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SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549   FORM 20-F


REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

ANNUAL REPORT PURSUANT TO SECTION
  13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended: December
  31, 2002

OR

TRANSITION REPORT PURSUANT
  TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 2-52441

IMPERIAL
  CHEMICAL INDUSTRIES PLC(Exact name of Registrant as specified in its charter)

ENGLAND AND WALES(Jurisdiction of incorporation or organization)

20 Manchester Square, London W1U 3AN, England(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12(b) of the
  Act.

|Title of
      each class                                                           | Name of each exchange
      on which registered
|----------------------------------------------------------------------------------- | -----------------------------------------------
|American Depositary Shares,
      each representing four Ordinary Shares of £1 each | New York Stock Exchange                        
|                                                                                    |                                                
|Ordinary Shares of £1
      each                                                    | New York Stock Exchange*                       

* Not for trading, but only in
  connection with the registration of American Depositary Shares representing
  such Ordinary Shares pursuant to the requirements of the Securities and Exchange
  Commission.

Securities registered or to be registered pursuant to Section 12(g) of the Act.

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.

None

Ordinary Shares of £1 each 1,191,200,145

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Indicate by check mark whether the registrant:
  (1) has filed all reports required to be filed by Section 13 or 15(d) of the
  Securities Exchange Act of 1934 during the preceding 12 months (or for such
  shorter period that the registrant was required to file such reports), and (2)
  has been subject to such filing requirements for the past 90 days.

Yes       No

Indicate by check mark which
  financial statement item the registrant has elected to follow. Item 17    Item 18

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Pursuant to Rule 12b-23(a) of the Securities Exchange Act of 1934, as amended, certain information for the Annual Report on Form 20-F of Imperial Chemical Industries PLC (the “Company”) for the fiscal year ended December 31, 2002 (this “Report”) as set out below is being incorporated by reference from the Company’s Annual Report and Accounts and Form 20-F 2002, which was furnished to the Securities and Exchange Commission as a Report on Form 6-K on March 11, 2003.

References below to major headings include all information under such major headings, including subheadings, unless such reference is part of a reference to a subheading, in which case such references includes only the information contained under the subheading.  Graphs are not included unless specifically identified below.

The information set forth under the heading “Forward-looking statements” on page 2 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

Certain words and expressions used in this document shall, unless the context otherwise requires, have the meanings ascribed to them under the heading “Definitions” on page 124 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 and incorporated herein by reference.

Words within single quotation marks, the letters ICI, the Roundel Device, The Vital Ingredient, the Face Logo, Dulux, Glidden, National Starch, Quest, Uniqema, Bondmaster, Ablestik, Acheson, Permabond, Elotex and Vinamul are all trademarks of the ICI Group.

Mania for Men, Eau Torride, Glow, Bora Bora and Washpoint are non-ICI trademarks.

Trading
  profit, profit before tax and earnings per share figures are quoted before goodwill
  amortisation and exceptional items throughout this Report (including the information
  contained in the Company’s Annual Report and Accounts and Form 20-F 2002
  contained in its Report on Form 6-K dated March 11, 2003 and incorporated herein
  by reference), with the exception of the financial statements on pages numbered
  50 to 115 included under Item 18 of this Report and in the same pages of the
  Company’s Annual Report and Form 20-F 2002 contained in its Report on
  Form 6-K dated March 11, 2003 incorporated herein by reference, unless otherwise
  stated.



Recent
  Developments

On March 25, 2003 the Company
  issued an update on current trading for the first quarter of 2003, contained
  in the Company’s Report on Form 6-K dated March 26, 2003, and which read
  as follows:

“Group sales and cash flow
  for the quarter are both expected to be satisfactory, in spite of continuing
  challenging trading conditions. Whilst Paints is performing in line with our
  expectations and Uniqema continues to experience difficult conditions, as in
  Q4, Group trading performance so far this year has been impacted by two principal
  factors:

| |  | Significant raw material cost increases
      in National Starch; and
| | - | ---------------------------------------------------------------------
| |   |                                                                      
| |  | Weakness in Quest Food sales in Europe.                              

As a result ICI expects Q1 profit before taxation, before exceptionals and goodwill amortisation, to be around £50m in comparison with last year’s £66m.

National Starch

Petrochemical-based raw material prices have risen rapidly in Q1.  To address this, National Starch has implemented and is continuing to implement price increases across its Adhesive and Specialty Polymer businesses. Given the inevitable lag in pricing to offset raw material cost increases, the benefit of

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improved pricing will be limited in Q1. Consequently, Q1 trading profit is expected to be around £39m (Q1 2002: £55m).

Cost reduction programmes are being initiated.

Quest

Quest reported sales in Q1 are expected to be some 10% below 2002.

As reported at the time of the Q2 2002 results, Quest experienced production problems at its Naarden, Netherlands facility, as a result of systems changes.  In response, a series of actions were initiated to tackle these production problems and restore customer service levels.  Customer service levels in Q1 are now better than prior year comparators. As indicated at the full year 2002 results, we continue to forecast a one-off cost impact of less than £5m in the current year relating to these problems.

However, Q1 sales for the European food business are now expected to be around 20% lower than the comparable period last year, mainly as a result of business lost following the customer service problems in 2002.  This is the main additional contributor to a forecast reduction in Quest’s Q1 trading profit from £29m in 2002 to around £9m this year.

Further action is being taken in order to sustain the improvements in customer service, restore market position and reduce costs. These include:

| |  | Innovation programmes to accelerate
      sales growth with our top 200 customers in Europe;
| | - | --------------------------------------------------------------------------------------------
| |   |                                                                                             
| |  | Establishing a new leadership team in
      the Foods business; and                         
| |   |                                                                                             
| |  | Cost reduction plans in the areas of
      marketing, IT and discretionary expenses.        

Paul Drechsler, who is currently Chairman and CEO of Quest, has resigned from the Board of ICI with immediate effect and will be leaving the Company. His successor is expected to be announced in the next few days.

Summary

Trading performance in Q1 will
  be adversely affected by the above factors. However, immediate actions have
  been taken in both National Starch and in Quest and ICI is undertaking a further
  Group-wide cost-reduction review to improve the overall performance of the Group.”



PART I

ITEM 1  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not  applicable.

ITEM 2  OFFER STATISTICS AND EXPECTED TIMETABLE

Not  applicable.

ITEM 3  KEY INFORMATION

A.      Selected Financial Data.

The information set forth under the headings “Selected financial data” on pages 4 to 6, “US GAAP results” and related subheadings on page 26 and “Shareholder information  Exchange rates” on page 123 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003, is incorporated herein by reference. The high and low exchange rates for each month since February 2003 based on the noon buying rate in New York City for cable

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transfers in pounds sterling as certified by the Federal Reserve Bank of New York for customs purposes (the “noon buying rate”) are set out below:

|US$ to pound sterling (£)2003 |  |  | Highest rate
      during
      period |  |  | Lowest rate
      during
      period | 
|----------------------------- |  |  | -------------------------------------- |  |  | ------------------------------------- | 
|                              |  |  |                                        |  |  |                                       | 
|                              |  |  | $                                      |  |  | $                                     | 
|February                      |  |  | 1.65                                   |  |  | 1.57                                  | 
|March (as of March 25, 2003)  |  |  | 1.61                                   |  |  | 1.56                                  | 

The noon buying rate on March
  25, 2003 was $1.57= £1.

B.      Capitalization and Indebtedness.

Not
  applicable.

C.      Reasons for the Offer and Use of Proceeds.

Not
  applicable.

D.      Risk Factors.

The
  information set forth under the heading “Shareholder information 
  Risk Factors” on pages 119 to 121 of the Company’s Annual Report
  and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March
  11, 2003, is incorporated herein by reference.

.

ITEM 4  INFORMATION ON THE COMPANY

A.      History and Development of the Company.

The information set forth under the headings “Description of business  General”, “Description of business  Group Strategy”, “ Description of business  Group Financial Objectives”, and “Description of business  Recent History” on page 10, “Notes relating to the accounts  Note 22  Disposal and restructuring provisions  Disposal provisions” on pages 83 and 84 , “Notes relating to the accounts  Note 30  Disposals” on page 91,  “Description of Business  Capital expenditure” on page 16 and 17 , including the table entitled “Group expenditure on tangible fixed assets” on page 16, “Shareholder information  Incorporation of the Company” and “Shareholder information  Registered Office” on page 122 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated  March 11, 2003 is incorporated herein by reference.

B.      Business Overview.

The information set forth under the headings “Description of business  Geographic focus” and “Description of business  Business segments” on page 11, “Description of business  Continuing operations” on pages 12 to 15, “Description of business  Huntsman International Holdings LLC” on page 15, “Description of business  Discontinued operations”, “Description of business  Markets and distribution”, “Description of business  Seasonality”, “Description of business  Sources and availability of raw materials”, “Description of business  Intellectual property”, “Description of business  Competition” on pages 15 and 16, “Description of business  Regulation, safety, health and the environment” on pages 17 and 18 and “Description of  business  Insurance” on page 19 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated  March 11, 2003 is incorporated herein by reference.

C.      Organizational Structure.

The information set forth under the heading “Principal subsidiary undertakings” on page 115 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

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D.      Property, Plants and Equipment.

The information set forth under the heading “Description of business  Continuing operations” on pages 12 to 15, “Description of business  Property” on page 19 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

ITEM 5  OPERATING AND FINANCIAL REVIEW AND PROSPECTS

A.      Operating Results.

The
  information set forth under the heading “Description of business 
  Regulation safety, health and the environment” on pages 17 and 18, and
  under the heading “Operating and financial review” on pages 20 to
  32, including the graphs related to Turnover  continuing operations, Trading
  profit  continuing operations and Group profit before tax on page 20,
  Turnover and Trading profit and turnover by customer location of “National
  Starch” on page 27, “Quest” on pages 27 and 28, “Performance
  Specialties” on page 28 and “Paints” on page 29, the information
  under the heading “Operating and financial review  Cash flow 
  UK GAAP” on pages 22 and 23, but excluding the other information under
  the heading “Operating and financial review  Cash flow” on
  pages 21 and 22 (including the table on page 22), “Operating and financial
  review  Treasury policies” on page 23, “Operating and financial
  review  Financing and interest rate risk” on page 23 and “Operating
  and financial review  liquidity and investments” on pages 23 and
  24 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained
  in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

Additionally, under the heading “Group Financial Review  Restructuring” on page 6 of the announcement of the Group’s Results (unaudited) Fourth Quarter and Full Year 2002 contained in its report on Form 6-K dated February 7, 2003, the Group reported that following the flavour production problems in Quest, certain elements of that business’s restructuring programme will be deferred, specifically those related to Quest’s further deployment of new supply chain systems.

Also,
  in an announcement on March 25, 2003 contained in its Report on Form 6-K dated
  March 26, 2003, which is incorporated herein by reference, the Group provided
  a “Trading Update” on current trading for the first quarter.

B.      Liquidity and Capital Resources.

The information set forth in the third paragraph under the heading “Description of business  Capital expenditure” on pages 16 and 17, in the table contained in “Notes relating to the accounts  Note 40  Commitments and contingent liabilities” on page 105 and under the headings “Operating and financial review  Cash flow-UK GAAP” and “Operating and financial review  Treasury policies” on pages 22 and 23,  “Operating and financial review  Financing and interest rate risk” on page 23, “Operating and financial review  Liquidity and investments” and “Operating and financial review  Foreign currency risk” and “Operating and financial review  Counterparty credit risk” on pages 23, 24 and 25 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

As
  noted in the third paragraph of “Operating and financial review 
  Liquidity and investments” on page 23 of the Company’s Annual Report
  and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March
  11, 2003 the Imperial Chemical Industries Employee Benefits Trust (the “Trust”)
  has entered into forward commitments to purchase shares in the Company, which
  include collateral requirements relating to the prevailing price of shares in
  the Company. Since December 31, 2002, the Trust has provided collateral.

ICI is of the opinion that the Group has sufficient working capital for its present requirements.

C.      Research and Development, Patents and Licenses, etc.

The information set forth under the headings “Description of business  Intellectual property” on page 16 and “Description of business  Research and development (R&D)” on page 17 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

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ITEM 6  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.      Directors and Senior Management.

The information set forth under the heading “Board of Directors” on page 33, but excluding the twelfth and thirteenth paragraphs thereof, and the information set forth under the heading “Executive Management Team” on page 34 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

Also,
  in the tenth paragraph of an announcement headed “Trading Update”
  dated March 25, 2003 contained in its report on Form 6-K dated March 26, 2003
  which is incorporated herein by reference, the Group reported that Paul Dreschler,
  who was currently Chairman and CEO of Quest, has resigned from the Board of
  ICI with immediate effect and would be leaving the Company.

B.      Compensation.

The information set forth under the headings “Remuneration report  Remuneration packages for Executive Directors” on pages 38 and 39, “Remuneration report  Performance Growth Plan” on pages 40 and 41 including the graphs relating to Five year cumulative Total Shareholder Return: ICI and Peer Group Indices and Five year cumulative Total Shareholder Return:ICI and FTSE 100 Indices, the headings “Remuneration report  Share option schemes” on pages 42 and 43, “Remuneration report  Retirement benefits” on page 44, “Remuneration report  Directors’ pension benefits”, including the table thereunder on page 44, the first two sentences of the second paragraph of “Notes relating to the accounts  Note 2  Directors’ and Officers’ remuneration and interests” on page 57 and under the subheading “Notes relating to the accounts  Note 23  Called-up share capital of parent company  Employees’ share option schemes and other share based plans” on page 86 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

As of March 20, 2003, there were options outstanding in respect of 48.0m Ordinary Shares of £1 normally exercisable in the period 2003 to 2013 at subscription prices of £1.34 to £10.08.

C.      Board Practices.

The information set forth in the twelfth and thirteenth paragraphs under the heading “Board of Directors” on page 33, under the subheadings “Audit Committee” and “Remuneration and Nomination Committee” on page 36 and in the subheading “Remuneration report  Directors’ service agreements and letters of engagement” on page 46 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

D.      Employees.

The information set forth under the heading “Description of business  Employees” on page 19 and under the heading “Notes relating to the accounts  Note 36  Employee numbers and costs” on page 96 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

E.      Share Ownership.

The
  information set forth under the headings “Remuneration report  Share
  option schemes  Directors’ interests in share options” on
  pages 42 and 43 and “Remuneration report  Directors’ interests
  in shares” on page 45 and from the third sentence of the second paragraph
  onwards of “Notes relating to the accounts  Note 2  Directors’
  and Officers’ remuneration and interests” on page 57 of the Company’s
  Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form
  6-K dated March 11, 2003 is incorporated herein by reference.

As of March 26, 2003, shares held by and options granted to Directors and Officers to subscribe for £1 Ordinary Shares in the Company were as follows:

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|                                                                                                                                                                     |  |  | £1
      Ordinary Shares(1) |  |  | Options
      granted(1)                                  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | --------------------------- |  |  | --------------------------------------------------------- | 
|                                                                                                                                                                     |  |  |                             |  |  |                                                           | 
|                                                                                                                                                                     |  |  | Number                      |  |  | Options outstanding
      at 
      March 26, 2003 Number | 
|                                                                                                                                                                     |  |  |                             |  |  |                                                           | 
|                                                                                                                                                                     |  |  |                             |  |  |                                                           | 
|Directors (for further details
        see Remuneration Report pages 42, 43 and 45 of the Annual Report and Form
        20-F 2002 incorporated herein by reference) |  |  | 541,104                     |  |  | 5,980,471                                                 | 
|Officers                                                                                                                                                             |  |  | 117,919                     |  |  | 3,027,858                                                 | 

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|(1) | Includes ADRs disclosed
        in terms of £1 Ordinary Share equivalents/Ordinary Share option
        equivalents.
|--- | --------------------------------------------------------------------------------------------------------------------

As of March 26, 2003, no individual director or officer had interests in shares or options exceeding one per cent of the issued Ordinary Share Capital of the Company.

As of March 26, 2003, the total amount of the Company’s voting securities owned by Directors and Officers of ICI, as a group, was:

|Title of Class  |  |  | Amount owned
      (number of shares) |  |  | Per cent of
      class | 
|--------------- |  |  | ------------------------------------- |  |  | ----------------------- | 
|                |  |  |                                       |  |  |                         | 
|Ordinary Shares |  |  | 659,023                               |  |  | 0.055                   | 

ITEM 7  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.      Major Shareholders.

The information set forth in paragraphs (a), (b)(i) and (c) under the heading “Shareholder information  Control of Company” on page 117 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

Set out below is updated information regarding interests in the Company’s £1 Ordinary Shares appearing in the Register of Interests in Shares maintained by the Company:

|                                     |  |  | As of March
      20, 2003                     | 
|------------------------------------ |  |  | ---------------------------------------------- | 
|                                     |  |  |                                                | 
|                                     |  |  | Amount owned
      (number of shares) millions | 
|                                     |  |  |                                                | 
|JPMorgan Chase Bank*                 |  |  | 107.4                                          | 
|Brandes Investment Partners
      LP |  |  | 103.7                                          | 
|Barclays Bank PLC                    |  |  | 48.6                                           | 
|Franklin Resources Inc               |  |  | 44.9                                           | 
|Artisan Partners LP                  |  |  | 37.4                                           | 

|  |                                                                                                   
|- | --------------------------------------------------------------------------------------------------
|* | This interest relates to ADRs
  issued by JPMorgan Chase Bank, as depositary, which evidence ADSs.

As of March 20, 2003, no other person held an interest in shares, comprising 3% or more of the issued Ordinary Share Capital of the Company, appearing in the Register of Interests in Shares maintained under the provisions of Section 211 of the Companies Act 1985.

B.      Related Party Transactions.

The information set forth under the heading “Notes relating to the accounts  Note 42  Related party transactions” on page 97 of the Company’s Annual Report and Accounts and Form 20-F

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2000 contained in its Report on Form 6-K dated March 12, 2001 and “Notes relating to the accounts  Note 41  Related party transactions” on page 106 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

C.      Interests of Experts and Counsel.

Not
  applicable.

ITEM 8  FINANCIAL INFORMATION

A.      Consolidated Statements and Other Financial Information.

See Item 18 for a full list of financial statements included as part of this report.

Export Sales.

The total amount of export sales from the United Kingdom and the total amount of export sales from the United Kingdom as a percentage of total sales by ICI companies located in the United Kingdom is set out below:

|                                                                                                                               |  |  | 2002  |  |  | 2001  |  |  | 2000  | 
|------------------------------------------------------------------------------------------------------------------------------ |  |  | ----- |  |  | ----- |  |  | ----- | 
|                                                                                                                               |  |  |       |  |  |       |  |  |       | 
|Exports from the United
      Kingdom                                                                                          |  |  | £516m |  |  | £503m |  |  | £858m | 
|Exports from the United
      Kingdom as a percentage of total sales made by ICI companies located in
      the United Kingdom |  |  | 38%   |  |  | 32%   |  |  | 30%   | 

Subsidiary Undertaking.

ICI Wilmington Inc. (“ICI Wilmington”) is a wholly owned subsidiary of ICI.  ICI has fully and unconditionally guaranteed the debt securities of ICI Wilmington.

Legal or Arbitration Proceedings.

The information set forth under the heading “Notes relating to the financial accounts  Note 40  Commitments and contingent liabilities” on pages 105 and 106 except for the first, second and eighth paragraph on page 105 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003, is incorporated herein by reference.

Policy on Dividend Distributions.

The information set forth under the heading “Operating and financial review  Dividend and dividend policy” on page 21 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

In an announcement on March 25, 2003, contained in its Report on Form 6-K which is incorporated herein by reference dated March 26, 2003, the Group provided a “Trading Update” on current trading for the first quarter.

The
  full text of this announcement appears under the heading of “Recent Developments”
  on page 1 of this Form 20-F.

ITEM 9  THE OFFER AND LISTING

A.      Offer and Listing Details.

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Price History of the Stock.

The information set forth in the fourth paragraph and the related table under the heading “Trading market for Ordinary Shares” ( beginning “The following table shows, for the years and months indicated, the reported high and low middle market values for the Company’s Ordinary Shares” etc.) on page 116 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

The reported high and low middle market values  for the Company’s Ordinary Shares on the London Stock Exchange, based on its Daily Official List and the reported high and low sale prices of ADSs, as reported by Dow Jones (ADR quotations) for each month since February 2003 are set out below:

|                             |  |  | £1 Ordinary
      Shares |  |  | ADSs     | 
|---------------------------- |  |  | ------------------------ |  |  | -------- | 
|                             |  |  |                          |  |  |          | 
|2003                         |  |  | Monthhigh                |  |  | Monthlow | 
|                             |  |  |                          |  |  |          | 
|                             |  |  | £                        |  |  | £        | 
|February                     |  |  | 2.04                     |  |  | 1.47     | 
|March (as of March 25, 2003) |  |  | 1.59                     |  |  | 0.94     | 

The Company’s share price
  as of March 25, 2003 was £0.94; the Company’s ADS price as of March
  25, 2003 was $6.05

B.      Plan of Distribution.

Not
  applicable.

C.      Markets.

The information set forth in the second and third paragraphs under the heading “Trading market for Ordinary Shares” on page 116 of the Company’s Annual Report and Accounts and          Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 (beginning “ The principal trading market for the Company’s Ordinary Shares is the London Stock Exchange” ) is incorporated herein by reference.

|                                            |  |  | Total   |  |  | In the United
      States | 
|------------------------------------------- |  |  | ------- |  |  | -------------------------- | 
|                                            |  |  |         |  |  |                            | 
|Number of record holders
      of:          |  |  |         |  |  |                            | 
|Ordinary Shares as at January
      1, 2003 |  |  | 167,263 |  |  | 722                        | 
|ADSs as at March 20, 2003                   |  |  | 2,541   |  |  | 2,486                      | 

As
  of March 20, 2003, the proportion of Ordinary Shares represented by ADSs was
  9.0% of the Ordinary Shares in issue.

D.      Selling Shareholders.

Not
  applicable.

E.      Dilution.

Not
  applicable.

F.      Expenses of the Issue.

Not
  applicable.

ITEM 10  ADDITIONAL INFORMATION

A.      Share capital.

Not
  applicable.

B.      Memorandum and Articles.

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The following summary contains a description of certain provisions of the Company’s Memorandum and Articles of Association (which are referred to as the Memorandum and the Articles respectively).  It does not purport to be complete and is qualified in its entirety by reference to the Memorandum and Articles, copies of which have been filed as Exhibit 1.1 hereto.

Registration and Objects

The Company is a public limited company incorporated pursuant to the Companies Acts 1908 to 1917 and is registered under number 218019 in the register of companies maintained by the Registrar of Companies for England and Wales.  The objects of the Company are set out in full in clause 5 of the Memorandum. They contemplate the conduct of a wide range of industrial and other businesses and activities.

Directors

Restrictions on Voting

Subject to the exceptions set out below, no director may vote on, or be counted in a quorum in relation to, any resolution of the board of directors in respect of any contract, arrangement or proposal in which he has a material interest and, if he does so, his vote is not to be counted. This prohibition does not apply to a director in relation to:

| |  | any arrangement for giving any director
      any security or indemnity in respect of money lent by him to, or obligations
      undertaken by him for the benefit of, the Company or any of its subsidiaries;                                                                                                                                                                                                                                                                                         
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any contract or arrangement by a director
      to participate in the underwriting of any offer of shares, debentures or
      other securities of the Company, or any of its subsidiaries, for subscription,
      purchase or exchange;                                                                                                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any contract or arrangement in which
      he is interested by virtue of his interest in shares or debentures or other
      securities of the Company, or by reason of any other interest in or through
      the Company;                                                                                                                                                                                                                                                                            
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any contract or arrangement concerning
      any other company in which the director is interested, directly or indirectly,
      whether as an officer, shareholder, creditor or otherwise, unless he owns
      more than 1% of that company’s equity share capital (determined on
      the basis set out in the Articles);                                                                                                                                                                         
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any proposal concerning the adoption,
      modification or operation of a superannuation fund or retirement, death
      or disability benefits scheme, share option scheme, share incentive scheme
      or profit sharing scheme, which relates both to directors and employees
      of the Company, or of any of its subsidiaries and does not accord to any
      director as such any privilege or advantage not generally accorded to the
      employees to which such scheme or fund relates;
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any arrangement for the benefit of employees
      of the Company, or of any of its subsidiaries under which the director benefits
      in a similar manner as the employees; or                                                                                                                                                                                                                                                                                                                      
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| |  | any proposal concerning any insurance
      which the Company is empowered to purchase or maintain for or for the benefit
      of any directors of the Company, or for persons who include directors of
      the Company.                                                                                                                                                                                                                                                                            

Compensation

Non-executive directors are entitled to receive such remuneration as the board of directors may determine, but the aggregate of all such remuneration to non-executive directors may not exceed £250,000 per annum unless authorized by an ordinary resolution.  Executive directors are entitled to receive such remuneration as the board of directors may determine.  In the absence of an independent

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quorum, directors do not have the power to vote compensation to themselves or any member of their body.

Borrowing Powers

Directors
  may exercise all borrowing powers of the Company, subject to the limitation
  that the aggregate principal amount from time to time outstanding of all the
  sums borrowed by the Company and its subsidiaries, exclusive of intra-group
  borrowings, may not, without the previous sanction of an ordinary resolution,
  exceed an amount equal to 2 1/2 times an adjusted capital and reserves
  figure calculated in the manner prescribed in the Articles.

Age Limit

No person is disqualified from being a director or is required to vacate that office by reason only of the fact that he is 70 or more years of age.  If at an annual general meeting a director who is 70 or more years of age as at the date of the directors’ report is proposed for re-election, his age must be set out in the directors’ report.

Share Ownership Requirements

No minimum holding of the Company’s shares is required in order to serve as a director.

Appointment

The Company’s Memorandum and Articles provide for a board of directors, consisting of at least five but not more than 25 directors, which is responsible for managing the Company’s business and affairs. The Company may from time to time by shareholder resolution increase the maximum number of directors beyond 25. Directors may be elected by the shareholders in a general meeting, or appointed by the board of directors.

Retirement

At each annual general meeting one-third of the directors, representing those directors who have been in office longest since their last election, as well as any directors appointed by the board of directors since the last annual general meeting, are required to retire and are then considered for re-election if they wish to stand for re-election. In cases when directors were elected or re-elected on the same day, the decision as to which of them is to retire is determined by lot unless they otherwise agree.

Rights, Preferences and Restrictions relating
  to Shares

The Company has an authorized share capital consisting of 1,400,000,000 ordinary shares of £1 nominal value per share. The rights, preferences and restrictions attaching to the ordinary shares are as follows:

Dividend Rights

No dividend may be paid other than out of profits available for distribution, as determined in accordance with UK GAAP and the UK Companies Act. Holders of the Company’s ordinary shares may declare dividends by ordinary resolution but may not declare dividends in excess of the amount recommended by the directors. The directors may also declare interim dividends. Any dividends must be distributed to shareholders in proportion to the amounts paid up on their shareholdings.

If a dividend is unclaimed for 12 years after the date such dividend became due for payment, it will be forfeited and will revert to the Company.

The Company’s Articles permit payment or satisfaction of a dividend wholly or partly by distribution of specific assets, including fully paid shares or debentures of any other company. Such action must be approved by the general meeting which declared the dividend and upon the recommendation of the directors.

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Voting Rights

Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder present in person at a general meeting, including the duly authorised representative of a corporate holder of the Company’s shares which is not itself a shareholder entitled to vote, has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every share held by that shareholder.  For all future general meetings, the Company intends to put resolutions to a poll rather than a show of hands.

A poll may be demanded by any of the following:

| |  | the chairman of the meeting,                                                                                                                                                                                                                                        
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                     
| |  | at least five shareholders entitled
      to vote and present in person, by proxy or by a duly authorized representative
      at the meeting,                                                                                                                      
| |   |                                                                                                                                                                                                                                                                     
| |  | any shareholder or shareholders representing
      in the aggregate not less than one-tenth of the total voting rights of all
      shareholders entitled to vote at the meeting and present in person, by proxy
      or by a duly authorized representative, or   
| |   |                                                                                                                                                                                                                                                                     
| |  | any shareholder or shareholders holding
      shares conferring a right to vote at the meeting on which there have been
      paid-up sums in the aggregate equal to not less than one-tenth of the total
      sum paid up on all the shares conferring that right.

A proxy has the authority to demand a poll or to join others in demanding one. Matters are transacted at the Company’s general meetings by the proposal and approval of three kinds of resolutions:

| |  | ordinary resolutions, which include
      resolutions for the election, re-election and removal of directors, the
      approval of financial statements, the declaration of final dividends, the
      appointment or reappointment of auditors, the increase of authorised share
      capital or the grant of authority to allot shares,
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                            
| |  | special resolutions, which include resolutions
      to amend the Company’s Memorandum or Articles or resolutions changing
      the name of the company, and                                                                                                                                                                              
| |   |                                                                                                                                                                                                                                                                                                                                            
| |  | extraordinary resolutions, which are
      those required under the UK Companies Act or the Company’s Articles
      to approve a matter outside the ordinary course, for example a resolution
      relating to the winding-up of ICI.                                                                                                    

An ordinary resolution requires the affirmative vote of a majority of the votes of those persons present in person or, where proxies are allowed (i.e. on a poll), by proxy and voting at a meeting at which there is a quorum. Special and extraordinary resolutions require the affirmative vote of not less than three-fourths of the votes of those present in person or, where proxies are allowed (i.e. on a poll), by proxy and voting at a meeting at which there is a quorum. In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he or she may have as a shareholder.

|Rights to Share in the Profits
|------------------------------

See "Dividend Rights" above.

|Rights in the Event of Liquidation
|----------------------------------

In the event of the liquidation of ICI, after payment of all liabilities and deductions in accordance with English law, the balance of assets available for distribution will be distributed first among the holders of the Company’s ordinary shares according to the amounts paid-up on the shares held by them. Any surplus thereafter will be distributed pro ratato the holders of the Company’s ordinary shares according to the respective number of ordinary shares held by them. This distribution is generally made in cash. A liquidator may, with the sanction of an extraordinary resolution of the shareholders and any other sanction required by the UK Insolvency Act 1986, divide among the

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shareholders in kind the whole or any part of the Company’s assets, whether they consist of property of the same kind or not.

|Redemption
      of Shares
|--------------------------

The Company’s shares are not expressly redeemable.

|Sinking
      Fund
|------------------

The Company’s shares are not subject to any sinking fund.

|Liability
      to Further Capital Calls
|----------------------------------------

All of the issued shares in the Company’s capital are fully paid.  Accordingly none of the Company’s shareholders are liable to further capital calls.

|Principal Shareholder Restrictions
|----------------------------------

There are no provisions in the Articles which would discriminate against any existing or prospective holder of the Company’s shares as a result of such shareholder owning a substantial number of shares.

|Changes
      to Shareholders’ Rights
|-------------------------------------

If, at any time, the Company’s share capital is divided into different classes of shares, the rights attached to any class may be varied, subject to the provisions of the UK Companies Act, either with the written consent of the holders of not less than three-fourths in nominal value of the issued shares of that class or upon the adoption of an extraordinary resolution passed at a separate general meeting of the holders of the shares of that class.

At every such separate meeting, all of the provisions of the Company’s Memorandum and Articles relating to proceedings at a general meeting apply, except that (a) the quorum is to be the number of persons (which must be at least two) who hold or represent by proxy not less than one-third in nominal value of the issued shares of the class or, if such quorum is not present on an adjourned meeting, one person who holds shares of the class regardless of the number of shares he holds, (b) any person present in person or by proxy may demand a poll, and (c) each shareholder will have one vote per share held in that particular class in the event a poll is taken.

Class rights are deemed not to have been varied by the creation or issue of new shares ranking equally with or subsequent to that class of shares in all respects or by the purchase by the Company of the Company’s own shares in accordance with the UK Companies Act and the Company’s Memorandum and Articles.

|Shareholders’
      Meetings
|----------------------------

The Company is required to hold an annual general meeting and may also hold extraordinary general meetings. All meetings of the Company’s shareholders other than the annual general meeting are called extraordinary general meetings. Five shareholders present at an annual general meeting or an extraordinary general meeting constitute a quorum.

At least 21 clear days’ written notice of an annual general meeting and of any extraordinary general meeting at which a special resolution or a resolution appointing a person as a director is to be proposed is required. At least 14 clear days’ written notice of any other extraordinary general meeting is required. An annual general meeting may, however, be held at short notice provided that all the shareholders entitled to attend and vote at the meeting agree. Any extraordinary general meeting may be held at short notice if a majority in number of shareholders, who together hold at least 95% in nominal value of the Company’s shares with a right to attend and vote at such meeting, agree. Clear days’ notice excludes the date on which the notice of a meeting is posted, the date on which such notice is deemed to have been served and the date of the meeting itself. Such notice, when sent by first class post, is deemed to have been served on the date following that on which the notice was posted.

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All shareholders or their proxies may attend and vote according to the voting rights set out above at an annual general meeting and extraordinary general meetings.

Under the Company’s Memorandum and Articles, the annual general meeting of shareholders must be held within 15 months of the preceding annual general meeting and at a time and place determined by the board of directors. The holders of at least one-tenth in nominal value of the Company’s issued shares may requisition a meeting of shareholders. The courts of England also have residual powers to call general meetings under the UK Companies Act.

|Limitation
      on Security Ownership
|--------------------------------------

There are no restrictions under English law or in the Memorandum or Articles that limit the right of non-resident or foreign shareholders to hold or exercise voting rights in respect of the Company’s ordinary shares.

|Change
      in Control
|-----------------------

There are no provisions in the Articles that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company or any of its subsidiaries.

|Disclosure
      of Shareholder Ownership
|-----------------------------------------

There are no provisions in the Company’s Memorandum or Articles whereby persons acquiring, holding or disposing of a certain percentage of the Company’s ordinary shares are required to make disclosure of their ownership percentage. Sections 198 to 211 of the UK Companies Act do, however, impose such disclosure requirements upon a person who acquires or ceases to have an interest in shares comprising any class of the Company’s issued and voting share capital and, as a result, either obtains, or ceases to have:

| |  | a ‘‘material interest’’
      in 3% or more of the nominal value of any class of the Company’s issued
      voting share capital; or                                                                                                                                                                                                      
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                           
| |  | an aggregate interest (whether ‘‘material’’
      or not) in 10% or more of the nominal value of any class of the Company’s
      issued voting share capital or the percentage of his interest in the Company’s
      issued voting share capital remains above the relevant level and changes
      by a whole percentage point or more.

A ‘‘material’’ interest means, broadly, any beneficial interest, including those of a spouse or a child or a step-child, those of a company which is accustomed to act in accordance with the relevant person’s instructions or in which one third or more of the votes are controlled by such person and certain other interests set out in the UK Companies Act, other than those of an investment manager or an operator of a unit trust/recognized scheme/collective investment scheme/open-ended investment company.

The UK Companies Act set out particular rules of disclosure where two or more parties have entered into an agreement to acquire interests in shares of a public company, and the agreement imposes obligations or restrictions on any such party with respect to the use, retention or disposal of their interests in the shares and an acquisition of shares by a party pursuant to the agreement has taken place.

Under the UK Companies Act, the Company may by notice in writing require a person that the Company knows or has reasonable cause to believe is or was during the three years preceding the date of the notice interested in the Company’s shares to indicate whether or not that is correct and, if that person does or did hold an interest in the Company’s shares, to provide certain information as set out in the UK Companies Act.

The UK Companies Act also regulates the disclosure of interests in shares or debentures held by directors and certain associated companies of the issuing company.

There are additional disclosure obligations under the Rules Governing Substantial Acquisitions of Shares where a person acquires 15% or more of the voting rights of a listed company or

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when an acquisition increases his holding of shares or rights over shares so as to increase his voting rights beyond that level by a whole percentage point. In this case notification should be directed to the London Stock Exchange and to the Company no later than noon on the business day following the date of the acquisition.

The UK City Code on Takeovers and Mergers also imposes strict disclosure requirements with regard to dealings in the securities of an offeror or offeree company on all parties to a takeover transaction, and anyone acting in concert with such parties, during the course of an offer period.

C.      Material Contracts.

The information set forth under the heading “Shareholder information  Material contracts” on page 122 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

D.      Exchange Controls.

The information set forth under the heading “Shareholder information  Exchange controls and other limitations affecting security holders” on page 117 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

E.      Taxation.

The following discussion is intended as a general guide only.

Shareholders who are in any doubt with regard to tax matters, or who are resident in countries other than the United Kingdom or USA should consult their tax adviser.

The Double Taxation (Income) Convention of 1975 (“the Current Convention”) between the United Kingdom and the United States has been renegotiated and an agreed text of a new Convention (“the New Convention”) has been ratified by both governments. The New Convention will enter into force when instruments of ratification are exchanged. Until then the Current Convention remains in force.

The following summary of the principal UK and certain US tax consequences of ownership of Ordinary Shares or ADSs, held as capital assets by US resident shareholders is based on current UK and US Federal tax law and practice and in part on representations of JPMorgan Chase Bank as Depositary for ADSs and assumes that each obligation in the deposit agreement among the Company, the Depositary and the holders from time to time of ADSs and any related agreement will be performed in accordance with its terms. The US Treasury has expressed concerns that parties to whom ADSs are pre-released may be taking actions that are inconsistent with the claiming, by US holders of ADSs, of foreign tax credits for US federal income tax purposes. Accordingly, the analysis of the creditability of UK taxes described below could be affected by future actions that may be taken by the US Treasury.

Taxation of dividends paid to US Shareholders

For US federal income tax purposes, the sum of the dividend paid and any associated tax credit or UK withholding tax considered to have been paid with respect to the dividend is includable in gross income by US resident shareholders that claim the benefits of the Current Convention and, for foreign tax credit limitation purposes, is foreign source income treated separately, together with other items of “passive income” (or, in the case of certain holders, “financial services income”). The withholding is treated as a foreign income tax which may, subject to certain restrictions and limitations, be eligible for credit against a US resident shareholder’s US federal income tax liability (or deductible by such shareholder in computing taxable income). Changes to UK tax law in relation to dividends paid on or after April 6, 1999 result in no effective repayment of any part of the tax credit associated with a dividend paid on or after April 6, 1999 being available under the Current Convention. However, US resident shareholders that claim the benefits of the Current Convention may elect to include in gross

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income an amount equal to a tax credit of one-ninth of the cash dividend paid and, subject to certain restrictions and limitations, claim a foreign tax credit for the equal amount of withholding tax.

Shareholders should note that under the New Convention no foreign tax credit will be available in respect of any associated tax credit or UK withholding tax considered to have been paid with respect to any dividend payment.

No dividends received deduction is allowed to US resident corporate shareholders with respect to dividends paid by the Company.

Taxation on capital gains

In certain circumstances, when a shareholder in the UK sells shares, liability to tax in respect of capital gains is computed by reference to the market value of the shares on March 31, 1982. The market value of ICI Ordinary Shares at March 31, 1982, for the purposes of capital gains tax, was 309p.

ICI and Zeneca demerged on June 1, 1993. Post-demerger ICI shares inherited a base cost for capital gains equivalent to 0.50239 of their pre-demerger base cost.

For the purposes of UK taxation of capital gains (“CGT”), the issue of new ICI shares in the rights issue is regarded as a reorganisation of the share capital of ICI. New shares acquired by taking up an entitlement under the rights issue are treated as the same asset as, and having been acquired at the same time as and at the same aggregate cost as, the existing holding of ICI shares. The subscription money for the new shares is added to the base cost of the existing holding. (In the case of shareholders within the charge to corporation tax, indexation allowance will apply to the amount paid for the new shares only from the date the amount is paid or liable to be paid.)

Under the Current Convention each contracting state may, in general, tax capital gains in accordance with the provisions of its domestic law. Under present UK law, individuals who are neither resident nor ordinarily resident in the UK, and companies which are not resident in the UK will not generally be liable to UK tax on capital gains made on the disposal of their Ordinary Shares or ADSs, unless such Ordinary Shares or ADSs are held in connection with a trade, profession or vocation carried on in the UK through a branch or agency. However, an individual who is temporarily resident outside the UK may, in certain circumstances, be subject to tax on gains realised whilst he or she is resident outside the UK.

A US resident shareholder will recognise capital gain or loss for US federal income tax purposes on the sale or exchange of the Ordinary Shares or ADSs in the same manner as such holder would on the sale or exchange of any other shares held as capital assets. Any gain or loss will generally be US source income or loss. US resident shareholders should consult their own tax advisers about the treatment of capital gains.

UK inheritance tax

Under the current Double Taxation (Estates) Convention (the “Estate Tax Convention”), between the US and the UK, Ordinary Shares or ADSs held by an individual shareholder who is domiciled for the purposes of the Estate Tax Convention in the US, and is not for the purposes of the Estate Tax Convention a national of the United Kingdom, nor resident in the UK for the last seven out of ten tax years, will generally not be subject to the UK inheritance tax on the individual’s death nor on a chargeable gift of the Ordinary Shares or ADSs during the individual’s lifetime provided that any applicable US federal gift or estate tax liability is paid, unless the Ordinary Shares or ADSs are part of the business property of a permanent establishment of the individual in the UK or, in the case of a shareholder who performs independent personal services, pertain to a fixed base situated in the UK.   Where the Ordinary Shares or ADSs have been placed in trust by a settlor who, at the time of settlement, was a US resident shareholder, the Ordinary Shares or ADSs will generally not be subject to UK inheritance tax unless the settlor, at the time of settlement, was not domiciled in the US or was a UK national. In the exceptional case where the Ordinary Shares or ADSs are subject both to UK inheritance tax and to US federal gift or estate tax, the Estate Tax Convention generally provides for double taxation to be relieved by means of credit relief.

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F.      Dividends and Paying Agents.

Not
  applicable.

G.      Statement by Experts.

Not
  applicable.

H.      Documents on Display.

The information set forth under the heading “Shareholder Information  Documents on display  Securities and Exchange Commission” on page 123 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

I.       Subsidiary Information.

The information set forth under the heading “Principal subsidiary undertakings” on page 115 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

ITEM 11  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The information set forth under the headings “Description of  business  Insurance” on page 19,  “Operating and financial reviewQuantitative disclosure about market risk” on pages 24 and 25, including the subheadings “Interest rate risk” and “Foreign currency risk”, “Operating and financial review  Financing and interest rate risk” on page 23,  “Operating and financial review  Counterparty credit risk” on page 24, and “Operating and financial reviewForeign currency risk” on pages 24 and 25 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

The
  Trust has entered into forward commitments to purchase 26.4m shares at a weighted
  average cost of £4.61 per share (total commitment £122m) in the
  period 2003-2005. These forward commitments include collateral requirements
  related to the prevailing share price of the Company. At December 31, 2002,
  no collateral deposits had been made; since that date the Trust has provided
  collateral deposits under these contracts. For further information see note 46 to the Financial Statements in Item 18.

ITEM 12  DESCRIPTION
  OF SECURITIES OTHER THAN EQUITY SECURITIES

Not
  applicable.

Part II

ITEM 13  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES.

The information set forth under the heading “Defaults, dividend arrearages and delinquencies” on page 116 of the Company’s Annual Report and Accounts and Form 20-F 2002 contained in its Report on Form 6-K dated March 11, 2003 is incorporated herein by reference.

ITEM 14  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15  CONTROLS AND PROCEDURES

The Company’s Chief Executive and Chief Financial Officer have evaluated the effectiveness of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, as amended) as of a date within 90 days prior to the filing of this Report and concluded that, as of the date of their evaluation, the Company’s disclosure controls and procedures were effective and designed to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to them by others within those entities, particularly during the period in which this Annual Report on Form 20-F 2002 has been prepared.

There have been no significant changes in the Company’s internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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ITEM 16  [RESERVED]

Part III

ITEM 17  FINANCIAL STATEMENTS

The Company has responded to Item 18 in lieu of this item.

ITEM 18  FINANCIAL STATEMENTS

The information set forth under the heading “Independent Auditors report on the Financial Statements to the Members of Imperial Chemical Industries PLC” and the financial statements (numbered pages 50 to 115) which begins on the next page constitutes the Company's response to this item.

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Contents to the Accounts

Independent Auditors' report
  on the Financial Statements to the Members of Imperial Chemical Industries PLCWe have audited the consolidated balance sheets of Imperial Chemical Industries
  PLC and subsidiaries (“the Group”) as of 31 December 2002 and 2001
  and the related consolidated profit and loss accounts, statements of total recognised
  gains and losses, statements of cash flow and reconciliations of movements in
  shareholders’ funds for each of the years in the three-year period ended
  31 December 2002. These consolidated financial statements are the responsibility
  of the Group's management. Our responsibility is to express an opinion on these
  consolidated financial statements based on our audits.

We conducted our audits in accordance
  with generally accepted auditing standards in the United Kingdom and the United
  States. These standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free from material
  misstatement. An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements. An audit also includes
  assessing the accounting principles used and significant estimates made by management,
  as well as evaluating the overall financial statement presentation. We believe
  that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
  financial statements referred to above present fairly, in all material respects,
  the financial position of the Group as of 31 December 2002 and 2001 and the
  results of the Group’s operations and cash flows for each of the years
  in the three-year period ended 31 December 2002, in conformity with generally
  accepted accounting principles in the United Kingdom.As more fully described in note 1 to
  the financial statements, the Group has adopted FRS 19 ‘Deferred Tax’
  in the year ended 31 December 2002. Consequently, the Group’s financial
  statements as of 31 December 2001 and 2000, and for each of the years in the
  two year period ended 31 December 2001 referred to above have been restated.

Generally accepted accounting
  principles in the United Kingdom vary in certain significant respects from generally
  accepted accounting principles in the United States. Application of generally
  accepted accounting principles in the United States would have affected the
  Group's results of operations for each of the years in the three year period
  ended 31 December 2002 and the Group’s shareholders’ equity as of
  31 December 2002 and 2001, to the extent summarised in note 42 to the consolidated
  financial statements.

KPMG Audit Plc
  Chartered Accountants
  Registered Auditor
  London
  12 February 2003

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contents
  to the accounts

Accounting
        policies
      50Group profit
        and loss account
      52Statement
        of Group total recognised gains and losses
      52Balance sheets
      54Statement
        of Group cash flow
      55Reconciliation
        of movements in shareholders funds
      55Notes relating to the accounts1
      
      Basis of presentation
        of financial information
      562
      
      Directors and Officers
        remuneration and interests
      573
      
      Exceptional items before
        tax
      584
      
      Segment information
      595
      
      Trading profit (loss)
      646
      
      Share of operating profits
        less losses of associates
      667
      
      Net interest payable
      668
      
      Taxation on profit (loss)
        on ordinary activities
      689
      
      Dividends
      7010
      
      Earnings (loss) per £1
        Ordinary Share
      7111
      
      Intangible fixed assets
         goodwill
      7212
      
      Tangible fixed assets
      7313
      
      Investments in subsidiary
        undertakings
      7414
      
      Investments in participating
        and other interests
      7515
      
      Stocks
      7616
      
      Debtors
      7717
      
      Current asset investments
        and short-term deposits
      7818
      
      Short-term borrowings
      7919
      
      Other creditors
      7920
      
      Loans
      8021
      
      Provisions for liabilities
        and charges
      8222
      
      Disposal and restructuring
        provisions
      8323
      
      Called-up share capital
        of parent company
      8624
      
      Reserves
      8825
      
      Net cash inflow from operating
        activities
      8926
      
      Returns on investments
        and servicing of finance
      9027
      
      Capital expenditure and
        financial investment
      9028
      
      Acquisitions
      9029
      
      Management of liquid
        resources
      9030
      
      Disposals
      9131
      
      Financing
      9232
      
      Analysis of net debt
      9333
      
      Cash and short-term borrowings
      9334
      
      Statement of Group cash
        flow: Basis of preparation
      9435
      
      Leases
      9536
      
      Employee numbers and
        costs
      9637
      
      Retirement benefits
      9738
      
      Financial risk management
      10039
      
      Statutory and other
        information
      10440
      
      Commitments and contingent
        liabilities
      10541
      
      Related party transactions
      10642
      
      Differences between UK
        and US accounting principles
      10743
      
      Valuation and qualifying
        accounts
      114Principal
        subsidiary undertakings
      115




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Contents to the Accounts



accounting policies



As used in the financial statements and related
    notes, the term Company refers to Imperial Chemical Industries
    PLC; the terms ICI and Group refer to the Company
    and its consolidated subsidiaries but not to associates. The financial statements are prepared under the historical cost convention and
in accordance with the Companies Act 1985 and applicable accounting standards.
Accounting policies conform with UK Generally Accepted Accounting Principles
(UK
GAAP).The following paragraphs describe the
main accounting policies. The accounting policies of some overseas subsidiaries
do not conform with UK Accounting Standards and, where appropriate, adjustments
are made on consolidation in order to present the Group financial statements
on a consistent basis. Note 42 describes the significant differences between
UK GAAP and US Generally Accepted Accounting Principals (US GAAP) and presents a reconciliation of net income
and shareholders equity from UK GAAP to US GAAP as a result of each difference. TurnoverTurnover excludes Intra-Group sales and value
added taxes. Revenue is recognised at the point at which title passes. DepreciationThe Groups
policy is to write-off the book value of each tangible fixed asset excluding
land to its residual value evenly over its estimated remaining life. Reviews
are made annually of the estimated remaining lives of individual productive assets,
taking account of commercial and technological obsolescence as well as normal
wear and tear. Under this policy it becomes
impracticable to calculate average asset lives exactly; however, the total lives
approximate to 35 years for buildings and 14 years for plant and equipment. Depreciation
of assets qualifying for grants is calculated on their full cost. No depreciation
has been provided on land. Pension costsThe pension costs relating to Group retirement
plans are assessed in accordance with the advice of independent qualified actuaries.
The amounts so determined include the regular cost of providing the benefits
under the plans which should be a level percentage of current and expected future
earnings of the employees covered under the plans. Variations from the regular
pension cost are spread on a systematic basis over the estimated average remaining
service lives
of current employees in the plans. Research and developmentResearch and development expenditure is charged
to profit in the year in which it is incurred. Exceptional itemsExceptional items are material items which derive
from events or transactions that fall within the ordinary activities of the Group
and which individually or, if of a similar type, in aggregate, need to be disclosed
by virtue of their size or incidence if the financial statements are to give
a true and fair view. Foreign currenciesProfit and loss accounts in foreign currencies
are translated into sterling at average rates for the relevant accounting periods.
Assets and liabilities are translated at exchange rates ruling at the date of
the Group balance sheet. Exchange differences on short-term foreign currency
borrowings and deposits are included with net interest payable. Exchange differences
on all other balances, except relevant


foreign currency
          loans, are taken to trading profit. In the Group accounts, exchange
          differences arising on consolidation of the net investments in overseas
          subsidiary undertakings and associates are taken to reserves, as are
          differences arising on equity investments denominated in foreign currencies
          in the Company accounts. Differences on relevant foreign currency loans
          are taken to reserves and offset against the differences on net investments
          in both Group and Company accounts.
     Financial derivativesHedge accountingThe Group uses various derivative financial
  instruments to reduce exposure to foreign exchange risks. These include currency swaps, forward currency contracts and currency options. The Group also uses interest rate swaps, forward rate agreements and interest rate caps derivatives to adjust
  interest rate exposures. The Group considers its derivative financial instruments to behedges (i.e.
  an offset of foreign exchange and interest rate risks) when certain criteria
  are met. Under hedge accounting for currency options, the Group defers the instruments
  impact on profit until it recognises the underlying hedged item in profit.
  Other material instruments do not involve deferral since the profit impact
  they offset
  occurs during the terms of the contracts.
        Foreign currency derivative instruments:
        The Groups criteria to qualify for hedge accounting are:
   The instrument must be related to a foreign currency asset or liability that is probable and whose characteristics have been identified;
   It must involve the same currency as the hedged item; and
   It must reduce the risk of foreign currency exchange movements on the Groups operations.Interest rate derivative instruments:
     The Groups criteria to
qualify for hedge accounting are:
   The instrument must be related to an asset or a liability; and
   It must change the character of the interest rate by converting a variable rate to a fixed rate or vice versa.Derivative financial
      instruments reported in the financial statements:
   The unamortised premium paid on purchased currency options is included in debtors in the balance sheet.Cash flows related to foreign currency derivative transactions are reported along with related transactions in net cash inflow from operating activities or returns on investments and
  servicing of finance, as appropriate, in the Statement of Group cash flow.     Currency swaps
    Principal
           amounts are revalued at exchange rates ruling at the date of the Group
           balance sheet and included in the sterling value of loans. In accordance
           with SSAP20 and FRS 3 exchange gains/losses are included in the Statement
           of Group total recognised gains and losses along with similar movements
      in the values of the investments being hedged.  Forward currency contracts
      Those forward currency contracts hedging transaction exposures (purchases and sales held in the books of account) are
revalued to balance sheet rates with net unrealised gains/losses being shown as debtors/creditors. Both realised gains and losses on purchases/sales and unrealised gains/losses on forward contracts are recognised in trading profit.




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Financial derivatives (continued)Forward currency contracts (continued)Those contracts used to change the currency
    mix of net debt are revalued to balance sheet rates with net unrealised gains/losses
    being shown as part of the debt they are hedging. The difference between spot
    and forward rate for these contracts is recognised as part of net interest
    payable over the period of the contract. Realised and unrealised exchange
    gains/losses are shown in the financial statements in the same place as the
    underlying borrowing/deposit. Currency optionsOption premia are recognised at their historic
cost in the Group balance sheet asother
debtors. At maturity, the option premia net of any realised gains on exercise,
are taken to the financial statements as trading profit. Interest rate swaps and forward rate agreementsInterest payments/receipts are accrued with
net interest payable. They are not revalued to fair value or shown on the Group
balance sheet at period end. If they are terminated early, the gain or loss is
spread over the
remaining maturity of the original instrument. Interest rate capsThe option premia are recognised on the Group
balance sheet asother
debtors. The option premia, net of any realised gains on individual caplets,
are taken to net interest payable and spread evenly over the lifetime of the
cap. AssociatesAssociates are undertakings in which the
    Group holds a long-term interest and over which it actually exercises significant
    influence. The Groups share of
    the profits less losses from associates are included in the Group profit and
    loss account on the equity accounting basis. The holding value of associates
    in the Group balance sheet is calculated by reference to the Groups
    equity in the net assets of such undertakings, as shown by the most recent
    accounts available.Interests
    in joint arrangements that are not entities are included proportionately in
    the accounts of the investing entity. InvestmentsInvestments are held at cost less provisions
for impairment. TaxationFull provision for deferred tax is made for
    timing differences between the recognition of gains and losses in the consolidated
    financial statements and their recognition in the tax computation, using current
    tax rates except as otherwise required by FRS 19. The Group does not discount
    these balances. No deferred tax is provided in respect of any future remittance
    of earnings of foreign subsidiaries or associates where no commitment has
    been made to remit such earnings.Taxation
    on exchange differences on relevant foreign currency loans used to finance
    net investments in subsidiary undertakings and associates is taken to reserves
    to be consistent with the treatment of the underlying exchange differences
    on the loans and net investments. Stock valuationFinished goods are stated at the lower of cost
and net realisable value, raw materials and other stocks at the lower of cost
and net realisable value; the first in, first out or an average method of valuation
is used. In determining cost for stock valuation purposes, depreciation is included
but selling expenses and certain overhead expenses are excluded.


Environmental liabilitiesThe Group is exposed to environmental liabilities
relating primarily to its past operations, principally in respect of soil and
groundwater remediation costs. Provisions for these costs are made when expenditure
on remedial work is probable and the cost can be estimated within a reasonable
range of possible outcomes. GoodwillOn the acquisition of a business, fair values
are attributed to the net assets acquired. Goodwill arises where the fair value
of the consideration given for a business exceeds the fair value of such net
assets. For
purchased goodwill arising on acquisitions after31 December 1997 goodwill is capitalised
and amortised through the profit and loss account over a period of 20 years unless
the Directors consider it has a materially different useful life, either on acquisition
or subsequently, if a shorter life is indicated. For goodwill arising on acquisitions
prior to 31 December 1997 purchased goodwill was charged directly to reserves
in the year of acquisition. On subsequent disposal or termination of a previously
acquired business, the profit or loss recognised on disposal or termination is
calculated after charging the amount of any related goodwill previously taken
to reserves. Employee Share Ownership Plan ESOPThe financial statements of the Group include
    the assets and related liabilities of Imperial Chemical Industries PLC Employee
    Benefits Trust and Impkemix Trustees Limited, a subsidiary company of the
    Group, which acts as trustee for the Groups
    employee share ownership plan. The shares held by the ESOP are stated at the
    lower of cost and estimated net realisable value.




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Contents to the Accounts

group profit and loss account

for the year ended 31 December 2002

|                                                           |       |  | 2002                                          |   |                                     
|---------------------------------------------------------- | ----- |  | --------------------------------------------- | - | ------------------------------------
|                                                           |       |  |                                               |  
|                                                           |       |  | Continuing
        operations                 |   | Discontinued
      operations       
|                                                           | notes |  | Before
      exceptional
      items
      £m |   | Exceptional
        items
        £m
|                                                           |       | 
|Turnover                                                   | 4,5   |  | 6,125                                         |   |                                     
|                                                           |       | 
|Operating costs                                            | 3,5   |  | (5,652                                        | ) |                                    
|                                                           |       | 
|Other operating income                                     | 5     |  | 23                                            |   |                                    
|                                                           |       | 
|Trading profit (loss)                                      | 3,4,5 |  | 496                                           |   |                                    
|                                                           |       | 
|After deducting
      goodwill amortisation                | 4     |  | (37                                           | ) |                                    
|                                                           |       | 
|                                                           |       |  |                                               |   |                                     
|                                                           |       | 
|Share of operating profits less losses
      of associates | 3,6   |  | 18                                            |   |                                    
|                                                           |       | 
|                                                           |       |  | 514                                           |   |                                    
|                                                           |       | 
|Fundamental reorganisation costs                           | 3     |  |                                               |   |                                    
|                                                           |       | 
|Profits less losses on sale or closure
      of operations | 3     |  |                                               |   | 40                                  
|                                                           |       | 
|Profits less losses on disposals of fixed
      assets     | 3     |  |                                               |   | 3                                   
|                                                           |       | 
|Amounts written off investments                            | 3     |  |                                               |   | (99                                 
|                                                           |       | 
|Profit (loss) on ordinary activities
      before interest | 4     |  | 514                                           |   | (56                                 
|                                                           |       | 
|Net interest payable                                       | 3,7   |  |                                               |   |                                     
|                                                           |       | 
|Group                                                      |       |  | (123                                          | ) |                                    
|                                                           |       | 
|Associates                                                 |       |  | (28                                           | ) |                                    
|                                                           |       | 
|                                                           |       |  | (151                                          | ) |                                    
|                                                           |       | 
|Profit (loss) on ordinary activities
      before taxation |       |  | 363                                           |   | (56                                 
|                                                           |       | 
|Taxation on profit (loss) on ordinary activities           | 8     |  | (115                                          | ) | 1                                   
|                                                           |       | 
|Profit (loss) on ordinary activities
      after taxation  |       |  | 248                                           |   | (55                                 
|                                                           |       | 
|Attributable to minorities                                 |       |  | (21                                           | ) | (6                                  
|                                                           |       | 
|Net profit (loss) for the financial
      year             |       |  | 227                                           |   | (61                                 
|                                                           |       | 
|Dividends                                                  | 9     |  |                                               |   |                                     
|                                                           |       | 
|Profit (loss) retained for the year                        | 24    |  |                                               |   |                                     
|                                                           |       | 
|Earnings (loss) per £1 Ordinary
      Share                | 10    |  |                                               |   |                                     
|                                                           |       | 
|Basic                                                      |       |  | 20.4                                          | p | (5.5)p                              
|                                                           |       | 
|Diluted                                                    |       |  | 20.3                                          | p | (5.5)p                              
|                                                           |       | 
|                                                          

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Contents to the Accounts

statement of
  group total recognised 
  gains and losses

for the year ended 31 December 2002

|                                                                                             | 2002 |   | 
|-------------------------------------------------------------------------------------------- | ---- | - | 
|                                                                                             | £m   |   | 
|                                                                                             |      |   | 
|Net profit (loss) for the financial
      year                                               |      |   | 
|                                                                                             |      |   | 
|Parent and subsidiary
      undertakings                                                     | 192  |   | 
|                                                                                             |      |   | 
|Associates                                                                                   | (13  | ) | 
|                                                                                             |      |   | 
|                                                                                             | 179  |   | 
|                                                                                             |      |   | 
|Currency translation differences on foreign
      currency net investments and related loans | (91  | ) | 
|                                                                                             |      |   | 
|Taxation on translation differences on
      foreign currency loans                          | 34   |   | 
|                                                                                             |      |   | 
|                                                                                             | (57  | ) | 
|                                                                                             |      |   | 
|Total recognised gains and losses for
      the year                                         | 122  |   | 
|                                                                                             |      |   | 
|Prior year adjustment (note 1)                                                               | (81  | ) | 
|                                                                                             |      |   | 
|Total gains and (losses) recognised
      since last annual report                           | 41   |   | 
|                                                                                             |      |   | 



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group profit and loss account

for the year ended 31 December 2002 (continued)

|                                                           |                                               | 2001
      
      
      (as restated  note
        1) |                                      | 2000
      
      
      (as restated  note
        1) |     
|---------------------------------------------------------- | --------------------------------------------- | ------------------------------------------------------- | ------------------------------------ | ------------------------------------------------------- | ----
|Continuing
        operations                              |                                               | Discontinued
        operations                         |                                      | Total                                                   |     
|                                                           | Before
      exceptional
      items
      £m |                                                         | Exceptional
        items
        £m |                                                         | £m  
|                                                          
|Turnover                                                   | 6,425                                         |                                                         |                                      |                                                         |    
|                                                          
|Operating costs                                            | (5,935                                        | )                                                       | (143                                 | )                                                       |    
|                                                          
|Other operating income                                     | 46                                            |                                                         |                                     |                                                         |    
|                                                          
|Trading profit (loss)                                      | 536                                           |                                                         | (143                                 | )                                                       |    
|                                                          
|After deducting
      goodwill amortisation                | (37                                           | )                                                       |                                     |                                                         |    
|                                                          
|                                                           |                                               |                                                         |                                      |                                                         |     
|                                                          
|Share of operating profits less losses
      of associates | 57                                            |                                                         | (9                                   | )                                                       |    
|                                                          
|                                                           | 593                                           |                                                         | (152                                 | )                                                       |    
|                                                          
|Fundamental reorganisation costs                           |                                               |                                                         |                                     |                                                         |    
|                                                          
|Profits less losses on sale or closure
      of operations |                                               |                                                         | (11                                  | )                                                       | 18  
|                                                          
|Profits less losses on disposals of fixed
      assets     |                                               |                                                         | 8                                    |                                                         |    
|                                                          
|Amounts written off investments                            |                                               |                                                         | (22                                  | )                                                       |    
|                                                          
|Profit (loss) on ordinary activities
      before interest | 593                                           |                                                         | (177                                 | )                                                       | 18  
|                                                          
|Net interest payable                                       |                                               |                                                         |                                      |                                                         |     
|                                                          
|Group                                                      | (162                                          | )                                                       |                                     |                                                         |    
|                                                          
|Associates                                                 | (67                                           | )                                                       |                                     |                                                         |    
|                                                          
|                                                           | (229                                          | )                                                       |                                     |                                                         |    
|                                                          
|Profit (loss) on ordinary activities
      before taxation | 364                                           |                                                         | (177                                 | )                                                       | 18  
|                                                          
|Taxation on profit (loss) on ordinary activities           | (116                                          | )                                                       | 48                                   |                                                         | (29 
|                                                          
|Profit (loss) on ordinary activities
      after taxation  | 248                                           |                                                         | (129                                 | )                                                       | (11 
|                                                          
|Attributable to minorities                                 | (26                                           | )                                                       | (2                                   | )                                                       |    
|                                                          
|Net profit (loss) for the financial
      year             | 222                                           |                                                         | (131                                 | )                                                       | (11 
|                                                          
|Dividends                                                  |                                               |                                                         |                                      |                                                         |     
|                                                          
|Profit (loss) retained for the year                        |                                               |                                                         |                                      |                                                         |     
|                                                          
|Earnings (loss) per £1 Ordinary
      Share                |                                               |                                                         |                                      |                                                         |     
|                                                          
|Basic                                                      | 25.5                                          | p                                                       | (15.0                                | )p                                                      | (1.3
|                                                          
|Diluted                                                    | 25.5                                          | p                                                       | (15.0                                | )p                                                      | (1.3
|                                                          

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statement of group total recognised gains and losses

for the year ended 31 December 2002 (continued)

|                                                                                             |     | 2001(as restated  note 1)£m |      | 2000(as restated  note 1)£m |  
|-------------------------------------------------------------------------------------------- | --- | ---------------------------- | ---- | ---------------------------- | -
|                                                                                             |     |                              |      |                              |  
|Net profit (loss) for the
      financial year                                               |     |                              |     
|                                                                                             |     |                              |      |                              |  
|Parent
      and subsidiary undertakings                                                     | 72  |                              | (196 | )                           
|                                                                                             |     |                              |      |                              |  
|Associates                                                                                   |     | 8                            |      | (11                          | )
|                                                                                             |     |                              |      |                              |  
|Currency translation differences
      on foreign currency net investments and related loans | 80  |                              | (207 | )                           
|                                                                                             |     |                              |      |                              |  
|Taxation on translation differences
      on foreign currency loans                          | (59 | )                            | (15  | )                           
|                                                                                             |     |                              |      |                              |  
|Total recognised gains and
      losses for the year                                         | (12 | )                            | (39  | )                           
|                                                                                             |     |                              |      |                              |  
|Prior year adjustment (note
      1)                                                         | (71 | )                            | (54  | )                           
|                                                                                             |     |                              |      |                              |  
|Total gains and (losses)
      recognised since last annual report                           | 9   |                              | (261 | )                           
|                                                                                             |     |                              |      |                              |  



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Contents to the Accounts

balance sheets at 31 December 2002

|                                             |       |  | Group  |   | Company            
|-------------------------------------------- | ----- |  | ------ | - | -------------------
|                                             |       |  |        |   |                    
|                                             |       |  | 2002   |   | 2001               
|                                             |       |  |        |   | (as restatednote 1)
|                                             | notes |  | £m     |   | £m                 
|                                             |       |  |        |   |                    
|Assets employed                              |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Fixed assets                                 |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Intangible assets  goodwill                 | 11    |  | 574    |   | 613                
|                                             |       |  |        |   |                    
|Tangible assets                              | 4,12  |  | 1,961  |   | 2,186              
|                                             |       |  |        |   |                    
|Investments                                  |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Subsidiary undertakings                      | 13    |  |        |   |                    
|                                             |       |  |        |   |                    
|Participating
      and other interests      | 14    |  | 69     |   | 374                
|                                             |       |  |        |   |                    
|                                             |       |  | 2,604  |   | 3,173              
|                                             |       |  |        |   |                    
|Current assets                               |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Stocks                                       | 15    |  | 651    |   | 753                
|                                             |       |  |        |   |                    
|Debtors                                      | 16    |  | 1,695  |   | 1,913              
|                                             |       |  |        |   |                    
|Investments and short-term deposits          | 17    |  | 285    |   | 159                
|                                             |       |  |        |   |                    
|Cash                                         | 33    |  | 267    |   | 301                
|                                             |       |  |        |   |                    
|                                             |       |  | 2,898  |   | 3,126              
|                                             |       |  |        |   |                    
|Total assets                                 |       |  | 5,502  |   | 6,299              
|                                             |       |  |        |   |                    
|Creditors due within one year                |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Short-term borrowings                        | 18    |  | (226   | ) | (418               
|                                             |       |  |        |   |                    
|Current installments of loans                | 20    |  | (500   | ) | (1,250             
|                                             |       |  |        |   |                    
|Other creditors                              | 19    |  | (1,692 | ) | (1,933             
|                                             |       |  |        |   |                    
|                                             |       |  | (2,418 | ) | (3,601             
|                                             |       |  |        |   |                    
|Net current assets (liabilities)             |       |  | 480    |   | (475               
|                                             |       |  |        |   |                    
|Total assets less current liabilities        | 4     |  | 3,084  |   | 2,698              
|                                             |       |  |        |   |                    
|Financed by                                  |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Creditors due after more than
      one year |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Loans                                        | 20    |  | 1,363  |   | 1,705              
|                                             |       |  |        |   |                    
|Other creditors                              | 19    |  | 32     |   | 49                 
|                                             |       |  |        |   |                    
|                                             |       |  | 1,395  |   | 1,754              
|                                             |       |  |        |   |                    
|Provisions for liabilities and
      charges | 21    |  | 1,121  |   | 1,257              
|                                             |       |  |        |   |                    
|Minority interests  equity                  |       |  | 69     |   | 51                 
|                                             |       |  |        |   |                    
|                                             |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Shareholders funds 
      equity           |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Called-up share capital                      | 23    |  | 1,191  |   | 728                
|                                             |       |  |        |   |                    
|Reserves                                     |       |  |        |   |                    
|                                             |       |  |        |   |                    
|Share premium
      account                  |       |  | 933    |   | 589                
|                                             |       |  |        |   |                    
|Associates
      reserves                   |       |  | 11     |   | 22                 
|                                             |       |  |        |   |                    
|Profit and loss
      account                |       |  | (1,636 | ) | (1,703             
|                                             |       |  |        |   |                    
|Total reserves                               | 24    |  | (692   | ) | (1,092             
|                                             |       |  |        |   |                    
|Total shareholders funds (page 55)          |       |  | 499    |   | (364               
|                                             |       |  |        |   |                    
|                                             |       |  | 3,084  |   | 2,698              
|                                             |       |  |        |   |                    

Included within Group net current assets (liabilities)
  are debtors of £545m (2001 £552m) which fall due after more than
  one year. Included within the Company net current liabilities are debtors of
  £327m (2001 £312m) which fall due after more than one year.

The accounts on pages 50 to 115 were approved
  by the Board of Directors on 12 February 2003 and were signed on its behalf
  by:

Lord TrotmanDirectorT A Scott Director



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Contents to the Accounts

statement of group cash flow
  for the year ended 31 December 2002

|                                                                         |       |  | 2002   |   | 2001 |   | 2000 |  
|------------------------------------------------------------------------ | ----- |  | ------ | - | ---- | - | ---- | -
|                                                                         | notes |  | £m     |   | £m   |   | £m   |  
|                                                                         |       |  |        |   |      |   |      |  
|Net cash inflow from operating activities                                | 25    |  | 623    |   | 637  |   | 586  |  
|                                                                         |       |  |        |   |      |   |      |  
|Dividends received from associates                                       |       |  |       |   |     |   | 5    |  
|                                                                         |       |  |        |   |      |   |      |  
|Returns on investments and servicing of
      finance                    | 26    |  | (185   | ) | (207 | ) | (230 | )
|                                                                         |       |  |        |   |      |   |      |  
|Taxation                                                                 |       |  | (35    | ) | (58  | ) | (104 | )
|                                                                         |       |  |        |   |      |   |      |  
|                                                                         |       |  | 403    |   | 372  |   | 257  |  
|                                                                         |       |  |        |   |      |   |      |  
|Capital expenditure and financial investment                             | 27    |  | (184   | ) | (206 | ) | (226 | )
|                                                                         |       |  |        |   |      |   |      |  
|                                                                         |       |  | 219    |   | 166  |   | 31   |  
|                                                                         |       |  |        |   |      |   |      |  
|Acquisitions and disposals                                               |       |  |        |   |      |   |      |  
|                                                                         |       |  |        |   |      |   |      |  
|Acquisitions                                                             | 28    |  | (54    | ) | (109 | ) | (13  | )
|                                                                         |       |  |        |   |      |   |      |  
|Disposals                                                                | 30    |  | 290    |   | 17   |   | (125 | )
|                                                                         |       |  |        |   |      |   |      |  
|                                                                         |       |  | 236    |   | (92  | ) | (138 | )
|                                                                         |       |  |        |   |      |   |      |  
|Equity dividends paid                                                    |       |  | (106   | ) | (185 | ) | (231 | )
|                                                                         |       |  |        |   |      |   |      |  
|Cash inflow (outflow) before use of liquid
      resources and financing |       |  | 349    |   | (111 | ) | (338 | )
|                                                                         |       |  |        |   |      |   |      |  
|Management of liquid resources                                           | 29    |  | (13    | ) | 253  |   | (12  | )
|                                                                         |       |  |        |   |      |   |      |  
|Financing                                                                |       |  |        |   |      |   |      |  
|                                                                         |       |  |        |   |      |   |      |  
|Issues of shares                                                         |       |  | 807    |   |     |   | 1    |  
|                                                                         |       |  |        |   |      |   |      |  
|Increase (decrease)
      in debt                                        |       |  | (1,151 | ) | (77  | ) | 335  |  
|                                                                         |       |  |        |   |      |   |      |  
|                                                                         | 31    |  | (344   | ) | (77  | ) | 336  |  
|                                                                         |       |  |        |   |      |   |      |  
|Increase (decrease) in cash                                              | 33    |  | (8     | ) | 65   |   | (14  | )
|                                                                         |       |  |        |   |      |   |      |  

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Contents to the Accounts

reconciliation
  of movements in shareholders funds for the year ended 31 December 2002

|                                                                                 |       |  | 2002 |   | 2001                |   | 2000                |  
|-------------------------------------------------------------------------------- | ----- |  | ---- | - | ------------------- | - | ------------------- | -
|                                                                                 |       |  |      |   | (as restatednote 1) |   | (as restatednote 1) |  
|                                                                                 | notes |  | £m   |   | £m                  |   | £m                  |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Net profit (loss) for the financial year                                         |       |  | 179  |   | 80                  |   | (207                | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Dividends                                                                        |       |  | (88  | ) | (116                | ) | (232                | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Profit (loss) retained for year                                                  |       |  | 91   |   | (36                 | ) | (439                | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Issues of ICI Ordinary Shares                                                    |       |  | 807  |   |                    |   | 1                   |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Goodwill movement                                                                |       |  |      |   |                     |   |                     |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Acquisitions                                                                     | 24    |  |     |   | (8                  | ) |                    |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Disposals                                                                        | 24    |  | 22   |   |                    |   | 41                  |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|                                                                                 |       |  | 22   |   | (8                  | ) | 41                  |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Other recognised losses related to the
      year                                | 24    |  | (57  | ) | (71                 | ) | (54                 | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Net increase (reduction) in shareholders
      funds                            |       |  | 863  |   | (115                | ) | (451                | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Shareholders funds at beginning of
      year  equity (as previously reported) |       |  | (283 | ) | (216                | ) | 244                 |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Prior year adjustment                                                            |       |  | (81  | ) | (33                 | ) | (42                 | )
|                                                                                 |       |  |      |   |                     |   |                     |  
|Shareholders funds at beginning of
      year  equity (as restated  note 1)   |       |  | (364 | ) | (249                | ) | 202                 |  
|                                                                                 |       |  |      |   |                     |   |                     |  
|Shareholders funds at end of year
       equity                                |       |  | 499  |   | (364                | ) | (249                | )
|                                                                                 |       |  |      |   |                     |   |                     |  



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Contents to the Accounts

notes relating to the accounts

1 Basis
  of presentation of financial information

New UK Accounting Standards

UK Accounting Standards which have been adopted,
  in whole or in part, for the first time in these financial statements are as
  follows:

FRS No. 17Retirement
  benefitsThis Standard sets out revised requirements for
  the accounting and disclosure of an employers retirement benefit obligations
  and related funding. Increasing levels of disclosure of amounts measured in
  accordance with the Standard, have been required over the years 2001 and 2002
  with recognition in the primary statements for accounting periods beginning
  on or after 1 January 2005 following suspension by the Accounting Standards
  Board. The Group has followed the transitional requirements of the Standard.
  In 2001 information on financial assumptions to calculate the projected benefit
  obligations of Group schemes and details of scheme assets, expected rates of
  return, liabilities and net (liabilities) assets were disclosed in note 37.
  In 2002 further analysis covering the amounts to be charged in future years
  to trading profit, other finance income and the Statement of Group total recognised
  gains and losses is provided in note 37. Upon full adoption in 2005, comparative
  financial statement information will be restated. The requirements of the Standard
  will have no impact on cash flows.

FRS No. 19Deferred TaxThis Standard requires full provision to be made
  for deferred tax assets and liabilities arising from timing differences between
  the recognition of gains and losses in the financial statements and their recognition
  in a tax computation except as otherwise required by FRS No. 19. It also requires
  deferred tax assets to be recognised to the extent that it is regarded as more
  likely than not that they will be recovered. The Standard allows the optional
  discounting of all or none of the deferred tax assets or liabilities and the
  Group has elected not to discount. Prior to the adoption of FRS No. 19, deferred
  tax was only provided on a partial provision basis. The standard is implemented
  in these financial statements and all primary statements and notes relating
  to the accounts have been restated.

Compliance with FRS No. 19 has increased the
  2001 deferred tax provision by £81m (2000 £33m). The tax charge
  on profit before goodwill amortisation and exceptional items has increased by
  £27m in 2001 (2000 £34m) resulting in a restated effective tax rate
  for 2001 of 28.9% (2000 31.6%), compared with 22.2% (2000 24.0%) originally
  reported. The net profit for 2001 decreased by £41m (2000 increase £21m).
  The estimated impact on the current years profit before goodwill amortisation
  and exceptional items if FRS No. 19 had not been adopted would be to reduce
  the underlying effective tax rate from 29% to approximately 22%. The impact
  on profit before tax has not been quantified as it is impractical to do so.
  The new standard has no impact on cash flows.

Both FRS No. 17 and FRS No. 19 were published
  in 2000 since which time no new UK Standards have been published.

Continuing and Discontinued Operations
  and Classes of Business

For UK reporting purposes, the results in these
  accounts differentiate between the Groups continuing and discontinued
  operations. As defined in FRS No. 3 –Reporting
  Financial Performance, discontinued operations
  are material, clearly separate operations which have been sold or permanently
  terminated either during the financial year or during the subsequent period
  up to the date of approval of the financial statements. All other operations
  are classified as continuing operations.

Discontinued operations, in these financial
  statements, comprise: 
   Chlor-Chemicals, Klea and Crosfield businesses
   Methanol business
   50% equity shareholding in Phillips-Imperial Petroleum Ltd

Where businesses have been reclassified as
  discontinued operations, comparative segmental data has been restated in all
  cases. Net interest payable and tax on profit (loss) on ordinary activities
  have been allocated to discontinued operations to reflect the legal entity incidence
  of these items within the business divested.

Non co-terminous year ends

Owing to local conditions and to avoid undue
  delay in the presentation of the Group accounts, three subsidiaries made up
  their accounts to dates earlier than 31 December, but not earlier than 30 September;
  additionally seven subsidiaries made up their accounts prior to 30 September
  but interim accounts to 31 December were drawn up for consolidation purposes.

Cash

In the statement of Group cash flow and related
  notes cash includes cash at bank, deposits repayable on demand and
  overdrafts; deposits are repayable on demand if they are, in practice, available
  within 24 hours without penalty.

Estimates

The preparation of the Consolidated financial
  statements in conformity with Generally Accepted Accounting Principles requires
  management to make estimates and assumptions that affect reported amounts and
  related disclosures. Actual results could differ from those estimates.



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Contents to the Accounts

2 Directors
  and Officers remuneration and interests

Information covering Directors remuneration,
  interests in shares, debentures, share options and pension benefits is included
  in the Remuneration report on pages 38 to 46.

The aggregate remuneration paid to or accrued
  for all Directors and Officers of the Company for services in all capacities
  during the year ended 31 December 2002 was £6.0m (2001 £4.8m; 2000
  £6.4m); Directors £4.0m (2001 £3.2m; 2000 £3.9m); Officers
  £2.0m (2001 £1.6m; 2000 £2.5m). The aggregate amount set aside
  or accrued to provide pension, retirement and similar benefits for Directors
  and Officers of the Company during the year ended 31 December 2002 was £1.0m
  (2001 £1.0m; 2000 £0.8m); Directors £0.7m (2001 £0.7m;
  2000 £0.6m); Officers £0.3m (2001 £0.3m; 2000 £0.2m).
  At 10 February 2003 shares held by and options granted to Directors and Officers
  to subscribe for Ordinary Shares in the Company were as follows:

|                                                                                                               | OrdinaryShares |  | Options
      granted                       
|-------------------------------------------------------------------------------------------------------------- | --------------- |  | ---------------------------------------------
|                                                                                                               |                 |  |                                              
|                                                                                                               |                 |  | Options
      outstanding at 10 February 2003
|                                                                                                               | Number          |  | Number                                       
|                                                                                                               |                 |  |                                              
|Directors (for further details see Remuneration
      Report pages 42 and 45)                                  | 522,202         |  | 3,842,921                                    
|                                                                                                               |                 |  |                                              
|Officers                                                                                                       | 99,789          |  | 1,687,849                                    
|                                                                                                               |                 |  |                                              
|Includes
      ADRs disclosed in terms of Ordinary Share equivalents/Ordinary Share option
      equivalents.



No individual director or officer had interests
  in shares or options exceeding one per cent of the issued Ordinary Share capital
  of the Company.



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Contents to the Accounts

notes relating to the accounts

3 Exceptional
  items before tax

|                                                                                    | 2002 |      | 2001 |      | 2000 |     
|----------------------------------------------------------------------------------- | ---- | ---- | ---- | ---- | ---- | ----
|                                                                                    | £m   |      | £m   |      | £m   |     
|Charged in arriving
      at trading profit (loss)                                  |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Continuing operations                                                               |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Rationalisation
      of operations                                                 |     |      | (143 | )(a) |     |     
|                                                                                    |      |      |      |      |      |     
|Credited (charged)
      after trading profit (loss)                                |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Continuing operations                                                               |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Profits
      less losses on sale or closure of operations                          |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Profits                                                                             | 114  | (b)  | 16   |      | 17   |     
|                                                                                    |      |      |      |      |      |     
|Losses                                                                              | (74  | )(c) | (27  | )(d) | (1   | )   
|                                                                                    |      |      |      |      |      |     
|                                                                                    | 40   |      | (11  | )    | 16   |     
|                                                                                    |      |      |      |      |      |     
|Fundamental
      reorganisation costs                                              |     |      |     |      | (14  | )(e)
|                                                                                    |      |      |      |      |      |     
|Profits
      less losses on disposal of fixed assets                               | 3    |      | 8    |      | 10   |     
|                                                                                    |      |      |      |      |      |     
|Share of
      associates exceptional operating items                              |     |      | (9   | )(f) |     |     
|                                                                                    |      |      |      |      |      |     
|Interest
      exceptional (see note 7)                                             |     |      |     |      | 16   |     
|                                                                                    |      |      |      |      |      |     
|Amounts
      written off investments                                               | (99) | (g)  | (22  | )(h) |     |     
|                                                                                    |      |      |      |      |      |     
|Discontinued operations                                                             |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Profits
      less losses on sale or closure of operations                          |      |      |      |      |      |     
|                                                                                    |      |      |      |      |      |     
|Profits                                                                             | 19   |      | 21   |      | 10   |     
|                                                                                    |      |      |      |      |      |     
|Losses                                                                              | (9   | )    | (3   | )    | (38  | )(i)
|                                                                                    |      |      |      |      |      |     
|Provision
      for losses on future sale                                           |     |      |     |      | (503 | )(j)
|                                                                                    |      |      |      |      |      |     
|                                                                                    | 10   |      | 18   |      | (531 | )   
|                                                                                    |      |      |      |      |      |     
|Profits
      less losses on disposal of fixed assets                               |     |      |     |      | 1    |     
|                                                                                    |      |      |      |      |      |     
|Exceptional items
      within profit (loss) on ordinary activities before taxation | (46  | )    | (159 | )    | (502 | )   
|                                                                                    |      |      |      |      |      |     

|(a) | A detailed description
      of those exceptional items charged/credited in arriving at trading profit
      (loss) is provided in note 22 and includes the following in respect of 2001:                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|    | (i)                                                                                                                                                                                                                                                                                                                                                                                      
|    | (ii)                                                                                                                                                                                                                                                                                                                                                                                     
|    | (iii)                                                                                                                                                                                                                                                                                                                                                                                    
|    | (iv)                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(b) | The profits on
      sale or closure of continuing operations in 2002 relate primarily to the
      profit on the sale of the Groups Catalyst business, Synetix (£90m)
      and the sale of the Security Systems business (£17m).                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(c) | The losses on
      sale or closure of continuing operations in 2002 relate primarily to the
      loss on the sale of the UK Nitrocellulose and EnergeticTechnologies business
      (£32m) and the write-down of the Groups investment in its 49%
      associate, Irish Fertilizer Industries Limited, and the additional costs
      incurred in relation to its liquidation (£27m).
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(d) | The losses on
      sale or closure of continuing operations in 2001 related primarily to the
      loss on disposal of Eutech (£19m).                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(e) | Fundamental reorganisation
      costs during 1999 and 2000 related to the reorganisation of the corporate
      centre as a consequence of the changing business portfolio.                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(f) | The share of associates
      exceptional operating items in 2001 related to the major restructuring of
      the Polyurethanes business of Huntsman International Holdings LLC.                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(g) | Amounts written
      off investments relates to provisions for all of ICIs existing investments
      in Ineos Chlor, where uncertainty exists as to the extent to which, and
      period over which these amounts will be recovered (see note 40).                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(h) | The write-down
      of investments in 2001 related to shares of the Company held to hedge obligations
      granted prior to 1999 under the employee share ownership plan. A provision
      has been made to write-down these shares to estimated net realisable value
      having regard to the period over which the related options are exercisable.                               
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(i) | Losses on the
      sale of discontinued operations in 2000 comprised the disposal of the Groups
      Methanol business and the 50% interest in Phillips-Imperial Petroleum Ltd.                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                          
|(j) | The provision
      for losses on future sale in 2000 related to the disposal of the Chlor-Chemicals,
      Klea and Crosfield operations completed in January 2001. The charge comprised
      £133m for fixed asset write-downs, a £41m goodwill write-off
      and £329m as a provision for the anticipated loss.                                                                    

Under UK GAAP, exceptional items are material
     items which derive from events or transactions that fall within the ordinary

  activities of the Group and which individually or, if of a similar type, in
     aggregate, need to be disclosed by virtue of their size or incidence if
    the
  financial statements are to give a true and fair view. Under US GAAP, exceptional
     items would be included in operating income, unless they relate to discontinued

  operations.



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Contents to the Accounts

4 Segment
  information

The Group is managed in five business segments,
  or classes, differentiated primarily by the nature of products manufactured
  in each, together with a segment for discontinued operations. An explanation
  of the basis on which operations are classified as discontinued is set out in
  note 1.

The major products of each business segment
  are as follows:

|Business                | Products                                                                                                                                                                                                                                                                                                                                   
|----------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |                                                                                                                                                                                                                                                                                                                                            
|National Starch         | adhesives, sealants, specialty synthetic
      polymers, specialty food and industrial starches, electronic and engineering
      materials, specialty coatings and process lubricants                                                                                                                                                     
|                        |                                                                                                                                                                                                                                                                                                                                            
|Quest                   | flavours, food ingredients, fragrances,
      fragrance materials                                                                                                                                                                                                                                                                          
|                        |                                                                                                                                                                                                                                                                                                                                            
|Performance Specialties | oleochemicals (process intermediates),
      polymers, base stocks and additives for lubricants, personal care, performance
      specialties for the manufacture of agrochemicals and coatings, oilfield
      chemicals, textile auxiliaries, spin finish, polymer additives, specialty
      cleaning and catalyst and support services*
|                        |                                                                                                                                                                                                                                                                                                                                            
|Paints                  | decorative paint, and coatings for food
      and beverage cans                                                                                                                                                                                                                                                                            
|                        |                                                                                                                                                                                                                                                                                                                                            
|Regional and Industrial | polyester staple fibre, pure terephthalic
      acid, soda ash, agrochemicals, pharmaceuticals, rubber chemicals and tartaric
      acid                                                                                                                                                                                                   
|                        |                                                                                                                                                                                                                                                                                                                                            

*Divested
  fourth quarter 2002.

The accounting policies for each segment are
  the same as those appearing on pages 50 and 51. The Groups policy is to
  transfer products internally at external market prices. Corporate overheads
  are allocated to each business segment on a consistent basis over the periods
  presented.



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notes relating to the accounts

4 Segment
  information (continued)

Classes of business

|                                                                | Turnover |   | Profit before
      taxation, goodwill amortisation and exceptional items |   | Profit before
      interest and taxation after exceptional items* |  
|--------------------------------------------------------------- | -------- | - | ------------------------------------------------------------------------- | - | ------------------------------------------------------------------ | -
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                | 2002     |   | 2001                                                                      |   | 2000                                                               |  
|                                                                | £m       |   | £m                                                                        |   | £m                                                                 |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Continuing operations                                           |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|International
      businesses                                  |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|National
      Starch                                           | 1,841    |   | 1,853                                                                     |   | 1,894                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Quest                                                           | 716      |   | 727                                                                       |   | 687                                                                |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Performance
      Specialties                                   | 804      |   | 832                                                                       |   | 837                                                                |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Paints                                                          | 2,182    |   | 2,233                                                                     |   | 2,152                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                | 5,543    |   | 5,645                                                                     |   | 5,570                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Regional and
      Industrial                                   | 615      |   | 821                                                                       |   | 892                                                                |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Inter-class
      eliminations                                  | (33      | ) | (41                                                                       | ) | (26                                                                | )
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                | 6,125    |   | 6,425                                                                     |   | 6,436                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Sales to discontinued
      operations                          |         |   |                                                                          |   | (21                                                                | )
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                | 6,125    |   | 6,425                                                                     |   | 6,415                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Discontinued operations                                         |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Total                                                           |         |   |                                                                          |   | 1,339                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Sales to continuing
      operations                            |         |   |                                                                          |   | (6                                                                 | )
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |         |   |                                                                          |   | 1,333                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Associates                                                      |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Share of profits
      less losses                              |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Interest payable                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Group net interest payable                                      |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Amounts written off investments                                 |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                | 6,125    |   | 6,425                                                                     |   | 7,748                                                              |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|*Goodwill
      amortisation charged in arriving at the results |         
|                                                                |          |   |                                                                           |   |                                                                    |  
|National Starch                                                 |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Quest                                                           |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Performance Specialties                                         |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Paints                                                          |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Continuing operations                                           |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|International
      businesses                                  |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|National
      Starch                                           |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Quest                                                           |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Performance
      Specialties                                   |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Paints                                                          |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Regional and
      Industrial                                   |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|Discontinued operations                                         |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  
|                                                                |          |   |                                                                           |   |                                                                    |  



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4 Segment
  information (continued)

Geographical areas

The information opposite is re-analysed in
  the table below by geographic area. The figures for each geographic area show
  the turnover and profit made by, and the net operating assets owned by, companies
  located in that area; export sales and related profits are included in the areas
  from which those sales were made.

|                                   | Turnover |   | Profit
      before taxation, goodwill amortisation and exceptional items |   | Profit
      before interest and taxation after exceptional items* |  
|---------------------------------- | -------- | - | ------------------------------------------------------------------------- | - | ------------------------------------------------------------------ | -
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 2002     |   | 2001                                                                      |   | 2000                                                               |  
|                                   | £m       |   | £m                                                                        |   | £m                                                                 |  
|Continuing operations              |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|United Kingdom                     |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Sales in the UK                    |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 752      |   | 932                                                                       |   | 994                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 100      |   | 122                                                                       |   | 84                                                                 |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 852      |   | 1,054                                                                     |   | 1,078                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Sales overseas                     |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 357      |   | 348                                                                       |   | 338                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 159      |   | 155                                                                       |   | 193                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 516      |   | 503                                                                       |   | 531                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 1,368    |   | 1,557                                                                     |   | 1,609                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Continental Europe                 |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 1,200    |   | 1,165                                                                     |   | 1,087                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 359      |   | 368                                                                       |   | 323                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 1,559    |   | 1,533                                                                     |   | 1,410                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|USA                                |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 2,050    |   | 2,120                                                                     |   | 2,094                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 152      |   | 156                                                                       |   | 156                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 2,202    |   | 2,276                                                                     |   | 2,250                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Other Americas                     |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 583      |   | 671                                                                       |   | 678                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 73       |   | 77                                                                        |   | 74                                                                 |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 656      |   | 748                                                                       |   | 752                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Asia Pacific                       |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 1,130    |   | 1,136                                                                     |   | 1,171                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 147      |   | 127                                                                       |   | 122                                                                |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 1,277    |   | 1,263                                                                     |   | 1,293                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Other countries                    |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|External                           | 53       |   | 53                                                                        |   | 53                                                                 |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Intra-Group                        | 1        |   |                                                                          |   |                                                                   |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 54       |   | 53                                                                        |   | 53                                                                 |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 7,116    |   | 7,430                                                                     |   | 7,367                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Inter-area eliminations            | (991     | ) | (1,005                                                                    | ) | (931                                                               | )
|                                   |          |   |                                                                           |   |                                                                    |  
|Sales to discontinued operations   |         |   |                                                                          |   | (21                                                                | )
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 6,125    |   | 6,425                                                                     |   | 6,415                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Discontinued operations            |         |   |                                                                          |   | 1,333                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Associates                         |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Share of profits
      less losses |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Interest payable                   |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Group net interest payable         |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|Amounts written off investments    |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  
|                                   | 6,125    |   | 6,425                                                                     |   | 7,748                                                              |  
|                                   |          |   |                                                                           |   |                                                                    |  
|After amortisation of goodwill     |          |   |                                                                           |   |                                                                    |  
|                                   |          |   |                                                                           |   |                                                                    |  

Turnover by Discontinued operations in 2000
  was primarily in the United Kingdom £1,113m, USA £92m and Continental
  Europe £52m.





---



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notes relating to the accounts

4 Segment
  information (continued)

Classes of business

|                                          |       |  | Total
      assets less current liabilities |  
|----------------------------------------- | ----- |  | ------------------------------------------- | -
|                                          |       |  |                                             |  
|                                          |       |  | 2002                                        |  
|                                          |       |  |                                             |  
|                                          |       |  | £m                                          |  
|                                          |       |  |                                             |  
|Net operating assets                      |       |  |                                             |  
|                                          |       |  |                                             |  
|Continuing operations                     |       |  |                                             |  
|                                          |       |  |                                             |  
|International
      businesses            |       |  |                                             |  
|                                          |       |  |                                             |  
|National
      Starch                     |       |  | 1,441                                       |  
|                                          |       |  |                                             |  
|Quest                                     |       |  | 447                                         |  
|                                          |       |  |                                             |  
|Performance
      Specialties             |       |  | 459                                         |  
|                                          |       |  |                                             |  
|Paints                                    |       |  | 864                                         |  
|                                          |       |  |                                             |  
|                                          |       |  | 3,211                                       |  
|                                          |       |  |                                             |  
|Regional and
      Industrial             |       |  | 297                                         |  
|                                          |       |  |                                             |  
|                                          |       |  | 3,508                                       |  
|                                          |       |  |                                             |  
|Discontinued operations                   |       |  |                                            |  
|                                          |       |  |                                             |  
|Total net operating assets                |       |  | 3,508                                       |  
|                                          |       |  |                                             |  
|Net non-operating liabilities             |       |  | (424                                        | )
|                                          |       |  |                                             |  
|                                          |       |  | 3,084                                       |  
|                                          |       |  |                                             |  
|                                          |       |  |                                             |  
|                                          |       |  |                                             |  
|                                          |       |  | Goodwill
      included above               |  
|                                          |       |  |                                             |  
|                                          |       |  | 2002                                        |  
|                                          |       |  | £m                                          |  
|                                          |       |  |                                             |  
|Goodwill                                  |       |  |                                             |  
|                                          |       |  |                                             |  
|National Starch                           |       |  | 266                                         |  
|                                          |       |  |                                             |  
|Quest                                     |       |  | 19                                          |  
|                                          |       |  |                                             |  
|Performance Specialties                   |       |  | 14                                          |  
|                                          |       |  |                                             |  
|Paints                                    |       |  | 260                                         |  
|                                          |       |  |                                             |  
|Regional and
      Industrial             |       |  | 15                                          |  
|                                          |       |  |                                             |  
|                                          |       |  | 574                                         |  
|                                          |       |  |                                             |  
|                                          |       |  |                                             |  
|                                          |       |  |                                             |  
|                                          |       |  | Net
      non-operating liabilities         |  
|                                          |       |  |                                             |  
|                                          | notes |  | 2002                                        |  
|                                          |       |  | £m                                          |  
|                                          |       |  |                                             |  
|Net non-operating liabilities             |       |  |                                             |  
|                                          |       |  |                                             |  
|Non-operating assets                      |       |  |                                             |  
|                                          |       |  |                                             |  
|Fixed asset investments                   | 14    |  | 69                                          |  
|                                          |       |  |                                             |  
|Non-operating
      debtors               | 16    |  | 110                                         |  
|                                          |       |  |                                             |  
|Investments and
      short-term deposits | 17    |  | 285                                         |  
|                                          |       |  |                                             |  
|Cash at bank                              | 33    |  | 267                                         |  
|                                          |       |  |                                             |  
|                                          |       |  | 731                                         |  
|                                          |       |  |                                             |  
|Non-operating liabilities                 |       |  |                                             |  
|                                          |       |  |                                             |  
|Short-term borrowings                     | 18    |  | (226                                        | )
|                                          |       |  |                                             |  
|Current instalments
      of loans        | 20    |  | (500                                        | )
|                                          |       |  |                                             |  
|Non-operating
      creditors             | 19    |  | (429                                        | )
|                                          |       |  |                                             |  
|                                          |       |  | (1,155                                      | )
|                                          |       |  |                                             |  
|                                          |       |  | (424                                        | )
|                                          |       |  |                                             |  



---



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|4Segment
         information (continued)
|-----------------------------------------
|                                         
|Geographic areas                         

|                                           | Tangible
      fixed assets |  | Total assets
      less
      current liabilities | 
|------------------------------------------ | --------------------------- |  | ------------------------------------------------- | 
|                                           |                             |  |                                                   | 
|                                           | 2002
      £m               |  | 2001£m                                            | 
|                                           |                             |  |                                                   | 
|Tangible fixed assets/Net operating assets |                             |  |                                                   | 
|                                           |                             |  |                                                   | 
|Continuing operations                      |                             |  |                                                   | 
|                                           |                             |  |                                                   | 
|United Kingdom                             | 269                         |  | 312                                               | 
|                                           |                             |  |                                                   | 
|Continental Europe                         | 414                         |  | 380                                               | 
|                                           |                             |  |                                                   | 
|USA                                        | 711                         |  | 815                                               | 
|                                           |                             |  |                                                   | 
|Other Americas                             | 123                         |  | 178                                               | 
|                                           |                             |  |                                                   | 
|Asia Pacific                               | 440                         |  | 497                                               | 
|                                           |                             |  |                                                   | 
|Other countries                            | 4                           |  | 4                                                 | 
|                                           |                             |  |                                                   | 
|                                           | 1,961                       |  | 2,186                                             | 
|                                           |                             |  |                                                   | 
|Discontinued operations                    |                            |  |                                                  | 
|                                           |                             |  |                                                   | 
|Total net operating assets                 |                             |  |                                                   | 
|                                           |                             |  |                                                   | 
|Net non-operating liabilities              |                             |  |                                                   | 
|                                           |                             |  |                                                   | 
|                                           | 1,961                       |  | 2,186                                             | 
|                                           |                             |  |                                                   | 

Total assets less current liabilities of Discontinued
  operations, in 2000, were primarily in the United Kingdom £83m, Continental Europe £33m and USA £130m.

|Turnover by customer
      location |       |  |       |  |       | 
|----------------------------------- | ----- |  | ----- |  | ----- | 
|                                    | 2002  |  | 2001  |  | 2000  | 
|                                    | £m    |  | £m    |  | £m    | 
|                                    |       |  |       |  |       | 
|Continuing operations               |       |  |       |  |       | 
|                                    |       |  |       |  |       | 
|United
      Kingdom                | 825   |  | 943   |  | 952   | 
|                                    |       |  |       |  |       | 
|Continental
      Europe            | 1,306 |  | 1,325 |  | 1,291 | 
|                                    |       |  |       |  |       | 
|USA                                 | 1,992 |  | 2,058 |  | 2,012 | 
|                                    |       |  |       |  |       | 
|Other Americas                      | 622   |  | 720   |  | 727   | 
|                                    |       |  |       |  |       | 
|Asia Pacific                        | 1,265 |  | 1,270 |  | 1,312 | 
|                                    |       |  |       |  |       | 
|Other countries                     | 115   |  | 109   |  | 121   | 
|                                    |       |  |       |  |       | 
|                                    | 6,125 |  | 6,425 |  | 6,415 | 
|                                    |       |  |       |  |       | 
|Discontinued operations             |      |  |      |  | 1,333 | 
|                                    |       |  |       |  |       | 
|                                    | 6,125 |  | 6,425 |  | 7,748 | 
|                                    |       |  |       |  |       | 

Turnover
by customer locations for Discontinued operations in 2000 was primarily in
the United Kingdom £864m, Continental Europe £201m and USA £97m.



---



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Contents to the Accounts

notes relating to the accounts

5Trading
  profit (loss)

|                                                                                |                        |   | 2002                     |  |         |  
|------------------------------------------------------------------------------- | ---------------------- | - | ------------------------ |  | ------- | -
|                                                                                |                        |   |                          |  |         |  
|                                                                                | Continuingoperations£m |   | Discontinuedoperations£m |  | Total£m |  
|                                                                                |                        |   |                          |  |         |  
|Trading profit (loss) before exceptional
      items                            |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Turnover                                                                        | 6,125                  |   |                         |  | 6,125   |  
|                                                                                |                        |   |                          |  |         |  
|Operating costs                                                                 |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Cost of sales                                                                   | (3,819                 | ) |                         |  | (3,819  | )
|                                                                                |                        |   |                          |  |         |  
|Distribution costs                                                              | (971                   | ) |                         |  | (971    | )
|                                                                                |                        |   |                          |  |         |  
|Research and development                                                        | (148                   | ) |                         |  | (148    | )
|                                                                                |                        |   |                          |  |         |  
|Administration and other expenses                                               | (714                   | ) |                         |  | (714    | )
|                                                                                |                        |   |                          |  |         |  
|                                                                                | (5,652                 | ) |                         |  | (5,652  | )
|                                                                                |                        |   |                          |  |         |  
|Other operating income                                                          |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Royalties                                                                       | 2                      |   |                         |  | 2       |  
|                                                                                |                        |   |                          |  |         |  
|Other income                                                                    | 21                     |   |                         |  | 21      |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                | 23                     |   |                         |  | 23      |  
|                                                                                |                        |   |                          |  |         |  
|Trading profit (loss)                                                           | 496                    |   |                         |  | 496     |  
|                                                                                |                        |   |                          |  |         |  
|Total charge for depreciation and amortisation
      of goodwill included above | (233                   | ) |                         |  | (233    | )
|                                                                                |                        |   |                          |  |         |  
|Gross profit, as defined by Companies Act
      1985                            | 2,306                  |   |                         |  | 2,306   |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Trading profit (loss) after exceptional
      items                             |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Turnover                                                                        | 6,125                  |   |                         |  | 6,125   |  
|                                                                                |                        |   |                          |  |         |  
|Operating costs                                                                 |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Cost of sales                                                                   | (3,819                 | ) |                         |  | (3,819  | )
|                                                                                |                        |   |                          |  |         |  
|Distribution costs                                                              | (971                   | ) |                         |  | (971    | )
|                                                                                |                        |   |                          |  |         |  
|Research and development                                                        | (148                   | ) |                         |  | (148    | )
|                                                                                |                        |   |                          |  |         |  
|Administration and other expenses                                               | (714                   | ) |                         |  | (714    | )
|                                                                                |                        |   |                          |  |         |  
|                                                                                | (5,652                 | ) |                         |  | (5,652  | )
|                                                                                |                        |   |                          |  |         |  
|Other operating income                                                          |                        |   |                          |  |         |  
|                                                                                |                        |   |                          |  |         |  
|Royalties                                                                       | 2                      |   |                         |  | 2       |  
|                                                                                |                        |   |                          |  |         |  
|Other income                                                                    | 21                     |   |                         |  | 21      |  
|                                                                                |                        |   |                          |  |         |  
|                                                                                | 23                     |   |                         |  | 23      |  
|                                                                                |                        |   |                          |  |         |  
|Trading profit (loss)                                                           | 496                    |   |                         |  | 496     |  
|                                                                                |                        |   |                          |  |         |  
|Total charge for depreciation and amortisation
      of goodwill included above | (233                   | ) |                         |  | (233    | )
|                                                                                |                        |   |                          |  |         |  
|Gross profit, as defined by Companies Act
      1985                            | 2,306                  |   |                         |  | 2,306   |  
|                                                                                |                        |   |                          |  |         |  

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | During the current year the
      Directors have reviewed the basis on which costs are allocated between cost
      of sales, distribution costs, research and development and administration
      and other expenses. To show a more appropriate allocation of costs between
      categories, a new analysis has been adopted and the comparative amounts
      for the years ended 31 December 2001 and 2000 have been restated on a basis
      comparable with the current year presentation.



| | ICI ANNUAL REPORT AND ACCOUNTS
      AND FORM 20-F 2002
| | -------------------------------------------------------



---



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5Trading
  profit (loss) (continued)

|                                                                                | 2001 (as restated)*                  |   | 2000 (as restated)*                   
|------------------------------------------------------------------------------- | ------------------------------------ | - | --------------------------------------
|                                                                                |                                      |   |                                       
|                                                                                | Continuing
      operations
      £m |   | Discontinued
      operations
      £m
|                                                                                |                                      |   |                                       
|Trading profit (loss) before
      exceptional items                            |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Turnover                                                                        | 6,425                                |   |                                      
|                                                                                |                                      |   |                                       
|Operating costs                                                                 |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Cost of sales                                                                   | (4,011                               | ) |                                      
|                                                                                |                                      |   |                                       
|Distribution costs                                                              | (1,023                               | ) |                                      
|                                                                                |                                      |   |                                       
|Research and development                                                        | (151                                 | ) |                                      
|                                                                                |                                      |   |                                       
|Administration and other expenses                                               | (750                                 | ) |                                      
|                                                                                |                                      |   |                                       
|                                                                                | (5,935                               | ) |                                      
|                                                                                |                                      |   |                                       
|Other operating income                                                          |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Royalties                                                                       | 4                                    |   |                                      
|                                                                                |                                      |   |                                       
|Other income                                                                    | 42                                   |   |                                      
|                                                                                |                                      |   |                                       
|                                                                                | 46                                   |   |                                      
|                                                                                |                                      |   |                                       
|Trading profit (loss)                                                           | 536                                  |   |                                      
|                                                                                |                                      |   |                                       
|Total charge for depreciation
      and amortisation of goodwill included above | (246                                 | ) |                                      
|                                                                                |                                      |   |                                       
|Gross profit, as defined by
      Companies Act 1985                            | 2,414                                |   |                                      
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                               
|Trading profit (loss) after
      exceptional items                             |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Turnover                                                                        | 6,425                                |   |                                      
|                                                                                |                                      |   |                                       
|Operating costs                                                                 |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Cost of sales                                                                   | (4,027                               | ) |                                      
|                                                                                |                                      |   |                                       
|Distribution costs                                                              | (1,032                               | ) |                                      
|                                                                                |                                      |   |                                       
|Research and development                                                        | (155                                 | ) |                                      
|                                                                                |                                      |   |                                       
|Administration and other expenses                                               | (864                                 | ) |                                      
|                                                                                |                                      |   |                                       
|                                                                                | (6,078                               | ) |                                      
|                                                                                |                                      |   |                                       
|Other operating income                                                          |                                      |   |                                       
|                                                                                |                                      |   |                                       
|Royalties                                                                       | 4                                    |   |                                      
|                                                                                |                                      |   |                                       
|Other income                                                                    | 42                                   |   |                                      
|                                                                                |                                      |   |                                       
|                                                                                | 46                                   |   |                                      
|                                                                                |                                      |   |                                       
|Trading profit (loss)                                                           | 393                                  |   |                                      
|                                                                                |                                      |   |                                       
|Total charge for depreciation
      and amortisation of goodwill included above | (263                                 | ) |                                      
|                                                                                |                                      |   |                                       
|Gross profit, as defined by
      Companies Act 1985                            | 2,398                                |   |                                      
|                                                                                |                                      |   |                                       



---




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Contents to the Accounts

notes relating to the accounts

6Share
  of operating profits less losses of associates

|                                                                      |                                              |   | 2002                                   |  |         |  
|--------------------------------------------------------------------- | -------------------------------------------- | - | -------------------------------------- |  | ------- | -
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      | Continuingoperationsbeforeexceptionalitems£m |   | Discontinued
      operations
      £m |  | Total£m |  
|                                                                      |                                              |   |                                        |  |         |  
|Share of operating profits less
      losses before interest and tax  |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Dividend and other income                                             |                                             |   |                                       |  |        |  
|                                                                      |                                              |   |                                        |  |         |  
|Share of operating profits less losses
      before exceptional items | 18                                           |   |                                       |  | 18      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      | 18                                           |   |                                       |  | 18      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|7Net
      interest payable                                           |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Interest payable and similar
      charges                            |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Group                                                                 |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Loan interest                                                         |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Bank
      loans                                                      | 38                                           |   |                                       |  | 38      |  
|                                                                      |                                              |   |                                        |  |         |  
|Other
      loans                                                     | 148                                          |   |                                       |  | 148     |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      | 186                                          |   |                                       |  | 186     |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Interest on short-term
      borrowings                               |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Bank
      borrowings                                                 | 11                                           |   |                                       |  | 11      |  
|                                                                      |                                              |   |                                        |  |         |  
|Other
      borrowings                                                | 35                                           |   |                                       |  | 35      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      | 46                                           |   |                                       |  | 46      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      | 232                                          |   |                                       |  | 232     |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Amortisation of discounted provisions                                 | 10                                           |   |                                       |  | 10      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Associates                                                            | 28                                           |   |                                       |  | 28      |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Interest receivable and similar
      income                          |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Group                                                                 | (119                                         | ) |                                       |  | (119    | )
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|                                                                      |                                              |   |                                        |  |         |  
|Net interest payable before
      exceptional items                   | 151                                          |   |                                       |  | 151     |  
|                                                                      |                                              |   |                                        |  |         |  



| | ICI ANNUAL REPORT AND ACCOUNTS
      AND FORM 20-F 2002
| | -------------------------------------------------------



---



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6Share
  of operating profits less losses of associates (continued)

|                                                                      |                                                                                 |   | 2001                            |  |                |   |                                                                                 | 2000 |                                        | 
|--------------------------------------------------------------------- | ------------------------------------------------------------------------------- | - | ------------------------------- |  | -------------- | - | ------------------------------------------------------------------------------- | ---- | -------------------------------------- | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      | Continuing
      operations
      before
      exceptional
      items
      £m |   | Discontinued
      operations£m |  | Total
      £m |   | Continuing
      operations
      before
      exceptional
      items
      £m |      | Discontinued
      operations
      £m | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Share of operating
      profits less losses before interest and tax  |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Dividend and other income                                             |                                                                                |   |                                |  |               |   | 1                                                                               |      | 5                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Share of operating profits
      less losses before exceptional items | 57                                                                              |   |                                |  | 57             |   | 90                                                                              |      | 4                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      | 57                                                                              |   |                                |  | 57             |   | 91                                                                              |      | 9                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|7Net
      interest payable(continued)                                |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Interest payable
      and similar charges                            |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Group                                                                 |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Loan
      interest                                                   |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Bank
      loans                                                      | 28                                                                              |   |                                |  | 28             |   | 42                                                                              |      | 1                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Other
      loans                                                     | 173                                                                             |   |                                |  | 173            |   | 74                                                                              |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      | 201                                                                             |   |                                |  | 201            |   | 116                                                                             |      | 1                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Interest
      on short-term borrowings                               |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Bank
      borrowings                                                 | 25                                                                              |   |                                |  | 25             |   | 27                                                                              |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Other
      borrowings                                                | 52                                                                              |   |                                |  | 52             |   | 150                                                                             |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      | 77                                                                              |   |                                |  | 77             |   | 177                                                                             |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      | 278                                                                             |   |                                |  | 278            |   | 293                                                                             |      | 1                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Amortisation of discounted
      provisions                           | 10                                                                              |   |                                |  | 10             |   | 6                                                                               |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Associates                                                            | 67                                                                              |   |                                |  | 67             |   | 60                                                                              |      |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Interest receivable
      and similar income                          |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Group                                                                 | (126                                                                            | ) |                                |  | (126           | ) | (98                                                                             | )    |                                       | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 
|Net interest payable
      before exceptional items                   | 229                                                                             |   |                                |  | 229            |   | 261                                                                             | *    | 1                                      | 
|                                                                      |                                                                                 |   |                                 |  |                |   |                                                                                 |      |                                        | 

|  |                                                                                                                                                                                      
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | In 2000 there was exceptional interest
      income of £16m relating to interest received on tax repayments. The
      total interest charge, including exceptional items, was £246m.



---





notes relating to the accounts

Back to Contents

Contents to the Accounts

|8                                                                                                                                                                                                                | Taxation on profit (loss) on ordinary activities
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------
|The Group has
      adopted FRS No. 19 Deferred tax during the year ended 31 December 2002.
      Consequently the Groups consolidated financial statements as at
31 December 2001 and 2000 have been restated.

|                                                       | Continuing
        operations                 |   | Discontinuedoperations                  |   | Total |  
|------------------------------------------------------ | --------------------------------------------- | - | --------------------------------------- | - | ----- | -
|                                                       | Before
      exceptional
      items
      £m |   | Exceptional
      items
      
      £m |   | £m    |  
|                                                       |                                               |   |                                         |   |       |  
|2002                                                   |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|ICI and subsidiary undertakings                        |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|United Kingdom taxation                                |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Corporation tax                                        | 9                                             |   | (8                                      | ) | (3    | )
|                                                       |                                               |   |                                         |   |       |  
|Double taxation
      relief                           | (2                                            | ) |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | 62                                            |   |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 69                                            |   | (8                                      | ) | (3    | )
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxation                                      |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxes                                         | 39                                            |   |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | 8                                             |   | 7                                       |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 47                                            |   | 7                                       |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Associates                                             | (1                                            | ) |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Taxation on profit (loss) on ordinary
      activities | 115                                           |   | (1                                      | ) | (3    | )
|                                                       |                                               |   |                                         |   |       |  
|2001 (as restated  note 1)                            |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|ICI and subsidiary undertakings                        |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|United Kingdom taxation                                |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Corporation tax                                        | 34                                            |   | (15                                     | ) | (16   | )
|                                                       |                                               |   |                                         |   |       |  
|Double taxation
      relief                           | (13                                           | ) |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | 41                                            |   | 9                                       |   | 95    |  
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 62                                            |   | (6                                      | ) | 79    |  
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxation                                      |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxes                                         | 56                                            |   | (22                                     | ) | 4     |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | 5                                             |   | (17                                     | ) | (54   | )
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 61                                            |   | (39                                     | ) | (50   | )
|                                                       |                                               |   |                                         |   |       |  
|Associates                                             | (7                                            | ) | (3                                      | ) |      |  
|                                                       |                                               |   |                                         |   |       |  
|Taxation on profit (loss) on ordinary
      activities | 116                                           |   | (48                                     | ) | 29    |  
|                                                       |                                               |   |                                         |   |       |  
|2000 (as restated  note 1)                            |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|ICI and subsidiary undertakings                        |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|United Kingdom taxation                                |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Corporation tax                                        | 24                                            |   | (8                                      | ) | (28   | )
|                                                       |                                               |   |                                         |   |       |  
|Double taxation
      relief                           | (4                                            | ) |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | (3                                            | ) | 8                                       |   | (3    | )
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 17                                            |   |                                        |   | (31   | )
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxation                                      |                                               |   |                                         |   |       |  
|                                                       |                                               |   |                                         |   |       |  
|Overseas taxes                                         | 82                                            |   | (5                                      | ) | 23    |  
|                                                       |                                               |   |                                         |   |       |  
|Deferred taxation                                      | 32                                            |   | 9                                       |   | (45   | )
|                                                       |                                               |   |                                         |   |       |  
|                                                       | 114                                           |   | 4                                       |   | (22   | )
|                                                       |                                               |   |                                         |   |       |  
|Associates                                             | 14                                            |   |                                        |   |      |  
|                                                       |                                               |   |                                         |   |       |  
|Taxation on profit (loss) on ordinary
      activities | 145                                           |   | 4                                       |   | (53   | )
|                                                       |                                               |   |                                         |   |       |  
|                                                      

UK and overseas taxation has been provided
  on the profits (losses) earned for the periods covered by the Group accounts.
  UK corporation tax has been provided at the rate of 30% (2001 30%; 2000 30%).

The exceptional tax charge (credit) in 2002,
  2001 and 2000 are in respect of disposal and restructuring programmes, as discussed
  in note 3.



| | ICI ANNUAL REPORT AND ACCOUNTS
      AND FORM 20-F 2002
| | -------------------------------------------------------



---



Back to Contents

8Taxation
  on profit (loss) on ordinary activities (continued)

|                                                                                   | 2002
      £m |   | 2001
      £m |   | 2000
      £m |  
|---------------------------------------------------------------------------------- | ------------- | - | ------------- | - | ------------- | -
|                                                                                   |               |   |               |   |               |  
|Profit (loss) on ordinary activities before
      taxation is analysed as follows: |               |   |               |   |               |  
|                                                                                   |               |   |               |   |               |  
|United Kingdom                                                                     | 80            |   | 73            |   | (355          | )
|                                                                                   |               |   |               |   |               |  
|Overseas                                                                           | 247           |   | 151           |   | 228           |  
|                                                                                   |               |   |               |   |               |  
|Associates                                                                         | (10           | ) | (19           | ) | 40            |  
|                                                                                   |               |   |               |   |               |  
|                                                                                   | 317           |   | 205           |   | (87           | )
|                                                                                   |               |   |               |   |               |  

The table below reconciles the total and current
  tax charge (credit) at the UK corporation tax rate to the Groups tax on
  profit (loss) on ordinary activities:

|                                                                                              |                 |   | (as
        restated |   | (as
        restated |  
|--------------------------------------------------------------------------------------------- | --------------- | - | -------------------- | - | -------------------- | -
|note
        1)                                                                               | note
        1)
|                                                                                              |                 |   |                      |   |                      |  
|Taxation charge (credit) at
      UK corporation tax rate(2002 30%; 2001
      30%; 2000 30%) | 95              |   | 62                   |   | (26                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Movement on provisions                                                                        | 26              |   | 17                   |   | 83                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Local taxes                                                                                   | 6               |   | 9                    |   | (3                   | )
|                                                                                              |                 |   |                      |   |                      |  
|Capital gains
      (losses) not taxable/deductible                                           | (22             | ) |                     |   | 26                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Taxable Intra-Group
      dividend income                                                     | 15              |   | 21                   |   | 20                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Depreciation
      permanently disallowed                                                     | 5               |   | (13                  | ) | (21                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Overseas tax
      rates                                                                      | (13             | ) | (3                   | ) | 11                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Current year
      tax losses not relieved                                                    | 25              |   | 23                   |   | 18                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Prior year tax
      losses utilised                                                          | (10             | ) | (9                   | ) | (8                   | )
|                                                                                              |                 |   |                      |   |                      |  
|Goodwill amortisation                                                                         | 9               |   | 9                    |   | 19                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Other                                                                                         | (25             | ) | (19                  | ) | (23                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Tax on profit (loss) on ordinary activities                                                   | 111             |   | 97                   |   | 96                   |  
|                                                                                              |                 |   |                      |   |                      |  
|                                                                                              |                 |   |                      |   |                      |  
|                                                                                              |                 |   |                      |   |                      |  
|Timing difference                                                                             |                 |   |                      |   |                      |  
|                                                                                              |                 |   |                      |   |                      |  
|Movement on provisions                                                                        | 33              |   | 62                   |   | 71                   |  
|                                                                                              |                 |   |                      |   |                      |  
|Pension and employee
      liabilities                                                        | 11              |   | (3                   | ) | (10                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Depreciation                                                                                  | 16              |   | (29                  | ) | (25                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Other                                                                                         | 17              |   | 49                   |   | (38                  | )
|                                                                                              |                 |   |                      |   |                      |  
|Total timing differences                                                                      | 77              |   | 79                   |   | (2                   | )
|                                                                                              |                 |   |                      |   |                      |  
|                                                                                              |                 |   |                      |   |                      |  
|                                                                                              |                 |   |                      |   |                      |  
|Current tax charge                                                                            | 34              |   | 18                   |   | 98                   |  
|                                                                                              |                 |   |                      |   |                      |  

The main factors affecting the total tax charge
  in future periods will be any changes to the corporation tax rates in force
  in the countries in which the Group operates and the mix of profits between
  those territories.

No taxes have been provided for liabilities
  which may arise on the distribution of unremitted earnings of subsidiaries and
  associates, except where distributions of such profits are planned. Cumulative
  unremitted earnings of overseas subsidiaries and associates totalled approximately
  £996m at 31 December 2002 (2001 £887m; 2000 £828m). The remittance
  of these amounts would incur tax at substantially lower than statutory rates
  after giving effect to foreign tax credits.



---



Back to Contents

Contents to the Accounts

notes relating to the accounts

|8Taxation
      on profit (loss) on ordinary activities (continued)                                                               
|----------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                  
|Deferred taxation                                                                                                                 
|                                                                                                                                  
|Deferred taxation accounted
      for in the Group financial statements and the potential amounts of deferred
      taxation were:

|                                                           | 2002£m |   | 2001(as restatednote 1)£m |  
|---------------------------------------------------------- | ------ | - | ------------------------- | -
|                                                           |        |   |                           |  
|Deferred tax liabilities                                   |        |   |                           |  
|                                                           |        |   |                           |  
|UK fixed assets                                            | 38     |   | 57                        |  
|                                                           |        |   |                           |  
|Non-UK fixed
      assets                                  | 179    |   | 151                       |  
|                                                           |        |   |                           |  
|Prepaid pension
      asset                                | 142    |   | 137                       |  
|                                                           |        |   |                           |  
|Others                                                     | 188    |   | 163                       |  
|                                                           |        |   |                           |  
|                                                           | 547    |   | 508                       |  
|                                                           |        |   |                           |  
|Deferred tax (assets)                                      |        |   |                           |  
|                                                           |        |   |                           |  
|Restructuring
      provisions                             | (13    | ) | (37                       | )
|                                                           |        |   |                           |  
|Pensions                                                   | (74    | ) | (66                       | )
|                                                           |        |   |                           |  
|Employee liabilities                                       | (60    | ) | (81                       | )
|                                                           |        |   |                           |  
|Business provisions                                        | (35    | ) | (45                       | )
|                                                           |        |   |                           |  
|Stock valuation                                            | (4     | ) | (7                        | )
|                                                           |        |   |                           |  
|Provisions on
      disposal of businesses                 | (91    | ) | (95                       | )
|                                                           |        |   |                           |  
|Losses                                                     | (140   | ) | (70                       | )
|                                                           |        |   |                           |  
|Intangibles                                                | (57    | ) | (22                       | )
|                                                           |        |   |                           |  
|Other                                                      | (26    | ) | (83                       | )
|                                                           |        |   |                           |  
|                                                           | (500   | ) | (506                      | )
|                                                           |        |   |                           |  
|Less valuation allowances                                  | 93     |   | 89                        |  
|                                                           |        |   |                           |  
|                                                           | (407   | ) | (417                      | )
|                                                           |        |   |                           |  
|Deferred tax accounted for at the balance
      sheet date | 140    |   | 91                        |  
|                                                           |        |   |                           |  
|Analysed as:                                               |        |   |                           |  
|                                                           |        |   |                           |  
|Current                                                    | 92     |   | (60                       | )
|                                                           |        |   |                           |  
|Non-current                                                | 48     |   | 151                       |  
|                                                           |        |   |                           |  
|                                                           | 140    |   | 91                        |  
|                                                           |        |   |                           |  

Deferred tax assets of £93m (2001 £89m)
  at 31 December 2002 have not been recognised due to the degree of uncertainty
  over the utilisation of the underlying tax losses and deductions in certain
  tax jurisdictions. Deferred tax assets on operating losses of £140m (2001
  £70m) less a valuation allowance of £73m (2001 £58m) are carried
  forward and available to reduce future taxable income of certain subsidiaries
  in a number of foreign jurisdictions. £3m of these deferred tax assets
  on operating losses, net of valuation allowance, have expiration dates through
  to 2005 and £64m can be carried forward indefinitely.

The deferred tax adjustments to net income
  and net equity to conform with US GAAP are disclosed in note 42.

9  Dividends

|                                         | 2002 |  | 2001(as restated) |  | 2000(as restated) |  | 2002£m |  | 2001£m |  | 2000
      £m
|---------------------------------------- | ---- |  | ----------------- |  | ----------------- |  | ------ |  | ------ |  | -------------
|Pence
        per £1 Ordinary Share     
|                                         |      |  |                   |  |                   |  |        |  |        |  |              
|Interim, paid 4 October 2002             | 3.00 |  | 5.19              |  | 10.38             |  | 36     |  | 45     |  | 90           
|                                         |      |  |                   |  |                   |  |        |  |        |  |              
|Second interim, payable on 22 April 2003 | 4.50 |  | 8.09              |  | 16.18             |  | 52     |  | 71     |  | 142          
|                                         |      |  |                   |  |                   |  |        |  |        |  |              
|                                         | 7.50 |  | 13.28             |  | 26.56             |  | 88     |  | 116    |  | 232          
|                                         |      |  |                   |  |                   |  |        |  |        |  |              

Comparative figures have been restated for
  the Company Rights Issue which closed on 20 March 2002.

Impkemix Trustees Limited, a wholly owned subsidiary
  which acts as a trustee for Imperial Chemical Industries PLC Employee Benefit
  Trust (the Trust) has waived the right to receive dividends on shares held by
  the Trust in its own name. Dividends received on shares allocated to beneficiaries
  and shares held in the form of American Depositary Shares (ADSs) are distributed,
  respectively, to beneficiaries and ADS holders.



| | ICI ANNUAL REPORT AND ACCOUNTS
      AND FORM 20-F 2002
| | -------------------------------------------------------



---



Back to Contents

Contents to the Accounts

10   Earnings
  (loss) per £1 Ordinary Share

|                                                                             | Continuingoperations£m |   | Discontinuedoperations£m |   | Total£m |  
|---------------------------------------------------------------------------- | ---------------------- | - | ------------------------ | - | ------- | -
|                                                                             |                        |   |                          |   |         |  
|2002                                                                         |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|Net profit (loss) for the financial year
      before exceptional items      | 227                    |   |                         |   | 227     |  
|                                                                             |                        |   |                          |   |         |  
|Exceptional items after tax and minorities                                   | (61                    | ) | 13                       |   | (48     | )
|                                                                             |                        |   |                          |   |         |  
|Net profit (loss) for the financial year                                     | 166                    |   | 13                       |   | 179     |  
|                                                                             |                        |   |                          |   |         |  
|                                                                             | million                |   | million                  |   | million |  
|                                                                             |                        |   |                          |   |         |  
|Weighted average Ordinary Shares in issue
      during year                  | 1,123                  |   | 1,123                    |   | 1,123   |  
|                                                                             |                        |   |                          |   |         |  
|Weighted average shares held by Group
      s employee share ownership plan | (9                     | ) | (9                       | ) | (9      | )
|                                                                             |                        |   |                          |   |         |  
|Basic weighted average Ordinary Shares
      in issue during year            | 1,114                  |   | 1,114                    |   | 1,114   |  
|                                                                             |                        |   |                          |   |         |  
|Dilutive effect of share options                                             | 2                      |   | 2                        |   | 2       |  
|                                                                             |                        |   |                          |   |         |  
|Diluted weighted average Ordinary Shares                                     | 1,116                  |   | 1,116                    |   | 1,116   |  
|                                                                             |                        |   |                          |   |         |  
|                                                                             | pence                  |   | pence                    |   | pence   |  
|                                                                             |                        |   |                          |   |         |  
|Basic earnings (loss) per £1 Ordinary
      Share                            |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|before exceptional
      items                                               | 20.4                   |   |                         |   | 20.4    |  
|                                                                             |                        |   |                          |   |         |  
|after exceptional
      items                                                | 14.9                   |   | 1.2                      |   | 16.1    |  
|                                                                             |                        |   |                          |   |         |  
|Diluted earnings (loss) per £1 Ordinary
      Share                          |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|before exceptional
      items                                               | 20.3                   |   |                         |   | 20.3    |  
|                                                                             |                        |   |                          |   |         |  
|after exceptional
      items                                                | 14.8                   |   | 1.2                      |   | 16.0    |  
|                                                                             |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|2001 (as restated  note 1)                                                  | £m                     |   | £m                       |   | £m      |  
|                                                                             |                        |   |                          |   |         |  
|Net profit (loss) for the financial year
      before exceptional items      | 222                    |   |                         |   | 222     |  
|                                                                             |                        |   |                          |   |         |  
|Exceptional items after tax and minorities                                   | (131                   | ) | (11                      | ) | (142    | )
|                                                                             |                        |   |                          |   |         |  
|Net profit (loss) for the financial year                                     | 91                     |   | (11                      | ) | 80      |  
|                                                                             |                        |   |                          |   |         |  
|                                                                             | million                |   | million                  |   | million |  
|                                                                             |                        |   |                          |   |         |  
|Weighted average Ordinary Shares in issue
      during year                  | 876                    |   | 876                      |   | 876     |  
|                                                                             |                        |   |                          |   |         |  
|Weighted average shares held by Group
      s employee share ownership plan | (7                     | ) | (7                       | ) | (7      | )
|                                                                             |                        |   |                          |   |         |  
|Basic weighted average Ordinary Shares
      in issue during year            | 869                    |   | 869                      |   | 869     |  
|                                                                             |                        |   |                          |   |         |  
|Dilutive effect of share options                                             |                       |   |                         |   |        |  
|                                                                             |                        |   |                          |   |         |  
|Diluted weighted average Ordinary Shares                                     | 869                    |   | 869                      |   | 869     |  
|                                                                             |                        |   |                          |   |         |  
|                                                                             | pence                  |   | pence                    |   | pence   |  
|                                                                             |                        |   |                          |   |         |  
|Basic earnings (loss) per £1 Ordinary
      Share                            |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|before exceptional
      items                                               | 25.5                   |   |                         |   | 25.5    |  
|                                                                             |                        |   |                          |   |         |  
|after exceptional
      items                                                | 10.5                   |   | (1.3                     | ) | 9.2     |  
|                                                                             |                        |   |                          |   |         |  
|Diluted earnings (loss) per £1 Ordinary
      Share                          |                        |   |                          |   |         |  
|                                                                             |                        |   |                          |   |         |  
|before exceptional
      items                                               | 25.5                   |   |                         |   | 25.5    |  
|                                                                             |                        |   |                          |   |         |  
|after exceptional
      items                                                | 10.5                   |   | (1.3                     | ) | 9.2     |  
|                                                                             |                        |   |                          |   |         |  



---



Back to Contents

Contents to the Accounts

notes relating to the accounts

10Earnings
  (loss) per £1 Ordinary Share (continued)

|                                                                            | Continuing
      operations
      £m |   | Discontinued
      operations
      £m |   | Total
      
      £m |  
|--------------------------------------------------------------------------- | ------------------------------------ | - | -------------------------------------- | - | --------------------- | -
|                                                                            |                                      |   |                                        |   |                       |  
|2000 (as restated  note 1)                                                 |                                      |   |                                        |   |                       |  
|                                                                            |                                      |   |                                        |   |                       |  
|Net profit (loss) for the financial year
      before exceptional items     | 243                                  |   | 6                                      |   | 249                   |  
|                                                                            |                                      |   |                                        |   |                       |  
|Exceptional items after tax and minorities                                  | 24                                   |   | (480                                   | ) | (456                  | )
|                                                                            |                                      |   |                                        |   |                       |  
|Net profit (loss) for the financial year                                    | 267                                  |   | (474                                   | ) | (207                  | )
|                                                                            |                                      |   |                                        |   |                       |  
|                                                                            | million                              |   | million                                |   | million               |  
|                                                                            |                                      |   |                                        |   |                       |  
|Weighted average Ordinary Shares in issue
      during year                 | 876                                  |   | 876                                    |   | 876                   |  
|                                                                            |                                      |   |                                        |   |                       |  
|Weighted average shares held by Groups
      employee share ownership plan | (7                                   | ) | (7                                     | ) | (7                    | )
|                                                                            |                                      |   |                                        |   |                       |  
|Basic weighted average Ordinary Shares
      in issue during year           | 869                                  |   | 869                                    |   | 869                   |  
|                                                                            |                                      |   |                                        |   |                       |  
|Dilutive effect of share options                                            |                                     |   |                                       |   |                      |  
|                                                                            |                                      |   |                                        |   |                       |  
|Diluted weighted average Ordinary Shares                                    | 869                                  |   | 869                                    |   | 869                   |  
|                                                                            |                                      |   |                                        |   |                       |  
|                                                                            | pence                                |   | pence                                  |   | pence                 |  
|                                                                            |                                      |   |                                        |   |                       |  
|Basic earnings (loss) per £1 Ordinary
      Share                           |                                      |   |                                        |   |                       |  
|                                                                            |                                      |   |                                        |   |                       |  
|before exceptional
      items                                              | 28.0                                 |   | 0.7                                    |   | 28.7                  |  
|                                                                            |                                      |   |                                        |   |                       |  
|after exceptional
      items                                               | 30.7                                 |   | (54.5                                  | ) | (23.8                 | )
|                                                                            |                                      |   |                                        |   |                       |  
|Diluted earnings (loss) per £1 Ordinary
      Share                         |                                      |   |                                        |   |                       |  
|                                                                            |                                      |   |                                        |   |                       |  
|before exceptional
      items                                              | 28.0                                 |   | 0.7                                    |   | 28.7                  |  
|                                                                            |                                      |   |                                        |   |                       |  
|after exceptional
      items                                               | 30.7                                 |   | (54.5                                  | ) | (23.8                 | )
|                                                                            |                                      |   |                                        |   |                       |  

There are no options, warrants or rights outstanding
  in respect of unissued shares except for the share option scheme for employees
  (note 23). Earnings per £1 Ordinary Share before exceptional items have
  been calculated to show the impact of exceptional items as these can have a distorting effect on earnings and
  therefore warrant separate consideration.

On 4 February 2002, the Company announced a
  Rights Issue and, following approval of the required resolutions at the subsequent
  Extraordinary General Meeting, 463m new Ordinary Shares were issued at 180p
  per share on the basis of 7 new Ordinary Shares for every 11 existing Ordinary
  Shares.

The actual cum rights price on 25 February
  2002, the last day of quotation cum rights, was 319p per share and the theoretical
  ex rights price for an Ordinary Share was therefore 265p per share. The comparative
  earnings per share are shown after applying the factor 265/319 to the published
  figures for 2001 and 2000, after adjusting for deferred tax (see note 1) in
  order to adjust for the bonus issue within the Rights Issue.

11 Intangible
  fixed assets  goodwill

|                           | £m  |  
|-------------------------- | --- | -
|                           |     |  
|Group                      |     |  
|                           |     |  
|Cost                       |     |  
|                           |     |  
|At beginning of year       | 743 |  
|                           |     |  
|Acquisitions               | 13  |  
|                           |     |  
|Disposals                  | (4  | )
|                           |     |  
|Exchange adjustments       | (15 | )
|                           |     |  
|At end of year             | 737 |  
|                           |     |  
|Amortisation               |     |  
|                           |     |  
|At beginning of year       | 130 |  
|                           |     |  
|Charge for year            | 37  |  
|                           |     |  
|Disposals                  | (1  | )
|                           |     |  
|Exchange adjustments       | (3  | )
|                           |     |  
|At end of year             | 163 |  
|                           |     |  
|Net book value at end 2002 | 574 |  
|                           |     |  
|Net book value at end 2001 | 613 |  
|                           |     |  
|

Substantially all of the Groups goodwill
  arose on the purchase of Acheson Industries Inc. and of the European Home Improvement
  business of Williams Plc in 1998. The Directors estimate that the useful economic
  life of this goodwill is at least 20 years and it is amortised over 20 years
  in accordance with FRS 10.

| | ICI ANNUAL REPORT AND ACCOUNTS
      AND FORM 20-F 2002
| | -------------------------------------------------------



---



Back to Contents

Contents to the Accounts

12Tangible
  fixed assets

|                              | Land
        and
      buildings |   | Plant
        and
      equipment |   | Payments
        on
      account and
      assets in
      course of
      construction |   | Total |  
|----------------------------- | -------------------------------- | - | --------------------------------- | - | ---------------------------------------------------------------------------------------- | - | ----- | -
|                              | £m                               |   | £m                                |   | £m                                                                                       |   | £m    |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Group                         |                                  |   |                                   |   |                                                                                          |   |       |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Cost                          |                                  |   |                                   |   |                                                                                          |   |       |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|At beginning of year          | 939                              |   | 2,441                             |   | 170                                                                                      |   | 3,550 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|New subsidiary undertakings   |                                 |   | 3                                 |   | 1                                                                                        |   | 4     |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Capital expenditure           |                                 |   |                                  |   | 215                                                                                      |   | 215   |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Transfers of assets into use  | 24                               |   | 218                               |   | (242                                                                                     | ) |      |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Exchange adjustments          | (62                              | ) | (186                              | ) | (3                                                                                       | ) | (251  | )
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Disposals and other movements | 4                                |   | (209                              | ) | (11                                                                                      | ) | (216  | )
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|At end of year                | 905                              |   | 2,267                             |   | 130                                                                                      |   | 3,302 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Depreciation                  |                                  |   |                                   |   |                                                                                          |   |       |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|At beginning of year          | 212                              |   | 1,152                             |   |                                                                                          |   | 1,364 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Charge for year               | 29                               |   | 167                               |   |                                                                                          |   | 196   |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Exchange adjustments          | (18                              | ) | (99                               | ) |                                                                                          |   | (117  | )
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Disposals and other movements | 19                               |   | (121                              | ) |                                                                                          |   | (102  | )
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|At end of year                | 242                              |   | 1,099                             |   |                                                                                          |   | 1,341 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Net book value at end 2002    | 663                              |   | 1,168                             |   | 130                                                                                      |   | 1,961 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  
|Net book value at end 2001    | 727                              |   | 1,289                             |   | 170                                                                                      |   | 2,186 |  
|                              |                                  |   |                                   |   |                                                                                          |   |       |  

Capital expenditure in the year includes capitalised
  finance leases of £4m; creditors for capital work done but not paid for
  decreased by £8m; the resulting cash expenditure on tangible fixed assets
  was £219m.

The net book value of the tangible fixed assets
  of the Group includes capitalised finance leases of £7m (2001 £6m)
  comprising cost of £9m (2001 £8m) less depreciation of £2m
  (2001 £2m). The depreciation charge for the year in respect of capitalised
  leases was £1m (2001 £1m) and finance charges were £nil (2001
  £nil).

Included in land and buildings is £135m
  (2001 £146m) in respect of the cost of land which is not subject to depreciation.



---



Back to Contents

Contents to the Accounts

notes relating to the accounts

12Tangible
  fixed assets (continued)

|                              | Land
        andbuildings£m |   | Plant
        andequipment£m |   | Payments
        onaccount andassets incourse ofconstruction£m |   | Total£m |  
|----------------------------- | --------------------------- | - | ---------------------------- | - | -------------------------------------------------------------- | - | ------- | -
|                              |                             |   |                              |   |                                                                |   |         |  
|Company                       |                             |   |                              |   |                                                                |   |         |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Cost                          |                             |   |                              |   |                                                                |   |         |  
|                              |                             |   |                              |   |                                                                |   |         |  
|At beginning of year          | 20                          |   | 163                          |   | 17                                                             |   | 200     |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Capital expenditure           |                             |   |                              |   | 24                                                             |   | 24      |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Transfers of assets into use  | 16                          |   | 14                           |   | (30                                                            | ) |        |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Disposals and other movements | (1                          | ) | (4                           | ) |                                                                |   | (5      | )
|                              |                             |   |                              |   |                                                                |   |         |  
|At end of year                | 35                          |   | 173                          |   | 11                                                             |   | 219     |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Depreciation                  |                             |   |                              |   |                                                                |   |         |  
|                              |                             |   |                              |   |                                                                |   |         |  
|At beginning of year          | 12                          |   | 119                          |   |                                                               |   | 131     |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Charge for year               | 1                           |   | 13                           |   |                                                               |   | 14      |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Disposals and other movements |                            |   | (4                           | ) |                                                               |   | (4      | )
|                              |                             |   |                              |   |                                                                |   |         |  
|At end of year                | 13                          |   | 128                          |   |                                                               |   | 141     |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Net book value at end 2002    | 22                          |   | 45                           |   | 11                                                             |   | 78      |  
|                              |                             |   |                              |   |                                                                |   |         |  
|Net book value at end 2001    | 8                           |   | 44                           |   | 17                                                             |   | 69      |  
|                              |                             |   |                              |   |                                                                |   |         |  

|                                                          |        |  |         |  |        |  |         | 
|--------------------------------------------------------- | ------ |  | ------- |  | ------ |  | ------- | 
|                                                          | Group  |  | Company | 
|                                                          |        |  |         |  |        |  |         | 
|                                                          | 2002£m |  | 2001
£m |  | 2002£m |  | 2001
£m | 
|                                                          |        |  |         |  |        |  |         | 
|The net book value of land and buildings
      comprises: |        |  |         |  |        |  |         | 
|                                                          |        |  |         |  |        |  |         | 
|Freeholds                                                 | 624    |  | 694     |  | 8      |  | 8       | 
|                                                          |        |  |         |  |        |  |         | 
|Long leases (over 50 years unexpired)                     | 18     |  | 26      |  |       |  |        | 
|                                                          |        |  |         |  |        |  |         | 
|Short leases                                              | 21     |  | 7       |  | 14     |  |        | 
|                                                          |        |  |         |  |        |  |         | 
|                                                          | 663    |  | 727     |  | 22     |  | 8       | 
|                                                          |        |  |         |  |        |  |         | 

13   Investments
  in subsidiary undertakings

|                                | Shares£m |   | Loans£m |   | Total£m |  
|------------------------------- | -------- | - | ------- | - | ------- | -
|                                |          |   |         |   |         |  
|Cost                            |          |   |         |   |         |  
|                                |          |   |         |   |         |  
|At beginning of year            | 7,874    |   | 1,654   |   | 9,528   |  
|                                |          |   |         |   |         |  
|New investments/new loans       | 755      |   | 4,614   |   | 5,369   |  
|                                |          |   |         |   |         |  
|Disposals/loans repaid          | (2,909   | ) | (361    | ) | (3,270  | )
|                                |          |   |         |   |         |  
|Exchange adjustments            | (10      | ) | (185    | ) | (195    | )
|                                |          |   |         |   |         |  
|At end of year                  | 5,710    |   | 5,722   |   | 11,432  |  
|                                |          |   |         |   |         |  
|Provisions                      |          |   |         |   |         |  
|                                |          |   |         |   |         |  
|At beginning of year            | (455     | ) | (1      | ) | (456    | )
|                                |          |   |         |   |         |  
|Exchange adjustments            | 4        |   |        |   | 4       |  
|                                |          |   |         |   |         |  
|Additions                       | (28      | ) |        |   | (28     | )
|                                |          |   |         |   |         |  
|Disposals/loans repaid          | 405      |   |        |   | 405     |  
|                                |          |   |         |   |         |  
|At end of year                  | (74      | ) | (1      | ) | (75     | )
|                                |          |   |         |   |         |  
|Balance sheet value at end 2002 | 5,636    |   | 5,721   |   | 11,357  |  
|                                |          |   |         |   |         |  
|Balance sheet value at end 2001 | 7,419    |   | 1,653   |   | 9,072   |  
|                                |          |   |         |   |         |  

|                                                                     |        |  |        | 
|-------------------------------------------------------------------- | ------ |  | ------ | 
|                                                                     | 2002£m |  | 2001£m | 
|                                                                     |        |  |        | 
|Shares in subsidiary undertakings which
      are listed investments |        |  |        | 
|                                                                     |        |  |        | 
|Balance sheet value                                                  | 4      |  | 4      | 
|                                                                     |        |  |        | 
|Market value                                                         | 32     |  | 19     | 
|                                                                     |        |  |        | 

The Companys investment in its subsidiary
  undertakings, which is eliminated in the Group consolidation, consists of either
  equity or long-term loans, or both. Normal trading balances are included in
  either debtors or creditors. Information on principal subsidiary undertakings
  is given on page 115.



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Contents to the Accounts

14   Investments
  in participating and other interests

|                                                     |                                              |    | Associates                                       |    |                |     | Other
      investments |     | Total                       |   
|---------------------------------------------------- | -------------------------------------------- | -- | ------------------------------------------------ | -- | -------------- | --- | ----------------------- | --- | --------------------------- | --
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     | Equity
      accounted
      shares
      £m |    | Non equity
      accounted
      shares
      £m |    | Loans
      £m |     | Own*shares£m            |     | Other
      shares
      £m |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Group                                                |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Cost                                                 |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At beginning of year                                 |                                              | 35 |                                                  | 1  |                | 210 |                         | 52  |                             | 17
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Additions                                            |                                              | 4  |                                                  |   |                | 13  |                         | 7   |                             | 2 
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Disposals and other movements                       | (35                                          | )  |                                                 |    | (221           | )   | (1                      | )   |                            |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Exchange adjustments                                 | 1                                            |    |                                                 |    | (2             | )   |                        |     | (1                          | ) 
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At end of year                                       |                                              | 5  |                                                  | 1  |                |    |                         | 58  |                             | 18
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Share of post-acquisition
      reserves less losses |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At beginning of year                                 |                                              | 22 |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Retained profits less losses                         | (13                                          | )  |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Disposals and other movements                       | 2                                            |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Exchange adjustments                                 |                                             |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At end of year                                       |                                              | 11 |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Provisions                                           |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At beginning of year                                 |                                              |   |                                                  | (1 | )              |    |                         | (22 | )                           | (1
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Additions                                            |                                              |   |                                                  |   |                |    |                         |    |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Disposals                                            |                                              |   |                                                  |   |                |    |                         |    |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Exchange adjustments                                 |                                             |    |                                                 |    |               |     |                        |     |                            |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|At end of year                                       |                                              |   |                                                  | (1 | )              |    |                         | (22 | )                           | (1
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Balance sheet value at end
      2002                | 16                                           |    |                                                 |    |               |     | 36                      |     | 17                          |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Balance sheet value at end 2001                      | 57                                           |    |                                                 |    | 210            |     | 30                      |     | 16                          |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|The above investments included:                      |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|2002                                                 |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Listed investments                                   |  balance sheet value                        |    |                                                  |    |                |     |                         | 36  |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |  market value                               |    |                                                  |    |                |     |                         | 23  |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|2001                                                 |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|Listed investments                                   |  balance sheet value                        |    |                                                  |    |                |     |                         | 30  |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   
|                                                     |  market value                               |    |                                                  |    |                |     |                         | 23  |                             |  
|                                                     |                                              |    |                                                  |    |                |     |                         |     |                             |   

|                                                                                                                             
|-----------------------------------------------------------------------------------------------------------------------------
|*                                                                                                                            
|                                                                                                                             
|ø                                                                                                                            
|                                                                                                                             
|                                                                                                                            
|                                                                                                                             
|The fair values
        of unlisted investments (other shares) are not materially different from
      their carrying values.
|                                                                                                                             
|The Groups
      principal associate at 31 December 2002 is:                                                                

|                      |                                                                                   |    |                                    |                           
|--------------------- | --------------------------------------------------------------------------------- | -- | ---------------------------------- | --------------------------
|                      | Issued
        share and loan capital at date oflatest available audited accounts |    | Held
        bya subsidiaryof ICI% | Principal
      activities
|Class of capital      | £m                                                                               
|                      |                                                                                   |    |                                    |                           
|ICInsurance
      Ltd | Ordinary                                                                          | 20 |                                    | 49                        
|                      |                                                                                   |    |                                    |                           

IC Insurance Ltd is incorporated in England
  and its principal operations are carried out in the UK.



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notes relating to the accounts

14Investments
  in participating and other interests (continued)

|                                | Loans |   | Other
      shares |   | Total |  
|------------------------------- | ----- | - | ------------------ | - | ----- | -
|                                | £m    |   | £m                 |   | £m    |  
|                                |       |   |                    |   |       |  
|Company                         |       |   |                    |   |       |  
|                                |       |   |                    |   |       |  
|Cost                            |       |   |                    |   |       |  
|                                |       |   |                    |   |       |  
|At the beginning of year        | 57    |   | 2                  |   | 59    |  
|                                |       |   |                    |   |       |  
|Additions                       | 40    |   |                    |   | 40    |  
|                                |       |   |                    |   |       |  
|Disposals                       | (31   | ) |                    |   | (31   | )
|                                |       |   |                    |   |       |  
|Exchange adjustments            | 1     |   |                    |   | 1     |  
|                                |       |   |                    |   |       |  
|At end of year                  | 67    |   | 2                  |   | 69    |  
|                                |       |   |                    |   |       |  
|Provisions                      |       |   |                    |   |       |  
|                                |       |   |                    |   |       |  
|At the beginning of year        |      |   | (1                 | ) | (1    | )
|                                |       |   |                    |   |       |  
|Additions                       | (67   | ) |                    |   | (67   | )
|                                |       |   |                    |   |       |  
|Disposals                       |       |   |                    |   |      |  
|                                |       |   |                    |   |       |  
|Exchange adjustments            |       |   |                    |   |      |  
|                                |       |   |                    |   |       |  
|At end of year                  | (67   | ) | (1                 | ) | (68   | )
|                                |       |   |                    |   |       |  
|Balance sheet value at end 2002 |      |   | 1                  |   | 1     |  
|                                |       |   |                    |   |       |  
|Balance sheet value at end 2001 | 57    |   | 1                  |   | 58    |  
|                                |       |   |                    |   |       |  

|                                    |               |  |               | 
|----------------------------------- | ------------- |  | ------------- | 
|                                    |               |  |               | 
|15Stocks                            |               |  |               | 
|                                    | Group         |  | Company       | 
|                                    |               |  |               | 
|                                    | 2002
      £m |  | 2001
      £m | 
|                                    |               |  |               | 
|Raw materials and consumables       | 218           |  | 261           | 
|                                    |               |  |               | 
|Stocks in process                   | 21            |  | 28            | 
|                                    |               |  |               | 
|Finished goods and goods for resale | 412           |  | 464           | 
|                                    |               |  |               | 
|                                    | 651           |  | 753           | 
|                                    |               |  |               | 



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16Debtors

|                                              | Group |   | Non-operating
        debtors
      included in Group |   | Company | 
|--------------------------------------------- | ----- | - | ----------------------------------------------------- | - | ------- | 
|                                              |       |   |                                                       |   |         | 
|                                              | 2002  |   | 2001                                                  |   | 2002    | 
|                                              | £m    |   | £m                                                    |   | £m      | 
|                                              |       |   |                                                       |   |         | 
|Amounts due within one year                   |       |   |                                                       |   |         | 
|                                              |       |   |                                                       |   |         | 
|Trade debtors                                 | 877   |   | 985                                                   |   |         | 
|                                              |       |   |                                                       |   |         | 
|Less: amounts set aside for doubtful accounts | (48   | ) | (67                                                   | ) |         | 
|                                              |       |   |                                                       |   |         | 
|                                              | 829   |   | 918                                                   |   |         | 
|                                              |       |   |                                                       |   |         | 
|Amounts owed by subsidiary undertakings       |       |   |                                                       |   |         | 
|                                              |       |   |                                                       |   |         | 
|Prepaid pension costs                         | 15    |   | 15                                                    |   |         | 
|                                              |       |   |                                                       |   |         | 
|Taxation recoverable                          | 68    |   | 108                                                   |   | 68      | 
|                                              |       |   |                                                       |   |         | 
|Other prepayments and accrued income          | 93    |   | 145                                                   |   | 31      | 
|                                              |       |   |                                                       |   |         | 
|Other debtors                                 | 145   |   | 175                                                   |   | 2       | 
|                                              |       |   |                                                       |   |         | 
|                                              | 1,150 |   | 1,361                                                 |   | 101     | 
|                                              |       |   |                                                       |   |         | 
|Amounts due after more than one year          |       |   |                                                       |   |         | 
|                                              |       |   |                                                       |   |         | 
|Prepaid pension costs                         | 510   |   | 495                                                   |   |        | 
|                                              |       |   |                                                       |   |         | 
|Other debtors                                 | 35    |   | 57                                                    |   | 9       | 
|                                              |       |   |                                                       |   |         | 
|                                              | 545   |   | 552                                                   |   | 9       | 
|                                              |       |   |                                                       |   |         | 
|                                              | 1,695 |   | 1,913                                                 |   | 110     | 
|                                              |       |   |                                                       |   |         | 

Trade debtors include amounts which have been
  securitised with a financial institution. An amount of £95m (2001 £97m)
  is included within the current instalment of loans as the Group retains the
  risks in relation to this amount. Accordingly the financial institution has
  rights over amounts included within trade debtors of £192m at 31 December
  2002 (2001 £200m) (up to a maximum of its loan).

Under US GAAP, the amounts due after more than
  one year would be shown as non-current.



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17Current
  asset investments and short-term deposits

|                                             | Group         |  | Company       | 
|-------------------------------------------- | ------------- |  | ------------- | 
|                                             |               |  |               | 
|                                             | 2002
      £m |  | 2001
      £m | 
|                                             |               |  |               | 
|Listed investments                           |              |  |              | 
|                                             |               |  |               | 
|Unlisted investments and short-term deposits | 285           |  | 159           | 
|                                             |               |  |               | 
|                                             | 285           |  | 159           | 
|                                             |               |  |               | 
|Included in cash and cash equivalents        | 158           |  | 135           | 
|                                             |               |  |               | 
|Market value of listed investments           |              |  |              | 
|                                             |               |  |               | 

Included in unlisted investments and short-term
  deposits and cash are amounts totalling £109m (2001 £104m) held
  by the Groups insurance subsidiaries. In 2002 £30m (2001 £38m)
  was readily available for the general purposes of the Group. Also included in
  2002 is an amount of £125m (2001 £nil) in relation to the sale of
  ICIs interests in Huntsman International Holdings LLC (see below).

The management of current asset investments
  is discussed in note 38.

Huntsman International Holdings
  LLCUnder the terms of a Sale and Purchase Agreement
  dated 14 June 2002, ICI agreed to sell its interests in Huntsman International
  Holdings LLC (HIH), which comprise (1) a holding of subordinated
  loan notes in HIH (HIH Notes) and (2) ICI Alta Inc., the wholly
  owned subsidiary of the Company which holds ICIs 30% equity interest in
  HIH and ICIs rights under the option Agreement with Huntsman Specialty
  Chemicals Corporation (HSCC) dated 2 November 2000 (the Option
  Agreement), as amended 20 December 2001, to CSFB Global Opportunities
  Partners, L.P. (now Matlin Patterson Global Opportunities Partners L.P.). The
  aggregate purchase price is $440m (£283m). Of this amount, $160m (£109m)
  has been received. The remaining $280m (£174m) (with an amount equivalent
  to interest from 15 May 2002 to the date of payment) will be payable on 15 May
  2003, with the purchaser having the option to pay all or part of the amount
  due prior to 15 May 2003 by means of instalment payments. As security for a
  portion of the outstanding purchase price, the HIH Notes have been pledged back
  to ICI, otherwise the agreement is effectively without recourse to Matlin Patterson
  Global Opportunities Partners L.P. This pledge will be released when ICI has
  received in aggregate at least $260m of the total purchase price. When ICI has
  received at least $350m of the total purchase price, ICI will release ICI Altas
  existing pledge over 21% of the 30% equity interest in HIH pledged to ICI by
  HSCC and reduce the amount due from HSCC to ICI Alta under the Option Agreement
  by approximately 50%. If no installment payments are made, the Option Agreement
  will remain in place on its existing terms. The sale of ICI Alta (and the indirect
  transfer of ICIs 30% equity interest in HIH) is permitted by the Option
  Agreement; however, due to separate constraints on members of HIH transferring
  any interests in HIH to third parties, the purchaser may be obligated to obtain
  the written consent of HSCC prior to transfer of ownership of ICI Alta.

Ownership of the HIH Notes has been transferred,
  subject to the pledge arrangements above, and ownership of ICI Alta will be
  transferred when the full purchase price has been received. The HIH Notes have
  been accounted for as sold, with some of the purchase price outstanding, and
  the equity interest in HIH accounted for as an investment rather than an associate
  undertaking. As the transaction has not been completed the estimated net overall
  gain of approximately £55m has not been recognised. The outstanding purchase
  price on the HIH Notes of $100m (£62m) and the loss on the HIH Notes of
  approximately £40m, together with the equity interest in HIH (£23m)
  are held in the Group balance sheet as current asset investments until such
  time as the total purchase price of $440m (£283m) has been received in
  full. At that date, the overall profit on the transaction will be recorded.
  Although not expected at this time, a failure by Matlin Patterson Global Opportunities
  Partners L.P. to complete all aspects of the Sale and Purchase Agreement, would
  require the Group to review and amend the above accounting treatment in the
  light of the circumstances then prevailing.

In general, HIH is required to make certain
  distributions in respect of taxes payable by its members (tax distributions),
  and may make other distributions upon approval of a majority of its board of
  directors, subject to two restrictions. First, under Delaware law, HIH may not
  make a distribution to its members if, after such distribution, HIHs liabilities
  would exceed the fair value of its assets. Second, with certain exceptions (including
  for tax distributions), the terms of HIHs outstanding indebtedness (which
  mature in 2009) generally prohibit HIH from making any distributions or payments
  on or with respect to HIHs equity while such indebtedness is outstanding.





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18Short-term
  borrowings

|                                                            | Group         |  | Company       |  | Average
        interest
      rate  Group* | 
|----------------------------------------------------------- | ------------- |  | ------------- |  | -------------------------------------------- | 
|                                                            |               |  |               |  |                                              | 
|                                                            | 2002
      £m |  | 2001
      £m |  | 2002
      £m                                | 
|                                                            |               |  |               |  |                                              | 
|Bank borrowings                                             |               |  |               |  |                                              | 
|                                                            |               |  |               |  |                                              | 
|Secured                                                     |               |  |               |  |                                              | 
|                                                            |               |  |               |  |                                              | 
|by floating charge                                          | 5             |  | 13            |  |                                             | 
|                                                            |               |  |               |  |                                              | 
|Unsecured                                                   | 38            |  | 54            |  |                                             | 
|                                                            |               |  |               |  |                                              | 
|                                                            | 43            |  | 67            |  |                                             | 
|                                                            |               |  |               |  |                                              | 
|Other borrowings (unsecured)                                | 183           |  | 351           |  |                                             | 
|                                                            |               |  |               |  |                                              | 
|                                                            | 226           |  | 418           |  |                                             | 
|                                                            |               |  |               |  |                                              | 
|Maximum short-term borrowings outstanding
      during year | 1,021         |  | 878           |  |                                             | 
|                                                            |               |  |               |  |                                              | 

*Based
  on borrowings outstanding at 31 December.

Various short-term lines of credit, both committed
  and uncommitted, are available to the Group and are reviewed regularly. There
  are no facility fees payable on uncommitted lines nor is there a requirement
  for an equivalent deposit to be maintained with any of the banks.

19 Other
  creditors

|                                                        | Group         |  | Non-operating
        creditors
      included in Group |  | Company       | 
|------------------------------------------------------- | ------------- |  | ------------------------------------------------------- |  | ------------- | 
|                                                        |               |  |                                                         |  |               | 
|                                                        | 2002
      £m |  | 2001
      £m                                           |  | 2002
      £m | 
|                                                        |               |  |                                                         |  |               | 
|Amounts due within one year                             |               |  |                                                         |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Trade creditors                                         | 754           |  | 804                                                     |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Amounts owed to subsidiary undertakings                 |               |  |                                                         |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Corporate taxation                                      | 298           |  | 327                                                     |  | 298           | 
|                                                        |               |  |                                                         |  |               | 
|Value added and payroll taxes and social
      security | 25            |  | 17                                                      |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Dividends to Ordinary Shareholders                      | 52            |  | 71                                                      |  | 52            | 
|                                                        |               |  |                                                         |  |               | 
|Environmental liabilities                               | 2             |  | 3                                                       |  |              | 
|                                                        |               |  |                                                         |  |               | 
|Accruals                                                | 278           |  | 365                                                     |  | 65            | 
|                                                        |               |  |                                                         |  |               | 
|Other creditors*                                        | 283           |  | 346                                                     |  | 14            | 
|                                                        |               |  |                                                         |  |               | 
|                                                        | 1,692         |  | 1,933                                                   |  | 429           | 
|                                                        |               |  |                                                         |  |               | 
|Amounts due after more than one year                    |               |  |                                                         |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Corporate taxation                                      | 2             |  | 2                                                       |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Amounts owed to subsidiary undertakings                 |               |  |                                                         |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Environmental liabilities                               | 1             |  | 5                                                       |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Pension liabilities                                     | 9             |  | 11                                                      |  |               | 
|                                                        |               |  |                                                         |  |               | 
|Other creditors*                                        | 20            |  | 31                                                      |  |               | 
|                                                        |               |  |                                                         |  |               | 
|                                                        | 32            |  | 49                                                      |  |               | 
|                                                        |               |  |                                                         |  |               | 

*Includes
  obligations under finance leases (note 35).

Under US GAAP, provisions for liabilities and
  charges (note 21) would be shown under other creditors  amounts due after
  more than one year.



---



notes relating to the accounts

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20 Loans

|                                                                             |              |           |       | Group |       | Company |    
|---------------------------------------------------------------------------- | ------------ | --------- | ----- | ----- | ----- | ------- | ---
|                                                                             |              |           |       |       |       |         |    
|                                                                             |              | Repayment |       | 2002  |       | 2001    |    
|                                                                             |              | dates     |       | £m    |       | £m      |    
|                                                                             |              |           |       |       |       |         |    
|Secured loans                                                                |              |           |       |       |       |         |    
|                                                                             |              |           |       |       |       |         |    
|US dollars                                                                   | 2003         |           | 98    |       | 106   |         |    
|                                                                             |              |           |       |       |       |         |    
|Other currencies                                                             | 2003/2006    |           | 72    |       | 103   |         |    
|                                                                             |              |           |       |       |       |         |    
|Total secured                                                                |              |           | 170   |       | 209   |         |    
|                                                                             |              |           |       |       |       |         |    
|Secured by fixed
      charge                                                |  bank loans |           |       | 17    |       | 77      |    
|                                                                             |              |           |       |       |       |         |    
|                                                                             |  other      |           |       | 1     |       | 28      |    
|                                                                             |              |           |       |       |       |         |    
|Secured by floating
      charge                                             |  bank loans |           |       | 132   |       | 104     |    
|                                                                             |              |           |       |       |       |         |    
|                                                                             |  other      |           |       | 20    |       |        |    
|                                                                             |              |           |       |       |       |         |    
|Unsecured loans                                                              |              |           |       |       |       |         |    
|                                                                             |              |           |       |       |       |         |    
|Sterling                                                                     |              |           |       |       |       |         |    
|                                                                             |              |           |       |       |       |         |    
|93/4% and
      10% Bonds                                                    |              | 2003/2005 |       | 200   |       | 200     |    
|                                                                             |              |           |       |       |       |         |    
|7.625% Bonds                                                                 |              | 2007      |       | 298   |       | 298     |    
|                                                                             |              |           |       |       |       |         |    
|6.375% to 6.52%
      medium-term notes                                      | 2003         |           | 130   |       | 130   |         | 130
|                                                                             |              |           |       |       |       |         |    
|3.649% to 5.054%
      short-term notes                                      | 2003         |           | 100   |       | 400   |         |    
|                                                                             |              |           |       |       |       |         |    
|Variable rate
      medium-term notes                                        | 2003         |           | 16    |       | 16    |         | 16 
|                                                                             |              |           |       |       |       |         |    
|Others                                                                       | 2003         |           | 10    |       | 27    |         |   
|                                                                             |              |           |       |       |       |         |    
|                                                                             |              |           | 754   |       | 1,071 |         | 346
|                                                                             |              |           |       |       |       |         |    
|US dollars                                                                   |              |           |       |       |       |         |    
|                                                                             |              |           |       |       |       |         |    
|8 7/8% Debentures                                                            | 2006         |           | 155   |       | 173   |         |    
|                                                                             |              |           |       |       |       |         |    
|8.9%
      medium-term notes                                                 | 2002         |           |      |       | 10    |         |    
|                                                                             |              |           |       |       |       |         |    
|7 1/2% Notes                                                                 | 2002         |           |      |       | 138   |         |    
|                                                                             |              |           |       |       |       |         |    
|6 3/4% Notes                                                                 | 2002         |           |      |       | 173   |         |    
|                                                                             |              |           |       |       |       |         |    
|6 19/20% Notes                                                               | 2004         |           | 466   |       | 518   |         |    
|                                                                             |              |           |       |       |       |         |    
|7 1/20% Notes                                                                | 2007         |           | 155   |       | 173   |         |    
|                                                                             |              |           |       |       |       |         |    
|6 3/4% Bonds                                                                 | 2002         |           |      |       | 345   |         |    
|                                                                             |              |           |       |       |       |         |    
|Variable rate
      medium-term notes                                        | 2003/2010    |           | 44    |       | 49    |         | 44 
|                                                                             |              |           |       |       |       |         |    
|Others                                                                       | 2003/2008    |           | 56    |       | 67    |         |    
|                                                                             |              |           |       |       |       |         |    
|                                                                             |              |           | 876   |       | 1,646 |         | 44 
|                                                                             |              |           |       |       |       |         |    
|Other currencies                                                             | 2003/2012    |           | 48    |       | 37    |         | 16 
|                                                                             |              |           |       |       |       |         |    
|Total unsecured                                                              |              |           | 1,678 |       | 2,754 |         | 406
|                                                                             |              |           |       |       |       |         |    
|Total loans 
      before financial derivatives(see table
      on page 81) |              |           | 1,848 |       | 2,963 |         | 406
|                                                                             |              |           |       |       |       |         |    
|Financial derivatives                                                        |              |           | 15    |       | (8    | )       |   
|                                                                             |              |           |       |       |       |         |    
|Total loans 
      after financial derivatives(see table
      on page 81)  |              |           | 1,863 |       | 2,955 |         | 406
|                                                                             |              |           |       |       |       |         |    

The secured debt referred to in this note and
  the secured short-term borrowings referred to in note 18 were secured by property,
  plant and other assets with a net book value at 31 December 2002 of £193m.

An analysis reflecting the effects of financial
  instruments on the Groups financial liabilities at 31 December 2002 is
  set out in note 38.



---



Back to Contents

20 Loans
  (continued)

Effects of financial derivatives

The following analysis reflects the effects
  of financial derivatives on the Groups borrowings at 31 December 2002.

|                                 | Before
financial derivatives |  | After
financial derivatives | 
|-------------------------------- | ---------------------------- |  | --------------------------- | 
|                                 | £m                           |  | £m                          | 
|                                 |                              |  |                             | 
|Sterling                         | 754                          |  | 297                         | 
|                                 |                              |  |                             | 
|US Dollar                        | 974                          |  | 1,136                       | 
|                                 |                              |  |                             | 
|Euro and Euro related currencies | 22                           |  | 147                         | 
|                                 |                              |  |                             | 
|Japanese Yen                     | 24                           |  | 161                         | 
|                                 |                              |  |                             | 
|Others                           | 74                           |  | 122                         | 
|                                 |                              |  |                             | 
|                                 | 1,848                        |  | 1,863                       | 
|                                 |                              |  |                             | 
|Fixed rate loans                 | 1,676                        |  | 886                         | 
|                                 |                              |  |                             | 
|Floating rate loans              | 172                          |  | 977                         | 
|                                 |                              |  |                             | 
|                                 | 1,848                        |  | 1,863                       | 
|                                 |                              |  |                             | 

|                                                                                 |       |  |         | 
|-------------------------------------------------------------------------------- | ----- |  | ------- | 
|                                                                                 | Group |  | Company | 
|                                                                                 |       |  |         | 
|                                                                                 | 2002  |  | 2001    | 
|                                                                                 | £m    |  | £m      | 
|                                                                                 |       |  |         | 
|Loan maturities                                                                  |       |  |         | 
|                                                                                 |       |  |         | 
|Bank loans                                                                       |       |  |         | 
|                                                                                 |       |  |         | 
|Loans or installments thereof are repayable:                                     |       |  |         | 
|                                                                                 |       |  |         | 
|After 5 years
      from balance sheet date                                      | 8     |  | 12      | 
|                                                                                 |       |  |         | 
|From 2 to 5 years                                                                | 144   |  | 126     | 
|                                                                                 |       |  |         | 
|From 1 to 2 years                                                                | 19    |  | 138     | 
|                                                                                 |       |  |         | 
|Total due after more than one year                                               | 171   |  | 276     | 
|                                                                                 |       |  |         | 
|Total due within one year                                                        | 236   |  | 176     | 
|                                                                                 |       |  |         | 
|                                                                                 | 407   |  | 452     | 
|                                                                                 |       |  |         | 
|Other loans                                                                      |       |  |         | 
|                                                                                 |       |  |         | 
|Loans or installments thereof are repayable:                                     |       |  |         | 
|                                                                                 |       |  |         | 
|After 5 years
      from balance sheet date                                      | 36    |  | 503     | 
|                                                                                 |       |  |         | 
|From 2 to 5 years                                                                | 648   |  | 734     | 
|                                                                                 |       |  |         | 
|From 1 to 2 years                                                                | 508   |  | 192     | 
|                                                                                 |       |  |         | 
|Total due after more than one year                                               | 1,192 |  | 1,429   | 
|                                                                                 |       |  |         | 
|Total due within one year                                                        | 264   |  | 1,074   | 
|                                                                                 |       |  |         | 
|                                                                                 | 1,456 |  | 2,503   | 
|                                                                                 |       |  |         | 
|Total loans                                                                      |       |  |         | 
|                                                                                 |       |  |         | 
|Loans or installments thereof are repayable:                                     |       |  |         | 
|                                                                                 |       |  |         | 
|After 5 years
      from balance sheet date                                      | 44    |  | 515     | 
|                                                                                 |       |  |         | 
|From 4 to 5 years                                                                | 470   |  | 187     | 
|                                                                                 |       |  |         | 
|From 3 to 4 years                                                                | 187   |  | 120     | 
|                                                                                 |       |  |         | 
|From 2 to 3 years                                                                | 135   |  | 553     | 
|                                                                                 |       |  |         | 
|From 1 to 2 years                                                                | 527   |  | 330     | 
|                                                                                 |       |  |         | 
|Total due after more than one year                                               | 1,363 |  | 1,705   | 
|                                                                                 |       |  |         | 
|Total due within one year                                                        | 500   |  | 1,250   | 
|                                                                                 |       |  |         | 
|Total loans                                                                      | 1,863 |  | 2,955   | 
|                                                                                 |       |  |         | 
|Aggregate amount of loans any installment
      of which falls due after 5 years | 98    |  | 569     | 
|                                                                                 |       |  |         | 



---





notes relating to the accounts

Back to Contents

Contents to the Accounts

|  
|--
|21

|                                                               | Deferred
      taxation |   | Pensions
      (note 37) |   | Employee
      benefits |   | Environmental
      provisions |   | Disposal
      provisions
      (note 22) |   | Restructuring
      provisions
      (note 22) |   | Other
      provisions |   | Total |  
|-------------------------------------------------------------- | ----------------------- | - | ------------------------ | - | ----------------------- | - | ------------------------------ | - | ----------------------------------------- | - | ---------------------------------------------- | - | ---------------------- | - | ----- | -
|                                                               | £m                      |   | £m                       |   | £m                      |   | £m                             |   | £m                                        |   | £m                                             |   | £m                     |   | £m    |  
|                                                               |                         |  
|Group                                                          |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|                                                               |                         |  
|At the beginning
        of 2002 as previously
      reported | 10                      |   | 179                      |   | 233                     |   | 43                             |   | 501                                       |   | 140                                            |   | 70                     |   | 1,176 |  
|                                                               |                         |  
|Prior year adjustments*                                        | 81                      |   |                         |   |                        |   |                               |   |                                          |   |                                               |   |                       |   | 81    |  
|                                                               |                         |  
|At beginning of 2002  as restated                             | 91                      |   | 179                      |   | 233                     |   | 43                             |   | 501                                       |   | 140                                            |   | 70                     |   | 1,257 |  
|                                                               |                         |  
|Profit and loss account                                        | 77                      |   | 23                       |   | 12                      |   |                               |   | 73                                        |   |                                               |   |                       |   | 185   |  
|                                                               |                         |  
|Increase due to effluxion of time                              |                         |   |                          |   |                         |   |                                |   | 10                                        |   |                                                |   |                        |   | 10    |  
|                                                               |                         |  
|Net amounts paid or becoming payable                           |                        |   | (54                      | ) | (13                     | ) | (5                             | ) | (127                                      | ) | (66                                            | ) | (9                     | ) | (274  | )
|                                                               |                         |  
|Movements
    due to acquisitionsand disposals                 | (1                      | ) | (3                       | ) | (3                      | ) |                               |   |                                          |   |                                               |   |                       |   | (7    | )
|                                                               |                         |  
|Exchange and other movements                                   | (27                     | ) | 3                        |   | (24                     | ) | 2                              |   | 1                                         |   | (10                                            | ) | 5                      |   | (50   | )
|                                                               |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|At end of 2002                                                 | 140                     |   | 148                      |   | 205                     |   | 40                             |   | 458                                       |   | 64                                             |   | 66                     |   | 1,121 |  
|                                                               |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|Company                                                        |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|                                                               |                         |  
|At the beginning
        of 2002 as previously
      reported | 53                      |   |                         |   |                        |   |                               |   | 115                                       |   | 11                                             |   | 14                     |   | 193   |  
|                                                               |                         |  
|Prior year adjustments*                                        | 1                       |   |                         |   |                        |   |                               |   |                                          |   |                                               |   |                       |   | 1     |  
|                                                               |                         |  
|At beginning of 2002  as restated                             | 54                      |   |                         |   |                        |   |                               |   | 115                                       |   | 11                                             |   | 14                     |   | 194   |  
|                                                               |                         |  
|Profit and loss account                                        | 66                      |   |                         |   |                        |   |                               |   | 3                                         |   |                                               |   | 1                      |   | 70    |  
|                                                               |                         |  
|Net amounts paid or becoming payable                           |                        |   |                         |   |                        |   |                               |   | (28                                       | ) | (4                                             | ) | (1                     | ) | (33   | )
|                                                               |                         |  
|Movements due to acquisitionsand disposals                     |                        |   |                         |   |                        |   |                               |   |                                          |   |                                               |   |                       |   |      |  
|                                                               |                         |  
|Exchange and other movements                                   | (62                     | ) |                         |   |                        |   |                               |   | (3                                        | ) |                                               |   | 5                      |   | (60   | )
|                                                               |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|At end of 2002                                                 | 58                      |   |                         |   |                        |   |                               |   | 87                                        |   | 7                                              |   | 19                     |   | 171   |  
|                                                               |                         |   |                          |   |                         |   |                                |   |                                           |   |                                                |   |                        |   |       |  
|                                                              

|* | The prior year adjustment relates to the
      Groups adoption of FRS No. 19 Deferred Tax (note 1).
|- | ----------------------------------------------------------------------------------------------------

Under US GAAP, provisions for liabilities and charges would be shown under other creditors (note 19).



---



Back to Contents

Contents to the Accounts

|  
|--
|22

|                                                | Disposal
      provisions |   | Restructuring
      provisions |  
|----------------------------------------------- | ------------------------- | - | ------------------------------ | -
|                                                |                           |   |                                |  
|                                                | 2002                      |   | 2001                           |  
|                                                | £m                        |   | £m                             |  
|                                                |                           |   |                                |  
|At beginning of year                            | 501                       |   | 766                            |  
|                                                |                           |   |                                |  
|Exceptional items before tax                    |                           |   |                                |  
|                                                |                           |   |                                |  
|Rationalisation
      of operations (note 3)    |                          |   |                               |  
|                                                |                           |   |                                |  
|Fundamental reorganisation
      costs (note 3) |                          |   |                               |  
|                                                |                           |   |                                |  
|Profit and loss
      account                   | 73                        |   | 3                              |  
|                                                |                           |   |                                |  
|Asset write-offs                                |                          |   |                               |  
|                                                |                           |   |                                |  
|Amounts paid                                    | (127                      | ) | (282                           | )
|                                                |                           |   |                                |  
|Movements due to acquisitions and disposals     |                          |   |                               |  
|                                                |                           |   |                                |  
|Exchange and other adjustments                  | 11                        |   | 14                             |  
|                                                |                           |   |                                |  
|At end of year                                  | 458                       |   | 501                            |  
|                                                |                           |   |                                |  
|Reported as                                     |                           |   |                                |  
|                                                |                           |   |                                |  
|Provisions                                      | 458                       |   | 501                            |  
|                                                |                           |   |                                |  
|Creditors                                       |                          |   |                               |  
|                                                |                           |   |                                |  
|                                                | 458                       |   | 501                            |  
|                                                |                           |   |                                |  
|Comprising                                      |                           |   |                                |  
|                                                |                           |   |                                |  
|Severance costs                                 | 33                        |   | 51                             |  
|                                                |                           |   |                                |  
|Other                                           | 425                       |   | 450                            |  
|                                                |                           |   |                                |  
|                                                | 458                       |   | 501                            |  
|                                                |                           |   |                                |  

Disposal provisionsICI commenced reshaping its portfolio
  of businesses in 1997 consistent with plans to focus its resources on Paints
  and Specialty Products. In pursuit of this strategy, the Group announced that
  it intended to divest most of its Industrial Chemicals businesses.

Prior to 2000

(i)   Polyurethanes, Tioxide and selected
  Petrochemicals businesses

In June 1999 the Group sold its Polyurethanes,
  Tioxide and selected Petrochemicals businesses (aromatics, hydrogen and North
  Tees Logistics businesses, together with the Olefines supply business) to Huntsman
  International Holdings LLC. Total provisions charged were £312m mainly
  in respect of termination costs (£38m) for 360 employees, pension costs
  relating to employees transferring to the purchaser (£35m), transaction
  costs (£42m), separation costs (£23m), IT related costs (£26m),
  site clearance costs (£13m), asset write-downs (£13m) and long-term
  residual costs (£91m). During 2002, revisions were made to the estimated
  costs of this disposal resulting in £2m being released as an exceptional
  profit, and £9m being created in relation to the rehabilitation of a site
  in Tasmania. At 31 December 2002, £114m remained to be spent principally
  relating to the cost of long-term employee benefits (£13m), site clearance
  costs (£6m), IT related costs (£4m), transaction and related legal
  costs (£3m), and long-term residual costs (£65m). With the exception
  of the long-term residual costs and long-term employee benefits, the majority
  of the provisions are expected to be substantially utilised by the end of 2003.

(ii)   Other disposals

Other significant disposals prior to 2000,
  where provisions remain, include the Polyester polymer intermediates business
  excluding operations in Pakistan, the Explosives operations in Canada, Latin
  America and Europe and the explosives distribution business in the USA, the
  Polyester film business, the Forest Products business based in Canada, the UK
  based Fertilizer business, the Teesside Utilities and Services business, the
  Acrylics business, the Automotive refinish business, the Fluoropolymer business,
  Ethylene Oxide and the Methylamines and derivatives business.

Disposal provisions of £830m were made
  for these disposals. During 2002, revisions were made to the estimated costs
  of these disposals resulting in £9m being released as an exceptional profit.
  At 31 December 2002, provisions remaining to be spent were £141m, including
  termination costs (£24m) where some 101 jobs are still to be terminated,
  environmental and site clearance costs (£31m), separation costs (£16m)
  and long-term residual costs (£52m). With the exception of the environmental,
  site clearance and long-term residual costs, the majority of the provisions
  are expected to be utilised by the end of 2003.



---



Back to Contents

notes relating to the accounts

|22 | Disposal
      and restructuring provisions (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Group announced
      the divestment of its Chlor-Chemicals, Klea and Crosfield businesses in
      December 2000 and completed the divestment in January 2001 (see note 40).
      The total pre-tax loss for the divestment was £503m, recorded as a
      fixed asset write-down of £133m, goodwill of £41m charged as
      a loss and £329m as a provision for the anticipated loss. Included
      in the calculation of the anticipated loss were disposal provisions of £305m.
      These provisions include long-term residual costs (£121m), pension
      transfer costs (£55m), termination costs (£39m) relating to
      230 employees, transition and separation costs (£33m), transaction
      costs (£17m) and environmental costs (£15m). During 2002, revisions
      were made to the estimated costs of this disposal resulting in £6m
      being released as an exceptional profit. At 31 December 2002, £150m
      remained to be spent principally on transition and separation costs (£4m),
      pension costs relating to employees transferring to the purchaser (£8m),
      termination costs (£8m) relating to some 37 employees, and long-term
      residual costs (£129m). With the exception of the long-term residual
      costs these provisions are expected to be substantially utilised by the
      end of 2003.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Group also
      divested some smaller businesses including its 50% interest in Phillips-Imperial
      Petroleum and its Methanol business. Provisions of £37m were raised
      for these disposals including termination costs (£9m) for 73 employees.
      At 31 December 2002, £10m remained to be spent principally on long-term
      costs (£6m). The provisions are expected to be substantially utilised
      by the end of 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The principal
      disposal in 2001 was the Groups Eutech engineering consultancy subsidiary.
      During 2002, revisions were made to the estimated costs of this disposal
      resulting in £2m being released as an exceptional profit. The remainder
      of the provisions were utilised in 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | 2002                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Group completed
         the sale of its catalyst business, Synetix, outside India in November
        2002
      and in India in December 2002. Provisions charged were £46m, mainly
       in respect of transition and separation costs (£19m), pension costs
        relating to employees transferring to the purchaser (£14m), termination
         costs (£2m) relating to 31 employees, transaction costs (£7m)
          and environmental costs (£2m). At 31 December 2002, £30m
          remained  to be spent including separation costs (£6m) and pension
          costs transferring  to the purchaser (£6m). The majority of the
          provisions are expected  to be utilised over the next two years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | The Group also
      divested some smaller businesses including the 51% owned pharmaceutical
      business of ICI India, its Security Systems business and the UK Nitrocellulose
      and Energetic Technologies businesses. In addition, IFI, the Irish Fertilizer
      business in which the Group has a 49% interest ceased trading. Provisions
      of £37m were raised for these transactions, mainly in respect of separation
      costs (£14m), costs relating to employees transferring to the purchaser
      (£13m) and transaction related costs (£5m). At 31 December 2002,
      £13m remained to be spent including termination costs (£1m)
      for 16 people, separation costs (£4m), and transaction related costs
      (£4m). The majority of the provisions are expected to be utilised
      over the next two years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  



---



Back to Contents

|22 | Disposal
      and restructuring provisions (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Restructuring
      provisions                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | Prior to
      2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In 1999 the
      Group undertook a series of restructuring actions across its portfolio,
      affecting the following segments: National Starch, Quest, Paints, Discontinued
      businesses, and reorganisation of the Corporate Centre.                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The total exceptional
      provisions before tax of £172m for these restructuring programmes
      was charged against 1999 profits. The total included £80m related
      to termination of 1,030 employees, £31m to asset write-downs and £61m
      for other costs. During 2002, revisions were made to these provisions resulting
      in £3m being released as an exceptional profit. At 31 December 2002,
      £22m of these provisions remained to be spent, including £9m
      relating to the termination of some 72 employees. The provisions are expected
      to be substantially utilised by the end of 2003.                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 2000                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The £14m
      restructuring charge in 2000 relates to additional restructuring of the
      Groups Corporate Centre announced in 1999. At 31 December 2002, £1m
      of these provisions remained unspent. These provisions are expected to be
      utilised in 2003.                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | 2001                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | In 2001 the
      Group undertook a series of restructuring actions in the following business
      segments:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   | The total exceptional
      charge before tax for these restructuring programmes was £143m, which
      has been charged against 2001 profits. The total included £78m relating
      to the termination of some 1,300 employees, £17m for asset write-downs
      and £48m for other costs. During 2002, revisions were made to the
      estimated costs of this programme resulting in £3m being charged as
      an exceptional loss. At 31 December 2002, £41m remained to be spent
      including £33m relating to termination of some 340 employees. The
      majority of the provisions are expected to be substantially utilised by
      the end of 2003.



---



Back to Contents

Contents to the Accounts

notes relating to the accounts

23  Called-up share capital of parent company

|                                                        | Authorised |  | Allotted,
      called-up
      and fully paid | 
|------------------------------------------------------- | ---------- |  | ---------------------------------------------- | 
|Ordinary Shares of £1 each                              | £m         |  | £m                                             | 
|                                                       
|At beginning of 2000                                    | 850        |  | 728                                            | 
|                                                       
|Employee share option schemes 
      options exercised |            |  |                                               | 
|                                                       
|At end of 2000                                          | 850        |  | 728                                            | 
|                                                       
|Employee share option schemes 
      options exercised |            |  |                                               | 
|                                                       
|At end of 2001                                          | 850        |  | 728                                            | 
|                                                       
|Rights Issue                                            |            |  | 463                                            | 
|                                                       
|Increase in authorised share capital                    | 550        |  |                                                | 
|                                                       
|Employee share option schemes 
      options exercised |            |  |                                               | 
|                                                       
|At end of 2002                                          | 1,400      |  | 1,191                                          | 
|                                                       
|                                                       

Rights IssueICIs rights issue closed on
  20 March 2002. A total of 463m Ordinary Shares of £1 each were issued
  at 180p per share in a 7 for 11 rights issue. Of the total £807m raised
  net of £27m expenses, £463m was credited to share capital and £344m
  to the share premium account.

Authorised share capitalAuthorised share capital
  was increased at the Extraordinary General Meeting on 25 February 2002.

Employees share option schemes
  and other share based plansICI granted share options
  and other market based units to Executive Directors, senior executives and certain
  key employees under four main plans: the Performance Growth Plan and other share
  based plans, the Share Option Scheme (Senior Staff Scheme), the Bonus Conversion
  Plan (which operated for the last time in respect of the 1999 performance year)
  and the Stock Appreciation Rights Plan (SARP). These schemes are described on
  pages 39 to 43. The Company also operates a savings related share option scheme
  (UK  Sharesave) for all UK employees meeting minimum service requirements.
  Following ICIs rights issue in 2002, the numbers of shares under option
  as at 1 January 2002 and their exercise prices were adjusted for the impact
  of the Rights Issue using adjusted factors determined by the Remuneration Committee
  of the Board. The option prices under these schemes were reduced by a factor
  of approximately 0.830 and the number of shares under option was increased,
  by a factor of approximately 1.204 calculated using the standard theoretical
  ex-rights price (TERP) adjustment to preserve the aggregate exercise
  price. The narrative and tables below set out the adjusted amounts.

At 31 December 2002 the maximum number of
  ordinary share equivalents which could be awarded under the Performance Growth
  Plan was 2,471,791 (2001 1,496,648). The maximum number awarded in 2002 was
  1,151,150, with lapses during the year of 176,007 (2001 50,382). 1,072,385 (2001
  650,235) would be awarded for achieving median TSR/on target Economic Profit
  performance.

The prices at which options are granted under
  the Senior Staff Scheme must not be less than the nominal value of an Ordinary
  Share nor less than the average of the middle market quotation of an ICI Ordinary
  Share on the London Stock Exchange on the five business days immediately preceding
  the date on which the option is offered. Options under this scheme expire after
  10 years. Grants under the SARP are made on the same terms as the Senior Staff
  Scheme. On exercise the participant receives the gain payable in American Depositary
  Shares  ADSs (for grants prior to 1998 paid two-thirds in cash and one-third
  in ADSs).

At 31 December 2002 there were 572,885 shares
  outstanding representing the matched shares under the Bonus Conversion Plan
  to be delivered as the Companys Ordinary Shares or in the form of ADSs.

The Group has acquired, or is committed to
  acquire under forward contracts, 36.2m shares or ADSs to hedge its obligations
  under the Senior Staff Scheme, the Performance Growth Plan, the Stock Appreciation
  Rights Plan and the Bonus Conversion Plan. 9.8m shares have been purchased in
  the market by a trust (see note 14). In addition, the trust has entered into
  forward commitments to purchase 26.4m shares at a weighted average cost of £4.61
  per share (total commitment £122m) in the period 2003 to 2005, these forward
  commitments include collateral requirements related to the prevailing share
  price of the Company. At 31 December 2002, no collateral deposits had been made.
  These shares are intended to satisfy requirements for share options exercisable
  in the period 2003 to 2012.

Under the UK  Sharesave Scheme the
  price at which options are granted must not be less than the greater of the
  nominal value of an Ordinary Share, or 80% of the average market value of an
  Ordinary Share on the three business days preceding the day on which the offer
  of options is made. The total purchase cost in respect of options granted under
  the UK  Sharesave Scheme is deducted from salary over a period of three
  or five years at the choice of the employee. The maximum number of shares made
  available under this scheme for issue under option during a 10 year period is
  5% of the Companys Ordinary Share Capital in issue on 21 March 1994.

Options granted to Directors are shown in
     the Remuneration report on pages 42 and 43.



---



Back to Contents

|23 | Called-up share capital
      of parent company (continued)
|-- | -----------------------------------------------------------
|   |                                                            
|a) | Transactions on Option Schemes                             

|                                  | Senior
      Staff Scheme |   | UK
       Sharesave                              |  | SARP                    |  
|--------------------------------- | ------------------------- | - | ------------------------------------------------- |  | ----------------------- | -
|                                  | Number
      of options   |   | Weighted
      average
      exercise
      price |  | Number
      of options |  
|                                  | 000                       |   | £                                                 |  | 000                     |  
|                                 
|Outstanding                       |                           |   |                                                   |  |                         |  
|                                 
|At beginning of 2000              | 10,968                    |   | 6.28                                              |  | 14,406                  |  
|                                 
|Granted                           | 4,259                     |   | 4.23                                              |  | 3,582                   |  
|                                 
|Exercised                         |                          |   |                                                  |  | (265                    | )
|                                 
|Cancelled                         | (559                      | ) | 5.97                                              |  | (5,239                  | )
|                                 
|At beginning of 2001              | 14,668                    |   | 5.70                                              |  | 12,484                  |  
|                                 
|Granted                           | 5,632                     |   | 4.25                                              |  | 6,071                   |  
|                                 
|Exercised                         |                          |   |                                                  |  | (57                     | )
|                                 
|Cancelled                         | (1,858                    | ) | 6.24                                              |  | (6,463                  | )
|                                  |                          
|At beginning of 2002              | 18,442                    |   | 5.20                                              |  | 12,035                  |  
|                                  |                           |   |                                                   |  |                         |  
|Granted                           | 6,272                     |   | 2.84                                              |  | 3,854                   |  
|                                  |                           |   |                                                   |  |                         |  
|Exercised                         |                          |   |                                                  |  | (12                     | )
|                                  |                           |   |                                                   |  |                         |  
|Cancelled                         | (2,311                    | ) | 5.82                                              |  | (3,630                  | )
|                                  |                           |   |                                                   |  |                         |  
|At end of 2002                    | 22,403                    |   | 4.48                                              |  | 12,247                  |  
|                                  |                          
|Number of options exercisable at: |                           |   |                                                   |  |                         |  
|                                 
|31 December 2000                  | 2,674                     |   | 6.20                                              |  |                        |  
|                                 
|31 December 2001                  | 5,035                     |   | 7.04                                              |  | 439                     |  
|                                  |                          
|31 December 2002                  | 7,795                     |   | 5.91                                              |  | 944                     |  
|                                  |                          

|   |                                                               
|-- | --------------------------------------------------------------
|b) | Summary of share options outstanding
      at 31 December 2002
|   |                                                               

|                           | Total options
      outstanding                      
      at 31 December 2002 |  | Exercisable
      options           
      at 31 December 2002      | 
|-------------------------- | ------------------------------------------------------------------------------- |  | ------------------------------------------------------------------- | 
|                           |                                                                                 |  |                                                                     | 
|                           | Number
      outstanding                                                        |  | Weighted
      average
      remaining
      contractual
      life | 
|                           | 000                                                                             |  | Years                                                               | 
|                          
|Exercise price
      range |                                                                                 |  |                                                                     | 
|                          
|Senior Staff
      Scheme  |                                                                                 |  |                                                                     | 
|                          
|£0
       £10             | 21,005                                                                          |  | 7.57                                                                | 
|                          
|£10
       £20            | 1,398                                                                           |  | 5.50                                                                | 
|                          
|                           | 22,403                                                                          |  |                                                                     | 
|                          
|UK  Sharesave             |                                                                                 |  |                                                                     | 
|                          
|£0
       £10             | 12,247                                                                          |  | 3.53                                                                | 
|                          
|£10
       £20            |                                                                                |  |                                                                    | 
|                          
|                           | 12,247                                                                          |  |                                                                     | 
|                          
|SARP (ADSs)                |                                                                                 |  |                                                                     | 
|                          
|$0
       $20             | 1,079                                                                           |  | 9.17                                                                | 
|                          
|$20
      $40             | 2,175                                                                           |  | 7.36                                                                | 
|                          
|$40
      $60             | 116                                                                             |  | 4.16                                                                | 
|                          
|$60
      $80             | 157                                                                             |  | 5.42                                                                | 
|                          
|                           | 3,527                                                                           |  |                                                                     | 
|                          

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|At 31 December
      2002 there were options outstanding in respect of 34.7m (2001 30.5m) Ordinary
      Shares of £1 each under the Senior
      Staff and UK  Sharesave Option Schemes normally exercisable in the
      period 2003 to 2012 (2001: 2002 to 2011) at subscription prices of £2.07
      to £10.08 (2001 £2.37 to £10.08). Movements in the number
      of shares under option during 2002 comprised new options 10.1m, options
      exercised 0.01m, and options lapsed or waived 5.9m. The number of Ordinary
      Shares issued during the year, wholly in respect of the exercise of options,
      totalled 0.01m (2001 0.05m; 2000 0.2m). The weighted average subscription
      price of options outstanding at 31 December 2002 was £3.86.



---



notes relating to the accounts

Contents to the Accounts

|  
|--
|24
|  

|                                                           | Share premium
      account |  | Retained
      earnings |   | Total                         |  
|---------------------------------------------------------- | --------------------------- |  | ----------------------- | - | ----------------------------- | -
|                                                           |                             |  | Associates              |   | Profit
      and
loss account |  
|                                                           | £m                          |  | £m                      |   | £m                            |  
|                                                           |                             |  |                         |   |                               |  
|Group                                                      |                             |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Reserves attributable to parent company
      shareholders |                             |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|At beginning of 2000  as previously
      reported        | 588                         |  | 26                      |   | (1,098                        | )
|                                                           |                             |  |                         |   |                               |  
|Prior year adjustment                                      |                             |  |                         |   | (42                           | )
|                                                           |                             |  |                         |   |                               |  
|As restated                                               | 588                         |  | 26                      |   | (1,140                        | )
|                                                           |                             |  |                         |   |                               |  
|Net profit (loss) for the financial year                   |                            |  | (11                     | ) | (196                          | )
|                                                           |                             |  |                         |   |                               |  
|Dividends (note 9)                                         |                             |  |                         |   | (232                          | )
|                                                           |                             |  |                         |   |                               |  
|Transfer of goodwill on disposals                          |                             |  |                         |   | 41                            |  
|                                                           |                             |  |                         |   |                               |  
|Amounts taken direct to reserves                           |                             |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Share premiums 
      share option schemes                | 1                           |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Exchange adjustments                                       |                            |  | (1                      | ) | (53                           | )
|                                                           |                             |  |                         |   |                               |  
|                                                           | 1                           |  | (1                      | ) | (53                           | )
|                                                           |                             |  |                         |   |                               |  
|At beginning of 2001                                      | 589                         |  | 14                      |   | (1,580                        | )
|                                                           |                             |  |                         |   |                               |  
|Net profit (loss) for the financial year                   |                            |  | 8                       |   | 72                            |  
|                                                           |                             |  |                         |   |                               |  
|Dividends (note 9)                                         |                             |  |                         |   | (116                          | )
|                                                           |                             |  |                         |   |                               |  
|Transfer of goodwill on disposals                          |                             |  |                         |   | (8                            | )
|                                                           |                             |  |                         |   |                               |  
|Amounts taken direct to reserves                           |                             |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Share premiums 
      share option schemes                |                            |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Exchange adjustments                                       |                            |  |                        |   | (71                           | )
|                                                           |                             |  |                         |   |                               |  
|                                                           |                            |  |                        |   | (71                           | )
|                                                           |                             |  |                         |   |                               |  
|At beginning of 2002                                      | 589                         |  | 22                      |   | (1,703                        | )
|                                                           |                             |  |                         |   |                               |  
|Net profit (loss) for the financial year                   |                            |  | (13                     | ) | 192                           |  
|                                                           |                             |  |                         |   |                               |  
|Dividends (note 9)                                         |                             |  |                         |   | (88                           | )
|                                                           |                             |  |                         |   |                               |  
|Transfer of goodwill                                       |                             |  |                         |   | 22                            |  
|                                                           |                             |  |                         |   |                               |  
|Movement in reserves                                       |                             |  | 2                       |   | (2                            | )
|                                                           |                             |  |                         |   |                               |  
|Amounts taken direct to reserves                           |                             |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Share premiums 
      Rights Issue                        | 344                         |  |                         |   |                               |  
|                                                           |                             |  |                         |   |                               |  
|Exchange adjustments                                       |                            |  |                        |   | (57                           | )
|                                                           |                             |  |                         |   |                               |  
|                                                           | 344                         |  |                        |   | (57                           | )
|                                                           |                             |  |                         |   |                               |  
|At end of 2002                                             | 933                         |  | 11                      |   | (1,636                        | )
|                                                           |                             |  |                         |   |                               |  

|                                                                                                                                                                                                                                                                                                                                                                                                                                 |                                                                                                                                                                                                                                                             
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                | The prior periods have been
      restated for the adoption of FRS No. 19 Deferred Taxation. This has resulted
      in a decrease in shareholdersfunds at 31 December 2001 of £81m (31 December 2000decrease £33m, 31 December
      1999decrease £42m).
|                                                                                                                                                                                                                                                                                                                                                                                                                                
|At the end of
      2002, the cumulative goodwill offset against profit and loss account amounted
      to £4,027m (2001 £4,049m; 2000 £4,041m). The transfer
      of goodwill in 2001 relates to adjustments to the purchase price of the
      1997 acquisitions. Included in this figure was negative goodwill the cumulative
      amount of which at 31 December 2002 was £1m (2001 £1m; 2000
      £1m).                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                
|In the Group
      accounts, £157m of net exchange gains on foreign currency loans (2001
      gains £8m; 2000 losses £128m) have been offset in reserves against
      exchange losses (2001 losses; 2000 gains) on the net investment in overseas
      subsidiaries and associates.                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                
|The cumulative
      exchange gains and losses on the translation of foreign currency financial
      statements into pounds sterling are taken into account in the above statement
      of Group reserves. US GAAP  SFAS No.52,Foreign
      Currency Translation,requires the separate
      disclosure of the cumulative amount of the foreign currency translation
      effects on shareholders funds,
      as follows:



|                     | 2002 |   | 2001
      (as restated
       note 1) |   | 2000
      (as restated
       note 1) |  
|-------------------- | ---- | - | --------------------------------------- | - | --------------------------------------- | -
|                     | £m   |   | £m                                      |   | £m                                      |  
|                     |      |   |                                         |   |                                         |  
|At beginning of year | (402 | ) | (331                                    | ) | (277                                    | )
|                     |      |   |                                         |   |                                         |  
|Exchange adjustments | (57  | ) | (71                                     | ) | (54                                     | )
|                     |      |   |                                         |   |                                         |  
|At end of year       | (459 | ) | (402                                    | ) | (331                                    | )
|                     |      |   |                                         |   |                                         |  

|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               | 
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | 
|There are no significant
      statutory or contractual restrictions on the distribution of current profits
      of subsidiary undertakings or associates except as regards Huntsman International
      Holdings LLC, see note 17; undistributed profits of prior years are, in
      the main, permanently employed in the businesses of these companies. The
      undistributed profits of Group companies overseas may be liable to overseas
      taxes and/or UK taxation (after allowing for double taxation relief) if
      they were to be distributed as dividends. No provision has been made in
      respect of potential taxation liabilities on realisation of assets at restated
      or revalued amounts or on realisation of associates at equity accounted
      value.



---



Back to Contents

Contents to the Accounts

|24 | Reserves (continued)
|-- | --------------------
|

The Articles of Association of Imperial Chemical
  Industries PLC state that borrowings after deducting cash, current asset investments
  and short-term deposits, must not exceed two and a half times the shareholders
  equity after adding back sums, calculated in accordance with US GAAP, equivalent
  to the unamortised balance of goodwill arising on acquisitions made after 1
  January 1986. Any borrowings, cash or short-term investments held by subsidiaries
  in their capacity as trustee of a Group pension fund are excluded from the calculation.
  For the purpose of calculating the basis of the borrowing limits, in accordance
  with the Articles of Association, the total of the sums standing to the credit
  of capital and revenue reserves of the Company and its subsidiary undertakings,
  to be added to the nominal amount of the share capital of the Company, was £2,970m
  at 31 December 2002 (2001 (restated  note 1) £2,693m; 2000 (restated
   note 1) £2,680m).

|                                                    | Share
      premium
      account |  | Profit
      and loss
      account |   | 2002
      Total |   | 2001
      Total | 
|--------------------------------------------------- | --------------------------------- |  | ----------------------------------- | - | ---------------- | - | ---------------- | -
|                                                    | £m                                |  | £m                                  |   | £m               |   | £m               |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Company                                             |                                   |  |                                     |   |                  |   |                  |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Reserves                                            |                                   |  |                                     |   |                  |   |                  |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|At beginning of year  as previously
      reported |                                   |  |                                     |   |                  |   | 2,859            |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Prior year adjustment (note 1)                      |                                   |  |                                     |   |                  |   | 47               |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|As restated                                         | 589                               |  | 1,952                               |   | 2,541            |   | 2,906            |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Net profit (loss) for the year                      |                                   |  | 236                                 |   | 236              |   | (233             | )
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Dividends                                           |                                   |  | (88                                 | ) | (88              | ) | (116             | )
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Amounts taken direct to reserves                    |                                   |  |                                     |   |                  |   |                  |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Share premiums
       Rights Issue                 | 344                               |  |                                     |   | 344              |   |                 |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|Exchange and
      other adjustments                |                                   |  | 33                                  |   | 33               |   | (16              | )
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|                                                    | 344                               |  | 33                                  |   | 377              |   | (16              | )
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|At end of year                                      | 933                               |  | 2,133                               |   | 3,066            |   | 2,541            |  
|                                                    |                                   |  |                                     |   |                  |   |                  |  
|                                                   

|                                                                                                                         | The prior periods have been
      restated for the adoption of FRS No. 19 Deferred Taxation. This has resulted
      in a decrease in shareholdersfunds at 31 December 2001 of £1m (31 December 2000increase £47m).
|------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                         
|By virtue of
      S230 of the Companies Act 1985, the Company is exempt from presenting a
      profit and loss account.

|  
|--
|  
|25
|  

|                                          | 2002 |   | 2001 |   | 2000 |  
|----------------------------------------- | ---- | - | ---- | - | ---- | -
|                                          | £m   |   | £m   |   | £m   |  
|                                          |      |   |      |   |      |  
|Trading profit                            | 496  |   | 393  |   | 577  |  
|                                          |      |   |      |   |      |  
|Exceptional charges within trading profit |     |   | 143  |   |     |  
|                                          |      |   |      |   |      |  
|Trading profit before exceptional items   | 496  |   | 536  |   | 577  |  
|                                          |      |   |      |   |      |  
|Depreciation and amortisation of goodwill | 233  |   | 246  |   | 268  |  
|                                          |      |   |      |   |      |  
|Stocks (increase)/decrease                | 11   |   | 7    |   | (6   | )
|                                          |      |   |      |   |      |  
|Debtors (increase)/decrease               | (35  | ) | 65   |   | (111 | )
|                                          |      |   |      |   |      |  
|Creditors increase/(decrease)             | 23   |   | (120 | ) | (12  | )
|                                          |      |   |      |   |      |  
|Other movements                           | (37  | ) | (23  | ) | (21  | )
|                                          |      |   |      |   |      |  
|                                          | 691  |   | 711  |   | 695  |  
|                                          |      |   |      |   |      |  
|Outflow related to exceptional items      | (68  | ) | (74  | ) | (109 | )
|                                          |      |   |      |   |      |  
|                                          | 623  |   | 637  |   | 586  |  
|                                          |      |   |      |   |      |  

Outflow related to exceptional items includes
  expenditure charged to exceptional provisions relating to business rationalisation
  and restructuring. The major part of the 2002 expenditure relates to provisions
  raised in prior years.



---



notes relating to the accounts

Contents to the Accounts

|  
|--
|26



|                                                                         | 2002 |   | 2001 |   | 2000 |  
|------------------------------------------------------------------------ | ---- | - | ---- | - | ---- | -
|                                                                         | £m   |   | £m   |   | £m   |  
|                                                                         |      |   |      |   |      |  
|Dividends received from other investments                                |     |   |     |   | 3    |  
|                                                                         |      |   |      |   |      |  
|Interest received                                                        | 121  |   | 93   |   | 38   |  
|                                                                         |      |   |      |   |      |  
|Interest paid                                                            | (285 | ) | (280 | ) | (256 | )
|                                                                         |      |   |      |   |      |  
|Dividends paid by subsidiary undertakings
      to minority shareholders | (21  | ) | (20  | ) | (15  | )
|                                                                         |      |   |      |   |      |  
|                                                                         | (185 | ) | (207 | ) | (230 | )
|                                                                         |      |   |      |   |      |  

|  
|--
|  
|27

|                                  | 2002 |   | 2001 |   | 2000 |  
|--------------------------------- | ---- | - | ---- | - | ---- | -
|                                  | £m   |   | £m   |   | £m   |  
|                                  |      |   |      |   |      |  
|Purchase of tangible fixed assets | (219 | ) | (235 | ) | (284 | )
|                                  |      |   |      |   |      |  
|Sale of fixed assets              | 35   |   | 29   |   | 58   |  
|                                  |      |   |      |   |      |  
|                                  | (184 | ) | (206 | ) | (226 | )
|                                  |      |   |      |   |      |  

|  
|--
|  
|28

|                                                                        |                                      | 2002
      Total
      fair value |    | 2001
      Total
      fair value |  
|----------------------------------------------------------------------- | ------------------------------------ | --------------------------------- | -- | --------------------------------- | -
|                                                                        |                                      | £m                                |    | £m                                |  
|                                                                        |                                      |                                   |    |                                   |  
|Subsidiary undertakings and
      operations                            |                                      |                                   |    |                                  
|                                                                        |                                      |                                   |    |                                  
|Fair value
      of net assets acquired                                 | 5                                    |                                   | 12 |                                  
|                                                                        |                                      |                                   |    |                                  
|Goodwill acquired                                                       |                                      | 1                                 |    | 43                                |  
|                                                                        |                                      |                                   |    |                                   |  
|Consideration for subsidiary
      undertakings and operations acquired | 6                                    |                                   | 55 |                                  
|                                                                        |                                      |                                   |    |                                  
|Investments in participating
      interests and other interests        | 44                                   |                                   | 41 |                                  
|                                                                        |                                      |                                   |    |                                  
|                                                                        |                                      | 50                                |    | 96                                |  
|                                                                        |                                      |                                   |    |                                   |  
|Less                                                                    |                                      |                                   |    |                                   |  
|                                                                        |                                      |                                   |    |                                   |  
|Cash included in undertakings
      acquired                            |                                     |                                   |   |                                  
|                                                                        |                                      |                                   |    |                                  
|Cash consideration                                                      |  current
      year                 | 50                                |    | 96                                |  
|                                                                        |                                      |                                   |    |                                   |  
|                                                                        |  deferred consideration             |                                  |    | (4                                | )
|                                                                        |                                      |                                   |    |                                   |  
|                                                                        |  previous years
      acquisitions | 4                                 |    | 17                                |  
|                                                                        |                                      |                                   |    |                                   |  
|                                                                        |                                      | 54                                |    | 109                               |  
|                                                                        |                                      |                                   |    |                                   |  

|  
|--
|  
|29



|                                                             | 2002 |   | 2001 |   | 2000 |  
|------------------------------------------------------------ | ---- | - | ---- | - | ---- | -
|                                                             | £m   |   | £m   |   | £m   |  
|                                                             |      |   |      |   |      |  
|Commercial paper                                             | (2   | ) | 1    |   | 89   |  
|                                                             |      |   |      |   |      |  
|Bank deposits and certificates of deposit                    | (12  | ) | 254  |   | (115 | )
|                                                             |      |   |      |   |      |  
|Floating rate notes, medium-term notes,
      treasury bills | 1    |   | (2   | ) | 14   |  
|                                                             |      |   |      |   |      |  
|                                                             | (13  | ) | 253  |   | (12  | )
|                                                             |      |   |      |   |      |  

Liquid resources are current asset investments
  held as readily disposable stores of value. In these accounts they comprise
  current asset investments and short-term deposits (note 17).



---



Back to Contents

Contents to the Accounts

30Disposals

|                                                     | 2002£m |   | 2001
        £m |  
|---------------------------------------------------- | ------ | - | --------------- | -
|                                                     |        |   |                 |  
|Subsidiary undertakings and operations               |        |   |                 |  
|                                                     |        |   |                 |  
|Tangible fixed
      assets and investments          | 83     |   | 243             |  
|                                                     |        |   |                 |  
|Net current assets                                   | 53     |   | 104             |  
|                                                     |        |   |                 |  
|Provisions for
      liabilities and charges         | (7     | ) | (43             | )
|                                                     |        |   |                 |  
|Minority interests                                   | (1     | ) | (22             | )
|                                                     |        |   |                 |  
|Book value of
      net assets disposed              | 128    |   | 282             |  
|                                                     |        |   |                 |  
|Disposal costs and provisions                        | 73     |   | 22              |  
|                                                     |        |   |                 |  
|Goodwill written back on disposal                    | 22     |   |                |  
|                                                     |        |   |                 |  
|Investments in participating interests               | 107    |   |                |  
|                                                     |        |   |                 |  
|Repayment of loans                                   |       |   | 3               |  
|                                                     |        |   |                 |  
|Profits less losses on disposals                     | 74     |   | (11             | )
|                                                     |        |   |                 |  
|Consideration received on prior year
      disposals | 23     |   | 41              |  
|                                                     |        |   |                 |  
|Non-cash consideration                               | (4     | ) | (22             | )
|                                                     |        |   |                 |  
|                                                     | 423    |   | 315             |  
|                                                     |        |   |                 |  
|Outflow on divestment provisions                     | (133   | ) | (298            | )
|                                                     |        |   |                 |  
|Cash consideration                                   | 290    |   | 17              |  
|                                                     |        |   |                 |  
|Comprising inflow (outflow) arising on               |        |   |                 |  
|                                                     |        |   |                 |  
|current years
      disposals                       | 360    |   | 96              |  
|                                                     |        |   |                 |  
|previous years
      disposals                      | (70    | ) | (79             | )
|                                                     |        |   |                 |  
|                                                     | 290    |   | 17              |  
|                                                     |        |   |                 |  

During 2002 the Group received gross cash
  consideration of £423m (2001 £315m), primarily for disposals of
  operations £423m (2001 £312m) and £nil (2001 £3m) in
  respect of repayment of fixed asset investment loans. Of this amount, £133m
  (2001 £298m) was paid against ongoing disposal costs and provisions.

Disposals by the Group during 2002 included
  the sale of its catalyst business, Synetix, the 51% owned pharmaceutical business
  of ICI India, Security Systems and the UK Nitrocellulose and Energetic Technologies
  businesses. In addition, Irish Fertilizer Industries Limited, in which the Group
  has a 49% interest, went into liquidation during the year.



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notes relating to the accounts

Contents to the Accounts

31Financing

|                                                    |       | Financing
         shares       |   | Financing  debt                 |   | Total |  
|--------------------------------------------------- | ----- | -------------------------------- | - | -------------------------------- | - | ----- | -
|                                                    |       |                                  |   |                                  |   |      
|                                                    |       | Shares
        issued by Company |   | Minorities*                      |   | Total |  
|                                                    | notes | Share
        capital
        23 |   | Share
        premium
        24 |   |       |  
|                                                    |       | £m                               |   | £m                               |   | £m    |  
|                                                    |       |                                  |   |                                  |   |       |  
|At beginning of 2000                                |       | (728                             | ) | (588                             | ) | (34   | )
|                                                    |       |                                  |   |                                  |   |       |  
|Exchange adjustments                                |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|Financing                                           |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|New finance                                         |       |                                 |   | (1                               | ) |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Finance repaid                                      |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|Cash flow                                           |       |                                 |   | (1                               | ) |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Acquisitions and disposals                          |       |                                  |   |                                  |   | (4    | )
|                                                    |       |                                  |   |                                  |   |       |  
|Other movements                                     |       |                                 |   |                                 |   |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|At beginning of 2001                                |       | (728                             | ) | (589                             | ) | (38   | )
|                                                    |       |                                  |   |                                  |   |       |  
|Exchange adjustments                                |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|Financing                                           |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|New finance                                         |       |                                 |   |                                 |   |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Finance repaid                                      |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|Cash flow                                           |       |                                 |   |                                 |   |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Acquisitions and disposals                          |       |                                  |   |                                  |   | 8     |  
|                                                    |       |                                  |   |                                  |   |       |  
|Other movements                                     |       |                                 |   |                                 |   | (1    | )
|                                                    |       |                                  |   |                                  |   |       |  
|At beginning of 2002                                |       | (728                             | ) | (589                             | ) | (31   | )
|                                                    |       |                                  |   |                                  |   |       |  
|Exchange adjustments                                |       |                                  |   |                                  |   | 3     |  
|                                                    |       |                                  |   |                                  |   |       |  
|Financing                                           |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|New finance                                         |       | (463                             | ) | (344                             | ) |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Finance repaid                                      |       |                                  |   |                                  |   |       |  
|                                                    |       |                                  |   |                                  |   |       |  
|Cash flow                                           |       | (463                             | ) | (344                             | ) |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Acquisitions and disposals                          |       |                                 |   |                                 |   |      |  
|                                                    |       |                                  |   |                                  |   |       |  
|Other movements                                     |       |                                 |   |                                 |   | (3    | )
|                                                    |       |                                  |   |                                  |   |       |  
|At end of 2002                                      |       | (1,191                           | ) | (933                             | ) | (31   | )
|                                                    |       |                                  |   |                                  |   |       |  
|*Share
      capital element of minority interests.



|  |                |                                       | Repaymentdates | Currency | Rate%   | Amount£m | 
|- | -------------- | ------------------------------------- | -------------- | -------- | ------- | -------- | 
|  |                |                                       |                |          |         |          | 
| | New finance    | Bank loan                             | 2003  2010    | Various  | Various | 711      | 
|  |                |                                       |                |          |         |          | 
|  |                | Euro commercial paper                 | 2003           | Various  | Various | 1,350    | 
|  |                |                                       |                |          |         |          | 
|  |                | US commercial paper                   | 2003           | US$      | Various | 1,085    | 
|  |                |                                       |                |          |         |          | 
|  |                | Others                                |                |          |         | 26       | 
|  |                |                                       |                |          |         |          | 
|  |                |                                       |                |          |         | 3,172    | 
|  |                |                                       |                |          |         |          | 
|ø | Finance repaid | Bank loan                             |                |          |         | 641      | 
|  |                |                                       |                |          |         |          | 
|  |                | Euro dollar medium-term
        notes |                | US$      | Various | 10       | 
|  |                |                                       |                |          |         |          | 
|  |                | Euro commercial paper                 |                | Various  | Various | 1,488    | 
|  |                |                                       |                |          |         |          | 
|  |                | US commercial paper                   |                | US$      | Various | 1,238    | 
|  |                |                                       |                |          |         |          | 
|  |                | Others                                |                |          |         | 946      | 
|  |                |                                       |                |          |         |          | 
|  |                |                                       |                |          |         | 4,323    | 
|  |                |                                       |                |          |         |          | 



---




Back to Contents

Contents to the Accounts

32 Analysis of net debt

|                           |       | Cash                      |   | Financing
       debt |   | Current asset
      investments                               |   | Net debt             |  
|-------------------------- | ----- | ------------------------- | - | ---------------------- | - | ------------------------------------------------------------- | - | -------------------- | -
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|                           |       |                           |   | Loans                  |   | Short-term
      borrowings
      other than
      overdrafts |   | Finance
      leases |  
|Due after
      one year   |       | Due within
      one year
|                           | notes | 1,33                      |   | 20                     |   | 20                                                            |   | 33                   |  
|                           |       | £m                        |   | £m                     |   | £m                                                            |   | £m                   |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|At beginning of 2000       |       | 222                       |   | (2,252                 | ) | (647                                                          | ) | (54                  | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Exchange adjustments       |       | (2                        | ) | (132                   | ) | 4                                                             |   | 8                    |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Cash flow                  |       | (14                       | ) | (99                    | ) | 433                                                           |   | (672                 | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Acquisitions and disposals |       |                          |   |                       |   | (4                                                            | ) | (1                   | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Other non-cash changes     |       | 3                         |   | 252                    |   | (252                                                          | ) |                     |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|At beginning of 2001       |       | 209                       |   | (2,231                 | ) | (466                                                          | ) | (719                 | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Exchange adjustments       |       | (8                        | ) | (32                    | ) | (2                                                            | ) | 42                   |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Cash flow                  |       | 65                        |   | (161                   | ) | (63                                                           | ) | 300                  |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Acquisitions and disposals |       | (11                       | ) |                       |   |                                                              |   | 4                    |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Other non-cash changes     |       | 5                         |   | 719                    |   | (719                                                          | ) | (4                   | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|At beginning of 2002       |       | 260                       |   | (1,705                 | ) | (1,250                                                        | ) | (377                 | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Exchange adjustments       |       | (5                        | ) | 100                    |   | 57                                                            |   | (42                  | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Cash flow                  |       | (8                        | ) | (28                    | ) | 963                                                           |   | 215                  |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Acquisitions and disposals |       | (1                        | ) |                       |   |                                                              |   | (1                   | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|Other non-cash changes     |       |                          |   | 270                    |   | (270                                                          | ) |                     |  
|                           |       |                           |   |                        |   |                                                               |   |                      |  
|At end of 2002             |       | 246                       |   | (1,363                 | ) | (500                                                          | ) | (205                 | )
|                           |       |                           |   |                        |   |                                                               |   |                      |  



33 Cash and short-term borrowings

|                           | Cash
      at bank |   | Short-term
      borrowings
      (note 18) |   | Net total      |   | Cash
      (at bank and
      overdrafts) |  
|-------------------------- | ------------------ | - | ------------------------------------------- | - | -------------- | - | ----------------------------------------- | -
|                           |                    |   |                                             |   |                |   |                                           |  
|                           | £m                 |   | Overdrafts
      £m                         |   | Other
      £m |   | Total
      £m                            |  
|                           |                    |   |                                             |   |                |   |                                           |  
|At beginning of 2000       | 270                |   | (48                                         | ) | (54            | ) | (102                                      | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Exchange adjustments       | (4                 | ) | 2                                           |   | 8              |   | 10                                        |  
|                           |                    |   |                                             |   |                |   |                                           |  
|Cash flow                  | (14                | ) |                                            |   | (672           | ) | (672                                      | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Acquisitions and disposals |                   |   |                                            |   | (1             | ) | (1                                        | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Other non-cash changes     | 3                  |   |                                            |   |               |   |                                          |  
|                           |                    |   |                                             |   |                |   |                                           |  
|At beginning of 2001       | 255                |   | (46                                         | ) | (719           | ) | (765                                      | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Exchange adjustments       | (4                 | ) | (4                                          | ) | 42             |   | 38                                        |  
|                           |                    |   |                                             |   |                |   |                                           |  
|Cash flow                  | 62                 |   | 3                                           |   | 300            |   | 303                                       |  
|                           |                    |   |                                             |   |                |   |                                           |  
|Acquisitions and disposals | (14                | ) | 3                                           |   | 4              |   | 7                                         |  
|                           |                    |   |                                             |   |                |   |                                           |  
|Other non-cash changes     | 2                  |   | 3                                           |   | (4             | ) | (1                                        | )
|                           |                    |   |                                             |   |                |   |                                           |  
|At beginning of 2002       | 301                |   | (41                                         | ) | (377           | ) | (418                                      | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Exchange adjustments       | (5                 | ) |                                            |   | (42            | ) | (42                                       | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Cash flow                  | (28                | ) | 20                                          |   | 215            |   | 235                                       |  
|                           |                    |   |                                             |   |                |   |                                           |  
|Acquisitions and disposals | (1                 | ) |                                            |   | (1             | ) | (1                                        | )
|                           |                    |   |                                             |   |                |   |                                           |  
|Other non-cash changes     |                   |   |                                            |   |               |   |                                          |  
|                           |                    |   |                                             |   |                |   |                                           |  
|At end of 2002             | 267                |   | (21                                         | ) | (205           | ) | (226                                      | )
|                           |                    |   |                                             |   |                |   |                                           |  

In the Statement of Group cash flow and related notes,cashincludes cash at bank, deposits repayable on demand and overdrafts; deposits are repayable on demand if they are available within 24 hours without penalty.



---



Back to Contents

notes relating to the accounts

Contents to the Accounts

34Statement
of Group cash flow: Basis of preparation

The Statement of Group cash flow is prepared
    in accordance with UK FRS No.1 (Revised 1996)  Cash
    Flow Statements, the objective of which is
similar to that set out in the US Standard SFAS No. 95  Statements
of Cash Flows. The two statements differ, however,
in their definitions of cash and their presentation of the main constituent items
of cash flow.

The definition of cash in the UK Standard is
    limited to cash plus deposits less overdrafts/borrowings repayable on demand
    without penalty. In the US, the definition in SFAS No. 95 excludes overdrafts
    but is widened to include cash equivalents, comprising short-term highly
    liquid investments that are both readily convertible to known amounts of
    cash and so near their maturities that they present insignificant risk of
    changes in value: generally, only investments with original maturities of
    3 months or less qualify for inclusion. Calculated in accordance with SFAS
    No. 95, cash and cash equivalents at 31 December 2000, 2001 and 2002 and the movements during the years
ending on those dates were as follows:

|                                                                                               | 2002
      £m |   | 2001
      £m |   | 2000
      £m | 
|---------------------------------------------------------------------------------------------- | ------------- | - | ------------- | - | ------------- | 
|                                                                                               |               |   |               |   |               | 
|Cash and cash equivalents                                                                      |               |   |               |   |               | 
|                                                                                               |               |   |               |   |               | 
|Cash                                                                                           | 267           |   | 301           |   | 255           | 
|                                                                                               |               |   |               |   |               | 
|Investments and short-term deposits which
      were within 3 months of maturity when acquired | 158           |   | 135           |   | 317           | 
|                                                                                               |               |   |               |   |               | 
|                                                                                               | 425           |   | 436           |   | 572           | 
|                                                                                               |               |   |               |   |               | 
|                                                                                               |               |   |               |   |               | 
|                                                                                               |               |   |               |   |               | 
|Change in the balance of cash and cash
      equivalents                                       |               |   |               |   |               | 
|                                                                                               |               |   |               |   |               | 
|At beginning of year                                                                           | 436           |   | 572           |   | 454           | 
|                                                                                               |               |   |               |   |               | 
|Exchange adjustments                                                                           | (12           | ) | (3            | ) | 1             | 
|                                                                                               |               |   |               |   |               | 
|Cash inflow (outflow) during year                                                              | 2             |   | (119          | ) | 114           | 
|                                                                                               |               |   |               |   |               | 
|Acquisitions and disposals                                                                     | (1            | ) | (14           | ) | 3             | 
|                                                                                               |               |   |               |   |               | 
|At end of year                                                                                 | 425           |   | 436           |   | 572           | 
|                                                                                               |               |   |               |   |               | 

The format of the UK statement employs some
  nine headings compared with three in SFAS No. 95. The cash flows within the
  UK headings ofOperating activities,
  Dividends received from associates, Returns on investments
  and servicing of finance and Taxation would all be included
  within the heading of Net cash provided by operating activities
  under SFAS No. 95. Likewise, the UK headings of Capital expenditure and
  financial investment and Acquisitions and disposals correspond
  with Cash flows from investing activities under SFAS No. 95, and
  Equity dividends paid, Management of liquid resources
  and Financing in the UK, subject to adjustments for cash equivalents,
  correspond with Cash flows from financing activities in the USA.



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Contents to the Accounts

35Leases

|                        | Total
      rentals under operating leases, charged as an expense in the profit and
      loss account | 
|----------------------- | ------------------------------------------------------------------------------------------------------ | 
|                        |                                                                                                        | 
|                        | Hire of plant
      and machinery                                                                      | 
|                        | £m                                                                                                     | 
|                        |                                                                                                        | 
|2002                    |                                                                                                        | 
|                        |                                                                                                        | 
|Continuing operations   | 10                                                                                                     | 
|                        |                                                                                                        | 
|Discontinued operations |                                                                                                       | 
|                        |                                                                                                        | 
|Total                   | 10                                                                                                     | 
|                        |                                                                                                        | 
|2001                    |                                                                                                        | 
|                        |                                                                                                        | 
|Continuing operations   | 11                                                                                                     | 
|                        |                                                                                                        | 
|Discontinued operations |                                                                                                       | 
|                        |                                                                                                        | 
|Total                   | 11                                                                                                     | 
|                        |                                                                                                        | 
|2000                    |                                                                                                        | 
|                        |                                                                                                        | 
|Continuing operations   | 10                                                                                                     | 
|                        |                                                                                                        | 
|Discontinued operations | 2                                                                                                      | 
|                        |                                                                                                        | 
|Total                   | 12                                                                                                     | 
|                        |                                                                                                        | 
|                       
|

|                                                                                                                                                                                                 | Land and buildings |  | Other assets  |               
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------ |  | ------------- | --------------
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 | 2002
      £m      |  | 2001
      £m |               
|                                                                                                                                                                                                 |                    |  |               |               
|Commitments under non-cancellable operating
      leases to pay rentals during the year following the year of these accounts,
      analysed according to the period in which each lease expires |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|Expiring within
      1 year                                                                                                                                                                     | 7                  |  | 7             |               
|                                                                                                                                                                                                 |                    |  |               |               
|Expiring in years
      2 to 5                                                                                                                                                                   | 15                 |  | 18            |               
|                                                                                                                                                                                                 |                    |  |               |               
|Expiring thereafter                                                                                                                                                                              | 20                 |  | 20            |               
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 | 42                 |  | 45            |               
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 | Operating leases   |  |               | Finance leases
|                                                                                                                                                                                                 |                    |  |               |               
|Obligations under leases comprise                                                                                                                                                                | 2002
      £m      |  | 2001
      £m |               
|                                                                                                                                                                                                 |                    |  |               |               
|Rentals due within
      1 year                                                                                                                                                                  | 64                 |  | 67            |               
|                                                                                                                                                                                                 |                    |  |               |               
|Rentals due after
      more than 1 year                                                                                                                                                         |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|From 1 to 2 years                                                                                                                                                                                | 51                 |  | 56            |               
|                                                                                                                                                                                                 |                    |  |               |               
|From 2 to 3 years                                                                                                                                                                                | 41                 |  | 43            |               
|                                                                                                                                                                                                 |                    |  |               |               
|From 3 to 4 years                                                                                                                                                                                | 30                 |  | 33            |               
|                                                                                                                                                                                                 |                    |  |               |               
|From 4 to 5 years                                                                                                                                                                                | 23                 |  | 26            |               
|                                                                                                                                                                                                 |                    |  |               |               
|After 5 years
      from balance sheet date                                                                                                                                                      | 123                |  | 146           |               
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 | 268                |  | 304           |               
|                                                                                                                                                                                                 |                    |  |               |               
|                                                                                                                                                                                                 | 332                |  | 371           |               
|                                                                                                                                                                                                 |                    |  |               |               
|Less amounts
      representing interest                                                                                                                                                         |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|Present value
      of net minimum lease payments                                                                                                                                                |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|Less current
      lease obligations                                                                                                                                                             |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               
|Non current lease
      obligations                                                                                                                                                              |                    |  |               |               
|                                                                                                                                                                                                 |                    |  |               |               

Obligations under finance leases are included
  in other creditors (note 19).

The Group had no commitments under finance
  leases at the balance sheet date which were due to commence thereafter.



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notes relating to the accounts

Contents to the Accounts

36   Employee numbers and costs

Average number of people employed by the
Group

|Classes of business                                       |        |  |        |  |        | 
|--------------------------------------------------------- | ------ |  | ------ |  | ------ | 
|                                                          | 2002   |  | 2001   |  | 2000   | 
|                                                          |        |  |        |  |        | 
|Continuing operations                                     |        |  |        |  |        | 
|                                                          |        |  |        |  |        | 
|International businesses                                  |        |  |        |  |        | 
|                                                          |        |  |        |  |        | 
|National
      Starch                                     | 9,710  |  | 10,110 |  | 10,570 | 
|                                                          |        |  |        |  |        | 
|Quest                                                     | 4,690  |  | 4,720  |  | 4,580  | 
|                                                          |        |  |        |  |        | 
|Performance
      Specialties                             | 3,800  |  | 4,120  |  | 4,140  | 
|                                                          |        |  |        |  |        | 
|Paints                                                    | 15,740 |  | 15,900 |  | 16,760 | 
|                                                          |        |  |        |  |        | 
|                                                          | 33,940 |  | 34,850 |  | 36,050 | 
|                                                          |        |  |        |  |        | 
|Regional and Industrial                                   | 3,690  |  | 4,490  |  | 4,970  | 
|                                                          |        |  |        |  |        | 
|Corporate                                                 |        |  |        |  |        | 
|                                                          |        |  |        |  |        | 
|Board
      support                                       | 130    |  | 150    |  | 180    | 
|                                                          |        |  |        |  |        | 
|Group
      technical resources and other shared services | 270    |  | 290    |  | 380    | 
|                                                          |        |  |        |  |        | 
|                                                          | 38,030 |  | 39,780 |  | 41,580 | 
|                                                          |        |  |        |  |        | 
|Discontinued operations                                   |       |  |       |  | 4,350  | 
|                                                          |        |  |        |  |        | 
|                                                          | 38,030 |  | 39,780 |  | 45,930 | 
|                                                          |        |  |        |  |        | 

|Geographic areas   |                       |  |        |  |        |  |        |  |        |  |        | 
|------------------ | --------------------- |  | ------ |  | ------ |  | ------ |  | ------ |  | ------ | 
|                   | Continuing operations |  | Total 
|                   |                       |  |       
|                   | 2002                  |  | 2001   |  | 2000   |  | 2002   |  | 2001   |  | 2000   | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|United Kingdom     | 6,250                 |  | 6,710  |  | 7,170  |  | 6,250  |  | 6,710  |  | 10,490 | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|Continental Europe | 6,340                 |  | 6,550  |  | 6,850  |  | 6,340  |  | 6,550  |  | 7,250  | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|USA                | 10,410                |  | 10,930 |  | 11,510 |  | 10,410 |  | 10,930 |  | 11,750 | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|Other Americas     | 5,310                 |  | 5,710  |  | 5,930  |  | 5,310  |  | 5,710  |  | 6,070  | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|Asia Pacific       | 9,420                 |  | 9,590  |  | 9,830  |  | 9,420  |  | 9,590  |  | 10,020 | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|Other countries    | 300                   |  | 290    |  | 290    |  | 300    |  | 290    |  | 350    | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 
|Total employees    | 38,030                |  | 39,780 |  | 41,580 |  | 38,030 |  | 39,780 |  | 45,930 | 
|                   |                       |  |        |  |        |  |        |  |        |  |        | 

|Number of people employed by the Group
      at the year end |        |  |        |  |        | 
|------------------------------------------------------------ | ------ |  | ------ |  | ------ | 
|                                                             | 2002   |  | 2001   |  | 2000   | 
|                                                             |        |  |        |  |        | 
|Continuing operations                                        | 36,660 |  | 38,600 |  | 40,960 | 
|                                                             |        |  |        |  |        | 
|Discontinued operations                                      |       |  |       |  | 4,170  | 
|                                                             |        |  |        |  |        | 
|Total employees                                              | 36,660 |  | 38,600 |  | 45,130 | 
|                                                             |        |  |        |  |        | 

|Employee costs                                                        |                       |   |               |   |               |   |        |   |               |   |               |  
|--------------------------------------------------------------------- | --------------------- | - | ------------- | - | ------------- | - | ------ | - | ------------- | - | ------------- | -
|                                                                      | Continuing operations |   | Total        
|                                                                      |                       |   |              
|                                                                      | 2002£m                |   | 2001
      £m |   | 2000
      £m |   | 2002£m |   | 2001
      £m |   | 2000
      £m |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Salaries                                                              | 1,009                 |   | 1,016         |   | 1,001         |   | 1,009  |   | 1,016         |   | 1,124         |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Social security costs                                                 | 95                    |   | 101           |   | 99            |   | 95     |   | 101           |   | 110           |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Pension costs                                                         | 89                    |   | 70            |   | 70            |   | 89     |   | 70            |   | 85            |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Other employment costs                                                | 27                    |   | 31            |   | 29            |   | 27     |   | 31            |   | 31            |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|                                                                      | 1,220                 |   | 1,218         |   | 1,199         |   | 1,220  |   | 1,218         |   | 1,350         |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Less amounts allocated to capital                                     | (4                    | ) | (1            | ) | (2            | ) | (4     | ) | (1            | ) | (2            | )
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Severance costs charged in arriving at
      profit (loss) before tax | 37                    |   | 104           |   | 15            |   | 37     |   | 104           |   | 54            |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  
|Employee costs charged in arriving at profit
      (loss) before tax  | 1,253                 |   | 1,321         |   | 1,212         |   | 1,253  |   | 1,321         |   | 1,402         |  
|                                                                      |                       |   |               |   |               |   |        |   |               |   |               |  



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Contents to the Accounts

|37                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   | Retirement benefits
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |                    
|The Group continues
      to report on employee retirement benefits in accordance with the UK Standard
      SSAP 24 Accounting for Pension costsand, in respect of post-retirement healthcare in compliance with the sixth
      Abstract of the Urgent Issues Task ForceAccounting
      for Post-Retirement Benefits other than Pensions.
      In 2002, additional analysis is also provided in accordance with the Accounting
      Standard, FRS No. 17Retirement Benefits (FRS 17). Although
      none of the amounts calculated in accordance with this Standard requires
      to be recognised in the primary statements until accounting periods beginning
      on or after 1 January 2005, full disclosure is being made progressively,
      by way of note, commencing during the year ending 31 December 2001 and will
      be complete by the year ending 31 December 2003.                                                                                                                                                                   
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Analysis is also
      provided in note 42 of the aggregate net periodic benefits cost and funded
      status of the Groups major post-retirement schemes restated in accordance
      with US GAAP and in compliance with the requirements of SFAS No.87 Employers Accounting for Pensions,SFAS
      No.88 Employers Accounting for Settlements and Curtailments of Defined Benefit
      Pension Plans and for Termination Benefits,
      SFAS No.106Employers Accounting for Post-Retirement Benefits other than Pensionsand SFAS No.132Employers Disclosures about Pensions and Other Post-Retirement Benefits.                                                                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Pensions
      (SSAP 24)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|GroupThe Company and most of its subsidiaries
      operate retirement plans which cover the majority of employees (including
      Directors) in the Group. These plans are generally of the defined benefit
      type under which benefits are based on employees
      years of service and average final remuneration and are funded through separate
      trustee-administered funds. Formal independent actuarial valuations of the
      Groups main plans are undertaken regularly, normally at least triennially
      and adopting the projected unit method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The actuarial
      assumptions used to calculate the projected benefit obligation of the Groups
      pension plans vary according to the economic conditions of the country in
      which they are situated. The weighted average discount rate used in determining
      the actuarial present values of the benefit obligations was 6.0% (2001 6.1%).
      The weighted average expected long-term rate of return on investments was
      6.1% (2001 6.3%). The weighted average rate of increase of future earnings
      was 4.0% (2001 4.1%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The market value
      of the fund assets of these plans at the date of the latest actuarial valuations
      was sufficient to cover 99% (2001 99%) of the benefits that had accrued
      to members after allowing for expected future increases in earnings; their
      market value was £7,721m (2001 £7,843m).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The total pension
      cost for the Group for 2002 was £89m (2001 £70m; 2000 £85m).
      Accrued pension costs amounted to £9m (2001 £11m) and are included
      in other creditors (note 19); provisions for the benefit obligation of a
      small number of mainly unfunded plans amounted to £148m (2001 £179m)
      and are included in provisions for liabilities and charges – pensions
      (note 21). Prepaid pension costs amounting to £525m (2001 £510m)
      are included in debtors (note 16).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|ICI
      Pension FundThe ICI Pension Fund accounts for approximately
      87% of the Groups plans
      in asset valuation and projected benefit terms.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|From the date
      of the actuarial valuation of the ICI Pension Fund as at 31 March 1994 the
      Company has been making payments into the Fund to reflect the extra liabilities
      arising from early retirement as retirements occur. Based on a Funding Review
      as at 31 March 1997, the Company agreed to make six annual payments into
      the Fund of £100m per annum from 1998 through 2003, subject to a review
      in 2000. The latest actuarial valuation of the Fund, as at 31 March 2000,
      disclosed a solvency ratio of 98% and the Company has agreed to make a further
      six annual payments into the Fund of £30m per annum from 2001 to 2006,
      subject to a review in 2003. The deficit, together with the prepayment,
      is taken into account in arriving at the employers pension costs charged
      in the accounts by being amortised as a percentage of pensionable emoluments
      over the expected working lifetime of existing members. In 2002 this gave
      rise to a charge of £16m (2001 £13m).
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|Healthcare
      (UITF Abstract 6)The Group provides in North America, and to a lesser extent in some other
      countries, certain unfunded healthcare and life assurance benefits for retired
      employees. At 31 December 2002 approximately 20,000 (2001 20,000) current
      and retired employees were eligible to benefit from these schemes. The liabilities
      in respect of these benefits are fully accrued over the expected working
      lifetime of the existing members.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The total post-retirement
      healthcare cost for the Group for 2002 was £12m (2001 £10m;
      2000 £13m) and the provision at the year end was £179m (2001
      £199m).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The Group has
      adopted the measurement basis of the US Standard, SFAS No.106Employers
      Accounting for Post-Retirement Benefits other than Pensionsas the basis of its UK GAAP reporting. Costs and provisions were determined
      on an actuarial basis. The assumptions relating to the US plans, which represent
      a substantial proportion on the Group total, are set out in the table on
      note 42.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|The healthcare
      cost trend has a significant effect on the amounts reported. For the Group,
      increasing the assumed health care cost rates by 1% in every year would
      increase the accumulated post-retirement benefit obligation as of 31 December
      2002 by £11m (2001 £8m) and the aggregate of the service and
      interest cost components of net periodic post-retirement benefit cost for
      the year ended 31 December 2002 by £2m (2001 £1m).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      



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notes relating to the accounts

|37 Retirement
      benefits (continued)                                                                                                                                                                                                            
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                    
|Retirement benefits
       Pensions and healthcare (FRS 17)                                                                                                                                                                                        
|                                                                                                                                                                                                                                                    
|The most recent
      actuarial valuations of the Groups major defined benefit pension schemes
      and post-retirement healthcare schemes have been updated to 31 December
      2002 to take account of the transitional requirements of FRS 17.
|                                                                                                                                                                                                                                                    
|Financial assumptions
      to calculate the projected benefit obligations of Group schemes                                                                                                                                                         
|                                                                                                                                                                                                                                                    
|The principal
      weighted average rates used were:                                                                                                                                                                                               

|                                                     | 2002% p.a. |  | 2001
      % p.a. | 
|---------------------------------------------------- | ---------- |  | ----------------- | 
|                                                     |            |  |                   | 
|                                                     |            |  |                   | 
|                                                     |            |  |                   | 
|Discount rate                                        | 5.7        |  | 6.0               | 
|                                                     |            |  |                   | 
|Inflation rate                                       | 2.3        |  | 2.5               | 
|                                                     |            |  |                   | 
|Long-term rate of increase in future earnings        | 3.8        |  | 3.9               | 
|                                                     |            |  |                   | 
|Increase in pensions in payment                      | 2.1        |  | 2.2               | 
|                                                     |            |  |                   | 
|Post-retirement healthcare cost inflation
      rate | 8.0        |  | 7.4               | 
|                                                     |            |  |                   | 

|Expected rates of return, assets, liabilities
      and net (liabilities) assets                                                                           |               |   |                             |   
|---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------- | - | --------------------------- | --
|                                                                                                                                                           | At 31Dec2002% |   | At 31Dec
      2001
      % |   
|                                                                                                                                                           |               |   |                             |   
|Expected rates of return                                                                                                                                   |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Equities                                                                                                                                                   | 8.6           |   | 7.8                         |   
|                                                                                                                                                           |               |   |                             |   
|Bonds                                                                                                                                                      | 4.7           |   | 5.4                         |   
|                                                                                                                                                           |               |   |                             |   
|Other                                                                                                                                                      | 5.5           |   | 6.9                         |   
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           | £m            |   | £m                          |   
|                                                                                                                                                           |               |   |                             |   
|Assets in schemes                                                                                                                                          |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Equities                                                                                                                                                   | 1,659         |   | 2,329                       |   
|                                                                                                                                                           |               |   |                             |   
|Bonds                                                                                                                                                      | 5,216         |   | 5,191                       |   
|                                                                                                                                                           |               |   |                             |   
|Other                                                                                                                                                      | 177           |   | 59                          |   
|                                                                                                                                                           |               |   |                             |   
|Total fair value of assets                                                                                                                                 | 7,052         |   | 7,579                       |   
|                                                                                                                                                           |               |   |                             |   
|Present value of scheme liabilities                                                                                                                        | 7,866         |   | 8,078                       |   
|                                                                                                                                                           |               |   |                             |   
|Net (deficit) in the schemes                                                                                                                               | (814          | ) | (499                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Less Unrecognisable surpluses                                                                                                                              |              |   | (12                         | ) 
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Deferred tax asset                                                                                                                                         | 126           |   | 96                          | * 
|                                                                                                                                                           |               |   |                             |   
|Net liabilities                                                                                                                                            | (688          | ) | (415                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Represented by                                                                                                                                             |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Deficits                                                                                                                                                   | (694          | ) | (423                        | )*
|                                                                                                                                                           |               |   |                             |   
|Surpluses                                                                                                                                                  | 6             |   | 8                           |   
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Analysis of net recognised (deficit)                                                                                                                       |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|ICI UK Pension Fund                                                                                                                                        | (257          | ) | (161                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Other funded pension schemes                                                                                                                               | (307          | ) | (115                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Total funded schemes                                                                                                                                       | (564          | ) | (276                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Unfunded pension schemes                                                                                                                                   | (75           | ) | (79                         | ) 
|                                                                                                                                                           |               |   |                             |   
|Post-retirement healthcare schemes                                                                                                                         | (175          | ) | (156                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Total unfunded schemes                                                                                                                                     | (250          | ) | (235                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Net recognised (deficit)                                                                                                                                   | (814          | ) | (511                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Represented by                                                                                                                                             |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|Deficits                                                                                                                                                   | (823          | ) | (524                        | ) 
|                                                                                                                                                           |               |   |                             |   
|Surpluses                                                                                                                                                  | 9             |   | 13                          |   
|                                                                                                                                                           |               |   |                             |   
|                                                                                                                                                           |               |   |                             |   
|*   The prior
      period has been restated for the adoption of FRS No. 19 Deferred Tax resulting
      in an increase in the deferred tax asset of £38m.



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Back to Contents

37Retirement
  benefits (continued)

Retirement benefits  Pensions and healthcare
  (FRS 17) (continued)Set out below is an analysis of the
  amounts that would be charged to the profit and loss account and the statement
  of total recognised gains and losses in respect of the Groups major defined
  benefit pension and post-retirement healthcare schemes in accordance with the
  transitional requirements of FRS 17.

Analysis of the
  amounts that would be charged to profit and loss account in accordance with
  FRS 17

|                                                                                                                                    | 2002£m |  
|----------------------------------------------------------------------------------------------------------------------------------- | ------ | -
|                                                                                                                                    |        |  
|Current service cost                                                                                                                | (60    | )
|                                                                                                                                    |        |  
|Past service cost                                                                                                                   | (5     | )
|                                                                                                                                    |        |  
|Previously unrecognised surplus from past
      service costs                                                                       | 2      |  
|                                                                                                                                    |        |  
|Losses on curtailments                                                                                                              | (44    | )
|                                                                                                                                    |        |  
|Gains on settlements                                                                                                                | 18     |  
|                                                                                                                                    |        |  
|                                                                                                                                    | (89    | )
|                                                                                                                                    |        |  
|                                                                                                                                    |        |  
|Other finance costs                                                                                                                 |        |  
|                                                                                                                                    |        |  
|Expected return on assets in schemes                                                                                                | 454    |  
|                                                                                                                                    |        |  
|Interest on liabilities in schemes                                                                                                  | (468   | )
|                                                                                                                                    |        |  
|Restriction relating to recoverable surplus                                                                                         | 1      |  
|                                                                                                                                    |        |  
|Net finance cost                                                                                                                    | (13    | )
|                                                                                                                                    |        |  
|Amounts charged to the profit and loss
      account                                                                                | (102   | )
|                                                                                                                                    |        |  
|                                                                                                                                    |        |  
|Analysis of amount that would be recognised
      in statement of total recognised gains and losses in accordance with FRS
      17 |        |  
|                                                                                                                                    |        |  
|Actual return less expected return on assets
      (deficit)                                                                        | (519   | )
|                                                                                                                                    |        |  
|Experience gains and (losses) arising on
      liabilities                                                                          | 201    |  
|                                                                                                                                    |        |  
|Changes in demographic and financial assumptions
      underlying                                                                   |        |  
|the
        present value of the liabilities (deficit)                                                                              | (89    | )
|                                                                                                                                    |        |  
|Adjustments to unrecognised scheme surplus                                                                                          | 7      |  
|                                                                                                                                    |        |  
|Net actuarial (loss) recognised in statement
      of total recognised gains and losses                                             | (400   | )
|                                                                                                                                    |        |  

Movement in net deficit during the year

|                                                                | 2002
      £m |  
|--------------------------------------------------------------- | ------------- | -
|                                                                |               |  
|Net recognised (deficit) at beginning of
      year             | (511          | )
|                                                                |               |  
|Movement
        in year:                                       |               |  
|                                                                |               |  
|Current
        service cost                                    | (60           | )
|                                                                |               |  
|Past
        service costs                                      | (5            | )
|                                                                |               |  
|Previously
        unrecognised surplus from past service costs | 2             |  
|                                                                |               |  
|Losses
        on curtailments                                  | (44           | )
|                                                                |               |  
|Gains
        on settlements                                    | 18            |  
|                                                                |               |  
|Net
        finance cost                                        | (13           | )
|                                                                |               |  
|Contributions                                                   | 161           |  
|                                                                |               |  
|Actuarial
        loss                                          | (400          | )
|                                                                |               |  
|Exchange
        adjustment gains                               | 38            |  
|                                                                |               |  
|Net (deficit) at end of year                                    | (814          | )
|                                                                |               |  

























The difference between the expected and actual return on assets was a deficit
  of £519m or 7% of the scheme assets at 31 December 2002. The experience
  gains arising on scheme liabilities were £201m or 3% of scheme liabilities
  at 31 December 2002. The net actuarial loss was £400m or 5% of the scheme
  liabilities at 31 December 2002.



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notes relating to the accounts

Contents to the Accounts

38Financial
  risk management

The Groups
  treasury objectives and policies are discussed in the Operating and Financial
  Review on pages 23 to 25.

(a)  Interest
  rate riskThe interest rate profile of the Groups
  financial assets and financial liabilities at 31 December 2002, after taking
  into account the effect of interest rate and currency swaps, is set out in the
  tables below. Further quantitative analysis of the sensitivity to movements
  in interest rates is reported in the Operating and Financial Review on pages
  23 to 24.

Financial assets

|                                                                            |                               | 2002                             |                         |         |   |  | 2001                                         |                                                 |                       
|--------------------------------------------------------------------------- | ----------------------------- | -------------------------------- | ----------------------- | ------- | - |  | -------------------------------------------- | ----------------------------------------------- | ----------------------
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|                                                                            | At
      fixedinterestrates£m | At
      floatinginterestrates£m | Interest
        free£m | Total£m |   |  | At fixed
      interest
      rates
      £m | At floating
      interest
      rates
      £m | Interest free
      £m
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Current asset investments, short-term                                       |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|deposits
        and cash                                                   |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Sterling                                                                    |                              |                                 | 63                      | 63      |   |  |                                             | 21                                              | 23                    
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|US
        Dollar                                                           |                              | 16                               | 52                      | 68      |   |  |                                             | 13                                              | 77                    
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Euro                                                                        |                              | 3                                | 38                      | 41      |   |  |                                             | 7                                               | 79                    
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Japanese
        Yen                                                        |                              |                                 | 2                       | 2       |   |  |                                             |                                                | 5                     
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Other
        currencies                                                    |                              | 35                               | 109                     | 144     |   |  |                                             | 14                                              | 117                   
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|                                                                            |                              | 54                               | 264                     | 318     |   |  |                                             | 55                                              | 301                   
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Fixed asset investments and
      debtorsdue
      after more than one year |                               |                                  |                         |         |   |  |                                              |                                                
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Sterling                                                                    |                               |                                  |                         | 4       |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|US
        Dollar                                                           |                               |                                  |                         | 38      |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Euro                                                                        |                               |                                  |                         | 2       |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Other
        currencies                                                    |                               |                                  |                         | 4       |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Total financial assets                                                      |                               |                                  |                         | 366     |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|At 31 December 2002 the
        financial assets of the Group comprised:    |                               |                                  |                         |         |   |  |                                              |                                                
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Investments in participating and                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|other investments                                                           |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Loans
        to associates                                                 |                               |                                  |                         |        |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Other
        investments                                                   |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Shares                                                                      |                               |                                  |                         | 17      |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Loans                                                                       |                               |                                  |                         |        |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Debtors due after more than one year                                        |                               |                                  |                         | 31      |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Current asset investments and short-term
      deposits                     |                               |                                  |                         | 160     |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Cash                                                                        |                               |                                  |                         | 267     |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Less financial assets of insurance subsidiaries                             |                               |                                  |                         | (109    | ) |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       
|Total financial assets                                                      |                               |                                  |                         | 366     |   |  |                                              |                                                 |                       
|                                                                            |                               |                                  |                         |         |   |  |                                              |                                                 |                       

Floating rate financial assets comprise bank deposits bearing interest at rates fixed in advance for periods ranging from 1 month to 6 months by reference to the relevant inter-bank rate.



---



Back to Contents

38  Financial
  risk management (continued)

(a)  Interest
  rate risk (continued) 
  Financial liabilities

|                 |                         |  | 2002                       |  |         |  |                                              |  | 2001                                            |   |                |  
|---------------- | ----------------------- |  | -------------------------- |  | ------- |  | -------------------------------------------- |  | ----------------------------------------------- | - | -------------- | -
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |               
|                 | At fixedinterestrates£m |  | At floatinginterestrates£m |  | Total£m |  | At fixed
      interest
      rates
      £m |  | At floating
      interest
      rates
      £m |   | Total
      £m |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|Sterling         | 48                      |  | 11                         |  | 59      |  | 170                                          |  | (283                                            | ) | (113           | )
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|US Dollar        | 475                     |  | 727                        |  | 1,202   |  | 661                                          |  | 1,449                                           |   | 2,110          |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|Euro             | 75                      |  | 226                        |  | 301     |  | 61                                           |  | 585                                             |   | 646            |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|Japanese Yen     | 257                     |  | 93                         |  | 350     |  | 227                                          |  | 176                                             |   | 403            |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|Other currencies | 31                      |  | 167                        |  | 198     |  | 97                                           |  | 266                                             |   | 363            |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  
|                 | 886                     |  | 1,224                      |  | 2,110   |  | 1,216                                        |  | 2,193                                           |   | 3,409          |  
|                 |                         |  |                            |  |         |  |                                              |  |                                                 |   |                |  

|At 31 December the financial
      liabilities of the Group comprised: |       |  |  |  |  |  |       | 
|---------------------------------------------------------------------- | ----- |  |  |  |  |  | ----- | 
|                                                                       |       |  |  |  |  |  |       | 
|Short-term
      borrowings                                            | 226   |  |  |  |  |  | 418   | 
|                                                                       |       |  |  |  |  |  |       | 
|Current
      instalments of loans                                     | 500   |  |  |  |  |  | 1,250 | 
|                                                                       |       |  |  |  |  |  |       | 
|Loans                                                                  | 1,363 |  |  |  |  |  | 1,705 | 
|                                                                       |       |  |  |  |  |  |       | 
|Other creditors
      due after more than one year                     |       |  |  |  |  |  |       | 
|                                                                       |       |  |  |  |  |  |       | 
|Environmental
        liabilities                                      | 1     |  |  |  |  |  | 5     | 
|                                                                       |       |  |  |  |  |  |       | 
|Other
        creditors                                                | 17    |  |  |  |  |  | 29    | 
|                                                                       |       |  |  |  |  |  |       | 
|Finance
        leases                                                 | 3     |  |  |  |  |  | 2     | 
|                                                                       |       |  |  |  |  |  |       | 
|Less financial
      liabilities of insurance subsidiaries             |      |  |  |  |  |  |      | 
|                                                                       |       |  |  |  |  |  |       | 
|                                                                       | 2,110 |  |  |  |  |  | 3,409 | 
|                                                                       |       |  |  |  |  |  |       | 

The applicable weighted average
  interest rates for fixed rate financial liabilities are: Sterling 7.9% (2001
  7.8%); US dollar 6.7% (2001 6.7%); Euro 4.7% (2001 4.4%); Japanese yen 0.7%
  (2001 0.7%); other currencies 14.6% (2001 15.6%).

The applicable weighted average
  period for which rates are fixed are: Sterling 4 years (2001 4 years); US dollar
  4 years (2001 3 years); Euro 5 years (2001 5 years); Japanese yen 3 years (2001
  3 years) and other currencies 2 years (2001 2 years).

The figures shown above take
  into account various interest rate swaps, currency swaps and forward exchange
  contracts used to manage the interest rate and currency profile of financial
  assets and liabilities.

(b) Currency exposures
  on monetary assets and liabilitiesAs explained in
  the Operating and Financial Review, on page 23, the Groups policy is,
  where practicable, to hedge all exposures on monetary assets and liabilities.
  As a result there are no significant non functional currency exposures.

(c) Maturity of financial
  liabilitiesThe maturity profile
  of the Groups financial liabilities, as defined in section (a) above,
  at 31 December 2002 was as follows:

|                                                          | 2002£m |  | 2001£m | 
|--------------------------------------------------------- | ------ |  | ------ | 
|                                                          |        |  |        | 
|In one year or less                                       | 726    |  | 1,668  | 
|                                                          |        |  |        | 
|In more than one year
      but not more than two years   | 548    |  | 366    | 
|                                                          |        |  |        | 
|In more than two years
      but not more than five years | 792    |  | 860    | 
|                                                          |        |  |        | 
|In more than five years                                   | 44     |  | 515    | 
|                                                          |        |  |        | 
|                                                          | 2,110  |  | 3,409  | 
|                                                          |        |  |        | 



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Back to Contents

notes relating to the accounts

38 Financial risk management (continued)

(d) Borrowing facilitiesCommitted facilities available to the Group
    at 31 December 2002 in respect of which all conditions precedent had been
met at that date were as follows:

|                                | 2002
   £m |  | 2001
£m | 
|------------------------------- | ---------- |  | ------- | 
|                                |            |  |         | 
|Expiring in one year or less    | 201        |  | 512     | 
|                                |            |  |         | 
|Expiring in more than one year  | 883        |  |        | 
|                                |            |  |         | 
|Expiring in more than two years | 425        |  | 1,232   | 
|                                |            |  |         | 
|                                | 1,509      |  | 1,744   | 
|                                |            |  |         | 

(e)Net
        debt managementThe Group manages the currency
and interest rate exposure which arises on borrowings and cash not immediately
required by the business on a net basis through the use of currency swaps, forward
exchange contracts, interest rate swaps and interest rate caps.The most significant consequences of this approach are:

|                                                                                                                                                   | to manage the currency exposures arising
      from loans by holding cash and through currency swaps.                                                      
|--------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                    |                                                                                                                                                            
|                                                                                                                                                   | to reduce the proportion of the Groups
        fixed interest rate liabilities arising from loans through the use of
        fixed to floating rate swaps.
|                                                                                                                                                    |                                                                                                                                                            
|The financial instruments used
      in debt management are accounted for as described in the Groups accounting
      policies on pages 50 and 51.

The notional principal amounts and fair values,
    net of associated hedges, of the Groups
    financial assets
and financial liabilities were as follows:

|                                                                              | Notional
	principal
          amounts
      At 31 December |   | Carrying values*
	At 31 December |   | Fair values*
	At 31 December |        
|----------------------------------------------------------------------------- | ---------------------------------------------------------- | - | -------------------------------- | - | ---------------------------- | -------
|                                                                              |                                                            |   |                                  |   |                              |        
|                                                                              | 2002
£m                                                    |   | 2001
£m                          |   |                              | 2002
£m
|                                                                              |                                                            |   |                                  |   |                              |        
|Interests in participating and other investments  other
        investments | 17                                                         |   | 287                              |   |                              | 17     
|                                                                              |                                                            |   |                                  |   |                              |        
|Current asset investments and short-term
        deposits                    | 54                                                         |   | 55                               |   |                              | 54     
|                                                                              |                                                            |   |                                  |   |                              |        
|Cash                                                                         | 264                                                        |   | 301                              |   |                              | 264    
|                                                                              |                                                            |   |                                  |   |                              |        
|Other financial assets                                                       | 31                                                         |   | 54                               |   |                              | 31     
|                                                                              |                                                            |   |                                  |   |                              |        
|Short-term borrowings                                                         | (224                                                       | ) | (418                             | ) |                              | (226   
|                                                                              |                                                            |   |                                  |   |                              |        
|Loans                                                                         | (1,850                                                     | ) | (2,965                           | ) |                              | (1,848 
|                                                                              |                                                            |   |                                  |   |                              |        
|Other financial liabilities                                                  | (21                                                        | ) | (36                              | ) |                              | (21    
|                                                                              |                                                            |   |                                  |   |                              |        
|Currency swaps                                                                | (814                                                       | ) | (849                             | ) |                              | (15    
|                                                                              |                                                            |   |                                  |   |                              |        
|Interest rate swaps                                                           | 3,485                                                      |   | 4,377                            |   |                              |       
|                                                                              |                                                            |   |                                  |   |                              |        
|Interest rate caps                                                            |                                                           |   | 1,945                            |   |                              |       
|                                                                              |                                                            |   |                                  |   |                              |        
|Total net liabilities                                                         |                                                            |   |                                  |   |                              | (1,744 
|                                                                              |                                                            |   |                                  |   |                              |        
|Financial assets                                                              |                                                            |   |                                  |   |                              | 366    
|                                                                              |                                                            |   |                                  |   |                              |        
|Financial liabilities                                                         |                                                            |   |                                  |   |                              | (2,110 
|                                                                              |                                                            |   |                                  |   |                              |        
|                                                                              |                                                            |   |                                  |   |                              | (1,744 
|                                                                              |                                                            |   |                                  |   |                              |        

|  |                                                                                  
|- | ---------------------------------------------------------------------------------
|* | (
    ) = liability                                                              
| | The
    Group has assumed that the fair value approximates to the carrying value.

The fair value of the Groups long-term
    publicly quoted debt is based upon quoted market prices. The fair value of
    the Groups non-publicly quoted debt, all swaps, and caps have been
    estimated from discounted anticipated cash flows utilising a zero coupon
yield curve.

The total decrease in the fair value of long-term debt net of associated hedges
for the year ended 31 December 2002 of £1,067m arose from the net repayment
of loans (£966m), favourable movements on foreign
exchange (£152m) and adverse movements due to changes in interest rates
(£51m).

A portfolio approach is adopted to create the Groups
target proportion of fixed and floating rate debt by currency. The maturity profile
of the net fixed rate exposure is spread over several years to reduce re-pricing
risk. Short term borrowings include balances relating to forward exchange contracts.
These balances are further analysed in section (g).

Where interest rate and currency instruments are designated to a group of borrowings
or cash and cash equivalents with similar characteristics, altering their interest
rate or currency profile, the net cash amounts to be received or paid on the
agreements are accrued in current assets or liabilities and recognised as an
adjustment to interest income or expense (accrual
accounting).



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Back to Contents

38Financial
risk management (continued)

(e) Net
debt management (continued)The
            Group is exposed to credit related losses in the event that counterparties
            to off-balance-sheet financial instruments do not perform according to
            the terms of the contract. In the opinion of management, the counterparties
            to the financial instruments are creditworthy parties and the Group does
            not expect any significant loss to result from non-performance. The immediate
            credit exposure of financial instruments is represented by those financial
instruments that have a positive fair value at 31 December 2002.

At 31 December 2002 the aggregate value of
    all financial instruments with a positive fair value (assets) was £62m
    for currency swaps, £96m for interest rate swaps, £12m for forward
contracts, nil for interest rate caps and £2m for currency options.

There were no
net material gains or losses deferred at 31 December 2002 (2001 nil).

(f) HedgesThe
        table below analyses movements in the fair values of derivatives used to
hedge financial assets and liabilities:

|                                                                      | 2002                                   |  | 2001                                       
|--------------------------------------------------------------------- | -------------------------------------- |  | -------------------------------------------
|                                                                      |                                        |  |                                            
|                                                                      | Fair
      value
      assets
      £m |  | Fair
      value
      liabilities
      £m
|                                                                      |                                        |  |                                            
|Unrecognised gains and losses on hedges
      at 1 January            | 429                                    |  | (289                                       
|                                                                      |                                        |  |                                            
|Gains and losses arising in previous years
      that were recognised |                                        |  |                                            
|                                                                      |                                        |  |                                            
|                                                                      |                                        |  |                                            
|Gains and losses arising before 1 January
      that were not         |                                        |  |                                            
|                                                                      |                                        |  |                                            
|                                                                      |                                        |  |                                            
|Gains and losses arising in the year that
      were not              |                                        |  |                                            
|                                                                      |                                        |  |                                            
|                                                                      |                                        |  |                                            
|Unrecognised gains and losses on hedges
      at 31 December          | 172                                    |  | (106                                       
|                                                                      |                                        |  |                                            
|Of which:                                                             |                                        |  |                                            
|                                                                      |                                        |  |                                            
|Gains and losses expected to be recognised
      within 1 year        | 44                                     |  | (21                                        
|                                                                      |                                        |  |                                            
|Gains and losses to be recognised after
      more than 1 year        | 128                                    |  | (85                                        
|                                                                      |                                        |  |                                            
|                                                                      | 172                                    |  | (106                                       
|                                                                      |                                        |  |                                            



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Back to Contents

Contents to the Accounts

notes relating to the accounts

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|
|

|                                    | Notionalprincipal amountsAt 31 December |   | Carrying
      values*At 31 December |   | Fair
      values*At 31 December |  
|----------------------------------- | --------------------------------------- | - | ------------------------------------ | - | -------------------------------- | -
|                                   
|                                   
|                                    |                                         |   |                                      |   |                                  |  
|                                    | 2002                                    |   | 2001                                 |   | 2002                             |  
|                                    | £m                                      |   | £m                                   |   | £m                               |  
|                                    |                                         |   |                                      |   |                                  |  
|Hedging working capital             |                                         |   |                                      |   | 1                                |  
|                                    |                                         |   |                                      |   |                                  |  
|Forward contracts to buy currency   | 99                                      |   | 86                                   |   |                                  |  
|                                    |                                         |   |                                      |   |                                  |  
|Forward contracts to sell currency  | (96                                     | ) | (85                                  | ) |                                  |  
|                                    |                                         |   |                                      |   |                                  |  
|Hedging anticipated cash flows      |                                         |   |                                      |   | 6                                |  
|                                    |                                         |   |                                      |   |                                  |  
|Currency contracts to buy currency  | 97                                      |   | 135                                  |   |                                  |  
|                                    |                                         |   |                                      |   |                                  |  
|Currency contracts to sell currency | (88                                     | ) | (133                                 | ) |                                  |  
|                                    |                                         |   |                                      |   |                                  |  
|Hedging debt                        |                                         |   |                                      |   | (4                               | )
|                                    |                                         |   |                                      |   |                                  |  
|Forward contracts to buy currency   | 617                                     |   | 1,445                                |   |                                  |  
|                                    |                                         |   |                                      |   |                                  |  
|Forward contracts to sell currency  | (620                                    | ) | (1,409                               | ) |                                  |  
|                                    |                                         |   |                                      |   |                                  |  

|* (  )
      = liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The carrying values
      of currency hedging instruments do not materially differ from the fair values
      based on quoted market prices.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|(h) Management
      of current asset investmentsSurplus funds are invested in high quality liquid
      marketable investments, including money market instruments, government securities
      and asset backed securities. Investments are of a plain vanilla nature with
      no embedded interest rate options. The majority of asset backed securities
      have some risk of early redemption, but are of a floating rate nature and
      hence have minimal fixed interest rate risk. There are no investments of
      a fixed rate nature with maturity greater than one year and consequently
      the fair value of investments is considered to be materially the same as
      the value in the Groups
      balance sheet. Investments are classified as available for sale.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The Groups
      exposure to credit risk is controlled by setting a policy for limiting credit
      exposure to counterparties, which is reviewed annually, and reviewing credit
      ratings and limiting individual aggregate credit exposures accordingly.
      The Group considers the possibility of material loss in the event of non-performance
      by a financial counterparty to be unlikely.                                                                                                                                                                                                                                                                                                                                                                                     
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The notional amounts
      of financial instruments used in debt and currency management do not represent
      amounts exchanged by the parties and, thus, are not a measure of the credit
      risk to the Group arising through the use of these instruments. The immediate
      credit risk of these instruments is represented by the fair value of contracts
      with a positive fair value.                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|39 Statutory and other
      information                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Remuneration of
      the Auditor charged in the Group accounts for the statutory audit was £2.8m
      (2001 £2.8m; 2000 £2.9m); fees paid to the Auditor (and its
      associates) of the Company for services other than statutory audit supplied
      to the Group during 2002 totalled £3.3m (2001 £3.1m; 2000 £5.1m)
      of which £2.1m (2001 £0.9m; 2000 £1.8m) was for audit
      related services, principally in connection with the Rights Issue and divestment
      transactions, £1.1m (2001 £1.8m; 2000 £0.7m) was for taxation
      services, and £0.1m (2001 £0.4m; 2000 £2.6m) was for other
      services.                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|The remuneration
      and expenses of the Auditor in respect of the statutory report to the members
      of the Company for the year 2002 amounted to £61,000 (2001 £66,000;
      2000 £60,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|Included in debtors
      in 2000 and 2001 was an interest free loan of £7,000 to Dr J D G McAdam.
      This was repaid during 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|In accordance
      with the Companys policy of providing housing assistance to staff
      on international assignment, a subsidiary has guaranteed a housing loan
      for an officer to the extent of £131,000 (2001 £123,000; 2000
      £126,000).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         



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Contents to the Accounts

40 Commitments
  and contingent liabilities

|                                                                    | Group |  | Company | 
|------------------------------------------------------------------- | ----- |  | ------- | 
|                                                                    |       |  |         | 
|                                                                    | 2002  |  | 2001    | 
|                                                                    | £m    |  | £m      | 
|                                                                    |       |  |         | 
|Commitments for capital expenditure not
      provided for in these |       |  |         | 
|                                                                    |       |  |         | 
|accounts
      (including acquisitions)                             |       |  |         | 
|                                                                    |       |  |         | 
|Contracts placed
      for future expenditure                       | 23    |  | 28      | 
|                                                                    |       |  |         | 
|Expenditure authorised
      but not yet contracted                 | 140   |  | 118     | 
|                                                                    |       |  |         | 
|                                                                    | 163   |  | 146     | 
|                                                                    |       |  |         | 



|Contingent liabilities
        existed at 31 December 2002 in connection with guarantees and uncalled
        capital relating to subsidiary and other undertakings and guarantees relating
        to pension funds, including the solvency of pension funds. There was no
        contingent liability in respect of guarantees of borrowings and uncalled
        capital for the Group at 31 December 2002 (2001 £nil); the maximum
        contingent liability for the Company, mainly on guarantees of borrowing
        by subsidiaries, was £1,441m (2001 £2,308m).
      The Group is also subject to contingencies
        pursuant to environmental laws and regulations that in the future may
        require it to take action to correct the effects on the environment of
        prior disposal or release of chemical substances by the Group or other
        parties. The ultimate requirement for such actions, and their cost, is
        inherently difficult to estimate, however provisions have been established
        at 31 December 2002 in accordance with the Groups accounting policy
        noted on page 51. It is believed that, taking account of these provisions,
        the cost of addressing currently identified environmental obligations
        is unlikely to impair materially the Groups financial position and
        results of operations.
      The Glidden Company (Glidden),
        a wholly owned subsidiary of ICI, is a defendant, along with former lead
        paint and pigment producers as well as other lead product manufacturers
        and their trade associations, in a number of suits in the United States.
        These suits seek damages for alleged personal injury caused by lead-based
        paint or the costs of removing lead-based paint. An alleged predecessor
        of Glidden manufactured lead pigments until the 1950s and lead-based consumer
        paint until the 1960s. Due to the nature of the suits, Glidden is unable
        to quantify the amount being claimed although the suits are likely to
        involve substantial claims for damages.
      The cases presently pending against Glidden
        include: a suit filed in 1989 by the New York City Housing Authority in
        New York state court seeking the removal of all lead-based paint from
        two housing projects; a purported statewide personal injury class action
        filed in 1998 on behalf of all lead poisoned children in New York state
        court; a personal injury suit filed in 1999 on behalf of six lead poisoned
        minors in state court in Maryland, and a personal injury action filed
        in 2002 on behalf of a lead poisoned adult in state court in Mississippi.
        Five other individual personal injury actions were filed in 2000 and 2001
        against Glidden and other members of the lead industry in Maryland state
        court, however, these actions have not been served on any of the defendants
        and no activity is expected for the foreseeable future. One additional
        personal injury action was filed in late 2002 in New York state court
        but Glidden has not been served in that case.
      Glidden has been dismissed from seventeen
        cases in 2002 and was not named as a defendant in more than two dozen
        lead paint lawsuits filed this year. Glidden continues to believe that
        it has strong defences to all of the pending cases and has denied all
        liability and will continue to vigorously defend all actions. |  | ICI Chemicals & Polymers Limited
        (C&P), a subsidiary, is involved in arbitration proceedings in Singapore
        regarding PTA technology exchange and licence arrangements with PT Polyprima
        Karyareksa (Polyprima). Fees due under these arrangements are being claimed
        against Polyprima who, in response, has claimed damages totalling up to
        $130m for alleged breach of contract, alleged fraud, deceit, misrepresentation
        and concealment, allegations which C&P rejects and intends to resist
        vigorously, C&Ps claim against Polyprima was heard before an
        arbitration tribunal in Singapore in May 2002 and the decision of the
        tribunal is awaited.
      The Group is also involved in various
        other legal proceedings, principally in the United Kingdom and United
        States, arising out of the normal course of business. The Directors do
        not believe that the outcome of these other proceedings will have a material
        effect on the Groups financial position.
      In recent years, the Group has carried
        out a programme of strategic disposals, in the course of which we have
        given to other parties in these transactions certain indemnities, warranties
        and guarantees, including indemnities, warranties and guarantees relating
        to known and potential latent environmental, health and safety liabilities.
        There are also a number of contracts relating to businesses which we exited
        as part of our disposal programme which have not been novated to the purchasers
        of these businesses.
      The Groups 50% interest in Teesside
        Gas Transportation Ltd (TGT) was sold, during 1996, to a subsidiary of
        its other shareholder, Enron Europe Ltd (Enron) which is currently in
        administration. TGT contracted with the owners of a distribution network
        (the CATS parties) for pipeline capacity for North Sea gas and the commitment
        is guaranteed severally on a 50:50 basis by the Company and Enron (the
        present value of the commitment guaranteed by the Company is estimated
        at £163m). On the sale of the Groups interest in TGT to Enron
        the Company received the benefit of a counter guarantee from Enrons
        parent, Enron Corp. Enron Corp. sought Chapter 11 bankruptcy protection
        in the USA on 2 December 2001.
      The Groups interest in Teesside
        Power Ltd (TPL) was sold on 31 December 1998 to Enron Teesside Operations
        Ltd (ETOL). TPL had previously contracted with certain gas sellers for
        the purchase of gas. Enron Corp. and the Company had guaranteed on a several
        basis the liability of TPL to the gas sellers in the proportions 70% and
        30% respectively. On the sale of the Groups interest in TPL to ETOL,
        the Company received the benefit of a counter indemnity from ETOL and
        a guarantee from Enron Corp. in respect of the Companys 30% guarantee
        commitment to the gas sellers. As mentioned above, Enron Corp. has sought
        Chapter 11 bankruptcy protection in the USA. The present value of this
        commitment is estimated at £285m. The subsidiaries from which the
        Company has indemnities are currently operating. The numbers quoted above
        are current estimates of the Companys maximum potential liability.
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Contents to the Accounts

notes relating to the accounts

|40 Commitments and contingent
        liabilities (continued)
      In connection with the disposal of the
        Groups Chlor-Chemicals business to Ineos Chlor, Ineos Chlor has
        made a £65 million claim against the Group relating to expenditure
        allegedly required in relation to the Runcorn site, which the Group is
        disputing. As yet, legal proceedings have not been commenced by Ineos
        Chlor but it is possible that they will be in the near future.
      Ineos Chlor has also approached the UK
        Department of Trade and Industry to seek Regional Selective Assistance
        for certain capital projects and is also seeking financial support from
        its parent company and the Group. ICI has received reports that Ineos
        Chlor may seek to close part or all of its business if this financial
        support is not forthcoming. If such a closure was to occur, a number of
        Chlor-Chemicals contracts in the Groups name which have not yet
        been novated to Ineos Chlor and certain environmental liabilities could
        revert to the Group or be accelerated.
      In connection with the sale of the Chlor-Chemicals
        business, the Group agreed to provide or guarantee up to £100m of
        future financing to Ineos Chlor. These facilities were available at market
        related rates, for 5 years and may, if necessary, be extended for a further
        2 years. As at 31 December 2002 Ineos Chlor had borrowed £70 million
        from the Company under these facilities. In addition the book value of
        the PIK notes which the Group received from Ineos Chlor as part of the
        consideration for the sale was £29 million at 31 December 2002.
        Whilst the Group has not waived Ineos Chlors obligations in respect
        of the loan facility or PIK notes, discussions to date with Ineos Chlor |  | indicate that some uncertainty exists
        as to the extent to which and period over which these amounts will be
        recovered. As a result, as mentioned in note 3(g) on page 58 the Group
        has provided for these amounts.
      The loan facilities together with Ineos
        Chlors obligation to assume various Chlor-Chemicals contracts are
        secured in favour of the Group. While any of these liabilities remain
        outstanding, the Group has certain rights under a shareholders agreement
        including, in the event of an Ineos Chlor default, the right, for no consideration,
        to take control of Ineos Chlor if the Group judges that it is in its best
        interests to do so. The Groups 15% shareholding in Ineos Chlor Limited,
        is subject to put and call options in certain circumstances.
      The only significant take-or-pay contract
        entered into by subsidiaries is the purchase of electric power, which
        commenced in the second quarter of 1998, for 15 years. The present value
        of this commitment at the year end is estimated at £162m.
      The ultimate outcome of the matters described
        above is subject to many uncertainties, including future events and the
        uncertainties inherent in litigation. The Group has made provision in
        its financial statements for such matters to the extent losses are presently
        considered probable and estimable. However, these matters involve substantial
        sums, and an unfavourable outcome of one or more of these matters could
        have a material effect on the Groups results of operations, liquidity
        and financial position.
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|41 Related
        party transactions
      The following information is provided
        in accordance with FRS No. 8  Related Party Transactions, as being
        material transactions with related parties during 2002.
      Related party: Huntsman International
        Holdings LLC (HIH), disclosed as a principal associate during the year.
Transactions:
      a)   Sales of
        naphtha and condensate to HIH amounted to £127m (2001 £152m;
        2000 £201m).
        b)   Purchase of ethylene
          and titanium dioxide from HIH amounted to £149m (2001 £177m;
          2000 £153m).
        c)   Amounts payable
          by the Group relating to the above transactions at year end amounted
          to £2m (2001 debtor £1m; 2000 debtor £1m).
          Related party: IC Insurance Ltd and its
        subsidiaries, disclosed as a principal associate on page 75.
      Transactions:
      a)   Insurance claims settled by IC Insurance
            Ltd with ICI amounted to £nil (2001 £nil; 2000 £0.2m).
        b)   Funds on deposit with ICI Finance
            PLC amounted to £10m (2001 £10m; 2000 £10m). |  | Related party: Irish Fertilizer Industries
        Ltd, an equity accounted associate in Ireland, which went into liquidation
        during the year.
      Transactions: Loans totalling £5.6m
        (2001 £5m; 2000 £5m) have been provided to the associate by
        ICI. The maximum amount outstanding during 2002 was £5.6m. Interest
        is payable at a rate of 72.37 basis points above the prevailing 2 year
        fixed rate.
      ICI has also provided the associate with
        a revolving credit facility under which £5.6m (2001 £3.1m;
        2000 £nil) has been borrowed. The maximum amount outstanding during
        2002 was £5.6m. Interest is payable at a rate of 150 basis points
        above the prevailing 1 month Euro LIBOR rate.
      The loans to the company have been written
        off during 2002 (see Note 3, footnote (c)).
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106ICI ANNUAL REPORT AND ACCOUNTS AND FORM 20-F 2002

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Contents to the Accounts

|42   Differences
      between UK and US accounting principlesThe accompanying Group financial statements included in this report
      are prepared in accordance with United Kingdom Generally Accepted Accounting
      Principles (UK GAAP). The significant differences between UK GAAP and US
      Generally Accepted Accounting Principles (US GAAP) which affect the Groups
      net income and shareholders equity are set out below:(a)  Accounting for pension costs 
      There are five significant differences between UK GAAP under SSAP 24 and
      US GAAP in accounting for pension costs: 
      (i) SFAS No. 87Employers
      Accounting for Pensions, requires that
      pension plan assets are valued by reference to their fair or market related
      values, whereas UK GAAP permits an alternative measurement of assets, which,
      in the case of the main UK retirement plans, is on the basis of the discounted
      present value of expected future income streams from the pension plan assets.(ii) SFAS No. 87 requires measurements of plan assets and obligations to
      be made as at the date of financial statements or a date not more than three
      months prior to that date. Under UK GAAP, calculations may be based on the
      results of the latest actuarial valuation. 
      (iii) SFAS No. 87 mandates a particular actuarial method  the projected
      unit credit method  and requires that each significant assumption
      necessary to determine annual pension cost reflects best estimates solely
      with regard to that individual assumption. UK GAAP does not mandate a particular
      method, but requires that the method and assumptions, taken as a whole,
      should be compatible and lead to the actuarys best estimate of the
      cost of providing the benefits promised. 
      (iv) Under SFAS No. 87 a negative pension cost may arise where a significant
      unrecognised net asset or gain exists at the time of implementation. This
      is required to be amortised on a straight-line basis over the average remaining
      service period of employees. Under UK GAAP, the Groups policy is to
      not recognise pension credits in its financial statements unless a refund
      of, or reduction in, contributions is likely. 
      (v) SFAS No. 88Employers
      Accounting for Settlements and Curtailments of Defined Benefit Pension Plans
      and for Termination Benefits,requires
      immediate recognition of previously unrecognised gains or losses when certain
      events meeting the definition of a plan settlement or curtailment occur.
      Under UK GAAP, such gains or losses are recognised over the expected service
      life of the remaining employees.(b) Purchase accounting adjustments, including the amortisation
      and impairment of goodwill and intangiblesIn the Groups financial statements, prepared in accordance with
      UK GAAP, goodwill arising on acquisitions accounted for under the purchase
      method after 1 January 1998 is capitalised and amortised. Prior to that
      date such goodwill arising on acquisitions by the Group was and remains
      eliminated against retained earnings. Values were not placed on intangible
      assets. Additionally, UK GAAP requires that on subsequent disposal or closure
      of a previously acquired asset, any goodwill previously taken directly to
      shareholders equity is then charged in the income statement against
      the income or loss on disposal or closure. |  | Prior to the
      adoption of SFAS No. 142Goodwill
      and other Intangible Assets,on 1 January
      2002, under US GAAP all goodwill was capitalised and amortised through charges
      against income over its estimated life not exceeding 40 years. Also, under
      US GAAP, it was normal practice to ascribe fair values to identifiable intangibles
      and for the purpose of the adjustments to US GAAP, included in the tables
      below, identifiable intangible assets of the Group were amortised to income
      over the lower of their estimated lives or 40 years. Provision under US
      GAAP was made where there was a permanent impairment to the carrying value
      of capitalised goodwill and intangible assets, based on a projection of
      future undiscounted cash flows. 
      The Group adopted the provisions of SFAS No. 142 from 1 January 2002. The
      standard requires that intangible assets with finite lives be amortised
      over their estimated useful lives. Intangible assets with indefinite useful
      lives are tested for impairment annually in lieu of being amortised. Goodwill
      is no longer amortised on a straight-line basis over its estimated useful
      life but instead is tested for impairment annually and whenever indicators
      of impairment arise (see section (l) below).(c) Capitalisation of interest 
      There is no requirement in the UK to capitalise interest and the Group does
      not capitalise interest in its Group financial statements. Under US GAAP,
      SFAS No. 34 Capitalization of Interest Costrequires interest incurred
      as part of the cost of constructing fixed assets to be capitalised and amortised
      over the life of the asset. (d) Derivative instruments and hedging activitiesIn June 1998 the Financial Accounting Standards Board (FASB) issued SFAS
      No. 133,Accounting for Derivative Instruments and Certain Hedging Activities.In June 2000 the FASB issued SFAS No.
      138,Accounting for Certain Derivative Instruments and Certain Hedging
      Activities, an Amendment of SFAS No. 133.SFAS No. 133 and SFAS No.
      138 require that all derivative instruments be recorded on the balance sheet
      at their respective fair values. SFAS No. 133 and SFAS No. 138 are effective
      for all fiscal quarters of all fiscal years beginning after 30 June 2000;
      the Group adopted SFAS No. 133 and SFAS No. 138 on 1 January 2001. In accordance
      with the transition provisions of SFAS No.133, the Group recorded, at 1
      January 2001, a net-of-tax cumulative-effect-type increase of £4m
      in accumulated other comprehensive income within shareholdersequity
      to recognise at fair value all derivatives that were previously designated
      as cash flow hedging instruments. A fair value adjustment increased debt
      by £35m which was offset by a corresponding amount to record derivatives
      previously designated as fair value hedging instruments. All of the transition
      adjustment that was recorded in accumulated other comprehensive income has
      been reclassified into earnings as of 31 December 2001. The fair value adjustment
      to debt is being amortised over the period of the debt in accordance with
      the transitional rules. Upon adoption, the Groups management decided
      not to designate any of its derivative instruments as hedges for US GAAP
      accounting purposes. Derivatives previously designated as cash flow and
      fair value hedges are now marked to market. Consequently, the Groups
      earnings under US GAAP may be more volatile because of the effect of derivative
      instruments. Under US GAAP, the forward contracts to purchase the Companys
      Ordinary Shares by the employee share trust in order to hedge obligations
      in respect of options issued under certain employee share option schemes,
      are recognised in the balance sheet at fair value, with changes in the fair
      value recognised in net income.
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notes relating to the accounts

|42   Differences
        between UK and US accounting principles (continued) (e) Restructuring costsUnder UK GAAP, provisions are made for restructuring costs once a detailed
        formal plan is in place and valid expectations have been raised in those
        affected that the restructuring will be carried out. Provision is made
        for voluntary redundancy payments to the extent that it is expected that
        volunteers will come forward. US GAAP requires a number of specific criteria
        be met before restructuring costs can be recognised as an expense. Among
        these criteria is the requirement that all significant actions arising
        from the restructuring plan and their completion dates must be identified
        by the balance sheet date. Under US GAAP voluntary severance benefits
        are accrued when the terms are accepted by the individual employee. Also,
        to the extent restructuring costs are related to the activities of the
        acquired company, US GAAP allows them to be recognised as a liability
        upon acquisition, provided certain specific criteria are met, whereas
        UK GAAP does not. Accordingly, timing differences arise between the UK
        GAAP and US GAAP recognition of such costs. SFAS No. 146 will be adopted
        from 1 January 2003 (see section (m) below).(f) Foreign exchangeUnder UK GAAP, on the sale of a foreign enterprise
        cumulative foreign exchange differences within reserves are not considered
        in arriving at a gain or loss on disposal. Under US GAAP, on the sale
        of a foreign enterprise the cumulative foreign currency differences within
        reserves are taken to net income in arriving at the gain or loss on disposal.(g) Discontinued operationsPrior to the adoption of SFAS No. 144 Accounting
        for the Impairment or Disposal of Long Lived Assets, as described
        below, the criteria for treatment of a disposal as a discontinued operation
        under US GAAP was different from the criteria under UK GAAP. A description
        of the UK GAAP criteria and a list of businesses which have been treated
        as discontinued operations under UK GAAP is included in note 1. No businesses
        met the criteria for discontinued operations under US GAAP. On 1 January
        2002 the Group adopted SFAS No. 144. SFAS No. 144 requires the disposal
        of a component of an enterprise meeting certain conditions, and which
        comprises operations and cash flows that can be clearly distinguished,
        operationally and for financial reporting purposes, from the rest of the
        entity, be disclosed as a discontinued operation. Under US GAAP, the Synetix
        disposal meets these conditions and, therefore, Synetix is classified
        as a discontinued operation. Accordingly, under US GAAP, the results of
        the operations and the gain on the disposal of Synetix are classified
        within discontinued operations. Prior period results have been restated.
        Under US GAAP, the gain on sale in 2002 amounted to £107m and Synetix
        sales were £121m, £143m and £125m for 2002, 2001 and
        2000 respectively. Additionally, UK GAAP sets out that for an operation
        to be treated as discontinued its disposal should have a material effect
        on the nature and focus of a reporting entitys operations and represent a material reduction
        in operating facilities. The Synetix disposal does not meet these requirements
        and has been classified as continuing under UK GAAP.In 2000, the Group recorded the disposal of its
        Chlor-Chemicals business. The disposal, for UK financial reporting purposes,
        was classified as a discontinued operation. However, under US GAAP Staff
        Accounting Bulletin (SAB) Topic 5E, due principally to the continuing
        15% equity interest of the Group in the disposed operations and a commitment
        by the Group to provide additional funding to finance the Ineos-Chlor
        business, the entity should not be deconsolidated. US GAAP accounting
        for the Chlor-Chemicals business may therefore differ from that under
        UK GAAP and may involve applying an equity |  | method of accounting
      for any future losses that may arise up to the full amount of the Groups
      investment and committed funding. The approximate gross assets and gross
      liabilities of Chlor-Chemicals are £155m and £155m respectively
      under UK GAAP at 31 December 2002.
      In 2002, the Group entered into an agreement to dispose of its investment
      in Notes and equity of Huntsman International Holdings LLC (HIH) to the
      same counterparty, for completion by 15 May 2003. A substantial deposit
      was received on the sale of the Notes (£109m), but none in respect
      of the equity which is therefore regarded as an option for US GAAP purposes.
      The sale of the HIH Notes is at a loss to the Group, while the equity transaction,
      if consummated under the agreed terms, will result in a gain in excess of
      the loss on the HIH Notes. The Group believes it is highly likely that both
      transactions will be completed and, accordingly, under UK GAAP, the Group
      has not recognised the loss on the HIH Notes, of approximately £40m
      nor the estimated net overall gain of approximately £55m and has discontinued
      the application of the equity method of accounting for its investment in
      HIH to reflect the change in economic benefits. Further explanation of the
      accounting for this complex transaction under UK GAAP is given in Note 17.Under US GAAP, the Notes transaction and the potential
      equity transaction have been accounted for as separate transactions since
      they are not interdependent. Accordingly, under US GAAP, a loss has been
      recognised on the sale of the HIH Notes (approximately £40m), and
      the gain on the equity transaction (approximately £95m) will be recognised
      when it occurs. Additionally, under US GAAP, the Group has continued to
      account for its equity investment in HIH under the equity method of accounting,
      and therefore has continued to recognise its proportionate share of HIHs
      operating results. The equity accounted results from 18 June 2002 (a pre-tax
      loss of £10m) have been included in the US GAAP net income reconciliation.(h) Employee share trust arrangements
      An employee share trust has been established in order to hedge obligations
      in respect of options issued under certain employee share option schemes.
      Under UK GAAP, the Companys Ordinary Shares held by the employee share
      trust are included at the lower of cost and estimated net realisable value
      in fixed asset investments. Under US GAAP, such shares are treated as treasury
      stock and included in shareholders equity at historic cost. (i) Ordinary dividends  
      Under UK GAAP, the proposed dividends on Ordinary Shares, as recommended
      by the directors, are deducted from shareholders equity and shown
      as a liability in the balance sheet at the end of the period to which they
      relate. Under US GAAP, such dividends are only deducted from shareholders'
      equity upon declaration of the dividend.(j) Taxation
      The Group adopted FRS No. 19 Deferred Tax in 2002 for UK GAAP purposes.
      Consequently, the consolidated financial statements as of 31 December 2001
      and 2000, and the three year period ended 31 December 2002 have been restated
      and disclosures have been modified to reflect retroactively the impact of
      the adoption of FRS 19 on such financial statements as required by UK GAAP.
      FRS 19 requires that full provision for deferred tax is recognised in the
      financial statements. The adoption of FRS 19 has eliminated most of the
      differences that previously existed between UK GAAP and US GAAP. As a result,
      the adjustment for taxation now primarily relates to the tax effect of other
      US GAAP adjustments.
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|42   Differences
      between UK and US accounting principles (continued) (k) Share compensation expense In the Groups
      consolidated financial statements prepared under UK GAAP, no compensation
      expense is recognised in respect of the Groups share option schemes.
      Under US GAAP, compensation cost has been recognised for all options, including
      arrangements under the Groups UK Sharesave scheme. The cost is calculated
      as the difference between the option price and the market price at the end
      of the reporting period for all option plans including performance related
      criteria. In the Groups UK Sharesave scheme, the cost is calculated
      as the difference between the option price and the market price at date
      of grant. The cost is amortised over the period from the date the options
      are granted to the date they are first exercisable, that is, the vesting
      date. Following the issue of EITF 0023, IssuesRelated to the Accounting for Share Compensationunder
      APB Opinion No. 25 and FASB Interpretation No. 44, the cost of the 2002
      grant under the Groups UK Sharesave scheme is treated in accordance
      with all other plans. At 31 December 2002, the Group had a number of share-based
      compensation plans, which are described in note 23 of the Groups financial
      statements. The Group recognises compensation costs for US GAAP purposes
      in accordance with the requirements of APB Opinion No. 25. Had compensation
      costs for the Groups share option plans been determined based on the
      fair value at the grant date for awards under those plans consistent with
      the method of SFAS No. 123Accounting
      for Stock-Based Compensation,the Groups
      net income of £9m in 2002 would have been reduced to £3m. The
      basic earnings per share as reported of 0.8p would be 0.3p on a proforma
      basis (2001 restated 1.5p would be 0.5p; 2000 no material difference).(l) New US Accounting Standards implemented in
      the period
      SFAS No. 142 Goodwill and Intangible AssetsIn June 2001, the FASB issued SFAS No. 142,Goodwill
      and Intangible Assets,which superseded APB 17, Intangible Assets.
      SFAS No. 142 eliminated the previous requirement to amortise goodwill and
      intangible assets. Upon adoption of SFAS No.142 an impairment test must
      be carried out on all intangible assets with indefinite useful lives and
      goodwill. The test for intangible assets with indefinite useful lives and
      of goodwill must be carried out annually. In addition, the useful economic
      lives of definite life intangibles are to be reviewed. Any impairment loss
      identified on the date of adoption of SFAS No. 142 is accounted for as a
      cumulative effect of change in accounting principle.The Group adopted the requirements of SFAS No. 142
      on 1 January 2002, when the Group had unamortised goodwill of £3,757m
      and intangible assets with a gross carrying amount of £300m less accumulated
      amortisation of £135m, under US GAAP. The definite life intangible
      assets are being amortised over a period of 10 years (amortisation expense
      for the period £30m). Amortisation of intangible assets with indefinite
      useful lives and goodwill ceased from 1 January 2002, resulting in an increase
      in US GAAP net income of £131m (basic earnings per Ordinary Share
      11.8p, diluted earnings per Ordinary Share 11.7p). If the standard had been
      applied in the year ended 31 December 2001 and 2000 US GAAP net income would
      have been £134m (EPS 15.4p higher  basic and diluted) higher
      (2000 £126m, and 14.5p higherbasic and diluted).The goodwill balance under US GAAP at 31 December
      2002 amounted to £3,507m (2001: £3,757m). The segmental analysis
      of this goodwill, based on the Groups defined segments is as follows:
      National Starch £1,967m (2001: £2,038m), Quest £742m (2001:
      £770m), Performance Specialties £256m (2001: £280m), Paints
      £523m (2001: £662m) and Regional and Industrial £19m (2001:
      £7m). |  | The significant
      movements in the period include the impairment of the goodwill relating
      to Paints Latin America (£122m) as described below, the disposal of
      Synetix and the related goodwill (£13m) and exchange.In the period to 31 December 2002, an impairment
      of £122m was recognised, representing the entire goodwill in the Paints
      Latin America reporting unit. Under UK GAAP, the majority of the goodwill
      related to acquisitions prior to 1998 and has been eliminated against reserves.
      This impairment resulted from the current difficult economic environment
      in the region and has been disclosed in the US GAAP reconciliation under
      the heading Purchase accounting adjustment.The fair value of the reporting unit, as required
      under the first stage of impairment in SFAS No.142, was calculated using
      a present value technique. This involved discounting the future cash flows
      of the reporting unit at an appropriate risk adjusted discount rate for
      the region. In calculating the fair value, significant management judgement
      was applied for example, the quantification of the underlying cash flows
      of the reporting unit including terminal growth values and the selection
      of an appropriate discount rate. As the fair value of the reporting unit
      was less than its book value, a second stage was performed which compared
      the fair value of the units goodwill to the book value of its goodwill.
      Fair value procedures similar to those used in a business combination were
      used in this stage.SFAS No. 144 Accounting for the Impairment or
      Disposal of Long-Lived Assets
      In August 2001, the FASB issued SFAS No. 144,Accounting for the Impairment
      or Disposal of Long-Lived Assets. SFAS No. 144 requires long-lived assets
      to be reviewed for impairment whenever events or changes in circumstances
      indicate that the carrying amount of an asset may not be recoverable. Recoverability
      is measured by a comparison of the carrying amount to future net cash flows
      expected to be generated by the asset. SFAS No. 144 requires companies to
      report separately discontinued operations and extends that reporting to
      a component of an entity that either has been disposed of or is classified
      as held for sale.The Group was required to adopt the provisions of
      SFAS No. 144 from 1 January 2002 but there were no events or changes in
      circumstances which indicated that the carrying values of assets might not
      be recoverable nor components of the Groups
      operations disposed of (by sale, abandonment, or in a distribution to owners)
      or classified as held for sale which required to be disclosed except as
      disclosed in section (g).EITF 01-09 Accounting for Consideration Given by a Vendor to a Customer
      (Including a Reseller of the Vendor s Products)EITF 0109
      was issued in November 2001 by the Emerging Issues Task Force (EITF). The
      pronouncement codifies and reconciles the consensus reached on EITF 00-14,
      00-22 and 00-25, which addresses the recognition, measurement and profit
      and loss account classification of certain selling expenses. The adoption
      of this issue has resulted in the reclassification of certain selling expenses
      including sales incentives, slotting fees, buydowns and distributor payments
      from cost of sales and administrative expenses to a reduction in sales.
      The Group has calculated that the adoption of EITF 01-09 in the year ended
      31 December 2002 decreased sales and cost of sales/administrative expenses
      as reported under UK GAAP by £55m (2001 £50m, 2000 £52m).
      The adoption of EITF 01-09 had no effect on trading profit.
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notes relating to the accounts

|42   Differences
      between UK and US accounting principles (continued)(m)  New
      US Accounting Standards and pronouncements not yet effectiveIn June 2001, the FASB issued SFAS No. 143, Accounting
      for Asset Retirement Obligations. SFAS No. 143 requires the Company
      to record the fair value of an asset retirement obligation as a liability
      in the period in which it incurs a legal obligation associated with the
      retirement of tangible long-lived assets that result from the acquisition,
      construction, development and/or normal use of the assets. SFAS No. 143
      is applicable for 2003. The Group has not yet completed evaluating the effect
      of this standard on its financial statements.SFAS No. 146 Accounting for the Costs Associated
      with Exit or Disposal Activities,requires
      that a liability for a cost associated with an exit or disposal activity
      should be measured at fair value and recorded when it meets the definition
      of a liability in FASB Concepts Statement No.6 - Elements of Financial Statements.
      SFAS No. 146 superseded EITF 94-3 Liability Recognition for Certain Employee
      Termination Benefits and Other Costs to Exit an Activity (Including Certain
      Costs Incurred in a Restructuring) which required recognition of a liability
      for costs associated with an exit or disposal activity initiated after 31
      December 2002. Restatement of prior periods is not required. Since SFAS
      No. 146 applies to future activities which may not yet have been envisaged,
      the impact of the application of SFAS No.146 cannot be determined in advance.
      FASB Interpretation No. 45,Guarantors Accounting and Disclosure
      Requirements for Guarantees, Including Indirect Guarantees of Indebtedness
      of Others was issued in November 2002. This interpretation addresses
      the disclosure to be made by a guarantor in its financial statements about
      its obligation under guarantees. FIN No. 45 also requires the guarantor
      to recognise a liability for the non-contingent component of the guarantee,
      that is the obligation to stand ready to perform in the event that specified
      triggering events or conditions occur. The initial measurement of this liability
      is the fair value of the guarantee at inception. The Group has adopted the
      disclosure requirements of FIN No. 45 and will apply the recognition and
      measurement provisions for all guarantees entered into or modified after
      31 December 2002. There are a number of contracts relating to businesses
      which we exited as part of our disposal |  | programme which
      have not been novated to the purchasers of these businesses. Note 40 discloses
      the nature and circumstances of the material guarantees together with their
      present value. The maximum potential amount of future undiscounted payments
      under all ICIs guarantees as defined by FIN No. 45, including those
      disclosed in Note 40, with terms ranging between 1 to 15 years, amounted
      to £1,217m at 31 December 2002. After taking into account various
      mitigating and recourse factors, mainly the ability to procure products
      from other sources and to onward sell the various products and services,
      the maximum potential amount of future undiscounted payments is reduced
      to £311m.In December 2002, the FASB issued SFAS No. 148 Accounting
      for Stock Based Compensation  Transition and Disclosure  an
      amendment of FASB No. 123.SFAS No. 148 permits two additional transition
      methods for entities that adopt the fair value based method of accounting
      for stock-based employee compensation. The statement also requires new disclosures
      about the ramp-up effect of stock-based employee compensation on reported
      results and that those effects be disclosed more prominently by specifying
      the form, content, and location of those disclosures. The transition guidance
      and annual disclosure provisions of SFAS No. 148 are effective fiscal years
      ending after 15 December 2002, with earlier application permitted in certain
      circumstances. The interim disclosure provisions are effective for financial
      reports containing financial statements for interim periods beginning after
      15 December 2002. The Group has not decided yet if it will adopt either
      of the transition method alternatives of SFAS No.148.FASB Interpretation No. 46,Consolidation of
      Variable Interest Entities,was issued in January 2003. The interpretation
      addresses consolidation by business enterprises of variable interest entities
      and requires such entities to be consolidated, even if it is not controlled
      as a subsidiary, if the equity investor is subject to a majority of the
      risk of loss from the variable interest entitys
      activities. The consolidation requirements of Interpretation No. 46 apply
      immediately to variable interest entities created after 31 January 2003
      and apply to older entities from 15 June 2003. The Group does not expect
      the impact of FIN No. 46 to have an impact on its financial statements.
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42 Differences
between UK and US accounting principles (continued)

The following is a summary of the material
    adjustments to net income and shareholders equity
    which would have been required if US GAAP had been applied instead of UK
GAAP:

|                                                                                        | 2002  |   | 2001                      |   | 2000                      |  
|--------------------------------------------------------------------------------------- | ----- | - | ------------------------- | - | ------------------------- | -
|                                                                                        |       |   | (as restated
    note 1) |   | (as restated
    note 1) |  
|                                                                                        | £m    |   | £m                        |   | £m                        |  
|                                                                                        |       |   |                           |   |                           |  
|Net income (loss) after exceptional items  UK GAAP                                     | 179   |   | 80                        |   | (207                      | )
|                                                                                        |       |   |                           |   |                           |  
|Continuing operations                                                                   | 166   |   | 91                        |   | 267                       |  
|                                                                                        |       |   |                           |   |                           |  
|Discontinued operations                                                                 | 13    |   | (11                       | ) | (474                      | )
|                                                                                        |       |   |                           |   |                           |  
|Adjustments to conform with US GAAP                                                     |       |   |                           |   |                           |  
|                                                                                        |       |   |                           |   |                           |  
|Pension expense                                                                         | (14   | ) | (37                       | ) | (108                      | )
|                                                                                        |       |   |                           |   |                           |  
|Purchase accounting adjustments                                                         |       |   |                           |   |                           |  
|                                                                                        |       |   |                           |   |                           |  
|Amortisation/impairment of goodwill and amortisation of intangibles                     | (117  | ) | (127                      | ) | (123                      | )
|                                                                                        |       |   |                           |   |                           |  
|Disposals and other adjustments                                                         | 12    |   |                          |   | 6                         |  
|                                                                                        |       |   |                           |   |                           |  
|Other disposal adjustments                                                              | (43   | ) | 10                        |   | (9                        | )
|                                                                                        |       |   |                           |   |                           |  
|Employee share trust arrangements                                                       |      |   | 22                        |   | 2                         |  
|                                                                                        |       |   |                           |   |                           |  
|Capitalisation of interest less amortisation and disposals                              | (5    | ) | (2                        | ) | (18                       | )
|                                                                                        |       |   |                           |   |                           |  
|Derivative instruments and hedging activities                                           | (41   | ) | 49                        |   | (8                        | )
|                                                                                        |       |   |                           |   |                           |  
|Restructuring costs                                                                     | (6    | ) | 5                         |   | (19                       | )
|                                                                                        |       |   |                           |   |                           |  
|Foreign exchange                                                                        |      |   |                          |   | (14                       | )
|                                                                                        |       |   |                           |   |                           |  
|Share compensation expense                                                              | (3    | ) | 1                         |   | (5                        | )
|                                                                                        |       |   |                           |   |                           |  
|Others                                                                                  | (2    | ) | 2                         |   | 2                         |  
|                                                                                        |       |   |                           |   |                           |  
|Tax effect of US GAAP adjustments                                                       | 49    |   | 10                        |   | 45                        |  
|                                                                                        |       |   |                           |   |                           |  
|Total US GAAP adjustments                                                               | (170  | ) | (67                       | ) | (249                      | )
|                                                                                        |       |   |                           |   |                           |  
|Net income (loss)  US GAAP                                                             | 9     |   | 13                        |   | (456                      | )
|                                                                                        |       |   |                           |   |                           |  
|Continuing operations                                                                  | (107  | ) | (4                        | ) | (467                      | )
|                                                                                        |       |   |                           |   |                           |  
|Discontinued operations                                                                | 116   |   | 17                        |   | 11                        |  
|                                                                                        |       |   |                           |   |                           |  
|                                                                                        | pence |   | pence                     |   | pence                     |  
|                                                                                        |       |   |                           |   |                           |  
|Basic and diluted net earnings (net loss) per Ordinary Share in accordance with US GAAP | 0.8   |   | 1.5                       |   | (52.5                     | )
|                                                                                        |       |   |                           |   |                           |  
|Continuing operations                                                                  | (9.6  | ) | (0.5                      | ) | (53.8                     | )
|                                                                                        |       |   |                           |   |                           |  
|Discontinued operations                                                                | 10.4  |   | 2.0                       |   | 1.3                       |  
|                                                                                        |       |   |                           |   |                           |  

 2001 and 2000 have been restated to classify Synetix as a discontinued operation under US GAAP.

The effect on earnings per £1 Ordinary
  Share of the exercise of all outstanding options (note 23) would not be material.

For US GAAP, the segmentation follows that of UK GAAP with the exception of adjustments
made between Continuing and Discontinued operations so that the segmentation
under US GAAP satisfies APB 30.

For the purposes of segmental disclosures under UK GAAP, reference should be
made to page 59 where there is a description of each class of business.



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notes relating to the accounts

42Differences between UK and US accounting principles (continued)

|                                                                            | Balance sheet
   line item |  | 2002  |   | 2001
   (as restated
 note 1) |  
|--------------------------------------------------------------------------- | -------------------------- |  | ----- | - | ------------------------------ | -
|                                                                            | note*                      |  | £m    |   | £m                             |  
|                                                                            |                            |  |       |   |                                |  
|Shareholders funds  equity, as shown in the Group Balance sheet  UK GAAP |                            |  | 499   |   | (364                           | )
|                                                                            |                            |  |       |   |                                |  
|Adjustments to conform with US GAAP                                         |                            |  |       |   |                                |  
|                                                                            |                            |  |       |   |                                |  
|Pension costs                                                               | 2                          |  | (525  | ) | (510                           | )
|                                                                            |                            |  |       |   |                                |  
|Pension costs                                                               | 4                          |  | (425  | ) | (26                            | )
|                                                                            |                            |  |       |   |                                |  
|Purchase accounting adjustments, including goodwill and intangibles         | 1                          |  | 3,109 |   | 3,320                          |  
|                                                                            |                            |  |       |   |                                |  
|Disposal accounting adjustments                                             | 4                          |  | (71   | ) | (28                            | )
|                                                                            |                            |  |       |   |                                |  
|Capitalisation of interest less amortisation and disposals                  | 1                          |  | 36    |   | 43                             |  
|                                                                            |                            |  |       |   |                                |  
|Derivative instruments and hedging activities                               | 2                          |  | (14   | ) | 41                             |  
|                                                                            |                            |  |       |   |                                |  
|Restructuring provision                                                     | 4                          |  | 1     |   | 7                              |  
|                                                                            |                            |  |       |   |                                |  
|Employee share trust arrangements                                           | 1                          |  | (30   | ) | (30                            | )
|                                                                            |                            |  |       |   |                                |  
|Ordinary dividends                                                          | 3                          |  | 52    |   | 72                             |  
|                                                                            |                            |  |       |   |                                |  
|Other                                                                       | 3                          |  | (6    | ) | (4                             | )
|                                                                            |                            |  |       |   |                                |  
|Deferred taxation and tax effects of US GAAP adjustments                    | 4                          |  | (482  | ) | (569                           | )
|                                                                            |                            |  |       |   |                                |  
|Deferred taxation and tax effects of US GAAP adjustments                    | 2                          |  | 661   |   | 616                            |  
|                                                                            |                            |  |       |   |                                |  
|Total US GAAP adjustments                                                   |                            |  | 2,306 |   | 2,932                          |  
|                                                                            |                            |  |       |   |                                |  
|Shareholders equity in accordance with US GAAP                             |                            |  | 2,805 |   | 2,568                          |  
|                                                                            |                            |  |       |   |                                |  
|                                                                            |                            |  |       |   |                                |  

|* | Relevant balance sheet line items included
        above to facilitate comparison between UK GAAP and US GAAP: 1 Fixed assets;
    2 Debtors; 3 Creditors; 4 Provision for liabilities and charges.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The effect of applying US GAAP to items other
  than those directly affecting net income or shareholders equity is dealt
  with in other notes relating to the accounts. The disclosures required by SFAS
  No. 130Reporting
  Comprehensive Incomehave been made in the
  Groups financial statements in the statement of total recognised
  gains and losses in note 24 and in the disclosure relating to pensions and
  other post-retirement benefits (US GAAP) in the next section of this note.

Pensions and other post-retirement benefits (US GAAP)For the purposes of the disclosure in accordance
  with US GAAP, the pension cost of the major UK retirement plans and of the retirement
  plans of the major non-UK subsidiaries have been presented in the following
  tables, on a Group basis, in accordance with the requirements of SFAS No. 87
  Accounting for Pensions and of SFAS No. 132  Employers
  Disclosures about Pensions and Other Post-Retirement Benefits. The actuarial
  liabilities of these plans comprise a substantial portion of the Group total.

Assumed discount rates and rates of increase in remuneration used in calculating
the projected benefit obligations together with long-term rates of return on
plan assets vary according to the economic conditions of the country in which
the retirement plans are situated. The weighted average rates used in the Groups
major pension plans for SFAS No. 87 purposes in the Group are shown in the table
below, together with the assumptions relating to other post-retirement benefit
plans.

|                                             | Pension benefits |  | Other post-retirement | 
|-------------------------------------------- | ---------------- |  | --------------------- | 
|                                             |                  |  |                       | 
|                                             |                  |  |                       | 
|                                             | 2002             |  | 2001                  | 
|                                             | %                |  | %                     | 
|                                             |                  |  |                       | 
|Discount rate                                | 5.7              |  | 5.9                   | 
|                                             |                  |  |                       | 
|Expected long-term rate of return on assets  | 5.2              |  | 5.9                   | 
|                                             |                  |  |                       | 
|Long-term rate of increase in remuneration   | 3.8              |  | 4.0                   | 
|                                             |                  |  |                       | 
|Initial post-retirement benefits trend rateø |                  |  |                       | 
|                                             |                  |  |                       | 

|  |                                                                                                       
|- | ------------------------------------------------------------------------------------------------------
|ø | Assumed to decrease gradually

          to 5.0% by the year 2008 and remain at that level thereafter.

The net periodic benefit cost for the major retirement plans under SFAS No. 87 and SFAS No. 88, and in respect of other post-retirement benefits SFAS No. 106, comprised:

|                                                          | Pension benefits |   | Other post-retirement benefits |  
|--------------------------------------------------------- | ---------------- | - | ------------------------------ | -
|                                                          |                  |   |                                |  
|                                                          | 2002             |   | 2001                           |  
|                                                          | £m               |   | £m                             |  
|                                                          |                  |   |                                |  
|Components of net periodic benefit cost                   |                  |   |                                |  
|                                                          |                  |   |                                |  
|Service cost                                              | 59               |   | 61                             |  
|                                                          |                  |   |                                |  
|Interest cost                                             | 456              |   | 462                            |  
|                                                          |                  |   |                                |  
|Expected return on plan assets for period                 | (458             | ) | (487                           | )
|                                                          |                  |   |                                |  
|Amortisation of prior service cost                        | 15               |   | 15                             |  
|                                                          |                  |   |                                |  
|Amortisation of transition amount                         | 3                |   | 3                              |  
|                                                          |                  |   |                                |  
|Recognised net actuarial loss                             | 6                |   | 18                             |  
|                                                          |                  |   |                                |  
|Recognised on termination/curtailment/settlement benefits | 28               |   | 49                             |  
|                                                          |                  |   |                                |  
|Net periodic benefit cost                                 | 109              |   | 121                            |  
|                                                          |                  |   |                                |  

The net periodic benefit cost includes £27m
    (2001 £51m) for contractual terminations which are included within
    the relevant UKGAAP
    statutoryheadings.



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42   Differences between UK
  and US accounting principles (continued)

Pensions and other post-retirement benefits
  (continued)
  The funded status of the Groups major post-retirement plans, covering
  both continuing and discontinued operations, under SFAS No. 87 and SFAS No.106
  is as follows:

|                                                     | Pension benefits |   | Other post-retirement
      benefits |  
|---------------------------------------------------- | ---------------- | - | ------------------------------------ | -
|                                                     |                  |   |                                      |  
|                                                     | 2002
      £m    |   | 2001
      £m                        |  
|                                                     |                  |   |                                      |  
|Change in benefit obligations                        |                  |   |                                      |  
|                                                     |                  |   |                                      |  
|Benefit obligation at beginning of year              | 7,970            |   | 8,045                                |  
|                                                     |                  |   |                                      |  
|Service cost                                         | 59               |   | 61                                   |  
|                                                     |                  |   |                                      |  
|Interest cost                                        | 456              |   | 462                                  |  
|                                                     |                  |   |                                      |  
|Participants
      contributions                    | 5                |   | 5                                    |  
|                                                     |                  |   |                                      |  
|Plan amendments                                      |                 |   | 1                                    |  
|                                                     |                  |   |                                      |  
|Actuarial loss
      (gain)                          | (139             | ) | (86                                  | )
|                                                     |                  |   |                                      |  
|Divestitures                                         | (16              | ) | (8                                   | )
|                                                     |                  |   |                                      |  
|Settlements                                          | (60              | ) | (32                                  | )
|                                                     |                  |   |                                      |  
|Termination benefits                                 | 46               |   | 51                                   |  
|                                                     |                  |   |                                      |  
|Exchange                                             | (55              | ) | 6                                    |  
|                                                     |                  |   |                                      |  
|Benefit payments                                     | (518             | ) | (535                                 | )
|                                                     |                  |   |                                      |  
|Benefit obligation at end of year                    | 7,748            |   | 7,970                                |  
|                                                     |                  |   |                                      |  
|Change in plan assets                                |                  |   |                                      |  
|                                                     |                  |   |                                      |  
|Fair value of plan assets at beginning
      of year | 7,569            |   | 8,159                                |  
|                                                     |                  |   |                                      |  
|Actual return
      on plan assets                   | (60              | ) | (162                                 | )
|                                                     |                  |   |                                      |  
|Business combinations                                |                 |   |                                     |  
|                                                     |                  |   |                                      |  
|Divestitures                                         | (9               | ) | (6                                   | )
|                                                     |                  |   |                                      |  
|Settlements                                          | (39              | ) | (27                                  | )
|                                                     |                  |   |                                      |  
|Employer
      s contributions                      | 142              |   | 124                                  |  
|                                                     |                  |   |                                      |  
|Participants
      contributions                    | 5                |   | 5                                    |  
|                                                     |                  |   |                                      |  
|Exchange                                             | (41              | ) | 11                                   |  
|                                                     |                  |   |                                      |  
|Benefit payments                                     | (518             | ) | (535                                 | )
|                                                     |                  |   |                                      |  
|Fair value of plan assets at end of year             | 7,049            |   | 7,569                                |  
|                                                     |                  |   |                                      |  
|Funded status                                        |                  |   |                                      |  
|                                                     |                  |   |                                      |  
|Funded status at end of year                         | (699             | ) | (401                                 | )
|                                                     |                  |   |                                      |  
|Unrecognised
      net actuarial loss (gain)         | 684              |   | 327                                  |  
|                                                     |                  |   |                                      |  
|Unrecognised
      transition amount                 | 24               |   | 35                                   |  
|                                                     |                  |   |                                      |  
|Unrecognised
      prior service cost                | 25               |   | 48                                   |  
|                                                     |                  |   |                                      |  
|Other                                                | 3                |   | (5                                   | )
|                                                     |                  |   |                                      |  
|Net amount recognised                                | 37               |   | 4                                    |  
|                                                     |                  |   |                                      |  
|Prepaid benefit cost                                 | 10               |   | 8                                    |  
|                                                     |                  |   |                                      |  
|Accrued benefit cost                                 | (509             | ) | (197                                 | )
|                                                     |                  |   |                                      |  
|Intangible assets                                    | 30               |   | 45                                   |  
|                                                     |                  |   |                                      |  
|Accumulated other comprehensive income               | 506              |   | 148                                  |  
|                                                     |                  |   |                                      |  
|Net (liability) asset recognised                     | 37               |   | 4                                    |  
|                                                     |                  |   |                                      |  

Plan assets consist primarily of investments
    in UK and overseas equity and fixed interest securities.

The total benefit obligation at the end of
    2002 for the major pension plans where the benefit obligations exceed plan
    assets was £7,636m (2001 £7,622m) and the fair value of the plan assets for such plans
  was £6,948m (2001 £7,237m). The total accumulated benefit obligation at the end of the year for major pension plans with accumulated benefit obligations in excess of plan assets was £7,435m (2001 £7,304m) and the fair value
  of plan assets for such plans was £6,949m (2001 £7,080m).



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notes relating to the accounts

Contents to the Accounts

43Valuation
  and qualifying accounts

|                                                                     | Balance at
      1 January |  | Additions
      charged to
      Cost and
      expenses |  | Deductions |   | Balance at
      31 December | 
|-------------------------------------------------------------------- | -------------------------- |  | -------------------------------------------------------- |  | ---------- | - | ---------------------------- | 
|                                                                     | £m                         |  | £m                                                       |  | £m         |   | £m                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|2000                                                                 |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for stocks                                                 | 43                         |  | 11                                                       |  | (9         | ) | 45                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for doubtful accounts                                      | 80                         |  | 9                                                        |  | (29        | ) | 60                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for investments in participating
      and other interests | 86                         |  |                                                         |  |           |   | 86                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     | 209                        |  | 20                                                       |  | (38        | ) | 191                          | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|2001                                                                 |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for stocks                                                 | 45                         |  | 12                                                       |  | (14        | ) | 43                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for doubtful accounts                                      | 60                         |  | 19                                                       |  | (12        | ) | 67                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for investments in participating
      and other interests | 86                         |  | 22                                                       |  | (84        | ) | 24                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     | 191                        |  | 53                                                       |  | (110       | ) | 134                          | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|2002                                                                 |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for stocks                                                 | 43                         |  | 11                                                       |  | (21        | ) | 33                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for doubtful accounts                                      | 67                         |  | 8                                                        |  | (27        | ) | 48                           | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|Allowance for investments in participating
      and other interests | 24                         |  | 99                                                       |  |           |   | 123                          | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 
|                                                                     | 134                        |  | 118                                                      |  | (48        | ) | 204                          | 
|                                                                     |                            |  |                                                          |  |            |   |                              | 



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Contents to the Accounts

|44 | Subsidiary Undertaking
|-- | ----------------------

ICI Wilmington Inc. (ICI
  Wilmington) is a wholly-owned subsidiary of ICI. ICI has fully and unconditionally
  guaranteed the debt securities of ICI Wilmington.

|45 | Differences between UK and US accounting
      principles: supplementary note
|-- | -----------------------------------------------------------------------------

As described in note 42 (g),
  for purposes of reporting US GAAP information the Group accounts for its 30%
  interest in Huntsman International Holdings LLC (HIH) by the equity method of
  accounting. Summarised consolidated balance sheet and profit and loss information
  of HIH as of 30 September 2002 (as disclosed in the HIH 10-Q for the quarterly
  period ended 30 September 2002) and 31 December 2001 is as follows: current
  assets of $1,201m (31 December 2001: $1,145m) and non-current assets of $3,830m
  (31 December 2001: $3,682m) and current liabilities of $789m (31 December 2001:
  $837m) and non-current liabilities of $3,838m) (31 December 2001: $3,629m).
  For the nine months ending 30 September 2002 HIH reported total revenues of
  $3,368m (full year 2001: $4,575m, full year 2000: $4,448m), gross profit of
  $458m (full year 2001: $585m, full year 2000: $743m) and net loss of $37m (full
  year 2001: net loss of $139m, full year 2000: net income of $82m).

|46 | Post balance sheet event (unaudited)
|-- | ------------------------------------

Employees’ share option schemes and other share based plans

As noted in the fifth paragraph under the above heading in note 23 to the notes relating to the accounts, Imperial Chemical Industries PLC Employee Benefits Trust (the “Trust”) has entered into forward commitments to purchase shares in the Company, which include collateral requirements relating to the prevailing price of shares in the Company.  At 31 December 2002, no collateral deposits had been made; since 31 December 2002, the Group has provided cash collateral.  Under US GAAP, the Group’s obligations under the forward commitments are accounted for in the balance sheet at fair value, with changes in the fair value of the commitments included in net income and shareholders’ equity as they occur.  As of 31 December 2002, shareholders’ equity, as determined under US GAAP, includes cumulative charges, since inception, related to these commitments of £62m.  Based on the share price at 25 March 2003, an additional charge against US GAAP net income of approximately £35m would be required.

Under UK GAAP, charges would be recognised only if the Group concluded that the decline in the value of the underlying share price is other than temporary.  No charges had been taken as of 31 December 2002 in respect of these obligations.  As set out in note 14, the Trust also holds 9.8m shares in the Company which are held on the Group balance sheet at a net book value of £36m. The Group continues to assess on an ongoing basis whether, and the extent to which, the level of the Company’s share price requires charges to be taken against both the forward commitments and the carrying value of the own shares held.

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Contents to the Accounts

principal subsidiary undertakings



|at 31 December 2002                                                                      |                         |                     |           |                                                                                                                                                                                                                                                                         
|---------------------------------------------------------------------------------------- | ----------------------- | ------------------- | --------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                         |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                         | Class of
      capital  | Held by ICI
      % |           | Principal
      activities in 2002                                                                                                                                                                                                                                      
|                                                                                        
|**UNITED KINGDOM**                                                                       |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                        
|ICI Chemicals & Polymers
      LtdEngland                                                | Ordinary                | 100                 |          | Manufacture of surfactants
      and catalysts                                                                                                                                                                                                                          
|                                                                                        
|ICI Finance PLC                                                                          | Ordinary                | 100                 |          | Financial services                                                                                                                                                                                                                                                      
|England                                                                                  |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                        
|Quest International (Fragrances, Flavours,
      Food Ingredients) UK LimitedEngland     | Ordinary                | 100                 |          | Manufacture of flavours, food
      ingredients and fragrances                                                                                                                                                                                                          
|                                                                                        
|CONTINENTAL EUROPE                                                                       |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                        
|Deutsche ICI GmbHGermany                                                                 | Ordinary                | 100                 |          | Manufacture of paints, adhesives
      and oleochemicals                                                                                                                                                                                                                
|                                                                                        
|Quest International Nederland
      BVThe Netherlands                                    | Ordinary                | 100                 |          | Manufacture of flavours and
      food ingredients                                                                                                                                                                                                                      
|                                                                                        
|Unichema Chemie BVThe Netherlands                                                        | Ordinary                | 100                 |          | Manufacture of specialty oleochemicals
      and derivatives                                                                                                                                                                                                            
|                                                                                        
|THE AMERICAS                                                                             |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                        
|ICI American Holdings IncUSA                                                             | Common                  | 100                 |          | Holding company                                                                                                                                                                                                                                                         
|                                                                                        
|The Glidden CompanyUSA                                                                   | Common                  | 100                 |          | Manufacture of paints                                                                                                                                                                                                                                                   
|                                                                                        
|Indopco IncUSA                                                                           | Common                  | 100                 |          | Manufacture of adhesives,
      industrial starches, electronicmaterials,
      food ingredients and flavourings, fragrances,oleochemicals, resins and specialty chemicals                                                                                              
|                                                                                        
|ICI Canada IncCanada                                                                     | Common
      Preference | 100
      100       | 
       | Manufacture of paints; merchanting
      of ICI and
      other products                                                                                                                                                                                                
|                                                                                        
|Tintas Coral LtdaBrazil                                                                  | Ordinary                | 100                 |          | Manufacture of paints                                                                                                                                                                                                                                                   
|                                                                                        
|ASIA PACIFIC                                                                             |                         |                     |           |                                                                                                                                                                                                                                                                         
|                                                                                        
|ICI India LtdIndia
      (Accounting date 31 March;
         reporting date 31 December) | Equity*                 | 51                  |           | Manufacture of paints, surfactants,
      adhesives,industrial explosives,
      rubber chemicals and nitrocellulose                                                                                                                                                    
|                                                                                        
|ICI Pakistan LtdPakistan                                                                 | Ordinary*               | 76                  |          | Manufacture of polyester staple
      fibre, soda ash, paints, specialty chemicals, formulation of agrochemicals
      and polyurethanes; marketing of toll manufactured and imported pharmaceuticals
      and animal health products; merchanting of general chemicals
|                                                                                        
|Pakistan PTA LtdPakistan                                                                 | Ordinary*               | 88                  |          | Manufacture of pure terephthalic
      acid                                                                                                                                                                                                                             
|                                                                                        
|Nippon NSC LtdJapan                                                                      | Common                  | 100                 |          | Manufacture of adhesives and
      specialty synthetic 
      polymers; merchanting of starch products                                                                                                                                                                  
|                                                                                        
|National Starch and Chemical
      (Thailand) LtdThailand                                | Ordinary                | 100                 |          | Manufacture of food and industrial
      starches                                                                                                                                                                                                                       
|                                                                                        
|                                                                                         |                         |                     |           |                                                                                                                                                                                                                                                                         
|*ListedHeld
      by subsidiaries                                                       |                         |                     |           |                                                                                                                                                                                                                                                                         

The country of principal operations and registration or incorporation is stated below each company. The accounting dates of principal subsidiary undertakings are 31 December unless otherwise stated.

The companies listed above are those whose results, in the opinion of the Directors, principally affected the profits or assets of the Group. A full list of subsidiary and associated undertakings at 31 December will be
annexed to the next annual return of the Company to be filed with the Registrar of Companies.



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|ITEM 19 
      EXHIBITS
|------------------------
|                        
|1.1                     
|                        
|4.1                     
|                        
|4.2                     
|                        
|4.3                     
|                        
|4.4                     
|                        
|4.5                     
|                        
|4.6                     
|                        
|4.7                     
|                        
|4.8                     
|                        
|4.9                     
|                        
|4.10                    
|                        
|4.11                    
|                        
|4.12                    
|                        
|4.13                    



19

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|4.14 | Performance
        Growth Plan dated April 28, 2000 incorporated herein by reference to Exhibit
        4.21 to Form 20-F filed by Imperial Chemical Industries PLC on April 13,
        2001.                                                                                                                                                                         
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                         
|4.15 | Supplementary
        Retirement and Savings Plan of National Starch and Chemical Corporation,
        as amended December 23, 1988 incorporated herein by reference to Exhibit
        4.22 to Form 20-F filed by Imperial Chemical Industries PLC on April 13,
        2001.                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                         
|7.1  | Statement explaining
      calculation of ratio of earnings to fixed charges  continuing operations.                                                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                         
|8.1  | List of significant
      subsidiaries.                                                                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.1 | Pursuant
        to Rule 12b-23 (a) of the Securities Exchange Act of 1934, as amended,
        the information incorporated into this report by reference to the Company’s
        Report on Form 6-K dated March 11, 2003, (file number 001-08588) which
        contains its Annual Report and Accounts and Form 20-F 2002, is attached
        as an exhibit hereto.
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.2 | Independent Auditors’ report on the Financial Statements to the
        Members of Imperial Chemical Industries PLC.                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.3 | Consent
        of KPMG Audit Plc.                                                                                                                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.4 | Section 906
      Certification.                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.5 | The Company’s
      Report on Form 6-K dated February 7, 2003.                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.6 | Note
        42 “Related Party Transactions” in the Notes relating to the
        Accounts in the Annual Report and Accounts and Form 20-F 2000 of Imperial
        Chemical Industries PLC.                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                         
|10.7 | The Company’s Report
      on Form 6-K dated March 26, 2003.                                                                                                                                                                                                                                                                                                            



20

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SIGNATURE



The registrant hereby
  certifies that it meets all of the requirements for filing on Form 20-F and
  that it has duly caused and authorized the undersigned to sign this Annual Report
  on its behalf.




| | IMPERIAL
      CHEMICAL INDUSTRIES PLC |                          
| | -------------------------------------- | -------------------------
| |                                        |                          
| | By:                                    | /s/                      
| |                                        | Debjani
        Jash     
| |                                        | Company
        Secretary
| |                                        |                          



London, England



March 26, 2003





21

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|I, Brendan R
      O’Neill, certify that:
|-----------------------------------------
|                                         
|1.                                       
|                                         
|2.                                       
|                                         
|3.                                       
|                                         
|4.                                       
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|                                         
|5.                                       
|                                         
|                                         
|                                         
|                                         
|                                         
|6.                                       
|                                         
|Date
        March 26, 2003              
|                                         

| |  | /s/                       | Brendan O’Neill | 
| |  | ------------------------- | --------------- | 
| |  | Brendan
        R O’Neill |                
| |  | Chief
        Executive   |                
| |  |                          

22

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|I, Timothy A
      Scott, certify that:
|---------------------------------------
|                                       
|1.                                     
|                                       
|2.                                     
|                                       
|3.                                     
|                                       
|4.                                     
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|                                       
|5.                                     
|                                       
|                                       
|                                       
|                                       
|                                       
|6.                                     
|                                       
|Date
        March 26, 2003            
|                                       

| |  | /s/                             | Tim Scott | 
| |  | ------------------------------- | --------- | 
| |  | Timothy
        A Scott         |          
| |  | Chief
        Financial Officer |          
| |  |                                

23

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|EXHIBIT INDEX
|-------------
|             
|1.1          
|             
|4.1          
|             
|4.2          
|             
|4.3          
|             
|4.4          
|             
|4.5          
|             
|4.6          
|             
|4.7          
|             
|4.8          
|             
|4.9          
|             
|4.10         
|             
|4.11         
|             
|4.12         
|             
|4.13         



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|4.14 | Performance Growth Plan
      dated April 28, 2000 incorporated herein by reference to Exhibit 4.21 to
      Form 20-F filed by Imperial Chemical Industries PLC on April 13, 2001.                                                                                                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                               
|4.15 | Supplementary Retirement
      and Savings Plan of National Starch and Chemical Corporation, as amended
      December 23, 1988 incorporated herein by reference to Exhibit 4.22 to Form
      20-F filed by Imperial Chemical Industries PLC on April 13, 2001.                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                               
|7.1  | Statement explaining calculation
      of ratio of earnings to fixed charges – continuing operations.                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                               
|8.1  | List of significant subsidiaries.                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.1 | Pursuant to Rule 12b-23
      (a) of the Securities Exchange Act of 1934, as amended, the information
      incorporated into this report by reference to the Company’s Report
      on Form 6-K dated March 11, 2003, (file number 001-08588) which contains
      its Annual Report and Accounts and Form 20-F 2002, is attached as an exhibit
      hereto.
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.2 | Independent Auditors’
      report on the Financial Statements to the Members of Imperial Chemical Industries
      PLC.                                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.3 | Consent of KPMG Audit Plc.                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.4 | Section 906 Certification.                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.5 | The Company’s Report
      on Form 6-K dated February 7, 2003.                                                                                                                                                                                                                                                                                                
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.6 | Note 42 “Related Party
      Transactions” in the Notes relating to the Accounts in the Annual
      Report and Accounts and Form 20-F 2000 of Imperial Chemical Industries PLC.                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                               
|10.7 | The Company’s Report
      on Form 6-K dated March 26, 2003.                                                                                                                                                                                                                                                                                                  

---