.8	–	4.8	827.0
Cost of sales	(516.6)	–	(516.6)	(4.3)	–	(4.3)	(520.9)
*URVVSURƮW	305.6	–	305.6	0.5	–	0.5	306.1
Distribution costs	(111.6)	–	(111.6)	(0.8)	–	(0.8)	(112.4)
Administrative expenses	(109.1)	47.7	(61.4)	(10.1)	9.8	(0.3)	(61.7)
2SHUDWLQJSURƮW	84.9	47.7	132.6	(10.4)	9.8	(0.6)	132.0
Other expenses	(1.6)	–	(1.6)	–	–	–	(1.6)
Finance income	0.3	–	0.3	–	–	–	0.3
Finance costs	(18.2)	–	(18.2)	–	–	–	(18.2)
3URƮWEHIRUHLQFRPHWD[	65.4	47.7	113.1	(10.4)	9.8	(0.6)	112.5
Tax	(15.6)	(8.8)	(24.4)	2.0	(1.7)	0.3	(24.1)
3URƮWIRUWKH\HDU	49.8	38.9	88.7	(8.4)	8.1	(0.3)	88.4
Attributable to:
Equity holders of the parent	49.8	38.9	88.7	(8.4)	8.1	(0.3)	88.4
Earnings per share
Basic (cents)	9.5	7.5	17.0	(1.6)	1.6	–	17.0
Diluted (cents)	9.5	7.4	16.9	(1.6)	1.6	–	16.9

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$GMXVWLQJLWHPVcontinued

7RVXSSRUWFRPSDUDELOLW\ZLWKWKHƮQDQFLDOVWDWHPHQWVDVSUHVHQWHGLQDUHFRQFLOLDWLRQIURPUHSRUWHGSURƮWORVVEHIRUHLQWHUHVWWR DGMXVWHGSURƮWEHIRUHLQFRPHWD[E\VHJPHQWLVVKRZQEHORZIRUHDFK\HDU

	2019
	Personal Care \$m	Coatings \$m	Talc \$m	Chromium \$m	(QHUJ\ \$m	Segment totals \$m	Central costs \$m	Total of continuing operations \$m	Discontinued operations \$m	Total \$m
5HSRUWHGRSHUDWLQJSURƮWORVV	29.1	43.7	19.9	12.6	3.8	109.1	(8.2)	100.9	–	100.9
Adjusting Items
Restructuring	0.7	2.6	0.2	0.1	–	3.6	1.5	5.1	–	5.1
Business transformation Increase in environmental provisions due to change in	1.6	0.5	–	0.4	–	2.5	–	2.5	–	2.5
discount rate Amortisation of intangibles arising	–	–	–	4.9	–	4.9	–	4.9	–	4.9
on acquisition Release of contingent	11.3	1.5	5.6	0.2	–	18.6	–	18.6	–	18.6
consideration	–	–	–	–	–	–	(9.0)	(9.0)	–	(9.0)
\$GMXVWHGRSHUDWLQJSURƮWORVV	42.7	48.3	25.7	18.2	3.8	138.7	(15.7)	123.0	–	123.0
Other expenses	–	–	–	–	–	–	(1.5)	(1.5)	–	(1.5)
Finance income	–	–	–	–	–	–	0.4	0.4	–	0.4
Finance costs	–	–	–	–	–	–	(28.4)	(28.4)	–	(28.4)
\$GMXVWHGSURƮWEHIRUHLQFRPHWD[	42.7	48.3	25.7	18.2	3.8	138.7	(45.2)	93.5	–	93.5

						2018
	Personal Care \$m	Coatings \$m	Talc \$m	Chromium \$m	Energy \$m	Segment totals \$m	Central costs \$m	Total of continuing operations \$m	Discontinued operations \$m	Total \$m
5HSRUWHGRSHUDWLQJSURƮWORVV	40.4	57.6	(0.2)	15.8	7.1	120.7	(35.8)	84.9	(10.4)	74.5
Adjusting Items
Restructuring							0.2	0.2	–	0.2
Business transformation	–	5.6	–	–	–	5.6	–	5.6	–	5.6
Increase in environmental
provisions due to additional
UHPHGLDWLRQZRUNLGHQWLƮHG	–	–	–	17.0	–	17.0	(0.5)	16.5	–	16.5
Costs related to acquisition
activities	0.2	–	–	–	–	0.2	16.3	16.5	–	16.5
Uplift due to fair value of Talc
inventory	–	–	2.9	–	–	2.9	–	2.9	–	2.9
Sale of Jersey City site	–	(12.7)	–	–	–	(12.7)	–	(12.7)	–	(12.7)
Sale of Surfactants business	–	–	–	–	–	–	0.5	0.5	–	0.5
Amortisation of intangibles arising
on acquisition	11.6	2.0	1.2	0.2	–	15.0	–	15.0	–	15.0
GMP pension	–	–	–	–	–	–	3.2	3.2	–	3.2
Surfactants commercial settlement	–	–	–	–	–	–	–	–	9.8	9.8
\$GMXVWHGRSHUDWLQJSURƮWORVV	52.2	52.5	3.9	33.0	7.1	148.7	(16.1)	132.6	(0.6)	132.0
Other expenses	–	–	–	–	–	–	(1.6)	(1.6)	–	(1.6)
Finance income	–	–	–	–	–	–	0.3	0.3	–	0.3
Finance costs	–	–	–	–	–	–	(18.2)	(18.2)	–	(18.2)
\$GMXVWHGSURƮWEHIRUHLQFRPHWD[	52.2	52.5	3.9	33.0	7.1	148.7	(35.6)	113.1	(0.6)	112.5

̝,QFRPHWD[H[SHQVH

	2019	2018
	\$m	\$m
&XUUHQWWD[RQFRQWLQXLQJRSHUDWLRQV UK corporation tax	5.7	8.1
Overseas corporation tax on continuing operations	6.6	11.7
Adjustments in respect of prior years:
United Kingdom	–	(0.9)
Overseas	1.1	(0.2)
Total current tax	13.4	18.7
'HIHUUHGWD[
United Kingdom	(0.1)	(1.4)
Overseas	1.4	3.8
Adjustment in respect of prior years:
United Kingdom	–	(0.4)
Overseas	(0.1)	(5.1)
Total deferred tax	1.2	(3.1)
Income tax expense for the year	14.6	15.6
&RPSULVLQJ
Income tax expense for the year	14.6	15.6
Adjusting items*
Overseas taxation on adjusting items	5.1	6.6
UK taxation on adjusting items	1.0	2.2
Taxation on adjusting items	6.1	8.8
Income tax expense for the year after adjusting items	20.7	24.4

* See Note 5 for details of adjusting items.

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	2019 \$m	2019 %	2018 \$m	2018 %
3URƮWEHIRUHWD[RQFRQWLQXLQJRSHUDWLRQV	61.0		65.4
Tax on ordinary activities at 19.00% (2018: 19.00%)*	11.6	19.0	12.4	19.0
'LƬHUHQFHLQRYHUVHDVHƬHFWLYHWD[UDWHV	1.7	2.8	1.5	2.3
,QFRPHQRWWD[DEOHDQGLPSDFWRIWD[HƱFLHQWƮQDQFLQJ	(15.2)	(24.9)	(6.8)	(10.4)
Expenses not deductible for tax purposes	13.6	22.3	16.6	25.4
Adjustments in respect of prior years	1.0	1.6	(6.6)	(10.1)
Tax rate changes	0.9	1.5	(1.3)	(2.0)
Movement in unrecognised deferred tax	1.0	1.6	(0.2)	(0.3)
7D[FKDUJHDQGHƬHFWLYHWD[UDWHIRUWKH\HDU	14.6	23.9	15.6	23.9

The tax credit related to discontinued operations is \$nil (2018: credit of \$2.0m).

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝3URƮWIRUWKH\HDU

3URƮWIRUWKH\HDULQFOXGLQJGLVFRQWLQXHGRSHUDWLRQVKDVEHHQDUULYHGDWDIWHUFKDUJLQJFUHGLWLQJ

	2019 \$m	2018 \$m
Employee costs (see Note 8)	137.6	134.6
Net foreign exchange gains	(0.2)	(0.3)
Research and development costs	7.8	9.3
'HSUHFLDWLRQRISURSHUW\SODQWDQGHTXLSPHQW	50.9	30.2
Amortisation of intangible assets	19.2	15.7
Total depreciation and amortisation expense	70.1	45.9
Loss on disposal	9.0	–
Release of contingent consideration	(9.0)	–
3URƮWRQGLVSRVDORISURSHUW\SODQWDQGHTXLSPHQW	0.4	0.6
:ULWHRƬRILQYHQWRU\	2.0	1.2
Cost of inventories recognised as expense	379.4	384.5
Fees payable to the Company's auditor and its associates:
Audit of company	0.4	0.4
Audit of subsidiaries	1.0	1.0
Audit related services – interim review	0.1	0.1
6HUYLFHVUHODWHGWRFRUSRUDWHƮQDQFHWUDQVDFWLRQV	–	0.3

̝(PSOR\HHV

	2019 \$m	2018 \$m
Employee costs:
Wages and salaries	121.9	117.4
Social security costs	9.7	9.5
Pension costs	6.0	7.7
	137.6	134.6

	1XPEHU	Number
Average number of FTE employees*:
Specialty Products	1,040
Talc	234	41
Chromium	258	258
Central	18	18
Total from continuing operations	1,550
Discontinued operations**	–	33
Total including discontinued operations	1,550

* Full time equivalent including contractors.

** The discontinued operations have been included on a 12 month average basis.

7KHDJJUHJDWHDPRXQWRI'LUHFWRUVoUHPXQHUDWLRQVDODU\ERQXVDQGEHQHƮWVLVVKRZQLQWKH5HPXQHUDWLRQ5HSRUWRQSDJH

• The aggregate amount of gains made by Directors on exercise of share options was \$0.1m (2018: \$0.9m).

• The remuneration of the highest paid Director was \$1.4m (2018: \$1.6m).

• 3D\PHQWVKDYHEHHQPDGHWRDGHƮQHGFRQWULEXWLRQSHQVLRQVFKHPHRQEHKDOIRI'LUHFWRU'LUHFWRU)RUWKHKLJKHVWSDLG'LUHFWRU pension contributions of \$0.2m (2018: \$0.2m) were made.

The calculation of the basic and diluted earnings per share attributable to the ordinary equity holders of the parent is based on the following:

	Continuing operations 2019 \$m	Discontinued operations 2019 \$m	Total operations 2019 \$m	Continuing operations 2018 \$m	Discontinued operations 2018 \$m	Total operations 2018 \$m
(DUQLQJV
Earnings for the purpose of basic earnings per share	46.4	–	46.4	49.8	(8.4)	41.4
Adjusting items net of tax	26.4	–	26.4	38.9	8.1	47.0
Adjusted earnings	72.8	–	72.8	88.7	(0.3)	88.4
					2019 m	2018 m

1XPEHURIVKDUHV
Weighted average number of shares for the purposes of basic earnings per share	579.6	520.9
(ƬHFWRIGLOXWLYHVKDUHRSWLRQV	8.9	5.4
Weighted average number of shares for the purposes of diluted earnings per share	588.5	526.3

	Continuing operations 2019 cents	Discontinued operations 2019 cents	Total operations 2019 cents	Continuing operations 2018 cents	Discontinued operations 2018 cents	Total operations 2018 cents
(DUQLQJVSHUVKDUH
Basic	8.0	–	8.0	9.5	(1.6)	7.9
Diluted	7.9	–	7.9	9.5	(1.6)	7.9
Basic after adjusting items	12.6	–	12.6	17.0	–	17.0
Diluted after adjusting items	12.4	–	12.4	16.9	–	16.9

**̝*RRGZLOODQGRWKHULQWDQJLEOHDVVHWV**

	Goodwill	Brand	Customer lists	Other intangible assets	Total
&RVW	\$m	\$m	\$m	\$m	\$m
At 1 January 2018	526.9	26.9	139.7	57.9	751.4
([FKDQJHGLƬHUHQFHV	(10.1)	(0.5)	(1.2)	(3.1)	(14.9)
Additions	–	–	–	1.2	1.2
Intangible assets arising on the acquisition of Mondo	200.5	–	40.9	47.3	288.7
At 31 December 2018	717.3	26.4	179.4	103.3	1,026.4
([FKDQJHGLƬHUHQFHV	8.4	0.3	(1.2)	(1.0)	6.5
Additions	–	–	–	2.8	2.8
Disposals	–	(0.8)	(12.4)	(1.9)	(15.1)
\$W'HFHPEHU	725.7	25.9	165.8	103.2	1,020.6
\$PRUWLVDWLRQ
At 1 January 2018	–	0.8	6.2	27.2	34.2
Charge for the year	–	1.1	8.5	6.0	15.6
At 31 December 2018	–	1.9	14.7	33.2	49.8
Charge for the year	–	1.1	10.7	7.4	19.2
Disposals	–	(0.7)	(4.6)	(1.2)	(6.5)
\$W'HFHPEHU	–	2.3	20.8	39.4	62.5
&DUU\LQJDPRXQW
\$W'HFHPEHU	725.7	23.6	145.0	63.8	958.1
At 31 December 2018	717.3	24.5	164.7	70.1	976.6
At 1 January 2018	526.9	26.1	133.5	30.7	717.2

The net book value of customer lists includes \$108.0m (2018: \$124.3m) in relation to the acquisition of SummitReheis which have remaining lives of between 4 and 21 years (2018: between 5 and 22 years) and \$37.0m (2018: \$40.4m) in relation to the acquisition of Mondo which has a remaining life of 14 years (2018: 15 years).

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

**̝*RRGZLOODQGRWKHULQWDQJLEOHDVVHWV**continued

,PSDLUPHQWWHVWLQJDQGLQGHƮQLWHOLIHDVVHWV

Goodwill is allocated to the Group's cash-generating units ("CGUs") as follows:

	2019 \$m	2018 \$m
Personal Care	293.2	291.2
Coatings	202.6	197.9
Talc	201.5	200.5
Chromium	–	–
Energy	28.4	27.7
At 31 December	725.7	717.3

7KH*URXSWHVWVDQQXDOO\IRULPSDLUPHQWRUPRUHIUHTXHQWO\LIWKHUHDUHHYHQWVRUFLUFXPVWDQFHVWKDWLQGLFDWHWKDWWKHFDUU\LQJDPRXQWPD\QRW be recoverable. No impairment charge was recorded in the year (2018: \$nil).

*RRGZLOODFTXLUHGLQDEXVLQHVVFRPELQDWLRQLVDOORFDWHGDWDFTXLVLWLRQWRWKH&*8VWKDWDUHH[SHFWHGWREHQHƮWIURPWKDW business combination.

The recoverable amounts of the CGUs are determined from value in use calculations. The key assumptions for the value in use calculations are H[SHFWHGFKDQJHVWRVDOHVYROXPHVVHOOLQJSULFHVDQGGLUHFWFRVWVGXULQJWKHIRUHFDVWSHULRGJURZWKUDWHVXVHGWRH[WUDSRODWHEH\RQGWKH IRUHFDVWSHULRGDQGWKHGLVFRXQWUDWHVDSSOLHGWRWKHUHVXOWLQJFDVKưRZV&KDQJHVLQVDOHVYROXPHVVHOOLQJSULFHVDQGGLUHFWFRVWVDUHEDVHG RQSDVWSUDFWLFHVDQGH[SHFWDWLRQVRIIXWXUHFKDQJHVLQWKHPDUNHW7KH*URXSSUHSDUHVFDVKưRZIRUHFDVWVGHULYHGIURPWKHPRVWUHFHQW SODQVDSSURYHGE\PDQDJHPHQWIRUWKHQH[WWKUHH\HDUVZLWKFDVKưRZVIRUSHULRGVEH\RQGWKUHH\HDUVH[WUDSRODWHGEDVHGRQHVWLPDWHG growth rates of between 2.0% and 5.0% (2018: 3.0% to 7.0%). The rates do not exceed the average long term growth rate for the relevant PDUNHWV0DQDJHPHQWHVWLPDWHVGLVFRXQWUDWHVXVLQJSUHWD[UDWHVWKDWUHưHFWFXUUHQWPDUNHWDVVHVVPHQWVRIWKHWLPHYDOXHRIPRQH\DQGWKH ULVNVVSHFLƮFWRWKH&*8V

,QRUGHUWRVWUHVVWHVWWKHUHVXOWVRYHUDZLGHUUDQJHRIFRQGLWLRQVPDQDJHPHQWKDVH[SDQGHGLWVWHVWLQJWRLQFOXGHDYDULHW\RIJURZWKUDWHV DQGDOWHUQDWLYHIRUHFDVWVFHQDULRVWKDWUHưHFWWKHSRWHQWLDOYDULDELOLW\RIULVNZLWKLQWKH&*8V'XULQJWKHWHVWLQJDUDQJHRIGLVFRXQWUDWHVIURP 9.5% to 10.5% (2018: 9.1% to 13.5%) was used.

:KHQWKHLPSDLUPHQWWHVWLQJZDVFDUULHGRXWLQ2FWREHUWKHOHDVWKHDGURRPDVDSHUFHQWDJHRI&*8DVVHWVZKHQYDOXHLQXVHZDV compared to total CGU assets including goodwill) was in the Talc CGU. The Talc CGU had headroom of \$142.4m. The headroom is based on a medium term growth rate of 5.0% and a long term growth rate of 3.0%. For the CGU's value in use to equal the total assets of the CGU sales ZRXOGKDYHWRGHFUHDVHE\DQDYHUDJHRIRYHUWKH\HDUIRUHFDVWSHULRGWKHPHGLXPWHUPJURZWKUDWHZRXOGQHHGWREHUHGXFHGWR and the long term growth rate to 1.5%.

7KHEUDQGLQWDQJLEOHVUHSUHVHQWWKHYDOXHDVFULEHGWRWKHWUDGLQJQDPHDQGUHSXWDWLRQRIWKH'HXFKHP)DQFRU:DWHUFU\O+L0DUDQG 6XPPLW5HKHLVDFTXLVLWLRQV7KH*URXSZLWKWKHH[FHSWLRQRI6XPPLW5HKHLVFRQVLGHUVWKHVHWRKDYHVLJQLƮFDQWDQGRQJRLQJYDOXHWRWKH EXVLQHVVWKDWZLOOEHPDLQWDLQHGDQGLWLVWKHUHIRUHFRQVLGHUHGDSSURSULDWHWRDVVLJQWKHVHDVVHWVDQLQGHƮQLWHXVHIXOOLIH7KHEUDQGUHODWLQJ WR6XPPLW5HKHLVLVEHLQJDPRUWLVHGRYHUDSHULRGRIWKUHH\HDUV7KHFDUU\LQJDPRXQWRIEUDQGLQWDQJLEOHVZLWKDQLQGHƮQLWHXVHIXOOLIHDVDW 31 December 2019 is \$23.4m (2018: \$23.1m). Brand intangibles are tested annually for impairment using similar assumptions to the goodwill WHVWLQJ7KHUHPDLQLQJLQWDQJLEOHDVVHWVFRPSULVHWKHYDOXHDVFULEHGWRFXVWRPHUOLVWVSDWHQWVDQGQRQFRPSHWHFODXVHVZKLFKDUHEHLQJ DPRUWLVHGRYHUSHULRGVRIƮYHWRWZHQW\IRXU\HDUV

̝3URSHUW\SODQWDQGHTXLSPHQW

	Right-of-use assets
	Land and buildings \$m	Plant and machinery \$m	Fixtures ƮWWLQJVDQG equipment \$m	Under construction \$m	Land and buildings \$m	Plant and machinery \$m	Fixtures ƮWWLQJVDQG equipment \$m	Total \$m
&RVW
At 1 January 2018	127.2	410.0	42.4	21.8	–	–	–	601.4
Additions	–	8.3	–	40.9	–	–	–	49.2
([FKDQJHGLƬHUHQFHV	(3.1)	(14.9)	(0.6)	(0.3)	–	–	–	(18.9)
Disposals	(19.6)	(85.1)	(1.1)	(0.3)	–	–	–	(106.1)
Acquisitions through business
combinations	15.8	231.6	0.4	2.4	–	–	–	250.2
5HFODVVLƮFDWLRQV	5.2	30.9	3.3	(39.4)	–	–	–	–
At 31 December 2018	125.5	580.8	44.4	25.1	–	–	–	775.8
Impact following adoption of IFRS 16	–	–	–	–	52.2	5.7	2.1	60.0
At 31 December 2018	125.5	580.8	44.4	25.1	52.2	5.7	2.1	835.8
Additions	–	14.3	0.1	33.4	0.1	0.1	0.4	48.4
([FKDQJHGLƬHUHQFHV	(0.1)	(4.2)	(0.1)	(0.1)	(0.2)	(0.1)	–	(4.8)
Disposals	(2.9)	(11.1)	(1.2)	(0.1)	(0.7)	(0.1)	–	(16.1)
5HFODVVLƮFDWLRQV	2.8	34.7	2.5	(40.0)	–	–	–	–
\$W'HFHPEHU	125.3	614.5	45.7	18.3	51.4	5.6	2.5	863.3
\$FFXPXODWHGGHSUHFLDWLRQ
At 1 January 2018	73.0	279.0	29.9	–	–	–	–	381.9
Charge for the year	2.9	25.1	1.6	–	–	–	–	29.6
([FKDQJHGLƬHUHQFHV	(1.7)	(7.7)	(0.4)	–	–	–	–	(9.8)
Disposals	(18.7)	(84.9)	(0.5)	–	–	–	–	(104.1)
5HFODVVLƮFDWLRQV	–	(0.4)	0.4	–	–	–	–	–
At 31 December 2018	55.5	211.1	31.0	–	–	–	–	297.6
Impact following adoption of IFRS 16	–	–	–	–	11.8	–	–	11.8
At 31 December 2018	55.5	211.1	31.0	–	11.8	–	–	309.4
Charge for the year	2.8	39.0	2.4	–	4.5	1.1	1.1	50.9
([FKDQJHGLƬHUHQFHV	–	(0.2)	(0.1)	–	–	–	–	(0.3)
Disposals	(0.4)	(9.0)	(0.7)	–	(0.2)	–	–	(10.3)
5HFODVVLƮFDWLRQV	–	(0.5)	0.5	–	–	–	–	–
\$W'HFHPEHU	57.9	240.4	33.1	–	16.1	1.1	1.1	349.7
1HWERRNYDOXH
\$W'HFHPEHU	67.4	374.1	12.6	18.3	35.3	4.5	1.4	513.6
At 31 December 2018	70.0	369.7	13.4	25.1	–	–	–	478.2
At 1 January 2018	54.2	131.0	12.5	21.8	–	–	–	219.5

*URXSFDSLWDOH[SHQGLWXUHFRQWUDFWHGEXWQRWSURYLGHGIRULQWKHVHƮQDQFLDOVWDWHPHQWVDPRXQWHGWRQLOQLO

̝,QYHQWRULHV

	2019 \$m	2018 \$m
Raw materials and consumables	56.7	70.6
Work in progress	15.7	15.3
Finished goods and goods purchased for resale	96.3	102.8
	168.7	188.7

Inventories are disclosed net of provisions for obsolescence of \$6.5m (2018: \$7.8m).

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG For the year ended 31 December 2019

̝7UDGHDQGRWKHUUHFHLYDEOHV

	2019 \$m	2018 \$m
Trade receivables	96.6	112.4
Other receivables	13.8	13.9
Prepayments	7.5	7.5
	117.9	133.8

̝7UDGHDQGRWKHUSD\DEOHV

	2019 \$m	2018 \$m
Trade payables	79.8	61.6
Other payables	15.2	20.9
Accruals	39.5	58.1
	134.5	140.6

7KHJURXSKDVQRWXVHGDQ\VXSSOLHUƮQDQFLQJDUUDQJHPHQWVLQWKHSHULRG

̝3URYLVLRQV

	Self
	Environmental \$m	insurance \$m	Restructuring \$m	Other \$m	Total \$m
At 1 January 2019	43.3	1.5	0.8	3.2	48.8
Charged/(credited) to the income statement:
Increase in provisions due to change in discount rate	4.9	–	–	–	4.9
Set up/(release) of provisions	–	0.9	4.0	(1.2)	3.7
Unwinding of discount	2.2	–	–	0.2	2.4
Utilised during the year	(6.7)	(0.4)	(1.2)	(0.5)	(8.8)
&XUUHQF\WUDQVODWLRQGLƬHUHQFHV	0.4	0.2	–	–	0.6
\$W'HFHPEHU	44.1	2.2	3.6	1.7	51.6
Due within 1 year	3.3	0.4	2.2	0.5	6.4
Due after 1 year	40.8	1.8	1.4	1.2	45.2

Environmental provisions relate to manufacturing and distribution sites including certain sites no longer owned by the Group. These provisions KDYHEHHQGHULYHGXVLQJDGLVFRXQWHGFDVKưRZPHWKRGRORJ\DQGUHưHFWWKHH[WHQWWRZKLFKLWLVSUREDEOHWKDWH[SHQGLWXUHZLOOEHLQFXUUHG over the next 25 years. Included within environmental provisions are amounts in respect of all anticipated costs related to the closure and UHPHGLDWLRQRIWKH&KURPLXP8.VLWHDW(DJOHVFOLƬH

(QYLURQPHQWDOSURYLVLRQVKDYHEHHQLQFUHDVHGE\PGXHWRưXFWXDWLRQVLQWKHGLVFRXQWUDWHVXVHGWRGLVFRXQWWKHSURYLVLRQV7KLVH[SHQVH is included within adjusting items (see Note 5).

,IWKHFRVWHVWLPDWHVRQZKLFKWKHSURYLVLRQVDW'HFHPEHUDUHEDVHGZHUHWRFKDQJHE\WKHSURYLVLRQUHFRJQLVHGZRXOGQHHG WRFKDQJHE\DSSUR[LPDWHO\P:KLOVWDUDQJHRIRXWFRPHVLVSRVVLEOHWKH'LUHFWRUVEHOLHYHWKDWWKHUHDVRQDEO\SRVVLEOHUDQJHIRUWKH environmental provision is from \$38.1m to \$46.0m.

Self-insurance provisions represent the aggregate of outstanding claims plus a projection of losses incurred but not reported. The self-LQVXUDQFHSURYLVLRQVDUHH[SHFWHGWREHXWLOLVHGZLWKLQƮYH\HDUV

5HVWUXFWXULQJSURYLVLRQVUHODWHWRFRVWVRIDGMXVWLQJKHDGFRXQWWUDLQLQJUHORFDWLRQDQGRWKHUFRVWVRIUHVWUXFWXULQJZKHUHDQHHGWRGRVRKDV EHHQLGHQWLƮHGE\PDQDJHPHQW

2WKHUSURYLVLRQVUHSUHVHQWSD\PHQWVPDGHIRUULJKWRIƮUVWUHIXVDORQDTXDUU\SD\PHQWVIRUZKLFKDUHOLQNHGWRWKHGLVFKDUJHRIUHVLGXHLQWR DQRWKHUTXDUU\RZQHGE\WKHVDPHFRXQWHUSDUW\7KHVHSURYLVLRQVDUHH[SHFWHGWREHXWLOLVHGZLWKLQƮYH\HDUV

Strategic Report

̝'HIHUUHGWD[DQG\$&7UHFRYHUDEOH

	Retirement EHQHƮW plans \$m	Accelerated tax depreciation \$m	Amortisation of US goodwill \$m	Other intangible assets \$m	Temporary GLƬHUHQFHV \$m	Unrelieved tax losses \$m	Total \$m
At 1 January 2018	0.9	(19.5)	(59.5)	(36.7)	14.0	7.6	(93.2)
Arising on acquisition	–	–	–	(43.2)	0.4	6.3	(36.5)
Credit/(charge) to the income statement	0.2	(12.1)	0.9	17.1	4.6	(7.5)	3.2
Charge to other comprehensive income	(0.2)	–	–	–	–	–	(0.2)
Charge to retained earnings	–	–	–	–	(2.2)	–	(2.2)
&XUUHQF\WUDQVODWLRQGLƬHUHQFHV	(0.1)	–	–	1.3	0.4	–	1.6
At 1 January 2019	0.8	(31.6)	(58.6)	(61.5)	17.2	6.4	(127.3)
Arising on disposal	–	–	–	2.8	–	–	2.8
Credit/(charge) to the income statement	0.2	(0.4)	0.1	(0.8)	0.7	(1.0)	(1.2)
Charge to other comprehensive income	1.5	–	–	–	(0.2)	–	1.3
Charge to retained earnings	–	–	–	–	0.3	–	0.3
&XUUHQF\WUDQVODWLRQGLƬHUHQFHV	(0.2)	–	–	(0.2)	2.5	–	2.1
\$W'HFHPEHU	2.3	(32.0)	(58.5)	(59.7)	20.5	5.4	(122.0)
Deferred tax assets	2.3	–	–	–	20.5	5.4	28.2
'HIHUUHGWD[OLDELOLWLHV	–	(32.0)	(58.5)	(59.7)	–	–	(150.2)

'HIHUUHGWD[DVVHWVKDYHEHHQUHFRJQLVHGWRWKHH[WHQWWKDWLWLVFRQVLGHUHGPRUHOLNHO\WKDQQRWWKDWWKHUHZLOOEHWD[DEOHSURƮWVIURPZKLFKWKH IXWXUHUHYHUVDORIWKHXQGHUO\LQJWLPLQJGLƬHUHQFHVFDQEHGHGXFWHG:KHUHWKLVLVQRWWKHFDVHGHIHUUHGWD[DVVHWVKDYHQRWEHHQUHFRJQLVHG

'HIHUUHGWD[OLDELOLWLHVDUHUHGXFHGIRUDQ\GHIHUUHGWD[DVVHWVZKLFKH[LVWZLWKLQDMXULVGLFWLRQZKHUHFRQVROLGDWHGWD[UHWXUQVDUHƮOHGDQGZKHUH tax assets and liabilities may be netted.

\$QDVVHWRIPZDVUHFRJQLVHGLQUHODWLQJWR8.DGYDQFHFRUSRUDWLRQWD[n\$&7oFUHGLWVZKLFKKDGSUHYLRXVO\EHHQXQUHFRJQLVHG EHFDXVHRIXQFHUWDLQW\RYHUIXWXUH8.WD[DEOHSURƮWV0RYHPHQWVLQWKH\$&7UHFRYHUDEOHEDODQFHDUHVKRZQEHORZ

	2019 \$m	2018 \$m
At 1 January	9.8	16.2
Utilisation	(5.2)	(8.1)
&XUUHQF\WUDQVODWLRQGLƬHUHQFHV	0.2	1.7
At 31 December	4.8	9.8

There are no material losses where deferred tax assets have not been recognised.

\$WWKHEDODQFHVKHHWGDWHWKHDJJUHJDWHDPRXQWRIWKHWHPSRUDU\GLƬHUHQFHVLQUHODWLRQWRWKHLQYHVWPHQWLQVXEVLGLDULHVIRUZKLFKGHIHUUHG WD[OLDELOLWLHVKDYHQRWEHHQUHFRJQLVHGZDVPP1ROLDELOLW\KDVEHHQUHFRJQLVHGLQUHVSHFWRIWKHVHGLƬHUHQFHVEHFDXVH WKH*URXSLVLQDSRVLWLRQWRFRQWUROWKHWLPLQJRIWKHUHYHUVDORIWKHWHPSRUDU\GLƬHUHQFHVDQGWKH*URXSFRQVLGHUVWKDWLWLVSUREDEOHWKDWVXFK GLƬHUHQFHVZLOOQRWUHYHUVHLQWKHIRUHVHHDEOHIXWXUH

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG For the year ended 31 December 2019

̝6KDUHFDSLWDO

	2019 \$m	2018 \$m
At 1 January	52.1	44.4
Issue of shares	–	7.7
At 31 December	52.1	52.1

In October 2018 the Group undertook a Rights Issue on the basis of one share for every four fully paid ordinary shares held. A total of RUGLQDU\VKDUHVZHUHLVVXHGDW~SHUVKDUH*URVVSURFHHGVRIPZHUHUHFHLYHGUHVXOWLQJLQDQLQFUHDVHLQVKDUH premium of \$214.5m after expenses.

Further details of share capital are set out in Note 9 to the Parent Company Financial Statements.

̝2WKHUUHVHUYHV

158.8	(69.0)	(8.4)	9.7	91.1
–	–	–	(1.3)	(1.3)
–	–	(2.8)	–	(2.8)
–	4.0	–	2.7	6.7
–	–	–	3.0	3.0
158.8	(73.0)	(5.6)	5.3	85.5
–	–	–	(1.5)	(1.5)
–	–	1.3	–	1.3
–	(15.8)	–	(0.4)	(16.2)
–	–	–	2.9	2.9
158.8	(57.2)	(6.9)	4.3	99.0
redemption reserve \$m	Translation reserve \$m	Hedging reserve \$m	Share options reserve \$m	Total \$m
	Capital

7KH&RPSDQ\FDQUHGHHPVKDUHVE\UHSD\LQJWKHPDUNHWYDOXHWRWKHVKDUHKROGHUZKHUHXSRQWKHVKDUHVDUHFDQFHOOHG5HGHPSWLRQPXVWEH IURPGLVWULEXWDEOHSURƮWV7KHFDSLWDOUHGHPSWLRQUHVHUYHUHSUHVHQWVWKHQRPLQDOYDOXHRIWKHVKDUHVUHGHHPHG

7KHWUDQVODWLRQUHVHUYHFRPSULVHVDOOIRUHLJQFXUUHQF\GLƬHUHQFHVDULVLQJIURPWKHWUDQVODWLRQRIWKHƮQDQFLDOVWDWHPHQWVRIIRUHLJQRSHUDWLRQV as well as from the translation of liabilities that hedge the Company's net investment in a foreign subsidiary.

7KHKHGJLQJUHVHUYHFRPSULVHVWKHHƬHFWLYHSRUWLRQRIWKHFXPXODWLYHQHWFKDQJHLQWKHIDLUYDOXHRIFDVKưRZKHGJLQJLQVWUXPHQWVUHODWHGWR hedged transactions that have not yet occurred.

The share options reserve comprises amounts accumulated in equity in respect of share options and awards granted to employees.

̝%RUURZLQJV

			2019 \$m	2018 \$m
Bank loans			558.1	594.2
Unamortised syndicate fees			(5.1)	(5.6)
Carrying value of borrowings at 31 December			553.0	588.6
The borrowings are repayable as follows:
Within one year			2.2	2.8
Within two to four years			393.1	–
,QWKHƮIWK\HDU			162.8	591.4
			558.1	594.2
The weighted average interest rates paid were as follows:
			2019 %	2018 %
Bank loans			3.4	3.7
Group borrowings were denominated as follows:
	US Dollar	Taiwan Dollar	Euro	Total
Bank loans
31 December 2019	245.2	2.0	310.9	558.1
'HFHPEHU	275.0	2.6	316.6	594.2

2IWKH86GROODUERUURZLQJVQLOZDVXQVHFXUHGQLOEHDULQJLQWHUHVWDWWKHUHOHYDQWLQWHUEDQNUDWHVSOXVDPDUJLQ7KH7DLZDQGROODUDQG remaining US dollar borrowings consisted of those secured by time deposits and those secured by charges over various land and buildings in Taiwan.

̝&DVKDQGFDVKHTXLYDOHQWV

&DVKDQGFDVKHTXLYDOHQWVIRUWKHSXUSRVHRIWKHFRQVROLGDWHGFDVKưRZVWDWHPHQWFRPSULVHWKHIROORZLQJ

	2019 \$m	2018 \$m
Cash at bank and on hand	103.9	96.1

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝)LQDQFLDOLQVWUXPHQWV

At 31 December 2019:

	Held at fair value		Held at amortised cost
	Through SURƮWDQG loss \$m	Derivatives used for hedging \$m	Loans and receivables \$m	Liabilities \$m	Total book value \$m	Total fair value \$m
&XUUHQW
Trade and other receivables (see note 13)	–	–	110.4	–	110.4	110.4
'HULYDWLYHƮQDQFLDOLQVWUXPHQWVVHHQRWH	–	0.1	–	–	0.1	0.1
Cash and cash equivalents (see note 20)	–	–	103.9	–	103.9	103.9
Financial assets	–	0.1	214.3	–	214.4	214.4
&XUUHQW
Bank overdrafts and loans (see note 19)	–	–	–	(2.2)	(2.2)	(2.2)
Trade and other payables (see note 14)	–	–	–	(134.5)	(134.5)	(134.5)
'HULYDWLYHƮQDQFLDOLQVWUXPHQWVVHHQRWH	(1.4)	(0.7)	–	–	(2.1)	(2.1)
Lease liabilities (see note 24)	–	–	–	(7.1)	(7.1)	(7.1)
1RQFXUUHQW
Loans and borrowings** (see note 19)	–	–	–	(550.8)	(550.8)	(555.9)
2WKHUƮQDQFLDOOLDELOLWLHV	–	–	–	–	–	–
Lease liabilities (see note 24)	–	–	–	(39.8)	(39.8)	(39.8)
Contingent consideration*** (see notes 5 and 32)	–	–	–	(13.0)	(13.0)	(13.0)
Financial liabilities	(1.4)	(0.7)	–	(747.4)	(749.5)	(754.6)
Total	(1.4)	(0.6)	214.3	(747.4)	(535.1)	(540.2)

At 31 December 2018:

	Held at fair value		Held at amortised cost
	Through SURƮWDQG loss \$m	Derivatives used for hedging \$m	Loans and receivables \$m	Liabilities \$m	Total book value \$m	Total fair value \$m
&XUUHQW
Trade and other receivables (see note 13)	–	–	126.3	–	126.3	126.3
'HULYDWLYHƮQDQFLDOLQVWUXPHQWVVHHQRWH	–	2.0	–	–	2.0	2.0
Cash and cash equivalents (see note 20)	–	–	96.1	–	96.1	96.1
Financial assets	–	2.0	222.4	–	224.4	224.4
&XUUHQW
Bank overdrafts and loans	–	–	–	(2.8)	(2.8)	(2.8)
Trade and other payables (see note 14)	–	–	–	(140.6)	(140.6)	(140.6)
Contingent consideration (see note 32)	(0.1)	–	–	–	(0.1)	(0.1)
1RQFXUUHQW
Loans and borrowings** (see note 19)	–	–	–	(585.8)	(585.8)	(591.4)
2WKHUƮQDQFLDOOLDELOLWLHV	–	–	–	(18.9)	(18.9)	(18.9)
Contingent consideration*** (see note 5 and note 32)	(21.3)	–	–	–	(21.3)	(21.3)
Financial liabilities	(21.4)	–	–	(748.1)	(769.5)	(775.1)
Total	(21.4)	2.0	222.4	(748.1)	(545.1)	(550.7)

'HULYDWLYHVLQDOLDELOLW\SRVLWLRQDW'HFHPEHUDUHVKRZQZLWKLQFXUUHQWƮQDQFLDOOLDELOLWLHVLQWKH&RQVROLGDWHGEDODQFHVKHHW

** Loans and borrowings are shown net of facility fees of \$5.1m (2018: \$5.6m).

2WKHUƮQDQFLDOOLDELOLWLHVRIQLOPUHODWHWRDQDPRXQWSD\DEOHWRWKHYHQGRURI0RQGRRQWKHUHVROXWLRQRIDWD[FDVH7KLVEDODQFHLVFRPELQHGZLWK WKHFRQWLQJHQWFRQVLGHUDWLRQSD\DEOHRIPPDQGVKRZQLQWKHQRQFXUUHQWƮQDQFLDOOLDELOLWLHVOLQHLQWKH&RQVROLGDWHGEDODQFHVKHHW VSOLWEHWZHHQFXUUHQWDQGQRQFXUUHQWƮQDQFLDOOLDELOLWLHV

)DLUYDOXHVPHDVXUHPHQWDQGKLHUDUFK

Basis for determining fair values

7KH*URXSPHDVXUHVIDLUYDOXHVLQUHVSHFWRIƮQDQFLDOLQVWUXPHQWVLQDFFRUGDQFHZLWK,)56XVLQJWKHIROORZLQJIDLUYDOXHKLHUDUFK\WKDW UHưHFWVWKHVLJQLƮFDQFHRIWKHLQSXWVXVHGLQPDNLQJWKHPHDVXUHPHQWV

Level 1: Quoted market price (unadjusted) in an active market for an identical instrument. /HYHO9DOXDWLRQWHFKQLTXHVEDVHGRQREVHUYDEOHLQSXWVHLWKHUGLUHFWO\RULQGLUHFWO\ /HYHO9DOXDWLRQWHFKQLTXHVXVLQJVLJQLƮFDQWXQREVHUYDEOHLQSXWV7KLVFDWHJRU\LQFOXGHVFRQWLQJHQWFRQVLGHUDWLRQ

7KHIROORZLQJVXPPDULVHVWKHVLJQLƮFDQWPHWKRGVDQGDVVXPSWLRQVXVHGLQHVWLPDWLQJWKHIDLUYDOXHVRIƮQDQFLDOLQVWUXPHQWV

7KH*URXSDVVHVVHVWKDWWKHIDLUYDOXHVRIFDVKDQGFDVKHTXLYDOHQWVWUDGHDQGRWKHUUHFHLYDEOHVWUDGHDQGRWKHUSD\DEOHVDQGWKHFXUUHQW SRUWLRQRIưRDWLQJUDWHEDQNDQGRWKHUERUURZLQJVDSSUR[LPDWHWRERRNYDOXHVGXHWRWKHVKRUWPDWXULW\SHULRGVRIWKHVHƮQDQFLDOLQVWUXPHQWV )RUWUDGHDQGRWKHUUHFHLYDEOHVDOORZDQFHVDUHPDGHZLWKLQWKHLUERRNYDOXHIRUFUHGLWULVN7KHIDLUYDOXHVRIOHDVHOLDELOLWLHVDSSUR[LPDWHWRWKHLU ERRNYDOXHVGXHWRWKHPHDVXUHPHQWRIOHDVHOLDELOLWLHVDWWKH*URXSoVLQFUHPHQWDOERUURZLQJUDWHZKLFKKDVQRWFKDQJHGVLJQLƮFDQWO\VLQFHWKH LQFHSWLRQRIWKHOHDVHOLDELOLWLHVSUHVHQWHG/HDVHVDUHDOVRQHJRWLDWHGDWPDUNHWUDWHVZLWKLQGHSHQGHQWXQUHODWHGWKLUGSDUWLHVDQGDUHVXEMHFW to periodic rental reviews.

Derivatives (level 2)

)DLUYDOXHLVHVWLPDWHGE\GLVFRXQWLQJWKHGLƬHUHQFHEHWZHHQWKHFRQWUDFWXDOIRUZDUGSULFHDQGWKHFXUUHQWIRUZDUGSULFHIRUWKHUHVLGXDO maturity of the contract using a risk free interest rate (based on government bonds).

1RQGHULYDWLYHQRQFXUUHQWƮQDQFLDOOLDELOLWLHVOHYHO

)DLUYDOXHLVFDOFXODWHGEDVHGRQWKHSUHVHQWYDOXHRIIXWXUHSULQFLSDODQGLQWHUHVWFDVKưRZVGLVFRXQWHGDWWKHPDUNHWUDWHRILQWHUHVWDWWKH reporting date.

&RQWLQJHQWFRQVLGHUDWLRQSD\DEOHOHYHO

)DLUYDOXHKDVEHHQHVWLPDWHGE\FDOFXODWLQJWKHSUHVHQWYDOXHRIWKHIXWXUHH[SHFWHGFDVKưRZV([SHFWHGFDVKLQưRZVDUHHVWLPDWHGEDVHG RQWKHWHUPVRIWKHVDOHDQGSXUFKDVHFRQWUDFWWKHHQWLW\oVNQRZOHGJHRIWKHEXVLQHVVDQGKRZWKHFXUUHQWHFRQRPLFHQYLURQPHQWLVOLNHO\WR LPSDFW{LW

\$VGLVFORVHGLQ1RWHDVDUHVXOWRIWKHDFTXLVLWLRQRI0RQGRDOLDELOLW\RIPIRUFRQWLQJHQWFRQVLGHUDWLRQSD\DEOHZDVUHFRJQLVHGDVDW WKHGDWHRIDFTXLVLWLRQ7KHUHZHUHQRVLJQLƮFDQWLQWHUUHODWLRQVKLSVEHWZHHQXQREVHUYDEOHLQSXWVWKDWPDWHULDOO\DƬHFWIDLUYDOXHV

&KDQJHVLQIDLUYDOXHRIƮQDQFLDOOLDELOLWLHVFODVVLƮHGDVOHYHOLQWKHKLHUDUFK\DUHDVIROORZV

	2019 \$m	2018 \$m
&RQWLQJHQWFRQVLGHUDWLRQDWIDLUYDOXHWKURXJKSURƮWRUORVV
At 1 January	21.4	–
Foreign exchange losses/(gains)	0.6	(0.9)
Additions	–	22.3
3URƮWDQGORVVPRYHPHQW	(9.0)	–
At 31 December	13.0	21.4

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝)LQDQFLDOLQVWUXPHQWVcontinued

Interest rates used for determining fair value

7KHLQWHUHVWUDWHVXVHGWRGLVFRXQWHVWLPDWHGFDVKưRZVZKHUHDSSOLFDEOHDUHEDVHGRQWKHJRYHUQPHQW\LHOGFXUYHDWWKHUHSRUWLQJGDWHSOXV DQDGHTXDWHFRQVWDQWFUHGLWVSUHDGDQGZHUHDVIROORZV

	2019 %	2018 %
Borrowings	2.3–4.4	1.5–5.2
7KHIROORZLQJWDEOHVKRZVDPRXQWVUHFRJQLVHGLQSURƮWRUORVVLQUHODWLRQWRƮQDQFLDODVVHWVDQGOLDELOLWLHVZLWKLQWKHVFRSHRI,)56
	2019 \$m	2018 \$m
5HFRJQLVHGLQSURƮWRUORVV
Interest income on bank deposits held at amortised cost	0.4	0.3
)DLUYDOXHRIFDVKưRZKHGJHVWUDQVIHUUHGIURPHTXLW\WRWKHLQFRPHVWDWHPHQW	–	0.1
Financial income	0.4	0.4
Interest on bank loans	(23.7)	(16.8)
Fair value movement on derivatives not in hedging relationships	(1.4)	–
Interest on lease liabilities	(1.8)	–
Financial costs	(26.9)	(16.8)
1HWƮQDQFLDOFRVWV	(26.5)	(16.4)
7KHIROORZLQJWDEOHVKRZVDPRXQWVUHFRJQLVHGGLUHFWO\LQHTXLW\LQUHODWLRQWRƮQDQFLDODVVHWVDQGOLDELOLWLHVZLWKLQWKHVFRSHRI,)56
	2019	2018

	\$m	\$m
5HFRJQLVHGGLUHFWO\LQHTXLW\
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHRIFDVKưRZKHGJH	(2.8)	1.4
)DLUYDOXHRIFDVKưRZKHGJHVWUDQVIHUUHGWRLQFRPHVWDWHPHQW	–	(0.1)
(ƬHFWLYHSRUWLRQRIFKDQJHLQIDLUYDOXHRIQHWLQYHVWPHQWKHGJH	27.5	(20.5)
)RUHLJQFXUUHQF\WUDQVODWLRQGLƬHUHQFHVIRUIRUHLJQRSHUDWLRQV	(23.9)	0.5
Recognised in:
Hedging reserve	(2.8)	1.3
Translation reserve	3.6	(20.0)

̝'HULYDWLYHƮQDQFLDOLQVWUXPHQWVDQGKHGJLQJDFWLYLWLHV

		&RQWUDFWRUXQGHUO\LQJ principal amount		Fair Value
At 31 December 2019:	Assets	/LDELOLWLHV	Assets \$m	/LDELOLWLHV \$m
&XUUHQW
		€30m /
,QWHUHVWUDWHVZDSVsFDVKưRZKHGJHV	–	\$100m	–	(0.6)
&RPPRGLW\VZDSVsFDVKưRZKHGJHV	0.2m MBTU	07	0.1	(0.1)
		\$110m /
Cross currency swaps	–	€100m	–	(1.4)
Total			0.1	(2.1)
	Contract or underlying SULQFLSDO{DPRXQW		Fair Value
At 31 December 2018:	Assets	Liabilities	Assets \$m	Liabilities \$m
&XUUHQW
,QWHUHVWUDWHVZDSVsFDVKưRZKHGJHV	\$100m	–	2.0	–
Total			2.0	–

Hedging activities

The Group is exposed to certain risks relating to its ongoing business operations. The primary risks managed using derivative instruments are IRUHLJQFXUUHQF\ULVNFRPPRGLW\SULFHULVNDQGLQWHUHVWUDWHULVN

The Group's risk management strategy is explained in Note 23.

Derivatives designated as hedging instruments

&DVKưRZKHGJHV

Commodity price risk

7KH*URXSHQWHUVLQWRFRPPRGLW\VZDSFRQWUDFWVWRUHGXFHWKHYRODWLOLW\DWWULEXWDEOHWRSULFHưXFWXDWLRQVRIDOXPLQLXPDQGJDV7RWKHH[WHQW WKH\FRQWLQXHWRPHHWWKHFULWHULDIRUKHGJHDFFRXQWLQJWKHFRPPRGLW\IRUZDUGFRQWUDFWVDUHDFFRXQWHGIRUDVFDVKưRZKHGJHV

There is an economic relationship between the hedged items and the hedging instruments as the terms of the commodity swap contracts match the terms of the expected highly probable forecast transactions (i.e. notional amount and expected payment date). As all critical terms PDWFKHGGXULQJWKH\HDUKHGJHLQHƬHFWLYHQHVVZDVLPPDWHULDO7KHKHGJHUDWLRLV

Interest rate risk

7KH*URXSHQWHUVLQWRLQWHUHVWUDWHVZDSVWRVZDSDSRUWLRQRIWKHLQWHUHVWDULVLQJIURPWKH*URXSoVV\QGLFDWHGUROOLQJFUHGLWIDFLOLW\IURPưRDWLQJ WRƮ[HG,QWHUHVWSD\PHQWVDUHKLJKO\SUREDEOHWKHKHGJHGULVNLVWKHFKDQJHLQWKHPDUNHWLQWHUHVWUDWH7KHKHGJHGLWHPVDUHWKHLQWHUHVWUDWH FDVKưRZVRQPRI86'GHQRPLQDWHGGHEWDQGPRI(85GHQRPLQDWHGGHEWWKH*URXSoVWRWDOGHEWLVVKRZQLQ1RWHWRWKH ƮQDQFLDOVWDWHPHQWV

7KHSULQFLSDOWHUPVQRWLRQDOUHVHWGDWHWHQRURIWKHKHGJHGLWHPVDQGWKHKHGJHGLQVWUXPHQWVKDYHEHHQPDWFKHGDORQJZLWKWKHFRQWUDFWXDO LQWHUHVWFDVKưRZVWKHUHIRUHFUHDWLQJDQH[DFWRƬVHWIRUWKHVHWUDQVDFWLRQUHVXOWLQJLQDQHWƮ[HGLQWHUHVWSD\DEOH\$VWKHLQWHUHVWUDWHVZDSV DQGWKHKHGJHGLWHPVDUHPDWFKHGHTXDODQGRSSRVLWHWHUPVRILQWHUHVWUDWHGDWHDQGPDWXULW\WKLVUHVXOWVLQDGHVLJQDWHGKHGJHUDWLRRI or 100%.

+HGJHLQHƬHFWLYHQHVVFDQDULVHIURP

Changes in timing of the hedged item
A reduction in the amount of the hedged item considered to be highly probable
A change in the credit risk of Elementis or the counterparty to the derivative contract
Foreign currency basis spreads

7KHHƬHFWRIFDVKưRZKHGJHVLQWKHFRQVROLGDWHGLQFRPHVWDWHPHQWDQGWKHFRQVROLGDWHGVWDWHPHQWRIRWKHUFRPSUHKHQVLYHLQFRPHLV as follows:

	Total hedging (loss)/gain recognised in OCI \$m	Amount UHFODVVLƮHG from OCI to SURƮWRUORVV \$m	Line item in the statement of SURƮWRUORVV \$m
<HDUHQGHG'HFHPEHU
			Admin
,QWHUHVWUDWHVZDSVsFDVKưRZKHGJHV	(2.4)	(0.3)	expenses
			Admin
&RPPRGLW\IRUZDUGFRQWUDFWVsFDVKưRZKHGJHV	(0.4)	0.3	expenses
<HDUHQGHG'HFHPEHU
			Admin
,QWHUHVWUDWHVZDSVsFDVKưRZKHGJHV	1.4	(0.1)	expenses

\$PRXQWVUHFODVVLƮHGIURPRWKHUFRPSUHKHQVLYHLQFRPHWRSURƮWRUORVVDUHGXHWRWKHKHGJHGLWHPDƬHFWLQJSURƮWRUORVVLQWKHSHULRG 7KHUHZHUHQRLQVWDQFHVRIQRQRFFXUDQFHRIKHGJHGFDVKưRZVLQHLWKHUWKHFXUUHQWRUFRPSDUDWLYHSHULRG

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝'HULYDWLYHƮQDQFLDOLQVWUXPHQWVDQGKHGJLQJDFWLYLWLHVcontinued

Hedge of net investments in foreign operations

7KH*URXSVHHNVWRGHQRPLQDWHWKHFXUUHQF\RILWVERUURZLQJVLQ(XURVDQG86GROODUVLQRUGHUWRPDWFKWKHFXUUHQF\RILWVFDVKưRZVHDUQLQJV and assets which are principally denominated in those currencies.

7KH(XURDQG86GROODUERUURZLQJVLQ(OHPHQWLV+ROGLQJV/LPLWHGDUHGHVLJQDWHGDVQHWLQYHVWPHQWKHGJHVDVWKHFRPSDQ\oVIXQFWLRQDO currency is GBP. The Group does not undertake derivative transactions to hedge the foreign currency translation exposures.

The Group analyses the Euro and US dollar net assets by subsidiary and the foreign currency borrowings in the name of Elementis Holdings /LPLWHGDUHDOORFDWHGDJDLQVWFHUWDLQWUDQFKHVRIQHWDVVHWVIRUDVSHFLƮFVXEVLGLDU\7KHUHIRUHWKHFULWLFDOWHUPVRIWKH(XURDQG86GROODU borrowings and their corresponding hedged items are the same.

7KH*URXSSHUIRUPVDTXDOLWDWLYHDVVHVVPHQWRIHƬHFWLYHQHVVDQGLWLVH[SHFWHGWKDWWKHYDOXHRIWKH(XURDQG86GROODUERUURZLQJVLQ*%3 and the value of the corresponding hedged items in GBP will systematically move in the opposite direction in response to movements in the underlying exchange rates.

7KHPDLQVRXUFHRILQHƬHFWLYHQHVVLQWKHVHKHGJLQJUHODWLRQVKLSVLVWKHLPSDFWRIDGHFOLQHLQWKHFDUU\LQJYDOXHRIWKHKHGJHGLWHPFRPSDUHG to the Euro and US dollar borrowings with the result that the value of the hedged item is less than the value of hedging instrument.

Foreign currency revaluation on the Euro and US dollar borrowings in the name of Elementis Holdings Limited are recorded in other FRPSUHKHQVLYHLQFRPHDQGGHIHUUHGLQWKHIRUHLJQFXUUHQF\WUDQVODWLRQUHVHUYHRQWKHEDODQFHVKHHWDVORQJDVWKHKHGJHLVHƬHFWLYH \$Q\LQHƬHFWLYHQHVVLVUHFRJQLVHGLQWKH,QFRPH6WDWHPHQWIRUWKDW\HDU

The impact of the hedged items on the statement of comprehensive income is as follows:

	2019	2018
	Foreign	Foreign
	FXUUHQF\	currency
	translation	translation
	reserve	reserve
	\$m	\$m
<HDUHQGHG'HFHPEHU
Net investment in foreign subsidiaries	27.5	(20.5)

,PSDFWRIKHGJLQJRQHTXLW

Set out below is the reconciliation of each component of equity and the analysis of other comprehensive income:

	&DVKưRZ hedge reserve \$m	Foreign currency translation reserve \$m
\$VDW-DQXDU\	(6.9)	(57.2)
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHDULVLQJIURP
'HULYDWLYHFDVKưRZKHGJLQJLQVWUXPHQWV	1.4	–
\$PRXQWUHFODVVLƮHGWRSURƮWRUORVV	(0.1)	4.2
Foreign currency revaluation of the net foreign operations	–	0.5
Foreign currency revaluation of borrowings	–	(20.5)
7D[HƬHFW	–	–
\$VDW-DQXDU\	(5.6)	(73.0)
(ƬHFWLYHSRUWLRQRIFKDQJHVLQIDLUYDOXHDULVLQJIURP
'HULYDWLYHFDVKưRZKHGJLQJLQVWUXPHQWV	(2.8)	–
\$PRXQWUHFODVVLƮHGWRSURƮWRUORVV	–	0.4
Foreign currency revaluation of the net foreign operations	–	(23.9)
Foreign currency revaluation of borrowings	–	27.5
7D[HƬHFW	–	–
\$VDW'HFHPEHU	(8.4)	(69.0)

̝)LQDQFLDOULVNPDQDJHPHQW

5LVNPDQDJHPHQWREMHFWLYHV

7KH*URXSKDVH[SRVXUHWRWKHIROORZLQJULVNVIURPLWVXVHRIƮQDQFLDOLQVWUXPHQWV

Credit risk
Liquidity risk
Market risk

The Board of Directors has overall responsibility for the establishment and oversight of the Group's risk management framework. The Group's ULVNPDQDJHPHQWSROLFLHVDUHHVWDEOLVKHGWRLGHQWLI\DQGDQDO\VHWKHULVNVIDFHGE\WKH*URXSWRVHWDSSURSULDWHULVNOLPLWVDQGFRQWUROVDQGWR PRQLWRUULVNVDQGDGKHUHQFHWROLPLWV5LVNPDQDJHPHQWSROLFLHVDQGV\VWHPVDUHUHYLHZHGUHJXODUO\WRUHưHFWFKDQJHVLQPDUNHWFRQGLWLRQV and the Group's activities.

The Group's Audit Committee oversees how management monitors compliance with the Group's risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Group. The Group's Audit Committee is assisted in its oversight role by Internal Audit. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and SURFHGXUHVWKHUHVXOWVRIZKLFKDUHUHSRUWHGWRWKH\$XGLW&RPPLWWHH

Credit risk

&UHGLWULVNLVWKHULVNRIƮQDQFLDOORVVWRWKH*URXSLIDFXVWRPHURUFRXQWHUSDUW\WRDƮQDQFLDOLQVWUXPHQWIDLOVWRPHHWLWVFRQWUDFWXDOREOLJDWLRQV and arises principally from the Group's receivables from customers.

7UDGHDQGRWKHUUHFHLYDEOHV

7KH*URXSoVH[SRVXUHWRFUHGLWULVNLVLQưXHQFHGPDLQO\E\WKHLQGLYLGXDOFKDUDFWHULVWLFVRIHDFKFXVWRPHU7KHGHPRJUDSKLFVRIWKH*URXSoV FXVWRPHUEDVHLQFOXGLQJWKHGHIDXOWULVNRIWKHLQGXVWU\DQGFRXQWU\LQZKLFKFXVWRPHUVRSHUDWHKDVOHVVLQưXHQFHRQFUHGLWULVN1RVLQJOH FXVWRPHUDFFRXQWVIRUDVLJQLƮFDQWSURSRUWLRQRIWKH*URXSoVUHYHQXH

Each new customer is analysed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are RƬHUHG7KH*URXSoVUHYLHZLQFOXGHVH[WHUQDOUDWLQJVZKHUHDYDLODEOHDQGLQVRPHFDVHVEDQNUHIHUHQFHV3XUFKDVHOLPLWVDUHHVWDEOLVKHGIRU HDFKFXVWRPHUZKLFKUHSUHVHQWVWKHPD[LPXPRSHQDPRXQWZLWKRXWUHTXLULQJDSSURYDOIURPWKH%RDUGRI'LUHFWRUV&XVWRPHUVWKDWIDLOWR meet the Group's benchmark creditworthiness may transact with the Group only on a prepayment basis.

7KH*URXSDSSOLHVWKH,)56VLPSOLƮHGDSSURDFKLQHVWDEOLVKLQJDQDOORZDQFHIRUH[SHFWHGFUHGLWORVVHV(&/V7KHUHIRUHWKH*URXSGRHVQRW track changes in credit risk but instead recognises a loss allowance based on lifetime ECLs at each reporting date. A provision matrix is used to calculate lifetime ECLs which takes into account the Group's historical credit loss experience adjusted for historical conditions that are not UHOHYDQWWRIXWXUHFDVKưRZVDQGIRUZDUGORRNLQJIDFWRUVVSHFLƮFWRWKHGHEWRUDQGHFRQRPLFHQYLURQPHQW

Investments

The Group limits its exposure to credit risk through a treasury policy that imposes graduated limits on the amount of funds that can EHGHSRVLWHGZLWKFRXQWHUSDUWLHVE\UHIHUHQFHWRWKHFRXQWHUSDUWLHVoFUHGLWUDWLQJVDVGHƮQHGE\6WDQGDUG 3RRUoVRU0RRG\oV Management does not expect any counterparty to fail to meet its obligations.

Exposure to credit risk

7KHFDUU\LQJDPRXQWRIƮQDQFLDODVVHWVUHSUHVHQWVWKHPD[LPXPFUHGLWH[SRVXUH7KHPD[LPXPH[SRVXUHWRFUHGLWULVNDWWKHUHSRUWLQJ date was:

		Carrying amount
	2019 \$m	2018 \$m
Trade receivables	96.6	112.4
Cash and cash equivalents	103.9	96.1
	200.5	208.5

The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:

		Carrying amount
	2019 \$m	2018 \$m
North America	32.6	35.0
Europe	30.5	36.6
Rest of the World	33.5	40.8
	96.6	112.4

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝)LQDQFLDOULVNPDQDJHPHQWcontinued

Expected credit losses

Set out below is the information about the credit risk exposure on the Group's trade receivables using a provision matrix:

	Gross 2019 \$m	Expected credit loss rate	Expected credit loss 2019 \$m	Gross 2018 \$m	Expected credit loss rate	Expected credit loss 2018 \$m
Not past due	87.0	1.3%	(1.1)	98.4	1.6%	(1.6)
Past due 0-30 days	8.5	3.5%	(0.3)	12.4	0.8%	(0.1)
Past due 31-120 days	2.1	4.8%	(0.1)	2.7	3.7%	(0.1)
Past due > 121 days	1.4	64.3%	(0.9)	0.9	22.2%	(0.2)
Total	99.0		(2.4)	114.4		(2.0)

The movement in the allowance for expected credit losses during the year was as follows:

	2019 \$m	2018 \$m
Balance at 1 January	2.0	0.9
Charge to income statement – administrative expenses	0.4	0.1
Increase in provision on acquisition of Mondo	–	1.0
Balance at 31 December	2.4	2.0

/LTXLGLW\ULVN

/LTXLGLW\ULVNLVWKHULVNWKDWWKH*URXSZLOOQRWEHDEOHWRPHHWLWVƮQDQFLDOREOLJDWLRQVDVWKH\IDOOGXH7KH*URXSoVDSSURDFKWRPDQDJLQJ OLTXLGLW\LVWRHQVXUHDVIDUDVSRVVLEOHWKDWLWZLOODOZD\VKDYHVXƱFLHQWOLTXLGLW\WRPHHWLWVOLDELOLWLHVZKHQGXHXQGHUERWKQRUPDODQGVWUHVVHG FRQGLWLRQVZLWKRXWLQFXUULQJXQDFFHSWDEOHORVVHVRUULVNLQJGDPDJHWRWKH*URXSoVUHSXWDWLRQ7KH*URXSoVIXQGLQJSROLF\LVWRKDYHFRPPLWWHG borrowings in place to cover at least 125% of the maximum forecast net borrowings for the next 12 month period. At the year end the Group KDGPPRIXQGUDZQFRPPLWWHGIDFLOLWLHVRIZKLFKPPH[SLUHVDIWHUPRUHWKDQ\HDU

([SRVXUHWROLTXLGLW\ULVN

7KHPDWXULW\DQDO\VHVIRUƮQDQFLDOOLDELOLWLHVVKRZLQJWKHDQWLFLSDWHGUHPDLQLQJFRQWUDFWXDOXQGLVFRXQWHGFDVKưRZVLQFOXGLQJIXWXUHLQWHUHVW SD\PHQWVDWFXUUHQW\HDUH[FKDQJHUDWHVDQGDVVXPLQJưRDWLQJLQWHUHVWUDWHVUHPDLQDWWKHODWHVWƮ[LQJUDWHVDUH

	'HFHPEHU
	:LWKLQ\HDU \$m	WR\HDUV \$m	WR\HDUV \$m	\$IWHU\HDUV \$m	Total \$m
Bank overdrafts	2.2	–	–	–	2.2
Secured bank loan	–	–	393.1	162.8	555.9
Trade and other payables	134.5	–	–	–	134.5
Lease liabilities	7.4	6.0	14.8	31.4	59.6
7RWDOQRQGHULYDWLYHƮQDQFLDOOLDELOLWLHV	144.1	6.0	407.9	194.2	752.2
Interest rate swaps*	0.6	–	–	–	0.6
Commodity swap contracts	0.1	–	–	–	0.1
Cross currency swaps	1.4	–	–	–	1.4
7RWDOGHULYDWLYHƮQDQFLDOOLDELOLWLHV	2.1	–	–	–	2.1

* Assumes no change in interest rates from those prevailing at the balance sheet date.

	31 December 2018
	Within 1 year \$m	1 to 2 years \$m	2 to 5 years \$m	After 5 years \$m	Total \$m
Bank overdrafts	2.8	–	–	–	2.8
Unsecured bank loan	–	–	–	–	–
Secured bank loan	–	–	591.4	–	591.4
Trade and other payables	140.6	–	–	–	140.6
7RWDOQRQGHULYDWLYHƮQDQFLDOOLDELOLWLHV	143.4	–	591.4	–	734.8
7RWDOGHULYDWLYHƮQDQFLDOOLDELOLWLHV	–	–	–	–	–

* Assumes no change in interest rates from those prevailing at the balance sheet date.

Market risk

0DUNHWULVNLVWKHULVNWKDWFKDQJHVLQPDUNHWSULFHVVXFKDVIRUHLJQH[FKDQJHUDWHVDQGLQWHUHVWUDWHVZLOODƬHFWWKH*URXSoVLQFRPHRUWKH YDOXHRILWVKROGLQJVRIƮQDQFLDOLQVWUXPHQWV7KHREMHFWLYHRIPDUNHWULVNPDQDJHPHQWLVWRPDQDJHDQGFRQWUROPDUNHWULVNH[SRVXUHVZLWKLQ DFFHSWDEOHSDUDPHWHUVZKLOVWRSWLPLVLQJWKHUHWXUQRQULVN

7KH*URXSXVHVGHULYDWLYHVLQWKHRUGLQDU\FRXUVHRIEXVLQHVVDQGDOVRLQFXUVƮQDQFLDOOLDELOLWLHVLQRUGHUWRPDQDJHPDUNHWULVNV\$OOVXFK transactions are carried out within the guidelines set by the Board.

0DUNHWULVNsFXUUHQF\ULVN

7KH*URXSLVH[SRVHGWRFXUUHQF\ULVNRQVDOHVSXUFKDVHVDQGERUURZLQJVWKDWDUHGHQRPLQDWHGLQDIRUHLJQFXUUHQF\RWKHUWKDQWKHUHVSHFWLYH IXQFWLRQDOFXUUHQFLHVRI*URXSHQWLWLHVSULPDULO\WKH86GROODUDQGWKHHXUR7KH*URXSKHGJHVXSWRRIFXUUHQWDQGIRUHFDVWWUDGH UHFHLYDEOHVDQGWUDGHSD\DEOHVGHQRPLQDWHGLQDIRUHLJQFXUUHQF\7KH*URXSXVHVIRUZDUGH[FKDQJHFRQWUDFWVWRKHGJHLWVFXUUHQF\ULVNZLWK a maturity of less than one year from the reporting date.

,QWHUHVWRQERUURZLQJVLVGHQRPLQDWHGLQFXUUHQFLHVWKDWPDWFKWKHFDVKưRZVJHQHUDWHGE\WKHXQGHUO\LQJRSHUDWLRQVRIWKH*URXSSULPDULO\ 86GROODUEXWDOVRHXURDQGSRXQGVVWHUOLQJ7KLVSURYLGHVDQHFRQRPLFKHGJHLQLQVWDQFHVZKHUHKHGJLQJGHULYDWLYHVDUHQRWHQWHUHGLQWR ,QUHVSHFWRIRWKHUPRQHWDU\DVVHWVDQGOLDELOLWLHVGHQRPLQDWHGLQIRUHLJQFXUUHQFLHVWKH*URXSHQVXUHVWKDWLWVQHWH[SRVXUHLVNHSWWRDQ acceptable level by buying or selling foreign currencies at spot rates when necessary to address short term imbalances.

7KH*URXSoVQHWLQYHVWPHQWLQRYHUVHDVVXEVLGLDULHVFUHDWHVH[SRVXUHWRIRUHLJQH[FKDQJHưXFWXDWLRQV7KHULVNLVKHGJHGE\86GROODU and euro denominated drawdowns under the syndicated facility designated as the hedged item in net investment hedge relationships. 7KLVPLWLJDWHVWKHFXUUHQF\ULVNDULVLQJIURPWKHUHWUDQVODWLRQRIDVXEVLGLDU\oVQHWDVVHWVLQWRSRXQGVVWHUOLQJWKHIXQFWLRQDOFXUUHQF\RIWKH ultimate parent Elementis plc.

Market risk – interest rate

7KH*URXSoVSROLF\LVWRERUURZDWERWKƮ[HGDQGưRDWLQJLQWHUHVWUDWHVDQGWRXVHLQWHUHVWUDWHVZDSVWRJHQHUDWHWKHUHTXLUHGLQWHUHVWSURƮOH 7KHVHLQWHUHVWVZDSVDUHGHVLJQDWHGZLWKLQFDVKưRZKHGJLQJUHODWLRQVKLSVZLWKWKHLQWHUHVWSD\PHQWVRQWKHERUURZLQJVWKH\DUHKHGJLQJ The risk being hedged is the exposure of the Group to market rate volatility on a portion of the core Group debt. The Group policy does not UHTXLUHWKDWDVSHFLƮFSURSRUWLRQRIWKH*URXSoVERUURZLQJVDUHDWƮ[HGUDWHVRILQWHUHVW

,QWHUHVWUDWHVHQVLWLYLW\DQDO\VLV

\$FKDQJHRIEDVLVSRLQWVLQLQWHUHVWUDWHVZRXOGKDYHLQFUHDVHGGHFUHDVHGSURƮWRUORVVE\WKHDPRXQWVVKRZQEHORZ7KLVDQDO\VLV DVVXPHVWKDWDOORWKHUYDULDEOHVLQSDUWLFXODUIRUHLJQFXUUHQF\UDWHVUHPDLQFRQVWDQW

		2019		2018
	ESV	ESV	100bps	100bps
	increase	decrease	increase	decrease
	\$m	\$m	\$m	\$m
Variable rate instruments	(3.8)	1.9	(3.5)	2.8

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝)LQDQFLDOULVNPDQDJHPHQWcontinued

0DUNHWULVNsFRPPRGLW\SULFHULVN

The group is exposed to movements in the prices of commodities it purchases such as aluminium. The volatility in the price of aluminium KDVOHGWRWKHGHFLVLRQWRHQWHULQWRFRPPRGLW\VZDSFRQWUDFWV7KHVZDSFRQWUDFWVGRQRWUHVXOWLQSK\VLFDOGHOLYHU\RIDOXPLQLXPEXWDUH GHVLJQDWHGDVFDVKưRZKHGJHVWRRƬVHWWKHHƬHFWRISULFHFKDQJHVLQDOXPLQLXP

&RPPRGLW\SULFHVHQVLWLYLW\DQDO\VLV

7KHIROORZLQJWDEOHGHWDLOVWKH*URXSoVVHQVLWLYLW\WRDLQFUHDVHLQDOXPLQLXPSULFHVZKLFKLVPDQDJHPHQWoVDVVHVVPHQWRIWKHUHDVRQDEO\ SRVVLEOHFKDQJHRQDYHUDJHRYHUDQ\JLYHQ\HDU\$VDOORIWKH*URXSoVDOXPLQLXPSXUFKDVHVDUHKHGJHGDQGDOODOXPLQLXPVZDSGHULYDWLYHV DFKLHYHKHGJHDFFRXQWLQJWKHUHLVQRLPSDFWRQSURƮWRUORVV

The table does not show the sensitivity to the Group's total commodity exposure or the impact of changes in volumes that may arise from LQFUHDVHRUGHFUHDVHLQWKHUHVSHFWLYHFRPPRGLW\SULFHV7KHVHQVLWLYLW\DQDO\VLVGHWHUPLQHVWKHSRWHQWLDOHƬHFWRQSURƮWRUORVVDQGHTXLW\ arising from the Group's aluminium swap contract positions as a result of the reasonably possible increases or decreases of the respective aluminium price.

	2019		2018
(ƬHFW	Impact	(ƬHFW	Impact
RQSURƮW	on total	RQSURƮW	on total
EHIRUHWD[	HTXLW\	before tax	equity
\$m	\$m	\$m	\$m
10% increase in aluminium prices	– –	–	–

Other market price risk

(TXLW\SULFHULVNDULVHVIURPHTXLW\VHFXULWLHVKHOGZLWKLQWKH*URXSoVGHƮQHGEHQHƮWSHQVLRQREOLJDWLRQV,QUHVSHFWRIWKH86VFKHPHV management monitors the mix of debt and equity securities in its investment portfolio based on market expectations. The primary goal of the *URXSoVLQYHVWPHQWVWUDWHJ\LVWRPD[LPLVHLQYHVWPHQWUHWXUQVZLWKRXWH[FHVVLYHULVNWDNLQJLQRUGHUWRPHHWSDUWLDOO\WKH*URXSoVXQIXQGHG EHQHƮWREOLJDWLRQVPDQDJHPHQWLVDVVLVWHGE\H[WHUQDODGYLVHUVLQWKLVUHJDUG,QUHVSHFWRIWKH8.VFKHPHWKHLQYHVWPHQWVWUDWHJ\LVVHWE\ the trustees and the Board is kept informed.

Capital management

7KH%RDUGoVSROLF\LVWRPDLQWDLQDVWURQJFDSLWDOEDVHVRDVWRPDLQWDLQLQYHVWRUFUHGLWRUDQGPDUNHWFRQƮGHQFHVXVWDLQIXWXUHGHYHORSPHQW RIWKHEXVLQHVVDQGPD[LPLVHVKDUHKROGHUYDOXH7KHFDSLWDOVWUXFWXUHRIWKH*URXSFRQVLVWVRIGHEWFDVKDQGFDVKHTXLYDOHQWVDQGHTXLW\ DWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQWFRPSULVLQJFDSLWDOUHVHUYHVDQGUHWDLQHGHDUQLQJV)LQDQFLQJIRUWKHUHFHQWDFTXLVLWLRQRI0RQGR was part funded through a Rights Issue and part through drawdowns on the Group's syndicated borrowing facility.

The Group utilises a mix of debt funding sources including term loans and revolving credit facilities (RCF) from the Group's syndicated ERUURZLQJIDFLOLW\ZLWKGLƬHULQJPDWXULWLHVWRHQVXUHFRQWLQXLW\DQGSURYLGHưH[LELOLW\7KHJURXSLVVXEMHFWWRWZRƮQDQFLDOFRYHQDQWVZKLFK DSSO\WRWKH*URXSoVV\QGLFDWHGERUURZLQJIDFLOLW\DVVXFKWKHJURXSLVUHTXLUHGWRPDLQWDLQDUDWLRRIQHWGHEWWR(%,7'\$RIOHVVWKDQ[ and minimum net interest cover of 3.0x (in relation to earnings before net interest expense and tax). The Net debt to EBITDA ratio stood at 2.7x times at 31 December 2019 (2018: 2.5x) and the Directors anticipate the strong cash generation of the Enlarged Group to drive a material GHOHYHUDJLQJSURƮOHJRLQJIRUZDUGVZLWKOHYHUDJHUHGXFLQJWRDQHWGHEWWR(%,7'\$UDWLRRIDURXQG[LQWKHPHGLXPWHUP1HWLQWHUHVWFRYHU at 31 December 2019 was 5.5x (2018: 10.0x).

7KH%RDUGPRQLWRUVWKHUHWXUQRQRSHUDWLQJFDSLWDOHPSOR\HG52&(ERWKLQFOXGLQJDQGH[FOXGLQJJRRGZLOODVGHƮQHGRQSDJH7KH*URXSoV target is to achieve a ROCE (including goodwill) in excess of our weighted average cost of capital.

The dividend policy is set out in the Chairman's statement on pages 6 and 7.

̝/HDVHV

Transition to IFRS 16 Leases

\$WWUDQVLWLRQIRUOHDVHVFODVVLƮHGDVRSHUDWLQJOHDVHVXQGHU,\$6OHDVHOLDELOLWLHVZHUHPHDVXUHGDWWKHSUHVHQWYDOXHRIWKHUHPDLQLQJOHDVH SD\PHQWVGLVFRXQWHGDWWKH*URXSoVLQFUHPHQWDOERUURZLQJUDWHDVDW-DQXDU\5LJKWRIXVHDVVHWVDUHPHDVXUHGDWHLWKHU

WKHLUFDUU\LQJDPRXQWDVLI,)56KDGEHHQDSSOLHGVLQFHWKHFRPPHQFHPHQWGDWHGLVFRXQWHGXVLQJWKHOHVVHHoVLQFUHPHQWDOERUURZLQJ rate – the Group applied this approach to its largest property leases; or
DQDPRXQWHTXDOWRWKHOHDVHOLDELOLW\DGMXVWHGE\WKHDPRXQWRIDQ\SUHSDLGRUDFFUXHGOHDVHSD\PHQWVsWKH*URXSDSSOLHGWKLVDSSURDFKWR all other leases.

7KH*URXSXVHGWKHIROORZLQJSUDFWLFDOH[SHGLHQWVZKHQDSSO\LQJ,)56WROHDVHVSUHYLRXVO\FODVVLƮHGDVRSHUDWLQJOHDVHVXQGHU,\$6

Used a single discount rate to a portfolio of leases with reasonably similar characteristics
Relied on its assessment of whether leases are onerous immediately before the date of initial application
Applied the exemptions to short-term leases (lease contracts with less than one year to maturity on adoption) and leases of low-value assets
Excluded the initial direct costs from the measurement of the right-of-use asset at the date of initial application
Used hindsight in determining the lease term where the contract contained options to extend or terminate the lease

:KHQPHDVXULQJOHDVHOLDELOLWLHVIRUOHDVHVWKDWZHUHFODVVLƮHGDVRSHUDWLQJOHDVHVWKH*URXSGLVFRXQWHGOHDVHSD\PHQWVXVLQJLWVLQFUHPHQWDO borrowing rate as 1 January 2019. The weighted average rate applied is 4%.

/HDVHOLDELOLWLHVUHFRJQLVHGDVDW-DQXDU\FDQEHUHFRQFLOHGWRWKHRSHUDWLQJOHDVHFRPPLWPHQWVDVRI'HFHPEHUDVIROORZV

	2019 \$m
Operating lease commitments disclosed as at 31 December 2018	48.3
Discounted using the incremental borrowing rate at 1 January 2019	41.8
Less: short-term leases recognised on a straight-line basis as expense	(0.2)
Less: low-value leases recognised on a straight-line basis as expense	(0.2)
\$GGDGMXVWPHQWVDVDUHVXOWRIDGLƬHUHQWWUHDWPHQWRIH[WHQVLRQDQGWHUPLQDWLRQRSWLRQV	11.9
Lease liability recognised as at 1 January 2019	53.3

7KHIROORZLQJWDEOHVVKRZWKHLPSDFWRIWKHVHFKDQJHVRQHDFKOLQHLWHPDƬHFWHG

Condensed consolidated income statement	Pre IFRS 16 2019 \$m	Operating lease expense \$m	Depreciation on right of use assets \$m	Interest on lease OLDELOLWLHV \$m	As reported 2019 \$m
Revenue	873.6	–	–	–	873.6
Cost of sales	(552.2)	–	–	–	(552.2)
*URVVSURƮW	321.4	–	–	–	321.4
Net operating costs	(221.6)	7.8	(6.7)	–	(220.5)
2SHUDWLQJSURƮW	99.8	7.8	(6.7)	–	100.9
Loss on disposal	(9.0)	–	–	–	(9.0)
1HWƮQDQFHFRVWVDQGRWKHUH[SHQVHV	(29.1)	–	–	(1.8)	(30.9)
3URƮWEHIRUHLQFRPHWD[	61.7	7.8	(6.7)	(1.8)	61.0
Tax	(14.6)	–	–	–	(14.6)
3URƮWIRUWKHSHULRG	47.1	7.8	(6.7)	(1.8)	46.4

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝/HDVHVcontinued

	Pre IFRS 16	Adjustment to EURXJKW forward EDODQFHVDVDW	Movement as a result of additions and disposals from 1 -DQXDU\ to	Depreciation, interest and FDVKưRZVIRU the 12 months to	Foreign exchange for the 12 months	As reported
	'HFHPEHU 2019	-DQXDU\ 2019	'HFHPEHU 2019	'HFHPEHU 2019	WR'HFHPEHU 2019	'HFHPEHU 2019
Condensed consolidated balance sheet	\$m	\$m	\$m	\$m	\$m	\$m
Non-current assets
Goodwill and other intangible assets	958.1	–	–	–	–	958.1
3URSHUW\SODQWDQGHTXLSPHQW	472.4	48.2	0.1	(6.7)	(0.4)	513.6
ACT recoverable	4.8	–	–	–	–	4.8
Deferred tax assets	28.2	–	–	–	–	28.2
1HWUHWLUHPHQWEHQHƮWVXUSOXV	7.4					7.4
Total non-current assets	1,470.9	48.2	0.1	(6.7)	(0.4)	1,512.1
Total current assets	393.1	–	–	–	–	393.1
Total assets	1,864.0	48.2	0.1	(6.7)	(0.4)	1,905.2
&XUUHQWOLDELOLWLHV
Bank overdrafts and loans	(2.2)	–	–	–	–	(2.2)
Trade and other payables	(134.5)	–	–	–	–	(134.5)
Financial liabilities	(2.1)	–	–	–	–	(2.1)
Current tax liabilities	(23.2)	–	–	–	–	(23.2)
Lease liabilities	–	(7.4)	(0.1)	0.4	–	(7.1)
Provisions	(6.4)	–	–	–	–	(6.4)
7RWDOFXUUHQWOLDELOLWLHV	(168.4)	(7.4)	(0.1)	0.4	–	(175.5)
1RQFXUUHQWOLDELOLWLHV
Loans and borrowings	(550.8)	–	–	–	–	(550.8)
(PSOR\HHUHWLUHPHQWEHQHƮWV	(24.5)	–	–	–	–	(24.5)
Deferred tax liabilities	(151.3)	1.1	–	–	–	(150.2)
Lease liabilities	–	(45.9)	–	5.6	0.5	(39.8)
Provisions	(45.2)	–	–	–	–	(45.2)
Financial liabilities	(13.0)	–	–	–	–	(13.0)
7RWDOQRQFXUUHQWOLDELOLWLHV	(784.8)	(44.8)	–	5.6	0.5	(823.5)
7RWDOOLDELOLWLHV	(953.2)	(52.2)	(0.1)	6.0	0.5	(999.0)
Net assets	910.8	(4.0)	–	(0.7)	0.1	906.2
(TXLW\
Share capital	52.1	–	–	–	–	52.1
Share premium	237.7	–	–	–	–	237.7
Other reserves	91.0	–	–	–	0.1	91.1
Retained earnings	530.0	(4.0)	–	(0.7)	–	525.3
(TXLW\DWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQW	910.8	(4.0)	–	(0.7)	0.1	906.2
7RWDOHTXLW\DQGUHVHUYHV	910.8	(4.0)	–	(0.7)	0.1	906.2

	Pre IFRS 16	(ƬHFWRI	As reported
&RQGHQVHGFRQVROLGDWHGVWDWHPHQWRIFDVKưRZV	2019 \$m	IFRS 16 \$m	2019 \$m
2SHUDWLQJDFWLYLWLHV
3URƮWIRUWKHSHULRG	38.6	7.8	46.4
Adjustments	98.6	–	98.6
2SHUDWLQJFDVKưRZVEHIRUHPRYHPHQWVLQZRUNLQJFDSLWDO	137.2	7.8	145.0
Decrease in inventories	18.6	–	18.6
Decrease in trade and other receivables	15.5	–	15.5
Decrease in trade and other payables	(8.5)	–	(8.5)
&DVKJHQHUDWHGE\RSHUDWLRQV	162.8	7.8	170.6
Income taxes paid	(2.2)	–	(2.2)
Interest paid	(23.2)	(1.8)	(25.0)
1HWFDVKưRZIURPRSHUDWLQJDFWLYLWLHV	137.4	6.0	143.4
,QYHVWLQJDFWLYLWLHV
1HWFDVKưRZIURPLQYHVWLQJDFWLYLWLHV	(49.0)	–	(49.0)
)LQDQFLQJDFWLYLWLHV
Issue of shares	0.1	–	0.1
Dividends paid	(49.3)	–	(49.3)
Net movement on existing debt	(30.4)	–	(30.4)
Payment of lease liabilities	–	(6.0)	(6.0)
1HWFDVKXVHGLQƮQDQFLQJDFWLYLWLHV	(79.6)	(6.0)	(85.6)
1HWGHFUHDVHLQFDVKDQGFDVKHTXLYDOHQWV	8.8	–	8.8
Cash and cash equivalents at beginning of period	96.1	–	96.1
Foreign exchange on cash and cash equivalents	(1.0)	–	(1.0)
&DVKDQGFDVKHTXLYDOHQWVDWHQGRISHULRG	103.9	–	103.9

Group as Lessee

7KH*URXSKDVOHDVHFRQWUDFWVIRUYDULRXVLWHPVRISURSHUW\SODQWPDFKLQHU\YHKLFOHVDQGRWKHUHTXLSPHQWXVHGLQLWVRSHUDWLRQV

7KH*URXSDOVRKDVFHUWDLQOHDVHVZLWKOHDVHWHUPVRIPRQWKVRUOHVVDQGOHDVHVRIORZYDOXHDVVHWVWRZKLFKWKH*URXSDSSOLHVWKHnVKRUW WHUPOHDVHoDQGnOHDVHRIORZYDOXHDVVHWVoUHFRJQLWLRQH[HPSWLRQV

7KHIROORZLQJDUHWKHDPRXQWVUHFRJQLVHGLQSURƮWRUORVV

	2019 \$m	2018 \$m
Depreciation expense on right-of-use assets	6.7	–
Interest expense on lease liabilities	1.8	–
Expense related to short-term leases and low-value assets	0.3	–
Expense relating to variable lease payments not included in lease liabilities	1.2	–
Minimum lease payments under operating leases recognised as an expense in the year	–	8.1

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝/HDVHVcontinued

Set out below are the carrying amounts of lease liabilities and the movements during the period:

	2019 \$m	2018 \$m
As at 1 January 2019	53.3	–
Additions	0.6	–
Disposals	(0.5)	–
Interest expense	1.8	–
Payments	(7.8)	–
Foreign exchange movements	(0.5)	–
As at 31 December 2019	46.9	–

The maturity analysis of lease liabilities is as follows:

	2019 \$m	2018 \$m
Within one year	7.1	–
,QWKHVHFRQGWRƮIWK\HDUVLQFOXVLYH	18.4	–
\$IWHUƮYH\HDUV	21.4	–
	46.9	–

/HDVHOLDELOLWLHVZHUHƮUVWUHFRJQLVHGDWWKHGDWHRILQLWLDODSSOLFDWLRQRI,)56RI-DQXDU\3ULRUWR-DQXDU\,\$6KDVEHHQ applied to operating leases with expenses recognised in the Income Statement on a straight line basis over the life of the lease.

Operating leases under IAS 17

\$W'HFHPEHUWKH*URXSKDGXQGLVFRXQWHGRXWVWDQGLQJFRPPLWPHQWVXQGHUQRQFDQFHOODEOHRSHUDWLQJOHDVHVZKLFKIHOOGXH as follows:

	2018 \$m
Within one year	10.6
,QWKHVHFRQGWRƮIWK\HDUVLQFOXVLYH	19.7
\$IWHUƮYH\HDUV	18.0
	48.3

̝5HWLUHPHQWEHQHƮWREOLJDWLRQV

7KH*URXSKDVDQXPEHURIFRQWULEXWRU\DQGQRQFRQWULEXWRU\SRVWUHWLUHPHQWEHQHƮWSODQVSURYLGLQJUHWLUHPHQWEHQHƮWVIRUWKHPDMRULW\RI HPSOR\HHVDQG([HFXWLYH'LUHFWRUV\$W'HFHPEHUWKHPDLQVFKHPHVLQWKH8.DQG86ZHUHRIWKHGHƮQHGEHQHƮWW\SHWKHEHQHƮW EHLQJEDVHGRQQXPEHURI\HDUVRIVHUYLFHDQGHLWKHUWKHHPSOR\HHoVƮQDOUHPXQHUDWLRQRUWKHHPSOR\HHoVDYHUDJHUHPXQHUDWLRQGXULQJD period of years before retirement. The assets of these schemes are held in separate trustee administered funds or are unfunded but provided for on the Group balance sheet.

7KH8.GHƮQHGEHQHƮWVFKHPHKDGDVXUSOXVXQGHU,\$6RIPP,QDFFRUGDQFHZLWKWKHUHTXLUHPHQWVRI,)5,&{ PDQDJHPHQWKDYHFRQFOXGHGWKDWWKHULJKWWRUHGXFHWKHPLQLPXPIXQGLQJFRQWULEXWLRQVZKHQWKHGHƮFLWIDOOVEHORZPLQFRQMXQFWLRQ ZLWKWKHXQFRQGLWLRQDOULJKWWRDUHIXQGRIDQ\VXUSOXVXQGHUDQ\ZLQGLQJXSRIWKHSODQSURYLGHVVXƱFLHQWHYLGHQFHWKDWDQDVVHWFHLOLQJGRHV not exist and as such the full surplus has been recognised.

,QDGGLWLRQWKH*URXSRSHUDWHVDQXQIXQGHGSRVWUHWLUHPHQWPHGLFDOEHQHƮW350%VFKHPHLQWKH867KHHQWLWOHPHQWWRWKHVHEHQHƮWVLV usually based on the employee remaining in service until retirement age and completion of a minimum service period.

2WKHUHPSOR\HHEHQHƮWVFKHPHVLQFOXGHGLQWKHWDEOHRYHUOHDIUHODWHWRWZRXQIXQGHGSHQVLRQVFKHPHVDORQJWHUPVHUYLFHDZDUGVFKHPH LQ*HUPDQ\DQGDVSHFLDOEHQHƮWVSURJUDPPHIRUDVPDOOQXPEHURIIRUPHUHPSOR\HHVRIWKH(DJOHVFOLƬHSODQW7KH*URXSDOVRDFTXLUHGWZR further unfunded pension schemes and two long term service award schemes all in Germany as part of the SummitReheis acquisition in 2017. These are included within this category.

7KH*URXSDOVRRSHUDWHVDVPDOOQXPEHURIGHƮQHGFRQWULEXWLRQVFKHPHVDQGWKHFRQWULEXWLRQVSD\DEOHGXULQJWKH\HDUDUHUHFRJQLVHGDV LQFXUUHG7KHSHQVLRQFKDUJHIRUWKHGHƮQHGFRQWULEXWLRQSHQVLRQVFKHPHVIRUFRQWLQXLQJRSHUDWLRQVIRUWKH\HDULVPP

1HWGHƮQHGEHQHƮWOLDELOLW

The net liability was as follows:

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Other \$m	Total \$m
2019
Total market value of assets	724.2	122.5	–	–	846.7
Present value of scheme liabilities	(716.8)	(132.4)	(6.0)	(8.6)	(863.8)
Net asset/(liability) recognised in the balance sheet	7.4	(9.9)	(6.0)	(8.6)	(17.1)
	UK pension scheme	US pension schemes	US PRMB scheme	Other	Total

	\$m	\$m	\$m	\$m	\$m
2018
Total market value of assets	671.3	108.3	–	–	779.6
Present value of scheme liabilities	(649.2)	(124.0)	(5.6)	(10.7)	(789.5)
Net asset/(liability) recognised in the balance sheet	22.1	(15.7)	(5.6)	(10.7)	(9.9)

Employer contributions in 2019 were \$nil (2018: \$0.5m) to the UK scheme and \$2.1m (2018: \$1.9m) to US schemes. Top up contributions to the UK scheme in 2020 will be nil based on the 2017 triennial valuation. Under this agreement top up contributions are no longer required until at least 2021. Expected contributions to the US schemes in the next year are \$1.5m.

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝5HWLUHPHQWEHQHƮWREOLJDWLRQVcontinued

0RYHPHQWLQQHWGHƮQHGEHQHƮWOLDELOLW

7KHIROORZLQJWDEOHVKRZVDUHFRQFLOLDWLRQIURPWKHRSHQLQJEDODQFHVWRWKHFORVLQJEDODQFHVIRUWKHQHWGHƮQHGEHQHƮWOLDELOLW\DQG its components.

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Other \$m	Total \$m
2019
Balance at 1 January	22.1	(15.7)	(5.6)	(10.7)	(9.9)
,QFOXGHGLQSURƮWRUORVV
Current service cost	(0.6)	(0.6)	(0.1)	(0.3)	(1.6)
Running costs	(1.1)	(0.4)	–	–	(1.5)
Net interest income/(expense)	0.6	(0.6)	(0.2)	(0.3)	(0.5)
Business disposal	–	–	–	4.0	4.0
	(1.1)	(1.6)	(0.3)	3.4	0.4
Included in other comprehensive income
Re-measurements:
Return on plan assets excluding interest income	43.8	16.9	–	–	60.7
Actuarial gains arising from demographic assumptions	–	1.0	–	–	1.0
\$FWXDULDOORVVHVDULVLQJIURPƮQDQFLDODVVXPSWLRQV	(56.2)	(12.2)	(0.4)	(2.2)	(71.0)
Actuarial (losses)/gains arising from experience adjustment	(1.5)	0.2	(0.4)	–	(1.7)
([FKDQJHGLƬHUHQFHV	0.3	–	–	0.3	0.6
	(13.6)	5.9	(0.8)	(1.9)	(10.4)
Contributions:
Employers	–	1.5	0.7	0.6	2.8
6XUSOXVGHƮFLWLQVFKHPHVDW'HFHPEHU	7.4	(9.9)	(6.0)	(8.6)	(17.1)

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Other \$m	Total \$m
2018
Balance at 1 January	21.9	(14.9)	(6.2)	(11.3)	(10.5)
,QFOXGHGLQSURƮWRUORVV
Current service cost	(0.8)	(0.7)	(0.1)	(0.1)	(1.7)
Past service cost	(3.4)	–	–	–	(3.4)
Running costs	(1.2)	(0.4)	–	–	(1.6)
Net interest expense	0.5	(0.5)	(0.2)	(0.2)	(0.4)
	(4.9)	(1.6)	(0.3)	(0.3)	(7.1)
Included in other comprehensive income
Re-measurements:
Return on plan assets excluding interest income	(39.8)	(8.9)	–	–	(48.7)
Actuarial gains arising from demographic assumptions	22.0	0.3	–	–	22.3
\$FWXDULDOJDLQVDULVLQJIURPƮQDQFLDODVVXPSWLRQV	39.1	8.1	0.3	–	47.5
Actuarial losses arising from experience adjustment	(15.4)	–	–	–	(15.4)
([FKDQJHGLƬHUHQFHV	(1.3)	–	–	0.5	(0.8)
	4.6	(0.5)	0.3	0.5	4.9
Contributions:
Employers	0.5	1.3	0.6	0.4	2.8
6XUSOXVGHƮFLWLQVFKHPHVDW'HFHPEHU	22.1	(15.7)	(5.6)	(10.7)	(9.9)

Plan assets

Plan assets comprise:

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2019
Equities	248.1	52.8	–	300.9
Bonds*	397.8	57.3	–	455.1
Cash/liquidity funds	78.3	12.4	–	90.7
	724.2	122.5	–	846.7

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2018
Equities	227.6	41.2	–	268.8
Bonds*	367.4	54.4	–	421.8

* Including LDI repurchase agreement liabilities.

7RUHGXFHYRODWLOLW\ULVNDOLDELOLW\GULYHQLQYHVWPHQW/',VWUDWHJ\IRUPVSDUWRIWKH7UXVWHHVoPDQDJHPHQWRIWKH8.GHƮQHGEHQHƮWVFKHPHoV DVVHWVLQFOXGLQJJRYHUQPHQWERQGVFRUSRUDWHERQGVDQGGHULYDWLYHV7KHERQGDVVHWVFDWHJRU\LQWKHWDEOHDERYHLQFOXGHVJURVVDVVHWVRI \$774.9m (2018: \$502.7m) and associated repurchase agreement liabilities of \$377.1m (2018: \$135.3m). Repurchase agreements are entered LQWRZLWKFRXQWHUSDUWLHVWREHWWHURƬVHWWKHVFKHPHoVH[SRVXUHWRLQWHUHVWDQGLQưDWLRQUDWHVZKLOVWUHPDLQLQJLQYHVWHGLQDVVHWVRIDVLPLODUULVN SURƮOH,QWHUHVWUDWHDQGLQưDWLRQUDWHGHULYDWLYHVDUHDOVRHPSOR\HGWRFRPSOHPHQWWKHXVHRIƮ[HGDQGLQGH[HGOLQNHGERQGVLQPDWFKLQJWKH SURƮOHRIWKHVFKHPHoVOLDELOLWLHV

Cash/liquidity funds 76.3 12.7 – 89.0

\$OOHTXLWLHVERQGVDQGOLTXLGLW\IXQGVKDYHTXRWHGSULFHVLQDFWLYHPDUNHWV2WKHUDVVHWVLQFOXGHLQVXUHGDQQXLWLHVDQLQVXUDQFHIXQGDQG various swap products.

:LWKLQWKH8.SHQVLRQVFKHPHWKHFXUUHQWDVVHWDOORFDWLRQLVDSSUR[LPDWHO\LQDOLDELOLW\PDWFKLQJIXQGFRQVLVWLQJRIJLOWVƮ[HGLQWHUHVW DQGLQGH[OLQNHGERQGVFDVKDQGVZDSVLQDEX\DQGPDLQWDLQIXQGDQGLQDQLQYHVWPHQWIXQGWKDWLQFOXGHVYDULRXVHTXLW\DQG equity like funds. The aim of the trustees is to manage the risk relative to the liabilities associated with the scheme's investments through a FRPELQDWLRQRIGLYHUVLƮFDWLRQLQưDWLRQSURWHFWLRQDQGKHGJLQJRIULVNFXUUHQF\LQWHUHVWUDWHDQGLQưDWLRQULVN7KH86VFKHPHFXUUHQWO\KDV DSSUR[LPDWHO\RILWVDVVHWYDOXHLQYHVWHGLQDUDQJHRIHTXLW\IXQGVGHVLJQHGWRWDUJHWKLJKHUUHWXUQVDQGWKXVUHGXFHWKHSHQVLRQGHƮFLW ZLWKWKHEDODQFHLQYHVWHGLQƮ[HGLQFRPHERQGVDQGFDVK7KHVWUDWHJ\LVWKDWDVWKHGHƮFLWUHGXFHVDJUHDWHUSURSRUWLRQRILQYHVWPHQWVZLOOEH made into liability matching funds. Changes in the fair value of plan assets for the major schemes are as follows:

671.3 108.3 – 779.6

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝5HWLUHPHQWEHQHƮWREOLJDWLRQVcontinued

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2019
Opening fair value of plan assets	671.3	108.3	–	779.6
Expected return	18.3	4.2	–	22.5
Running costs	(1.1)	(0.4)	–	(1.5)
Actuarial gains	43.8	16.9	–	60.7
Contributions by employer	–	1.5	–	1.5
Contributions by employees	0.1	–	–	0.1
%HQHƮWVSDLG	(36.0)	(8.0)	–	(44.0)
([FKDQJHGLƬHUHQFHV	27.8	–	–	27.8
Closing fair value of plan assets	724.2	122.5	–	846.7

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2018
Opening fair value of plan assets	778.7	120.3	–	899.0
Expected return	18.0	4.0	–	22.0
Running costs	(1.2)	(0.4)	–	(1.6)
Actuarial gain	(39.8)	(8.9)	–	(48.7)
Contributions by employer	0.5	1.4	–	1.9
Contributions by employees	0.1	–	–	0.1
%HQHƮWVSDLG	(42.7)	(8.1)	–	(50.8)
([FKDQJHGLƬHUHQFHV	(42.3)	–	–	(42.3)
Closing fair value of plan assets	671.3	108.3	–	779.6

'HƮQHGEHQHƮWREOLJDWLRQ

&KDQJHVLQWKHSUHVHQWYDOXHRIWKHGHƮQHGEHQHƮWREOLJDWLRQIRUWKHPDMRUVFKHPHVDUHDVIROORZV

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2019
2SHQLQJGHƮQHGEHQHƮWREOLJDWLRQ	(649.2)	(124.0)	(5.6)	(778.8)
Service cost	(0.6)	(0.6)	(0.1)	(1.3)
Interest cost	(17.7)	(4.8)	(0.2)	(22.7)
Contributions by employees	(0.1)	–	–	(0.1)
Actuarial gains/(losses)
– demographic assumptions	–	1.0	–	1.0
sƮQDQFLDODVVXPSWLRQV	(56.2)	(12.2)	(0.4)	(68.8)
– experience adjustments	(1.5)	0.2	(0.4)	(1.7)
%HQHƮWVSDLG	36.0	8.0	0.7	44.7
([FKDQJHGLƬHUHQFHV	(27.5)	–	–	(27.5)
&ORVLQJGHƮQHGEHQHƮWREOLJDWLRQ	(716.8)	(132.4)	(6.0)	(855.2)

	UK pension scheme \$m	US pension schemes \$m	US PRMB scheme \$m	Total \$m
2018
2SHQLQJGHƮQHGEHQHƮWREOLJDWLRQ	(756.8)	(135.2)	(6.2)	(898.2)
Service cost	(0.8)	(0.7)	(0.1)	(1.6)
Past service cost	(3.4)	–	–	(3.4)
Interest cost	(17.5)	(4.4)	(0.2)	(22.1)
Contributions by employees	–	–	–	–
Actuarial gains/(losses) arising from:
– demographic assumptions	22.0	0.2	–	22.2
sƮQDQFLDODVVXPSWLRQV	39.1	8.0	0.3	47.4
– experience adjustments	(15.4)	–	–	(15.4)
%HQHƮWVSDLG	42.7	8.1	0.6	51.4
([FKDQJHGLƬHUHQFHV	40.9	–	–	40.9
&ORVLQJGHƮQHGEHQHƮWREOLJDWLRQ	(649.2)	(124.0)	(5.6)	(778.8)

Financial statements

For the year ended 31 December 2019

̝5HWLUHPHQWEHQHƮWREOLJDWLRQVcontinued

Actuarial assumptions

A full actuarial valuation was carried out on 30 September 2017 for the UK scheme and at 31 December 2015 for the US schemes.

The principal assumptions used by the actuaries for the major schemes have been updated by the actuaries at the balance sheet date and were as follows:

	UK	US
	%	%
2019
Rate of increase in salaries	4.0	3.00
Rate of increase in pensions in payment	2.9	1\$
Discount rate	2.0	3.1
,QưDWLRQ	3.0	2.25
2018
Rate of increase in salaries	4.2	3.00/3.45
Rate of increase in pensions in payment	3.1	N/A
Discount rate	2.8	4.0
,QưDWLRQ	3.2	2.25

The assumed life expectancies on retirement are:

	UK		US
	2019 2018		2019	2018
	\HDUV	years	\HDUV	years
Retiring at 31 December
Males	22	22	20	21
Females	24	24	22	22
Retiring in 20 years
Males	24	24	21	21
Females	25	25	23	23

The main assumptions for the PRMB scheme are a discount rate of 3.05% (2018: 4.0%) per annum and a health care cost trend of 6.5% SHUDQQXPIRUFODLPVSUHDJHUHGXFLQJWRSHUDQQXPE\\$FWXDULDOYDOXDWLRQVRIUHWLUHPHQWEHQHƮW plans in other jurisdictions have either not been updated for IAS 19 purposes or disclosed separately because of the costs involved and the FRQVLGHUDEO\VPDOOHUVFKHPHVL]HVDQGQXPEHUVRIHPSOR\HHVLQYROYHG

\$W'HFHPEHUWKHZHLJKWHGDYHUDJHGXUDWLRQRIWKHGHƮQHGEHQHƮWREOLJDWLRQVIRUWKHPDMRUVFKHPHVZDVDVIROORZV

UK: 13 years

US: 10 years.

6HQVLWLYLW\DQDO\VLV

The sensitivities regarding the principal assumptions used to measure the scheme liabilities are set out below:

Assumption	Change in assumption	Impact on UK scheme	Impact on US scheme
Discount rate	Increased/decreased by 0.5%	Decreased/increased by 6%	Decreased/increased by 5%
5DWHRILQưDWLRQ	Increased/decreased by 0.5%	Increased/decreased by 5%	Increased/decreased by 0%
Rate of salary growth	Increased/decreased by 0.5%	Increased/decreased by 0%	Increased/decreased by 0%
Rate of mortality	Increased by 1 year	Increased by 5%	Increased by 3%

7KHVHQVLWLYLW\DQDO\VHVDERYHKDYHEHHQGHWHUPLQHGEDVHGRQDPHWKRGWKDWH[WUDSRODWHVWKHLPSDFWRQWKHGHƮQHGEHQHƮWREOLJDWLRQDV a result of reasonable changes in key assumptions occurring at the end of the reporting period. These sensitivities have been calculated WRVKRZWKHPRYHPHQWRIWKHGHƮQHGREOLJDWLRQIROORZLQJDFKDQJHLQDSDUWLFXODUDVVXPSWLRQLQLVRODWLRQDVVXPLQJQRRWKHUFKDQJHVLQ market conditions.

̝6KDUHEDVHGSD\PHQWV

The Group maintains a number of active share option and award plans and schemes for its employees. These are as follows:

Savings-related options

Options are granted under the tax-advantaged Save As You Earn (SAYE) share option scheme in the UK. The SAYE allows UK-based eligible employees to acquire options over the Company's shares at a discount of up to 20% of their market value at the date of grant. Options are QRUPDOO\H[HUFLVDEOHGXULQJWKHVL[PRQWKSHULRGIROORZLQJHLWKHUWKHWKLUGRUƮIWKDQQLYHUVDU\RIWKHVWDUWRIWKHUHOHYDQWVDYLQJVFRQWUDFW Savings contracts are subject to the statutory savings limit of £500 per month.

US-based employees can enter into a similar share save scheme (Share Save). Employees can enter into two year savings contracts saving up WRDPD[LPXPRISHUPRQWKDOORZLQJHOLJLEOHHPSOR\HHVWRDFTXLUHRSWLRQVRYHUWKH&RPSDQ\oVVKDUHVDWDGLVFRXQWRIXSWRRI their market value at the date of grant.

Long-term incentive plan (LTIP) awards

The LTIP is a discretionary employee share scheme for Executive Directors and senior managers. The vesting of the awards are subject to performance conditions over a three year period at the discretion of the Remuneration Committee. The performance conditions of the LTIP are GHWDLOHGLQWKH5HPXQHUDWLRQ5HSRUWRQSDJHVWR\$VDSSURYHGDWWKH\$*0UHVWULFWHGVKDUHVLHVKDUHVWKDWYHVWEDVHGRQWLPH only) are awarded to participants below Board level. Shadow LTIPs are in place for senior managers based in China and Malaysia.

'HIHUUHGVKDUHERQXVSODQ'6%3DZDUGV

7KH'6%3RSHUDWHVH[FOXVLYHO\IRUWKH([HFXWLYH'LUHFWRUV8QGHUWKLVVFKHPHRIDQ\FDVKERQXVSD\DEOHLVDZDUGHGLQVKDUHVDQG deferred for two years. There are no other performance conditions other than continued employment.

/HJDF\6FKHPHV

3ULRUWRWKHLQWURGXFWLRQRIWKH/7,3IRUVHQLRUPDQDJHUVFHUWDLQHPSOR\HHVSDUWLFLSDWHGLQWKH([HFXWLYH6KDUH2SWLRQ6FKHPHn(626o The ESOS which (except for outstanding awards which will run their course) has been discontinued. The Company operated shadow ESOS for a QXPEHURIVHQLRUPDQDJHUVZKRZHUHHPSOR\HGRUEDVHGLQ&KLQDRU0DOD\VLD

Options were valued (as shown in the table below) using the binomial option pricing model. The fair value per option granted and the assumptions used in the calculations are as follows:

	2019	2018
Fair value per option (pence)	115.6	155.4
Expected volatility (%)	31	26
Risk free rate (%)	0.5	0.7
Expected dividend yield (%)	4.3	3.4

([SHFWHGYRODWLOLW\ZDVGHWHUPLQHGE\FDOFXODWLQJWKHKLVWRULFDOYRODWLOLW\RIWKH&RPSDQ\oVVKDUHSULFHRYHUWKHSUHYLRXVƮYH\HDUV 7KHH[SHFWHGOLIHXVHGLQWKHPRGHOKDVEHHQDGMXVWHGEDVHGRQPDQDJHPHQWoVEHVWHVWLPDWHIRUWKHHƬHFWVRIQRQWUDQVIHUDELOLW\H[HUFLVH restrictions and behavioural considerations. The Group recognised total expenses of \$3.0m (2018: \$2.8m) related to share based payment transactions during the year.

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝6KDUHEDVHGSD\PHQWVcontinued

At 31 December 2019 the following options/awards to subscribe for ordinary shares were outstanding:

			Exercisable
Year of grant	Exercise price (p)1	From	To	At 1 January 2019 '000	Granted '000	Exercised '000	Expired '000	At 31 December 2019 '000
	UK savings related share option scheme
2015	189.72	01/10/18	01/04/19	9	–	–	(9)	–
2016	160.89	01/10/19	01/04/20	163	–	(31)	(22)	110
2017	207.40	01/10/20	01/04/21	24	–	–	(12)	12
2018	163.91	01/01/22	01/07/22	200	–	–	(134)	66
2019	121.33	01/11/22	01/05/23	–	342	–	–	342
2019	121.33	01/11/24	01/05/25	–	25	–	–	25
				396	367	(31)	(177)	555
	US savings related share option scheme
2017	217.18	07/09/19	07/12/19	236	–	–	(229)	7
2018	160.14	05/12/20	05/03/21	585	–	–	(208)	377
2019	133.96	11/09/21	11/12/21	–	578	–	–	578
				821	578	–	(437)	962
	([HFXWLYHVKDUHRSWLRQVFKHPHVDZDUGVJUDQWHGXQGHUWKH/7,3
2010	52.16	06/04/13	06/04/20	186	–	(92)	–	94
2011+	137.18	04/04/14	04/04/21	110	–	–	(14)	96
2012+	177.81	27/06/15	27/06/22	216	–	–	(20)	196
2016+	218.17	04/04/19	04/04/26	904	–	–	(904)	–
2016*	Nil	04/04/19	04/04/26	999	–	–	(999)	–
Ɲ	Nil	04/04/19	19/09/26	263	–	–	(263)	–
Ɲ	Nil	07/03/17	07/03/27	92	–	–	–	92
2017#	Nil	07/03/19	07/03/27	55	–	(48)	–	7
2017~	Nil	07/03/20	07/03/27	17	–	–	–	17
2017+	264.66	03/04/20	03/04/27	847	–	–	(59)	788
2017*†	Nil	03/04/20	03/04/27		–	–	(71)
Ɲ	Nil	01/08/19	01/08/27	63	–	–	(63)	–
2018#	Nil	05/03/20	05/03/28	233	–	–	–	233
2018*†	Nil	30/04/21	30/04/21		–	–	(239)
2018*	Nil	27/06/21	27/06/21	7	–	–	–	7
2018*	Nil	29/10/21	29/10/21	38	–	–	(2)	36
2018*	Nil	21/12/20	21/12/20	209	-	–	–	209
2018*	Nil	21/12/21	21/12/21	361	-	–	–	361
2019	Nil	03/01/21	30/01/21	–	124	–	–	124
2019	Nil	03/01/22	30/01/22	–	157	–	–	157
	Nil	06/03/21	06/03/21	–	110	–	–	110
2019#	Nil	06/03/21	06/03/29	–	49	–	–	49
2019*~	Nil	01/04/22	01/04/22	–		–	(98)
2019 †	Nil	01/04/22	01/04/22	–	5	–	–	5
						(140)

:KHUHQHFHVVDU\RSWLRQSULFHVZHUHDGMXVWHGIRUE\DIDFWRURIWRUHưHFWWKHGLOXWLYHHƬHFWVRIWKH5LJKWV,VVXH

These options include cash settled shadow executive options granted to a number of executives on the same basis as the executive options (with the same performance conditions and exercise provisions). These shadow options are included in the calculation of the total expenses recognised by the Group related to VKDUHEDVHGSD\PHQWV7KHFORVLQJEDODQFHRIWKHDQGRSWLRQVVKRZQDERYHLQFOXGHDSSUR[LPDWHO\DQGVKDGRZRSWLRQVUHVSHFWLYHO\

Ɲ \$ZDUGVPDGHDVRQHRƬDJUHHPHQWVWKDWERUURZIURPWKHWHUPVRIWKH/7,3 † These options include cash settled shadow LTIPs granted to a number of executives on the same basis as the LTIP (with the same performance conditions and exercise provisions). These shadow LTIPs are included in the calculation of the total expenses recognised by the Group related to share based payments. 7KHFORVLQJEDODQFHRIDQG/7,3VVKRZQDERYHLQFOXGHDSSUR[LPDWHO\DQGVKDGRZ/7,3VUHVSHFWLYHO\

Conditional share award under the Deferred Share Bonus Plan.

a \$ZDUGVPDGHDVRQHRƬDJUHHPHQWVXQGHUWKH'HIHUUHG6KDUH%RQXV3ODQQLOFRVWRSWLRQV

DQG/7,3VVKRZQDERYHLQFOXGHDSSUR[LPDWHO\DQGVKDGRZ/7,3VUHVSHFWLYHO\ &RQGLWLRQDOVKDUHDZDUGXQGHUWKH'HIHUUHG6KDUH%RQXV3ODQQLOFRVWDZDUGVWUXFWXUHGDVUHVWULFWHGVKDUHXQLWV The weighted average remaining contractual life of the above shares outstanding at 31 December 2019 was 7.9 years (2018: 7.1 years).

The weighted average exercise prices of options disclosed in the previous table were as follows:

	2019 Average exercise price (p)	2018 Average exercise price (p)
At 1 January	79.8	113.2
Granted	23.0	41.7
Exercised	57.4	118.9
Expired	100.5	147.4
At 31 December	44.4	79.8
Exercisable at 31 December	116.8	nil

7KHZHLJKWHGDYHUDJHVKDUHSULFHDWWKHGDWHRIH[HUFLVHRIVKDUHRSWLRQVH[HUFLVHGGXULQJWKH\HDUZDVSHQFH̡SHQFH 7KHQXPEHURIH[HUFLVDEOHRSWLRQVRXWVWDQGLQJDVDW'HFHPEHUZDV'HFHPEHUQLO

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The Company is a guarantor to the UK pension scheme under which it guarantees all current and future obligations of UK subsidiaries FXUUHQWO\SDUWLFLSDWLQJLQWKHSHQVLRQVFKHPHWRPDNHSD\PHQWVWRWKHVFKHPHXSWRDVSHFLƮHGPD[LPXPDPRXQW7KHPD[LPXPDPRXQW RIWKHJXDUDQWHHLVWKDWZKLFKLVQHHGHGDWWKHWLPHWKHJXDUDQWHHLVFDOOHGRQWREULQJWKHVFKHPHoVIXQGLQJOHYHOXSWRRILWVOLDELOLWLHV calculated in accordance with section 179 of the Pensions Act 2004. This is also sometimes known as a Pension Protection Fund (PPF) JXDUDQWHHDVKDYLQJVXFKDJXDUDQWHHLQSODFHUHGXFHVWKHDQQXDO33)OHY\RQWKHVFKHPH

7KH*URXSFRQVLVWVRIWKH3DUHQW&RPSDQ(OHPHQWLVSOFLQFRUSRUDWHGLQWKH8QLWHG.LQJGRPDQGLWVVXEVLGLDULHVDQGDVVRFLDWHV ,QDFFRUGDQFHZLWK6HFWLRQRIWKH&RPSDQLHV\$FWDIXOOOLVWRIUHODWHGXQGHUWDNLQJVWKHFRXQWU\RILQFRUSRUDWLRQDQGWKHHƬHFWLYH SHUFHQWDJHRIHTXLW\RZQHGDVDW'HFHPEHULVGLVFORVHGLQ1RWHWRWKHSDUHQWFRPSDQ\ƮQDQFLDOVWDWHPHQWV

7KHUHPXQHUDWLRQRINH\PDQDJHPHQWSHUVRQQHORIWKH*URXSZKLFKLVGHƮQHGDVWKH%RDUGDQGWKHEXVLQHVVSUHVLGHQW&KURPLXPLV shown below:

	2019 \$m	2018 \$m
6DODULHVDQGVKRUWWHUPHPSOR\HHEHQHƮWV	2.4	2.3
2WKHUORQJWHUPEHQHƮWV	0.3	0.4
Share based payments	0.6	1.6
	3.3	4.3

Full details of all elements of the remuneration of Directors is set out in the Directors' remuneration report on pages 79 to 95.

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝0RYHPHQWLQQHWFDVKERUURZLQJV

	2019 \$m	2018 \$m
&KDQJHLQQHWFDVKUHVXOWLQJIURPFDVKưRZV
Increase in cash and cash equivalents	8.8	45.9
Decrease /(increase) in borrowings repayable within one year	0.6	(0.2)
Decrease/(increase) in borrowings repayable after one year	29.7	(257.8)
	39.1	(212.1)
&XUUHQF\WUDQVODWLRQGLƬHUHQFHV	4.8	5.1
Decrease/(increase) in net borrowings	43.9	(207.0)
Net borrowings at beginning of year	(498.1)	(291.1)
1HWERUURZLQJVDWHQGRI\HDU	(454.2)	(498.1)

	Bank and other ERUURZLQJV \$m	Lease OLDELOLWLHV \$m	Total ƮQDQFLQJ OLDELOLWLHV \$m	Cash and cash HTXLYDOHQWV \$m	1HWGHEWDQG lease OLDELOLWLHV \$m
\$W-DQXDU\	(346.1)	–	(346.1)	55.0	(291.1)
Exchange rate adjustments	9.9	–	9.9	(4.8)	5.1
Business acquired (see note 32)	–	–	–	(484.7)	(484.7)
Business disposed (see note 33)	–	–	–	58.0	58.0
Issue of shares net of issue costs*	–	–	–	222.2	222.2
&DVKưRZVIURPƮQDQFLQJDFWLYLWLHV	(258.0)	–	(258.0)	258.0	–
Other movements	–	–	–	(7.6)	(7.6)
\$W'HFHPEHU	(594.2)	–	(594.2)	96.1	(498.1)
Adoption of IFRS 16	–	(53.3)	(53.3)	–	(53.3)
5HYLVHG-DQXDU\	(594.2)	(53.3)	(647.5)	96.1	(551.4)
Exchange rate adjustments	5.8	0.5	6.3	(1.0)	5.3
Business disposed	–	0.5	0.5	(2.1)	(1.6)
&DVKưRZVIURPƮQDQFLQJDFWLYLWLHV	30.4	6.0	36.4	(30.4)	6.0
Other movements	(0.1)	(0.6)	(0.7)	41.3	40.6
\$W'HFHPEHU	(558.1)	(46.9)	(605.0)	103.9	(501.1)

&DVKưRZVUHODWLQJWRWKHULJKWVLVVXHZHUHPPOHVVLVVXDQFHFRVWVRIP

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\$QLQWHULPGLYLGHQGRIFHQWVSHUVKDUH̡FHQWVZDVSDLGRQ6HSWHPEHUDQGWKH*URXSLVSURSRVLQJDƮQDOGLYLGHQG RIFHQWVSHUVKDUH̡FHQWVIRUWKH\HDUHQGHG'HFHPEHU7KHWRWDOGLYLGHQGIRUWKH\HDULVFHQWVSHUVKDUH ̡FHQWV

7KHDPRXQWSD\DEOHIRUWKHƮQDOGLYLGHQGEDVHGRQWKHDQWLFLSDWHGQXPEHURITXDOLI\LQJRUGLQDU\VKDUHVUHJLVWHUHGRQWKHUHFRUGGDWH LV{P

The payment of this dividend will not have any tax consequences for the Group.

)ROORZLQJWKH5LJKWV,VVXHLQ2FWREHUGLYLGHQGVSHUVKDUHIRUSHULRGVSULRUWRWKLVKDYHEHHQUHEDVHGWRUHưHFWWKHERQXVHOHPHQW resulting from this Rights Issue.

	2019				2018
	Interim	Final	)XOO\HDU	Interim	Final	Full-year
Unadjusted dividend per share (cents)	2.80	5.75	8.55	2.95	5.70	8.65
Adjustment factor (x)	1.00	1.00		0.9152	1.00
Rebased dividend per share (cents)	2.80	5.75	8.55	2.70	5.70	8.40

̝&RQWLQJHQWOLDELOLWLHV

\$VLVWKHFDVHZLWKRWKHUFKHPLFDOFRPSDQLHVWKH*URXSRFFDVLRQDOO\UHFHLYHVQRWLFHVRIOLWLJDWLRQUHODWLQJWRUHJXODWRU\DQGOHJDOPDWWHUV \$SURYLVLRQLVUHFRJQLVHGZKHQWKH*URXSEHOLHYHVLWKDVDSUHVHQWOHJDORUFRQVWUXFWLYHREOLJDWLRQDVDUHVXOWRIDSDVWHYHQWDQGLWLVSUREDEOH WKDWDQRXWưRZRIHFRQRPLFEHQHƮWVZLOOEHUHTXLUHGWRVHWWOHWKHREOLJDWLRQ:KHUHLWLVGHHPHGWKDWDQREOLJDWLRQLVPHUHO\SRVVLEOHDQGWKDW WKHSUREDELOLW\RIDPDWHULDORXWưRZLVQRWUHPRWHWKH*URXSZRXOGGLVFORVHDFRQWLQJHQWOLDELOLW\

,QWKH8.*RYHUQPHQWWKURXJK+05&LQWURGXFHGWKH8.)LQDQFH&RPSDQ([HPSWLRQn)&(oUHJLPH(OHPHQWLVHQWHUHGLQWRWKH)&( regime during 2014. In October 2017 the European Commission opened a State Aid investigation into the regime. In April 2019 the European &RPPLVVLRQFRQFOXGHGWKDWWKH)&(UHJLPHFRQVWLWXWHG6WDWH\$LGLQFLUFXPVWDQFHVZKHUH*URXSVKDGDFFHVVHGWKHUHJLPHXVLQJDƮQDQFLQJ FRPSDQ\ZLWK8.VLJQLƮFDQWSHRSOHIXQFWLRQVWKH(XURSHDQ&RPPLVVLRQWKHUHIRUHLQVWUXFWHGWKH8.*RYHUQPHQWWRFROOHFWDQ\UHOHYDQW6WDWH Aid amounts. The UK Government indicated that it disagreed with the European Commission's conclusion and appealed the decision in July ,QDXWXPQ+05&PDGHDQLQLWLDOLQIRUPDWLRQUHTXHVWWRWKH*URXSVDƬHFWHGZKLFKLQFOXGHG(OHPHQWLV:HXQGHUVWDQGWKDW+05& ZLOOQRZVHHNWRDVVHVV*URXSVIRU6WDWH\$LGEDVHGXSRQWKHLU8.VLJQLƮFDQWSHRSOHIXQFWLRQDQDO\VHV)ROORZLQJFRQVXOWDWLRQZLWKH[WHUQDO SURIHVVLRQDODGYLVHUV(OHPHQWLVEHOLHYHVWKDWWKHUHLVDWHFKQLFDOSRVLWLRQIRUDVVHUWLQJWKDWRXUUHOHYDQWƮQDQFLQJFRPSDQ\VKRXOGQRWEH GHHPHGWRKDYH8.VLJQLƮFDQWSHRSOHIXQFWLRQV7KHUDQJHRISRVVLEOHRXWFRPHVLVEHWZHHQQLODQGPKRZHYHUEDVHGRQWKHZRUN XQGHUWDNHQWRGDWHPDQDJHPHQWEHOLHYHWKDWWKHSRWHQWLDOIRUDPDWHULDORXWưRZLVORZ2QWKLVEDVLVQRSURYLVLRQKDVEHHQPDGHZLWKLQWKHVH ƮQDQFLDOVWDWHPHQWVLQUHVSHFWRIWKLVFDVH

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2Q2FWREHUWKH*URXSDFTXLUHGDOOWKHVKDUHVRI0RQGR0LQHUDOV+ROGLQJ%90RQGRIRUDQLQLWLDOSXUFKDVHFRQVLGHUDWLRQRIP Mondo is a leading mine-to-market producer of talc and other mineral products with a strong presence in Northern and Central Europe and a JURZLQJFXVWRPHUEDVHLQ(DVWHUQ(XURSH6RXWKHUQ(XURSH6RXWK\$PHULFDDQG\$VLD7KH0RQGR*URXSVXSSOLHVWDOFWRFXVWRPHUVRSHUDWLQJ LQDZLGHUDQJHRIHQGPDUNHWVLQFOXGLQJLQGXVWULDOVHFWRUVHJSODVWLFVSDLQWV FRDWLQJVWHFKQLFDOFHUDPLFVOLIHVFLHQFHVDQGSDSHUVHFWRUV HJSDSHUƮOOHUSDSHUFRDWLQJV0RQGRXVHVSURSULHWDU\ưRWDWLRQSURFHVVNQRZKRZDQGIRUPXODWLRQH[SHUWLVHWRGHOLYHUVXSHULRUSURGXFW quality and consistency to its customers.

7KHDFTXLVLWLRQKDGWKHIROORZLQJHƬHFWRQWKH*URXSoVDVVHWVDQGOLDELOLWLHV

				Fair value of
		Book value at	Fair value	assets
	Note	acquisition \$m	adjustments \$m	acquired \$m
Intangible assets	10	19.6	68.7	88.3
3URSHUW\SODQWDQGHTXLSPHQW	11	226.2	24.1	250.3
Inventories		24.3	1.9	26.2
Trade and other receivables		21.9	(1.1)	20.8
7D[LQGHPQLƮFDWLRQDVVHW		–	6.6	6.6
Trade and other payables		(18.1)	(1.0)	(19.1)
Other accruals		(26.1)	–	(26.1)
Cash and cash equivalents		39.9	–	39.9
Provisions	15	(2.7)	(1.1)	(3.8)
Corporation tax		(0.4)	0.2	(0.2)
Deferred tax	16	(12.2)	(24.3)	(36.5)
7RWDOLGHQWLƮDEOHQHWDVVHWVDFTXLUHG		272.4	74.0	346.4
Goodwill				200.5
Total consideration				546.9
of which:
Contingent consideration				22.3
&RQVLGHUDWLRQSDLGVDWLVƮHGLQFDVK				524.6
Cash acquired				(39.9)
1HWFDVKRXWưRZ				484.7

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝\$FTXLVLWLRQcontinued

The fair value adjustment to inventories of \$1.9m is the net of an uplift due to fair value of \$2.9m less an increase in provision for obsolescence of \$1.0m.

The valuation techniques used for measuring the fair value of material assets acquired were as follows.

Assets acquired	Valuation technique
3URSHUW\SODQWDQGHTXLSPHQW	\$FRVWDSSURDFKPHWKRGEHQFKPDUNHGWRPDUNHWZKHUHDYDLODEOHZDVWKHPHWKRG used to value machinery & equipment and buildings.
	Land that had previously been valued during a purchase price allocation exercise conducted in 2012 was included at NBV due to management's opinion that values had QRWYDULHGVLJQLƮFDQWO\LQWKHLQWHUYHQLQJSHULRG
Intangible assets	Intangible assets have been categorised into two groups: customer relationships and technology. Customer relationships have been valued using a Multi-period Excess (DUQLQJV0HWKRGLQZKLFKWKHYDOXHLVHTXDOWRWKHSUHVHQWYDOXHRILQFUHPHQWDODIWHU WD[FDVKưRZVDWWULEXWDEOHWRWKHDVVHWDIWHUGHGXFWLQJFRQWULEXWRU\DVVHWFKDUJHV Technology has been valued using a Relief from Royalty methodology.
Inventories	The market approach has been used to determine fair value based on the net realisable YDOXHRIWKHLQYHQWRU\OHVVFRVWVWRVHOODQGDUHDVRQDEOHSURƮWPDUJLQ

7KHFRQVLGHUDWLRQIRUWKHDFTXLVLWLRQVKDVEHHQDOORFDWHGDJDLQVWLGHQWLƮHGQHWDVVHWVZLWKWKHUHPDLQLQJEDODQFHUHFRUGHGDVJRRGZLOO 7KHJRRGZLOOUHFRJQLVHGRQDFTXLVLWLRQUHưHFWVERWKWKHFDSDELOLWLHVRIWKHDFTXLUHGHQWLWLHVoSHUVRQQHODQGWKHV\QHUJLVWLFRSSRUWXQLWLHVJRLQJ IRUZDUGQHLWKHURIZKLFKFDQEHDOORFDWHGWRDQLGHQWLƮDEOHLQWDQJLEOHDVVHW

Contingent consideration of \$22.3m recognised on acquisition for the Mondo transaction was made up of:

a. \$9.4m relating to potential payouts that may be made under an earn-out mechanism dependant on EBITDA performance for the years 2018 -2020 exceeding certain thresholds. The potential undiscounted amount payable under the agreement is between \$0.0m and \$53.0m. The fair value of the contingent consideration arrangement of \$9.4m was estimated by calculating the present value of the future expected FDVKưRZVEDVHGRQDZHLJKWHGSUREDELOLW\DQDO\VLVRIDUDQJHRISD\PHQWVWRJLYHDQHVWLPDWHRIWKHƮQDOREOLJDWLRQ
b. DIXUWKHUPWKDWPD\EHSD\DEOHVXEMHFWWRWKHVXFFHVVIXOFRQFOXVLRQRIDQKLVWRULFSUHDFTXLVLWLRQLQWHUHVWGHGXFWLRQGLVSXWHZLWKWKH Finnish Tax authorities.

7KHUHZHUHDQXPEHURIRQHRƬFRVWVDVVRFLDWHGZLWKWKHDFTXLVLWLRQRI0RQGR0LQHUDOVsSULPDULO\WKHZULWHRƬRIWKHVHWXSFRVWVRIWKH SUHYLRXVƮQDQFLQJV\QGLFDWHQRZUHSODFHGE\DQHZIDFLOLW\EDQNDQGODZ\HUVIHHVUHWHQWLRQERQXVHVIRU0RQGRHPSOR\HHVWKDWKDYH QRWEHHQFDSLWDOLVHGLQDFFRUGDQFHZLWK,)56+RZHYHUWKHVHKDYHEHHQUHưHFWHGDVDGMXVWLQJLWHPVZLWKLQ1RWHDQGUHFRJQLVHGLQ administrative expenses and operating cash.

\$FTXLVLWLRQVPDGHGXULQJFRQWULEXWHGPWRWKH*URXSoVUHYHQXHDQGPWRWKHRSHUDWLQJSURƮW

7KHHVWLPDWHGFRQWULEXWLRQRI0RQGR0LQHUDOVWRWKHUHVXOWVRIWKH*URXSKDGWKHDFTXLVLWLRQEHHQPDGHRQ-DQXDU\DQGDVVXPLQJ WKDWWKHIDLUYDOXHDGMXVWPHQWVWKDWDURVHRQDFTXLVLWLRQZRXOGKDYHEHHQWKHVDPHDWWKHHDUOLHUGDWHDUHDVIROORZV

	2018 \$m
Revenue	158.4
2SHUDWLQJSURƮW	24.6

Shareholder Information

2Q'HFHPEHUWKH*URXSGLVSRVHGRI65/'HQWDO*PE+ZKLFKFRPSULVHGWKH'HQWDOSODQWDW/XGZLJVKDIHQ*HUPDQ\IRUFRQVLGHUDWLRQ RI{P

7KHUHVXOWVRI65/'HQWDO*PE+ZKLFKKDYHEHHQLQFOXGHGLQWKHFRQVROLGDWHGLQFRPHVWDWHPHQWZHUHDVIROORZV

	Year ended 'HFHPEHU 2019
	\$m
Revenue	17.9
Expenses	(17.9)
3URƮWEHIRUHWD[	–
Attributable tax expense	(0.1)
1HWSURƮWDWWULEXWDEOHWRGLVFRQWLQXHGRSHUDWLRQVDWWULEXWDEOHWRRZQHUVRIWKH&RPSDQ\	(0.1)

Revenue includes \$nil related to inter-segment sales in 2019 (2018: \$nil).

'XULQJWKH\HDU65/'HQWDO*PE+FRQWULEXWHGPPWRWKH*URXSoVQHWRSHUDWLQJFDVKưRZVDQGSDLGQLOPLQ respect of investing activities.

The Group recognised a total loss on current year disposal of:

	Year ended
	'HFHPEHU
	2019
	\$m
Consideration received	0.2
Net assets disposed of (see table below)	(7.8)
Disposal costs	(1.0)
Recycling of deferred foreign exchange gains	(0.4)
Loss on disposal	(9.0)

Details of assets and liabilities at the date of disposal are provided in the following table:

Goodwill	8.7

Intangible assets
3URSHUW\SODQWDQGHTXLSPHQW	1.9
Inventories	1.6
Trade and other receivables	2.3
Cash and bank balances	1.3
Total assets	15.8
Trade and other payables	(1.1)
Pensions	(4.0)
Tax liabilities	(2.9)
Total liabilities	(8.0)
Net assets	7.8

Financial statements

1RWHVWRWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVFRQWLQXHG

For the year ended 31 December 2019

̝%XVLQHVVH[LWVcontinued

2018 Business exits – discontinued operations

2Q)HEUXDU\WKH*URXSGLVSRVHGRI(OHPHQWLV6SHFLDOWLHV1HWKHUODQGV%9ZKLFKFDUULHGRXWDOORIWKH*URXSoV6XUIDFWDQWVRSHUDWLRQV 7KHGLVSRVDOJHQHUDWHGFDVKưRZIRUWKHH[SDQVLRQRIWKH*URXSoVRWKHUEXVLQHVVHV

7KHUHVXOWVRIWKHGLVFRQWLQXHGRSHUDWLRQVZKLFKKDYHEHHQLQFOXGHGLQWKHFRQVROLGDWHGLQFRPHVWDWHPHQWRQWKHOLQHn/RVVIURP GLVFRQWLQXHGRSHUDWLRQVoZHUHDVIROORZV

	Year ended 31 December 2018 \$m
Revenue	4.8
Expenses	(15.2)
3URƮWEHIRUHWD[	(10.4)
Attributable tax expense	2.0
1HWSURƮWDWWULEXWDEOHWRGLVFRQWLQXHGRSHUDWLRQVDWWULEXWDEOHWRRZQHUVRIWKH&RPSDQ\	(8.4)

Revenue includes \$nil related to inter-segment sales in 2018.

'XULQJ(OHPHQWLV6SHFLDOWLHV1HWKHUODQGV%9FRQWULEXWHGPWRWKH*URXSoVQHWRSHUDWLQJFDVKưRZVDQGSDLGPLQUHVSHFWRI investing activities.

The Group recognised a total loss on disposal of:

	Year ended 31 December 2018 \$m
Consideration received	47.9
Net assets disposed of (see table below)	(42.0)
Disposal costs	(2.2)
Recycling of deferred foreign exchange gains	(4.2)
Loss on disposal	(0.5)

Net assets disposed of are analysed as follows:

	2018 \$m
Goodwill	3.2
Intangible assets	2.4
3URSHUW\SODQWDQGHTXLSPHQW	38.0
Inventories	8.6
Trade and other receivables	11.1
Cash and bank balances	2.8
Total assets	66.1
Trade and other payables	(20.3)
Pensions	(0.4)
Tax liabilities	(3.4)
Bank overdrafts and loans	–
Total liabilities	(24.1)
Net assets	42.0

̝%DODQFHVKHHWUHVWDWHPHQW

In accordance with IAS 1 we have shown below a balance sheet as at the beginning of the comparative period to show the UK pension surplus of PZLWKLQQRQFXUUHQWDVVHWVDQGWRRƬVHWXQDPRUWLVHGV\QGLFDWHIHHVRIPDJDLQVWWKHERUURZLQJVWRZKLFKWKH\UHODWHZLWKLQQRQFXUUHQWOLDELOLWLHV

	2018 'HFHPEHU \$m	Restatement	Restated 2018 'HFHPEHU \$m	2017 'HFHPEHU \$m	Restatement	Restated 2017 'HFHPEHU \$m
Non-current assets
Goodwill and other intangible assets	976.6	–	976.6	717.2	–	717.2
3URSHUW\SODQWDQGHTXLSPHQW	478.2	–	478.2	219.5	–	219.5
ACT recoverable	9.8	–	9.8	16.2	–	16.2
Deferred tax assets	24.4	–	24.4	0.2	–	0.2
1HWUHWLUHPHQWEHQHƮWVXUSOXV	–	22.1	22.1	–	21.9	21.9
Total non-current assets		22.1		953.1	21.9	975.0
Current assets
Inventories	188.7	–	188.7	143.6	–	143.6
Trade and other receivables	139.4	(5.6)	133.8	124.6	(5.3)	119.3
Derivatives	2.0	–	2.0	0.9	–	0.9
Current tax assets	3.0	–	3.0	4.3	–	4.3
Cash and cash equivalents	96.1	–	96.1	55.0	–	55.0
Total current assets	429.2	(5.6)	423.6	328.4	(5.3)	323.1
\$VVHWVFODVVLƮHGDVKHOGIRUVDOH	–	–	–	58.2	–	58.2
Total assets		16.5			16.6
&XUUHQWOLDELOLWLHV
Bank overdrafts and loans	(2.8)	–	(2.8)	(2.7)	–	(2.7)
Trade and other payables	(140.6)	–	(140.6)	(117.7)	–	(117.7)
Financial liabilities	(0.1)	–	(0.1)	–	–	–
Current tax liabilities	(17.1)	–	(17.1)	(14.1)	–	(14.1)
Provisions	(7.3)	–	(7.3)	(10.8)	–	(10.8)
7RWDOFXUUHQWOLDELOLWLHV	(167.9)	–	(167.9)	(145.3)	–	(145.3)
1RQFXUUHQWOLDELOLWLHV
Loans and borrowings	(591.4)	5.6	(585.8)	(343.4)	5.3	(338.1)
5HWLUHPHQWEHQHƮWREOLJDWLRQV	(9.9)	(22.1)	(32.0)	(10.5)	(21.9)	(32.4)
Deferred tax liabilities	(151.7)	–	(151.7)	(93.4)	–	(93.4)
Provisions	(41.5)	–	(41.5)	(21.9)	–	(21.9)
Financial liabilities	(40.2)	–	(40.2)	–	–	–
7RWDOQRQFXUUHQWOLDELOLWLHV	(834.7)	(16.5)	(851.2)	(469.2)	(16.6)	(485.8)
/LDELOLWLHVFODVVLƮHGDVKHOGIRUVDOH	–	–		(22.9)	–	(22.9)
7RWDOOLDELOLWLHV		(16.5)		(637.4)	(16.6)	(654.0)
Net assets	915.6	–	915.6	702.3	–	702.3
(TXLW\
Share capital	52.1	–	52.1	44.4	–	44.4
Share premium	237.6	–	237.6	21.9	–	21.9
Other reserves	85.5	–	85.5	99.0	–	99.0
Retained earnings	540.4	–	540.4	537.0	–	537.0
7RWDOHTXLW\DWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQW	915.6	–	915.6	702.3	–	702.3
7RWDOHTXLW\	915.6	–	915.6	702.3	–	702.3

&DVKưRZVUHODWLQJWRWKHULJKWVLVVXHZHUHPPOHVVLVVXDQFHFRVWVRIP

7KH'HFHPEHUEDODQFHVKHHWKDVEHHQUHVWDWHGWRVKRZWKH8.SHQVLRQVXUSOXVRIPZLWKLQQRQFXUUHQWDVVHWVDQGWRRƬVHW unamortised syndicate fees of \$5.6m against the borrowings to which they relate within non-current liabilities. Erroneously the pension VXUSOXVRIPKDGEHHQRƬVHWDJDLQVWSHQVLRQOLDELOLWLHVRIP,QDGGLWLRQWKHXQDPRUWLVHGV\QGLFDWHIHHVRIPZHUHSUHYLRXVO\ incorrectly presented within trade and other receivables. None of the restatements have had any impact on diluted or basic EPS.

Corporate Governance

Financial statements

Balance sheet

at 31 December 2019

			Restated1
	Note	2019 £m	2018 £m
Fixed assets
Investments	6	773.9	771.8
Non-current assets
Debtors	7	12.7	12.7
&UHGLWRUVDPRXQWVIDOOLQJGXHZLWKLQRQH\HDU
Creditors	8	(0.6)	(0.6)
Net current assets		12.1	12.1
7RWDODVVHWVOHVVFXUUHQWOLDELOLWLHV		786.0	783.9
&UHGLWRUVDPRXQWVIDOOLQJGXHDIWHUPRUHWKDQRQH\HDU
Amounts due to subsidiary undertakings		(188.2)	(146.4)
Net assets		597.8	637.5
Capital and reserves
Called up share capital	9	28.9	28.9
Share premium account		176.5	176.4
Capital redemption reserve	9	83.3	83.3
Other reserves		250.5	250.5
Share option reserve	9	17.7	15.6
3URƮWDQGORVVDFFRXQW		40.9	82.8
(TXLW\VKDUHKROGHUVoIXQGV		597.8	637.5

5HVWDWHGWRPRYHDPRXQWVUHODWLQJWRVKDUHEDVHGSD\PHQWVWRVKDUHEDVHGSD\PHQWVUHVHUYHVHHQRWHIRUWKHUHVWDWHPHQWRIWKH'HFHPEHU company balance sheet.

7KH&RPSDQ\UHFRJQLVHGDORVVIRUWKHƮQDQFLDO\HDUHQGHG'HFHPEHURI~P~P

7KHƮQDQFLDOVWDWHPHQWVRI(OHPHQWLVSOFUHJLVWHUHGQXPEHURQSDJHVWRZHUHDSSURYHGE\WKH%RDUGRQ0DUFKDQG signed on its behalf by:

Paul Waterman Ralph Hewins CEO CFO

6WDWHPHQWRIFKDQJHVLQHTXLW

for the year ended 31 December 2019

	Restated1
	Share	Share	Capital redemption	Other	Share options	Restated1 Retained
	capital	premium	reserve	reserves	reserve	earnings	Total
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2018	23.1	12.8	83.3	250.5	2.9	75.5	448.1
Restatement	–	–	–	–	10.6	(10.6)	–
Restated balance at 1 January 2018	23.1	12.8	83.3	250.5	13.5	64.9	448.1
Comprehensive income
3URƮWIRUWKH\HDU	–	–	–	–	–	(1.3)	(1.3)
Total other comprehensive income	–	–	–	–	–	–	–
Total comprehensive income	–	–	–	–	–	(1.3)	(1.3)
Transactions with owners
Issue of shares by the Company	5.8	163.6	–	–	–	–	169.4
Share based payments	–	–	–	–	2.1	–	2.1
Dividends received	–	–	–	–	–	50.0	50.0
Dividends paid	–	–	–	–	–	(30.8)	(30.8)
Total transactions with owners	5.8	163.6	–	–	2.1	19.2	190.7
Balance at 31 December 2018	28.9	176.4	83.3	250.5	15.6	82.8	637.5
%DODQFHDW-DQXDU\	28.9	176.4	83.3	250.5	15.6	82.8	637.5
Comprehensive income
3URƮWIRUWKH\HDU	–	–	–	–	–	(3.1)	(3.1)
Total other comprehensive income	–	–	–	–	–	–	–
Total comprehensive income	–	–	–	–	–	(3.1)	(3.1)
Transactions with owners
Issue of shares by the Company	–	0.1	–	–	–	–	0.1
Share based payments	–	–	–	–	2.1	–	2.1
Dividends received	–	–	–	–	–	–	–
Dividends paid	–	–	–	–	–	(38.8)	(38.8)
Total transactions with owners	–	0.1	–	–	2.1	(38.8)	(36.6)
%DODQFHDW'HFHPEHU	28.9	176.5	83.3	250.5	17.7	40.9	597.8

5HVWDWHGWRPRYHDPRXQWVUHODWLQJWRVKDUHEDVHGSD\PHQWVWRWKHVKDUHEDVHGSD\PHQWVUHVHUYHVHHQRWHIRUWKHUHVWDWHPHQWRIWKH'HFHPEHU company balance sheet.

The Company's distributable reserves amount to £40.9m (2018: £82.8m) at the end of the period. The Company regularly reviews its distributable reserves and makes dividend recapitalisations as and when necessary to ensure it can make all expected dividend payments. 7KH&RPSDQ\KDVVXƱFLHQWVXEVLGLDU\UHVHUYHVWRHQDEOHVXFKUHFDSLWDOLVDWLRQVLQDQGJRLQJIRUZDUG

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Financial statements

1RWHVWRWKHFRPSDQ\ƮQDQFLDOVWDWHPHQWVRI(OHPHQWLVSOF

for the year ended 31 December 2019

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(OHPHQWLVSOFLVDSXEOLFFRPSDQ\OLPLWHGE\VKDUHVDQGLVLQFRUSRUDWHGDQGGRPLFLOHGLQ(QJODQG7KHDGGUHVVRILWVUHJLVWHUHGRƱFHLV &DUROLQH+RXVH+LJK+ROERUQ/RQGRQ:&9';7KHSULQFLSDODFWLYLW\RIWKH&RPSDQ\LVWRDFWDVWKHXOWLPDWHKROGLQJFRPSDQ\RIWKH Elementis Group of companies.

̝%DVLVRISUHSDUDWLRQ

7KH&RPSDQ\oVƮQDQFLDOVWDWHPHQWVKDYHEHHQSUHSDUHGXQGHUWKHKLVWRULFDOFRVWFRQYHQWLRQLQFRPSOLDQFHZLWKDSSOLFDEOH8QLWHG.LQJGRP DFFRXQWLQJVWDQGDUGVLQFOXGLQJ)LQDQFLDO5HSRUWLQJ6WDQGDUGsn5HGXFHGGLVFORVXUHIUDPHZRUNs'LVFORVXUHH[HPSWLRQVIURP(8DGRSWHG ,)56IRUTXDOLI\LQJHQWLWLHVon)56oDQGZLWKWKH&RPSDQLHV\$FW7KH&RPSDQ\KDVSUHVHQWHGLWVUHVXOWVXQGHU)56

\$VDTXDOLI\LQJHQWLW\ZKRVHUHVXOWVDUHFRQVROLGDWHGLQWKH(OHPHQWLVSOF&RQVROLGDWHGƮQDQFLDOVWDWHPHQWVRQSDJHVWRWKH&RPSDQ\ KDVWDNHQDGYDQWDJHRIWKHH[HPSWLRQXQGHU)56IURPSUHSDULQJDVWDWHPHQWRIFDVKưRZVDQGDVVRFLDWHGQRWHVWKHHƬHFWVRIQHZEXW QRW\HWHƬHFWLYH,)56VGLVFORVXUHVLQUHVSHFWRIWUDQVDFWLRQVDQGWKHFDSLWDOPDQDJHPHQWRIZKROO\RZQHGVXEVLGLDULHVDQGNH\PDQDJHPHQW personnel compensation disclosures.

\$VWKHFRQVROLGDWHGƮQDQFLDOVWDWHPHQWVLQFOXGHHTXLYDOHQWGLVFORVXUHVWKH&RPSDQ\KDVDOVRWDNHQWKHGLVFORVXUHH[HPSWLRQVXQGHU)56 LQUHVSHFWRIJURXSVHWWOHGVKDUHEDVHGSD\PHQWVXQGHU,)566KDUHEDVHGSD\PHQW,)56OHDVHVGLVFORVXUHVUHTXLUHGE\,)56 Financial Instruments Disclosures and by IFRS 13 Fair Value Measurement.

By virtue of section 408 of the Companies Act 2006 the company is exempt from presenting an income statement and disclosing employee QXPEHUVDQGVWDƬFRVWV

\$VDFRQVHTXHQFHRIWKHPDMRULW\RIWKH&RPSDQ\oVDVVHWVOLDELOLWLHVDQGH[SHQVHVRULJLQDWLQJLQ8.SRXQGVWHUOLQJWKH&RPSDQ\KDVFKRVHQ the UK pound sterling as its reporting currency.

̝6XPPDU\RIVLJQLƮFDQWDFFRXQWLQJSROLFLHV

7KHSULQFLSDODFFRXQWLQJSROLFLHVDSSOLHGLQWKHSUHSDUDWLRQRIWKHVHƮQDQFLDOVWDWHPHQWVDUHVHWRXWEHORZ7KHVHSROLFLHVKDYHEHHQ FRQVLVWHQWO\DSSOLHGWRDOOWKH\HDUVSUHVHQWHGXQOHVVRWKHUZLVHVWDWHG7KH&RPSDQ\KDVDGRSWHG)56LQWKHVHƮQDQFLDOVWDWHPHQWV

Foreign currencies

Transactions in foreign currencies are recorded at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated using the contracted rate or the rate of exchange ruling at the balance sheet date and the JDLQVDQGORVVHVRQWUDQVODWLRQDUHLQFOXGHGLQWKHSURƮWDQGORVVDFFRXQW

Investments

Investments in subsidiaries are included in the balance sheet at cost less accumulated impairment losses.

Potential indicators of impairment including the market capitalisation of the group dropping below the net assets of Elementis plc have been considered. The recoverable amounts of cash generating units as determined for the impairment testing of goodwill also support the recoverable amounts of the parent company's investments.

Dividends on shares presented within shareholders' funds

Dividends unpaid at the balance sheet date are only recognised as a liability at that date to the extent that they are appropriately authorised and are no longer at the discretion of the Company.

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7KH&RPSDQ\SDUWLFLSDWHVLQWKH(OHPHQWLV*URXSGHƮQHGEHQHƮWSHQVLRQVFKHPH7KHDVVHWVRIWKHVFKHPHDUHKHOGVHSDUDWHO\IURPWKRVH of the Company. Details of the latest actuarial valuation carried out in September 2017 can be found in the 2018 Elementis plc Annual report DQGDFFRXQWV)ROORZLQJWKHLQWURGXFWLRQRIWKHUHYLVHGUHSRUWLQJVWDQGDUGDQ\VXUSOXVRUGHƮFLWLQWKH(OHPHQWLV*URXSGHƮQHGEHQHƮWSHQVLRQ VFKHPHLVWREHUHSRUWHGLQWKHƮQDQFLDOVWDWHPHQWVRI(OHPHQWLV8./WGZKLFKHPSOR\VWKHPDMRULW\RIDFWLYHPHPEHUVRIWKHVFKHPHDQGLV UHVSRQVLEOHIRUPDNLQJGHƮFLWFRQWULEXWLRQVXQGHUWKHFXUUHQWIXQGLQJSODQ

Taxation

'HIHUUHGWD[LVSURYLGHGRQWHPSRUDU\GLƬHUHQFHVEHWZHHQWKHFDUU\LQJDPRXQWVRIDVVHWVDQGOLDELOLWLHVIRUƮQDQFLDOUHSRUWLQJSXUSRVHVDQG the amounts used for taxation purposes. Advance corporation tax recoverable by deduction from future corporation tax is carried forward within deferred taxation or as ACT recoverable within debtors as appropriate.

7KHUHZHUHQRVLJQLƮFDQWMXGJHPHQWVRUHVWLPDWHVQHFHVVDU\LQ

Changes in accounting policies

7KHDFFRXQWLQJSROLFLHVDGRSWHGDUHFRQVLVWHQWZLWKWKRVHRIWKHSUHYLRXVƮQDQFLDO\HDUH[FHSWIRUWKHDGRSWLRQRI,)56/HDVHV7KHUHKDV EHHQQRLPSDFWIURPWKLVVWDQGDUGRQWKH&RPSDQ\oVƮQDQFLDOVWDWHPHQWV

The fair value of share options granted to employees is recognised as an expense with a corresponding increase in equity. Where the Company JUDQWVRSWLRQVRYHULWVRZQVKDUHVWRWKHHPSOR\HHVRILWVVXEVLGLDULHVLWUHFRJQLVHVLQLWVLQGLYLGXDOƮQDQFLDOVWDWHPHQWVDQLQFUHDVHLQWKH FRVWRILQYHVWPHQWLQLWVVXEVLGLDULHVHTXLYDOHQWWRWKHHTXLW\VHWWOHGVKDUHEDVHGSD\PHQWFKDUJHUHFRJQLVHGLQLWVVXEVLGLDULHVoƮQDQFLDO VWDWHPHQWVZLWKWKHFRUUHVSRQGLQJFUHGLWEHLQJUHFRJQLVHGGLUHFWO\LQHTXLW\7KHIDLUYDOXHLVPHDVXUHGDWJUDQWGDWHDQGVSUHDGRYHUWKH period during which the employees become unconditionally entitled to the options. The fair value of the options granted is measured using a ELQRPLDOPRGHOWDNLQJLQWRDFFRXQWWKHWHUPVDQGFRQGLWLRQVXSRQZKLFKWKHRSWLRQVZHUHJUDQWHG7KHDPRXQWUHFRJQLVHGDVDQH[SHQVHLV DGMXVWHGWRUHưHFWWKHDFWXDOQXPEHURIVKDUHRSWLRQVWKDWYHVWH[FHSWZKHUHIRUIHLWXUHLVRQO\GXHWRVKDUHSULFHVQRWDFKLHYLQJWKHWKUHVKROG for vesting.

&ODVVLƮFDWLRQRIƮQDQFLDOLQVWUXPHQWVLVVXHGE\WKH&RPSDQ

Financial instruments issued by the Company are treated as equity only to the extent that they meet the following two conditions:

a. 7KH\LQFOXGHQRFRQWUDFWXDOREOLJDWLRQVXSRQWKH&RPSDQ\WRGHOLYHUFDVKRURWKHUƮQDQFLDODVVHWVRUWRH[FKDQJHƮQDQFLDODVVHWVRU ƮQDQFLDOOLDELOLWLHVZLWKDQRWKHUSDUW\XQGHUFRQGLWLRQVWKDWDUHSRWHQWLDOO\XQIDYRXUDEOHWRWKH&RPSDQ\
b. :KHUHWKHLQVWUXPHQWZLOORUPD\EHVHWWOHGLQWKH&RPSDQ\oVRZQHTXLW\LQVWUXPHQWVLWLVHLWKHUDQRQGHULYDWLYHWKDWLQFOXGHVQRREOLJDWLRQ to deliver a variable number of the Company's own equity instruments or is a derivative that will be settled by the Company's exchanging a Ʈ[HGDPRXQWRIFDVKRURWKHUƮQDQFLDODVVHWVIRUDƮ[HGQXPEHURILWVRZQHTXLW\LQVWUXPHQWV

7RWKHH[WHQWWKDWWKHGHƮQLWLRQLVQRWPHWWKHSURFHHGVRILVVXHDUHFODVVLƮHGDVDƮQDQFLDOOLDELOLW\:KHUHWKHLQVWUXPHQWVRFODVVLƮHG WDNHVWKHOHJDOIRUPRIWKH&RPSDQ\oVRZQVKDUHVWKHDPRXQWVSUHVHQWHGLQWKHVHƮQDQFLDOVWDWHPHQWVIRUFDOOHGXSVKDUHFDSLWDODQGVKDUH premium account exclude amounts in relation to those shares.

)LQDQFHSD\PHQWVDVVRFLDWHGZLWKƮQDQFLDOOLDELOLWLHVDUHGHDOWZLWKDVSDUWRILQWHUHVWSD\DEOHDQGVLPLODUFKDUJHV)LQDQFHSD\PHQWV DVVRFLDWHGZLWKƮQDQFLDOLQVWUXPHQWVWKDWDUHFODVVLƮHGDVSDUWRIVKDUHKROGHUVoIXQGVDUHGHDOWZLWKDVDSSURSULDWLRQVLQWKHUHFRQFLOLDWLRQRI movements in shareholders' funds.

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Details of Directors' remuneration for the Company are included in the Directors' remuneration report within the Elementis plc Annual Report and Accounts on pages 79 to 95.

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	Unlisted shares at cost £m	Unlisted loans £m	Capital contributions £m	Total £m
Cost at 1 January 2019	0.1	759.0	12.7	771.8
Additions	–	–	2.1	2.1
1HWERRNYDOXH'HFHPEHU	0.1	759.0	14.8	773.9
Net book value 31 December 2018	0.1	759.0	12.7	771.8

7KHLQYHVWPHQWLQXQOLVWHGORDQVLVZLWK(OHPHQWLV+ROGLQJV/WGDQLQGLUHFWZKROO\RZQHGVXEVLGLDU\7KHLQYHVWPHQWVLQXQOLVWHGVKDUHVDUH LQ(OHPHQWLV*URXS%9DQG(OHPHQWLV2YHUVHDV,QYHVWPHQWV/WGERWKZKROO\RZQHGVXEVLGLDULHV&DSLWDOFRQWULEXWLRQVUHODWHWRVKDUHEDVHG payment awards made to employees of subsidiary companies.

Financial statements

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for the year ended 31 December 2019

̝,QYHVWPHQWVcontinued

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Subsidiary undertakings		Country of incorporation and operation
Adentatec GmbH Competence in Dental	Personal Care products	Germany1
Alembic Manufacturing Ltd	Personal Care products	United Kingdom2
'HXFKHP&R/WG	Additives and resins	Taiwan3
Deuchem (HK) Trading Co Ltd	Additives and resins	People's Republic of China – Hong Kong
		Special Administrative Region4
Deuchem (Shanghai) Chemical Co. Ltd	Additives and resins	People's Republic of China5
Eisenbacher Dentalwaren ED GmbH	Personal Care products	Germany6
Elementis Chromium Inc	Chromium chemicals	United States of America7
Elementis Chromium LLP	Chromium chemicals	United Kingdom8
Elementis Deuchem (Shanghai)
Chemical Ltd	Additives and resins	People's Republic of China5
Elementis LTP Inc	Chromium chemicals	United States of America7
Elementis Minerals BV	Talc products	Netherlands9
Elementis Specialties (Anji) Ltd	Organoclays	People's Republic of China10
Elementis Specialties (Changxing) Ltd	Organoclays	People's Republic of China11
Elementis Specialties do
Brasil Quimica Ltda	Coatings additives	%UD]LO12
Elementis Specialties Inc	5KHRORJLFDODGGLWLYHVFRORXUDQWVZD[HV	United States of America7
	RWKHU{VSHFLDOW\DGGLWLYHV
Elementis SRL Inc	Personal Care products	United States of America7
Elementis UK Limited trading as:	5KHRORJLFDODGGLWLYHVFRORXUDQWV
Elementis Specialties	ZD[HVRWKHUVSHFLDOW\DGGLWLYHV	United Kingdom8
Elementis Pharma GmbH	Personal Care products	Germany13
Mondo Minerals Deutschland GmbH	Talc products	Germany14
Elementis Minerals Nickel Oy	Talc products	Finland15
Mondo Trading (Beijing) Company Ltd	Talc products	People's Republic of China16

5HJLVWHUHGRƱFH.RQUDG\$GHQDXHU6WUD¼H.ÓOQ*HUPDQ\

5HJLVWHUHGRƱFH8QLW:LPERXUQH%XLOGLQJV\$WODQWLF:D\%DUU\'RFNV%DUU\6RXWK*ODPRUJDQ&)5\$8.

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5HJLVWHUHGRƱFH6LDQ7RZQ&KDQJ[LQJ&RXQW\=KHMLDQJ3URYLQFH&KLQD
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--------------------------------------------------------------------------------------------------	--	--

Subsidiary undertakings		Country of incorporation and operation
Agrichrome Ltd	Non-trading	United Kingdom1
American Chrome & Chemicals Inc	Dormant	United States of America2
Deuchem Holding Inc	Dormant	Samoa3
Deuchem International Inc	Dormant	Samoa3
Elementis America Shared Services Inc	Dormant	United States of America2
Elementis Australia Ltd	Dormant	United Kingdom1
Elementis Benelux NV	Non-trading (in liquidation)	Belgium4
Elementis Catalysts Inc	Dormant	United States of America2
Elementis Chemicals Inc	Dormant	United States of America2
Elementis Chromium America Inc	Dormant	United States of America2
Elementis Export Sales Inc	Non-trading	United States of America2
Elementis Finance (Australia) Ltd	Dormant	United Kingdom1
Elementis Finance (Europe) Ltd	Non-trading	United Kingdom1
Elementis Finance (Germany) Ltd	Non-trading	United Kingdom1
Elementis Finance (Ireland) Ltd	Non-trading	Ireland5
Elementis Finance (Jersey) Ltd	Non-trading	Jersey6
Elementis Finance (US) Ltd	Non-trading	United Kingdom1
Elementis Germany GmbH	Non-trading	Germany7
Elementis Germany Ltd	Dormant	United Kingdom1
Elementis Global LLC	Non-trading	United States of America2
Elementis GmbH	Non-trading	Germany7
Elementis Group (Finance) Ltd	Non-trading	United Kingdom1
Elementis Group BV	Non-trading	Netherlands8
Elementis Group Ltd	Dormant	United Kingdom1
Elementis Holdings Ltd	Non-trading	United Kingdom1
Elementis London Ltd	Dormant	United Kingdom1
Elementis Minerals Holding BV	Non-trading	Netherlands9
Elementis Nederland BV	Non-trading	Netherlands8
Elementis New Zealand Ltd	Dormant	United Kingdom1
Elementis NZ Ltd	Non-trading	New Zealand10
Elementis Overseas Investments Ltd	Non-trading	United Kingdom1
Elementis Pigments Inc	Dormant	United States of America2
Elementis S.E.A. (Malaysia) Sdn Bhd	Non-trading	Malaysia11
Elementis Securities Ltd	Non-trading	United Kingdom1
Elementis Services GmbH	Non-trading	Germany7
Elementis Specialties (India) Private Ltd	Non-trading	India12
Elementis US Holdings Inc	Non-trading	United States of America2
Elementis US Ltd	Non-trading	United Kingdom1
H & C Acquisitions Ltd	Dormant	United Kingdom1
H & C Lumber Inc	Dormant	United States of America2
Harcros Chemicals Canada Inc	Dormant	Canada13
Iron Oxides S.A. de CV	Dormant	Mexico14
Mondo Minerals International BV	Dormant	Netherlands8

Corporate Governance

Financial statements

1RWHVWRWKHFRPSDQ\ƮQDQFLDOVWDWHPHQWVRI(OHPHQWLVSOFFRQWLQXHG

for the year ended 31 December 2019

̝,QYHVWPHQWVcontinued

Subsidiary undertakings		Country of incorporation and operation
NB Chrome Ltd	Dormant	United Kingdom1
5HKHLV,QF	Non-trading	United States of America2
65/&RÓSHUDWLHI8\$	Non-trading	Netherlands9
SRLH Holdings Inc	Non-trading	United States of America2
65/,QWHUQDWLRQDO+ROGLQJV//&	Non-trading	United States of America2
Talc Holding Finance Oy	Non-trading	Finland15
Talc Holding Oy	Non-trading	Finland15
WBS Carbons Acquisitions Corp	Non-trading	United States of America2

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Notes:

• 2WKHUWKDQ(OHPHQWLV([SRUW6DOHV,QF(OHPHQWLV*URXS%9DQG(OHPHQWLV2YHUVHDV,QYHVWPHQWV/WGQRQHRIWKHXQGHUWDNLQJVLVKHOGGLUHFWO\E\WKH&RPSDQ\ Equity capital is in ordinary shares and voting rights equate to equity ownership.

• \$OOXQGHUWDNLQJVOLVWHGDERYHKDYHDFFRXQWLQJSHULRGVHQGLQJ'HFHPEHUZLWKWKHH[FHSWLRQVRIL(OHPHQWLV6SHFLDOWLHV,QGLD3ULYDWH/WGIRUZKLFKWKH

relevant date is 31 March; and (ii) Elementis Finance (Germany) Limited for which the relevant date is 30 September. • Undertakings operating in the United Kingdom are incorporated in England and Wales. In the case of corporate undertakings other than in the United Kingdom

their country of operation is also their country of incorporation. • \$OOXQGHUWDNLQJVOLVWHGDERYHKDYHEHHQLQFOXGHGLQWKH&RQVROLGDWHGƮQDQFLDOVWDWHPHQWVRIWKH*URXSIRUWKH\HDU

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	2019 £m	2018 £m

Group relief receivable	12.7	12.7

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	2019 £m	2018 £m
Accruals and deferred income	0.6	0.6

	2019 1XPEHU '000	2019 £m	2018 £m
&DOOHGXSDOORWWHGDQGIXOO\SDLG
Ordinary shares of 5 pence each
At 1 January	580,394	28.9	23.1
Issue of shares	124	–	5.8
At 31 December	580,518	28.9	28.9

'XULQJWKH\HDUDWRWDORIRUGLQDU\VKDUHVZLWKDQDJJUHJDWHQRPLQDOYDOXHRI~ZHUHDOORWWHGDQGLVVXHGIRUFDVKWRYDULRXV employees at subscription prices between 52 pence and 170 pence on the exercise of options under the Group's share option schemes. The total subscription monies received by the Company for these shares was £0.1m.

In October 2018 the Group undertook a rights issue on the basis of 1 share for every four fully paid ordinary shares held. The issue was resulted LQWKHLVVXHRIRUGLQDU\VKDUHVDW~SHUVKDUH

RUGLQDU\VKDUHVZLWKDQDJJUHJDWHQRPLQDOYDOXHRI~ZHUHDOORWWHGDQGLVVXHGIRUFDVKWRYDULRXVHPSOR\HHVDWVXEVFULSWLRQ prices between 170 pence and 226 pence on the exercise of options under the Group's share option schemes.

The total subscription monies received by the Company for these shares was £172.5m as a result of the rights issue and employee allotments. The holders of ordinary shares are entitled to receive dividends and entitled to one vote per share at meetings of the Company.

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The share options reserve comprises amounts accumulated in equity in respect of share options and awards granted to employees.

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The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the year HQGHG'HFHPEHU8QOHVVRWKHUZLVHVWDWHGWKHXQGHUWDNLQJVOLVWHGEHORZDUHDOORZQHGHLWKHUGLUHFWO\RULQGLUHFWO\E(OHPHQWLV plc. The Company will guarantee the debts and liabilities of the UK subsidiaries listed below at the balance sheet date in accordance with section 479C of the Companies Act 2006. The Company has assessed the probability of loss under the guarantee as remote.

	Proportion of shares held by the	Proportion of shares held by
	Company	subsidiary
Name	(%)	(%)	Company Number
Agrichrome Limited	100	–	2228826
Elementis Finance (Germany) Limited	100	–	5531634
Elementis Finance (US) Limited	100	–	9303101
Elementis Germany Limited	100	–	48664
Elementis Group (Finance) Limited	100	–	9303017
Elementis Group Limited	100	–	4048541
Elementis Overseas Investments Limited	100	–	8008981
Elementis Securities Limited	100	–	597303
Elementis US Limited	100	–	8005226
Elementis Finance (Europe) Limited	100	–	11717371

Financial statements

1RWHVWRWKHFRPSDQ\ƮQDQFLDOVWDWHPHQWVRI(OHPHQWLVSOFFRQWLQXHG

for the year ended 31 December 2019

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,QDFFRUGDQFHZLWK,\$6ZHKDYHVKRZQEHORZDEDODQFHVKHHWDVDWWKHEHJLQQLQJRIWKHFRPSDUDWLYHSHULRGWRVKRZWKHUHFODVVLƮFDWLRQRI DPRXQWVUHODWLQJWRVKDUHEDVHGSD\PHQWVWRWKHVKDUHEDVHGSD\PHQWVUHVHUYH7KHVHZHUHLQFRUUHFWO\LQFOXGHGLQWKHSURƮWDQGORVVDFFRXQW in the prior year. The amounts in the share-based payments reserve are non-distributable.

	2017		Restated 2017
	31 December £m	Restatement	31 December £m
Fixed assets
Investments	769.7	–	769.7
Non-current assets		–
Debtors	12.7	–	12.7
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Creditors	(0.6)	–	(0.6)
Net current assets	12.1	–	12.1
7RWDODVVHWVOHVVFXUUHQWOLDELOLWLHV	781.8	–	781.8
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Amounts due to subsidiary undertakings	(333.7)	–	(333.7)
Net assets	448.1	–	448.1
Capital and reserves
Called up share capital	23.1	–	23.1
Share premium account	12.8	–	12.8
Capital redemption reserve	83.3	–	83.3
Other reserves	250.5	–	250.5
Share option reserve	2.9	10.6	13.5
3URƮWDQGORVVDFFRXQW	75.5	(10.6)	64.9
(TXLW\VKDUHKROGHUVoIXQGV	448.1	–	448.1

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Alternative performance measures

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	2019 3URƮWDQG	2018 3URƮWDQG	2018 3URƮWDQG	2018 3URƮWDQG
	loss on total operations \$m	loss on continuing operations \$m	loss on discontinued operations \$m	loss on total operations \$m
3URƮWIRUWKH\HDU	46.4	49.8	(8.4)	41.4
Adjustments for
Finance income	(0.4)	(0.3)	–	(0.3)
Finance costs and other expenses after adjusting items	31.3	19.8	–	19.8
Tax charge	14.6	15.6	(2.0)	13.6
Depreciation and amortisation	70.1	45.6	0.3	45.9
Excluding intangibles arising on acquisition	(18.6)	(15.0)	–	(15.0)
\$GMXVWLQJLWHPVLPSDFWLQJSURƮWEHIRUHWD[	31.1	47.7	9.8	57.5
EBITDA	174.5	163.2	(0.3)	162.9

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	2019 \$m	2018 \$m
1HWFDVKưRZIURPRSHUDWLQJDFWLYLWLHV	143.4	84.3
Less: Capital expenditure Add:	(47.3)	(50.8)
Income tax paid or received	2.2	6.9
Interest paid or received	25.0	14.3
Pension contributions net of current service cost	1.2	1.2
Adjusting items	30.3	21.8
2SHUDWLQJFDVKưRZ	154.8	77.7

Operating cash conversion

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	2019 \$m	2018 \$m
2SHUDWLQJSURƮWIURPWRWDORSHUDWLRQVDIWHUDGMXVWLQJLWHPV	123.0	132.0
2SHUDWLQJFDVKưRZ Add:	154.8	77.7
Provision and share based pay	5.4	4.5
	160.2	82.2
2SHUDWLQJFDVKưRZFRQYHUVLRQ	130%	62%

Shareholder Information

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	2019 \$m	2018 \$m
Revenue	873.6	827.0
Variable costs	(473.1)	(444.2)
Non variable costs	(79.1)	(76.7)
Cost of sales	(552.2)	(520.9)

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	2019 \$m	2018 \$m
2SHUDWLQJSURƮWIURPWRWDORSHUDWLRQVDIWHUDGMXVWLQJLWHPV		132.0
Fixed assets excluding goodwill	746.0	737.5
Working capital	152.1	181.9
Operating provisions	(51.6)	(48.8)
Operating capital employed	846.5	870.6
5HWXUQRQFDSLWDOHPSOR\HG	15%	15%

Average trade working capital to sales ratio

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Unaudited information

To better understand the full year performance of the business segments operated by the Group for the 12 months to 31 December 2018 for FRPSDUDWLYHSXUSRVHVWKHLQIRUPDWLRQEHORZLQFOXGHVWKHUHVXOWVIRUWKH7DOFVHJPHQWIRUWKHWHQPRQWKVSULRUWRDFTXLVLWLRQ

Group performance	2019 continuing operations \$	2018 Continuing operations \$m1	2018 Talc 1 Jan to 22 Oct \$m2	2018 Pro forma continuing operations \$m
Revenue	873.6	822.2	136.9	959.1
\$GMXVWHGRSHUDWLQJSURƮW	123.0	132.6	20.7	153.3
Adjusted operating margin	14.1%	16.1%	15.1%	16.0%
Adjusted EBITDA	174.5	163.2	36.6	199.8
IFRS 16 adjustment	(7.9)	–	–	–
Adjusted EBITDA pre IFRS 16	166.6	163.2	36.6	199.8
Net Debt3	454.2	498.1	–	498.1
Net Debt / EBITDA *	2.73			2.49

([WHUQDOUHYHQXHE\EXVLQHVVVHJPHQW	2018 Continuing operations \$m1	2018 Talc 1 Jan to 22 Oct \$m2	2018 Pro forma continuing operations \$m	%
Personal Care	210.3	–	210.3	21.9
Coatings	362.2	–	362.2	37.8
Talc	21.5	136.9	158.4	16.5
Chromium	173.3	–	173.3	18.1
Energy	54.9	–	54.9	5.7
	822.2	136.9	959.1	100.0

([WHUQDOUHYHQXHE\JHRJUDSK\	2018 Continuing operations \$m1	2018 Talc 1 Jan to 22 Oct \$m2	2018 Pro forma continuing operations \$m	%
North America	290.3	6.0	296.3	30.9
Europe	233.2	116.1	349.3	36.4
Rest of World	298.7	14.8	313.5	32.7
	822.2	136.9	959.1	100.0

12 months to Mondo performance	31 Dec 2019 €m	12 months to 31 Dec 2018 €m2
Revenue 135.6		134.3
\$GMXVWHGRSHUDWLQJSURƮW	23.0	20.8

* Net Debt/EBITDA where EBITDA is the Adjusted EBITDA on continuing operations of the Group on a pre IFRS16 basis and including full prior months of Mondo is WKHGHƮQLWLRQRI1HW'HEW(%,7'\$IRU(OHPHQWLVoFRUHEDQNLQJFRYHQDQWV

1 Source – Elementis annual accounts.

2 Source – Mondo management accounts for the relevant period.

3 See note 28.

Shareholder Information

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	2019	2018	2017	2016 restated2	2015 restated2
Turnover	\$m	\$m	\$m	\$m	\$m
Continuing operations	883.4	833.2	797.7	629.2	623.4
Discontinued operations	–	4.8	47.8	43.1	53.8
Group turnover	883.4	838.0	845.5	672.3	677.2
2SHUDWLQJSURƮWDIWHUDGMXVWLQJLWHPV
Continuing operations	123.0	132.6	122.7	97.3	119.8
Discontinued operations	–	(0.6)	5.4	(0.3)	4.5
	123.0	132.0	128.1	97.0	124.3
Adjusting items before interest	(31.1)	(57.5)	(30.9)	(12.5)	2.8
3URƮWEHIRUHLQWHUHVW	91.9	74.5	97.2	84.5	127.1
Other expenses	(1.5)	(1.6)	(1.2)	(1.4)	(2.1)
Net interest payable	(29.4)	(17.9)	(11.7)	(7.6)	(4.2)
3URƮWEHIRUHWD[	61.0	55.0	84.3	75.5	120.8
Tax	(14.6)	(13.6)	33.3	(7.4)	(26.2)
3URƮWDWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQW	46.4	41.4	117.6	68.1	94.6

	2019 \$m	2018 \$m	2017 \$m	2016 restated2 \$m	2015 restated2 \$m
Basic
Earnings per ordinary share (cents)	8.0	7.9	23.3	14.7	20.5
Earnings per ordinary share after adjusting items (cents)	12.6	17.0	18.1	17.6	21.4
Diluted
Earnings per ordinary share (cents)	7.9	7.9	23.0	13.5	18.7
Earnings per ordinary share after adjusting items (cents)	12.4	16.9	17.9	16.1	19.0
'LYLGHQGSHURUGLQDU\VKDUHFHQWV	8.55	8.65	8.80	16.80	16.45
'LYLGHQGSHURUGLQDU\VKDUHUHEDVHG3 (cents)	8.55	8.40	8.05	15.38	15.06
Interest cover (times)1	5.3	8.0	13.5	138.6	124.3
(TXLW\DWWULEXWDEOHWRHTXLW\KROGHUVRIWKHSDUHQW	906.2	915.6	702.3	627.1	653.8
1HWGHEWFDVK	(454.2)	(498.1)	(291.1)	77.5	74.0
:HLJKWHGDYHUDJHQXPEHURIRUGLQDU\VKDUHVLQLVVXHGXULQJWKH\HDUPLOOLRQ	588.5	526.3	513.0	510.0	509.4

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2 Restated following the adjustment for amortisation of intangibles 2016 and 2015 restated but not prior years. This is not expected to be material.

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Shareholder services

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Category	Number of shareholders	Percentage of total	Percentage of issued share capital
Private individuals		91.81%	2.48%
Nominee companies	407	4.67%	76.75%
Limited and public limited companies	263	3.02%	18.85%
Other corporate bodies	42	0.48%	1.92%
3HQVLRQIXQGVLQVXUDQFHFRPSDQLHVDQGEDQNV	2	0.02%	0.00%

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Range of holdings	Number of shareholders	Percentage of total	Percentage of issued share capital
1-499		50.38%	0.13%
500-999		12.87%	0.14%
		25.12%	0.82%
	454	5.21%	0.53%
	283	3.25%	0.96%
	65	0.75%	0.80%
	106	1.22%	4.10%
	27	0.31%	3.24%
SOXV	78	0.90%	89.29%

Registrars

(QTXLULHVFRQFHUQLQJVKDUHVRUVKDUHKROGLQJVVXFKDVWKHORVVRID VKDUHFHUWLƮFDWHFRQVROLGDWLRQRIVKDUHFHUWLƮFDWHVDPDOJDPDWLRQ RIKROGLQJVRUGLYLGHQGSD\PHQWVVKRXOGEHDGGUHVVHGWRWKH Company's registrars:

Equiniti Group plc

\$VSHFW+RXVH6SHQFHU5RDG/DQFLQJ:HVW6XVVH[%1'\$ Tel: 0371 284 2379 or +44 (0)121 415 7043

)RUVKDUHKROGHUVZLWKKHDULQJGLƱFXOWLHV Tel: 0371 384 2255 or +44 (0)121 415 7028

Lines are open between 8.30am and 5.30pm Monday to Friday (excluding public holidays in England and Wales).

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Share dealing services

Equiniti provides a share dealing service that enables shares to be bought or sold by UK shareholders by telephone or over the internet. )RUWHOHSKRQHVKDUHGHDOLQJSOHDVHFDOOEHWZHHQ 8.30am and 4.30pm (lines are open until 6.00pm for enquiries) and for LQWHUQHWVKDUHGHDOLQJSOHDVHYLVLW www.shareview.co.uk/dealing

Dividends

Shareholders who wish dividends to be paid directly into their bank or building society account should contact Equiniti for a dividend mandate form. This method of payment removes the risk of delay or loss of dividend cheques in the post.

Electronic communications

Shareholders can elect to receive shareholder documents electronically by registering with Shareview at www.shareview.co.uk. This will save on printing and distribution FRVWVFUHDWLQJHQYLURQPHQWDOEHQHƮWV:KHQ\RXUHJLVWHU\RXZLOO EHVHQWDQHPDLOQRWLƮFDWLRQWRVD\ZKHQVKDUHKROGHUGRFXPHQWV are available on our website and you will be provided with a link to WKDWLQIRUPDWLRQ:KHQUHJLVWHULQJ\RXZLOOQHHG\RXUVKDUHKROGHU UHIHUHQFHQXPEHUZKLFKFDQEHIRXQGRQ\RXUVKDUHFHUWLƮFDWHRU proxy form. Please contact Equiniti if you require any assistance or further information.

Share fraud

6KDUHRULQYHVWPHQWVFDPVDUHRIWHQUXQIURPnERLOHUURRPVoZKHUH IUDXGVWHUVFROGFDOOLQYHVWRUVRƬHULQJWKHPZRUWKOHVVRYHUSULFHGRU HYHQQRQH[LVWHQWVKDUHVRURƬHUWREX\WKHLUVKDUHVLQDFRPSDQ\ at a higher price than the market value. Shareholders are advised WREHYHU\ZDU\RIDQ\XQVROLFLWHGDGYLFHRƬHUVWREX\VKDUHVDWD GLVFRXQWRURƬHUVRIIUHHUHSRUWVDERXWWKHFRPSDQ(YHQVHDVRQHG investors have been caught out by such fraudsters. The FCA has some helpful information.

Report a scam

,I\RXDUHFRQWDFWHGE\DFROGFDOOHU\RXVKRXOGLQIRUPWKH&RPSDQ\ Secretary by email and also the FCA by using their share fraud reporting form at www.fca.org.uk/scams or calling their Consumer Helpline on 0800 111 6768.

,I\RXKDYHDOUHDG\SDLGPRQH\WRDVKDUHIUDXGVWHUSOHDVHFRQWDFW Action Fraud on 0300 123 2040 or www.actionfraud.police.uk.

Corporate information

Financial calendar

04 March 2020
	3UHOLPLQDU\DQQRXQFHPHQWRIƮQDOUHVXOWVIRUWKH\HDUHQGHG
	31 December 2019
29 April 2020	Annual General Meeting
29 April 2020	Trading update
30 April 2020	([GLYLGHQGIRUƮQDOGLYLGHQGIRUSD\DEOHRQRUGLQDU\VKDUHV
01 May 2020	5HFRUGGDWHIRUƮQDOGLYLGHQGIRUSD\DEOHRQRUGLQDU\VKDUHV
29 May 2020	3D\PHQWRIƮQDOGLYLGHQGIRURQRUGLQDU\VKDUHV
28 July 2020	Interim results announcement for the half year ending 30 June 2020
03 September 2020	Ex-dividend date for interim dividend for 2020 payable on ordinary shares
04 September 2020	Record date for interim dividend for 2020 payable on ordinary shares
25 September 2020	Payment of interim dividend for 2020 on ordinary shares

Annual general meeting

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The notice of meeting is included in a separate document.

*&RPSDQ\VHFUHWDU* Laura Higgins

5HJLVWHUHGQXPEHU 3299608

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Caroline House 55-57 High Holborn London WC1V 6DX UK

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Elementis plc Caroline House 55-57 High Holborn London WC1V 6DX UK Tel: +44 (0)20 7067 2999

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469 Old Trenton Road East Windsor NJ 08512 US Tel: +1 609 443 2000

Independent auditors

Deloitte LLP /LWWOH1HZ6WUHHW/RQGRQ(&\$75

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Solicitors Herbert Smith Freehills LLP ([FKDQJH+RXVH3ULPURVH6WUHHW/RQGRQ(&\$(*

Email [email protected]

:HEVLWH www.elementis.com

Shareholder Information

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ACC	American Chemistry Council
ACT	Advance corporation tax
AGM	Annual General Meeting
ART	Annual Report team
Articles	Articles of Association
AWC	Average trade working capital
Board	Board of Directors of Elementis plc
Brexit	The withdrawal of the UK from the EU
CAPAs	Corrective and preventative actions
CapEx	Capital expenditure
CDP	Carbon disclosure project
CEO	&KLHI([HFXWLYH2ƱFHU
CFO	&KLHI)LQDQFLDO2ƱFHU
CGU	Cash generating unit
CHRO	&KLHI+XPDQ5HVRXUFHV2ƱFHU
CO2	Carbon dioxide
CO2e	Carbon dioxide equivalent
Code	UK Corporate Governance Code
&RPSDQ\	Elementis plc
COSMOS	Cosmetic Organic and Natural Standard
CSR	Corporate Social Responsibility
DB Scheme	'HƮQHGEHQHƮWVFKHPH
DEFRA	Department for Environment and
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DNED	Designated Non-Executive Director
EBITDA	(DUQLQJVEHIRUHLQWHUHVWWD[GHSUHFLDWLRQ
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ECL	Expected credit losses
ECT	Elementis Compliance Team
ELT	Executive Leadership team
EPS	Earnings per share
ESC	Elementis Sustainability Council
ESG	(QYLURQPHQWDO6RFLDODQG*RYHUQDQFH
ESOS	Executive share option scheme
ESOT	Employee share ownership trust
EU	European Union
FRC	Financial Reporting Council
FRS	Financial Reporting Standards
FTSE	Financial Times Stock Exchange
GAAP	Generally Accepted Accounting Principles
GDP	Gross domestic product
GDPR	General Data Protection Regulation
GHG	Greenhouse gases
GJ	Gigajoule

IA	Investment Association
IAS	International Accounting Standards
IASB	International Accounting Standards Board
IFC	Inside front cover
IFRIC	International Financial Reporting
	Interpretations Committee
IFRS	International Financial Reporting Standards
ISS	Institutional Shareholder Services
KPI	Key performance indicator
kWh	Kilowatt per hour
LDI	Liability driven instrument
LPG	/LTXHƮHG3HWUROHXP*DV
LTA	Lost time accident
LTIP	Long term incentive plan
MBTU	Thousand British Thermal Units
Mondo	Mondo Minerals Holding B.V.
	and its subsidiaries
NED	Non-Executive Director
NIC	National Insurance Contributions
OSHA	Occupational Safety and
	Health Administration
PBT	3URƮWEHIRUHWD[
PRMB	3RVWUHWLUHPHQWPHGLFDOEHQHƮW
R&D	Research & Development
REACH	5HJLVWUDWLRQ(YDOXDWLRQ\$XWKRULVDWLRQDQG restriction of Chemicals
RCF	Revolving credit facility
RfR	Relief from royalty
Rights Issue	A one to four Rights Issue that was undertaken by the Company in October 2018
ROCE	Return on capital employed
RSPO	Roundtable for sustainable palm oil
RTO	Regenerative thermal oxidiser
SAYE	Save As You Earn
SID	Senior Independent Director
SummitReheis	65/++ROGLQJV,QFDQGLWVVXEVLGLDULHV
SVP	Senior Vice President
TCFD	The Task Force on Climate-related
	Financial Disclosures
TRIR	Total recordable incident rate
TSR	Total shareholder return
UK	United Kingdom
UN	United Nations
UN GC COP	United Nations Global Compact
	Communication On Progress
US	United States of America
VOC	Volatile organic compound

Group Elementis plc and its subsidiaries HMRC HM Revenue & Customs HSE +HDOWKVDIHW\DQGHQYLURQPHQW

The paper used in this report is elemental chlorine free and is FSC® FHUWLƮHG,WLVSULQWHGWR,62 HQYLURQPHQWDOSURFHGXUHVXVLQJYHJHWDEOHEDVHGLQNV

The Forest Stewardship Council® (FSC® ) is an international network which promotes responsible management of the world's forests. )RUHVWFHUWLƮFDWLRQLVFRPELQHGZLWKDV\VWHP of product labelling that allows consumers to readily identify timber based products IURPFHUWLƮHGVRXUFHV

Elementis plc

Caroline House 55-57 High Holborn London WC1V 6DX UK

Tel: +44 (0)20 7067 2999 www.elementis.com

AI Terminal

Elementis PLC

4640_10-k_2019-12-31_b9552c91-49b7-4050-9481-f0624b7c0ec0.pdf

Innovation. Growth. Efficiency.

Contents

What's inside this report

How we impact HYHU\GD\ life

How we innovate

01 Strategic report

54 Corporate Governance

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Operational highlights

Strategic highlights

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Revenue

Our purpose

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Kitchen

Chairman's statement

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Dear Shareholders

Business and markets

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Balance sheet

Dividend

Governance and Board

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Performance

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People

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Strong cash generation

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COVID-19

Outlook

Corporate governance

Q&A with our CEO

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Responding to a changing world

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