##### Table of Contents



---

---

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 20-F

|    |  |                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------
|{ } |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12 (b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934                                  
|   
|   
|   
|   
|    |  | OR                                                                                                                               
|   
|   
|   
|   
|{X} |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR 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 333 
12714

LUCITE INTERNATIONAL
GROUP HOLDINGS
LIMITED
(Exact Name of Registrant as Specified in Its Charter)

ENGLAND and WALES
(Jurisdiction of incorporation or organisation)

QUEENS GATE, 15-17 QUEENS TERRACE, SOUTHAMPTON SO14 3BP
(Address of principal executive offices)

Securities registered or to be registered pursuant to Section 12 (b) of the Act:
NONE

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:

10.25% Senior Secured Notes due 2010

Indicate the number of outstanding shares of each of the issuers classes of
capital or common stock as of the close of the period covered by the annual
report:

175,029,700 Ordinary Shares of £1 each

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
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
     X                No


Indicate by check mark which financial statement items the Registrant has elected to follow:

Item 17
             Item 18     X




---

---





---

TABLE OF CONTENTS



|                     |                                                                                      |  |  |  |  |  |  | 
|-------------------- | ------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART I              
|                     | ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES                                   
|                     | ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS                            
|                     | ITEM 8 FINANCIAL INFORMATION                                                        
|                     | ITEM 9 THE OFFER AND LISTING                                                        
|                     | ITEM 10 ADDITIONAL INFORMATION                                                      
|                     | ITEM 11 QUANTITIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                    
|                     | ITEM 12 DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES                      
|PART II             
|                     | ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                             
|                     | ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
|                     | ITEM 15 CONTROLS AND PROCEDURES                                                     
|                     | ITEM 16 [RESERVED]                                                                  
|PART III            
|                     | ITEM 17 FINANCIAL STATEMENTS                                                        
|                     | ITEM 18 FINANCIAL STATEMENTS                                                        
|                     | ITEM 19 EXHIBITS                                                                    
|SIGNATURES          
|Credit Facilities   
|List of Subsidiaries



---



##### Table of Contents



TABLE OF CONTENTS

|                            |        |              |                                                        |  |   |    |      |  |  | 
|--------------------------- | ------ | ------------ | ------------------------------------------------------ |  | - | -- | ---- |  |  | 
|                            |        |              |                                                        |  |   |    | PAGE
|                            |        |              |                                                        |  |   |    |     
|                           
|PRESENTATION OF INFORMATION |        |              | 5                                                      | 
|                           
|                           
|                           
|                           
|                           
|                            |        | PART I       |                                                        |  |   |   
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 1 |              | IDENTITY OF DIRECTORS, SENIOR MANAGEMENT               |  |   |    |     
|                           
|                           
|                           
|                           
|                            |        | AND ADVISORS |                                                        |  | 6 |   
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 2 |              | OFFER STATISTICS AND EXPECTED TIMETABLE                |  |   | 6  |     
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 3 |              | KEY INFORMATION                                        |  |   | 6  |     
|                           
|                           
|                           
|                           
|                           
|                            | A      |              | SELECTED FINANCIAL DATA                                |  |   | 6  |     
|                           
|                           
|                           
|                           
|                           
|                            | B      |              | CAPITALISATION AND INDEBTEDNESS                        |  |   | 7  |     
|                           
|                           
|                           
|                           
|                           
|                            | C      |              | REASONS FOR THE OFFER AND USE OF PROCEEDS              |  |   | 7  |     
|                           
|                           
|                           
|                           
|                           
|                            | D      |              | RISK FACTORS                                           |  |   | 8  |     
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 4 |              | INFORMATION ON THE COMPANY                             |  |   | 15 |     
|                           
|                           
|                           
|                           
|                           
|                            | A      |              | HISTORY AND DEVELOPMENT OF THE COMPANY                 |  |   | 15 |     
|                           
|                           
|                           
|                           
|                           
|                            | B      |              | BUSINESS OVERVIEW                                      |  |   | 15 |     
|                           
|                           
|                           
|                           
|                           
|                            | C      |              | ORGANISATIONAL STRUCTURE                               |  |   | 22 |     
|                           
|                           
|                           
|                           
|                           
|                            | D      |              | PROPERTY, PLANTS AND EQUIPMENT                         |  |   | 23 |     
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 5 |              | OPERATING AND FINANCIAL REVIEW AND PROSPECTS           |  |   | 24 |     
|                           
|                           
|                           
|                           
|                           
|                            | A      |              | OPERATING RESULTS                                      |  |   | 27 |     
|                           
|                           
|                           
|                           
|                           
|                            | B      |              | LIQUIDITY AND CAPITAL RESOURCES                        |  |   | 31 |     
|                           
|                           
|                           
|                           
|                           
|                            | C      |              | RESEARCH AND DEVELOPMENT, PATENTS AND
  LICENSES, ETC. |  |   | 33 |     
|                           
|                           
|                           
|                           
|                           
|                            | D      |              | TREND INFORMATION                                      |  |   | 34 |     
|                           
|                           
|                           
|                           
|                           
|                            | ITEM 6 |              | DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES             |  |   | 34 |     
|                           
|                           
|                           
|                           
|                           
|                            | A      |              | DIRECTORS AND SENIOR MANAGEMENT                        |  |   | 34 |     
|                           
|                           
|                           
|                           
|                           
|                            | B      |              | COMPENSATION                                           |  |   | 35 |     
|                           
|                           
|                           
|                           
|                           
|                            | C      |              | BOARD PRACTICES                                        |  |   | 35 |     
|                           
|                           
|                           
|                           
|                           
|                            | D      |              | EMPLOYEES                                              |  |   | 37 |     
|                           
|                           
|                           
|                           
|                           
|                            | E      |              | SHARE OWNERSHIP                                        |  |   | 38 |     

2



---



##### Table of Contents



TABLE OF CONTENTS Cont:-

|        |    |                                                   |                                                         |  |    |    |      |  | 
|------- | -- | ------------------------------------------------- | ------------------------------------------------------- |  | -- | -- | ---- |  | 
|        |    |                                                   |                                                         |  |    |    | PAGE
|        |    |                                                   |                                                         |  |    |    |     
|ITEM 7  |    | MAJOR SHAREHOLDERS
AND RELATED PARTY TRANSACTIONS |                                                         |  | 39 |   
|       
|       
|       
|       
|       
|        | A. |                                                   | MAJOR SHAREHOLDERS                                      |  |    | 39 |     
|       
|       
|       
|       
|       
|        | B. |                                                   | RELATED PARTY TRANSACTIONS                              |  |    | 39 |     
|       
|       
|       
|       
|       
|        | C. |                                                   | INTERESTS OF EXPERTS AND COUNSEL                        |  |    | 40 |     
|       
|       
|       
|       
|       
|ITEM 8  |    | FINANCIAL INFORMATION                             |                                                         |  | 40 |   
|       
|       
|       
|       
|       
|        | A. |                                                   | CONSOLIDATED
STATEMENTS AND OTHER FINANCIAL INFORMATION |  |    | 40 |     
|       
|       
|       
|       
|       
|        | B. |                                                   | SIGNIFICANT CHANGES                                     |  |    | 41 |     
|       
|       
|       
|       
|       
|ITEM 9  |    | THE OFFER AND LISTING                             |                                                         |  | 41 |   
|       
|       
|       
|       
|       
|        | A. |                                                   | OFFER AND LISTING DETAILS                               |  |    | 41 |     
|       
|       
|       
|       
|       
|        | B. |                                                   | PLAN OF DISTRIBUTION                                    |  |    | 41 |     
|       
|       
|       
|       
|       
|        | C. |                                                   | MARKETS                                                 |  |    | 41 |     
|       
|       
|       
|       
|       
|        | D. |                                                   | SELLING SHAREHOLDERS                                    |  |    | 41 |     
|       
|       
|       
|       
|       
|        | E. |                                                   | DILUTION                                                |  |    | 41 |     
|       
|       
|       
|       
|       
|        | F. |                                                   | EXPENSES OF THE ISSUE                                   |  |    | 41 |     
|       
|       
|       
|       
|       
|ITEM 10 |    | ADDITIONAL INFORMATION                            |                                                         |  | 41 |   
|       
|       
|       
|       
|       
|        | A. |                                                   | SHARE CAPITAL                                           |  |    | 41 |     
|       
|       
|       
|       
|       
|        | B. |                                                   | MEMORANDUM AND ARTICLES OF ASSOCIATION                  |  |    | 41 |     
|       
|       
|       
|       
|       
|        | C. |                                                   | MATERIAL CONTRACTS                                      |  |    | 42 |     
|       
|       
|       
|       
|       
|        | D. |                                                   | EXCHANGE CONTROLS                                       |  |    | 42 |     
|       
|       
|       
|       
|       
|        | E. |                                                   | TAXATION                                                |  |    | 42 |     
|       
|       
|       
|       
|       
|        | F. |                                                   | DIVIDENDS AND PAYING AGENTS                             |  |    | 47 |     
|       
|       
|       
|       
|       
|        | G. |                                                   | STATEMENTS BY EXPERTS                                   |  |    | 47 |     
|       
|       
|       
|       
|       
|        | H. |                                                   | DOCUMENTS ON DISPLAY                                    |  |    | 47 |     
|       
|       
|       
|       
|       
|        | I. |                                                   | SUBSIDIARY INFORMATION                                  |  |    | 47 |     

3



---



##### Table of Contents



TABLE OF CONTENTS Cont:-

|        |  |                                                                              |  |  |    |      |  | 
|------- |  | ---------------------------------------------------------------------------- |  |  | -- | ---- |  | 
|        |  |                                                                              |  |  |    | PAGE
|        |  |                                                                              |  |  |    |     
|ITEM 11 |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES                                     |  |  | 48 |     
|       
|       
|       
|       
|       
|       
|ITEM 12 |  | DESCRIPTION OF
SECURITIES OTHER THAN EQUITY SECURITIES                       |  |  | 49 |     
|       
|       
|       
|       
|       
|        |  | PART II                                                                      |  |  |    |     
|       
|       
|       
|       
|       
|ITEM 13 |  | DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES                              |  |  | 50 |     
|       
|       
|       
|       
|       
|ITEM 14 |  | MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS |  |  | 50 |     
|       
|       
|       
|       
|       
|ITEM 15 |  | CONTROLS AND PROCEDURES                                                      |  |  | 50 |     
|       
|       
|       
|       
|       
|ITEM 16 |  | [RESERVED]                                                                   |  |  | 50 |     
|       
|       
|       
|       
|       
|        |  | PART III                                                                     |  |  |    |     
|       
|       
|       
|       
|       
|ITEM 17 |  | FINANCIAL STATEMENTS                                                         |  |  | 50 |     
|       
|       
|       
|       
|       
|ITEM 18 |  | FINANCIAL STATEMENTS                                                         |  |  | 50 |     
|       
|       
|       
|       
|       
|ITEM 19 |  | EXHIBITS                                                                     |  |  | 51 |     

4



---



##### Table of Contents



PRESENTATION OF INFORMATION

The consolidated financial statements and the related notes thereto in this
report have been prepared in accordance with UK generally accepted accounting
principles ("UK GAAP").  UK GAAP differs in certain material respects from US
generally accepted accounting principles ("US GAAP").  For a discussion of the
significant differences between UK and US accounting principles with respect to
our consolidated financial statements, see Note 27 to the audited financial
statements at Item 18.

Unless the context requires otherwise, the terms Lucite International, the
Company, the group, our, us and we refer to Lucite International
Group Holdings Limited and its subsidiaries as a combined entity. Lucite
International Finance plc is the company that issued the notes registered under
the U.S. Securities Act of 1933. It is a wholly-owned subsidiary of Lucite
International Group Holdings Limited and was formed for the purpose of issuing
and selling securities and making the proceeds of those issues available to us.
The term Lucite International Finance refers to the issuer of the notes.

We have not presented separate financial statements for Lucite International
Finance plc or Lucite International Investment Limited because management has
determined that this information is not material to holders of the notes.

Market information or other statements presented in this report regarding our
position relative to our competition, including market shares and industry
statistics, are based upon internal company surveys; there can be no assurance
as to the accuracy and completeness of this information. Internal company
surveys reflect our best estimates based upon information we have obtained from
customers or from trade or business organisations or associations or other
contacts within the industries in which we compete. Our market data has not
been verified by any independent sources.

The acquisition of a portion of ICIs interest in Kaohsiung Monomer Co. Ltd
(KMC) was not completed until September 1, 2001. The historical financial
information included under Selected Financial Data (Item 3A) and Operating
and Financial Review and Prospects (Item 5), therefore includes our interest
in KMC during the twelve months ended December 31, 2000 and the eight months
ended August 31, 2001, on an equity accounting basis. On September 1, 2001, the
Company agreed with ICI to acquire the remaining 51% of the shares of the
majority shareholder. As from September 1, 2001 KMC was fully consolidated into
the results and net assets of the group.

Forward-Looking Statements

This report includes forward-looking statements based on our current
expectations and projections about future events, including:



| |  | our high degree of leverage and significant debt service obligations as
well as future cash flow and earnings;                                                                                    
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | our sales growth across our principal businesses and our strategy for
controlling costs, growing margins, increasing manufacturing capacity and
production levels and making capital expenditures;
| 
| |  | raw material costs or supply arrangements;                                                                                                                                                        
| 
| |  | our technological and manufacturing assets and our ability to utilize them
to further increase sales and the profitability of our businesses;                                                     
| 
| |  | our ability to retain existing and obtain new customers;                                                                                                                                          
| 
| |  | our ability to develop new products and technologies successfully;                                                                                                                                
| 
| |  | the cyclical and highly competitive nature of the acrylics industries;                                                                                                                            
| 
| |  | risks related to environmental costs, liabilities or claims; and                                                                                                                                  
| 
| |  | currency fluctuations.                                                                                                                                                                            

These forward-looking statements are subject to a number of risks and
uncertainties, which could cause our actual results to differ materially from
historical results or those anticipated, some of which are beyond our control.
The words believe, expect, anticipate and similar expressions identify
forward-looking statements. We undertake no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events or otherwise.

5



---



##### Table of Contents






PART I

ITEM 1 IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

NOT APPLICABLE

ITEM 2 OFFER STATISTICS AND EXPECTED TIMETABLE

NOT APPLICABLE

ITEM 3 KEY INFORMATION

A.     SELECTED FINANCIAL DATA

The selected historical financial information in the table below has been
classified between predecessor and successor periods. The predecessor periods
represent the financial periods prior to the acquisition of the acrylics
division of ICI and the successor periods represent the financial periods
subsequent to that acquisition.

The table below sets forth selected historical combined (predecessor) and
consolidated financial information for Lucite International as of and for each
of the periods indicated. Our financial statements are prepared in accordance
with UK GAAP, which differs in certain significant respects from US GAAP. For a
discussion of the significant differences between UK and US accounting
principles, you should refer to Note 27 to the audited financial statements.
You should read the data below in conjunction with the Operating and Financial
Review and Prospects (Item 5). The information for the year ended December
31, 2000 and December 31, 2001 has been restated for the effects of FRS19
deferred tax, which have been extracted from our consolidated financial
statements included herein. The information prior to the nine months ended
September 30, 1999 has not been restated as it relates to the predecessor
period.

|                                             |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |      |  
|-------------------------------------------- | ---------------------------------------------- | ---- | ---------------------- | ---- | ------------------------ | -------- | ------------ | -------- | - | -------- |  | ---- | ------------ |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                             |                                                |      | Predecessor - Combined |      | Successor  Consolidated
|                                             |                                                |      |                        |      |                         
|                                             |                                                |      | Year                   |      | Nine                     |          | For the      |          |   |          |  |      |              |  |  |      |   |  | 
|                                             |                                                |      | ended                  |      | months                   |          | period       |          |   |          |  |      |              |  |  |      |   |  | 
|                                             |                                                |      | December               |      | ended                    |          | October 1,   |          |   |          |  |      |              |  |  |      |   |  | 
|                                             |                                                |      | 31,                    |      | September                |          | 1999 to      |          |   |          |  |      | Year ended   |  |  |      |  
|                                             |                                                |      |                        |      | 30,                      |          | December 31, |          |   |          |  |      | December 31, |  |  |      |  
|                                             |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  | 
|                                             |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  | 
|In Millions                                  |                                                | 1998 |                        | 1999 |                          | 1999     |              | 2000     |   | 2001     |  | 2002
|                                             |                                                |      |                        |      |                          | as       |              | as       |   | as       |  |     
|                                             |                                                |      |                        |      |                          | restated |              | restated |   | restated |  |     
|                                             |                                                |      |                        |      |                          |          |              |          |   |          |  |     
|Profit and Loss Account Information:         |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|Amounts in accordance with UK GAAP:          |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|                                             | Turnover                                       |      |                        | £537 |                          |          |              | £379     |   |          |  | £118 |              |  |  | £560 |   |  |  | £577 |   |  |  | £582 |  
|                                            
|                                            
|                                            
|                                            
|                                             | Cost of sales                                  |      |                        | (387 | )                        |          |              | (283     | ) |          |  | (90  | )            |  |  | (433 | ) |  |  | (458 | ) |  |  | (457 | )
|                                            
|                                            
|                                            
|                                            
|                                             | Gross profit                                   |      |                        | 150  |                          |          |              | 96       |   |          |  | 28   |              |  |  | 127  |   |  |  | 119  |   |  |  | 125  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Net operating expenses (a)(b)                  |      |                        | (124 | )                        |          |              | (88      | ) |          |  | (28  | )            |  |  | (111 | ) |  |  | (101 | ) |  |  | (98  | )
|                                            
|                                            
|                                            
|                                            
|                                             | Share of profit from joint venture             |      |                        |     |                          |          |              |         |   |          |  |     |              |  |  | 2    |   |  |  | 2    |   |  |  |     |  
|                                            
|                                            
|                                            
|                                            
|                                             | Operating profit                               |      |                        | 26   |                          |          |              | 8        |   |          |  |     |              |  |  | 18   |   |  |  | 20   |   |  |  | 27   |  
|                                            
|                                            
|                                            
|                                            
|                                             | Net interest payable                           |      |                        | (17  | )                        |          |              | (10      | ) |          |  | (8   | )            |  |  | (40  | ) |  |  | (28  | ) |  |  | (29  | )
|                                            
|                                            
|                                            
|                                            
|                                             | (Loss)/profit on ordinary activities
after tax |      |                        | 6    |                          |          |              | (11      | ) |          |  | (8   | )            |  |  | (12  | ) |  |  | (2   | ) |  |  |     |  
|                                            
|                                            
|                                            
|                                            
|                                             | Equity minority interest                       |      |                        | (1   | )                        |          |              | 1        |   |          |  |     |              |  |  |     |   |  |  | (1   | ) |  |  | (3   | )
|                                            
|                                            
|                                            
|                                            
|                                             | (Loss)/profit for the financial
year/period    |      |                        | 5    |                          |          |              | (10      | ) |          |  | (8   | )            |  |  | (12  | ) |  |  | (3   | ) |  |  | (3   | )
|                                            
|                                            
|                                            
|                                            
|Amounts in accordance with US GAAP:          |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|                                             | Profit (loss) for the financial
year/period    |      |                        | (7   | )                        |          |              | (13      | ) |          |  | (16  | )            |  |  | (8   | ) |  |  | (1   | ) |  |  | 1    |  
|                                            
|                                            
|                                            
|                                            
|Balance Sheet information (at end of period) |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|Amounts in accordance with UK GAAP:          |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|                                             | Current assets                                 |      |                        | 147  |                          |          |              |          |   |          |  | 181  |              |  |  | 180  |   |  |  | 185  |   |  |  | 182  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Total assets                                   |      |                        | 520  |                          |          |              |          |   |          |  | 638  |              |  |  | 661  |   |  |  | 663  |   |  |  | 623  |  
|                                            
|                                            
|                                            
|                                            
|                                             | Creditors due after more than one year         |      |                        | (6   | )                        |          |              |          |   |          |  | (214 | )            |  |  | (370 | ) |  |  | (336 | ) |  |  | (330 | )
|                                            
|                                            
|                                            
|                                            
|                                             | Net assets                                     |      |                        | 379  |                          |          |              |          |   |          |  | 171  |              |  |  | 156  |   |  |  | 168  |   |  |  | 142  |  
|                                            
|                                            
|                                            
|                                            
|Amounts in accordance with US GAAP:          |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|                                             | Shareholders equity                           |      |                        | 373  |                          |          |              |          |   |          |  | 163  |              |  |  | 172  |   |  |  | 170  |   |  |  | 145  |  
|                                            
|                                            
|                                            
|                                            
|Other Financial Information:                 |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|Amounts in accordance with UK GAAP:          |                                                |      |                        |      |                          |          |              |          |   |          |  |      |              |  |  |      |   |  |  |      |   |  |  |     
|                                            
|                                            
|                                            
|                                            
|                                             | Depreciation and amortization                  |      |                        | 38   |                          |          |              | 30       |   |          |  | 10   |              |  |  | 39   |   |  |  | 39   |   |  |  | 45   |  
|                                            
|                                            
|                                            
|                                            
|                                             | Capital expenditure and financial
investment   |      |                        | (19  | )                        |          |              | (10      | ) |          |  | (7   | )            |  |  | (28  | ) |  |  | (26  | ) |  |  | (28  | )

6



---



##### Table of Contents



NOTES TO SELECTED FINANCIAL DATA



|(a) |  | Included in net operating expenses under UK GAAP are exceptional
operating expenses. These expenses consist of restructuring, severance and
relocation costs as follows; £5 million for the year ended December 31,
1998; £5 million for the nine months ended September 30, 1999; £3 million
for the period October 1, 1999 to December 31, 1999; £14 million for the
year ended December 31, 2000, £4m for the year ended December 31, 2001 and
£nil for the year ended December 31, 2002. Further details of these
exceptional operating expenses are included in Note 5 to the consolidated
financial statements. Additionally, the £3 million and £9 million of
severance and relocation cost expensed to the UK GAAP profit and loss
account for the period October 1, 1999 to December 31, 1999 and for the
year ended December 31, 2000 respectively has been included in the
allocation of the costs of the acquisition of ICI Acrylics as a liability
assumed under US GAAP.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Net operating expenses for the year ended December 31, 1998 and for the
nine months ended September 30, 1999 include ICI allocated central
management expenses of £4 million and £3 million respectively, and ICI
allocated pension expenses of £3 million and £3 million, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   
|(c) |  | For details of exchange rates for pounds sterling expressed in US dollars
per pound sterling please see Item 11, Quantative and Qualitative
Disclosures About Market Risk.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

Exchange Rate Information

Our reporting currency is the pound sterling. The following table sets forth,
for the periods and dates indicated, information regarding the average daily
rate for pound sterling, expressed in dollars per £1.00. These rates were not
used to prepare the financial statements included in this annual report.

|                                     |  |         |      |     |  |   |      | 
|------------------------------------ |  | ------- | ---- | --- |  | - | ---- | 
|                                     |  | High    |      | Low
|                                     |  |         |      |    
|Month                                |  |         |      |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|March 2003                           |  | $       | 1.61 |     |  | $ | 1.56 | 
|                                    
|                                    
|                                    
|                                    
|February 2003                        |  |         | 1.65 |     |  |   | 1.57 | 
|                                    
|                                    
|                                    
|                                    
|January 2003                         |  |         | 1.65 |     |  |   | 1.60 | 
|                                    
|                                    
|                                    
|                                    
|December 2002                        |  |         | 1.61 |     |  |   | 1.56 | 
|                                    
|                                    
|                                    
|                                    
|November 2002                        |  |         | 1.59 |     |  |   | 1.54 | 
|                                    
|                                    
|                                    
|                                    
|October 2002                         |  |         | 1.57 |     |  |   | 1.54 | 
|                                    
|                                    
|                                    
|                                    
|                                    
|                                     |  | Average |      |     |  |  
|                                     |  |         |      |     | 
|Year ended December 31,              |  |         |      |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|2002                                 |  | $       | 1.50 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|2001                                 |  |         | 1.44 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|2000                                 |  |         | 1.51 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|1999                                 |  |         | 1.61 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|1998                                 |  |         | 1.66 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|Nine months ended September 30, 1999 |  | $       | 1.61 |     |  |   |      | 
|                                    
|                                    
|                                    
|                                    
|Three months ended December 31, 1999 |  |         | 1.62 |     |  |   |      | 

B.     CAPITALISATION AND INDEBTEDNESS

NOT APPLICABLE

C.     REASONS FOR THE OFFER AND USE OF PROCEEDS

NOT APPLICABLE

7



---



##### Table of Contents



D.     RISK FACTORS

Risks Relating to Our Capital Structure

Substantial leverage  Our substantial debt could adversely affect our
financial health and prevent us from fulfilling our obligations under these
notes.

We have a significant amount of debt following the completion of the
acquisition of ICI Acrylics and related transactions. The following chart shows
total debt and shareholders equity as of December 31, 2002.

|                                        |  |              |  | 
|--------------------------------------- |  | ------------ |  | 
|                                        |  | As of       
|                                        |  | December 31,
|                                        |  | 2002        
|                                        |  |             
|Total debt (net of debt issuance costs) |  | £343 million
|                                       
|                                       
|                                       
|                                       
|Shareholders equity                    |  | £130 million

Our substantial debt could have important consequences to holders of the notes.
For example, it could, amongst other things:

| |  | limit our ability to take advantage of significant business opportunities;                                                                                                                       
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | make it more difficult for us to satisfy our obligations with respect to the notes;                                                                                                              
| 
| |  | increase our vulnerability to general adverse economic and industry conditions;                                                                                                                  
| 
| |  | limit our ability to fund future working capital, capital expenditures, any future acquisitions, research, development and
     technology process costs and other general business requirements;
| 
| |  | limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and                                                                         
| 
| |  | place us at a competitive disadvantage compared to our competitors that have less debt.                                                                                                          

Effective subordination  If our operating subsidiaries are unable to make
distributions to us,
Lucite International Finance or the guarantors, as the case may be, we may be
unable to pay the amounts due on the notes.

We expect to obtain the money to pay the principal and interest on the notes
from our operating subsidiaries. However, these subsidiaries may not be able to
make distributions to us. For example, any payment of interest, dividends,
distributions, loans or advances by our operating subsidiaries to Lucite
International Finance and the guarantors could be subject to restrictions on
dividends or repatriation of earnings under applicable local law, monetary
transfer restrictions and foreign currency exchange regulations in the
jurisdictions in which the subsidiaries operate. Moreover, payments to Lucite
International Finance and the guarantors by the operating subsidiaries will be
contingent upon these subsidiaries earnings.

Further, our operating subsidiaries are separate and distinct legal entities
and have no obligation, contingent or otherwise, to pay any amounts due
pursuant to the notes or to make any funds available therefor, whether by
dividends, loans, distributions or other payments, and do not guarantee the
payment of interest on, or principal of, the notes. Any right that Lucite
International Finance and the guarantors have to receive any assets of any of
the operating subsidiaries upon the liquidation or reorganisation of those
subsidiaries, and the consequent right of holders of notes to realise proceeds
from the sale of their assets, will be effectively subordinated to the claims
of that subsidiarys creditors, including trade creditors and holders of debt
issued by that subsidiary. In particular, some of our subsidiaries are
borrowers under, or have guaranteed the obligations of the borrowers under, the
senior credit facilities but have not guaranteed the notes. Moreover, any
guarantees of the notes by our subsidiaries will be subordinated to any
indebtedness of a guarantor, including indebtedness under the senior credit
facilities, that is either senior or secured.

8



---



##### Table of Contents



Contractual subordination The right to receive payments on the notes are
junior to our other borrowings under our senior credit facilities and possibly
some or all of our future borrowings and therefore, we may not be able to pay
amounts we owe under the notes if we have not or are unable to make payments we
owe under our senior debt.

The notes are unsecured obligations. The obligations of the guarantors to us
under the subordinated guarantees rank behind their respective obligations to
the lending banks under our existing credit facilities and any other senior
debt they may incur. In addition, the obligations of the guarantors under the
guarantees also rank behind any other debt that they may secure by charging or
pledging any of their respective assets. As a result, upon any distribution to
the creditors of the subordinated guarantors in a bankruptcy, liquidation,
reorganisation or similar proceeding, the holders of their respective senior
debt will be entitled to be paid in full in cash before any payment may be made
with respect to the guarantees.

The right to receive payments on the notes depends upon Lucite International
Finances ability to receive funds from the other subsidiaries of Lucite
International and the guarantors and the guarantors ability to honour their
guarantee obligations. Since the intercompany loan and the subordinated
guarantees rank behind the guarantors senior debt, including their respective
obligations under our senior credit facilities, claims under the notes will be
junior to those of the lending banks under our senior credit facilities.

Restrictive covenants in our senior credit facilities  If we default, we will
not be able to meet our payment obligations to holders of the notes.

Our ability to continue to comply with the covenants and restrictions contained
in our senior credit facilities may be affected by events beyond our control.
These include prevailing economic, financial and industry conditions. If we
breach any of these covenants or restrictions, we could be in default under our
senior credit facilities. This would, as well as other risks described in this
section, permit the lending banks to declare all amounts that we have borrowed
under our senior credit facilities to be due and payable, together with accrued
and unpaid interest. This could prevent us from meeting our payment obligations
under the notes. The lending banks could also refuse to extend further credit
under the senior credit facilities. If we are unable to repay our debt to the
lending banks, they could proceed against the collateral that secured the debt.

The significant covenants in our senior credit facilities, referred to in the
preceding paragraph, restrict our ability to:



| |  | dispose of assets,                                           
|- |  | -------------------------------------------------------------
| 
| |  | grant security interests,                                    
| 
| |  | make loans,                                                  
| 
| |  | acquire assets,                                              
| 
| |  | enter into agreements of merger or consolidation,            
| 
| |  | incur additional debt,                                       
| 
| |  | incur guarantee obligations,                                 
| 
| |  | conduct specified investment activities,                     
| 
| |  | declare or pay dividends or redeem or purchase capital stock,
| 
| |  | make capital expenditures and                                
| 
| |  | prepay debt.                                                 

In addition, our senior credit facilities require us to comply with specified
financial ratios and tests.

Financing change of control offer  We may not be able to raise the funds
necessary to finance a change of control offer required by the indenture to the
notes and, if this occurs, we would be in default under the indenture.

Under the terms of the notes, we are required to offer to repurchase the notes
if a change of control occurs. However, our obligations under our senior credit
facilities could be accelerated upon the occurrence of a change of control
offer, and we would have to satisfy those obligations prior to purchasing the
notes. Therefore, it is possible that we may not have sufficient funds at the
time of the change of control to make the required repurchase of notes or that
the restrictions in our credit facility will not allow repurchases. Our failure
to repurchase the notes would be an event of default under the indenture
governing the notes.

The change of control provisions contained in the indenture may not protect
holders of notes in the event of highly leveraged transactions, including
reorganisations, restructuring or mergers, because these transactions may not
involve a change in voting power or beneficial interest of the magnitude
required to trigger the change of control provisions.

9



---



##### Table of Contents



Ability to service debt  To pay the amounts due on the notes, we will require
a significant amount of cash. Our ability to generate cash depends on many
factors beyond our control.

We may not have sufficient cash to pay our obligations under the notes due to a
number of factors we cannot control. We expect to obtain the money to make the
payments that we owe under the notes from our operating subsidiaries. However,
the ability of our subsidiaries to upstream monies to Lucite International
Finance or the guarantors of the notes as described above as well as to pay
operating expenses and to fund planned capital expenditures, any future
acquisitions and research and development efforts will depend on our
businesses ability to generate cash in the future. This, to an extent, is
subject to general economic, financial, competitive, legislative, regulatory
and other factors that are beyond our control.

The cash flow from the operations of these subsidiaries might not be adequate
to enable these subsidiaries to upstream sufficient monies to enable Lucite
International Finance and the guarantors of the notes to meet our debt service
obligations and other liquidity needs for the foreseeable future. Further, if
the subsidiaries are unable to generate sufficient cash flow to meet their
payment obligations, they may be forced to reduce or delay planned expansions
or capital expenditures, sell significant assets, discontinue specified
operations, obtain additional equity capital or attempt to restructure or
refinance all or a portion of their indebtedness on or before maturity.

Additional borrowings available  Despite current debt levels, we may still be
able to incur substantially more debt. This could further exacerbate the risks
described above.

We may be able to incur substantial additional debt in the future. If new debt
is added to our current debt levels, the risks that we now face could
intensify. The terms of the indenture governing the notes permit us to borrow
more money, subject to limitations. As of December 31, 2002, £220 million was
outstanding under our senior credit facilities, and these borrowings are senior
to the notes and guarantees. Additionally, our revolving credit facility would
permit additional borrowing of up to $34 (£21) million and all of those
borrowings would be contractually or structurally senior to the notes and the
guarantees.

Control by funds managed by Charterhouse Development Capital Limited
(Charterhouse)  Our principal investors may have interests that conflict
with the interests of holders of the notes and can take actions that prevent or
hinder us from making payments on the notes.

In the event of a conflict of interest between holders of our notes and our
principal investors, their actions could affect our ability to meet our payment
obligations. Charterhouse and some of the directors of Ineos Capital have
invested in the equity of Lucite International Limited, the holding company
that owns Lucite International, and ultimately control the voting stock of all
the companies that together conduct our business.

Charterhouse owns 78% of our common stock. This ownership gives Charterhouse
significant control over our operations. Furthermore, Charterhouse has the
power to elect all of the directors of our companies, to change their
management, to approve any changes to their documents and to approve any
mergers.

Goodwill  A change in the estimated useful life, or a write-off, of goodwill
could negatively affect operating results and net worth.

A change in the estimated useful life of goodwill or the write-off of a portion
of goodwill could negatively affect operating results and net worth. The
acquisition of the acrylics business of ICI resulted in the recognition of a
substantial amount of goodwill. At December 31, 2002, goodwill totalled £83
million in accordance with U.K. GAAP, compared to U.K. GAAP net assets of £142
million. We have estimated the useful life associated with positive goodwill to
be 20 years. However, subsequent changes in the acrylics industry, including
competition and advances in technology, may in the future shorten the estimated
useful life of goodwill or result in the write-off of a portion of goodwill. A
shortening of the useful life or a write-off of a portion of goodwill could
further decrease our earnings or increase our net losses in future periods.

10



---



##### Table of Contents



Risks Relating to Business Operations

The chemicals industry is cyclical  Changing market demands and prices may
negatively affect our operating margins and impair our cash flow, which in turn
could affect our ability to make payments due under the notes.

Cyclicality and volatility in the chemical industry, market supply and demand
and prices for raw materials may negatively impact our operating margins and
cash flow. This, in turn, may impair our ability to make payments due under the
notes.

Substantially all of our revenue is attributable to sales of methyl
methacrylate (MMA) and MMA-related products, the prices of which have been
historically cyclical and sensitive to relative changes in supply and demand,
the availability and price of feedstocks and general economic conditions.
Historically, the markets for some of our products have experienced alternating
periods of tight supply, causing prices and margins to increase, followed by
periods of capacity additions, resulting in oversupply and declining prices and
margins. The MMA industry experienced increases in capacity through new
production facilities coming on line and reduced demand in 1998, primarily
because of economic uncertainty in Asia. Both of these factors combined to
reduce prices for MMA and negatively affected our business, financial condition
and results of operations for the latter half of 1998 and into 1999. The
market demand recovered strongly from late 1999 through 2000 with some
weakening in 2001 through to 2002 due primarily to a slowing of the US
industrial based economy. Demand in the latter part of 2002 has recovered
strongly. We do not know if prices will remain firm or decrease. In addition,
we do not know if future growth in demand for MMA and MMA-related products will
be sufficient to alleviate any existing or future conditions of excess industry
capacity or that these conditions will not be sustained or further aggravated
by anticipated or unanticipated capacity additions or other events. See the
risk described under the caption  The significant competition in the chemicals
industry, whether through efforts of new and current competitors, or through
consolidation of existing customers, may adversely affect our competitive
position, sales and overall operations.

Further, the prices for a large portion of our raw materials are similarly
cyclical. Our ability to pass on increases in the cost of raw materials to our
customers is, to a large extent, dependent upon market conditions. There may be
periods of time in which we are not able to recover increases in the cost of
raw materials due to weakness in demand or an oversupply of our products.

Our relationship with DuPont is critical to our business and if this
relationship were to cease, our cash flow, margins and competitive position
could be materially and adversely affected.

DuPont is our largest supplier and our largest customer and we rely on DuPont
for various manufacturing services. If DuPont were to cease to be our supplier
or our customer or were to cease sharing site services with us, our cash flow,
margins and competitive position could be materially and adversely affected.

DuPont is our only supplier of hydrocyanic acid (HCN) in the United States.
DuPont produces HCN for its own internal use and we are the only unaffiliated
purchaser of its production. Our current HCN supply contract with DuPont
expires in June 2003; however, we have agreed terms for the continuation of
supply for a further five years following this date.

DuPont is also our largest customer, generating approximately 8% of our total
revenues. Several of our U.S. facilities are located within DuPont chemical
complexes and are operated by DuPont under our direction and we share supplies
and services at those sites with DuPont.

International operations  We are exposed to economic downturns and local
business risks in several different countries, particularly in the United
States, and they could adversely affect our profitability.

We derive substantial revenues from international operations, particularly the
United States. If there is a further economic downturn in the United States
and/or other countries in which we operate, our profitability may be adversely
affected. Further, our subsidiaries have interests in substantial physical
assets in several countries, including England, France, Japan, Mexico, The
Netherlands, Taiwan, Thailand and the United States. Accordingly, our business
is subject to risks inherent in international operations and we may experience
reduced profitability from these operations. These risks include:



| |  | political and economic conditions;                            
|- |  | --------------------------------------------------------------
| 
| |  | differences and unexpected changes in regulatory environments;

11



---



##### Table of Contents





| |  | varying tax regimes;                                                    
|- |  | ------------------------------------------------------------------------
| 
| |  | exposure to different legal standards, including insolvency regimes; and
| 
| |  | difficulties in staffing and managing operations.                       

Currency fluctuations  Our exposure to currency fluctuation risks in many
countries may adversely affect our turnover and operating margins.

Because we generate a significant percentage of our revenues and a
substantially lower percentage of our operating expenses in currencies other
than the pound sterling (including the U.S. dollar), fluctuations in the value
of the pound sterling against other currencies have had in the past, and may
have in the future, a material effect on our turnover and operating margins.
Our operations are conducted in over 100 countries. The results of operations
and the financial position of these subsidiaries are reported in the relevant
foreign currencies and then translated into pounds sterling at the applicable
exchange rates for inclusion in our combined (predecessor) and consolidated
financial statements. The exchange rates between these currencies and the pound
sterling in recent years have fluctuated significantly and may in the future
fluctuate substantially.

In addition, because our financial statements are stated in pounds sterling,
the translation effect of these fluctuations have had in the past, and may have
in the future, a material effect on our business, financial condition or
results of operations and may significantly affect the comparability of our
results between financial periods. For additional related disclosure, see Item
11 under the caption Quantitative and Qualitative Disclosures about Market
Risks.

Key suppliers  If we are unable to retain or replace our key suppliers,
especially our external HCN suppliers, each of whom is exclusive in a given
region, our results of operations may be negatively affected.

We rely on DuPont in the Americas, BASF in Europe and China Petrochemical
Development Corporation in Asia, our three main suppliers of HCN, for all of
the HCN that we obtain from external sources. HCN is crucial to our MMA
manufacturing process; there is only one external HCN supplier for each of our
plants, with no ready alternative supplier. If any of these suppliers is unable
to meet its obligations under present supply agreements, we may not be able to
find alternative suppliers. In addition, some of the raw materials we use may
become unavailable within the geographic area from which we now source our raw
materials and there can be no assurance that we will be able to obtain suitable
and cost effective substitutes. Any interruption of supply or any price
increase of HCN or other raw materials could disrupt production or reduce our
operating margins and thus have a material adverse effect on our business,
financial condition or results of operations.

The significant competition in the chemicals industry, whether through efforts
of new and current competitors, or through consolidation of existing customers,
may adversely affect our competitive position, sales and overall operations.

The markets for some of our products are highly competitive. We are exposed to
the competitive characteristics of several different geographic markets and
industries. In addition, we believe that rapid identification of substitutes
for existing products, new product applications and the ability to supply
commercial quantities of products that enable these applications are important
competitive factors. Some of our competitors have greater financial, technical
and marketing resources than we do. As the markets for our products expand, we
expect that additional competition will emerge and that existing competitors
may commit more resources to the markets in which we participate. We may not be
able to compete effectively in these various areas in the future and our
competitive position and results or operations may suffer as a result.
Because we have business operations in the upstream and downstream markets, we
compete and have competed in the downstream market with many of the customers
who purchase from us. Although this has not been a problem in the past, this
relationship creates the potential for conflicting interests and our
competitive relationship with some of our customers may adversely affect our
sales to those customers.

In addition, the methacrylate industry may consolidate further in which case we
may lose customers if the customers merge with competing producers and no
longer require our output. In such a situation, if the customers were large
enough, our sales may be materially and adversely affected.

Our principal competitors vary from business to business and range from large
international companies, such as Rohm & Haas, Degussa-Hüels AG (including Rohm
GmbH), AtoFina, and Mitsubishi Rayon Co. Ltd., to a large number of smaller
regional companies of varying sizes.

12



---



##### Table of Contents



Continued technological innovation and the successful commercial introduction
of products are important for our future growth and our failure in these areas
could negatively impact our profit margins and competitive position.

We will have to continue to identify, develop and market innovative products on
a timely basis to replace existing products in order to maintain our profit
margins and our competitive position. All of our businesses experience periodic
technological change and ongoing product improvements and obsolescence of
existing products. Manufacturers periodically introduce new generations of
products or require new technological capacity to develop customised products.
In the past we have benefited from our ability to operate at the forefront of
certain markets and our future growth will depend on our continued ability to
gauge the direction of the commercial and technological progress in all key
markets and upon our ability to successfully develop, manufacture and market
products in these changing markets.

Our future growth will depend on our ability to meet the technological and
production requirements involved in producing large quantities of high-purity
chemicals and complex chemical intermediates. For example, we use the acetone
cyanohydrin (ACH) process to produce MMA, which may or may not be more
cost-effective than competing processes, such as the isobutylene/tertiary butyl
alcohol process and the ethylene process, depending on raw material costs. We
may fail in developing new products and/or technology or in gaining acceptance
of these products by our customers. If we fail to keep pace with the evolving
technological innovations in our markets, then our business, financial
condition and results of operations may be materially and adversely affected.

The failure of our trademarks, patents and confidentiality agreements to
protect our intellectual property could adversely affect our business.

The failure of our patents, trademarks or confidentiality agreements to protect
our processes, apparatuses, technology, trade secrets or proprietary know-how
could lead to increased competition and thus have a material adverse effect on
our business, financial condition or results of operations. Proprietary
protection of our processes, apparatuses and other technology is important to
our business. We rely upon unpatented proprietary know-how and continuing
technological innovation and other trade secrets to develop and maintain our
competitive position. While it is our policy to enter into confidentiality
agreements with our employees and third parties to protect our intellectual
property, there can be no assurances that our confidentiality agreements will
not be breached, that they will provide meaningful protection for our trade
secrets or proprietary know-how, or that adequate remedies will be available in
the event of an unauthorised use or disclosure of these trade secrets and
know-how. In addition, there can be no assurances that others will not obtain
knowledge of these trade secrets through independent development or other
access by legal means.

Our actions to protect our proprietary rights may be insufficient to prevent
others from developing similar products to ours. In addition, the laws of many
foreign countries do not protect our intellectual property rights to the same
extent as the laws of the United States or United Kingdom.

Environmental matters  We will have ongoing costs and may have additional
costs, obligations and liabilities.

The chemicals business is highly regulated in many countries. Increasingly
stringent regulations govern our manufacturing processes, wastes and emissions
in all of the jurisdictions in which we do business and will continue to
require material ongoing costs. Given the nature of our business, violations of
environmental laws may result in substantial fines, penalties, damages or other
costs, restrictions or civil or criminal sanctions imposed on our operating
activities. In addition, potentially significant expenditures could be
necessary in order to comply with existing or future environmental laws. For
additional related disclosure, see Item 4 under the caption Information on the
Company  Business Overview and Item 5 under the caption Operating and
Financial Review and Prospects.

Under some environmental laws, we may be liable for the costs of investigating
and cleaning up environmental contamination on or from our properties or at
off-site locations where, for example, we disposed of or arranged for the
disposal or treatment of hazardous wastes. We are aware that there is or may be
soil or groundwater contamination at some of our facilities resulting from past
operations at these or neighbouring facilities. We may need to remediate soil
and groundwater contaminated with hazardous substances to ensure that they pose
no unacceptable risk to human health and the environment. The acquisition
agreement relating to the acquisition of ICI Acrylics provides for
indemnification of Lucite International Investment Limited by ICI and specified
affiliated companies for some of these environmental liabilities, costs, and
other matters, provided that various requirements and procedures specified in
the acquisition agreement are satisfied. The extent of the indemnification
depends on the nature of the matter being indemnified, the time from the
closing of the

13



---



##### Table of Contents



acquisition at which the indemnification claim is made, and other
considerations and may be subject to certain deductibles and maximum amounts,
such as an aggregate deductible of £1 million and an aggregate cap of £94
million, both of which apply to certain claims that would otherwise be
indemnifiable. The indemnity covers historical environmental claims for ten
years from the date of the acquisition provided that notice of a potential
claim is given within that ten-year period. Our costs for any environmental
liabilities may be material and our indemnity from ICI might not sufficiently
cover those liabilities. For additional related disclosure, see Item 4 under
the caption Information on the Company Business OverviewEnvironmental
Regulations.

Our operations are subject to hazards, which could result in significant
liability to us.

We are not fully insured against all potential hazards incident to our business
and the occurrence of any
of these events could result in significant liability to us. Our operations are
subject to the usual hazards associated with chemical manufacturing and the
related storage and transportation of feedstocks, products and wastes. These
hazards can cause personal injury and loss of life, severe damage to or
destruction of property and equipment and environmental damage, and may result
in suspension of operations and the imposition of civil and criminal
liabilities. These hazards include:



| |  | explosions,                                                                                                     
|- |  | ----------------------------------------------------------------------------------------------------------------
| 
| |  | fires,                                                                                                          
| 
| |  | inclement weather,                                                                                              
| 
| |  | natural disasters including earthquakes,                                                                        
| 
| |  | mechanical failure,                                                                                             
| 
| |  | unscheduled downtime,                                                                                           
| 
| |  | transportation interruptions,                                                                                   
| 
| |  | remediation, and                                                                                                
| 
| |  | chemical spills, discharges or releases of toxic or hazardous substances
or gases and other environmental risks.

We may face capacity constraints that would make us unable to meet increased
product demands resulting from our growth and, consequently, our revenues and
profits may suffer.

Our future growth and financial performance are dependent, in part, on our
ability to increase our production capacity. We have no current plans to
construct additional facilities. However, we are planning to expand the total
production capacity of our plants through de-bottlenecking and modernising
production technology but some of these capacity increases will not be in place
in the near term. We may not be able to complete our planned capacity expansion
at that time or at all, which could cause our revenues and profits to suffer.

Insurance cover  changes in the insurance market have resulted in the risk
borne by the group increasing.

Due to ongoing changes in the insurance markets during the last two years the
uninsured portions of our risks with respect to property damage and business
interruption have increased compared with the period prior to December 31,
2001. The limit of self-insured excess for most forms of property damage
increased from £250,000 in the earlier period to £1,250,000 now. Similarly
business interruption excess has increased from 15 days in the earlier period
to 60 days now.

14



---



##### Table of Contents



ITEM 4 INFORMATION ON THE COMPANY

A.     HISTORY AND DEVELOPMENT OF THE COMPANY

Lucite International Group Holdings Limited, known commercially as Lucite
International, was incorporated and registered in England and Wales on August
23, 1999 as a private limited company. Lucite International Finance plc, the
issuer of the notes, is a public limited company incorporated and registered in
England and Wales. It was incorporated on August 24, 1999.

The Company changed its name in 2002 from Ineos Acrylics Group Holdings Limited
to Lucite International Group Holdings Limited. Henceforth the group has been
known commercially as Lucite International.

The registered offices of both companies are located at Queens Gate, 15-17
Queens Terrace, Southampton S014 3BP, United Kingdom and our telephone number
is +44238024-8150. Our agent in the United States is Lucite International,
Inc., which is located at The Lucite® Centre, 7275 Goodlett Farms Parkway,
Cordova, Tennessee, 38018, USA.

B.     BUSINESS OVERVIEW

We are the leading global producer and seller of methyl methacrylate (MMA),
the principal building block of Acrylic materials, with approximately a quarter
of the world market, by volume. We classify this market as our upstream
business. We also have leading positions in producing and selling acrylic-based
polymers, resins, sheet and composites. We classify these markets as our
downstream businesses. We are the only company in the methacrylates business
to have production, research, marketing and selling facilities in the three
principal acrylic markets: the Americas, Europe and Asia.

A network of 16 manufacturing facilities, which are located in nine countries,
supports our upstream and downstream businesses. In 2002, our upstream business
had £315 million in external sales (2001: £279 million) and our downstream
business had £267 million in external sales (2001: £298 million), representing
54% and 46% of our total sales respectively (2001: 48% and 52% respectively).
For additional disclosure regarding our sales, including a description of
revenues in each of our main geographic markets, please see Note 3 to the
financial statements of Lucite International Group Holdings Limited
accompanying this report.

Products

Upstream Business

The principal products of our upstream business are methyl methacrylates, or
MMA, and speciality methacrylates (SpMAs). Approximately 80% of sales by our
upstream business are attributable to MMA. We also produce a limited range of
high-value and high-volume SpMAs, which impart specific high performance
properties to its end products, such as gloss and adhesion. We also sell liquid
sodium cyanide mainly in the United Kingdom, which is used to produce
detergents and as an ingredient in pharmaceuticals and agrochemicals.



| |  | MMA.We are the largest producer of MMA in the world.MMA is produced in
liquid form and is the main building block of acrylic materials. Its
commercial value derives from its ability to form resins with excellent
transparency and colourability, strength and weatherability and
recyclability. MMA in liquid form is used in a wide range of applications
from paints and coatings to lubricants and textiles. We sell MMA to third
party manufacturers and we also utilize it in our own downstream business.
In 2002, we used approximately 27% of our MMA in our own downstream
production.
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | SpMA.We have a leading position in the SpMAs market in the sectors in
which we operate.SpMAs are usually manufactured by chemically modifying
MMA to achieve specific desirable performance characteristics in their end
uses. The majority of our SpMA production is used in the surface coating
and automotive industry with the balance being used in the lubricants,
inks and adhesives industries.                                                                                                                                                                                           

15



---



##### Table of Contents



Downstream Business

Our downstream business uses the MMA we manufacture to produce and sell
methacrylate-based polymers, resins, sheet and composites in thousands of
variations.

Our production knowledge and expertise allows us to manufacture products with a
large variety of aesthetic effects and functional properties for different
customers, markets and applications.

Our main downstream product categories are the following:



| |  | Polymers:Polymers consist principally of MMA and are used to provide
clarity, transparency, colourability, impact resistance and recyclability
in end products. Although we focus on higher margin applications, such as
architectural applications, films and optics, we also supply most of the
key application segments, including automotive, construction, lighting,
extrusion and housewares.                                                                                                                                            
|- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Resins:Resins are composed of MMA, SpMAs and other additives to provide
weatherability, formability, gloss and toughness in end uses. Resins are
produced in a variety of liquid and solid formats, including beads. We
manufacture only bead resins. In 2002, we were one of the leading
producers of bead resins. We supply most of the key product areas,
including marine and container coatings, inks, adhesives and electronics.                                                                                                         
| 
| |  | Acrylic Sheet:Acrylic sheets characteristics of optical transparency,
good impact strength and resistance to weathering make it suitable for a
wide range of applications including glazing, do-it-yourself,
transportation, acoustics and lighting. The main variants for customising
acrylic sheet are size, thickness, colour and surface effects. In baths,
kitchens, and spas, we have a leading global position, with high-quality
customers and premier brands in this market. We invented the acrylic bath
concept in the early 1950s.
| 
| |  | Composites:Composites are manufactured from a selection of MMA, polymers,
aluminium trihydride, quartz and silica. We sell composites in the form of
a liquid dispersion which can then be moulded and cured at high
temperatures for durability and desired aesthetic effects. We have a
leading position in the kitchen sink market in Europe, and in the bath and
vanity basin market in Japan.                                                                                                                                             

Many of our downstream products are sold under brand names and trademarks that
are well known globally. Our best-known brands and trademarks include:



| |  | Lucite®, used especially in the bath and spa market. Lucite® was established more than 50 years ago by DuPont and enjoys
particularly high brand recognition in the United States.
|- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Perspex®, a long-established European brand used for signs and corporate imaging.                                                                                                 
| 
| |  | Diakon®, a polymer primarily used in Europe in the automotive and appliance industries.                                                                                           
| 
| |  | UltraQuartz®, a new brand that we believe has growth potential in the composites-based kitchen sink market.                                                                       
| 
| |  | Elvacite®, a well-recognised brand in the bead resins industry.                                                                                                                   

16



---



##### Table of Contents



Customers, Sales, Marketing and Distribution

Our customers include some of the largest paints and resins producers in the
world, such as PPG,
Sherwin-Williams, DuPont, Akzo Nobel and ICI, including National Starch; major
manufacturers of kitchen, bath and spa products, such as American Standard,
Whirlpool and US Industries (which owns Spring Ram and Jacuzzi); do-it-yourself
retailers, such as Home Depot and Lowes; and entrepreneurial sheet producers
including Plaskolite (US) and Barlo (Europe). In 2002, we sold our products to
more than 3,000 customers. During 2002, our 20 largest customers accounted for
approximately 39% of our total turnover.

Our major customers typically purchase MMA from us under multi-year contracts,
with prices reset periodically based on general market conditions including raw
material prices. Furthermore, most of these contracts grant us the right to
sell a minimum percentage of the customers MMA requirements. Pricing for MMA
is generally related to the market price for acetone, the principal raw
material, and HCN, as well as to demand. Customers generally negotiate on the
basis of volume discounts, contract length and global reach.

Customers purchase most downstream products from us under short to mid-term
contracts, each with individual customer specifications. Pricing for downstream
products is generally related to demand for the end use applications, quality,
service innovation and brand needs.

For major markets and key product lines, we sell through our global network of
sales and marketing personnel. For our general-purpose sheet, polymer and resin
products and, including sales into developing markets and regions, we often use
independent distributors. Distributors typically manage a range of sheet
products and provide a service, such as selling our products in smaller
quantities and cutting acrylic sheet, to the customers particular
requirements. Our sales force is generally organised along upstream and
downstream product categories.

Customer service operations are spread over the geographic regions of our
customer base. Customer service representatives process orders to customer
specifications, determine product availability and schedule deliveries.
Customer service centres are located in Memphis, Tennessee for the US market,
in Darwen and Cassel, UK and Rozenburg, Netherlands for the European market and
in Bangkok, Thailand, Kaohsiung, Taiwan, Singapore and Tokyo, Japan sites for
the Asian market. We also have customer service in South Africa.

Manufacturing Process

We produce MMA using the acetone cyanohydrin three-step process, commonly
referred to in the chemicals industry as the ACH process, which is used for
most of the production in the Americas and Europe. The primary alternative
methacrylate production is the C4 process, a direct two-step oxidation of a C4
raw material, favoured by Japanese producers. In 2002, we produced
approximately 500 kilotonnes of MMA including our subsidiary (previously joint
venture), KMC.

We have found that our three-step process of producing MMA is cost-effective,
relative to other processes, especially when low-cost acetone and hydrocyanic
acid are available locally in sufficient quantities. Our method has advantages
over the C4 method including requiring our competitors to achieve greater
economies of scale to efficiently compete.

We have patents to produce MMA using methods other than our three-step process.
We have developed a two-stage process to synthesise MMA from ethylene and
methyl propionate, which we refer to as our Alpha technology and which would
enable us to produce MMA in quantities greater than 100 kilotonnes per year at
attractive cost levels. The pilot of this technology was commenced in 2001 and
was completed at the end of 2002. We purchased patents for an MMA process,
which we refer to as our Beta technology, from Shell in 1997. Applying this
process, we have the ability to convert methyl propadiene into MMA in a
one-step process. With this technology, we could produce MMA in quantities from
40 to 50 kilotonnes per year at attractive cost levels

We use the continuous and batch processes to manufacture polymers, the batch
process to manufacture resins and continuous cast, cell cast and extruded
processes to manufacture acrylic sheet.

17



---



##### Table of Contents



Raw Materials and Suppliers

We purchase goods and services from a wide range of suppliers. In 2002, the top
ten suppliers accounted for approximately 46% of supplies by value (2001: 48%).

Prices of each of our raw materials depend on different factors. For example,
the pricing of methanol is very competitive, because it is readily available
from a number of suppliers. By contrast, the price of HCN has been the least
susceptible to fluctuations in economic conditions, as it is determined by
long-term contracts with each of our three external suppliers. However this is
affected by, for example, natural gas prices. The price of acetone is closely
linked to the demand for phenol, as acetone is a by-product of phenol
production.

Intellectual Property Rights

Proprietary protection of our processes, apparatuses and other technology and
inventions is important to our business. We own approximately 80 patent
families and we have approximately 300 pending patent applications. We also
rely upon un-patented proprietary know-how and continuing technological
innovation and other trade secrets to develop and maintain our competitive
position.

We believe that branding in the downstream businesses is important and we
currently own over 30 active brands. Our key brands and trademarks include:
Lucite®, Perspex®, Elvacite®, Colacryl®, Diakon®, Asterite®, Prismex® (which we
market under license), UltraQuartz® and ModenGlas®, for which we have US or
foreign trademark rights.

Competition

The MMA business is characterised by a small number of major competitors, most
of whose MMA production is for internal use. We believe that we have the
largest market share and none of our competitors presently has a comparable MMA
production capacity or geographic spread. Our competitors include Rohm & Haas,
Degussa-Hüls AG, Mitsubishi Rayon Co., Ltd., Asahi Kasei, Sumitomo and Kuraray.
Moreover, there are only a few volume SpMAs producers, including Rohm & Haas
and Mitsubishi Rayon Co., Ltd. The primary factors for competition in the
production of MMA and SpMAs are price, quality, service and reliability of
supply.

Competition in the downstream market is fragmented and there are many
non-vertically integrated manufacturers. Our main competitors in the polymer,
resins and composites market include AtoFina, Degussa-Hüls AG, Mitsubishi Rayon
Co. Ltd., Sumitomo, and Avecia and other non integrated producers. Our
competitors in the acrylic sheet market include integrated manufacturers such
as AtoFina and Degussa-Hüls AG, Mitsubishi Rayon Co Ltd. and several major
independent manufacturers such as Plaskolite Inc, Aristech Acrylics LLC and
Barlo. In our downstream acrylic business, we compete based on price, product
innovation and service.

Relationship with DuPont

Since 1993, when ICI Acrylics acquired DuPonts US acrylics business, including
an MMA plant in
Beaumont, Texas, an MMA acrylic continuous cast sheet plant in Memphis,
Tennessee, and an MMA and SpMA plant in Belle, West Virginia, DuPont has been a
major customer of and supplier to our business. Under the 1993 acquisition
agreement, DuPont is required to supply 100% of our requirement for HCN in the
manufacture of ACH and MMA at our Memphis and Beaumont facilities and 100% of
our requirement for ACH at our Belle facility until June 30, 2003. The supply
prices are calculated according to a formula negotiated by ICI as part of the
overall acquisition. All of the HCN we purchase from DuPont is manufactured at
these shared complexes. We have agreed terms for the continued supply of HCN
from DuPont for a further five years following the expiration of the current
agreement in June 2003.

In addition, DuPont supplies methanol, natural gas and other goods and services
to our Beaumont and Memphis facilities.

All of the facilities acquired from DuPont remain located within shared
chemicals complexes. Our facilities rely on services provided by DuPont
pursuant to service agreements. Supplies and services, which are integral to
the complex, are contracted until June 30, 2003. We are actively negotiating a
new service contract with DuPont on similar performance, service and financial
terms as the existing contract for a length of time yet to be agreed. These
supplies and services include utilities, steam, natural gas, nitrogen, plant
protection, water, fire protection and railroads. In addition, DuPont operates
some of our facilities on our behalf, providing all

18



---



##### Table of Contents



site services and labour. We believe that we have good relationships with
DuPont and currently intend to continue all of our existing arrangements with
DuPont.

We currently supply 100% of DuPonts MMA needs for the production of DuPonts
Corian® product and Finishes business in the United States.

We also have a contract with DuPont to supply a range of products, including
MMA, methacrylic acid,
SpMAs and resins to DuPont in the United States until June 30, 2003. Both
parties have signed a letter of intent with regard to a new three-year
contract; the terms of this contract are still in negotiation.

Employees

As of December 31, 2002 we employed approximately 1993 people. Approximately
27% of our employees work in the United States, 41% in Europe, 23% in Asia and
9% in the rest of the world. Some of our employees are subject to collective
bargaining agreements. Overall, we believe that our relations with our
employees are good.

Seasonality

Taken as a whole there are no material seasonal factors in business
performance.

Environmental Regulations

National and international laws regulate the production and marketing of
chemical substances, however every country has its own legal procedures for
registration and import. Laws and regulations in the European Union, the United
States and Japan are most significant to our business. This includes the
European inventory of existing commercial chemical substances, the European
list of notified chemical substances, the U.S. Toxic Substances Control Act and
the chemical list of the Japanese Ministry of Trade and Industry.

In the ordinary course of business, we are subject to continual environmental
inspections and monitoring by governmental enforcement authorities. We may
incur substantial costs, including fines, damages and criminal or civil
sanctions, for actual or alleged violations arising under applicable
environmental laws. In addition, our production facilities require operating
permits that are subject to renewal, modification and, in some circumstances,
revocation. Violations of permit requirements can also result in restrictions
or prohibitions on plant operations, substantial fines and civil or criminal
sanctions. Our operations involve the generation, handling, transportation, use
and disposal of numerous hazardous substances. Changes in regulations regarding
the generation, handling, transportation, use and disposal of hazardous
substances could inhibit or interrupt our operations and thus have a negative
impact on our results of operations. From time to time, these operations may
result in violations under environmental laws, including spills or other
releases of hazardous substances to the environment. We could incur material
costs to address catastrophic incidents that may occur as well as to implement
measures to prevent such incidents. In addition, catastrophic incidents could
result in public outrage, which may have a significant negative impact on our
reputation and results of operations. Adverse reactions may be significantly
influenced by public perception of the issues, irrespective of whether actual
or potential significant harm is caused to human health or the environment.

Under some environmental laws, we may be jointly and severally liable for the
costs of environmental contamination on or from our properties and at off-site
locations where we dispose or arrange for disposal or treatment of hazardous
wastes. For example, in the United States, under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 and similar
state laws, a current owner or operator of real property may be liable for
these costs regardless of whether the owner or operator owned or operated the
real property at the time of the release of the hazardous substances and
regardless of whether the release or disposal was in compliance with law at the
time it occurred. In addition, under the Resource Conservation and Recovery Act
of 1976 and similar state laws, as the holder of permits to treat or store
hazardous wastes, we may, under some circumstances, be required to remediate
contamination at our properties regardless of when the contamination occurred.
Similar laws are being developed or are in effect to varying degrees in other
parts of the world, most notably in the European Union. We cannot assess any
third-party claims that may arise under these laws at the present time.

We may also incur costs for capital improvements and general compliance under
applicable environmental laws, including costs to acquire, maintain and repair
pollution control equipment. Capital expenditures are planned, for example,
under national legislation implementing the European Union Directive on
Integrated Pollution Prevention and Control (IPPC). Under this directive, the
majority of our plants will, over the next few years, be required to obtain
IPPC authorisations which will regulate air and water discharges, waste

19



---



##### Table of Contents



management and other matters relating to the impact of operations on the
environment, and to conduct site assessments to evaluate environmental
conditions. Although the implementing legislation in most member states is not
yet in effect, it is likely that additional expenditures may be necessary in
some cases to meet the requirements of IPPC authorisations.

Capital expenditures and costs and operating expenses relating to environmental
matters will be subject to evolving regulatory requirements and will depend on
the timing of the promulgation and enforcement of specific standards that
impose requirements on our operations. Therefore, we cannot assure you that
material capital expenditures, costs or operating expenses beyond those
currently anticipated will not be required under applicable environmental laws.

Our operations are experienced and effective in containing and handling a range
of chemicals that can have serious impacts on human health and the environment
including hydrocyanic acid, sodium cyanide and ammonia. We are aware that there
is or may be soil or groundwater contamination at some of our facilities,
former facilities, and offsite locations resulting from past operations at
these or neighbouring facilities. We may need to remediate soil and groundwater
contaminated with hazardous substances to protect against unacceptable risk to
human health and the environment. We may incur significant costs for any
investigation and remediation. Based on available information, we believe that
the costs we may need to incur to investigate and remediate any contamination
will not have a material adverse effect on our business, financial condition or
results of operations.

We have indemnification rights, including indemnities from ICI, for the
facilities transferred in connection with the acquisition and related
transactions. We discuss these rights under Risk Factors  Environmental
matters. We cannot give any assurance that these indemnities will fully cover
the costs of any investigation and remediation that may be required and that we
will not be required to bear some or all of these costs or that these costs
will not be material.

U.K. Insolvency Laws

Each of the guarantors and Lucite International Finance is an English company.
Therefore, any insolvency proceedings by or against Lucite International
Finance or the guarantors would likely be based on English insolvency laws. The
procedural and substantive provisions of English insolvency laws generally are
more favourable to secured creditors than comparable provisions of US law and
afford debtors and unsecured creditors only limited protection from secured
creditors. Due to the nature of English insolvency laws and the unsecured
nature of the claims of holders of these notes against us, the ability of
holders of the notes to protect their interests will be more limited than would
be the case under US bankruptcy laws. The lenders under our senior credit
facility have first ranking security on all the assets of the guarantors of the
notes, other than Lucite International Group Holdings Limited, and many of
their subsidiaries. As a result, after the enforcement of the collateral, the
security agent under the credit facility will have effective control of and the
right to direct the disposition of the assets of the guarantors and their
affiliates. In addition, under English insolvency law, in the event of a
winding up, our liabilities under these notes will be paid after certain of our
other debts which are entitled to priority under English law, such as money
owed to the UK Inland Revenue for income tax deducted at source, value added
tax and certain other taxes and duties owed to the UK Customs and Excise,
social security contributions, occupational pension scheme contributions and
salaries owed to employees.

In any insolvency proceedings by or against Lucite International Group Holdings
Limited or Lucite International Investment Limited, each of which has
guaranteed the notes on a senior basis, the guarantee will rank as an unsecured
debt of the guarantor behind the claims of secured creditors of the guarantor.
The ability of holders of the notes to recover from that guarantor will be
subject to the same principles as set out in the preceding paragraph resulting
from the application of English insolvency laws.

In any insolvency proceedings by or against any of the subordinated guarantors,
each of which has guaranteed the notes on a subordinated basis, the
subordinated guarantees will rank behind all of the current and future
indebtedness. This will include indebtedness under the senior credit facilities
of the subordinated guarantors (other than trade payables), except indebtedness
that expressly provides that it is not senior to the guarantees and other types
of indebtedness. In addition, the ability of holders of the notes to recover
from a subordinated guarantor will be subject to the same principles as set out
in the second preceding paragraph resulting from the application of English
insolvency laws.

20



---



##### Table of Contents



Insurance

We insure our plant, equipment and other assets for property damage in the
amount of approximately 1.6 billion with an insurance policy, which we believe
to be in accordance with customary industry practices, including deductibles
and coverage amounts. We also carry a business interruption policy in the
amount of 600 million for specified events for up to 18 months. In addition,
we carry third party liability insurance. We remain subject to significant
increased coverage excesses (deductibles) and additional exclusions for risks
such as terrorism and earthquake loss.

Legal Matters

On March 25, 2003, the Company received notification that the European
Commission is investigating Lucite International Limited and Lucite
International UK Limited with regard to possible participation in
anti-competitive practices contrary to Article 81 of the Treaty of Rome. Such
investigation is a preliminary step and does not imply that the Company has
engaged in any unlawful activities relating to anti-competitive practices.
There is no strict deadline to complete anti-competitive inquiries and their
duration is determined by the complexity of each case, the exercise of the
rights of defence and by the Commissions procedures. Lucite International
Limited is co-operating fully with the European Commission on these matters.

We are a party to various proceedings instituted by governmental authorities
and others arising under provisions of applicable laws, including environmental
laws. We do not believe that the outcome of any of these matters will have a
material adverse effect on our financial condition or results of operations.

21



---



##### Table of Contents



C.     ORGANISATIONAL STRUCTURE

Corporate Structure The following chart sets forth the
corporate structure of our group. GRAPH
  (a)
        
        Charterhouse owns 78% of the common stock and 97% of the preferred stock of Lucite International Limited. Directors of Ineos Capital and
related parties own 11% of the common stock and none of the preferred stock of Lucite International Limited.(b)
        
        Guarantor of the senior notes. Lucite International Group Holdings Limited and Lucite International Investment Limited guaranteed the
notes on a senior basis and the other guarantors guaranteed the notes on a subordinated basis. The subordinated guarantees are subject to
important conditions, including a standstill period of up to 179 days following an event of default. In addition, the subordinated
guarantors are subsidiaries of the senior guarantors. As a result, the senior guarantees are effectively subordinated to all existing and
future obligations of the subordinated guarantors.(c)
        
        Guarantor of senior credit facility.(d)
        
        Security to lenders under senior credit facility.(e)
        
        Revolving credit facility may be borrowed by operating companies.(f)
        
        Some of these entities are guarantors of, and have pledged security under, the senior credit facility.(g)
        
        Facility available for up to £40 million.


A full listing of significant subsidiaries is provided in Note 28 to the
financial statements.

22



---



##### Table of Contents



D.     PROPERTY, PLANTS AND EQUIPMENT

Properties and Manufacturing Facilities

We currently lease the office space for our principal executive offices, which
are located in Southampton, England. Additionally, we also lease
administrative, technical and sales office space in various locations in the
countries in which we operate.

We produce our upstream and downstream products at 16 plants in nine countries.
The following chart provides information regarding the production capacities of
our plants (assuming no shutdowns during the year) and, unless otherwise noted,
we own the plant site and facilities.

|                                    |  |                        |  |                          |     |                          |     |         |    |  |     | 
|----------------------------------- |  | ---------------------- |  | ------------------------ | --- | ------------------------ | --- | ------- | -- |  | --- | 
|                                    |  |                        |  |                          |     | Nominal                  |     | Nominal
|Site                                |  | Products               |  | Upstream Capacity        |     | Downstream Capacity     
|                                    |  |                        |  |                          |     |                         
|                                    |  |                        |  | (in kilotonnes per year) |     | (in kilotonnes per year)
|                                    |  |                        |  |                          |     |                         
|Beaumont TX (US)                    |  | MMA                    |  |                          | 140 |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|Belle WV (US) (a) (d)               |  | SpMA                   |  |                          | 57  |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|Billingham (UK)                     |  | MMA                    |  |                          | 200 |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | SpMA                   |  |                          | 41  |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Liquid sodium cyanide  |  |                          | 30  |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|Clairvaux (France)                  |  | Cast acrylic sheet     |  |                          |    |                          |     |         | 2  | 
|                                   
|                                   
|                                   
|                                   
|Darwen (UK)                         |  | Cast acrylic sheet     |  |                          |    |                          |     |         | 31 | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Composites             |  |                          |    |                          |     |         | 6  | 
|                                   
|                                   
|                                   
|                                   
|Ibaraki (Japan)                     |  | Composites             |  |                          |    |                          |     |         | 7  | 
|                                   
|                                   
|                                   
|                                   
|Kaohsiung (Taiwan) (b)              |  | MMA                    |  |                          | 95  |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|Memphis TN (US)                     |  | MMA                    |  |                          | 154 |                          |     |         |   | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Cast acrylic sheet     |  |                          |    |                          |     |         | 20 | 
|                                   
|                                   
|                                   
|                                   
|Monterrey (Mexico) (d)              |  | Extruded acrylic sheet |  |                          |    |                          |     |         | 6  | 
|                                   
|                                   
|                                   
|                                   
|Newton Aycliffe (UK)                |  | Polymers and resins    |  |                          |     |                          |     |         | 4  | 
|                                   
|                                   
|                                   
|                                   
|Olive Branch MS (US)                |  | Extruded acrylic sheet |  |                          |    |                          |     |         | 38 | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Polymers and resins    |  |                          |    |                          |     |         | 38 | 
|                                   
|                                   
|                                   
|                                   
|Parkersburg WV (US) (a) (d)         |  | Polymers and resins    |  |                          |    |                          |     |         | 12 | 
|                                   
|                                   
|                                   
|                                   
|Presidents Island, Memphis, TN (US) |  | Polymers and resins    |  |                          |    |                          |     |         | 13 | 
|                                   
|                                   
|                                   
|                                   
|Umbogintwini (South Africa)         |  | Cast acrylic sheet     |  |                          |    |                          |     |         | 7  | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Extruded acrylic sheet |  |                          |    |                          |     |         | 1  | 
|                                   
|                                   
|                                   
|                                   
|Rozenburg (Netherlands) (e)         |  | Polymers and resins    |  |                          |    |                          |     |         | 20 | 
|                                   
|                                   
|                                   
|                                   
|Bangkok Thailand (c)                |  | Cast acrylic sheet     |  |                          |    |                          |     |         | 8  | 
|                                   
|                                   
|                                   
|                                   
|                                    |  | Extruded acrylic sheet |  |                          |    |                          |     |         | 7  | 
|                                   
|                                   
|                                   
|                                   
|Total                               |  |                        |  |                          |     |                          | 717 |         |    |  | 220 | 



|(a) |  | DuPont currently operates these facilities on our behalf pursuant to a
service agreement.
|--- |  | -----------------------------------------------------------------------------------------
|   
|(b) |  | We own approximately 60% and another shareholder owns the remaining 40%
of this facility.
|   
|(c) |  | We own 59% of this facility and East Asiatic (Thailand) Co Ltd owns
19.5%.               
|   
|(d) |  | Plant site and facilities leased by Lucite International.                                
|   
|(d) |  | Site services provided by Huntsman ICI.                                                  

We invested substantially in new plant capacity in the first half of the 1990s.
These investments included building a new world scale monomer plant at our
Beaumont, Texas facility, doubling the nominal capacity of the Cassel monomer
facility at Billingham, constructing substantially enhanced environmental
control processes in the UK and doubling polymer capacity in our facility in
Holland.

We believe that our plants and facilities are maintained in good condition and
are adequate for our current needs.

23



---



##### Table of Contents



ITEM 5 OPERATING AND FINANCIAL REVIEW AND PROSPECTS

Overview

We have two core operating sectors: upstream and downstream. The upstream
segment produces both MMA and SpMAs (monomers), which are the chemical building
blocks for the production of acrylics. The downstream segment produces
methacrylate materials in various forms, which include polymer, resins, acrylic
sheet and composites. These products are manufactured at facilities located in
the Americas, Europe and Asia and are sold in over 100 countries.

Our two operating sectors are impacted to varying degrees by economic
conditions, prices of raw materials and global supply and demand pressures. The
fundamental drivers of the upstream segment include the following:



| |  | the selling prices of the key raw materials, such as acetone, HCN and methanol, and               
|- |  | --------------------------------------------------------------------------------------------------
| 
| |  | downstream demand for monomers from both our downstream operations and our external customer base.

Raw materials have, during the past five years, accounted for approximately
6575% of the cost of monomer production. Approximately 25 30% of our upstream
production is used internally in our downstream business while approximately
70 75% is sold into the merchant market to manufacturers of paints, coatings,
adhesives, sealants, inks and other acrylic products. We sell monomers
internally to our downstream businesses at market prices.

Other key drivers include:



| |  | industry supply and demand, and                                   
|- |  | ------------------------------------------------------------------
| 
| |  | the relative cost-competitiveness of our manufacturing facilities.

Generally, changes in demand for our downstream products follow changes in
gross domestic product because end uses for methacrylate materials span a wide
range of industry sectors including transportation and automotive,
architecture, surface coatings and household appliances and fittings.
Variations in demand are regional, however, due to the different economic
cycles in different geographic regions. Methacrylate monomers represent
approximately 65% to 75% of the raw materials used in the production of
downstream products for both 2001 and 2002; this is an increase from
approximately 60% to 65% in 2000.

From mid-1999 through 2000 there was a trend of increasing monomer prices in
the Americas, Asia and Europe, reflecting the higher material costs arising
during 2000. During 2001 recessionary forces, particularly in the United
States, resulted in some decrease in demand with a resultant downward trend on
both selling prices and the cost of raw materials towards the latter part of
2001. During 2002 and in particular the latter half of that year there was a
significant increase in both raw material costs and selling prices with
tightening of supply relative to strong demand.

Historically, we have been able to pass on to our customers most of the changes
in monomer raw material prices such as acetone and methanol, although typically
there has been a three to six month lag. Acetone constitutes the principal raw
material used in the production of MMA and has been an important factor in
setting our MMA selling prices. Natural gas is also an important indirect
feedstock to the production of the intermediate HCN.

Cost saving initiatives implemented recently include:



| |  | a reorganisation program in Europe and the United States that was announced in March 2000,
which has reduced personnel by 110 employees and
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | a further reduction in employee numbers by 54 in the UK manufacturing area, which was
announced in September 2001.                         

In addition, ongoing cost savings and margin enhancing projects include:



| |  | greater exploitation of volume discounts on raw material purchases,                                                       
|- |  | --------------------------------------------------------------------------------------------------------------------------
| 
| |  | continued efforts to maximize downstream profits through a focus on higher margin high
value-added specialty products, and

24



---



##### Table of Contents





| |  | efforts to optimise purchased services.
|- |  | ---------------------------------------

Our operations are conducted in over 100 countries. The results of operations
and the financial position of these operations are reported in the relevant
foreign currencies and then translated into pounds sterling at the applicable
exchange rates for inclusion in our financial statements. The exchange rates
between these currencies and the pound sterling in recent years have fluctuated
significantly and may in the future fluctuate substantially. Because we
generate a significant percentage of our revenues and a substantially lower
percentage of our operating expenses in currencies other than the pound
sterling, fluctuations in the value of the pound sterling against other
currencies have had in the past, and may have in the future, a material effect
on our turnover and operating margins.

We operate 16 manufacturing facilities in nine countries. In our upstream
business, each plant is shut down every three years for typically 35 days for
cleaning and maintenance, however, the frequency of these overhauls is
decreasing as a result of improved operating and maintenance efficiency. Our
downstream facilities are continuously maintained without any major scheduled
shutdowns.

Critical accounting policies and use of accounting estimates

The accounting policies that have been applied are detailed within Note 1 to
the financial statements. These policies comply with generally accepted
accounting principles applicable in the UK but require some degree of judgement
regarding the estimates and assumptions used to apply them.

The application of these assumptions and judgements affects the reported
amounts of profit during the year and the assets and liabilities at the balance
sheet date. Actual results may differ from the estimates calculated using these
assumptions and judgements. Management believes that the following accounting
policies are the critical policies where the assumptions and judgements made
could have a significant impact on the consolidated financial statements.
These critical accounting policies have been discussed and agreed with the
Companys Audit Committee.

Impairment of goodwill

The calculation for impairment of goodwill uses a discounted cash-flow approach
to value the net assets of the Company. We have calculated this on a regional
upstream and downstream basis as this is how we manage the business.

Within the calculation of the value of net assets, we have made estimates to
allow us to split any non product-specific cashflows back to upstream and
downstream products.

The calculation requires us to make estimates concerning future cash flow of
the business based on future expected sales prices and future expected feed
stock prices. These estimates are made using long-term forecast information
for the business and are based on our best view of future market conditions.
The chemical industry is however cyclical and changing market demands and
prices may adversely impact on these future projections of cash flow.
Substantially all of our revenue is attributable to sales of MMA and
MMA-related products, the prices of which have been historically cyclical and
sensitive to relative changes in supply and demand and the availability and
price of feedstocks. Our ability to pass on higher feedstock prices is to a
large extent dependent upon market conditions and thus impacts on our future
cash forecasts.

The calculation discounts future cash flow at an appropriate discount rate for
the Company based on the financial structure that we have in place. We have
used an average discount rate based on the weighted average cost of capital of
a number of companies of similar structure within our industry. We have
conducted a sensitivity review on the numbers calculated and found that a 2%
increase in the discount factor changes the net asset valuation of the Company
by 11% but does not give rise to any impairment in any of the segments
considered.

This policy is considered to be a critical accounting policy, as impairment
charges recorded in the profit and loss account would have a significant impact
on net profit.

25



---



##### Table of Contents



Depreciation of tangible fixed assets

It is our policy to depreciate tangible fixed assets, except land, on a
straight-line basis over the life of the asset. A key assumption in this policy
is the life applied to each class of fixed asset, which will in turn determine
the annual depreciation charge. In deciding the appropriate lives to be
applied to the assets, management takes into account various factors including,
amongst other things, the accumulated experience of the effective asset lives
from historical business operations. Variations in the asset lives used could
impact the earnings of the business through an increase or decrease in
depreciation charge.

This policy is considered to be a critical accounting policy since the
depreciation charges are a significant component of net profit and so variation
in these charges would have a significant impact on net profit.

Pension liabilities

The amounts recognised in the financial statements related to pension and other
post-retirement benefits are determined from actuarial valuations. Inherent in
these valuations are assumptions including expected return on plan assets,
discount rates at which the liabilities could be settled at December 31, 2002,
rate of increase in future compensation levels and health care cost trend
rates. These assumptions are updated annually and are disclosed in Note 22 to
the financial statements.

The expected long-term rate of return on assets is developed with input from
independent, professionally qualified actuaries who base these assumptions on
broad equity and bond indices. The long-term rate of return assumptions used
for determining net periodic pension expense for 2002 were 10% for the US
Scheme and 6.8% for the UK scheme. The rates used to determine net periodic
pension expense for 2003 are 8.5% for the US scheme and 7.3% for the UK scheme.
These rates have been discussed with the actuaries and we believe that based on
our mix of equities and bonds and the inflation assumptions used that the rates
applied are appropriate. Future actuarial pension expense will depend on future
investment performance, changes in future discount rates and various other
factors related to the population of participants in the pension plans.

The discount rates used for determining future pension obligations are based on
long-term high quality corporate bonds. The discount rate used to value the US
liabilities reduced from 7.25% at December 31, 2001 to 6.75% at December 31,
2002. The discount rate used to value the UK liabilities reduced from 5.8% at
December 31, 2001 to 5.6% at December 31, 2002.

The assumption for the long-term rate of increase in compensation levels
remained at the same level for the US scheme at 4.5% and was reduced in line
with inflation for the UK scheme to 2.25%.

The fair value of the US scheme assets decreased from £38 million at December
31, 2001 to £28 million at December 31, 2002. The fair value of the UK scheme
assets decreased from £52 million at December 31, 2001 to £47 million at
December 31, 2002. These decreases in the scheme asset values reflect declining
investment performance during the year ended December 31, 2002.

The Company does not expect significant additional cash contributions to be
required for either the US or the UK plans in 2003.

This policy is considered to be critical since changes in pension assumptions
could have a significant impact on the Companys reported net profit.

Deferred tax

Deferred tax assets are recognised to the extent that they are expected to
arise from short-term timing differences between the financial statements and
the tax base of the groups assets and liabilities. The extent to which we
would recognise deferred tax on losses would be dependent on the assumptions
concerning the future taxable profits of the business against which the losses
can be relieved. We have not recognised losses where we do not believe that we
will relieve them within a reasonable time horizon.

26



---



##### Table of Contents



A.     OPERATING RESULTS

The results of operations for the year ended December 31, 2002 include the
results of the Kaohsiung Monomer Company (KMC) on a fully consolidated basis
for the whole year. The results of operations for the year ended December 31,
2001 include our interest in the results of the KMC on an equity accounting
basis until September 1, 2001. At this date we acquired an additional
shareholding in KMC taking our total shareholding to 60% and have fully
consolidated KMC from this point onwards. The results of operations for the
year ended December 31, 2000 include our interest in KMC on an equity
accounting basis for the full year.

The following table shows historical turnover and operating profit for our
principal businesses for the three years ended December 31, 2002.

|                                |  |              |     |      |  |      |     |   |  |  |     |  
|------------------------------- |  | ------------ | --- | ---- |  | ---- | --- | - |  |  | --- | -
|                                |  | Year ended  
|                                |  | December 31,
|                                |  | £ million   
|                                |  |             
|                                |  | 2000         |     | 2001 |  | 2002
|                                |  |              |     |      |  |     
|Turnover:                       |  |              |     |      |  |      |     |   |  |  |     |  
|                               
|                               
|                               
|                               
|Upstream                        |  |              | 351 |      |  |      | 374 |   |  |  | 402 |  
|                               
|                               
|                               
|                               
|Downstream                      |  |              | 291 |      |  |      | 298 |   |  |  | 274 |  
|                                |  |              |     |      |  |      |     |   |  |  |     |  
|                                |  |              | 642 |      |  |      | 672 |   |  |  | 676 |  
|                               
|                               
|                               
|                               
|Interclass eliminations         |  |              | (82 | )    |  |      | (95 | ) |  |  | (94 | )
|                                |  |              |     |      |  |      |     |   |  |  |     |  
|Total turnover                  |  |              | 560 |      |  |      | 577 |   |  |  | 582 |  
|                                |  |              |     |      |  |      |     |   |  |  |     |  
|Operating profit:               |  |              |     |      |  |      |     |   |  |  |     |  
|                               
|                               
|                               
|                               
|Upstream                        |  |              | 6   |      |  |      | 16  |   |  |  | 12  |  
|                               
|                               
|                               
|                               
|Downstream                      |  |              | 24  |      |  |      | 6   |   |  |  | 15  |  
|                                |  |              |     |      |  |      |     |   |  |  |     |  
|                                |  |              | 30  |      |  |      | 22  |   |  |  | 27  |  
|                               
|                               
|                               
|                               
|Exceptional operating expenses  |  |              | (14 | )    |  |      | (4  | ) |  |  |    |  
|                               
|                               
|                               
|                               
|Share of Joint Venture Earnings |  |              | 2   |      |  |      | 2   |   |  |  |    |  
|                                |  |              |     |      |  |      |     |   |  |  |     |  
|Total operating profit          |  |              | 18  |      |  |      | 20  |   |  |  | 27  |  
|                                |  |              |     |      |  |      |     |   |  |  |     |  

Year ended December 31, 2002 compared to the year ended December 31, 2001.

Turnover

Total turnover increased £5 million or 1% from £577 million for the year ended
December 31, 2001 to £582 million for the year ended December 31, 2002.

Turnover from upstream operations increased £28 million or 7% from £374 million
for the year ended December 31, 2001 to £402 million for the year ended
December 31, 2002. Turnover from upstream operations in 2002 was increased by
approximately £45 million or 12% compared to 2001 as a result of full
consolidation of KMC from September 1, 2001. Lower average monomer prices in
2002 compared with 2001 led to a £38 million or 10% reduction in upstream
turnover for the year ended December 31, 2002. Currency exchange movements had
a £15 million or 4% adverse impact and increased sales volume had a £24 million
or 6% favourable effect on upstream turnover during the year ended December 31,
2002. The balance of the increase in turnover arises as a result of a
reclassification of sales between the upstream and the downstream businesses of
£12 million or 3% (see comments below).

Turnover for downstream operations decreased £24 million or 8% from £298
million for the year to December 31, 2001 to £274 million for the year to
December 31, 2002. This decrease resulted from an increase of £18 million, or
6%, attributable to increased sales volume, which was offset by a decrease of
£10 million, or 3%, due to lower sales prices and a decrease of £11 million, or
4%, due to unfavourable currency exchange movements. The balance of the
decrease in turnover arises as a result of a reclassification of sales between
the upstream and the downstream businesses of £21 million or 7% (see comments
below).

Trading operations in a number of territories previously served by ICI
distributors have been classified wholly as downstream during the year ended
December 31, 2001. With effect from January 1, 2002, following the full
consolidation of KMC within the business, we have re-analysed these trading
operations to add clarity to the results. As a result, downstream turnover
decreased for the year ended December 31, 2002 by £15 million (£21 million for
the year ended December 31, 2001) and upstream turnover increased for the year
ended December 31, 2002 by £7 million (£12 million for the year ended December
31, 2001). The resulting change in inter-class eliminations resulted in no
impact on the overall group turnover.

27



---



##### Table of Contents



Cost of sales

Cost of sales decreased £1 million from £458 million for the year ended
December 31, 2001 to £457 million for the year to December 31, 2002. Of this an
increase of £33 million or 7% arose from the full consolidation of KMC from
September 1, 2001. Exchange movements had a favourable impact of approximately
£24 million or 5% on the full year ended December 31, 2002. Lower overall raw
materials costs when taken net of usage efficiencies resulted in a £30 million
or 7% reduction in cost of sales, which has been mostly offset by the impact of
higher sales volumes, which increased approximately £21 million or 5%.

Net operating expenses

Net operating expenses decreased £3 million or 3% from £101 million for the
year ended December 31, 2001 to £98 million for the year ended December 31,
2002.

This decrease was due to a reduction of £4 million in respect of exceptional
operating expenses and an aggregate positive effect of £4 million due to
savings from restructuring programmes and currency translation of overseas
operations. These factors were partially offset by the £5 million effect of
the full consolidation of KMC from September 1, 2001.

Net interest payable

Net interest payable increased by £1 million or 3% from £28 million for the
year ended December 31, 2001 to £29 million for the year ended December 31,
2002. Of this increase £4 million is attributable to adverse foreign exchange
movements relating to external debt not hedged by foreign currency assets.
These effects included a £1 million loss in 2002 versus a £3 million gain in
2001. The balance of £3 million reflects lower interest rates on debt arising
under senior credit facilities, offset by increased borrowings under those
facilities.

Taxation on Loss on Ordinary Activities

The taxation credit on loss on ordinary activities decreased by £4 million from
£6 million for the year ended December 31, 2001 to £2 million for the year
ended December 31, 2002. The results for the year ended December 31, 2001 have
been re-stated as a result of FRS19 and as a result the 2001 amount reflects a
£5 million deferred tax credit relating to US losses and capital allowances not
previously recognised. During the year ended December 31, 2002 we have decided
not to increase the deferred tax asset for any further losses in the United
States due to the extended time period over which they may be utilised.

Equity Minority Interests

Equity minority interests increased £2 million from £1 million for the year
ended December 31, 2001 to £3 million for the year ended December 31, 2002 as a
result of consolidating the results of KMC for periods after September 1, 2001.

Year ended December 31, 2001 compared to the year ended December 31, 2000

Turnover

Total turnover increased £17 million or 3% from £560 million for the year ended
December 31, 2000 to £577 million for the year ended December 31, 2001.

Turnover from upstream operations increased £23 million or 7% from £351 million
for the year ended December 31, 2000 to £374 million for the year ended
December 31, 2001. Turnover from upstream operations in 2001 was increased by
approximately £18 million compared to 2000 as a result of full consolidation of
KMC for the period from September 1, 2001, versus equity accounting for KMC
during the whole of the year ended December 31, 2000.

The recorded increase in upstream turnover is stated net of approximately £28
million or minus 8% attributable to volume decrease and approximately £11
million or 3% attributable to favourable exchange movements. The balance of
growth in upstream turnover reflects the increasing prices of major
methacrylate monomers during the year ended December 31, 2001.

28



---



##### Table of Contents



Turnover for downstream operations increased £7 million or 2% from £291 million
for the year to December 31, 2000 to £298 million for the year to December 31,
2001. Of this increase £10 million is attributable to the full year effect of
two acquisitions made during 2000. There is an £11 million decrease or 4%,
which is attributable to decreased volume demand and an increase of £5 million
or 2% due to price increases. The balance of the increase is attributable to
favourable exchange movements.

Cost of sales

Cost of sales increased £25 million or 6% from £433 million for the year ended
December 31, 2000 to £458 million for the year to December 31, 2001.

Of this increase £14 million arose from the full consolidation of KMC from
September 1, 2001 combined with the full year effect of acquisitions made in
2000 of £8 million. Adverse exchange movements of approximately £13 million
combined with higher overall raw materials costs when taken net of efficiencies
of £16 million, has been mostly offset by the impact of lower sales volumes of
approximately £26 million. The higher raw material costs compared to December
31, 2001 have arisen due to higher production volumes during the first part of
2001 when raw material prices were higher; in the latter part of 2001 the
prices were actually declining.

In comparison to the twelve months ended December 31, 2000, key raw material
prices were approximately 12% lower for acetone, 15% higher for methanol and
10% higher for US natural gas.

Net operating expenses

Net operating expenses decreased £10 million or 9% from £111 million for the
year ended December 31, 2000 to £101 million for the year ended December 31,
2001.

Net operating expenses increased by £1 million as a result of full
consolidation of KMC from September 1, 2001 and by £2 million in respect of
acquisitions in 2000. There was a reduction of £10 million in respect of
exceptional operating expenses compared to year ended December 31, 2001; £4
million was charged as exceptional during the year ended December 31, 2001
representing a program to reduce fixed costs in the UK manufacturing area. The
balance of £3 million is comprised of savings from restructuring programmes
offset by currency translation of overseas operations

Net interest payable

Net interest payable decreased £12 million or 30% from £40 million for the year
ended December 31, 2000 to £28 million for the year ended December 31, 2001. Of
this decrease £3 million reflects the reduced amortisation of debt issue fees
and £8 million is attributable to £3 million of gains on foreign exchange on
external debt not hedged by foreign currency assets in 2001 versus a £5 million
loss in 2000. The balance of the decrease reflects decreases in interest rates
applied to debt arising under senior credit facilities, offset by increased
utilisation of revolver facilities.

Taxation on Loss on Ordinary Activities

The taxation credit on loss on ordinary activities decreased by £4 million from
£10 million for the year ended December 31, 2000 to £6 million for the year
ended December 31, 2001. The numbers have been restated at December 31, 2002 as
a result of the adoption of FRS19.

Equity Minority Interests

Equity minority interests in the profit and loss account increased £1 million
from £ nil for the year ended December 31, 2000 to £1 million for the year
ended December 31, 2001 as a result consolidating the results of KMC for
periods after September 1, 2001.

29



---



##### Table of Contents



Recent US accounting pronouncements

On January 17, 2003, the Financial Accounting Standards Board (FASB or the
Board) issued FASB Interpretation No. 46 (FIN 46 or the Interpretation),
Consolidation of Variable Interest Entities, an interpretation of ARB 51.The
primary objectives of FIN 46 are to provide guidance on the identification of
entities for which control is achieved through means other than through voting
rights (variable interest entities or VIEs) and how to determine when and
which business enterprise should consolidate the VIE (the primary
beneficiary). This consolidation model applies to an entity in which either
(1) the equity investors (if any) do not have a controlling interest or (2) the
equity investment at risk is insufficient to finance that entitys activities
without receiving additional subordinated financial support from other parties.
In addition FIN 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in a VIE make additional
disclosures. The effective date relating to implementation and disclosure
requirements included in the Interpretation (although early adoption is
permitted), are for VIEs created before February 1, 2003, effective no later
than the beginning of the first interim or annual reporting period beginning
after June 15, 2003 and for VIEs created after January 31, 2003, effective
immediately. The Company adopted the transitional disclosure requirements of
the Interpretation for the fiscal year ended December 31, 2002. There was no
material impact on the financial statements.

On November 25, 2002 the FASB issued FASB Interpretation No. 45 (FIN 45 or
the Interpretation), Guarantors Accounting and Disclosure Requirements for
Guarantees of Indebtedness of Others (an interpretation of FASB Statements No.
5, 57 and 107 and rescission of FASB Interpretation No. 34).FIN 45 clarifies
the requirements of FASB Statement No. 5 (FAS 5), Accounting for Contingencies,
relating to a guarantors accounting for, and disclosure of, the issuance of
certain types of guarantees. The Interpretations provisions for initial
recognition and measurement are to be applied on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year end. The guarantors previous accounting for guarantees
that were issued before the date of FIN 45s initial application may be revised
or restated to reflect the effect of the recognition and measurement provisions
of the Interpretation. The Company has adopted the disclosure requirements for
the fiscal year ended December 31, 2002 as disclosed in Note 27(f) to the
financial statements. The assessment of the impact on the financial statements
of the full adoption of FIN45 has not yet been completed.

In June 2002 the Financial Accounting Standards Board issued FAS 146 Accounting
for the Costs Associated with Exit or Disposal Activities.This standard will
require companies to recognise costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. The provisions of this standard are effective for exit
or disposal activities that are initiated after December 31, 2002. This is not
expected to have a material impact on the Company.

In April 2002 the Financial Accounting Standards Board issued FAS 145
Rescission of FASB Statements
No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.This statement eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classifications under the
criteria of Accounting Principles Board No. 30 Reporting the Results of
Operations.This statement also requires sales-leaseback accounting for
certain lease modifications that have economic effects that are similar to
sales-leaseback transactions, and makes various other technical corrections to
existing pronouncements. This statement is effective for the Company for the
year ending December 31, 2002. The adoption of this statement has not had a
material effect on the Companys results of operations or financial position.

In August 2001 the Financial Accounting Standards Board issued FAS 143
Accounting For Asset Retirement Obligations, effective for financial statements
issued for the fiscal years after June 15, 2002. The Provisions of FAS 143
require companies to record an asset and related liability for the costs
associated with the retirement of long-lived tangible assets if a legal
liability to retire the asset exists. The adoption is not expected to have a
significant impact on the Companys financial results of operations or
financial position as the Company does not currently have any asset retirement
obligations that would be subject to the provisions of the statement.

Recent UK accounting pronouncements

In December 2000 the Accounting Standards Board (ASB) issued Financial
Reporting Standard No. 19, Deferred Tax (FRS 19). FRS 19 introduces a form
of full provision for deferred taxation. Deferred tax should be provided on
timing differences that have originated but not reversed by the balance sheet
date, but only when there is an obligation to pay more tax in the future as a
result of the reversal of those timing differences. We are required to comply
with FRS 19 in the financial statements for the year ended December 31, 2002.
The impact of the adoption of this standard is reflected in the financial
statements for the year ended

30



---



##### Table of Contents



December 31, 2002 and has resulted in a prior year adjustment to reserves of £5
million, an opening deferred tax asset of £18 million and deferred tax
provision of £16 million. This affects only the UK GAAP figures.

In November 2000 the ASB issued Financial Reporting Standard No. 17,
Retirement Benefits"(FRS 17). FRS 17 requires pension scheme assets to be
measured at market value and pension scheme liabilities to be measured using
specified actuarial methods using a corporate bond rate. The resulting surplus
or deficit should be immediately recognised in the balance sheet. In the
annual financial statements additional analysis was provided in accordance with
FRS 17 for which disclosure requirements have been implemented progressively
during the previous and current financial years in accordance with the
provisions of that standard. The ASB recently announced it has postponed
requiring full implementation of the standard until 2005.

B.     LIQUIDITY AND CAPITAL RESOURCES

Liquidity

Cash flow provided by operating activities was £57 million for the year ended
December 31, 2002, £83 million for the year ended December 31, 2001 and £56
million for the year ended December 31, 2000. Cash flow from operating
activities increased by approximately £11 million for the year ended December
31, 2002 due to the full inclusion of KMC, which had been reflected on an
equity accounting basis until September 1, 2001. Working capital balances
resulted in an outflow of £14 million for the year ended December 31, 2002
versus an inflow of £24 million for the year ended December 31, 2001. This has
resulted from a low working capital position as at December 31, 2001.
Management believes that the working capital position as at December 31, 2002
is adequate to fund operations.

We continue to have significant cash requirements for debt service. As of
December 31, 2002, we had £220 million outstanding in term loans and revolving
facilities borrowed under our senior credit facilities and 200 million (£130
million) aggregate principal amount of notes outstanding. In addition, we
require liquidity for capital expenditures and working capital needs. Our
principal source of funds is anticipated to be cash flows from operating
activities. In addition, we have $34 million of available borrowings under the
revolving credit facility.

Under the terms of our senior credit facilities our bankers require us to
comply with certain financial covenant ratios based upon our operating
performance and our total debt position (our leverage ratio).

During 2002 our covenant limits were re-set for the testing period December 31,
2002 to March 31, 2004. In connection with the amendments to our senior credit
facilities and with other investment opportunities, our parent company, Lucite
International Limited established a £40 million deep discount bond facility
with Charterhouse. In the event of a covenant breach under our senior bank
facilities, Lucite International Limited has agreed, upon the request of our
senior banks, to borrow under the deep discount bond facility and to invest the
proceeds of such borrowings in our equity capital. The amount of the borrowing
and equity investment will be the amount required to remedy the covenant
breach.

Our future operating performance and ability to service amounts outstanding
under our senior credit facilities, as well as the amounts due under the notes,
will be subject to future economic conditions, financial, business and other
factors, many of which are beyond our control.

Borrowings under our senior credit facilities bear interest at LIBOR-based
floating rates for varying interest periods. The facility consists of three
term loan facilities for an aggregate £188 million as at December 31, 2002, and
a revolving working capital facility with a maximum commitment of up to $85
million (£53 million) of which £32 million had been drawn at December 31, 2002.
The senior credit facilities impose restrictions on our ability to make capital
expenditures and limit our ability to incur additional indebtedness.
Similarly, the terms of the notes also impose restrictions on the incurrence of
additional debt. The notes are scheduled to be repaid in one instalment on May
15, 2010. However, we may be required to purchase the notes before that date in
the event of a change of control or a material asset sale.

We have no off balance sheet arrangements or special purpose entities and we
have no triggers that are rating agency determined. Refer to Note 16 to the
financial statements for further details on the repayment profile of our senior
credit facilities and our senior notes.

31



---



##### Table of Contents



Our total committed contracts that will impact on our cash position over the
next five years and thereafter is as follows:

|                                   |  |                  |     |      |  |      |    |      |  |      |    |      |  |       |    |  |  |  |    |  |  |       |     |  |  |  |     | 
|---------------------------------- |  | ---------------- | --- | ---- |  | ---- | -- | ---- |  | ---- | -- | ---- |  | ----- | -- |  |  |  | -- |  |  | ----- | --- |  |  |  | --- | 
|                                   |  | Maturity profile
|                                   |  | £'m             
|                                   |  |                 
|                                   |  |                  |     |      |  |      |    |      |  |      |    |      |  |       |    |  |  |  |    |  |  | After |     |  |  | 
|Contractual commitments            |  | 2003             |     | 2004 |  | 2005 |    | 2006 |  | 2007 |    | 2007 |  | Total
|                                   |  |                  |     |      |  |      |    |      |  |      |    |      |  |      
|Senior credit facilities           |  |                  | 17  |      |  |      | 18 |      |  |      | 18 |      |  |       | 49 |  |  |  | 69 |  |  |       | 49  |  |  |  | 220 | 
|                                  
|                                  
|                                  
|                                  
|Senior notes                       |  |                  |    |      |  |      |   |      |  |      |   |      |  |       |   |  |  |  |   |  |  |       | 130 |  |  |  | 130 | 
|                                  
|                                  
|                                  
|                                  
|Finance lease obligations          |  |                  |    |      |  |      | 1  |      |  |      |   |      |  |       | 1  |  |  |  |   |  |  |       | 5   |  |  |  | 7   | 
|                                  
|                                  
|                                  
|                                  
|Non-cancellable purchase
contracts |  |                  | 104 |      |  |      | 44 |      |  |      | 28 |      |  |       | 15 |  |  |  | 15 |  |  |       | 42  |  |  |  | 248 | 
|                                   |  |                  |     |      |  |      |    |      |  |      |    |      |  |       |    |  |  |  |    |  |  |       |     |  |  |  |     | 
|Total                              |  |                  | 121 |      |  |      | 63 |      |  |      | 46 |      |  |       | 65 |  |  |  | 84 |  |  |       | 226 |  |  |  | 605 | 
|                                   |  |                  |     |      |  |      |    |      |  |      |    |      |  |       |    |  |  |  |    |  |  |       |     |  |  |  |     | 

Interest is paid on the senior notes at 10.25%. The current rates applicable to
our senior credit facilities are 2.676% plus a margin for the Euro-denominated
debt and 1.338% plus a margin for the US dollar-denominated debt. The margin
ranges from 2% to 3% depending upon the maturity date of the tranche of debt.

We may be required to purchase the senior notes before the maturity date in the
event of a change of control or a material asset sale. The payment profile of
the senior credit facilities may change if we generate excess cash as defined
under the senior credit facilities agreement in any financial year until
maturity. In the event of generating such excess cash we would be required to
pay up to 50% of the excess cash generated as a prepayment against our senior
credit facilities.

Treasury Policies

Our policy is to utilise excess cash within the group by paying down against
the revolving credit facility. Any cash that is held locally on a short-term
basis is invested in overnight money markets where appropriate to do so.

We do not hedge specifically against currency exposure other than to structure
our original debt obligations in currencies that naturally hedge against
movements in our net assets.

During the year we reset a portion of the senior debt interest at the
prevailing LIBOR rate. Details of this can be seen in Note 20 to the financial
statements. In some cases we have set the interest periods for up to twelve
months in order to fix our interest exposure at historically low rates.

Capital Expenditures

In 2002 we made capital expenditures of £28 million of which £15 million was
incurred on existing capacity, £4 million on safety, health and the environment
(SHE) standards at our sites and £9 million was incurred on expansion and
upgrades. In addition, commitments for capital expenditure are £21 million,
representing amounts that we have contracted to purchase but have not yet
purchased plus expenditure that we have authorised but not yet contracted for.
We currently anticipate that our capital expenditures will be approximately £35
million through 2003.

Environmental Regulations

We are subject to extensive local, national and foreign laws, regulations,
rules and ordinances relating to pollution, the protection of the environment
and the generation, storage, handling, transportation, treatment, disposal and
remediation of hazardous substances and waste materials.

Capital expenditures relating to safety, health and environmental matters
totalled approximately £6 million in 2000, £10 million in 2001 and £4 million
in 2002 for our business. Costs in 2003 are expected to remain at historical
levels in order to cover, among other things, our routine measures to prevent
loss of containment. Our estimated capital expenditures for safety, health and
environmental matters are expected to be approximately £7 million in 2003.
Capital expenditures are planned, for example, under national legislation
implementing the European Union Directive on Integrated Pollution Prevention
and Control (IPPC). Under this directive, some of our plants are required and
will, over the next few years, continue to be required to obtain IPPC
authorisations which will regulate air and water discharges, waste management
and other matters relating to the impact of operations on the environment, and
to conduct site assessments to evaluate environmental conditions. It is likely
that additional expenditures may be necessary in some cases to meet the
requirements of

32



---



##### Table of Contents



IPPC authorisations. Capital expenditures and costs and operating expenses
relating to environmental matters will be subject to evolving regulatory
requirements and will depend on the timing of the promulgation of specific
standards, which impose requirements on our operations. The ultimate costs
under applicable environmental laws and the timing of these costs are difficult
to predict; however, potentially significant expenditures could be required in
order to comply with existing or future environmental laws. Projections are
based on managements best estimates but actual expenditures may differ from
those estimates.

C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.

Our Research, Technology and Engineering Group constitutes our research and
development core. Since 1999 we have enhanced our management and focus of
research and development expenditures such that, at a current annual investment
of £9 million on new product and process technologies, our productivity has
doubled.

We principally conduct our research and development at our research facilities
located in Wilton, United Kingdom, Memphis, Tennessee, Ibaraki, Japan and
Darwen, United Kingdom. Over 70 scientists and engineers are engaged at these
research facilities in strategic projects to lower costs of production and to
develop new products, processes and product enhancements. For example, we have
developed our Alpha and Beta technologies, two new low cost MMA production
methods that do not use HCN as a raw material, and we are also developing our
Omega process, which provides us a significantly more competitive method of
synthetically producing HCN. The Omega technology is operational at the Cassel
works in the United Kingdom and the Alpha process has been successfully piloted
in the United Kingdom.

Increasing the market for acrylic products

We constantly strive toward increasing the market for acrylics through the
development of new product applications, either through our own downstream
operations or in conjunction with strategic partners. During 2002, we spent £5
million on research and development to expand and create downstream
applications for acrylic products. In 2002 sales of new products developed in
the past three years constituted close to 25% of our downstream sales, and over
25% of our downstream gross margin.

The unique optical properties of acrylic polymer, its colourability and
weatherability, and the ability to manipulate light through it, are foundation
blocks for developing future application opportunities. The following new
product applications are significant areas of focus for the Company:

     Lucite® Lustre

Lucite® Lustre is a series of advanced acrylic sheet for spas and bathtubs that
employs a sophisticated combination of components to give high fashion visual
aesthetics and texture, built on the existing superior quality and formability
of our sheet products.

     Lucite® TufCoat®

Lucite® TufCoat® is targeted toward architectural capping applications such as
sidings for house construction, windows and doors. Due to its outstanding
weathering characteristics, its flexibility and its ability to provide a wide
range of colour and sheen types, TufCoat® allows manufacturers of these
house-building products to offer much longer consumer guarantees than
conventional paints, wood-finishes or other thermoplastic materials.

     Elvacite®

Elvacite® embraces a family of advanced polymer systems with many
performance-enhancing characteristics for marine and container coatings,
electronics, inks and adhesives. Our flexibility to produce materials of novel
architecture and incorporate reactive functionality, have allowed us to develop
leading edge solutions for our customers in their drive to low VOC (Volatile
Organic Compounds) products.

33



---



##### Table of Contents



     Light Management Solutions, including Prismex®

Prismex®, which we market under license, is targeted at corporate and retail
signage applications and its usage is growing at retail outlets, showcase
displays at movie theatres and airports, and retail display cabinets. Prismex®
allows for significantly higher levels of translucency than traditional sheet,
a characteristic that allows for substantial energy savings. In addition we
have developed novel, proprietary technology embodied in the Lux series of
products that provide a wider range of display options along with material and
energy savings. As we extend our light management solutions further we are
developing products for the 3-D signage market.

D.     TREND INFORMATION

Global demand for methacrylates resumed a strong growth trend from mid 1999
through the twelve months ended December 31, 2000. This volume recovery was
associated with generally good economic growth, selling price increases and
increased raw material costs and other input costs. In particular, by the end
of the twelve months ended December 31, 2000 energy costs in the United States
achieved historically high levels.

During the twelve months ended December 31, 2001 market demand for
methacrylates declined. This trend was most significant in North America and
was associated with a period of selling price decreases and declining raw
material prices. In particular the three months ended December 31, 2001 was a
period of weak demand in North America and this was reflected in global
markets. One consequence of the weak demand pattern was a decline in selling
prices that extended into the first half of the twelve months ended December
31, 2002.

During the second half of the twelve months ended December 31, 2002 demand for
methacrylates recovered very strongly in all markets with significant uplift
driven by demand for new products in Asia. The increase in demand also
coincided with certain supply constraints experienced by both producers of
methacrylates and their raw material suppliers. Selling prices and prices of
raw materials, particularly energy costs, recovered strongly during the second
half of the twelve months ended December 31, 2002. In general industry and
supply chain inventory levels remain low subsequent to the balance sheet date
and the market continues to experience strong demand and price conditions with
correspondingly high input prices (notably oil and natural gas inputs) and some
limitations on supply.




ITEM 6 DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.     DIRECTORS AND SENIOR MANAGEMENT

Scott Davidson

It is with deep regret and great sadness that on March 21, 2003 we lost our
friend and leader Scott Davidson who sadly passed away suddenly as a result of
a heart attack. Mr Davidson led our business for 10 years and drove it forward
with incredible passion, vision, energy and creativity. He was a unique and
charismatic leader who will be missed by all those who had the privilege of
knowing him. Until his death, Mr. Davidson served as Chief Executive Officer
and Director of Lucite International Group Holdings Limited and its parent
company, Lucite International Limited.

Directors and Executive officers of Lucite International Group Holdings Limited

The following table sets forth the name, age and principal position of each of
the persons that are
directors and executive officers of Lucite International Group Holdings
Limited:

|                   |  |     |    |          |  |                                                                                                       
|------------------ |  | --- | -- | -------- |  | ------------------------------------------------------------------------------------------------------
|Name               |  | Age |    | Position
|                   |  |     |    |         
|Ian R. Lambert     |  |     | 47 |          |  | Chief Executive Officer (appointed March 25, 2003) and
VP  Finance, Treasurer, Secretary and Director
|                  
|                  
|                  
|                  
|Neil L Sayers      |  |     | 49 |          |  | VP  Technology and Manufacturing and Director                                                        
|                  
|                  
|                  
|                  
|A. Paul Henderson  |  |     | 47 |          |  | VP  Europe, Middle East and Africa
and Director                                                      
|                  
|                  
|                  
|                  
|J. Jefferson Davis |  |     | 59 |          |  | VP  Americas                                                                                         
|                  
|                  
|                  
|                  
|Gregory Liou       |  |     | 52 |          |  | VP  Asia Pacific and General Manager, KMC                                                            

34



---



##### Table of Contents



Ian R. Lambertjoined ICI in 1985 from Ernst & Young. In his first two years
with ICI he worked in the Agrochemicals business. In 1989, he became manager of
management accounting for the Engineering Plastics business in the US, before
moving to become controller, ICI Engineering Plastics in 1990. From 1991, he
spent three years as Director of Finance and IT at ICI Fiberite in Arizona, US,
before becoming finance manager, ICI Materials, in Belgium. Mr. Lambert became
financial controller of ICI Acrylics in 1995 before being appointed to Chief
Financial Officer in 1997. On March 25, 2003 he was appointed Chief Executive
Officer and holds this appointment in addition to that of Chief Financial
Officer until a further appointment of a new Chief Financial Officer can be
made. He is a chartered accountant and has an MA and MPhil from Cambridge
University.

Neil L Sayersjoined ICI in 1974 and worked in a number of manufacturing and
technical roles in the Nylon, Aromatics and Oil Refinery businesses before
joining ICI Acrylics in 1988 as Cassel Site Technical Manager, becoming Site
Manager in 1992. In 1998 he was made responsible for R&D and currently has
responsibility for Manufacturing Excellence, Technology, Safety, Health and
Environment on a global basis. Mr Sayers has a BSc in Chemical Engineering from
UMIST.

A.     Paul Hendersonjoined ICI in 1978 and worked in the Petrochemicals Division
fulfilling a number of marketing roles with the Fibre Intermediate and
Aromatics businesses. He joined ICI Fibres in Harrogate in 1990, transferring
to Oestrigen in Germany in 1991 to run the global sales of Nylon Textile
Filament yarns. On the sale of the Nylon business in 1993 he transferred with
the sale to Du Pont as Sales and Marketing Manager for Nylon textiles in
Europe. In 1998 joined Burmah Castrol as European Managing Director for the
speciality wax blending subsiduary, Dussek Campbell. Joined Lucite
International in March 2001 as Vice President for Europe, Middle East and
Africa. Mr Henderson has a BA (Hons) in Modern Languages (French and Spanish)
from Manchester University.

J. Jefferson Davisjoined ICI Acrylics in 1993 from DuPont. Mr Davis has spent
much of his career in the acrylics industry and has wide experience in both
commercial and operational roles. He was Managing Director of the Lucite
Acrylic Sheet Business before it was transferred to ICI Acrylics ownership in
1994. From 1994 to 1996, Mr. Davis was Manufacturing Director, ICI Acrylics
Inc. and currently has responsibility for world wide Manufacturing and
Technology at Lucite International. Mr. Davis has a BS Textile Engineering from
Georgia Tech.

Gregory Lioujoined ICI China in Taiwan in 1975 and has experience in a number
of commercial roles, being Sales Manager, Dulux Paints Taiwan from 1982 to
1984, General Manager of Savlon Pharmaceuticals, 1984 to 1985 and Business
Development Manager for ICI Taiwan from 1985 to 1990. Mr. Liou was Deputy
General Manager of ICI Far East from 1990 to 1994 and then joined the Acrylics
business in 1995 as General Manager, Kaohsiung Monomer Company (KMC). In his
current role, Mr Liou is Vice President Asia Pacific and combines this with his
responsibilities as General Manager, KMC. Mr. Liou is also responsible for our
liaison with Joint Venture partners in APAC. Mr. Liou has a MSc (Agriculture)
from National Taiwan University.

B.     COMPENSATION

For the year ended December 31, 2002, aggregate executive officers and
directors compensation for Lucite International was £1.2 million. This
includes £0.1 million that we have paid into schemes for retirement and similar
benefits for our directors and executive officers for the year ended December
31, 2002.

C.     BOARD PRACTICES

Lucite International Group Holdings Limited is a subsidiary of Lucite
International Limited. Certain of the directors of Lucite International
Limited constitute the Board of Lucite International Group Holdings Limited.
The Boards duty of corporate governance is discharged in conjunction with the
Board of Lucite International Limited. The Board meets on a regular basis to
review performance and business plans of the group. The Board has established
policies for the conduct of the business within the group, including
delegations of Board authority to directors and members of senior management.
In addition, the Board appoints committees to ensure appropriate oversight of
the group companies operations.

35



---



##### Table of Contents



Board Committees

Our audit committee and remuneration committee have been appointed by the Board
of Lucite International Limited and are remitted to cover the entire Company
including all subsidiaries of Lucite International Group Holdings Limited. Each
committee has operated throughout the year.

The audit committee comprises Mr G J Arbuthnott (Chairman) and Mr PR Shaw. The
committee is responsible for the appointment of auditors and reviews the
suitability and effectiveness of internal control systems and the application
of corporate policies throughout the Company.

Geoffrey Arbuthnottis a Director of Charterhouse Development Capital and
Chairman of Lucite International Limited. An honours graduate in Law from
Edinburgh University and a Chartered Accountant, he joined Charterhouse in 1984
where he has been responsible for the successful investments in Medway Ports,
British Bus and Porterbrook. Mr. Arbuthnott led the investment in Lucite
International for Charterhouse.

Peter R. Shawwas appointed a Non-Executive Director of Lucite International
Limited on 1 April 2001. Mr Shaw is a graduate in chemistry with significant
experience in the chemical industry and worked for ICI for 34 years in a number
of senior international positions in Europe and Asia. From 1995 to 2000 Mr Shaw
was ICIs Group Vice President and Head of Mergers and Acquisitions.

Our remuneration committee at December 31, 2002 consisted of Mr PR Shaw
(Chairman), Mr GJ Arbuthnott, Mr S Davidson and Mr K Leith.

The primary function of the remuneration committee is to determine remuneration
and other terms of employment for the directors and senior employees of the
Company having due regard for performance.

In setting the remuneration policy the committee considers a number of factors
including:

     the salaries and benefits available to senior management in comparable companies

     the need to ensure senior management commitment to the continued success of the business by means of incentive schemes.

Directors

The directors serve for an indefinite term from appointment, subject to removal
by a resolution of shareholders. No director is employed on terms and
conditions other than those applicable to other salaried employees.

36



---



##### Table of Contents



D. EMPLOYEES

The average number of persons employed (including executive directors but
excluding temporary and contract staff) is as follows:

|              |  |              |       |              |  |              |       |  |  |  |       | 
|------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  |  | ----- | 
|              |  | Year ended   |       | Year ended   |  | Year ended  
|              |  | December 31, |       | December 31, |  | December 31,
|              |  | 2000         |       | 2001         |  | 2002        
|              |  |              |       |              |  |             
|Upstream      |  |              | 636   |              |  |              | 620   |  |  |  | 680   | 
|             
|             
|             
|             
|Downstream    |  |              | 1,271 |              |  |              | 1,367 |  |  |  | 1,320 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|              |  |              | 1,907 |              |  |              | 1,987 |  |  |  | 2,000 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|Europe        |  |              | 865   |              |  |              | 854   |  |  |  | 828   | 
|             
|             
|             
|             
|Americas      |  |              | 568   |              |  |              | 548   |  |  |  | 531   | 
|             
|             
|             
|             
|Asia          |  |              | 354   |              |  |              | 378   |  |  |  | 454   | 
|             
|             
|             
|             
|Rest of World |  |              | 120   |              |  |              | 207   |  |  |  | 187   | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|              |  |              | 1,907 |              |  |              | 1,987 |  |  |  | 2,000 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 

|                                  |  |              |       |              |  |              |       |  |  |  |       | 
|--------------------------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  |  | ----- | 
|                                  |  | December 31, |       | December 31, |  | December 31,
|                                  |  | 2000         |       | 2001         |  | 2002        
|                                  |  |              |       |              |  |             
|Number of employees at period end |  |              | 2,010 |              |  |              | 2,006 |  |  |  | 1,993 | 
|                                  |  |              |       |              |  |              |       |  |  |  |       | 

Movement in employee numbers during the twelve months ended December 31, 2002
is analysed as follows:

|                                  |  |          |     |            |  |       |       |  |  |  |       |  
|--------------------------------- |  | -------- | --- | ---------- |  | ----- | ----- |  |  |  | ----- | -
|                                  |  | Upstream |     | Downstream |  | Total
|                                  |  |          |     |            |  |      
|Employees as at
December 31, 2001 |  |          | 690 |            |  |       | 1,316 |  |  |  | 2,006 |  
|                                 
|                                 
|                                 
|                                 
|Other movements                   |  |          | (17 | )          |  |       | 4     |  |  |  | (13   | )
|                                  |  |          |     |            |  |       |       |  |  |  |       |  
|Employees as at
December 31, 2002 |  |          | 673 |            |  |       | 1,320 |  |  |  | 1,993 |  
|                                  |  |          |     |            |  |       |       |  |  |  |       |  

Included in the above totals are approximately 3 people in process of
redeployment as at December 31, 2002 as a result of corporate restructuring
initiatives.

Employees are represented locally by a number of labour unions. Management
believes that its relationship with these unions is generally constructive.

37



---



##### Table of Contents



E.     SHARE OWNERSHIP

All of the issued share capital of Lucite International Group Holdings Limited
is held directly by Lucite International Limited. Lucite International Finance
plc and the guarantors other than Lucite International Group Holdings Limited
are direct or indirect subsidiaries of Lucite International Group Holdings
Limited.

The issued share capital of Lucite International Limited consists of 7,799,999
A Ordinary Shares, 1,850,001 B Ordinary Shares and 350,000 C Ordinary Shares.
In addition, the issued share capital of Lucite International Limited also
includes 174,911,000 A Preference Shares. These preference shares are not
convertible into ordinary shares. The preference shares do not entitle their
holders to vote for the election of directors of, or on any matters relating
to, Lucite International Limited.

Under the Articles of Association of Lucite International Limited, A Ordinary
Shares generally have the same voting rights as B Ordinary Shares. However,
some holders of A Ordinary Shares and B Ordinary Shares and Lucite
International Limited have entered into a Subscription and Shareholders
Agreement that imposes limitations on the voting of these shares. See
Subscription and Shareholders Agreement. C Ordinary shares are management
shares and have the same voting rights as B Ordinary shares subject to any
limitations contained in the subscription and shareholder agreement.

The following table sets forth information regarding the ownership of the
Ordinary Shares of Lucite International Limited as at March 31, 2003, by the
following:

     Each person or group known by us to be the owner of more than 5% of the outstanding shares of the Ordinary Shares of Lucite
International Limited; and

     All of the directors and officers of Lucite International Limited and Lucite International as a group.

|                                                          |  |                 |           |          |  |            |    |  
|--------------------------------------------------------- |  | --------------- | --------- | -------- |  | ---------- | -- | -
|                                                          |  |                 |           |          |  | Percent of
|                                                          |  | Number of       |           | Ordinary
|Name                                                      |  | Ordinary Shares |           | Shares  
|                                                          |  |                 |           |         
|Charterhouse Parties(a)                                   |  |                 | 7,794,091 |          |  |            | 78 | %
|                                                         
|                                                         
|                                                         
|                                                         
|Shares to be issued employees of Lucite International (b) |  |                 | 550,000   |          |  |            | 6  | %
|                                                         
|                                                         
|                                                         
|                                                         
|Directors of Lucite International Limited (d)             |  |                 | 350,000   |          |  |            | 3  | %
|                                                         
|                                                         
|                                                         
|                                                         
|Directors of Ineos Capital(c) & related parties           |  |                 | 1,100,000 |          |  |            | 11 | %
|                                                         
|                                                         
|                                                         
|                                                         
|Other                                                     |  |                 | 200,000   |          |  |            | 2  | %



---

|(a) |  | Charterhouse Parties means each of Charterhouse, any of its affiliates or subsidiaries, any person or fund managed or advised by any person in respect of its
interest in Charterhouse and any investor in a Charterhouse fund (either in their capacity as investor or as direct co-investors).
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(b) |  | Represents B Ordinary Shares that are currently held by the Lucite International Employee Share Plan.                                                                                                                                                                                          
|   
|   
|   
|   
|(c) |  | Represents B Ordinary Shares that are held by the directors of Ineos Capital.                                                                                                                                                                                                                   
|   
|   
|   
|   
|(d) |  | Represents C Ordinary Shares that are held by the directors of Lucite International Limited.                                                                                                                                                                                                    

Lucite International Employee Share Plan

Our philosophy is that our employees should have the opportunity to participate
in the creation of value for the parts of the business that they can directly
influence. Our principal investors have allocated 9% of the ordinary shares of
Lucite International Limited, the parent company of Lucite International, to
management and an employee benefit trust. We and our principal investors have
ensured that all of the management and employees of Lucite International have
had the opportunity to acquire interests in these shares through the creation
of an employee share plan.

Under the Lucite International Employee Share Plan, Charterhouse made available
550,000 ordinary one pence shares in the Company to employees (the employee
shares). Shares will be allocated between employees based on business
performance criteria at a future date when Charterhouse sells all or a
substantial portion of its remaining investment in the ordinary shares in
Lucite International Limited. These shares have been put into trust for the
employees during 2002. No charge in respect of the grant of options to
employees under the employee share plan has been made in the financial
statements due to the uncertainty of the timing of the sale of Charterhouses
investment.

Subsequent to the year-end the Company has issued restricted ordinary D shares
to the US employees under the US employee share scheme. These restricted
ordinary D shares will be redeemed by the Company and replaced with ordinary B
shares in the event of Charterhouse selling all or a substantial portion of its
remaining investment in the ordinary shares in Lucite International Limited.

38



---



##### Table of Contents



Subscription and Shareholders
Agreement

In October 1999, Lucite International Limited entered into a Subscription and
Shareholders Agreement with its shareholders, including Charterhouse funds (the
Charterhouse Investors) and directors of Ineos Capital Limited (the Ineos
Investors). Charterhouse Investors and Ineos Investors have pre-emptive rights
allowing them to acquire, in proportion to their respective shareholdings, any
shares proposed to be issued by Lucite International Limited. Ineos Investors
cannot transfer, grant, create or dispose of any right or interest in any
shares of Lucite International Limited without the prior written consent of the
Charterhouse Investors, subject to various exceptions. The exceptions include
permitted transfers to family members or, if the Ineos Investor is a company,
to a wholly owned subsidiary. Ineos Investors, however, receive tag-along
rights in cases of transfer of shares by Charterhouse Investors.

Charterhouse Investors and Ineos Investors have agreed not to make, and not to
allow Lucite International to make mergers and acquisitions, share issuances
and other strategic decisions involving Lucite International, without the
consent of a majority of the Charterhouse Investors.

The agreement will terminate upon the earliest of (1) the closing of an initial
public offering by Lucite International Limited; (2) all of the Charterhouse
Investors and the Ineos Investors ceasing to hold any shares in Lucite
International Limited; and (3) the sale of the entire issued share capital of
Lucite International Limited to a third party purchaser.

The Articles of Association of Lucite International Limited and the
Subscription and Shareholders Agreement provide that the Charterhouse funds,
as the holder of the A Ordinary Shares, are entitled to appoint two directors
of Lucite International Limited. Under the Articles, the presence of at least
one Charterhouse director is required for the transaction of business by the
Board, any committee of the Board must always include at least one Charterhouse
director and any resolution passed by the committee will not be effective
unless at least one Charterhouse director votes in favour of the decision. The
Articles also provide that the Charterhouse funds have a right to appoint the
Chairman of the Board.




ITEM 7 MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.     MAJOR SHAREHOLDERS

The parties who are beneficial owners of 5% or more of the ordinary share
capital of Lucite International Limited, which owns 100% of the ordinary share
capital of Lucite International Group Holdings Limited are set out in item 6. E
Shareholders.

B.     RELATED PARTY TRANSACTIONS

Trading Transactions with Shareholders of the Group

For the twelve months ended December 31, 2000:Lucite International purchased
management services from Charterhouse and the directors of Ineos Capital in the
amounts of £50,000 and £300,000 respectively plus related travel expenses.

Lucite International also purchased certain third party goods and services via
Ineos PLC, a company controlled by the directors of Ineos Capital in the amount
of £53,000. Such services included the rental expenses of our Southampton
offices and sundry employee costs in respect of shared services.

For the twelve months ended December 31, 2001:Lucite International purchased
management services from Charterhouse and the directors of Ineos Capital in the
amounts of £50,000 and £300,000 respectively plus related travel expenses.

Lucite International also purchased certain third party goods and services via
Ineos PLC a company controlled by the directors of Ineos Capital in the amount
of £300,000. Such services included the rental expenses of our Southampton
offices and sundry employee costs in respect of shared services.

Lucite International also purchased certain third party goods and services,
consisting mainly of raw materials, from other Ineos companies controlled by
the Directors of Ineos Capital, to the value of £11 million. We also sold some
goods and services, relating mainly to shared offices in the United States, to
other Ineos companies to the value of £2 million. These companies were
acquired by Ineos Capital during 2001 and have been

39



---



##### Table of Contents



included as related parties from the date of each acquisition. Prior to their
acquisition the companies have been treated as non-related.

Amounts due to and from these companies at 31 December 2001 were £ nil.

For the twelve months ended December 31, 2002:Lucite International purchased
management services from Charterhouse for the amount of £25,000 plus related
travel expenses.

Lucite International also purchased certain third party goods and services,
mainly raw materials, from other Ineos companies controlled by the Directors of
Ineos Capital, to the value of £13 million. We also sold some goods and
services to other Ineos companies to the value of £2 million.

As at 31 December 2002, amounts payable to these companies totaled £2 million.

There have been no related party activities with Charterhouse since the
year-end.

Trading Transactions with Other
Entities within the Group

During normal course of business the Company transacted with Kaohsiung Monomer
Company (KMC), which was a joint venture until September 1, 2001 and is now a
60% owned subsidiary. Sales to and purchases from this company for the period
where it was a joint venture were as follows:

|                        |  |                         |   |                         |  |  |   | 
|----------------------- |  | ----------------------- | - | ----------------------- |  |  | - | 
|                        |  | Year ended December 31, |   | Year ended December 31,
|                        |  | 2000                    |   | 2001                   
|                        |  | £'m                     |   | £'m                    
|                        |  |                         |   |                        
|Profit and loss account |  |                         |   |                         |  |  |   | 
|                       
|                       
|                       
|                       
|Sales of product        |  |                         | 1 |                         |  |  | 1 | 
|                       
|                       
|                       
|                       
|Purchases of product    |  |                         | 6 |                         |  |  | 7 | 

C.     INTERESTS OF EXPERTS AND COUNSEL

NOT APPLICABLE




ITEM 8 FINANCIAL INFORMATION

A.     CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

See Item 18 of this Annual Report.

Legal proceedings

On March 25, 2003, the Company received notification that the European
Commission is investigating Lucite International Limited and Lucite
International UK Limited with regard to possible participation in
anti-competitive practices contrary to Article 81 of the Treaty of Rome. Such
investigation is a preliminary step and does not imply that the Company has
engaged in any unlawful activities relating to anti-competitive practices.
There is no strict deadline to complete anti-competitive inquiries and their
duration is determined by the complexity of each case, the exercise of the
rights of defence and by the Commissions procedures. Lucite International
Limited is co-operating fully with the European Commission on these matters.

We are from time to time involved in various legal proceedings of a nature
considered normal to our business. In the event of adverse outcomes of these
proceedings, we believe that resulting liabilities are either covered by
insurance, guarantee, and established reserves or would not have a material
adverse effect on our financial condition or our results of operations.

Dividend distribution policy

No dividends have been paid other than payments to minority interests in our
Thai subsidiary, Thai Poly Acrylic plc and to minority interests in our
subsidiary Kaohsiung Monomer Company Ltd.

There are no retained earnings available for payment of dividends under UK GAAP
as at December 31, 2002.

40



---



##### Table of Contents



B.     SIGNIFICANT CHANGES

There have been no significant changes since December 31, 2002.




ITEM 9 THE OFFER AND LISTING

A.     OFFER AND LISTING DETAILS

All of the share capital of Lucite International Group Holdings Limited is
privately held as described elsewhere in this annual report. There is no
public market for the shares of Lucite International Group Holdings Limited.



|B. |  | PLAN OF DISTRIBUTION 
|-- |  | ---------------------
|  
|   |  | NOT APPLICABLE       
|  
|C. |  | MARKETS              
|  
|   |  | None.                
|  
|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 OF ASSOCIATION

Our Memorandum and Articles of Association are on file with the Registrar of
Companies for England and Wales under Company Number 3829877. As set forth in
Section 3.1 of our Memorandum of Association, Lucite International Group
Holdings Limited was established to carry on business as a general commercial
company.

Directors

A director of our Company need not be a shareholder. A director is permitted
to vote at any meeting of the directors or of a committee of the directors on
any resolution concerning a transaction or arrangement to which we may enter
and in which the director has a material interest, provided that the director
has disclosed to the directors the nature and extent of his interest. Each
member of the board of directors is appointed at the annual shareholder
meeting.

41



---



##### Table of Contents



Share Capital

Our share capital consists of a single class of 175,029,700 ordinary shares,
par value £1 each, the entirety of which is owned by our parent company, Lucite
International Limited. The holders of the ordinary shares are entitled to
receive notice of and to attend all meetings of the shareholders and have one
vote for each ordinary share held at all meetings of the shareholders. The
holders of the ordinary shares are entitled to receive dividends as and when
declared from time to time by the directors and to be paid in equal amounts per
share on all ordinary shares at the time outstanding. In the event of the
dissolution, liquidation or winding-up of our Company, the holders of the
ordinary shares are entitled to receive the remaining assets of our Company as
determined by the liquidator.

C.     MATERIAL CONTRACTS

Indenture, dated as of May 4, 2000, among Lucite International Finance plc, as
issuer, Lucite International Group Holdings Limited, Lucite International
Investment Limited, Lucite International Holdings Limited, and Lucite
International Holdco Limited, each as a guarantor, and The Bank of New York, as
trustee. Pursuant to the terms and conditions of the agreement, Lucite
International Finance issued
200,000,000 of our
10 1/4% Senior Notes due
2010, and we, along with the other guarantors, agreed to guarantee the notes.

Agreement dated September 29, 2000 between Lucite International UK Limited and
BASF Plc. Pursuant to the terms of the agreement Lucite International UK
Limited will invest in and on a plant for the manufacture of acetone
cyanohydrin on land leased from BASF at Seal Sands, Teeside, England. BASF
have agreed to operate the plant on behalf of Lucite International and to
supply HCN and convert HCN to acetone cyanohydrin (ACH) for supply to Lucite
International. The agreement is for a term of 15 years from commencement of
plant operations with provision for negotiated continuation thereafter. Plant
operations commenced in September 2002.

D.     EXCHANGE CONTROLS

There are no UK foreign exchange controls currently in force that restrict the
export or import of capital or that affect the remittance of interest,
dividends or other payments to non UK resident holders of the Companys
securities (except as otherwise detailed under Item 10.E Taxation). There
are no limitations imposed by UK law that restrict the right of non UK resident
or non UK citizen owners to hold or vote the securities of the Company.

E.     TAXATION

United States Federal Income Taxation

The following summary describes the material United States federal income tax
consequences of the ownership of notes by US holders (as defined below) as of
the date hereof. The discussion set forth below is applicable to US holders (1)
who are residents of the United States for purposes of the current United
Kingdom/United States Income Tax Convention (the Treaty), (2) whose notes are
not, for purposes of the Treaty, effectively connected with a permanent
establishment in the UK and (3) who otherwise qualify for the full benefits of
the Treaty. Except where noted, it deals only with notes held as capital assets
and does not deal with special situations, such as those of dealers in
securities or currencies, financial institutions, tax-exempt entities, life
insurance companies, traders in securities that elect to use a mark-to-market
method of accounting for their securities holdings, persons liable for
alternative minimum tax, persons holding notes as a part of a hedging,
integrated, conversion or constructive sale transaction or a straddle, certain
US expatriates or US holders of notes whose functional currency is not the US
dollar. If a partnership holds the notes, the tax treatment of a partner will
generally depend on the status of the partner and the activities of the
partnership. A partner of a partnership holding the notes should consult tax
advisors. Furthermore, the discussion below is based upon the provisions of the
Internal Revenue Code of 1986, as amended (the Code), and regulations,
rulings and judicial decisions thereunder as of the date hereof, and such
authorities may be repealed, revoked or modified so as to result in federal
income tax consequences different from those discussed below.

As used in this annual report, a US holder means a beneficial owner of a note
that is (1) a citizen or individual resident of the United States, (2) a
corporation or partnership created or organised in or under the laws of the
United States or any political subdivision, (3) an estate the income of which
is subject to United States federal income taxation regardless of its source or
(4) a trust (X) that is subject to the primary supervision of a court

42



---



##### Table of Contents



within the United States and the control of one or more United States persons
as described in section 7701(a)(30) of the Code or (Y) that has a valid
election in effect under applicable United States Treasury Regulations to be
treated as a United States person.

Payments of Interest

Interest on a note will generally be taxable to a US holder as ordinary income
at the time it is paid or accrued in accordance with the US holders method of
accounting for United States federal income tax purposes. Interest income on a
note generally will constitute foreign source income and generally will be
considered passive income or financial services income, which are treated
separately from other types of income in computing the foreign tax credit
allowable to US holders under United States federal income tax laws.

Because interest payments are made in euro, the following rules will apply.
Cash basis US holders are required to include in income the US dollar value of
the amount received, determined by translating such amount into US dollars at
the spot rate in effect on the date of receipt, regardless of whether the
payment is in fact converted into US dollars. No exchange gain or loss will be
recognised with respect to the receipt of such payment.

Accrual basis US holders may determine the amount of income recognised with
respect to such interest payment in accordance with either of two methods.
Under the first method, the US holder will be required to include in income for
each taxable year the US dollar value of the interest that has accrued during
such year, determined by translating such interest at the average rate of
exchange for the period or periods during which such interest accrued. Under
the second method, an accrual basis holder may elect to translate interest
income at the spot rate on the last day of the accrual period (or last day of
the taxable year in the case of an accrual period that straddles the holders
taxable year) or on the date the interest payment is received if such date is
within five days of the end of the accrual period. This election must be
applied consistently to all debt instruments from year to year and may not be
revoked without the consent of the IRS. Upon receipt of an interest payment on
such note (including amounts received upon the disposition of a note
attributable to accrued but unpaid interest), such US holder will recognise
ordinary income or loss in an amount equal to the difference between the US
dollar value of such payment (determined by translating the euro received at
the spot rate for the euro in effect on the date received) and the US dollar
value of the interest income that such US holder has previously included in
income with respect to such payment.

Sale, Exchange and Retirement of Notes

Upon the sale, exchange, retirement or other taxable disposition of a note, a
US holder will recognise gain or loss equal to the difference between the
amount realised upon the sale, exchange, retirement or other disposition (other
than amounts attributable to accrued and unpaid interest, which will be treated
as a payment of interest for federal income tax purposes) and the US Holders
tax basis in the note. If a US holder receives euros on the sale, exchange,
retirement or other disposition of the note, the amount realised generally will
be based on the spot rate of the euro on the date of the sale, exchange,
retirement or other disposition. If the notes are traded on an established
securities market, a cash basis US holder will determine the US dollar amount
realised by translating the euros received at the spot rate of exchange on the
settlement date of the sale, exchange, retirement or other disposition. An
accrual method taxpayer may elect the same treatment with respect to the
purchase and sale of notes traded on an established securities market, provided
that the election is applied consistently. This election cannot be changed
without the consent of the Internal Revenue Service.

A US holders tax basis in a note generally will be the US holders cost of
obtaining the note which, in the case of a US holder that purchased such note
with euros will be the US dollar value of the euros paid for such note
determined at the time of such purchase. Gain or loss recognised by a US holder
on the sale, exchange, retirement or other disposition of a note will generally
be treated as United States source gain or loss. Subject to the foreign
currency rules discussed below, gain or loss recognised in the exchange will be
capital gain or loss and will be long-term capital gain or loss if at the time
of sale, exchange, retirement or other disposition, the note has been held for
more than one year. Capital gains of individuals derived with respect to
capital assets held for more than one year are eligible for reduced rates of
taxation. The deductibility of capital losses is subject to limitations.

If a US holder purchased a note with previously owned euros, the US holder will
recognise ordinary exchange gain or loss at the time of purchase attributable
to the difference at the time of purchase, if any, between the US holders tax
basis in such euros and the fair market value of the note in US dollars on the
date of purchase. If the notes are traded on an established securities market
by a cash method taxpayer, euros paid or received are translated into US
dollars at the spot rate on the settlement date of the purchase or sale. An
accrual method taxpayer may elect the same treatment with respect to the
purchase and sale of notes traded on an established

43



---



##### Table of Contents



securities market, provided that the election is applied consistently. This
election cannot be changed without the consent of the Internal Revenue Service.

Upon the sale, exchange or retirement of a note, a US holder will recognise
exchange gain or loss with respect to the principal amount of such note. For
these purposes, the principal amount of the note is the US holders purchase
price for the note calculated in euros on the date of purchase, and the amount
of exchange gain or loss recognised is equal to the difference between (i) the
US dollar value of the principal amount determined on the date of the sale,
exchange, retirement or other disposition of the note and (ii) the US dollar
value of the principal amount determined on the date such US holder purchased
the note. As discussed above, if the notes are sold on an established
securities market by a cash method taxpayer (or, upon election, an accrual
basis US holder), euros received are translated into US dollars at the spot
rate on the settlement date of the sale. Such gain or loss will be treated as
ordinary income or loss (and will not be treated as interest income or expense,
except to the extent provided in Treasury regulations or administrative
pronouncements of the Internal Revenue Service) and generally will be United
States source gain or loss. The realisation of such gain or loss will be
limited to the amount of overall gain or loss realised on the disposition of a
note.

Exchange Gain or Loss with Respect to Foreign Currency

A US holders tax basis in euros received as interest on a note will be the US
dollar value thereof at the spot rate in effect on the date the euros are
includible in income. A US holders tax basis in euros received on the sale,
exchange or retirement of a note will be equal to the US dollar value of the
euros, determined at the time of the sale, exchange or retirement. As
discussed above, if the notes are traded on an established securities market, a
cash basis US holder (or, upon election, an accrual basis US holder) will
determine the US dollar value of the euros by translating the euros received at
the spot rate of exchange on the settlement date of the sale, exchange or
retirement.

Any gain or loss recognised by a US holder on a sale, exchange or other
disposition of the euros will be ordinary income or loss (and will not be
treated as interest income or expense, except to the extent provided in
Treasury regulations or administrative pronouncements of the Internal Revenue
Service) and generally will be United States source gain or loss.

Information Reporting and Backup Withholding

In general, information reporting requirements will apply to some payments of
principal and interest on a note and to the proceeds of the sale of a note made
to US holders other than exempt recipients (such as corporations). Backup
withholding will apply to such payments if the US holder fails to provide its
taxpayer identification number or, in the case of interest payments, fails
either to report in full dividend and interest income or to make certain
certifications of exempt status.

Any amounts withheld under the backup withholding rules will be allowed as a
refund or a credit against the US holders United States federal income tax
liability provided the required information is furnished to the Internal
Revenue Service.

United Kingdom Taxation

The following summary describes the material UK tax consequences of the
ownership of the notes as of the date hereof. Except where noted, it relates
only to the position of persons who are the absolute beneficial owners of notes
as capital assets and may not apply to persons in special situations, such as
dealers in securities or persons who are or become connected with the Issuer
other than through their holding of notes, and (other than in relation to
withholding tax) it deals only with persons who are resident or, in the case of
individuals, resident or ordinarily resident in the UK. Furthermore, the
discussion below is based upon the Issuers understanding of UK tax laws and UK
Inland Revenue practice as of the date hereof; such laws may be repealed,
revoked or modified and such practice may change so as to result in UK tax
consequences different from those discussed below. Persons considering the
purchase, ownership or disposition of notes should consult their own tax
advisers concerning the UK tax consequences in the light of their particular
situations as well as any consequences arising under the law of any other
relevant tax jurisdiction.No representations with respect to the tax
consequences to any particular holder of book-entry interests are made in this
section.

44



---



##### Table of Contents



Payments on the Notes

No withholding or deduction on account of UK income tax will be required from
payments of principal or, for so long as the notes continue to be in bearer
form and are listed on the Luxembourg Stock Exchange or some other stock
exchange recognised by the UK Inland Revenue from payments of interest:



| | (a) |  | where payment is made through a paying agent who is not in the UK; or
| | --- |  | ---------------------------------------------------------------------
|
| | (b) |  | where payment is made through a paying agent in the UK and either:   

|    |  |                                                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|(1) |  | the beneficial owner of the notes is beneficially
entitled to the interest and is not resident in the UK, or                         
|   
|   
|   
|   
|(2) |  | the notes are held in a recognised clearing
system within the meaning of section 841A of the Income and
Corporation Taxes Act 1988,

and, in the case of (b), either any other administrative conditions imposed by
regulations made under the Income and Corporation Taxes Act 1988, as amended
from time to time, have been satisfied or the Inland Revenue has notified the
paying agent in the UK that at least one of the conditions in (b) has been
satisfied. In all other cases, and in particular where paid in respect of the
definitive notes in registered form, interest will (subject to what is said
below) be paid after deduction of income tax at the lower rate (currently 20%)
subject to any direction to the contrary by the UK Inland Revenue under an
applicable double taxation treaty. A holder who is entitled to the protection
of an applicable double taxation treaty may be eligible to recover all or part
of any UK tax withheld from payments of interest to which such holder is
beneficially entitled by making a claim under the treaty on the appropriate
form. Alternatively, a claim may be made to the UK Inland Revenue in advance
of a payment of interest. If the claim is accepted by the UK Inland Revenue,
they may authorise subsequent payments to that holder to be made without
withholding of UK tax or subject to the withholding of tax at a rate that is
less than the lower rate.

Where any person in the UK, acting in the course of a trade or profession:



| | (a) |  | acts as custodian of the notes, in respect of which he
receives any interest or interest is paid at his direction or with
his consent;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | collects or secures payment of or receives interest on the
notes for another person, including the holder; or                         
|
| | (c) |  | otherwise acts for another person in arranging to collect or
secure payment of interest on the notes;                                 

(except in any case by means only of clearing a cheque or arranging for the
clearing of a cheque) that person (a collecting agent) is liable to account
for UK income tax at the lower rate (currently 20%) on such interest and is
entitled to deduct an amount from interest or other sums due from him to the
holder unless:



| | (a) |  | the note is held in a recognised clearing system and the collecting
agent either:
| | --- |  | -----------------------------------------------------------------------------------

|    |  |                                                                                                 
|--- |  | ------------------------------------------------------------------------------------------------
|(1) |  | pays or accounts for the interest directly or
indirectly to the recognised clearing system; or
|   
|   
|   
|   
|(2) |  | is acting as depository for the recognised
clearing system in respect of the Eurobond Note;   



| | (b) |  | the person beneficially entitled to the interest is either
not resident in the UK and beneficially owns the note or is of a
description prescribed by regulations;                                                                                                                                                                                                                                                                                
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (c) |  | the interest arises to non-UK resident trustees of specified
discretionary or accumulation trusts (where, among other things,
none of the beneficiaries of the trust is resident in the UK);                                                                                                                                                                                                                                                      
|
| | (d) |  | the person beneficially entitled to the interest is eligible
for specified reliefs from tax in respect of the interest;                                                                                                                                                                                                                                                                                                                           
|
| | (e) |  | the interest falls to be treated as the income of, or of the
government of, a sovereign power or of an international
organisation; or                                                                                                                                                                                                                                                                                                             
|
| | (f) |  | the note and the interest are beneficially owned by a person
falling into specified categories, or one of other specified
circumstances applies, in each case as prescribed by regulations
made under the Income and Corporation Taxes Act 1988, which would
apply, for example, to notes held under a personal equity plan or
individual savings account, in a pension funds pooling scheme or by
an Inland Revenue-approved superannuation fund.

In the case of each of the above exceptions (except (a)(2)), further
administrative conditions imposed by regulations (for instance, as to the
making of a declaration in the required form) may have to be satisfied for the
relevant exception to be available.

Interest on the notes constitutes UK source income for tax purposes and, as
such, may be subject to income tax by direct assessment even where paid without
withholding. However, except for any income tax deducted as described above, a
holder who is not resident for tax purposes in the UK (other than some
trustees) will not be liable to UK tax on interest on the notes unless that
holder is chargeable to income tax or corporation tax on a

45



---



##### Table of Contents



branch or agency in the UK through which it carries on a trade, profession or
vocation and in connection with which the interest is received or to which the
notes are attributable. There are exemptions for interest received by specified
categories of agent (such as some brokers and investment managers).

The provision relating to additional amounts would not apply if the Inland
Revenue sought to assess directly to UK tax a person entitled to the relevant
interest.

Depending on the correct legal analysis of payments made by the guarantor as a
matter of UK tax law, it is possible that payments by the guarantor would be
subject to withholding on account of UK tax, subject to any claim that could be
made under applicable double taxation treaties.

Proposed EU Withholding Tax Directive

In May 1998, the European Commission presented to the Council of Ministers of
the European Union a proposal to oblige member states to adopt either a
withholding tax system or an information reporting system in relation to
interest, discounts and premiums. Negotiation over the precise form of this
and related proposals are ongoing. It remains unclear whether this proposal
will be adopted and, if it is adopted, whether it will be adopted in its
current form. The withholding tax system would require a paying agent
established in a member state to withhold tax, at a minimum rate of 20%, from
any interest, discount or premium paid to an individual resident in another
member state unless such an individual presents a certificate obtained from the
tax authorities of the member state in which he is resident confirming that
those authorities are aware of the payment due to that individual. The
information reporting system would require a member state to supply to other
member states details of any payment of interest, discount or premium made by
paying agents within its jurisdiction to an individual resident in another
member state. For these purposes, the term paying agent is widely defined and
includes an agent who collects interest, discounts or premiums on behalf of an
individual beneficially entitled thereto. If this proposal is adopted, it will
not apply to payments of interest, discounts and premiums made before 1 January
2003.

UK Corporation Tax Payers

In general, holders that are within the charge to UK corporation tax will be
charged to tax as income
on all profits and gains arising from returns on and fluctuations in value of
the notes broadly in accordance with their authorised accounting treatment.
Such a holder will generally be charged to tax in each accounting period by
reference to interest and any profits and gains (or relief for any loss) that,
in accordance with the holders authorised accounting method, is applicable to
that period.

Any gains or losses held by UK resident corporate holders or other specified
holders who are within the charge to UK corporation tax which are attributable
to fluctuations in the value of the US dollar, relative to, in most cases,
sterling, will, subject to reliefs and exclusions contained in the relevant
legislation, be included in the calculation of such holders taxable income on
an accruals basis for each accounting period during which the notes are held.

Other UK Tax Payers  Taxation of Chargeable Gains

The notes will not be treated by the Inland Revenue as qualifying corporate
bonds within the meaning of section 117 of the Taxation of Chargeable Gains
Act 1992. Accordingly, a disposal by a holder who is UK resident for tax
purposes but who is not within the charge to UK corporation tax may give rise
to a chargeable gain or an allowable loss for purposes of the UK taxation of
chargeable gains.

It should be noted that to calculate any chargeable gain arising on a transfer
of a note, sterling values are compared at acquisition and disposal.
Accordingly a chargeable gain may arise on disposal even where the foreign
currency amount obtained is less than, or equal to, the foreign currency paid
to acquire the note.

Other UK Tax Payers  Accrued Income Scheme

On a transfer of notes by a holder, any interest which has accrued since the
last interest payment date may be chargeable to tax as income of that holder.

Stamp Duty and Stamp Duty Reserve Tax

No UK stamp duty or stamp duty reserve tax is payable on the issue of the
global notes.

46



---



##### Table of Contents





|F. |  | DIVIDENDS AND PAYING AGENTS
|-- |  | ---------------------------
|  
|   |  | NOT APPLICABLE             
|  
|G. |  | STATEMENT BY EXPERTS       
|  
|   |  | NOT APPLICABLE             
|  
|H. |  | DOCUMENTS ON DISPLAY       

We have filed this Annual Report on Form 20-F with the Securities and Exchange
Commission under the Securities Exchange Act of 1934. Statements made in this
annual report as to the contents of any contract, agreement or other document
referred to are not necessarily complete. With respect to each such contract,
agreement or other document filed as an exhibit to this annual report,
reference is made to the exhibit for a more complete description of the matter
involved, and each such statement shall be deemed qualified in its entirety by
such reference.

We are subject to the informational requirements of the Exchange Act and file
reports and other information with the Securities and Exchange Commission.
Reports and other information which we file with the Securities and Exchange
Commission, including this Annual Report on Form 20-F, may be inspected and
copied at the public reference facilities of the Securities and Exchange
Commission at:

|                      |  |                        
|--------------------- |  | -----------------------
|450 Fifth Street N.W. |  | 500 West Madison Street
|Room 1024             |  | Suite 1400             
|Washington D.C. 20549 |  | Chicago, Illinois 60661

You can also obtain copies of this material by mail from the Public Reference
Section of the Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. Additionally, copies of this
material may also be obtained from the Securities and Exchange Commissions
Internet site at http://www.sec.gov. The Commissions telephone number is
1-800-SEC-0330.



|I. |  | SUBSIDIARY INFORMATION
|-- |  | ----------------------
|  
|   |  | NOT APPLICABLE        

47



---



##### Table of Contents






ITEM 11 QUANTITIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISK

The principal market risks (i.e. the risk of loss arising from adverse changes
in market rates and prices) to which we are exposed are; interest rates on
debt, foreign exchange rates and fluctuations in raw material prices.

We are also exposed to rapid increases in raw material prices that may not be
reflected in our selling prices under the terms of a number of our major
customer contracts.

The following risk management discussion and the estimated amounts generated
from analytical techniques are forward looking statements of market risk
assuming certain market conditions occur. Our actual results in the future may
differ materially from those projected results due to actual developments in
the market.

Interest rates

Based on variable rate debt levels at December 31, 2002 of £140 million a one
percent change in interest rates would impact net interest expense by
approximately £1.4 million per annum.

Interest rate risk profile of financial liabilities

As at December 31, 2001 and 2002 the Company had the following interest rate
profile for financial liabilities, after taking into account the interest rate
swaps used to manage the interest profile:

|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|-------- | ----------------------------------- |  | --------------------- | --- | --------------------- |  | ----------------- | --- | - |  | --- | --- | -
|         |                                     |  | At December 31, 2001 
|         |                                     |  |                      
|         |                                     |  | Floating rate         |     | Fixed rate            |  | December 31, 2001
|         |                                     |  | financial liabilities |     | financial liabilities |  | Total            
|         |                                     |  | £'m                   |     | £'m                   |  | £'m              
|         |                                     |  |                       |     |                       |  |                  
|Currency |                                     |  |                       |     |                       |  |                   |     |   |  |     |    
|        
|        
|        
|        
|         | Sterling                            |  |                       |    |                       |  |                   |    |   |  |     |    |  
|        
|        
|        
|        
|         | Euro                                |  |                       | 59  |                       |  |                   | 160 |   |  |     | 219 |  
|        
|        
|        
|        
|         | US Dollars                          |  |                       | 77  |                       |  |                   | 57  |   |  |     | 134 |  
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|         |                                     |  | 136                   |     |                       |  | 217               |     |   |  | 353 |    
|        
|        
|        
|        
|         | Unamortised issue costs             |  |                       | (4  | )                     |  |                   | (5  | ) |  |     | (9  | )
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|         | Bank
and other borrowings (Note 16) |  |                       | 132 |                       |  |                   | 212 |   |  |     | 344 |  
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  

|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|-------- | ----------------------------------- |  | --------------------- | --- | --------------------- |  | ----------------- | --- | - |  | --- | --- | -
|         |                                     |  | At December 31, 2002 
|         |                                     |  |                      
|         |                                     |  | Floating rate         |     | Fixed rate            |  | December 31, 2002
|         |                                     |  | financial liabilities |     | financial liabilities |  | Total            
|         |                                     |  | £'m                   |     | £'m                   |  | £'m              
|         |                                     |  |                       |     |                       |  |                  
|Currency |                                     |  |                       |     |                       |  |                   |     |   |  |     |    
|        
|        
|        
|        
|         | Sterling                            |  |                       | 13  |                       |  |                   |    |   |  |     | 13  |  
|        
|        
|        
|        
|         | Euro                                |  |                       | 94  |                       |  |                   | 130 |   |  |     | 224 |  
|        
|        
|        
|        
|         | US Dollars                          |  |                       | 33  |                       |  |                   | 80  |   |  |     | 113 |  
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|         |                                     |  | 140                   |     |                       |  | 210               |     |   |  | 350 |    
|        
|        
|        
|        
|         | Unamortised issue costs             |  |                       | (3  | )                     |  |                   | (4  | ) |  |     | (7  | )
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  
|         | Bank and other borrowings (Note 16) |  |                       | 137 |                       |  |                   | 206 |   |  |     | 343 |  
|         |                                     |  |                       |     |                       |  |                   |     |   |  |     |     |  

All the groups creditors falling due within one year (other than bank and
other borrowings) are excluded from the above tables either due to the
exclusion of short-term items or because they do not meet the definition of a
financial liability.

The US dollar-denominated tranche B debt ($47.8m) and the US dollar-denominated
tranche C debt ($79.8m) have been rolled over under existing credit agreements
at the rate of 4.330% for the US dollar-denominated tranche B debt and 4.8663%
for the US dollar-denominated tranche C debt; both rates are inclusive of
lender margins. Both interest rates are fixed until the end of September 2003
and accordingly these loans are shown as fixed rate financial liabilities
above.

48



---



##### Table of Contents



Risk Management

The following table provides information about the groups financial
instruments that are sensitive to changes in interest rates as of December 31,
2002. For the Companys fixed rate and variable rate debt, the tables present
principal amounts at December 31, 2002 exchange rates and weighted average
interest rates by expected maturity date. Variable rates are based on implied
forward rates as of December 31 derived from the zero coupon yield curve as of
December 31, 2002.

|                         |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |      |  |  |       |   |  |       |       |       |  |       |       |       |  |      |       |      |  |  |       | 
|------------------------ |  | -------------------------------------- | ---- | ---- |  | ---- | ---- | ---- |  | ---- | ---- | ---------- |  | ---- | ---- | ---- |  | ---- | ---- | ---- |  |  | ----- | - |  | ----- | ----- | ----- |  | ----- | ----- | ----- |  | ---- | ----- | ---- |  |  | ----- | 
|                         |  | Interest Rate Risk Management         
|                         |  | Principal Amount by expected maturity.
|                         |  |                                       
|                         |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |      |  |  |       |   |  |       |       |       |  |       |       |       |  | Fair |       | Fair
|                         |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |      |  |  |       |   |  | Total |       | Total |  | value |       | value
|                         |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |      |  |  |       |   |  | 12/31 |       | 12/31 |  | 12/31 |       | 12/31
|                         |  | 2003                                   |      | 2004 |  | 2005 |      | 2006 |  | 2007 |      | Thereafter |  | 2002 |      | 2001 |  | 2002 |      | 2001
|                         |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |     
|Fixed rate (Euro)        |  |                                        |     |      |  |      |     |      |  |      |     |            |  |      |     |      |  |      |     |      |  |  | 130.4 |   |  |       | 130.4 |       |  |       | 122.4 |       |  |      | 129.7 |      |  |  | 113.8 | 
|                        
|                        
|                        
|                        
|Interest rate (fixed)    |  |                                        |      |      |  |      |      |      |  |      |      |            |  |      |      |      |  |      |      |      |  |  | 10.25 | % |  |       |       |       |  |       |       |       |  |      |       |      |  |  |       | 
|                        
|                        
|                        
|                        
|Variable rate (USD)      |  |                                        | 4.5  |      |  |      | 4.8  |      |  |      | 4.8  |            |  |      | 4.1  |      |  |      | 39.7 |      |  |  | 71.3  |   |  |       | 129.2 |       |  |       | 133.5 |       |  |      | 129.2 |      |  |  | 133.5 | 
|                        
|                        
|                        
|                        
|Interest rate (variable) |  |                                        | 4.11 | %    |  |      | 4.63 | %    |  |      | 5.16 | %          |  |      | 5.65 | %    |  |      | 6.07 | %    |  |  | 6.07  | % |  |       |       |       |  |       |       |       |  |      |       |      |  |  |       | 
|                        
|                        
|                        
|                        
|Variable rate (Euro)     |  |                                        | 12.7 |      |  |      | 13.4 |      |  |      | 13.4 |            |  |      | 11.5 |      |  |      | 19.8 |      |  |  | 19.8  |   |  |       | 90.6  |       |  |       | 97.6  |       |  |      | 90.6  |      |  |  | 97.6  | 
|                        
|                        
|                        
|                        
|Interest rate (variable) |  |                                        | 4.91 | %    |  |      | 5.12 | %    |  |      | 5.45 | %          |  |      | 5.79 | %    |  |      | 6.14 | %    |  |  | 6.14  | % |  |       |       |       |  |       |       |       |  |      |       |      |  |  |       | 

We do not hedge our interest rate exposure in a manner that would entirely
eliminate the effects of changes in market interest rates on our cash flow and
earnings.

We have entered into the following interest rate contracts to manage interest
rate risk on our variable rate senior credit facilities.

The US dollar-denominated tranche B debt ($47.8m) and the US dollar-denominated
tranche C debt ($79.8m) have been rolled over under existing credit agreements
at the rate of 4.330% for the US dollar-denominated tranche B debt and 4.8663%
for the US dollar-denominated tranche C debt; both rates are inclusive of
lender margins. Both interest rates are fixed until the end of September 2003.

Foreign exchange

A substantial portion of our revenues is generated in currencies other than our
reporting currency of pounds sterling; in particular, we have net positive cash
inflows in US dollars and Euros or Euro determined currencies.

As at December 31, 2002 we had no foreign currency contracts options or other
derivatives. To date we have not used foreign currency hedging transactions.
Our fixed and variable rate borrowings are denominated in US dollars and Euros
to provide a hedge against foreign currency movements but we retain a net
exposure to the weakening of the US dollar and the Euro against our reporting
currency of pounds sterling.

Raw materials

At the end of 2002 we entered into a contractual arrangement to hedge a portion
of our raw material costs against spikes in natural gas prices over the coming
winter. During 2001 natural gas prices spiked to an all time high, which had an
adverse effect on the gross margin of the business. The contract that we have
entered into is a costless collar with floor and ceiling prices set on
various volume tranches. The floor and ceiling prices have been established
with the intent that there will be no settlement either way but merely to cover
the risk of excessive fluctuation. As of December 31, 2002 this arrangement had
a fair value equating to a £0.1 million asset. This fair value has been
calculated based on the market price for natural gas at the year-end compared
to the ceiling and floor prices of the collar.




ITEM
12     DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

NOT APPLICABLE

49



---



##### Table of Contents






PART II




ITEM 13   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

NONE




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

NONE




ITEM 15   CONTROLS AND PROCEDURES

Internal controls and procedures are evaluated by our Chief Executive Officer
and Chief Financial Officer by means of a cascade process throughout the group.
The cascade process requires all key managers to evaluate the effectiveness of
the internal control framework within their own particular areas of
responsibility and report any weaknesses or breakdown in controls back through
the cascade process.

Based on an evaluation, as of a date within 90 days of the filing of this Form
20-F, our Chief Executive Officer and Chief Financial Officer has concluded
that our disclosure controls and procedures (as defined in Rules 13a-14(c) and
15d-14(c) under the Securities Exchange Act of 1934) are effective to ensure
that information required to be disclosed in the reports we file or submit
under the Securities Exchange Act of 1934 is reordered, processed, summarised
and reported on a timely basis.

There have been no significant changes in 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.




ITEM 16   [RESERVED]




PART III




ITEM 17   FINANCIAL STATEMENTS

The registrant has responded to Item 18 in lieu of responding to this Item.




ITEM 18   FINANCIAL STATEMENTS

See the Index to Combined and Consolidated Financial Statements accompanying
this report on page F-1.

50



---



##### Table of Contents






ITEM 19 EXHIBITS

|        |  |                                                                                                                                                                                                                                                                                      
|------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                                                                                                                                      
|No.     |  | Description of Exhibit                                                                                                                                                                                                                                                               
|1.1     |  | Memorandum and Articles of Association of Lucite International Group
Holdings Limited. (1)                                                                                                                                                                                           
|       
|       
|       
|       
|2.1     |  | Indenture, dated May 4, 2000, among Lucite International Finance plc, the
Company, Lucite International Investment Limited, Lucite International
Holdings Limited and Lucite International Holdco Limited (collectively,
the Registrants) and The Bank of New York, as trustee. (2)
|       
|       
|       
|       
|2.2     |  | Credit Facilities, dated October 3, 1999, as amended at December 13,
2002, among Lucite International Limited, Deutsche Bank AG London and
Merrill Lynch International. (3)                                                                                                          
|       
|       
|       
|       
|2.3     |  | Intercreditor Deed, dated November 2, 1999, among Lucite International
Limited, Lucite International UK Bondco Limited, Lucite International UK
Finco Limited, Deutsche Bank AG, Merrill Lynch International, the Original
Bridge Lenders and the High Yield Trustee. (4)            
|       
|       
|       
|       
|2.4     |  | Loan Agreement, dated October 21, 1999, between Lucite International UK
Finco Limited and Lucite International UK Bondco Limited. (5)                                                                                                                                                
|       
|       
|       
|       
|2.5     |  | Amendment Agreement, dated April 28, 2000, to Loan Agreement dated
October 21, 1999, between Lucite International UK Finco Limited and Lucite
International UK Bondco Limited. (6)                                                                                                   
|       
|       
|       
|       
|4.1     |  | Agreement dated September 29, 2000, between Lucite International UK
Limited and BASF PLC relating to the supply of HCN, the construction and
operation of an ACH plant and toll manufacture of ACH. (7)                                                                              
|       
|       
|       
|       
|8.1     |  | List of subsidiaries of Lucite International Group Holdings Limited. (8)                                                                                                                                                                                                             



---

|(1) |  | Incorporated by reference from Exhibit 3.2 to the Companys Registration
Statement on Form F-4, File No. 333-12714, filed with the Securities and
Exchange Commission on October 19, 2000.                           
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Incorporated by reference from Exhibit 4.1 to the Companys Registration
Statement on Form F-4, File No. 333-12714, filed with the Securities and
Exchange Commission on October 19, 2000.                           
|   
|   
|   
|   
|(3) |  | Filed herewith.                                                                                                                                                                                                      
|   
|   
|   
|   
|(4) |  | Incorporated by reference from Exhibit 10.2 to the Companys Registration
Statement on Form F-4, File No. 333-12714, filed with the Securities and
Exchange Commission on October 19, 2000.                          
|   
|   
|   
|   
|(5) |  | Incorporated by reference from Exhibit 10.3 to the Companys Registration
Statement on Form F-4, File No. 333-12714, filed with the Securities and
Exchange Commission on October 19, 2000.                          
|   
|   
|   
|   
|(6) |  | Incorporated by reference from Exhibit 10.4 to the Companys Registration
Statement on Form F-4, File No. 333-12714, filed with the Securities and
Exchange Commission on October 19, 2000.                          
|   
|   
|   
|   
|(7) |  | Incorporated by reference from Exhibit 10.5 to the Companys Annual
Report for the year ended December 31, 2001 on Form 20-F, File No.
333-12714, filed with the Securities and Exchange Commission on April 5,
2002.
|   
|   
|   
|   
|(8) |  | Filed herewith.                                                                                                                                                                                                      

51



---



##### Table of Contents






SIGNATURES

The registrant hereby certifies that it meets all of the requirements for
filing on Form 20-F and that it has duly caused this annual report to be signed
on its behalf by the undersigned, thereto duly authorised.

LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

/s/ IAN R. LAMBERT

Ian R. Lambert
Chief Executive Officer
April 11, 2003

52



---



##### Table of Contents



CERTIFICATIONS

I, Ian R. Lambert, Chief Executive Officer of Lucite International Group
Holdings Limited, certify that:



|1. |  | I have reviewed this annual report on Form 20-F of Lucite International
Group Holdings Limited;                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant, as of, and for, the periods presented in this annual
report;                  
|  
|4. |  | The Registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | (a) |  | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this annual report is being
prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the
Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: April 11, 2003

/s/ Ian R. Lambert

Ian R. Lambert
Chief Executive Officer

53



---



##### Table of Contents



CERTIFICATIONS

I, Ian R. Lambert, Chief Financial Officer of Lucite International Group
Holdings Limited, certify that:



|1. |  | I have reviewed this annual report on Form 20-F of Lucite International
Group Holdings Limited;                                                                                                                                                                                                                         
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this annual report;
|  
|3. |  | Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of
the registrant as of, and for, the periods presented in this annual
report;                   
|  
|4. |  | The registrants other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as
defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we
have:                                                                                                



| | (a) |  | designed such disclosure controls and procedures
to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made
known to us by others within those entities, particularly
during the period in which this annual report is being
prepared;
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | evaluated the effectiveness of the registrants
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this annual report (the
Evaluation Date); and                                                                                                  
|
| | (c) |  | presented in this annual report our conclusions
about the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation Date;                                                                                                                        



|5. |  | The registrants other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrants auditors and the audit
committee of the registrants board of directors (or persons performing
the equivalent function):
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) |  | all significant deficiencies in the design or
operation of internal controls which could adversely affect
the registrants ability to record, process, summarize and
report financial data and have identified for the registrants
auditors any material weaknesses in internal controls; and
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | any fraud, whether or not material, that involves
management or other employees who have a significant role in
the registrants internal controls; and                                                                                                                                        



|6. |  | The registrants other certifying officer and I have indicated in this
annual report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and
material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Date: April 11, 2003

/s/ Ian R. Lambert

Ian R. Lambert
Chief Financial Officer

54



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

|                                                                                                                                                                           |  |  |      | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  |  | ---- | 
|LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED                                                                                                                                |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Report of independent accountants                                                                                                                                          |  |  | F-2  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated profit and loss accounts for the year ended December 31, 2002, the year ended
December 31, 2001 and the year ended December 31, 2000                          |  |  | F-3  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated statements of total recognised gains and losses for the year ended December 31, 2002,
the year ended December 31, 2001 and the year ended December 31, 2000   |  |  | F-4  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated balance sheets as at December 31, 2002 and 2001                                                                                                               |  |  | F-5  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated cash flow statements for the year ended December 31, 2002, the year ended
December 31, 2001 and the year ended December 31, 2000                              |  |  | F-6  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Reconciliation of movements in equity shareholders funds for the year ended
December 31, 2002, F-7 the year ended December 31, 2001 and the year ended
December 31, 2000  |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Notes to the consolidated financial statements                                                                                                                             |  |  | F-8  | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|LUCITE INTERNATIONAL HOLDINGS LIMITED                                                                                                                                      |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Report of independent accountants                                                                                                                                          |  |  | F-67 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated profit and loss accounts for the year ended December 31, 2002, the year
ended December 31, 2001 and the year ended December 31, 2000                          |  |  | F-68 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated statements of total recognised gains and losses for the year ended
December 31, 2002, the year ended December 31, 2001 and the year ended December 31, 2000   |  |  | F-69 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated balance sheets as at December 31, 2002 and 2001                                                                                                               |  |  | F-70 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated cash flow statements for the year ended December 31, 2002, the year ended
December 31, 2001 and the year ended December 31, 2000                              |  |  | F-71 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Reconciliation of movements in equity shareholders funds for the year ended
December 31, 2002, F-72 the year ended December 31, 2001 and the year ended
December 31, 2000 |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Notes to the consolidated financial statements                                                                                                                             |  |  | F-73 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|LUCITE INTERNATIONAL HOLDCO LIMITED                                                                                                                                        |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Report of independent accountants                                                                                                                                          |  |  | F-75 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated profit and loss accounts for the year ended December 31, 2002, the
year ended December 31,
2001 and the year ended December 31, 2000                          |  |  | F-76 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated statements of total recognised gains and losses for the year ended December 31, 2002,
the year ended December 31, 2001 and the year ended December 31, 2000   |  |  | F-77 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated balance sheets as at December 31, 2002 and 2001                                                                                                               |  |  | F-78 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Consolidated cash flow statements for the year ended December 31, 2002, the year
ended December 31, 2001
and the year ended December 31, 2000                              |  |  | F-79 | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Reconciliation of movements in equity shareholders funds for the year ended
December 31, 2002, F-80 the year ended December 31, 2001 and the year ended
December 31, 2000 |  |  |      | 
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|                                                                                                                                                                          
|Notes to the consolidated financial statements                                                                                                                             |  |  | F-81 | 





---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Lucite International Group
Holdings Limited

We have audited the accompanying consolidated balance sheets of Lucite
International Group Holdings Limited (the Company) as of December 31, 2002
and 2001, and the related consolidated profit and loss accounts, cash flow
statements, total recognised gains and losses and reconciliation of movements
in shareholders funds for each of the three years ended December 31, 2002.
These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years ended December 31, 2002, in conformity with
accounting principles generally accepted in the United Kingdom.

As discussed on page F-8 to the financial statements, the Company changed its
method of accounting for deferred taxation in 2002.

Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected
results of operations for each of the three years ended December 31, 2002 and
consolidated shareholders funds at December 31, 2002, 2001, to the extent
summarised in Note 27 to the financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants
London, England
April 11, 2003

F-2



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

CONSOLIDATED PROFIT AND LOSS ACCOUNT

|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|----------------------------------------------------------------------------------------------------- |  | ----- | ---- | ----------- |  | ------------ | ---- | ------------ |  | ------------ | ---- | - |  |  | ---- | -
|                                                                                                      |  |       |      |             |  | Year ended   |      | Year ended   |  |              |      |  
|                                                                                                      |  |       |      |             |  | December 31, |      | December 31, |  | Year ended  
|                                                                                                      |  |       |      |             |  | 2000         |      | 2001         |  | December 31,
|                                                                                                      |  |       |      |             |  | £'m          |      | £'m          |  | 2002        
|                                                                                                      |  | Notes |      | as restated |  | as restated  |      | £'m         
|                                                                                                      |  |       |      |             |  |              |      |             
|Turnover including share of joint venture                                                             |  |       |      |             |  |              | 581  |              |  |              | 589  |   |  |  | 582  |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Less: share of joint ventures turnover                                                               |  |       |      |             |  |              | (21  | )            |  |              | (12  | ) |  |  |     |  
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Group turnover                                                                                        |  |       | 3, 4 |             |  |              | 560  |              |  |              | 577  |   |  |  | 582  |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Net operating costs before exceptional
operating expenses and amortisation of
intangible fixed assets |  |       | 4    |             |  |              | (525 | )            |  |              | (550 | ) |  |  | (550 | )
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Exceptional operating expenses                                                                        |  |       | 5    |             |  |              | (14  | )            |  |              | (4   | ) |  |  |     |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Amortisation of goodwill and other
intangible fixed assets                                            |  |       | 10   |             |  |              | (5   | )            |  |              | (5   | ) |  |  | (5   | )
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Total net operating costs                                                                             |  |       |      |             |  |              | (544 | )            |  |              | (559 | ) |  |  | (555 | )
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Group operating profit                                                                                |  |       | 3, 4 |             |  |              | 16   |              |  |              | 18   |   |  |  | 27   |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Share of operating profit from joint venture                                                          |  |       |      |             |  |              | 2    |              |  |              | 2    |   |  |  |     |  
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Operating profit including joint venture                                                              |  |       |      |             |  |              | 18   |              |  |              | 20   |   |  |  | 27   |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Net interest payable                                                                                  |  |       | 8    |             |  |              | (40  | )            |  |              | (28  | ) |  |  | (29  | )
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Loss on ordinary activities before taxation                                                           |  |       | 6    |             |  |              | (22  | )            |  |              | (8   | ) |  |  | (2   | )
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Taxation on loss on ordinary activities                                                               |  |       | 9    |             |  |              | 10   |              |  |              | 6    |   |  |  | 2    |  
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Loss on ordinary activities after taxation                                                            |  |       |      |             |  |              | (12  | )            |  |              | (2   | ) |  |  |     |  
|                                                                                                     
|                                                                                                     
|                                                                                                     
|                                                                                                     
|Equity minority interests                                                                             |  |       |      |             |  |              |     |              |  |              | (1   | ) |  |  | (3   | )
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  
|Loss for the financial year                                                                           |  |       |      |             |  |              | (12  | )            |  |              | (3   | ) |  |  | (3   | )
|                                                                                                      |  |       |      |             |  |              |      |              |  |              |      |   |  |  |      |  

Group turnover and group operating profit relate entirely to continuing
operations.

The accompanying notes are an integral part of these financial statements

F-3



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

|                                                                                                                       |  |              |     |              |  |              |    |   |  |  |     |  
|---------------------------------------------------------------------------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | -- | - |  |  | --- | -
|                                                                                                                       |  | Year ended   |     | Year ended   |  |              |    |  
|                                                                                                                       |  | December 31, |     | December 31, |  | Year ended  
|                                                                                                                       |  | 2000         |     | 2001         |  | December 31,
|                                                                                                                       |  | £'m          |     | £'m          |  | 2002        
|                                                                                                                       |  | as restated  |     | as restated  |  | £'m         
|                                                                                                                       |  |              |     |              |  |             
|Loss for the financial year                                                                                            |  |              | (12 | )            |  |              | (3 | ) |  |  | (3  | )
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|                                                                                                                      
|Currency translation differences on
foreign currency net investments net of
translation on foreign currency
borrowings |  |              |    |              |  |              | 2  |   |  |  | (21 | )
|                                                                                                                       |  |              |     |              |  |              |    |   |  |  |     |  
|Total recognised loss relating to the year                                                                             |  |              | (12 | )            |  |              | (1 | ) |  |  | (24 | )
|                                                                                                                       |  |              |     |              |  |              |    |   |  |  |     |  
|Prior year adjustment for deferred
taxation (note 1)                                                                   |  |              |     |              |  |              |    |   |  |  | 5   |  
|                                                                                                                       |  |              |     |              |  |              |    |   |  |  |     |  
|Total gains and losses recognised since
last annual report                                                             |  |              |     |              |  |              |    |   |  |  | (19 | )
|                                                                                                                       |  |              |     |              |  |              |    |   |  |  |     |  

The accompanying notes are an integral part of these financial statements

F-4



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

BALANCE SHEET AS AT DECEMBER 31, 2002 AND 2001

|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|------------------------------------------------------- |  | ----- | -- | ------------- |  | ---- | ---- | ---- |  |  | ---- | -
|                                                        |  |       |    |               |  | 2001 |      |      |  | 
|                                                        |  |       |    |               |  | £m   |      | 2002
|                                                        |  | Notes |    | (as restated) |  | £m  
|                                                        |  |       |    |               |  |     
|Fixed assets                                            |  |       |    |               |  |      |      |      |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets                                       |  |       | 10 |               |  |      | 94   |      |  |  | 89   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Negative goodwill                                       |  |       | 10 |               |  |      | (6   | )    |  |  | (6   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Tangible assets                                         |  |       | 11 |               |  |      | 390  |      |  |  | 358  |  
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |  |       |    |               |  |      | 478  |      |  |  | 441  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Current assets                                          |  |       |    |               |  |      |      |      |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Stocks                                                  |  |       | 12 |               |  |      | 69   |      |  |  | 75   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debtors                                                 |  |       | 13 |               |  |      | 96   |      |  |  | 96   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Cash at bank and in hand                                |  |       |    |               |  |      | 20   |      |  |  | 11   |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|                                                        |  |       |    |               |  |      | 185  |      |  |  | 182  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Total assets                                            |  |       |    |               |  |      | 663  |      |  |  | 623  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Creditors: amounts falling due within one year          |  |       | 14 |               |  |      | (111 | )    |  |  | (119 | )
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Net current assets                                      |  |       |    |               |  |      | 74   |      |  |  | 63   |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Total assets less current liabilities                   |  |       |    |               |  |      | 552  |      |  |  | 504  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Creditors: amounts falling due after more than one year |  |       | 15 |               |  |      | (336 | )    |  |  | (330 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Provisions for liabilities and charges                  |  |       | 18 |               |  |      | (48  | )    |  |  | (32  | )
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Net assets                                              |  |       |    |               |  |      | 168  |      |  |  | 142  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Shareholders equity                                    |  |       |    |               |  |      |      |      |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Called up equity share capital                          |  |       | 19 |               |  |      | 175  |      |  |  | 175  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Profit and loss account                                 |  |       |    |               |  |      | (21  | )    |  |  | (45  | )
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Total equity shareholders funds                        |  |       |    |               |  |      | 154  |      |  |  | 130  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity minority interests                               |  |       |    |               |  |      | 14   |      |  |  | 12   |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  
|Capital employed                                        |  |       |    |               |  |      | 168  |      |  |  | 142  |  
|                                                        |  |       |    |               |  |      |      |      |  |  |      |  

The accompanying notes are an integral part of these financial statements

F-5



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

CASH FLOW STATEMENT

|                                                                       |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|---------------------------------------------------------------------- |  | ----- | -- | --------- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                                       |  |       |    |           |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                       |  |       |    |           |  | December 31, |     | December 31, |  | December 31,
|                                                                       |  |       |    |           |  | 2000         |     | 2001         |  | 2002        
|                                                                       |  | Notes |    | (pound)'m |  | (pound)'m    |     | (pound)'m   
|                                                                       |  |       |    |           |  |              |     |             
|Cash inflow from operating                                             |  |       | 21 | (a)       |  |              | 56  |              |  |              | 83  |   |  |  | 57  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|activities                                                             |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Returns on investments and
servicing of finance                        |  |       | 21 | (b)       |  |              | (29 | )            |  |              | (33 | ) |  |  | (28 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Taxation                                                               |  |       |    |           |  |              | (1  | )            |  |              | (3  | ) |  |  | (4  | )
|                                                                       |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                       |  |       |    |           |  |              | 26  |              |  |              | 47  |   |  |  | 25  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Capital expenditure and
financial investment                           |  |       | 21 | (c)       |  |              | (28 | )            |  |              | (26 | ) |  |  | (28 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Acquisitions and disposals                                             |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Acquisition of ICI Acrylics                                            |  |       | 21 | (d)       |  |              | (9  | )            |  |              | (1  | ) |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other acquisitions                                                     |  |       | 21 | (d)       |  |              | (20 | )            |  |              | 5   |   |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Proceeds from sale of businesses                                       |  |       | 21 | (d)       |  |              | 1   |              |  |              |    |   |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Cash payments against provisions                                       |  |       |    |           |  |              | (11 | )            |  |              |    |   |  |  |    |  
|                                                                       |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|Net cash (outflow)/inflow
before use of liquid resources
and financing |  |       |    |           |  |              | (41 | )            |  |              | 25  |   |  |  | (3  | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Financing                                                              |  |       | 21 | (e)       |  |              | 2   |              |  |              | (23 | ) |  |  | (5  | )
|                                                                       |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  
|(Decrease)/ Increase in cash                                           |  |       | 21 | (f)       |  |              | (39 | )            |  |              | 2   |   |  |  | (8  | )
|                                                                       |  |       |    |           |  |              |     |              |  |              |     |   |  |  |     |  

The accompanying notes are an integral part of these financial statements

F-6



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED

RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS FUNDS

|                                |  |               |     |             |  |                 |     |       |  |  |     |  
|------------------------------- |  | ------------- | --- | ----------- |  | --------------- | --- | ----- |  |  | --- | -
|                                |  |               |     |             |  | Profit and loss |     |       |  | 
|                                |  |               |     |             |  | account         |     | Total
|                                |  | Share capital |     | £'m         |  | £'m            
|                                |  | £'m           |     | as restated |  | as restated    
|                                |  |               |     |             |  |                
|Balance at December 31, 1999    |  |               | 175 |             |  |                 | (8  | )     |  |  | 167 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |             |  |                 | (12 | )     |  |  | (12 | )
|                                |  |               |     |             |  |                 |     |       |  |  |     |  
|Balance at December 31, 2000    |  |               | 175 |             |  |                 | (20 | )     |  |  | 155 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |             |  |                 | (3  | )     |  |  | (3  | )
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |               |    |             |  |                 | 2   |       |  |  | 2   |  
|                                |  |               |     |             |  |                 |     |       |  |  |     |  
|Balance at December 31, 2001    |  |               | 175 |             |  |                 | (21 | )     |  |  | 154 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |             |  |                 | (3  | )     |  |  | (3  | )
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |               |    |             |  |                 | (21 | )     |  |  | (21 | )
|                                |  |               |     |             |  |                 |     |       |  |  |     |  
|Balance at December 31, 2002    |  |               | 175 |             |  |                 | (45 | )     |  |  | 130 |  
|                                |  |               |     |             |  |                 |     |       |  |  |     |  

There are no significant statutory or contractual restrictions on the
distribution of current year income of subsidiary undertakings. Undistributed
profits are, in the main, employed in the business of these companies. The
undistributed income of the businesses overseas may be liable to overseas taxes
and/or United Kingdom taxation, after allowing for double taxation relief, if
they were to be distributed as dividends.

The cumulative exchange gains and losses on the translation of foreign currency
financial statements into pounds sterling are taken into account in the above
reconciliation of movements in combined net investment and consolidated
shareholders funds.

A prior year adjustment has been made to the 2000 and 2001 figures as a result
of the adoption of FRS19 deferred tax. The amounts as previously stated
before the prior year adjustment, are set out below:

|                                |  |               |     |         |  |                 |     |   |  |  |     |  
|------------------------------- |  | ------------- | --- | ------- |  | --------------- | --- | - |  |  | --- | -
|                                |  |               |     |         |  | Profit and loss |     |   |  | 
|                                |  | Share capital |     | account |  | Total          
|                                |  | £'m           |     | £'m     |  | £'m            
|                                |  |               |     |         |  |                
|Balance at December 31, 1999    |  |               | 175 |         |  |                 | (8  | ) |  |  | 167 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |         |  |                 | (14 | ) |  |  | (14 | )
|                                |  |               |     |         |  |                 |     |   |  |  |     |  
|Balance at December 31, 2000    |  |               | 175 |         |  |                 | (22 | ) |  |  | 153 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |         |  |                 | (6  | ) |  |  | (6  | )
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |               |    |         |  |                 | 2   |   |  |  | 2   |  
|                                |  |               |     |         |  |                 |     |   |  |  |     |  
|Balance at December 31, 2001    |  |               | 175 |         |  |                 | (26 | ) |  |  | 149 |  
|                                |  |               |     |         |  |                 |     |   |  |  |     |  

The accompanying notes are an integral part of these financial statements

F-7



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS

The consolidated financial statements included herein do not comprise the
Companys statutory accounts within the meaning of section 240 of the Companies
Act 1985 of Great Britain. Statutory accounts for the year ended December 31,
2002 have not yet been delivered to the Registrar of the Companies for England
and Wales.

1 Accounting Policies

The financial statements have been prepared under the historical cost
convention in accordance with applicable accounting standards in the United
Kingdom.

Accounting policies conform with UK Generally Accepted Accounting Principles
(UK GAAP). The principal accounting policies, which have been applied
consistently with the exception of deferred taxation, are set out below.

Changes to accounting policies

The Company has adopted FRS19 Deferred Tax in these financial statements.
The adoption of this standard represents a change in accounting policy and the
comparative figures have been restated accordingly. The impact of this change
in accounting policy is to reduce the provision for deferred tax at December
31, 2000 by approximately £2 million and as at December 31, 2001 by a further
£3 million, due to the recognition of certain losses within the United States
that are anticipated to be recoverable.

Basis of consolidation
The consolidated financial statements comprise the financial statements of
Lucite International Group Holdings Limited and its majority owned
subsidiaries. All inter-company transactions are eliminated, as are any
inter-company profits included in a subsidiary companys profit and loss
account, which were not realised at the balance sheet date.

Acquisitions are accounted for using the purchase method of accounting. The
purchase consideration of an investment is allocated to the assets and
liabilities acquired on the basis of fair value at the date of acquisition.

Where the Company does not own a majority shareholding in an entity but has a
participating interest in that entitys equity, the equity method of accounting
has been used. Investments in joint ventures are accounted for under the gross
equity method.

Turnover
Turnover represents the invoiced value of goods sold to third parties net of
sales discounts and value added taxes. Turnover excludes sales between
entities within the group. Revenue is recognised at the point at which title
passes and prices are determinable.

The pricing for products sold is determined by prevailing market prices (market
contracts and arrangements) or is linked by a formula to published raw material
prices.

Goodwill
On 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 such net assets. Goodwill arising on acquisition is
capitalised as an intangible asset and is amortised through the profit and loss
account over a period of 20 years unless it is considered that it has a
materially different useful economic life.

Negative goodwill arising in acquisitions is included within fixed assets and
released to the profit and loss in the period in which the fair values of the
non monetary assets purchased on the same acquisition are recovered, whether
through depreciation or sale.

F-8



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

Tangible fixed assets
Fixed assets are stated at cost less accumulated depreciation. The book value
of each tangible fixed asset is written off to its residual value over its
estimated remaining useful economic 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.
Estimated useful economic lives of tangible fixed assets are as follows:

|                                 |  |             |  | 
|-------------------------------- |  | ----------- |  | 
|Buildings                        |  | 20-30 years
|                                
|                                
|                                
|                                
|Plant and equipment              |  |             |  | 
|                                
|                                
|                                
|                                
|- plant and machinery            |  | 10-20 years
|                                
|                                
|                                
|                                
|- computer hardware and software |  | 3-4 years  

Some manufacturing facilities need to be partially or completely overhauled
approximately every two to three years. At the time of the overhaul, the
Company assesses the overhauls impact on the manufacturing facility
considering such factors as the facilitys estimated useful life, capacity and
efficiency. Only costs for major overhauls, which enhance capacity and
efficiency of facilities and/or extend their useful life are capitalised and
amortised over the estimated period until the next major overhaul. Normal
maintenance and repairs of all other plant and equipment are expensed as
incurred.

Previously the cost of the overhauls on the US plants were charged in the year
of shutdown as the two main plants were overhauled every other year with the
resulting charge approximating to the amortisation charge had they been
capitalised. As the time between overhauls for these plants has been
successfully extended from a two-year frequency to a three-year frequency the
overhaul costs will be capitalised in line with the groups accounting policy.
The effect of the change has resulted in an increase in operating profit of £2
million for the current year.

Leased assets
Where assets are financed by leasing agreements that give rights approximating
to ownership, (finance leases) the assets are treated as if they had been
purchased outright. The amount capitalised is the present value of the minimum
lease payments payable during the lease term. The corresponding leasing
commitments are shown as amounts payable to the lessor. Depreciation on the
relevant assets is charged to the profit and loss account.

Lease payments are analysed between capital and interest components so that the
interest element of the payment is charged to the profit and loss account over
the period of the lease and represents a constant of the balance of capital
repayments outstanding.

All other leases are treated as operating leases. Their annual rentals are
charged to the profit and loss account on a straight-line basis over the term
of the lease.

Reverse premiums and similar incentives to enter into operating lease
agreements are initially recorded as deferred income and released to the profit
and loss account over the period to the date on which the rent is first
expected to be adjusted to the prevailing market rate.

Pension costs
The pension costs relating to the UK retirement plan 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 plan, which should
be a level percentage of current and expected future earnings of the employees
covered under the plan. Variations from the regular pension cost are spread on
a systematic basis over the estimated average remaining service lives of
current employees in the plan. Non-UK subsidiaries recognise the expected cost
of providing pensions on a systematic basis over the average remaining service
lives of employees in accordance with the advice of independent qualified
actuaries.

Research and development
Research and development expenditure is charged to the profit and loss account
in the year in which it is incurred.

F-9



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

Stocks
Stocks are stated 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, a proportion of labour and overhead expense that
relates to production has been absorbed.

Foreign currencies
Profit and loss accounts of subsidiary undertakings, which are denominated in
foreign currencies, are translated into Sterling at average exchange rates for
the relevant accounting periods. Assets and liabilities are translated at
exchange rates ruling at the balance sheet date. Exchange differences arising
on the re-translation of the results and net investment in subsidiary
undertakings are taken directly to reserves.

Exchange differences on relevant foreign currency loans which are taken out as
a currency hedge against investments in foreign subsidiaries are recorded in
reserves in the consolidated balance sheet to the extent that they are matched
by exchange differences arising on translation of foreign currency net
investment.

Exchange differences on all other transactions are included in the
determination of profit or loss for the year.

Environmental liabilities
The Company is exposed to environmental liabilities relating 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.

Taxation
The charge for taxation is based on the loss for the year and takes into
account deferred taxation because of timing differences between the treatment
of certain items for taxation and for accounting purposes.

With effect from January 1, 2002 the group changed its accounting policy on
deferred tax in line with FRS19 Deferred Tax. FRS19 introduces a form of
full provision for accounting for deferred tax called the incremental liability
approach, which replaces the partial provision approach previously followed
under SSAP15.

Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more tax in the future or a right to
pay less tax in the future have occurred at the balance sheet date. A net
deferred tax asset is regarded as recoverable and therefore recognised only
when, on the basis of all available evidence, it can be regarded as more likely
than not that there will be suitable taxable surpluses from which the future
reversal of the underlying timing differences can be deducted. Deferred tax
balances are not discounted.

Previously deferred tax was provided on timing differences to the extent that
they were expected to reverse in the foreseeable future. The effect of this
change in accounting policy is set out in note 18 to the accounts and prior
year comparatives have been changed accordingly.

Fair value of financial instruments
The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amount of financial instruments that are
recognised at historical cost amounts.

The following methods and assumptions were used by the Company in estimating
fair value disclosures for financial instruments:



| |  | Cash and cash equivalents, trade debtors, certain other current assets,
short-term borrowings, and current maturities of long-term debt: The
amounts reported in the consolidated balance sheets approximate to fair
value.
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
| |  | Loans: The amounts reported in the consolidated balance sheets for loans
approximate to fair value, since such debt was primarily variable rate
debt.                                                                      

F-10



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

Derivative financial instruments
The Company has entered into interest rate caps to hedge its variable rate
debt. The Company does not hold or issue derivative financial instruments for
trading purposes. The interest rate swap and cap agreements are designated as
hedges, and effectiveness is determined by matching the principle balance and
terms with that specific obligation. Amounts due to or from interest rate swap
counterparties are recorded in interest rate expense in the period in which
they accrue. The premiums paid to purchase interest rate caps are included in
net debt and amortised to interest expense over the shorter of the original
term of the agreements or the life of the financial instruments to which they
are matched.

Provisions
Estimated costs to be incurred in connection with restructuring measures are
provided for when the Company has a constructive obligation, which is generally
the announcement date. The announcement date is the date at which the plan is
announced officially to employees with sufficient detailed information to
enable the employees to estimate the redundancy indemnities to which they are
entitled.

Borrowings
Borrowings are initially stated at the fair value of the consideration received
after deduction of issue costs. Issue costs, together with finance charges are
charged to the profit and loss account over the term of the borrowings and
represent a constant proportion of the balance of capital repayments
outstanding. Unamortised issue costs are deducted from the carrying value of
related borrowings.

2 Business description

Lucite International Group Holdings Limited is a wholly owned subsidiary of
Lucite International Limited. Lucite International Limited does not trade and
has no investments other than Lucite International Group Holdings Limited. The
principal shareholder and ultimate controlling party of Lucite International
Limited is Charterhouse Development Capital Limited. Lucite International
Group Holdings Limited is a non-trading holding company for the remainder of
the subsidiary companies included in the Lucite International Group. These
subsidiary companies are listed in Note 28 to these financial statements.
Lucite International Group Holdings Limited and subsidiary companies (together
referred to as Lucite or the Company) are engaged in the production and
distribution of methacrylate monomers, the principal building block of acrylic,
and the production and distribution of acrylic based polymers, resins, sheet
and composites. These products are manufactured at facilities located in the
Americas, Europe and Asia and are sold throughout the world.

F-11



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

3 Segmental reporting

Class of business
The Companys business comprises the production and distribution of Upstream
products, being methyl methacrylate monomers and speciality methacrylates
(methacrylic acid and higher monomers) and Downstream products, being acrylic
sheet, speciality polymers, resins and composites.
Turnover, operating profit, depreciation, total assets less current liabilities
and capital expenditure attributable to each different class of business are as
follows:

|                               |  |              |     |              |  |              |     |   |  |  |     |  
|------------------------------ |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                               |  | Year ended   |     | Year ended   |  | Year ended  
|                               |  | December 31, |     | December 31, |  | December 31,
|                               |  | 2000         |     | 2001         |  | 2002        
|                               |  | £'m          |     | £'m          |  | £'m         
|                               |  |              |     |              |  |             
|Turnover                       |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|Upstream                       |  |              | 351 |              |  |              | 374 |   |  |  | 402 |  
|                              
|                              
|                              
|                              
|Downstream                     |  |              | 291 |              |  |              | 298 |   |  |  | 274 |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                               |  |              | 642 |              |  |              | 672 |   |  |  | 676 |  
|                              
|                              
|                              
|                              
|Inter-class eliminations       |  |              | (82 | )            |  |              | (95 | ) |  |  | (94 | )
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|                               |  |              | 560 |              |  |              | 577 |   |  |  | 582 |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|Operating profit               |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|Upstream                       |  |              | 6   |              |  |              | 16  |   |  |  | 12  |  
|                              
|                              
|                              
|                              
|Downstream                     |  |              | 24  |              |  |              | 6   |   |  |  | 15  |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                               |  |              | 30  |              |  |              | 22  |   |  |  | 27  |  
|                              
|                              
|                              
|                              
|Exceptional operating expenses |  |              | (14 | )            |  |              | (4  | ) |  |  |    |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|Operating profit               |  |              | 16  |              |  |              | 18  |   |  |  | 27  |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|Depreciation                   |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|Upstream                       |  |              | 25  |              |  |              | 22  |   |  |  | 31  |  
|                              
|                              
|                              
|                              
|Downstream                     |  |              | 9   |              |  |              | 12  |   |  |  | 9   |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|                               |  |              | 34  |              |  |              | 34  |   |  |  | 40  |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|Amortisation                   |  |              |     |              |  |              |     |   |  |  |     |  
|                              
|                              
|                              
|                              
|Upstream                       |  |              | 3   |              |  |              | 3   |   |  |  | 3   |  
|                              
|                              
|                              
|                              
|Downstream                     |  |              | 2   |              |  |              | 2   |   |  |  | 2   |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  
|                               |  |              | 5   |              |  |              | 5   |   |  |  | 5   |  
|                               |  |              |     |              |  |              |     |   |  |  |     |  

The upstream business sells to third parties and within the group. The
intra-group transactions are eliminated within the inter-class eliminations
shown above.

F-12



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

|                                                                       |  |             |     |      |  |  |     |  
|---------------------------------------------------------------------- |  | ----------- | --- | ---- |  |  | --- | -
|                                                                       |  | 2001        |     | 2002
|                                                                       |  | £'m         |     | £'m 
|                                                                       |  | as restated |     |     
|Total assets less current liabilities                                  |  |             |     |      |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Upstream                                                               |  |             | 360 |      |  |  | 336 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Downstream                                                             |  |             | 167 |      |  |  | 162 |  
|                                                                       |  |             |     |      |  |  |     |  
|Net operating assets                                                   |  |             | 527 |      |  |  | 498 |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Assets and liabilities that are not attributable to types of business: |  |             |     |      |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|- cash at bank and in hand                                             |  |             | 20  |      |  |  | 11  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|- Deferred taxation asset                                              |  |             | 18  |      |  |  | 12  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|- bank and other borrowings (note 14 )                                 |  |             | (13 | )    |  |  | (17 | )
|                                                                       |  |             |     |      |  |  |     |  
|                                                                       |  |             | 552 |      |  |  | 504 |  
|                                                                       |  |             |     |      |  |  |     |  
|Capital expenditure                                                    |  |             |     |      |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Upstream                                                               |  |             | 16  |      |  |  | 20  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Downstream                                                             |  |             | 10  |      |  |  | 8   |  
|                                                                       |  |             |     |      |  |  |     |  
|                                                                       |  |             | 26  |      |  |  | 28  |  
|                                                                       |  |             |     |      |  |  |     |  

Geographical analysis
The Companys products are manufactured at facilities located in the Americas,
Europe and Asia and are sold throughout the world. Sales between group
companies are recorded at managements estimate of external market prices.
Turnover according to geographical location of the operating unit and the
geographical location of the customer together with an analysis of the net book
amount of tangible fixed assets according to the geographical location of these
assets, are presented on the following page.

The Directors of the Company are of the opinion that disclosure of
profitability and trading assets by geographical location would be seriously
prejudicial to the interests of the Company. Accordingly, they have elected to
exercise the exemption from such disclosure permitted by Statement of Standard
Accounting Practice No 25, Segmental Reporting.

F-13



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|--------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                    |  | Year ended   |     | Year ended   |  | Year ended  
|                                                    |  | December 31, |     | December 31, |  | December 31,
|                                                    |  | 2000         |     | 2001         |  | 2002        
|                                                    |  | £'m          |     | £'m          |  | £'m         
|                                                    |  |              |     |              |  |             
|Turnover by geographical location of operating
unit |  |              |     |              |  |              |     |   |  |  |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|Europe                                              |  |              |     |              |  |              |     |   |  |  |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|External                                            |  |              | 196 |              |  |              | 203 |   |  |  | 181 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Intra-group                                         |  |              | 10  |              |  |              | 15  |   |  |  | 13  |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 206 |              |  |              | 218 |   |  |  | 197 |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|Americas                                            |  |              |     |              |  |              |     |   |  |  |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|External                                            |  |              | 305 |              |  |              | 294 |   |  |  | 289 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Intra-group                                         |  |              | 18  |              |  |              | 10  |   |  |  | 15  |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 323 |              |  |              | 304 |   |  |  | 304 |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|Asia                                                |  |              |     |              |  |              |     |   |  |  |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|External                                            |  |              | 51  |              |  |              | 68  |   |  |  | 99  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Intra-group                                         |  |              |    |              |  |              |    |   |  |  |    |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 51  |              |  |              | 68  |   |  |  | 99  |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|Rest of world                                       |  |              |     |              |  |              |     |   |  |  |     |  
|                                                   
|                                                   
|                                                   
|                                                   
|External                                            |  |              | 8   |              |  |              | 12  |   |  |  | 13  |  
|                                                   
|                                                   
|                                                   
|                                                   
|Intra-group                                         |  |              |    |              |  |              |    |   |  |  |    |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 8   |              |  |              | 12  |   |  |  | 13  |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 588 |              |  |              | 602 |   |  |  | 610 |  
|                                                   
|                                                   
|                                                   
|                                                   
|Intra-group eliminations                            |  |              | (28 | )            |  |              | (25 | ) |  |  | (28 | )
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                                    |  |              | 560 |              |  |              | 577 |   |  |  | 582 |  
|                                                    |  |              |     |              |  |              |     |   |  |  |     |  

Included in turnover for Asia are the sales recorded by Kaohsiung Monomer
Company Limited (KMC). Due to delayed completion of the sale of KMC from
ICI, for the year ended December 31, 2000 the Company has accounted for KMC as
a joint venture. Since September 1, 2001 following the purchase from ICI of
the remaining shares in the majority shareholder the results of KMC have been
fully consolidated

F-14



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

|                                              |  |              |     |              |  |              |     |  |  |  |     | 
|--------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | --- |  |  |  | --- | 
|                                              |  | Year ended   |     | Year ended   |  | Year ended  
|                                              |  | December 31, |     | December 31, |  | December 31,
|                                              |  | 2000         |     | 2001         |  | 2002        
|                                              |  | £'m          |     | £'m          |  | £'m         
|                                              |  |              |     |              |  |             
|Turnover by
geographical location
of customer |  |              |     |              |  |              |     |  |  |  |     | 
|                                             
|                                             
|                                             
|                                             
|Europe                                        |  |              | 175 |              |  |              | 181 |  |  |  | 163 | 
|                                             
|                                             
|                                             
|                                             
|Americas                                      |  |              | 300 |              |  |              | 286 |  |  |  | 279 | 
|                                             
|                                             
|                                             
|                                             
|Asia                                          |  |              | 62  |              |  |              | 83  |  |  |  | 110 | 
|                                             
|                                             
|                                             
|                                             
|Rest of world                                 |  |              | 23  |              |  |              | 27  |  |  |  | 30  | 
|                                              |  |              |     |              |  |              |     |  |  |  |     | 
|                                              |  |              | 560 |              |  |              | 577 |  |  |  | 582 | 
|                                              |  |              |     |              |  |              |     |  |  |  |     | 

|                                                                 |  |      |     |      |  |  |     | 
|---------------------------------------------------------------- |  | ---- | --- | ---- |  |  | --- | 
|                                                                 |  | 2001 |     | 2002
|                                                                 |  | £'m  |     | £'m 
|                                                                 |  |      |     |     
|Tangible fixed assets by geographical location of operating unit |  |      |     |      |  |  |     | 
|                                                                
|                                                                
|                                                                
|                                                                
|Europe                                                           |  |      | 157 |      |  |  | 157 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Americas                                                         |  |      | 201 |      |  |  | 174 | 
|                                                                
|                                                                
|                                                                
|                                                                
|Asia                                                             |  |      | 30  |      |  |  | 24  | 
|                                                                
|                                                                
|                                                                
|                                                                
|Rest of world                                                    |  |      | 2   |      |  |  | 3   | 
|                                                                 |  |      |     |      |  |  |     | 
|                                                                 |  |      | 390 |      |  |  | 358 | 
|                                                                 |  |      |     |      |  |  |     | 

F-15



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

4 Cost of sales, gross profit, distribution costs and administrative expenses

|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|---------------------------------------------------------------------------------------------------------------- |  | ------------ | ---- | ------------ |  | ------------ | ---- | - |  |  | ---- | -
|                                                                                                                 |  | Year ended   |      | Year ended   |  | Year ended  
|                                                                                                                 |  | December 31, |      | December 31, |  | December 31,
|                                                                                                                 |  | 2000         |      | 2001         |  | 2002        
|                                                                                                                 |  | £'m          |      | £'m          |  | £'m         
|                                                                                                                 |  |              |      |              |  |             
|Group turnover                                                                                                   |  |              | 560  |              |  |              | 577  |   |  |  | 582  |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Cost of sales                                                                                                    |  |              | (433 | )            |  |              | (458 | ) |  |  | (457 | )
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Gross profit                                                                                                     |  |              | 127  |              |  |              | 119  |   |  |  | 125  |  
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|Distribution costs                                                                                               |  |              | 43   |              |  |              | 43   |   |  |  | 45   |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Administrative expenses before
exceptional expenses, amortisation of
goodwill and research and development
costs |  |              | 40   |              |  |              | 40   |   |  |  | 38   |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|- exceptional operating expenses (note 5)                                                                        |  |              | 14   |              |  |              | 4    |   |  |  |     |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|- amortisation of goodwill and other
intangible fixed assets (note 10)                                           |  |              | 5    |              |  |              | 5    |   |  |  | 5    |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Research and development costs                                                                                   |  |              | 9    |              |  |              | 9    |   |  |  | 10   |  
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|Total administrative expenses                                                                                    |  |              | 68   |              |  |              | 58   |   |  |  | 53   |  
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|                                                                                                                
|                                                                                                                
|                                                                                                                
|                                                                                                                
|Total operating expenses                                                                                         |  |              | 544  |              |  |              | 559  |   |  |  | 555  |  
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  
|Group operating profit                                                                                           |  |              | 16   |              |  |              | 18   |   |  |  | 27   |  
|                                                                                                                 |  |              |      |              |  |              |      |   |  |  |      |  

5 Exceptional operating expenses

For the year ended December 31, 2000
Exceptional operating expenses relate to integration and set-up expenses
associated with the separation from ICI of £2 million. This was all paid in
the period. A further £10 million was assessed in March 2000 in respect of
the restructuring cost incurred to terminate and relocate 110 employees
primarily in the European and US operations.

£2 million of additional restructuring charges were made involving the
implementation of headcount and cost reduction program.

For the year ended December 31, 2001
£4 million has been charged representing a program to reduce fixed costs in
the UK manufacturing area reducing headcount by 54 in the period 2001 to 2003.
The reductions are fully defined and announced and approximately half of the
provision has now been paid. This initiative is part of a long term
manufacturing productivity plan.

F-16



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

6 Loss on ordinary activities before taxation

|                                                                      |  |              |    |              |  |              |    |  |  |  |    | 
|--------------------------------------------------------------------- |  | ------------ | -- | ------------ |  | ------------ | -- |  |  |  | -- | 
|                                                                      |  | Year ended   |    | Year ended   |  | Year ended  
|                                                                      |  | December 31, |    | December 31, |  | December 31,
|                                                                      |  | 2000         |    | 2001         |  | 2002        
|                                                                      |  | £'m          |    | £'m          |  | £'m         
|                                                                      |  |              |    |              |  |             
|Loss on ordinary activities before
taxation is stated after charging: |  |              |    |              |  |              |    |  |  |  |    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Depreciation of tangible fixed assets:                                |  |              |    |              |  |              |    |  |  |  |    | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|- owned assets                                                        |  |              | 31 |              |  |              | 31 |  |  |  | 37 | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|- capitalised plant shut-down costs                                   |  |              | 3  |              |  |              | 3  |  |  |  | 3  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Amortisation of goodwill                                              |  |              | 5  |              |  |              | 5  |  |  |  | 5  | 
|                                                                     
|                                                                     
|                                                                     
|                                                                     
|Hire of machinery and equipment                                       |  |              | 1  |              |  |              | 1  |  |  |  | 1  | 
|                                                                      |  |              |    |              |  |              |    |  |  |  |    | 

7 Staff costs

|                                                              |  |              |    |              |  |              |    |  |  |  |    | 
|------------------------------------------------------------- |  | ------------ | -- | ------------ |  | ------------ | -- |  |  |  | -- | 
|                                                              |  | Year ended   |    | Year ended   |  | Year ended  
|                                                              |  | December 31, |    | December 31, |  | December 31,
|                                                              |  | 2000         |    | 2001         |  | 2002        
|                                                              |  | £'m          |    | £'m          |  | £'m         
|                                                              |  |              |    |              |  |             
|Staff costs                                                   |  |              |    |              |  |              |    |  |  |  |    | 
|                                                             
|                                                             
|                                                             
|                                                             
|Salaries                                                      |  |              | 55 |              |  |              | 57 |  |  |  | 61 | 
|                                                             
|                                                             
|                                                             
|                                                             
|Social security costs                                         |  |              | 5  |              |  |              | 5  |  |  |  | 5  | 
|                                                             
|                                                             
|                                                             
|                                                             
|Pension and post retirement benefit costs                     |  |              | 7  |              |  |              | 7  |  |  |  | 7  | 
|                                                             
|                                                             
|                                                             
|                                                             
|Other employment costs                                        |  |              | 2  |              |  |              | 3  |  |  |  | 3  | 
|                                                              |  |              |    |              |  |              |    |  |  |  |    | 
|                                                              |  |              | 69 |              |  |              | 72 |  |  |  | 76 | 
|                                                             
|                                                             
|                                                             
|                                                             
|Severance costs charged in arriving at profit before taxation |  |              | 12 |              |  |              | 4  |  |  |  |   | 
|                                                              |  |              |    |              |  |              |    |  |  |  |    | 
|Employee costs charged in arriving at profit before taxation  |  |              | 81 |              |  |              | 76 |  |  |  | 76 | 
|                                                              |  |              |    |              |  |              |    |  |  |  |    | 

F-17



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Employee numbers
Average number of people employed by class of business and geographical
location of operating unit.

|              |  |              |       |              |  |              |       |  |  |  |       | 
|------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  |  | ----- | 
|              |  | Year ended   |       | Year ended   |  | Year ended  
|              |  | December 31, |       | December 31, |  | December 31,
|              |  | 2000         |       | 2001         |  | 2002        
|              |  | Number       |       | Number       |  | Number      
|              |  |              |       |              |  |             
|Upstream      |  |              | 636   |              |  |              | 620   |  |  |  | 680   | 
|             
|             
|             
|             
|Downstream    |  |              | 1,271 |              |  |              | 1,367 |  |  |  | 1,320 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|              |  |              | 1,907 |              |  |              | 1,987 |  |  |  | 2,000 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|Europe        |  |              | 865   |              |  |              | 854   |  |  |  | 828   | 
|             
|             
|             
|             
|Americas      |  |              | 568   |              |  |              | 548   |  |  |  | 531   | 
|             
|             
|             
|             
|Asia          |  |              | 354   |              |  |              | 378   |  |  |  | 454   | 
|             
|             
|             
|             
|Rest of World |  |              | 120   |              |  |              | 207   |  |  |  | 187   | 
|              |  |              |       |              |  |              |       |  |  |  |       | 
|              |  |              | 1,907 |              |  |              | 1,987 |  |  |  | 2,000 | 
|              |  |              |       |              |  |              |       |  |  |  |       | 

|                                  |  |              |       |              |  |              |       |  |  |  |       | 
|--------------------------------- |  | ------------ | ----- | ------------ |  | ------------ | ----- |  |  |  | ----- | 
|                                  |  | December 31, |       | December 31, |  | December 31,
|                                  |  | 2000         |       | 2001         |  | 2002        
|                                  |  | Number       |       | Number       |  | Number      
|                                  |  |              |       |              |  |             
|Number of employees at period end |  |              | 2,010 |              |  |              | 2,006 |  |  |  | 1,993 | 
|                                  |  |              |       |              |  |              |       |  |  |  |       | 

F-18



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

8 Net interest payable

|                                                                        |  |              |    |              |  |              |    |   |  |  |    | 
|----------------------------------------------------------------------- |  | ------------ | -- | ------------ |  | ------------ | -- | - |  |  | -- | 
|                                                                        |  | Year ended   |    | Year ended   |  | Year ended  
|                                                                        |  | December 31, |    | December 31, |  | December 31,
|                                                                        |  | 2000         |    | 2001         |  | 2002        
|                                                                        |  | £'m          |    | £'m          |  | £'m         
|                                                                        |  |              |    |              |  |             
|Interest payable on Senior Credit Facilities                            |  |              | 19 |              |  |              | 17 |   |  |  | 12 | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Interest payable on Bridge Loan                                         |  |              | 5  |              |  |              |   |   |  |  |   | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Interest payable in Senior notes                                        |  |              | 8  |              |  |              | 13 |   |  |  | 13 | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Interest payable on other external bank loans
and overdrafts            |  |              |   |              |  |              | 1  |   |  |  |   | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Covenant waiver fees                                                    |  |              |   |              |  |              |   |   |  |  | 1  | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Arrangement fee on £40m debt facility                                   |  |              |   |              |  |              |   |   |  |  | 1  | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Amortisation of issue costs on
Senior Credit Facilities and Bridge Loan |  |              | 4  |              |  |              | 1  |   |  |  | 1  | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Foreign exchange loss arising on external debt                          |  |              | 5  |              |  |              |   |   |  |  | 1  | 
|                                                                        |  |              |    |              |  |              |    |   |  |  |    | 
|                                                                        |  |              | 41 |              |  |              | 32 |   |  |  | 29 | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Interest receivable and similar income                                  |  |              | (1 | )            |  |              | (1 | ) |  |  |   | 
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Foreign exchange gain arising on external debt                          |  |              |   |              |  |              | (3 | ) |  |  |   | 
|                                                                        |  |              |    |              |  |              |    |   |  |  |    | 
|Net interest payable                                                    |  |              | 40 |              |  |              | 28 |   |  |  | 29 | 
|                                                                        |  |              |    |              |  |              |    |   |  |  |    | 

9 Taxation on loss on ordinary activities

|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|----------------------------------- |  | ----------------- | --- | ----------------- |  | ----------------- | -- | - |  |  | --- | -
|                                    |  | Year ended        |     | Year ended        |  | Year ended       
|                                    |  | December 31, 2000 |     | December 31, 2001 |  | December 31, 2002
|                                    |  | £'m               |     | £'m               |  | £'m              
|                                    |  | as restated       |     | as restated       |  |                  
|                                    |  |                   |     |                   |  |                  
|United Kingdom taxation             |  |                   |     |                   |  |                   |    |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Corporation tax at prevailing rates |  |                   |    |                   |  |                   |   |   |  |  |    |  
|                                   
|                                   
|                                   
|                                   
|Transfer from deferred taxation     |  |                   | (5  | )                 |  |                   | (4 | ) |  |  | (11 | )
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|                                    |  |                   | (5  | )                 |  |                   | (4 | ) |  |  | (11 | )
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|Overseas taxation                   |  |                   |     |                   |  |                   |    |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Overseas taxes                      |  |                   |    |                   |  |                   | 1  |   |  |  | 4   |  
|                                   
|                                   
|                                   
|                                   
|Joint ventures                      |  |                   | 1   |                   |  |                   | 1  |   |  |  |    |  
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|Total current tax                   |  |                   | 1   |                   |  |                   | 2  |   |  |  | 4   |  
|                                   
|                                   
|                                   
|                                   
|Deferred taxation                   |  |                   | (6  | )                 |  |                   | (4 | ) |  |  | 5   |  
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|                                    |  |                   | (5  | )                 |  |                   | (2 | ) |  |  | 9   |  
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  
|                                    |  |                   | (10 | )                 |  |                   | (6 | ) |  |  | (2  | )
|                                    |  |                   |     |                   |  |                   |    |   |  |  |     |  

F-19



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Factors effecting tax charge for the year

|                                                                                         |  |              |     |              |  |              |    |   |  |  |     |  
|---------------------------------------------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | -- | - |  |  | --- | -
|                                                                                         |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                                         |  | December 31, |     | December 31, |  | December 31,
|                                                                                         |  | 2000         |     | 2001         |  | 2002        
|                                                                                         |  | £'m          |     | £'m          |  | £'m         
|                                                                                         |  |              |     | as restated  |  |             
|                                                                                         |  |              |     |              |  |             
|Loss on ordinary activities before tax                                                   |  |              | (22 | )            |  |              | (8 | ) |  |  | (2  | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Standard rate of corporation tax in the UK                                               |  |              | 30  | %            |  |              | 30 | % |  |  | 30  | %
|                                                                                         |  |              |     |              |  |              |    |   |  |  |     |  
|Loss on ordinary activities multiplied by
the standard rate of corporation tax in the
UK |  |              | (7  | )            |  |              | (2 | ) |  |  | (1  | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Effects of:                                                                              |  |              |     |              |  |              |    |   |  |  |     |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Expenses not deductible for tax purposes                                                 |  |              | (12 | )            |  |              | (4 | ) |  |  | (11 | )
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Local taxes                                                                              |  |              | 1   |              |  |              | 1  |   |  |  | 1   |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Capital allowances in excess of depreciation                                             |  |              | (16 | )            |  |              | 2  |   |  |  | 3   |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Other deferred tax in the year                                                           |  |              | 2   |              |  |              | (4 | ) |  |  | 2   |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Tax losses created not utilised                                                          |  |              | 33  |              |  |              | 10 |   |  |  | 10  |  
|                                                                                        
|                                                                                        
|                                                                                        
|                                                                                        
|Adjustments in respect of prior periods                                                  |  |              |     |              |  |              | (1 | ) |  |  |    |  
|                                                                                         |  |              |     |              |  |              |    |   |  |  |     |  
|Current tax charge for the year                                                          |  |              | 1   |              |  |              | 2  |   |  |  | 4   |  
|                                                                                         |  |              |     |              |  |              |    |   |  |  |     |  

Factors that may effect future tax charges
The group has approximately £147 million of losses available to carry forward
to future years. On the basis of all available evidence the group feel that it
will utilise approximately £69 million against future profits in the United
States. A deferred tax asset has therefore been provided in respect of this
amount. No deferred tax has been provided in respect of the excess losses as
on the basis of all available information there is not sufficient certainty
that a sustainable tax liability will exist in future accounting periods.

F-20



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

10 Intangible assets

|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|------------------------ |  | ----------- | - | -------- |  | -------- | --- | -------- |  |  | -- | - |  |  | --- | -
|                         |  | Other       |   |          |  |          |     | Negative |  |  |    |  
|                         |  | intangibles |   | Goodwill |  | goodwill |     | Total   
|                         |  | £'m         |   | £'m      |  | £'m      |     | £'m     
|                         |  |             |   |          |  |          |     |         
|Cost                     |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|                        
|                        
|                        
|                        
|At December 31, 2000     |  |             |  |          |  |          | 105 |          |  |  |   |   |  |  | 105 |  
|                        
|                        
|                        
|                        
|Additions                |  |             | 1 |          |  |          |    |          |  |  | (6 | ) |  |  | (5  | )
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|At December 31, 2001     |  |             | 1 |          |  |          | 105 |          |  |  | (6 | ) |  |  | 100 |  
|                        
|                        
|                        
|                        
|Additions                |  |             |  |          |  |          |    |          |  |  |   |   |  |  |    |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|At December 31, 2002     |  |             | 1 |          |  |          | 105 |          |  |  | (6 | ) |  |  | 100 |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|Accumulated
amortisation |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|                        
|                        
|                        
|                        
|At December 31, 2000     |  |             |  |          |  |          | 7   |          |  |  |   |   |  |  | 7   |  
|                        
|                        
|                        
|                        
|Charge for year          |  |             |  |          |  |          | 5   |          |  |  |   |   |  |  | 5   |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|At December 31, 2001     |  |             |  |          |  |          | 12  |          |  |  |   |   |  |  | 12  |  
|                        
|                        
|                        
|                        
|Charge for year          |  |             |  |          |  |          | 5   |          |  |  |   |   |  |  | 5   |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|At December 31, 2002     |  |             |  |          |  |          | 17  |          |  |  |   |   |  |  | 17  |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|Net book amounts at      |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|                        
|                        
|                        
|                        
|December 31, 2000        |  |             |  |          |  |          | 98  |          |  |  |   |   |  |  | 98  |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|December 31, 2001        |  |             | 1 |          |  |          | 93  |          |  |  | (6 | ) |  |  | 88  |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  
|December 31, 2002        |  |             | 1 |          |  |          | 88  |          |  |  | (6 | ) |  |  | 83  |  
|                         |  |             |   |          |  |          |     |          |  |  |    |   |  |  |     |  

F-21



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

11 Tangible fixed assets

|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|---------------------------- |  | --------- | -- | --------- |  | ---------------- | --- | ----- |  | ------------------ | --- | - |  |  | --- | -
|                             |  |           |    |           |  |                  |     |       |  | Payments on        |     |   |  | 
|                             |  |           |    |           |  |                  |     |       |  | account and assets |     |   |  | 
|                             |  | Land and  |    | Plant and |  | in the course of |     |       |  |                   
|                             |  | buildings |    | equipment |  | construction     |     | Total
|                             |  | £'m       |    | £'m       |  | £'m              |     | £'m  
|                             |  |           |    |           |  |                  |     |      
|Cost                         |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|                            
|                            
|                            
|                            
|At December 31, 2000         |  |           | 43 |           |  |                  | 605 |       |  |                    | 27  |   |  |  | 675 |  
|                            
|                            
|                            
|                            
|Capital expenditure          |  |           |   |           |  |                  |    |       |  |                    | 25  |   |  |  | 25  |  
|                            
|                            
|                            
|                            
|Acquisitions                 |  |           | 1  |           |  |                  | 77  |       |  |                    | 2   |   |  |  | 80  |  
|                            
|                            
|                            
|                            
|Transfers of assets into
use |  |           |   |           |  |                  | 11  |       |  |                    | (11 | ) |  |  |    |  
|                            
|                            
|                            
|                            
|Exchange adjustments         |  |           | (1 | )         |  |                  | 4   |       |  |                    |    |   |  |  | 3   |  
|                            
|                            
|                            
|                            
|Disposals                    |  |           | 1  |           |  |                  | (1  | )     |  |                    |    |   |  |  |    |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|At December 31, 2001         |  |           | 44 |           |  |                  | 696 |       |  |                    | 43  |   |  |  | 783 |  
|                            
|                            
|                            
|                            
|Capital expenditure          |  |           |   |           |  |                  |    |       |  |                    | 22  |   |  |  | 22  |  
|                            
|                            
|                            
|                            
|Overhaul costs capitalised   |  |           |   |           |  |                  |    |       |  |                    | 6   |   |  |  | 6   |  
|                            
|                            
|                            
|                            
|Transfers of assets into
use |  |           |   |           |  |                  | 22  |       |  |                    | (22 | ) |  |  |    |  
|                            
|                            
|                            
|                            
|Exchange adjustments         |  |           | (2 | )         |  |                  | (26 | )     |  |                    | (1  | ) |  |  | (29 | )
|                            
|                            
|                            
|                            
|Disposals                    |  |           |   |           |  |                  | (5  | )     |  |                    |    |   |  |  | (5  | )
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|At December 31, 2002         |  |           | 42 |           |  |                  | 687 |       |  |                    | 48  |   |  |  | 777 |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|Accumulated depreciation     |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|                            
|                            
|                            
|                            
|At December 31, 2000         |  |           | 12 |           |  |                  | 289 |       |  |                    |    |   |  |  | 301 |  
|                            
|                            
|                            
|                            
|Acquisitions                 |  |           |   |           |  |                  | 59  |       |  |                    |    |   |  |  | 59  |  
|                            
|                            
|                            
|                            
|Charge for year              |  |           | 1  |           |  |                  | 33  |       |  |                    |    |   |  |  | 34  |  
|                            
|                            
|                            
|                            
|Disposals                    |  |           |    |           |  |                  | (1  | )     |  |                    |    |   |  |  | (1  | )
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|At December 31, 2001         |  |           | 13 |           |  |                  | 380 |       |  |                    |    |   |  |  | 393 |  
|                            
|                            
|                            
|                            
|Charge for year              |  |           | 1  |           |  |                  | 39  |       |  |                    |    |   |  |  | 40  |  
|                            
|                            
|                            
|                            
|Exchange movement            |  |           |   |           |  |                  | (9  | )     |  |                    |    |   |  |  | (9  | )
|                            
|                            
|                            
|                            
|Disposals                    |  |           |   |           |  |                  | (5  | )     |  |                    |    |   |  |  | (5  | )
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|At December 31, 2002         |  |           | 14 |           |  |                  | 405 |       |  |                    |    |   |  |  | 419 |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|Net book amounts at          |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|                            
|                            
|                            
|                            
|December 31, 2000            |  |           | 31 |           |  |                  | 316 |       |  |                    | 27  |   |  |  | 374 |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|December 31, 2001            |  |           | 31 |           |  |                  | 316 |       |  |                    | 43  |   |  |  | 390 |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  
|December 31, 2002            |  |           | 28 |           |  |                  | 282 |       |  |                    | 48  |   |  |  | 358 |  
|                             |  |           |    |           |  |                  |     |       |  |                    |     |   |  |  |     |  

Included in land and buildings is £8 million (2001: £8 million) in respect of
the cost of land which is not subject to depreciation.

The net book value of tangible fixed assets includes capitalised finance
leases of £4 million (2001: £5 million) comprising cost of £6 million (2001:
£6 million) less accumulated depreciation of £2 million (2001: £1 million).
The depreciation charge for the year in respect of capitalised finance leases
was £0.4 million (2001: £0.4 million).

|                                                  |  |      |    |      |  |  |    | 
|------------------------------------------------- |  | ---- | -- | ---- |  |  | -- | 
|                                                  |  | 2001 |    | 2002
|                                                  |  | £'m  |    | £'m 
|                                                  |  |      |    |     
|Analysis of net book amount of land and buildings |  |      |    |      |  |  |    | 
|                                                 
|                                                 
|                                                 
|                                                 
|Freehold                                          |  |      | 26 |      |  |  | 24 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Long leasehold (over 50 years unexpired)          |  |      | 5  |      |  |  | 4  | 
|                                                  |  |      |    |      |  |  |    | 
|                                                  |  |      | 31 |      |  |  | 28 | 
|                                                  |  |      |    |      |  |  |    | 

F-22



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

12 Stocks

|                                    |  |      |    |      |  |  |    | 
|----------------------------------- |  | ---- | -- | ---- |  |  | -- | 
|                                    |  | 2001 |    | 2002
|                                    |  | £'m  |    | £'m 
|                                    |  |      |    |     
|Raw materials and consumables       |  |      | 23 |      |  |  | 26 | 
|                                   
|                                   
|                                   
|                                   
|Finished goods and goods for resale |  |      | 46 |      |  |  | 49 | 
|                                    |  |      |    |      |  |  |    | 
|                                    |  |      | 69 |      |  |  | 75 | 
|                                    |  |      |    |      |  |  |    | 

13 Debtors

|                                             |  |             |    |      |  |  |    |  
|-------------------------------------------- |  | ----------- | -- | ---- |  |  | -- | -
|                                             |  | 2001        |    | 2002
|                                             |  | £'m         |    | £'m 
|                                             |  | as restated |    |     
|                                             |  |             |    |     
|Trade debtors                                |  |             | 82 |      |  |  | 84 |  
|                                            
|                                            
|                                            
|                                            
|less amounts set aside for doubtful accounts |  |             | (9 | )    |  |  | (7 | )
|                                             |  |             |    |      |  |  |    |  
|                                             |  |             | 73 |      |  |  | 77 |  
|                                            
|                                            
|                                            
|                                            
|Other prepayments and accrued income         |  |             | 1  |      |  |  | 2  |  
|                                            
|                                            
|                                            
|                                            
|Other debtors                                |  |             | 4  |      |  |  | 5  |  
|                                            
|                                            
|                                            
|                                            
|Deferred taxation asset                      |  |             | 18 |      |  |  | 12 |  
|                                             |  |             |    |      |  |  |    |  
|                                             |  |             | 96 |      |  |  | 96 |  
|                                             |  |             |    |      |  |  |    |  

The deferred tax asset is due in more than one year.

14 Creditors  Amounts falling due within one year

|                                    |  |      |     |      |  |  |     | 
|----------------------------------- |  | ---- | --- | ---- |  |  | --- | 
|                                    |  | 2001 |     | 2002
|                                    |  | £'m  |     | £'m 
|                                    |  |      |     |     
|Bank and other borrowings (note 16) |  |      | 13  |      |  |  | 17  | 
|                                   
|                                   
|                                   
|                                   
|Trade creditors                     |  |      | 63  |      |  |  | 58  | 
|                                   
|                                   
|                                   
|                                   
|Finance leases (note 17)            |  |      | 1   |      |  |  |    | 
|                                   
|                                   
|                                   
|                                   
|Other creditors                     |  |      | 21  |      |  |  | 23  | 
|                                   
|                                   
|                                   
|                                   
|Accruals                            |  |      | 13  |      |  |  | 21  | 
|                                    |  |      |     |      |  |  |     | 
|                                    |  |      | 111 |      |  |  | 119 | 
|                                    |  |      |     |      |  |  |     | 

15 Creditors  Amounts falling due after more than one year

|                                    |  |      |     |      |  |  |     | 
|----------------------------------- |  | ---- | --- | ---- |  |  | --- | 
|                                    |  | 2001 |     | 2002
|                                    |  | £'m  |     | £'m 
|                                    |  |      |     |     
|Bank and other borrowings (note 16) |  |      | 331 |      |  |  | 326 | 
|                                   
|                                   
|                                   
|                                   
|Finance leases (note 17)            |  |      | 4   |      |  |  | 4   | 
|                                   
|                                   
|                                   
|                                   
|Other creditors                     |  |      | 1   |      |  |  |    | 
|                                    |  |      |     |      |  |  |     | 
|                                    |  |      | 336 |      |  |  | 330 | 
|                                    |  |      |     |      |  |  |     | 

F-23



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

16 Bank and other borrowings

|                          |                           |  |      |    |      |  |     |    | 
|------------------------- | ------------------------- |  | ---- | -- | ---- |  | --- | -- | 
|                          |                           |  | 2001 |    | 2002
|                          |                           |  | £'m  |    | £'m 
|                          |                           |  |      |    |     
|Senior Credit Facilities: |                           |  |      |    |      |  |     |   
|                         
|                         
|                         
|                         
|                          | Term Loan A               |  |      | 84 |      |  |     | 69 | 
|                         
|                         
|                         
|                         
|                          | Term Loan B               |  |      | 72 |      |  |     | 69 | 
|                         
|                         
|                         
|                         
|                          | Term Loan C               |  |      | 57 |      |  |     | 50 | 
|                         
|                         
|                         
|                         
|                          | Revolving Credit Facility |  |      | 18 |      |  |     | 32 | 
|                         
|                         
|                         
|                         
|Senior Notes              |                           |  | 122  |    |      |  | 130 |   
|                         
|                         
|                         
|                         
|Unamortised issue costs   |                           |  | (9   | )  |      |  | (7  | ) 
|                          |                           |  |      |    |      |  |     |    | 
|                          |                           |  | 344  |    |      |  | 343 |   
|                          |                           |  |      |    |      |  |     |    | 

Senior Credit Facilities
On October 3, 1999, the Company entered into a Bank Credit Agreement with
Deutsche Bank AG London Branch and Merrill Lynch Capital Corporation related to
Senior Credit Facilities. These facilities consisted of (i) a seven-year $85
million revolving credit facility (the Revolving Credit Facility), and (ii) a
seven-year £95 million aggregate principal amount Term Loan A, an eight-year
£70 million aggregate principal amount Term Loan B and a nine-year £50 million
aggregate principal amount Term Loan C (the Term Loan A, the Term Loan B
and the Term Loan C are referred to collectively as the Senior Term Loans).
The Term Loan A and the Term Loan B were drawn down in a combination of Euros
and US Dollars. The Term Loan C was drawn down in US Dollars. The balances
outstanding at December 31, 2001 have been retranslated into pounds sterling at
exchange rates prevailing at that date. The Revolving Credit Facility is
available to be drawn down in US Dollars and other Optional Currencies, by way
of Revolving Advances, issue of Letters of Credit or Bank Guarantees. At
December 31, 2002, the unused proportion of this facility was $34 million
(2001: $59 million).

The Senior Credit Facilities bear interest at a rate equal to the aggregate of
the cost of LIBOR funds for one, two, three or six months as the Company may
elect, plus costs to the Lender of compliance with all reserve assets,
liquidity or cash margin or other like requirements of the Bank of England,
the Financial Services Authority, the European Central Bank or in relation to
Regulation D in the United States of America as specified in the Bank Credit
Agreement, plus a margin. This margin for the Revolving Credit Facility and
the Term Loan A ranges from 1.25% to 2% per annum, determined by the Companys
most recent financial ratios and is fixed at 2.5% and 3% for the Term Loan B
and the Term Loan C, respectively.

F-24



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

The Term Loan A is repayable in six-monthly installments commencing June 30,
2000. Repayment amounts are calculated with reference to a percentage of the
total loan balance, the percentages being specified in the Bank Credit
Agreement. The repayment profile is as follows:

|                   |  |   |        | 
|------------------ |  | - | ------ | 
|                   |  | %
|                   |  |  
|June 30, 2000      |  |   | 1.05   | 
|                  
|                  
|                  
|                  
|December 31, 2000  |  |   | 2.64   | 
|                  
|                  
|                  
|                  
|June 30, 2001      |  |   | 2.64   | 
|                  
|                  
|                  
|                  
|December 31, 2001  |  |   | 5.27   | 
|                  
|                  
|                  
|                  
|June 30, 2002      |  |   | 5.27   | 
|                  
|                  
|                  
|                  
|December 31, 2002  |  |   | 8.42   | 
|                  
|                  
|                  
|                  
|June 30, 2003      |  |   | 8.42   | 
|                  
|                  
|                  
|                  
|December 31, 2003  |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|June 30, 2004      |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|December 31, 2004  |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|June 30, 2005      |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|December 31, 2005  |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|June 30, 2006      |  |   | 9.47   | 
|                  
|                  
|                  
|                  
|September 30, 2006 |  |   | 9.47   | 
|                   |  |   |        | 
|                   |  |   | 100.00 | 
|                   |  |   |        | 

Installments due in 2000, 2001 and 2002 were paid on the due dates. For the
year ended December 31, 2001 under the terms of the senior credit facility we
had generated excess cash of which 50% was due back to the senior credit
providers as a prepayment on the senior debt. This prepayment amounted to £6
million and was split across all tranches of senior debt.

The Term Loan B and the Term Loan C are repayable by way of two equal
installments commencing June 30, 2007 and June 30, 2008 respectively. Any
balance outstanding on the Revolving Credit Facility is repayable in full on
the last day of each interest period over which any of the facility is drawn
down and may be rolled forward until 2006.

The obligations of the Company under the Senior Credit Facilities are secured
by a first-priority interest in substantially all of the assets of the Company
and its subsidiary undertakings.

The Senior Credit Facilities contain restrictive covenants that, among other
things and under certain conditions, restrict the Companys indebtedness,
liens, leasing arrangements, transactions with affiliates, asset sales,
capital expenditures, acquisitions, investments, dividend and other restricted
payments. Additionally, these covenants require that certain financial ratios
be maintained. The Senior Credit Facilities are secured on the assets of the
groups major operating subsidiaries and by guarantee from Lucite
International Holdings Limited, Lucite International Investment Limited and a
number of other subsidiaries.

The debt issuance costs for the Senior Term Loans were approximately £5.5
million and are being amortised to the profit and loss account over the terms
of the Senior Term Loans.

10.25% senior notes

The 10.25% Senior Notes mature in full on 15 May 2010. The Senior Notes are
denominated in Euros and amount to 200 million. The Senior Notes are
guaranteed by Lucite International Investment Limited and Lucite International
Holdings Limited on a subordinated basis.

F-25



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

Maturity analysis of bank and other borrowings
The maturity analysis of the Companys bank and other borrowings is as follows:

|                           |  |      |     |      |  |  |     |  
|-------------------------- |  | ---- | --- | ---- |  |  | --- | -
|                           |  | 2001 |     | 2002
|                           |  | £'m  |     | £'m 
|                           |  |      |     |     
|Within 1 year or on demand |  |      | 13  |      |  |  | 17  |  
|                          
|                          
|                          
|                          
|Between 1 and 2 years      |  |      | 17  |      |  |  | 18  |  
|                          
|                          
|                          
|                          
|Between 2 and 5 years      |  |      | 72  |      |  |  | 135 |  
|                          
|                          
|                          
|                          
|Over 5 years               |  |      | 251 |      |  |  | 180 |  
|                           |  |      |     |      |  |  |     |  
|                           |  |      | 353 |      |  |  | 350 |  
|                          
|                          
|                          
|                          
|Unamortised issue costs    |  |      | (9  | )    |  |  | (7  | )
|                           |  |      |     |      |  |  |     |  
|                           |  |      | 344 |      |  |  | 343 |  
|                           |  |      |     |      |  |  |     |  

17 Finance leases

|                                                               |  |      |    |      |  |  |    |  
|-------------------------------------------------------------- |  | ---- | -- | ---- |  |  | -- | -
|                                                               |  | 2001 |    | 2002
|                                                               |  | £'m  |    | £'m 
|                                                               |  |      |    |     
|Obligations under finance leases comprise:                     |  |      |    |      |  |  |    |  
|                                                              
|                                                              
|                                                              
|                                                              
|Rentals due after more than 1 year:                            |  |      |    |      |  |  |    |  
|                                                              
|                                                              
|                                                              
|                                                              
|- from 1 to 2 years                                            |  |      | 1  |      |  |  |   |  
|                                                              
|                                                              
|                                                              
|                                                              
|- from 2 to 3 years                                            |  |      | 1  |      |  |  | 1  |  
|                                                              
|                                                              
|                                                              
|                                                              
|- from 3 to 4 years                                            |  |      | 1  |      |  |  |   |  
|                                                              
|                                                              
|                                                              
|                                                              
|- from 4 to 5 years                                            |  |      | 1  |      |  |  | 1  |  
|                                                              
|                                                              
|                                                              
|                                                              
|- after 5 years from the balance sheet date                    |  |      | 5  |      |  |  | 5  |  
|                                                               |  |      |    |      |  |  |    |  
|                                                               |  |      | 9  |      |  |  | 7  |  
|                                                              
|                                                              
|                                                              
|                                                              
|Less: amounts representing interest relating to future periods |  |      | (4 | )    |  |  | (3 | )
|                                                               |  |      |    |      |  |  |    |  
|Present value of net minimum lease payments                    |  |      | 5  |      |  |  | 4  |  
|                                                              
|                                                              
|                                                              
|                                                              
|Less current lease obligations                                 |  |      | (1 | )    |  |  |   |  
|                                                               |  |      |    |      |  |  |    |  
|Non current obligations                                        |  |      | 4  |      |  |  | 4  |  
|                                                               |  |      |    |      |  |  |    |  

F-26



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

18 Provisions for liabilities and charges

|                                                     |  |               |    |             |  |          |     |          |  |             |    |   |  |  |    |   |  |  |    |  
|---------------------------------------------------- |  | ------------- | -- | ----------- |  | -------- | --- | -------- |  | ----------- | -- | - |  |  | -- | - |  |  | -- | -
|                                                     |  |               |    |             |  | Deferred |     | Unfunded |  | Employee    |    |   |  | 
|                                                     |  | Restructuring |    | taxation    |  | pensions |     | benefits |  | Total      
|                                                     |  | £'m           |    | £'m         |  | £'m      |     | £'m      |  | £'m        
|                                                     |  |               |    | as restated |  |          |     |          |  | as restated
|                                                     |  |               |    |             |  |          |     |          |  |            
|At December 31, 2000                                 |  |               | 5  |             |  |          | 9   |          |  |             | 12 |   |  |  | 8  |   |  |  | 34 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Charged to the
profit and loss
account in the
period |  |               | 4  |             |  |          | 7   |          |  |             | 3  |   |  |  | 1  |   |  |  | 15 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Acquisition of KMC                                   |  |               |   |             |  |          |    |          |  |             | 3  |   |  |  |   |   |  |  | 3  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Exchange / other                                     |  |               | 2  |             |  |          |    |          |  |             |   |   |  |  |   |   |  |  | 2  |  
|                                                    
|                                                    
|                                                    
|                                                    
|Utilised in the year                                 |  |               | (4 | )           |  |          |    |          |  |             | (1 | ) |  |  | (1 | ) |  |  | (6 | )
|                                                     |  |               |    |             |  |          |     |          |  |             |    |   |  |  |    |   |  |  |    |  
|At December 31, 2001                                 |  |               | 7  |             |  |          | 16  |          |  |             | 17 |   |  |  | 8  |   |  |  | 48 |  
|                                                    
|                                                    
|                                                    
|                                                    
|Charged to the
profit and loss
account in the
period |  |               |   |             |  |          | (11 | )        |  |             | 2  |   |  |  | 1  |   |  |  | (8 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Exchange / other                                     |  |               | (1 | )           |  |          |    |          |  |             | (2 | ) |  |  | (1 | ) |  |  | (4 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Utilised in the year                                 |  |               | (3 | )           |  |          |    |          |  |             |   |   |  |  | (1 | ) |  |  | (4 | )
|                                                     |  |               |    |             |  |          |     |          |  |             |    |   |  |  |    |   |  |  |    |  
|At December 31, 2002                                 |  |               | 3  |             |  |          | 5   |          |  |             | 17 |   |  |  | 7  |   |  |  | 32 |  
|                                                     |  |               |    |             |  |          |     |          |  |             |    |   |  |  |    |   |  |  |    |  

No provision has been released or applied for any purpose other than that for
which it was established.

Restructuring
During the period January 1, 2000 to December 31, 2000 the Company introduced
restructuring programs with primary emphasis on European administration and
selling costs. A charge of £10 million was made in March 2000 coincident with
the announcement of these initiatives and involving 110 personnel reductions.
Additional initiatives amounting to £2 million were also implemented during
the period to December 31, 2000 to restructure costs globally and a £2 million
charge for corporate separation and set up costs was recognized.

In the year ended December 31, 2001 a further £4 million redundancy costs were
charged in respect of the long term manufacturing productivity plan.

Deferred taxation
There has been a prior year adjustment to restate the deferred taxation
provision as at December 31, 2000 and December 31, 2001 as a result of the
adoption of FRS19 Deferred tax. The result of the restatement was to
recategorise the deferred taxation balance into a deferred taxation provision
and a deferred taxation asset, the asset is shown within debtors on the
balance sheet and can be seen in note 13 to the financial statements. The
effect of the change in accounting policy on the current and prior periods in
respect of deferred taxation on the adoption of FRS19 is as follows:

|                                         |                                     |                                                 |     |                             |   |      |    |      |   |  |   |    |    |  
|---------------------------------------- | ----------------------------------- | ----------------------------------------------- | --- | --------------------------- | - | ---- | -- | ---- | - |  | - | -- | -- | -
|                                         |                                     |                                                 |     | Loss for the financial year
|                                         |                                     |                                                 |     |                            
|                                         |                                     |                                                 |     | 2000                        |   | 2001 |    | 2002
|                                         |                                     |                                                 |     | £'m                         |   | £'m  |    | £'m 
|                                         |                                     |                                                 |     |                             |   |      |    |     
|(Loss)/profit prior to adoption of FRS19 |                                     |                                                 | (14 | )                           |   |      | (6 | )    |   |  | 3 |   
|                                        
|                                        
|                                        
|                                        
|Effect of the adoption of FRS19:         |                                     |                                                 |     |                             |   |      |    |      |   |  |   |   
|                                        
|                                        
|                                        
|                                        
|                                         |                                     | Increase/(decrease) in deferred taxation credit |     |                             | 2 |      |    |      | 3 |  |   |    | (6 | )
|                                         |                                     |                                                 |     |                             |   |      |    |      |   |  |   |   
|                                         | As reported after adoption of FRS19 |                                                 |     | (12                         | ) |      |    | (3   | ) |  |   | (3 | ) 
|                                         |                                     |                                                 |     |                             |   |      |    |      |   |  |   |   

F-27



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

|                                         |                                                |  |            |   |      |  |     |    |  
|---------------------------------------- | ---------------------------------------------- |  | ---------- | - | ---- |  | --- | -- | -
|                                         |                                                |  | Net assets
|                                         |                                                |  |           
|                                         |                                                |  | 2001       |   | 2002
|                                         |                                                |  | £'m        |   | £'m 
|                                         |                                                |  |            |   |     
|(Loss)/profit prior to adoption of FRS19 |                                                |  | 163        |   |      |  | 143 |   
|                                        
|                                        
|                                        
|                                        
|Effect of the adoption of FRS19:         |                                                |  |            |   |      |  |     |   
|                                        
|                                        
|                                        
|                                        
|                                         | Increase/(decrease) in deferred taxation asset |  |            | 5 |      |  |     | (1 | )
|                                         |                                                |  |            |   |      |  |     |   
|As reported after adoption of FRS19      |                                                |  | 168        |   |      |  | 142 |   
|                                         |                                                |  |            |   |      |  |     |   

The amounts of deferred taxation accounted for as at the balance sheet date and
the potential amounts of deferred taxation are disclosed below:

|                                                          |  |             |     |      |  |  |     |  
|--------------------------------------------------------- |  | ----------- | --- | ---- |  |  | --- | -
|                                                          |  | 2001        |     | 2002
|                                                          |  | £'m         |     | £'m 
|                                                          |  | as restated |     |     
|                                                          |  |             |     |     
|Accounted for at the balance sheet date                   |  |             |     |      |  |  |     |  
|                                                         
|                                                         
|                                                         
|                                                         
|Timing differences on capital allowances and depreciation |  |             | 39  |      |  |  | 35  |  
|                                                         
|                                                         
|                                                         
|                                                         
|Miscellaneous timing differences                          |  |             | (12 | )    |  |  | (16 | )
|                                                         
|                                                         
|                                                         
|                                                         
|Tax losses                                                |  |             | (29 | )    |  |  | (26 | )
|                                                          |  |             |     |      |  |  |     |  
|                                                          |  |             | (2  | )    |  |  | (7  | )
|                                                          |  |             |     |      |  |  |     |  
|Not accounted for at the balance sheet date               |  |             |     |      |  |  |     |  
|                                                         
|                                                         
|                                                         
|                                                         
|Timing differences on capital allowances and depreciation |  |             |    |      |  |  |    |  
|                                                         
|                                                         
|                                                         
|                                                         
|Tax losses                                                |  |             | (11 | )    |  |  | (26 | )
|                                                          |  |             |     |      |  |  |     |  
|                                                          |  |             | (11 | )    |  |  | (26 | )
|                                                          |  |             |     |      |  |  |     |  

The movement of the deferred taxation balance is as follows:

|                                                              |  |           |     |               |  |             |     |   |  |  |    |  
|------------------------------------------------------------- |  | --------- | --- | ------------- |  | ----------- | --- | - |  |  | -- | -
|                                                              |  | Net asset |     | Net liability |  | Total      
|                                                              |  | £'m       |     | £'m           |  | £'m        
|                                                              |  |           |     |               |  | as restated
|                                                              |  |           |     |               |  |            
|At December 31, 2000                                          |  |           | (14 | )             |  |             | 19  |   |  |  | 5  |  
|                                                             
|                                                             
|                                                             
|                                                             
|(Credit)/ charge to the profit and loss account in the period |  |           | (4  | )             |  |             | (3  | ) |  |  | (7 | )
|                                                              |  |           |     |               |  |             |     |   |  |  |    |  
|At December 31, 2001                                          |  |           | (18 | )             |  |             | 16  |   |  |  | (2 | )
|                                                             
|                                                             
|                                                             
|                                                             
|Charge/ (credit) to the profit and loss account in the period |  |           | 5   |               |  |             | (11 | ) |  |  | (6 | )
|                                                             
|                                                             
|                                                             
|                                                             
|Exchange movement                                             |  |           | 1   |               |  |             |    |   |  |  | 1  |  
|                                                              |  |           |     |               |  |             |     |   |  |  |    |  
|At December 31, 2002                                          |  |           | (12 | )             |  |             | 5   |   |  |  | (7 | )
|                                                              |  |           |     |               |  |             |     |   |  |  |    |  

F-28



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Unfunded pensions
This provision is for the benefit obligation of unfunded pension plans and the
provision for the under-funding of funded pension schemes.

Employee benefits
The additional costs of funding post-retirement non-pension benefits (e.g.
medical care above that provided by the State but required as part of Company
Benefits Plans) have been provided. The provision relates primarily to
USA-based employees.

19 Called up equity share capital

|                                                                                  |  |        |             |     |  |  |     | 
|--------------------------------------------------------------------------------- |  | ------ | ----------- | --- |  |  | --- | 
|                                                                                  |  | Number |             | £'m
|                                                                                  |  |        |             |    
|Authorised,
allotted and fully paid
At December 31, 2002 and at December 31, 2001 |  |        |             |     |  |  |     | 
|                                                                                 
|                                                                                 
|                                                                                 
|                                                                                 
|Ordinary shares of £1 each                                                        |  |        | 175,029,700 |     |  |  | 175 | 
|                                                                                  |  |        |             |     |  |  |     | 

The ordinary shares above were issued to Lucite International Limited on
October 1, 1999.

20 Financial Instruments

Foreign exchange and interest rate disclosure
The Company holds and issues financial instruments in order to finance its
operations and to manage interest and foreign currency risks arising from its
operations. The Companys major financial risks relate to movements in
exchange rates and interest rates. The Company borrows in US Dollars, Euros
and pounds sterling at variable rates and is subject to fluctuations in
interest rates on its borrowings and surplus cash. The Companys policy is to
hedge on specific borrowings against future movements in interest rates, which
is effected by using derivatives, such as interest rate swaps and caps where
appropriate.

The US dollar denominated tranche B debt ($47.8m) and the US denominated
tranche C debt ($79.8m) have been rolled over under existing credit agreements
at the rate of 4.330% for the USD tranche B debt and 4.8663% for the USD
tranche C debt, both rates are inclusive of lender margins. Both interest
rates are fixed until the end of September 2003.

Short term debtors and creditors have been excluded from the following
disclosures, other than the currency risk disclosures.

F-29



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Interest rate risk profile of financial liabilities
As at December 31, 2001 and 2002 the Company had the following interest rate
profile for financial liabilities, after taking into account the interest rate
swaps used to manage the interest profile:

|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|----------------------------------- |  | --------------------- | --- | -------------------- |  | ----------------- | --- | - |  |  | --- | -
|                                    |  | At December 31, 2001 
|                                    |  |                      
|                                    |  | Floating rate         |     | Fixed rate financial |  | December 31, 2001
|                                    |  | financial liabilities |     | liabilities          |  | Total            
|                                    |  | £'m                   |     | £'m                  |  | £'m              
|                                    |  |                       |     |                      |  |                  
|Currency                            |  |                       |     |                      |  |                   |     |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Sterling                            |  |                       |    |                      |  |                   |    |   |  |  |    |  
|                                   
|                                   
|                                   
|                                   
|Euro                                |  |                       | 59  |                      |  |                   | 160 |   |  |  | 219 |  
|                                   
|                                   
|                                   
|                                   
|US Dollars                          |  |                       | 77  |                      |  |                   | 57  |   |  |  | 134 |  
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|                                    |  |                       | 136 |                      |  |                   | 217 |   |  |  | 353 |  
|                                   
|                                   
|                                   
|                                   
|Unamortised issue costs             |  |                       | (4  | )                    |  |                   | (5  | ) |  |  | (9  | )
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|Bank and other borrowings (note 16) |  |                       | 132 |                      |  |                   | 212 |   |  |  | 344 |  
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  

|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|----------------------------------- |  | --------------------- | --- | -------------------- |  | ----------------- | --- | - |  |  | --- | -
|                                    |  | At December 31, 2002 
|                                    |  |                      
|                                    |  | Floating rate         |     | Fixed rate financial |  | December 31, 2002
|                                    |  | financial liabilities |     | liabilities          |  | Total            
|                                    |  | £'m                   |     | £'m                  |  | £'m              
|                                    |  |                       |     |                      |  |                  
|Currency                            |  |                       |     |                      |  |                   |     |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Sterling                            |  |                       | 13  |                      |  |                   |    |   |  |  | 13  |  
|                                   
|                                   
|                                   
|                                   
|Euro                                |  |                       | 94  |                      |  |                   | 130 |   |  |  | 224 |  
|                                   
|                                   
|                                   
|                                   
|US Dollars                          |  |                       | 33  |                      |  |                   | 80  |   |  |  | 113 |  
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|                                    |  |                       | 140 |                      |  |                   | 210 |   |  |  | 350 |  
|                                   
|                                   
|                                   
|                                   
|Unamortised issue costs             |  |                       | (3  | )                    |  |                   | (4  | ) |  |  | (7  | )
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  
|Bank and other borrowings (note 16) |  |                       | 137 |                      |  |                   | 206 |   |  |  | 343 |  
|                                    |  |                       |     |                      |  |                   |     |   |  |  |     |  

All the groups creditors falling due within one year (other than bank and
other borrowings) are excluded from the above tables either due to the
exclusion of short-term items or because they do not meet the definition of a
financial liability.

The US dollar denominated tranche B debt ($47.8m) and the US denominated
tranche C debt ($79.8m) have been rolled over under existing credit agreements
at the rate of 4.330% for the USD tranche B debt and 4.8663% for the USD
tranche C debt, both rates are inclusive of lender margins. Both interest
rates are fixed until the end of September 2003 and accordingly these loans
are shown as fixed rate financial liabilities above.

F-30



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

|                     |  |                                  |      |                         |  |                         |     | 
|-------------------- |  | -------------------------------- | ---- | ----------------------- |  | ----------------------- | --- | 
|                     |  | At December 31, 2001            
|                     |  | Fixed rate financial liabilities
|                     |  |                                 
|                     |  |                                  |      |                         |  | Weighted average period
|                     |  | Weighted average interest rate   |      | for which rate is fixed
|Currency             |  | %                                |      | Years                  
|                     |  |                                  |      |                        
|Sterling             |  |                                  |     |                         |  |                         |    | 
|                    
|                    
|                    
|                    
|US dollars           |  |                                  | 5.15 |                         |  |                         | 0.8 | 
|                    
|                    
|                    
|                    
|Euro                 |  |                                  | 9.19 |                         |  |                         | 6.6 | 
|                     |  |                                  |      |                         |  |                         |     | 
|At December, 31 2001 |  |                                  | 8.13 |                         |  |                         | 5.1 | 
|                     |  |                                  |      |                         |  |                         |     | 

|                     |  |                                  |       |                         |  |                         |     | 
|-------------------- |  | -------------------------------- | ----- | ----------------------- |  | ----------------------- | --- | 
|                     |  | At December 31, 2002            
|                     |  | Fixed rate financial liabilities
|                     |  |                                 
|                     |  |                                  |       |                         |  | Weighted average period
|                     |  | Weighted average interest rate   |       | for which rate is fixed
|Currency             |  | %                                |       | Years                  
|                     |  |                                  |       |                        
|Sterling             |  |                                  |      |                         |  |                         |    | 
|                    
|                    
|                    
|                    
|US dollars           |  |                                  | 4.65  |                         |  |                         | 0.8 | 
|                    
|                    
|                    
|                    
|Euro                 |  |                                  | 10.25 |                         |  |                         | 7.3 | 
|                     |  |                                  |       |                         |  |                         |     | 
|At December, 31 2002 |  |                                  | 8.14  |                         |  |                         | 4.8 | 
|                     |  |                                  |       |                         |  |                         |     | 

Floating rate financial liabilities bear interest at rates, based on relevant
national LIBOR equivalents, which are fixed in advance for periods of between
one month and six months.

Interest rate risk of financial assets

|                 |  |                          |    |                          |  |  |    |  
|---------------- |  | ------------------------ | -- | ------------------------ |  |  | -- | -
|                 |  | 2001                     |    | 2002                    
|                 |  | Cash at bank and in hand |    | Cash at bank and in hand
|Currency         |  | £m                       |    | £m                      
|                 |  |                          |    |                         
|Sterling         |  |                          | 3  |                          |  |  |   |  
|                
|                
|                
|                
|US Dollars       |  |                          | 4  |                          |  |  | (5 | )
|                
|                
|                
|                
|Euro             |  |                          | 4  |                          |  |  | 6  |  
|                
|                
|                
|                
|Other currencies |  |                          | 9  |                          |  |  | 10 |  
|                 |  |                          |    |                          |  |  |    |  
|At December, 31  |  |                          | 20 |                          |  |  | 11 |  
|                 |  |                          |    |                          |  |  |    |  
|Floating rate    |  |                          | 20 |                          |  |  | 3  |  
|                
|                
|                
|                
|Fixed rate       |  |                          |   |                          |  |  | 8  |  
|                 |  |                          |    |                          |  |  |    |  
|At December, 31  |  |                          | 20 |                          |  |  | 11 |  
|                 |  |                          |    |                          |  |  |    |  

F-31



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Maturity of financial liabilities
The maturity profile of the financial liabilities of the company, other than
short term operating creditors and accruals at December 31, 2001 and 2002 were:

|                                                              |  |                   |     |        |  |             |    |           |  |       |   |  |  |  |     |  
|------------------------------------------------------------- |  | ----------------- | --- | ------ |  | ----------- | -- | --------- |  | ----- | - |  |  |  | --- | -
|                                                              |  | December 31, 2001
|                                                              |  |                  
|                                                              |  |                   |     |        |  |             |    |           |  | Other |   |  |  | 
|                                                              |  |                   |     |        |  | Finance     |    | financial |  |       |   | 
|                                                              |  | Debt              |     | leases |  | liabilities |    | Total    
|                                                              |  | £m                |     | £m     |  | £m          |    | £m       
|                                                              |  |                   |     |        |  |             |    |          
|In one year or less or on demand                              |  |                   | 13  |        |  |             | 1  |           |  |       |  |  |  |  | 14  |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than one year but not more than two years             |  |                   | 17  |        |  |             | 1  |           |  |       |  |  |  |  | 18  |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than two years but not more than five years           |  |                   | 72  |        |  |             | 2  |           |  |       |  |  |  |  | 74  |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than five years                                       |  |                   | 251 |        |  |             | 5  |           |  |       |  |  |  |  | 256 |  
|                                                              |  |                   |     |        |  |             |    |           |  |       |   |  |  |  |     |  
|                                                              |  |                   | 353 |        |  |             | 9  |           |  |       |  |  |  |  | 362 |  
|                                                             
|                                                             
|                                                             
|                                                             
|Less:amounts representing interest relating to
future periods |  |                   |    |        |  |             | (4 | )         |  |       |  |  |  |  | (4  | )
|                                                             
|                                                             
|                                                             
|                                                             
|Unamortised issue costs                                       |  |                   | (9  | )      |  |             |   |           |  |       |  |  |  |  | (9  | )
|                                                              |  |                   |     |        |  |             |    |           |  |       |   |  |  |  |     |  
|                                                              |  |                   | 344 |        |  |             | 5  |           |  |       |  |  |  |  | 349 |  
|                                                              |  |                   |     |        |  |             |    |           |  |       |   |  |  |  |     |  

|                                                              |  |                   |     |                |  |             |    |       |  |           |   |  |  |  |     |  
|------------------------------------------------------------- |  | ----------------- | --- | -------------- |  | ----------- | -- | ----- |  | --------- | - |  |  |  | --- | -
|                                                              |  | December 31, 2002
|                                                              |  |                  
|                                                              |  |                   |     |                |  |             |    |       |  | Other     |   |  |  | 
|                                                              |  |                   |     |                |  |             |    |       |  | financial |   |  |  | 
|                                                              |  | Debt              |     | Finance leases |  | liabilities |    | Total
|                                                              |  | £m                |     | £m             |  | £m          |    | £m   
|                                                              |  |                   |     |                |  |             |    |      
|In one year or less or on demand                              |  |                   | 17  |                |  |             |   |       |  |           |  |  |  |  | 17  |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than one year but not more than two years             |  |                   | 18  |                |  |             |   |       |  |           |  |  |  |  | 18  |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than two years but not more than five years           |  |                   | 135 |                |  |             | 2  |       |  |           |  |  |  |  | 137 |  
|                                                             
|                                                             
|                                                             
|                                                             
|In more than five years                                       |  |                   | 180 |                |  |             | 5  |       |  |           |  |  |  |  | 185 |  
|                                                              |  |                   |     |                |  |             |    |       |  |           |   |  |  |  |     |  
|                                                              |  |                   | 350 |                |  |             | 7  |       |  |           |  |  |  |  | 357 |  
|                                                             
|                                                             
|                                                             
|                                                             
|Less:amounts representing interest relating to
future periods |  |                   |    |                |  |             | (3 | )     |  |           |  |  |  |  | (3  | )
|                                                             
|                                                             
|                                                             
|                                                             
|Unamortised issue costs                                       |  |                   | (7  | )              |  |             |   |       |  |           |  |  |  |  | (7  | )
|                                                              |  |                   |     |                |  |             |    |       |  |           |   |  |  |  |     |  
|                                                              |  |                   | 343 |                |  |             | 4  |       |  |           |  |  |  |  | 347 |  
|                                                              |  |                   |     |                |  |             |    |       |  |           |   |  |  |  |     |  

Borrowing facilities

The group has the following undrawn committed borrowing facilities available
at December 31, 2002 in respect of which all conditions had been met at that
date:

|                                 |  |               |    |            |  |                   |   |                   |  |  |    |  |  |  |    | 
|-------------------------------- |  | ------------- | -- | ---------- |  | ----------------- | - | ----------------- |  |  | -- |  |  |  | -- | 
|                                 |  | Floating rate |    | Fixed rate |  | December 31, 2002 |   | December 31, 2001
|                                 |  | £'m           |    | £'m        |  | £'m               |   | £'m              
|                                 |  |               |    |            |  |                   |   |                  
|Expiring within one year         |  |               |   |            |  |                   |  |                   |  |  |   |  |  |  |   | 
|                                
|                                
|                                
|                                
|Expiring between 1 and 2 years   |  |               |   |            |  |                   |  |                   |  |  |   |  |  |  |   | 
|                                
|                                
|                                
|                                
|Expiring after more than 2 years |  |               | 21 |            |  |                   |  |                   |  |  | 21 |  |  |  | 37 | 
|                                 |  |               |    |            |  |                   |   |                   |  |  |    |  |  |  |    | 
|                                 |  |               | 21 |            |  |                   |  |                   |  |  | 61 |  |  |  | 37 | 
|                                 |  |               |    |            |  |                   |   |                   |  |  |    |  |  |  |    | 

In addition to the above our parent company Lucite International Limited has a
£40 million unsecured subordinated deep discounted bond facility with
Charterhouse. The fees associated with raising this facility were £0.8
million, which have been charged to the profit and loss account in the year as
they are payable by the group. The facility is available until March 2004 and
was fully undrawn at December 31, 2002 the proceeds from any drawn amounts on
this facility will be invested into our equity capital. At March 31, 2004 any
drawn amounts may be converted to equity in Lucite International Limited on
terms to be agreed with Charterhouse.

F-32



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS- (Continued)

Fair values of financial assets and financial liabilities
Set out below is a comparison, by category, of book values (before debt issue
costs) and fair values of all the Companys financial liabilities as at
December 31, 2002.

|                                                                                |  |                   |     |                   |  |            |     |            |  |  |     |  |  |  |     | 
|------------------------------------------------------------------------------- |  | ----------------- | --- | ----------------- |  | ---------- | --- | ---------- |  |  | --- |  |  |  | --- | 
|                                                                                |  | December 31, 2002 |     | December 31, 2001
|                                                                                |  |                   |     |                  
|                                                                                |  | Book value        |     | Fair value        |  | Book value |     | Fair value
|                                                                                |  | £'m               |     | £'m               |  | £'m        |     | £'m       
|                                                                                |  |                   |     |                   |  |            |     |           
|Primary financial instruments held or issued to finance the
Groups operations: |  |                   |     |                   |  |            |     |            |  |  |     |  |  |  |     | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Short-term borrowings and current portion of long-term borrowings               |  |                   | 17  |                   |  |            | 17  |            |  |  | 13  |  |  |  | 13  | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Long-term borrowings                                                            |  |                   | 333 |                   |  |            | 332 |            |  |  | 340 |  |  |  | 331 | 

The fair value of fixed rate debt instruments is determined by reference to
market prices of those instruments.

Foreign currency exposures
The Company has significant operations in the US as well as other countries
outside of the UK and consequently movements in pounds sterling exchange rates
can significantly affect the balance sheet. In addition currency exposures
can arise from sales and purchase transactions in foreign currencies. The
Companys policy is to use foreign currency loans to hedge foreign currency
assets and liabilities.

The table below shows the extent to which group companies have monetary assets
and liabilities in currencies other than their own local currency. Foreign
exchange differences on re-translation of these assets are taken to the profit
and loss account.

|                                  |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|--------------------------------- |  | ----------------------------------------------------------------------- | - | ---------- |  | ----- | ---- | ---------- |  | ----- | ---- | - |  | ----- | - |  |  |  | ---- | -
|                                  |  | Net
foreign currency monetary assets/(liabilities) at December, 31 2001
|                                  |  |                                                                         |  
|                                  |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  | Other |   |  |  | 
|                                  |  | Sterling                                                                |   | US dollars |  | Euros |      | currencies |  | Total
|                                  |  |                                                                         |   |            |  |       |      |            |  |      
|Functional currency of operation: |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|                                 
|                                 
|                                 
|                                 
|Sterling                          |  |                                                                         |  |            |  |       | (134 | )          |  |       | (213 | ) |  |       |  |  |  |  | (347 | )
|                                 
|                                 
|                                 
|                                 
|US dollars                        |  |                                                                         |  |            |  |       |     |            |  |       |     |   |  |       | 3 |  |  |  | 3    |  
|                                 
|                                 
|                                 
|                                 
|Euro                              |  |                                                                         |  |            |  |       | 1    |            |  |       |     |   |  |       |  |  |  |  | 1    |  
|                                 
|                                 
|                                 
|                                 
|Other currencies                  |  |                                                                         |  |            |  |       | 5    |            |  |       |     |   |  |       |  |  |  |  | 5    |  
|                                  |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|Total                             |  |                                                                         |  |            |  |       | (128 | )          |  |       | (213 | ) |  |       | 3 |  |  |  | (338 | )
|                                  |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  

|                     |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|-------------------- |  | ----------------------------------------------------------------------- | - | ---------- |  | ----- | ---- | ---------- |  | ----- | ---- | - |  | ----- | - |  |  |  | ---- | -
|                     |  | Net
foreign currency monetary assets/(liabilities) at December, 31 2002
|                     |  |                                                                        
|                     |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  | Other |   |  |  | 
|                     |  | Sterling                                                                |   | US dollars |  | Euros |      | currencies |  | Total
|                     |  |                                                                         |   |            |  |       |      |            |  |      
|Functional currency: |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|                    
|                    
|                    
|                    
|Sterling             |  |                                                                         |  |            |  |       | (118 | )          |  |       | (201 | ) |  |       |  |  |  |  | (319 | )
|                    
|                    
|                    
|                    
|US dollars           |  |                                                                         |  |            |  |       |     |            |  |       | 2    |   |  |       |  |  |  |  | 2    |  
|                    
|                    
|                    
|                    
|Euro                 |  |                                                                         |  |            |  |       | 1    |            |  |       |     |   |  |       |  |  |  |  | 1    |  
|                    
|                    
|                    
|                    
|Other currencies     |  |                                                                         |  |            |  |       | 7    |            |  |       |     |   |  |       |  |  |  |  | 7    |  
|                     |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  
|Total                |  |                                                                         |  |            |  |       | (110 | )          |  |       | (199 | ) |  |       |  |  |  |  | (309 | )
|                     |  |                                                                         |   |            |  |       |      |            |  |       |      |   |  |       |   |  |  |  |      |  

Financial instruments held for trading purposesThe company does not trade in financial instruments.

F-33



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

21 Notes to the cash flow statement

(a)  Net cash inflow from operating activities

|                                             |  |              |     |              |  |              |    |   |  |  |     |  
|-------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | -- | - |  |  | --- | -
|                                             |  | Year ended   |     | Year ended   |  | Year ended  
|                                             |  | December 31, |     | December 31, |  | December 31,
|                                             |  | 2000         |     | 2001         |  | 2002        
|                                             |  | £'m          |     | £'m          |  | £'m         
|                                             |  |              |     |              |  |             
|Operating profit                             |  |              | 16  |              |  |              | 18 |   |  |  | 27  |  
|                                            
|                                            
|                                            
|                                            
|Depreciation and amortisation of intangibles |  |              | 39  |              |  |              | 39 |   |  |  | 45  |  
|                                            
|                                            
|                                            
|                                            
|Stocks (increase)/ decrease                  |  |              | (16 | )            |  |              | 8  |   |  |  | (9  | )
|                                            
|                                            
|                                            
|                                            
|Debtors (increase)/ decrease                 |  |              | (11 | )            |  |              | 21 |   |  |  | (11 | )
|                                            
|                                            
|                                            
|                                            
|Creditors increase/ (decrease)               |  |              | 11  |              |  |              | (5 | ) |  |  | 6   |  
|                                            
|                                            
|                                            
|                                            
|Other movements                              |  |              | 17  |              |  |              | 2  |   |  |  | (1  | )
|                                             |  |              |     |              |  |              |    |   |  |  |     |  
|Cash inflow from operating activities        |  |              | 56  |              |  |              | 83 |   |  |  | 57  |  
|                                             |  |              |     |              |  |              |    |   |  |  |     |  

(b)  Returns on investments and servicing of finance

|                                                                   |  |              |     |              |  |              |     |   |  |  |     |  
|------------------------------------------------------------------ |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                                   |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                   |  | December 31, |     | December 31, |  | December 31,
|                                                                   |  | 2000         |     | 2001         |  | 2002        
|                                                                   |  | £'m          |     | £'m          |  | £'m         
|                                                                   |  |              |     |              |  |             
|Interest received                                                  |  |              | 2   |              |  |              | 1   |   |  |  |    |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Interest paid                                                      |  |              | (31 | )            |  |              | (34 | ) |  |  | (25 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Dividends paid by
subsidiary
undertakings to
minority
shareholders |  |              |    |              |  |              |    |   |  |  | (3  | )
|                                                                   |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                   |  |              | (29 | )            |  |              | (33 | ) |  |  | (28 | )
|                                                                   |  |              |     |              |  |              |     |   |  |  |     |  

(c)  Capital expenditure and financial investment

|                                    |  |              |     |              |  |              |     |   |  |  |     |  
|----------------------------------- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                    |  | Year ended   |     | Year ended   |  | Year ended  
|                                    |  | December 31, |     | December 31, |  | December 31,
|                                    |  | 2000         |     | 2001         |  | 2002        
|                                    |  | £'m          |     | £'m          |  | £'m         
|                                    |  |              |     |              |  |             
|Purchase of intangible fixed assets |  |              |    |              |  |              | (1  | ) |  |  |    |  
|                                   
|                                   
|                                   
|                                   
|Purchase of tangible fixed assets   |  |              | (28 | )            |  |              | (25 | ) |  |  | (28 | )
|                                    |  |              |     |              |  |              |     |   |  |  |     |  
|                                    |  |              | (28 | )            |  |              | (26 | ) |  |  | (28 | )
|                                    |  |              |     |              |  |              |     |   |  |  |     |  

F-34



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

(d)  Acquisitions and disposals

Acquisition of ICI Acrylics

|                                             |  |              |   |              |  |              |   |  |  |  |   | 
|-------------------------------------------- |  | ------------ | - | ------------ |  | ------------ | - |  |  |  | - | 
|                                             |  | Year ended   |   | Year ended   |  | Year ended  
|                                             |  | December 31, |   | December 31, |  | December 31,
|                                             |  | 2000         |   | 2001         |  | 2002        
|                                             |  | £'m          |   | £'m          |  | £'m         
|                                             |  |              |   |              |  |             
|Consideration paid on acquisition            |  |              | 5 |              |  |              |  |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Cash acquired with predecessor business      |  |              |  |              |  |              |  |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Fees associated with acquisition of
Acrylics |  |              | 4 |              |  |              | 1 |  |  |  |  | 
|                                            
|                                            
|                                            
|                                            
|Business from ICI                            |  |              |   |              |  |              |   |  |  |  |   | 
|                                             |  |              |   |              |  |              |   |  |  |  |   | 
|Net cash outflow                             |  |              | 9 |              |  |              | 1 |  |  |  |  | 
|                                             |  |              |   |              |  |              |   |  |  |  |   | 

Other Acquisitions

|                                                                                                 |  |              |    |              |  |              |     |   |  |  |   | 
|------------------------------------------------------------------------------------------------ |  | ------------ | -- | ------------ |  | ------------ | --- | - |  |  | - | 
|                                                                                                 |  | Year ended   |    | Year ended   |  | Year ended  
|                                                                                                 |  | December 31, |    | December 31, |  | December 31,
|                                                                                                 |  | 2000         |    | 2001         |  | 2002        
|                                                                                                 |  | £'m          |    | £'m          |  | £'m         
|                                                                                                 |  |              |    |              |  |             
|Consideration paid on acquisition
Of Bonar Polymers Ltd, UK                                      |  |              | 13 |              |  |              |    |   |  |  |  | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Acquisition of Acrylics division of
AECI, South Africa                                           |  |              | 7  |              |  |              |    |   |  |  |  | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Acquisition of sundry intangible assets                                                          |  |              | 1  |              |  |              |    |   |  |  |  | 
|                                                                                                
|                                                                                                
|                                                                                                
|                                                                                                
|Cash acquired with Bonar Polymers Limited, UK                                                    |  |              | (1 | )            |  |              |    |   |  |  |  | 
|                                                                                                 |  |              |    |              |  |              |     |   |  |  |   | 
|Acquisition of remaining majority
shareholding in Kaohsiung Monomer Company,
Taiwan from ICI Plc |  |              |   |              |  |              | 5   |   |  |  |  | 
|                                                                                                 |  |              |    |              |  |              |     |   |  |  |   | 
|Cash acquired with Kaohsiung Monomer
Company, Taiwan                                             |  |              |   |              |  |              | (10 | ) |  |  |  | 
|                                                                                                 |  |              |    |              |  |              |     |   |  |  |   | 
|                                                                                                 |  |              | 20 |              |  |              | (5  | ) |  |  |  | 
|                                                                                                 |  |              |    |              |  |              |     |   |  |  |   | 

Disposals

|                                                       |  |              |   |              |  |              |   |  |  |  |   | 
|------------------------------------------------------ |  | ------------ | - | ------------ |  | ------------ | - |  |  |  | - | 
|                                                       |  | Year ended   |   | Year ended   |  | Year ended  
|                                                       |  | December 31, |   | December 31, |  | December 31,
|                                                       |  | 2000         |   | 2001         |  | 2002        
|                                                       |  | £'m          |   | £'m          |  | £'m         
|                                                       |  |              |   |              |  |             
|Cash inflow from
disposal of Lucite
International GmbH |  |              | 1 |              |  |              |  |  |  |  |  | 
|                                                       |  |              |   |              |  |              |   |  |  |  |   | 
|                                                       |  |              | 1 |              |  |              |  |  |  |  |  | 
|                                                       |  |              |   |              |  |              |   |  |  |  |   | 

F-35



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

(e) Financing

|                                           |  |              |      |              |  |              |     |   |  |  |     |  
|------------------------------------------ |  | ------------ | ---- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                           |  | Year ended   |      | Year ended   |  | Year ended  
|                                           |  | December 31, |      | December 31, |  | December 31,
|                                           |  | 2000         |      | 2001         |  | 2002        
|                                           |  | £'m          |      | £'m          |  | £'m         
|                                           |  |              |      |              |  |             
|Movement in debt due within one year       |  |              | (125 | )            |  |              | (8  | ) |  |  | (14 | )
|                                          
|                                          
|                                          
|                                          
|Movement in debt due after one year        |  |              |     |              |  |              | (15 | ) |  |  | (6  | )
|                                          
|                                          
|                                          
|                                          
|Equity issue costs paid                    |  |              | (3   | )            |  |              |    |   |  |  |    |  
|                                          
|                                          
|                                          
|                                          
|Issue of debt due after more than one year |  |              | 145  |              |  |              |    |   |  |  | 15  |  
|                                          
|                                          
|                                          
|                                          
|Debt issue costs paid                      |  |              | (5   | )            |  |              |    |   |  |  |    |  
|                                          
|                                          
|                                          
|                                          
|Settlement of Exchange contract            |  |              | (10  | )            |  |              |    |   |  |  |    |  
|                                           |  |              |      |              |  |              |     |   |  |  |     |  
|Cash (outflow)/inflow from financing       |  |              | 2    |              |  |              | (23 | ) |  |  | (5  | )
|                                           |  |              |      |              |  |              |     |   |  |  |     |  

(f) Analysis of net debt

|                       |  |              |    |           |  |            |      |          |  |          |     |   |  |  |    |   |  |  |      |  
|---------------------- |  | ------------ | -- | --------- |  | ---------- | ---- | -------- |  | -------- | --- | - |  |  | -- | - |  |  | ---- | -
|                       |  |              |    |           |  | Debt due   |      | Debt due |  |          |     |   |  |  |    |  
|                       |  | Cash at bank |    | after one |  | within one |      | Finance  |  |          |     |  
|                       |  | and in hand  |    | year      |  | year       |      | leases   |  | Net debt
|                       |  | £'m          |    | £'m       |  | £'m        |      | £'m      |  | £'m     
|                       |  |              |    |           |  |            |      |          |  |         
|At January 1, 2001     |  |              | 19 |           |  |            | (362 | )        |  |          | (7  | ) |  |  | (5 | ) |  |  | (355 | )
|                      
|                      
|                      
|                      
|Cash flow              |  |              | 2  |           |  |            | 15   |          |  |          | 8   |   |  |  |   |   |  |  | 25   |  
|                      
|                      
|                      
|                      
|Other non-cash changes |  |              |   |           |  |            | 12   |          |  |          | (13 | ) |  |  |   |   |  |  | (1   | )
|                      
|                      
|                      
|                      
|Exchange movement      |  |              | (1 | )         |  |            | 4    |          |  |          | (1  | ) |  |  |   |   |  |  | 2    |  
|                       |  |              |    |           |  |            |      |          |  |          |     |   |  |  |    |   |  |  |      |  
|At December 31, 2001   |  |              | 20 |           |  |            | (331 | )        |  |          | (13 | ) |  |  | (5 | ) |  |  | (329 | )
|                       |  |              |    |           |  |            |      |          |  |          |     |   |  |  |    |   |  |  |      |  
|Cash flow              |  |              | (8 | )         |  |            | (8   | )        |  |          | 13  |   |  |  |   |   |  |  | (3   | )
|                      
|                      
|                      
|                      
|Other non-cash changes |  |              | (1 | )         |  |            | 16   |          |  |          | (17 | ) |  |  |   |   |  |  | (2   | )
|                      
|                      
|                      
|                      
|Exchange movement      |  |              |   |           |  |            | (3   | )        |  |          |    |   |  |  | 1  |   |  |  | (2   | )
|                       |  |              |    |           |  |            |      |          |  |          |     |   |  |  |    |   |  |  |      |  
|At December 31, 2002   |  |              | 11 |           |  |            | (326 | )        |  |          | (17 | ) |  |  | (4 | ) |  |  | (336 | )
|                       |  |              |    |           |  |            |      |          |  |          |     |   |  |  |    |   |  |  |      |  

F-36



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)



|(g) |  | Reconciliation of net cash flow to movement in net debt
|--- |  | -------------------------------------------------------

|                                                      |  |                   |      |                   |  |                   |      |   |  |  |      |  
|----------------------------------------------------- |  | ----------------- | ---- | ----------------- |  | ----------------- | ---- | - |  |  | ---- | -
|                                                      |  | Year ended        |      | Year ended        |  | Year ended       
|                                                      |  | December 31, 2000 |      | December 31, 2001 |  | December 31, 2002
|                                                      |  | £'m               |      | £'m               |  | £'m              
|                                                      |  |                   |      |                   |  |                  
|(Decrease)/increase in cash in the year/period        |  |                   | (39  | )                 |  |                   | 2    |   |  |  | (9   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from movements in debt and lease
financing |  |                   | (15  | )                 |  |                   | 23   |   |  |  | 6    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Exchange movement                                     |  |                   | (24  | )                 |  |                   | 2    |   |  |  | (2   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Other non-cash changes                                |  |                   | 2    |                   |  |                   | (1   | ) |  |  | (2   | )
|                                                      |  |                   |      |                   |  |                   |      |   |  |  |      |  
|Movement in net debt                                  |  |                   | (76  | )                 |  |                   | 26   |   |  |  | (7   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Opening net debt                                      |  |                   | (279 | )                 |  |                   | (355 | ) |  |  | (329 | )
|                                                      |  |                   |      |                   |  |                   |      |   |  |  |      |  
|Closing net debt                                      |  |                   | (355 | )                 |  |                   | (329 | ) |  |  | (336 | )
|                                                      |  |                   |      |                   |  |                   |      |   |  |  |      |  

22 Pensions and other post retirement benefits

Lucite International Limited has established a number of pension schemes
around the world covering many of its employees. The principal funds are the
UK pension scheme, which is a funded defined benefit scheme, the US pension
schemes, which are defined benefit schemes, the majority of which are funded,
and the US post retirement medical benefit plan which is an unfunded defined
benefit plan. There is also a much smaller fund within KMC the assets of which
are held by the Central Trust of China.

The most recent actuarial valuations of the US pension schemes and the US post
retirement medical benefit plan were at December 31, 2001, and the most recent
actuarial valuation of the UK pension scheme was at October 31, 2000. The
valuations were carried out using the projected unit method and were carried
out by Cigna for the US schemes and Watson Wyatt for the UK scheme, both
independent professionally qualified actuaries.

The main assumptions used for the valuation of the UK scheme at October 31,
2000 were a long-term investment return of 6.6% increases in salaries of 4%,
dividend growth of 2.5% and increases in pensions of 2.5%. The market value of
the UK schemes assets was £55 million and the actuarial value of those assets
represented 100% of the benefits accrued to members after allowing for
expected future increases in earnings.

The main assumptions used for the valuations of the US schemes were a
long-term investment return of 9% increases in salaries of 4.5%, discount rate
of 6.75% and increases in pensions of 2.5%. The market value of the US
schemes assets was $45 million and the actuarial value of those assets
represented 75% of the benefits accrued to members after allowing for expected
future increases in earnings. The funding of the US plan is subject to the
statutory funding requirements, these requirements will mean that the funding
deficit is expected to reduce over time.

The main assumptions used for the valuation of the US post retirement medical
benefit plan were long-term medical claim inflation rate starting at 8.5% for
2003 and reducing to 4.5% over the next eight years and a discount rate of
6.75%

The main assumptions used for the valuation of the KMC fund were long-term
investment return of 5.0%, increases in salaries 3.5% and discount rate of
5.0%. There is no assumption required regarding increases to pension costs as
all amounts are paid as lump sums.

The total pension and post retirement benefit costs for the period ended 31
December 2002 was £7 million (2001: £7 million). Provisions for unfunded
pensions and employee benefits across the group at 31 December 2002 were £17
million (2001: £17 million) and £8 million (2001: £8 million) respectively
(Note 18).

Pension costs relating to foreign schemes are charged in accordance with local
best practice using different accounting policies. The US scheme is accounted
for using applicable US accounting standards; the cost of obtaining valuations
for the purpose of adjusting to the applicable UK accounting standard is
considered to be out of proportion to the benefits gained.

F-37



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

FRS 17 Retirement Benefits

The most recent actuarial valuations of the Companys major retirement benefit
schemes have been updated to December 31, 2002 to take account of the
requirements of FRS 17. The actuarial valuations have been carried out using
the projected unit method of valuation.

Financial assumptions to calculate the scheme liabilities under FRS 17 are:

|                                |  |                   |      |                 |  |                    |      |                  |  |  |      |   |  |  |       |  
|------------------------------- |  | ----------------- | ---- | --------------- |  | ------------------ | ---- | ---------------- |  |  | ---- | - |  |  | ----- | -
|                                |  | December 31, 2001
|                                |  |                  
|                                |  | UK pension fund   |      | US Pension Plan |  | US Healthcare Plan |      | KMC pension fund
|                                |  | % p.a.            |      | % p.a.          |  | % p.a.             |      | % p.a.          
|                                |  |                   |      |                 |  |                    |      |                 
|Discount rate                   |  |                   | 5.80 | %               |  |                    | 7.25 | %                |  |  | 7.25 | % |  |  | 5.00  | %
|                               
|                               
|                               
|                               
|Salary increases                |  |                   | 3.90 | %               |  |                    | 4.50 | %                |  |  |     |   |  |  | 3.50  | %
|                               
|                               
|                               
|                               
|Pension increases               |  |                   | 2.50 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  |      |  
|                               
|                               
|                               
|                               
|Social security increases       |  |                   | 2.50 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  |      |  
|                               
|                               
|                               
|                               
|Ultimate health care
trend rate |  |                   |     |                 |  |                    |     |                  |  |  | 4.50 | % |  |  |      |  
|                               
|                               
|                               
|                               
|Inflation rate                  |  |                   | 2.50 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  | -0.01 | %
|                               
|                               
|                               
|                               
|Percentage funding level        |  |                   | 81   | %               |  |                    | 70   | %                |  |  |     |   |  |  |      |  

|                                |  |                   |      |                 |  |                    |      |                  |  |  |      |   |  |  |       |  
|------------------------------- |  | ----------------- | ---- | --------------- |  | ------------------ | ---- | ---------------- |  |  | ---- | - |  |  | ----- | -
|                                |  | December 31, 2002
|                                |  |                  
|                                |  | UK pension fund   |      | US Pension Plan |  | US Healthcare Plan |      | KMC Pension fund
|                                |  | % p.a.            |      | % p.a.          |  | % p.a.             |      | % p.a.          
|                                |  |                   |      |                 |  |                    |      |                 
|Discount rate                   |  |                   | 5.60 | %               |  |                    | 6.75 | %                |  |  | 6.75 | % |  |  | 3.75  | %
|                               
|                               
|                               
|                               
|Salary increases                |  |                   | 3.75 | %               |  |                    | 4.50 | %                |  |  |     |   |  |  | 2.50  | %
|                               
|                               
|                               
|                               
|Pension increases               |  |                   | 2.25 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  |      |  
|                               
|                               
|                               
|                               
|Social security increases       |  |                   | 2.25 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  |      |  
|                               
|                               
|                               
|                               
|Ultimate health care
trend rate |  |                   |     |                 |  |                    |     |                  |  |  | 4.5  | % |  |  |      |  
|                               
|                               
|                               
|                               
|Inflation rate                  |  |                   | 2.25 | %               |  |                    | 3.00 | %                |  |  |     |   |  |  | -0.18 | %
|                               
|                               
|                               
|                               
|Percentage funding level        |  |                   | 65   | %               |  |                    | 48   | %                |  |  |     |   |  |  |      |  

The assets in the schemes and the expected rate of return were:

|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |    |   |  |  |    |   |  |  |      |  
|----------------------------------- |  | ----------------- | --- | --------------- |  | --------- | ---- | ---------------- |  | --------- | --- | --------- |  | --------- | ---- | - |  | ---------- | -- | - |  |  | -- | - |  |  | ---- | -
|                                    |  | December 31, 2001
|                                    |  |                  
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  | US         |    |   |  |  |    |   |  | 
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  | Healthcare |    |   |  |  |    |   |  | 
|                                    |  | UK Pension Fund   |     | US Pension Plan |  | Plan      |      | KMC pension fund
|                                    |  | Value at          |     | Long-term       |  | Value at  |      | Long term        |  | Value at  |     | Value at  |  | Long term
|                                    |  | December          |     | rate of         |  | December  |      | rate of          |  | December  |     | December  |  | rate of  
|                                    |  | 31, 2001.         |     | return          |  | 31, 2001. |      | return           |  | 31, 2001. |     | 31, 2001. |  | return   
|                                    |  |                   |     | expected.       |  |           |      | expected         |  |           |     |           |  | expected 
|                                    |  | £'m               |     | % p.a.          |  | £'m       |      | % p.a.           |  | £'m       |     | £'m       |  | % p.a.   
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |          
|Bonds                               |  |                   | 8   |                 |  |           | 5.00 | %                |  |           | 15  |           |  |           | 7.25 | % |  |            |   |   |  |  |   |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Equities                            |  |                   | 41  |                 |  |           | 7.30 | %                |  |           | 21  |           |  |           | 8.75 | % |  |            |   |   |  |  |   |   |  |  |     |  
|                                   
|                                   
|                                   
|                                   
|Others                              |  |                   | 3   |                 |  |           | 5.00 | %                |  |           | 2   |           |  |           | 4.50 | % |  |            |   |   |  |  | 1  |   |  |  | 5.00 | %
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |    |   |  |  |    |   |  |  |      |  
|Total market value of assets        |  |                   | 52  |                 |  |           |      |                  |  |           | 38  |           |  |           |      |   |  |            |   |   |  |  | 1  |   |  |  |      |  
|                                   
|                                   
|                                   
|                                   
|Present value of scheme liabilities |  |                   | (64 | )               |  |           |      |                  |  |           | (54 | )         |  |           |      |   |  |            | (9 | ) |  |  | (4 | ) |  |  |      |  
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |    |   |  |  |    |   |  |  |      |  
|Deficit in the scheme               |  |                   | (12 | )               |  |           |      |                  |  |           | (16 | )         |  |           |      |   |  |            | (9 | ) |  |  | (3 | ) |  |  |      |  
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |    |   |  |  |    |   |  |  |      |  
|Net pension liability               |  |                   | (12 | )               |  |           |      |                  |  |           | (16 | )         |  |           |      |   |  |            | (9 | ) |  |  | (3 | ) |  |  |      |  
|                                    |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |    |   |  |  |    |   |  |  |      |  

F-38



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |     |   |  |  |    |   |  |  |      |  
|------------------------------------------ |  | ----------------- | --- | --------------- |  | --------- | ---- | ---------------- |  | --------- | --- | --------- |  | --------- | ---- | - |  | ---------- | --- | - |  |  | -- | - |  |  | ---- | -
|                                           |  | December 31, 2002
|                                           |  |                  
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  | US         |     |   |  |  |    |   |  | 
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  | Healthcare |     |   |  |  |    |   |  | 
|                                           |  | UK Pension Fund   |     | US Pension Plan |  | Plan      |      | KMC pension fund
|                                           |  | Value at          |     | Long-term       |  | Value at  |      | Long term        |  | Value at  |     | Value at  |  | Long term
|                                           |  | December          |     | rate of         |  | December  |      | rate of          |  | December  |     | December  |  | rate of  
|                                           |  | 31, 2002.         |     | return          |  | 31, 2002. |      | return           |  | 31, 2002. |     | 31, 2002. |  | return   
|                                           |  |                   |     | expected.       |  |           |      | expected         |  |           |     |           |  | expected 
|                                           |  | £'m               |     | % p.a.          |  | £'m       |      | % p.a.           |  | £'m       |     | £'m       |  | % p.a.   
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |          
|Bonds                                      |  |                   | 9   |                 |  |           | 5.00 | %                |  |           | 11  |           |  |           | 7.50 | % |  |            |    |   |  |  |   |   |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|Equities                                   |  |                   | 36  |                 |  |           | 8.00 | %                |  |           | 14  |           |  |           | 9.00 | % |  |            |    |   |  |  |   |   |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|Others                                     |  |                   | 2   |                 |  |           | 5.00 | %                |  |           | 3   |           |  |           | 9.00 | % |  |            |    |   |  |  | 1  |   |  |  | 3.75 | %
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |     |   |  |  |    |   |  |  |      |  
|Total market value of                      |  |                   | 47  |                 |  |           |      |                  |  |           | 28  |           |  |           |      |   |  |            |    |   |  |  | 1  |   |  |  |      |  
|                                          
|                                          
|                                          
|                                          
|assets
Present value of scheme
liabilities |  |                   | (72 | )               |  |           |      |                  |  |           | (58 | )         |  |           |      |   |  |            | (10 | ) |  |  | (4 | ) |  |  |      |  
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |     |   |  |  |    |   |  |  |      |  
|Deficit in the scheme                      |  |                   | (25 | )               |  |           |      |                  |  |           | (30 | )         |  |           |      |   |  |            | (10 | ) |  |  | (3 | ) |  |  |      |  
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |     |   |  |  |    |   |  |  |      |  
|Net pension liability                      |  |                   | (25 | )               |  |           |      |                  |  |           | (30 | )         |  |           |      |   |  |            | (10 | ) |  |  | (3 | ) |  |  |      |  
|                                           |  |                   |     |                 |  |           |      |                  |  |           |     |           |  |           |      |   |  |            |     |   |  |  |    |   |  |  |      |  

Deferred tax assets in relation to pension liabilities have not been
recognised as they would not be recoverable in the foreseeable future.

If the above amounts had been recognised in the financial statements, the
groups net assets and profit and loss reserve at December 31, 2001 and
December 31, 2002 would be as follows:

Net assets

|                                                          |  |             |     |            |  |  |     |  
|--------------------------------------------------------- |  | ----------- | --- | ---------- |  |  | --- | -
|                                                          |  | 2001        |     | 2002      
|                                                          |  | £' million  |     | £' million
|                                                          |  | As restated |     |            |  | 
|                                                          |  |             |     |            |  |  |    
|Net assets                                                |  |             | 168 |            |  |  | 142 |  
|                                                         
|                                                         
|                                                         
|                                                         
|Pensions provisions in respect of material funded schemes |  |             | 24  |            |  |  | 24  |  
|                                                          |  |             |     |            |  |  |     |  
|Net assets excluding material pension provisions          |  |             | 192 |            |  |  | 166 |  
|                                                         
|                                                         
|                                                         
|                                                         
|Pension liability                                         |  |             | (40 | )          |  |  | (68 | )
|                                                          |  |             |     |            |  |  |     |  
|Net assets including net pension liability under FRS17    |  |             | 152 |            |  |  | 98  |  
|                                                          |  |             |     |            |  |  |     |  

Reserves

|                                                                    |  |             |     |            |  |  |     |  
|------------------------------------------------------------------- |  | ----------- | --- | ---------- |  |  | --- | -
|                                                                    |  | 2001        |     | 2002      
|                                                                    |  | £' million  |     | £' million
|                                                                    |  | as restated |     |           
|                                                                    |  |             |     |           
|Profit and loss reserve                                             |  |             | (21 | )          |  |  | (45 | )
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Pensions provisions in respect of material funded schemes           |  |             | 24  |            |  |  | 24  |  
|                                                                    |  |             |     |            |  |  |     |  
|Profit and loss reserve excluding material pension provisions       |  |             | 3   |            |  |  | (21 | )
|                                                                   
|                                                                   
|                                                                   
|                                                                   
|Pension liability                                                   |  |             | (40 | )          |  |  | (68 | )
|                                                                    |  |             |     |            |  |  |     |  
|Profit and loss reserve including net pension liability under FRS17 |  |             | (37 | )          |  |  | (89 | )
|                                                                    |  |             |     |            |  |  |     |  

Net assets and reserves have been restated by £5 million for the year ended
December 31, 2001 as a result of a change in accounting policy arising on the
adoption of FRS19 Deferred Tax. The year ended December 31, 2001 has been
restated to include the KMC pension fund as a material funded scheme.

Analysis of the amount which would be charged to operating profit

|                       |  |                   |   | 
|---------------------- |  | ----------------- | - | 
|                       |  | Year ended       
|                       |  | December 31, 2002
|                       |  | £'m              
|                       |  |                  
|Current service cost   |  |                   | 6 | 
|Past service cost      |  |                   |  | 
|                       |  |                   |   | 
|Total operating charge |  |                   | 6 | 
|                       |  |                   |   | 

F-39



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

Analysis of the amount which would be credited to other finance income

|                                         |  |                   |    |  
|---------------------------------------- |  | ----------------- | -- | -
|                                         |  | Year ended       
|                                         |  | December 31, 2002
|                                         |  | £'m              
|                                         |  |                  
|Expected return on pension scheme assets |  |                   | 7  |  
|                                        
|                                        
|                                        
|                                        
|Interest on pension scheme liabilities   |  |                   | (8 | )
|                                         |  |                   |    |  
|Net return                               |  |                   | (1 | )
|                                         |  |                   |    |  

Analysis of amount which would be recognised in statement of total recognised
gains and losses (STRGL)

|                                                                              |  |                   |     |  
|----------------------------------------------------------------------------- |  | ----------------- | --- | -
|                                                                              |  | Year ended       
|                                                                              |  | December 31, 2002
|                                                                              |  | £'m              
|                                                                              |  |                  
|Actual return less expected return on pension scheme assets                   |  |                   | (20 | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Experience gains and losses arising on scheme liabilities                     |  |                   | (3  | )
|                                                                             
|                                                                             
|                                                                             
|                                                                             
|Changes in assumptions underlying the present value of the scheme liabilities |  |                   | (5  | )
|                                                                              |  |                   |     |  
|Actuarial loss recognised in STRGL                                            |  |                   | (28 | )
|                                                                              |  |                   |     |  

Movement in deficit during the year

|                                           |  |                   |     |  
|------------------------------------------ |  | ----------------- | --- | -
|                                           |  | Year ended       
|                                           |  | December 31, 2002
|                                           |  | £'m              
|                                           |  |                  
|Deficit in scheme at beginning of the year |  |                   | (40 | )
|                                          
|                                          
|                                          
|                                          
|Movement in the year;                      |  |                   |     |  
|                                          
|                                          
|                                          
|                                          
|Current service cost                       |  |                   | (6  | )
|                                          
|                                          
|                                          
|                                          
|Contributions                              |  |                   | 4   |  
|                                          
|                                          
|                                          
|                                          
|Past service costs                         |  |                   |    |  
|                                          
|                                          
|                                          
|                                          
|Other finance costs                        |  |                   | (1  | )
|                                          
|                                          
|                                          
|                                          
|Exchange gain                              |  |                   | 3   |  
|                                          
|                                          
|                                          
|                                          
|Actuarial loss                             |  |                   | (28 | )
|                                          
|                                          
|                                          
|                                          
|Deficit in scheme at end of the year       |  |                   | (68 | )

History of experience gains and losses

|                                                                           |  |                   |     |  
|-------------------------------------------------------------------------- |  | ----------------- | --- | -
|                                                                           |  | Year ended       
|                                                                           |  | December 31, 2002
|                                                                           |  |                  
|Difference between the actual and expected return on scheme assets:        |  |                   |     |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Amount (£ million)                                                         |  |                   | (20 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Percentage of scheme assets                                                |  |                   | 26  | %
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Experience gains and losses on scheme liabilities:                         |  |                   |     |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Amount (£ million)                                                         |  |                   | (3  | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Percentage of present value of scheme liabilities                          |  |                   | 2   | %
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Total amount recognised in statement of total recognised gains and losses: |  |                   |     |  
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Amount (£ million)                                                         |  |                   | (28 | )
|                                                                          
|                                                                          
|                                                                          
|                                                                          
|Percentage of present value of scheme liabilities                          |  |                   | 19  | %

F-40



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

23 Related party transactions

The following information is provided in accordance with Financial Reporting
Standard No 8, Related Party Transactions (FRS 8).

(i)  Trading transactions with shareholders of the group

For the twelve months ended December 31, 2000:Lucite International purchased
management services from Charterhouse Development Corporation and the directors
of Ineos Capital in the amounts of £50,000 and £300,000 respectively plus
related travel expenses.

Lucite International also purchased certain third party goods and services via
Ineos PLC, a company controlled by the directors of Ineos Capital in the amount
of £300,000. Such services included the rental expenses of our Southampton
offices and sundry employee costs in respect of shared services.

For the twelve months ended December 31, 2001:Lucite International purchased
management services from Charterhouse Development Corporation and the directors
of Ineos Capital in the amounts of £50,000 and £300,000 respectively plus
related travel expenses.

Lucite International also purchased certain third party goods and services via
Ineos PLC, a company controlled by the directors of Ineos Capital in the amount
of £53,000. Such services included the rental expenses of our Southampton
offices and sundry employee costs in respect of shared services.

Lucite International also purchased certain third party goods and services from
other Ineos associated companies controlled by the Directors of Ineos Capital,
to the value of £11 million. We also sell some goods and services to other Ineos
associated companies to the value of £2 million. These companies were acquired
by Ineos Capital during 2001 and have been included as related party
transactions from the date of each acquisition, prior to this date the
transactions have been treated as non-related.

Amounts due to and from these companies at 31 December 2001 were approximately
£nil.

For the twelve months ended December 31, 2002:Lucite International purchased
management services from Charterhouse Development Corporation for the amount of
£25,000 plus related travel expenses.

Lucite International also purchased certain third party goods and services from
other Ineos associated companies controlled by the Directors of Ineos Capital,
to the value of £13 million. We also sell some goods and services to other
Ineos associated companies to the value of £2 million.

As at 31 December 2002, amounts payable to these companies totaled £2 million.

(ii)  Trading transactions with other entities within the Acrylics group

The Company has taken advantage of the exemption conferred by FRS 8 and has not
disclosed transactions with wholly owned subsidiaries within the Acrylics
group. During normal course of business the company transacted with Kaohsiung Monomer Company (KMC which was a joint venture until September 1, 2001 and is
now a 60% owned subsidiary). Sales to and purchases from this company for the
period where it was a joint venture were as follows:

|                        |  |                         |   |                         |  |  |   | 
|----------------------- |  | ----------------------- | - | ----------------------- |  |  | - | 
|                        |  | Year ended December 31, |   | Year ended December 31,
|                        |  | 2000                    |   | 2001                   
|                        |  | £'m                     |   | £'m                    
|                        |  |                         |   |                        
|Profit and loss account |  |                         | 1 |                         |  |  |   | 
|                       
|                       
|                       
|                       
|Sales of product        |  |                         | 1 |                         |  |  | 1 | 
|                       
|                       
|                       
|                       
|Purchases of product    |  |                         | 6 |                         |  |  | 7 | 

F-41



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

24 Financial risk management

The Companys exposure to credit risk is controlled by setting a policy for
limiting credit exposure to counter parties, which is reviewed annually, and
reviewing credit ratings and limiting individual aggregate credit exposures
accordingly. The Company considers the possibility of material loss in the
event of non-performance by a financial counter party to be unlikely.

25 Contingent liabilities and commitments

|                                                      |  |      |    |      |  |  |    | 
|----------------------------------------------------- |  | ---- | -- | ---- |  |  | -- | 
|                                                      |  | 2001 |    | 2002
|                                                      |  | £'m  |    | £'m 
|                                                      |  |      |    |     
|Commitments for capital expenditure not provided for: |  |      |    |      |  |  |    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Contracts placed for future expenditure               |  |      | 7  |      |  |  | 8  | 
|                                                     
|                                                     
|                                                     
|                                                     
|Expenditure authorised but not yet contracted         |  |      | 10 |      |  |  | 13 | 
|                                                      |  |      |    |      |  |  |    | 
|                                                      |  |      | 17 |      |  |  | 21 | 
|                                                      |  |      |    |      |  |  |    | 

The Company is involved in various legal proceedings arising out of the normal
course of business. It is not believed that the outcome of these proceedings
will have a material effect on the Companys financial position.

The Company 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 Company or other parties. The ultimate requirement for such
actions, and their cost is inherently difficult to estimate. If necessary
provisions are established in accordance with the Groups accounting policy.
No provisions for environmental obligations have been made at December 31,
2001 or 2002 and management believe that any cost of addressing currently
identified environmental obligations will not have a material impact on the
Companys financial position or results of operations.

26 Subsequent events

On March 25, 2003, the Company received notification that the European
Commission is investigating Lucite International Limited and Lucite
International UK Limited with regard to possible participation in
anti-competitive practices contrary to Article 81 of the Treaty of Rome. Such
investigation is a preliminary step and does not imply that the Company has
engaged in any unlawful activities relating to anti-competitive practices.
There is no strict deadline to complete anti-competitive inquiries and their
duration is determined by the complexity of each case, the exercise of the
rights of defence and by the Commissions procedures. Lucite International
Limited is co-operating fully with the European Commission on these matters.

F-42



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)

27 Summary of significant differences between UK and US accounting principles

The financial statements are prepared and presented in accordance with UK
GAAP, which differs in certain significant respects from US GAAP. The
following is a summary of the effect on net income and shareholders equity of
the differences between UK GAAP and US GAAP.



|(a) |  | Effect on the loss for the financial year of differences between UK GAAP and US GAAP
|--- |  | ------------------------------------------------------------------------------------

|                                          |                                                           |                                        |       |       |   |             |     |              |   |              |     |              |  |    |     |     |   | 
|----------------------------------------- | --------------------------------------------------------- | -------------------------------------- | ----- | ----- | - | ----------- | --- | ------------ | - | ------------ | --- | ------------ |  | -- | --- | --- | - | 
|                                          |                                                           |                                        |       |       |   |             |     | Year ended   |   | Year ended   |     | Year ended  
|                                          |                                                           |                                        |       |       |   |             |     | December 31, |   | December 31, |     | December 31,
|                                          |                                                           |                                        |       |       |   |             |     | 2000         |   | 2001         |     | 2002        
|                                          |                                                           |                                        |       |       |   |             |     | £'m          |   | £'m          |     | £'m         
|                                          |                                                           |                                        |       | Notes |   | as restated |     | as restated  |   |             
|                                          |                                                           |                                        |       |       |   |             |     |              |   |             
|Loss for the financial year under
UK GAAP |                                                           |                                        |       |       |   |             | (12 | )            |   |              | (3  | )            |  |    | (3  | )  
|                                         
|                                         
|                                         
|                                         
|                                          | Adjustments to conform with US GAAP                       |                                        |       |       |   |             |     |              |   |              |     |              |  |    |     |     |  
|                                         
|                                         
|                                         
|                                         
|                                          | Purchase accounting adjustments:                          |                                        |       |       |   |             |     |              |   |              |     |              |  |    |     |     |  
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - depreciation of fixed assets         |       | (ia)  |   |             | 7   |              |   |              | 6   |              |  |    | 6   |    
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - amortisation of other intangibles    |       | (ib)  |   |             | (15 | )            |   |              | (14 | )            |  |    | (13 | )  
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - amortisation of goodwill             |       | (ic)  |   |             | 4   |              |   |              | 3   |              |  |    | 5   |    
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - provisions assumed                   |       | (id)  |   |             | 9   |              |   |              |    |              |  |    |    |    
|                                         
|                                         
|                                         
|                                         
|                                          | Pensions                                                  |                                        | (ii)  |       |   |            |     |              |   |             |     |              |  | (2 | )  
|                                         
|                                         
|                                         
|                                         
|                                          | Capitalisation of interest less
amortisation              |                                        | (iii) |       |   | 2           |     |              |   | 2            |     |              |  | 3  |    
|                                         
|                                         
|                                         
|                                         
|                                          | Capitalisation of loan arrangement
fees less amortisation |                                        | (iv)  |       |   |            |     |              |   |             |     |              |  | 1  |    
|                                         
|                                         
|                                         
|                                         
|                                          | Foreign exchange (loss)/gain on debt                      |                                        |       | (v    | ) |             |     | (7           | ) |              |     | 1            |  |    |     | (13 | )
|                                         
|                                         
|                                         
|                                         
|                                          | Deferred taxation                                         |                                        |       |       |   |             |     |              |   |              |     |              |  |    |    
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - arising on UK GAAP results           |       | (vi)  |   |             | 6   |              |   |              | 3   |              |  |    | 15  |    
|                                         
|                                         
|                                         
|                                         
|                                          |                                                           | - arising on other US GAAP
adjustments |       | (vi)  |   |             | (2  | )            |   |              | 1   |              |  |    | 2   |    
|                                          |                                                           |                                        |       |       |   |             |     |              |   |              |     |              |  |    |     |    
|Net loss under US GAAP                    |                                                           |                                        |       |       |   |             | (8  | )            |   |              | (1  | )            |  |    | 1   |    
|                                          |                                                           |                                        |       |       |   |             |     |              |   |              |     |              |  |    |     |    

F-43



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)



|(b) |  | Effect on Consolidated shareholders funds of differences between UK GAAP and US GAAP
|--- |  | -------------------------------------------------------------------------------------

|                                                                   |  |          |  |               |     |      |     |      |     |   |     | 
|------------------------------------------------------------------ |  | -------- |  | ------------- | --- | ---- | --- | ---- | --- | - | --- | 
|                                                                   |  |          |  |               |     | 2001 |     | 2002
|                                                                   |  | notes    |  | £'m           |     | £'m 
|                                                                   |  |          |  | (as restated) |     |     
|                                                                   |  |          |  |               |     |     
|Consolidated shareholders funds under UK GAAP                     |  |          |  |               |     |      | 154 |      |     |   | 130 | 
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Purchase accounting adjustments                                    |  | (ia,b,c) |  |               | (18 | )    |     |      | (20 | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Exchange translation differences on goodwill and intangible assets |  | (ib)     |  |               | 12  |      |     |      | 2   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Pensions                                                           |  | (ii)     |  |               | 7   |      |     |      | (3  | )
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Capitalisation of interest less amortisation                       |  | (iii)    |  |               | 4   |      |     |      | 7   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Capitalisation of loan arrangement fees                            |  | (iv)     |  |               |    |      |     |      | 1   |  
|                                                                  
|                                                                  
|                                                                  
|                                                                  
|Deferred taxation                                                  |  | (vi)     |  |               | 11  |      |     |      | 28  |  
|                                                                   |  |          |  |               |     |      |     |      |     |  
|Consolidated shareholders funds under US GAAP                     |  |          |  |               |     |      | 170 |      |     |   | 145 | 
|                                                                   |  |          |  |               |     |      |     |      |     |  

The consolidated shareholders funds under UK GAAP have been restated by £5
million for the period ended December 31, 2001 as a result of a change in
accounting policy arising on the adoption of FRS 19 Deferred Tax

The cumulative exchange differences posted to reserves as at December 31, 2002
was £7 million (2001: £12 million)



|(c) |  | Notes to the income statement and net asset reconciliation
|--- |  | ----------------------------------------------------------
|   
|(i) |  | Purchase accounting adjustments                           

Under UK GAAP the purchase price of a business is assigned first to the
separable tangible assets acquired and liabilities assumed on the basis of
their fair values at the date of acquisition. Any excess of cost over the
fair value of net tangible assets acquired is then allocated to identifiable
intangible assets to the extent that their value can be measured reliably on
initial recognition, the asset could be separately disposed of, and the asset
is controlled through custody or legal rights; otherwise the values associated
therewith should be included within the purchase price attributable to
goodwill. Any remaining excess should then be recorded as acquisition
goodwill and amortised over a period not to exceed 20 years unless such
goodwill is regarded as having an indefinite useful life, whereupon it is not
amortised. Additionally, under UK GAAP the recording of the net assets
acquired and the acquisition goodwill may be done at the holding company level
without any push down accounting being applied.

Differences exist between US GAAP and UK GAAP in the determination of
acquisition price and valuation of assets and liabilities at the acquisition
date. The adjustments referred to above for purchase accounting arise as a
result of these differences, as described below.



| |                                 
| | --------------------------------
| | (a) Depreciation of fixed assets



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under US GAAP the results of acquisition accounting must be allocated (i.e.
pushed down) to the respective business units. As a result of this pushdown
accounting, negative goodwill arises in a number of business units. Under
US GAAP the negative goodwill should be deducted from the non-monetary fixed
assets acquired as part of the acquisition. The effect of this treatment is
to reduce the fair value under US GAAP of the tangible fixed assets acquired
below the value recognised under UK GAAP. Accordingly, the annual
depreciation charge related to those assets is lower under US GAAP than
under UK GAAP.

F-44



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS (Continued)



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (b) Amortisation of other intangibles                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | Under US GAAP, an intangible asset shall be recognized as an asset apart
from goodwill if it arises from contractual or other legal rights,
regardless of whether those rights are transferable or separable from the
acquired entity or from other rights and obligations. Under UK GAAP the
asset must be capable of being separately disposed of in order to be
recognized as an intangible asset. Accordingly, the Company has recognized
£109 million of intangible assets under US GAAP that have been included in
goodwill for UK GAAP purposes. As such, the annual amortisation charge
related to these intangible assets is higher under US GAAP than under UK
GAAP. In addition, a number of these intangible assets have been pushed
down to the business units to which they relate for US GAAP purposes. Many
of these business units are based in the United States. These assets are
retranslated at the prevailing exchange rate at each balance sheet date into
the Companys reporting currency, giving rise to translation differences.
These translation differences have been included above in shareholders
funds.
|
| | (c) Amortisation of goodwill                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | As a result of push down accounting, as well as differences in the
recognition of intangible assets, the goodwill balance recognised under US
GAAP is lower than that recognised under UK GAAP. For the years ended 2000
and 2001, this resulted in a lower goodwill amortisation charge under US
GAAP. In 2002, the Company adopted FAS 142 and ceased amortisation of
goodwill under US GAAP. As such, the adjustment for 2002 is the reversal of
the goodwill amortisation recognised under UK GAAP for that year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|
| | (d) Provisions assumed                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Under US GAAP certain restructuring charges can be included in the
determination of the fair value of the business acquired, while under UK
GAAP costs of reorganising and integrating the business acquired should be
dealt with as post acquisition costs and do not affect the fair values at
the date of acquisition. Certain provisions related to severance and
relocation costs have been included in purchase accounting for US GAAP and
charged to post acquisition expense under UK GAAP.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       



|(ii) |  | Accounting for pension costs
|---- |  | ----------------------------

There are four significant differences between UK GAAP and US GAAP in
accounting for pension costs:



|(a) |  | SFAS No 87, Employers 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 UK retirement plan, is on the basis of the
discounted present value of expected future income streams from the
pension plan assets.                                                                                                      
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | SFAS No 87; requires measurements of plan assets and obligations to be
made as at the date of financial statements or a date no more than three
months prior to that date. Under UK GAAP, calculations may be based on
the results of the latest actuarial valuation.                                                                                                                                                                                                                
|   
|(c) |  | 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.
|   
|(d) |  | 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 policy
is not to recognise pension credits in its financial statements unless a
refund of, or reduction in, contributions is likely.                                                               



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

The principal pension plans within the Company are the UK pension fund, the US
pension plan and the US Healthcare plan. Provision has been made (Note 19)
for the benefit obligation of a small number of unfunded pension plans and for
the under-funding of funded pension schemes in other parts of the group. The
disclosures required by SFAS No 132 Employers Disclosures about Pensions and
Other Retirement Benefits in respect of the Companys three principal pension
plans are set out below:

The net pension cost, in accordance with SFAS No 87, for the Companys
principal pension plans is summarised as follows:

|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|---------------------------------------------- |  | ------------------------------------ | -- | ------- |  | --------------- | -- | ----- |  |  | - |  |  |  | -- | -
|                                               |  | For the year ended December 31, 2000
|                                               |  |                                     
|                                               |  |                                      |    |         |  | US              |    |       |  |  |   |  |  | 
|                                               |  | UK                                   |    | Pension |  | US              |    |       |  | 
|                                               |  | Pension Fund                         |    | Plan    |  | Healthcare Plan |    | Total
|                                               |  | £'m                                  |    | £'m     |  | £'m             |    | £'m  
|                                               |  |                                      |    |         |  |                 |    |      
|Components of pension/post retirement expense: |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Service cost                                   |  |                                      | 4  |         |  |                 | 2  |       |  |  |  |  |  |  | 6  |  
|                                              
|                                              
|                                              
|                                              
|Interest cost                                  |  |                                      | 2  |         |  |                 | 3  |       |  |  | 1 |  |  |  | 6  |  
|                                              
|                                              
|                                              
|                                              
|Expected return on plan assets                 |  |                                      | (3 | )       |  |                 | (4 | )     |  |  |  |  |  |  | (7 | )
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|Net periodic pension cost                      |  |                                      | 3  |         |  |                 | 1  |       |  |  | 1 |  |  |  | 5  |  
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  

|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|---------------------------------------------- |  | ------------------------------------ | -- | ------- |  | --------------- | -- | ----- |  |  | - |  |  |  | -- | -
|                                               |  | For the year ended December 31, 2001
|                                               |  |                                     
|                                               |  |                                      |    |         |  | US              |    |       |  |  |   |  |  | 
|                                               |  | UK                                   |    | Pension |  | US              |    |       |  | 
|                                               |  | Pension Fund                         |    | Plan    |  | Healthcare Plan |    | Total
|                                               |  | £'m                                  |    | £'m     |  | £'m             |    | £'m  
|                                               |  |                                      |    |         |  |                 |    |      
|Components of pension/post retirement expense: |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Service cost                                   |  |                                      | 4  |         |  |                 | 2  |       |  |  |  |  |  |  | 6  |  
|                                              
|                                              
|                                              
|                                              
|Interest cost                                  |  |                                      | 3  |         |  |                 | 4  |       |  |  | 1 |  |  |  | 8  |  
|                                              
|                                              
|                                              
|                                              
|Expected return on plan assets                 |  |                                      | (4 | )       |  |                 | (4 | )     |  |  |  |  |  |  | (8 | )
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|Net periodic pension cost                      |  |                                      | 3  |         |  |                 | 2  |       |  |  | 1 |  |  |  | 6  |  
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  

|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|---------------------------------------------- |  | ------------------------------------ | -- | ------- |  | --------------- | -- | ----- |  |  | - |  |  |  | -- | -
|                                               |  | For the year ended December 31, 2002
|                                               |  |                                     
|                                               |  |                                      |    |         |  | US              |    |       |  |  |   |  |  | 
|                                               |  | UK                                   |    | Pension |  | US              |    |       |  | 
|                                               |  | Pension Fund                         |    | Plan    |  | Healthcare Plan |    | Total
|                                               |  | £'m                                  |    | £'m     |  | £'m             |    | £'m  
|                                               |  |                                      |    |         |  |                 |    |      
|Components of pension/post retirement expense: |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Service cost                                   |  |                                      | 4  |         |  |                 | 2  |       |  |  |  |  |  |  | 6  |  
|                                              
|                                              
|                                              
|                                              
|Interest cost                                  |  |                                      | 4  |         |  |                 | 4  |       |  |  | 1 |  |  |  | 9  |  
|                                              
|                                              
|                                              
|                                              
|Expected return on plan assets                 |  |                                      | (4 | )       |  |                 | (4 | )     |  |  |  |  |  |  | (8 | )
|                                              
|                                              
|                                              
|                                              
|Other: amortisation                            |  |                                      | 1  |         |  |                 |   |       |  |  |  |  |  |  | 1  |  
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  
|Net periodic pension cost                      |  |                                      | 5  |         |  |                 | 2  |       |  |  | 1 |  |  |  | 8  |  
|                                               |  |                                      |    |         |  |                 |    |       |  |  |   |  |  |  |    |  

F-46



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

The following table sets forth the funded status of the principal plans at
December 31, 2001:

|                                                       |  |                      |     |         |  |                 |     |       |  |  |    |   |  |  |      |  
|------------------------------------------------------ |  | -------------------- | --- | ------- |  | --------------- | --- | ----- |  |  | -- | - |  |  | ---- | -
|                                                       |  | At December 31, 2001
|                                                       |  |                     
|                                                       |  |                      |     |         |  | US              |     |       |  |  |    |   |  | 
|                                                       |  | UK                   |     | Pension |  | US              |     |       |  | 
|                                                       |  | Pension Fund         |     | Plan    |  | Healthcare Plan |     | Total
|                                                       |  | £'m                  |     | £'m     |  | £'m             |     | £'m  
|                                                       |  |                      |     |         |  |                 |     |      
|Fair value of plan assets                              |  |                      | 52  |         |  |                 | 38  |       |  |  |   |   |  |  | 90   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Accumulated post retirement benefit obligations (APBO) |  |                      |    |         |  |                 |    |       |  |  | (9 | ) |  |  | (9   | )
|                                                      
|                                                      
|                                                      
|                                                      
|Projected benefit obligation (PBO)                     |  |                      | (64 | )       |  |                 | (51 | )     |  |  |   |   |  |  | (115 | )
|                                                       |  |                      |     |         |  |                 |     |       |  |  |    |   |  |  |      |  
|Funded status and accrued benefit cost                 |  |                      | (12 | )       |  |                 | (13 | )     |  |  | (9 | ) |  |  | (34  | )
|                                                      
|                                                      
|                                                      
|                                                      
|Unrecognised net actuarial (gain)/loss                 |  |                      | 19  |         |  |                 | 2   |       |  |  | 2  |   |  |  | 23   |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |    |   |  |  |      |  
|Balance sheet prepaid/(accrued) pension costs          |  |                      | 7   |         |  |                 | (11 | )     |  |  | (7 | ) |  |  | (11  | )
|                                                       |  |                      |     |         |  |                 |     |       |  |  |    |   |  |  |      |  

The following table sets forth the funded status of the principal plans at
December 31, 2002:

|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|------------------------------------------------------ |  | -------------------- | --- | ------- |  | --------------- | --- | ----- |  |  | --- | - |  |  | ---- | -
|                                                       |  | At December 31, 2002
|                                                       |  |                     
|                                                       |  |                      |     |         |  | US              |     |       |  |  |     |   |  | 
|                                                       |  | UK                   |     | Pension |  | US              |     |       |  | 
|                                                       |  | Pension Fund         |     | Plan    |  | Healthcare Plan |     | Total
|                                                       |  | £'m                  |     | £'m     |  | £'m             |     | £'m  
|                                                       |  |                      |     |         |  |                 |     |      
|Fair value of plan assets                              |  |                      | 47  |         |  |                 | 28  |       |  |  |    |   |  |  | 75   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Accumulated post retirement benefit obligations (APBO) |  |                      |    |         |  |                 |    |       |  |  | (10 | ) |  |  | (10  | )
|                                                      
|                                                      
|                                                      
|                                                      
|Projected benefit obligation (PBO)                     |  |                      | (73 | )       |  |                 | (58 | )     |  |  |    |   |  |  | (131 | )
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Funded status and accrued benefit cost                 |  |                      | (26 | )       |  |                 | (30 | )     |  |  | (10 | ) |  |  | (66  | )
|                                                      
|                                                      
|                                                      
|                                                      
|Unrecognised net actuarial loss                        |  |                      | 31  |         |  |                 | 18  |       |  |  | 3   |   |  |  | 52   |  
|                                                      
|                                                      
|                                                      
|                                                      
|Exchange gain                                          |  |                      |    |         |  |                 | (1  | )     |  |  |    |   |  |  |     |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Balance sheet prepaid/(accrued) pension costs          |  |                      | 5   |         |  |                 | (13 | )     |  |  | (7  | ) |  |  | (14  | )
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Accumulated benefit obligations (ABO)                  |  |                      |     |         |  |                 | 49  |       |  |  |     |   |  |  | 49   |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Minimum liability                                      |  |                      |     |         |  |                 | 21  |       |  |  |     |   |  |  | 21   |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Intangible assets                                      |  |                      |     |         |  |                 |    |       |  |  |     |   |  |  |     |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  
|Accumulated other comprehensive income                 |  |                      |     |         |  |                 | 8   |       |  |  |     |   |  |  | 8    |  
|                                                       |  |                      |     |         |  |                 |     |       |  |  |     |   |  |  |      |  

F-47



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

The change in benefit obligation during the year to December 31, 2001 was as
follows:

|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|----------------------------- |  | -------------------- | -- | ------- |  | --------------- | -- | ----- |  |  | -- | - |  |  | --- | -
|                              |  | At December 31, 2001
|                              |  |                     
|                              |  |                      |    |         |  | US              |    |       |  |  |    |   |  | 
|                              |  | UK                   |    | Pension |  | US              |    |       |  | 
|                              |  | Pension Fund         |    | Plan    |  | Healthcare Plan |    | Total
|                              |  | £'m                  |    | £'m     |  | £'m             |    | £'m  
|                              |  |                      |    |         |  |                 |    |      
|PBO/APBO at December 31, 2000 |  |                      | 55 |         |  |                 | 50 |       |  |  | 8  |   |  |  | 113 |  
|                             
|                             
|                             
|                             
|Service cost                  |  |                      | 4  |         |  |                 | 2  |       |  |  |   |   |  |  | 6   |  
|                             
|                             
|                             
|                             
|Employee contributions        |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1   |  
|                             
|                             
|                             
|                             
|Interest cost                 |  |                      | 4  |         |  |                 | 4  |       |  |  | 1  |   |  |  | 9   |  
|                             
|                             
|                             
|                             
|Benefit payments              |  |                      | (1 | )       |  |                 | (3 | )     |  |  | (1 | ) |  |  | (5  | )
|                             
|                             
|                             
|                             
|Net actuarial gain/(loss)     |  |                      | 1  |         |  |                 |   |       |  |  | 1  |   |  |  | 2   |  
|                             
|                             
|                             
|                             
|Exchange gain                 |  |                      |   |         |  |                 | (2 | )     |  |  |   |   |  |  | (2  | )
|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|PBO/APBO at December 31, 2001 |  |                      | 64 |         |  |                 | 51 |       |  |  | 9  |   |  |  | 124 |  
|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  

The change in benefit obligation during the year to December 31, 2002 was as
follows:

|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|----------------------------- |  | -------------------- | -- | ------- |  | --------------- | -- | ----- |  |  | -- | - |  |  | --- | -
|                              |  | At December 31, 2002
|                              |  |                     
|                              |  |                      |    |         |  | US              |    |       |  |  |    |   |  | 
|                              |  | UK                   |    | Pension |  | US              |    |       |  | 
|                              |  | Pension Fund         |    | Plan    |  | Healthcare Plan |    | Total
|                              |  | £'m                  |    | £'m     |  | £'m             |    | £'m  
|                              |  |                      |    |         |  |                 |    |      
|PBO/APBO at December 31, 2001 |  |                      | 64 |         |  |                 | 51 |       |  |  | 9  |   |  |  | 124 |  
|                             
|                             
|                             
|                             
|Service cost                  |  |                      | 4  |         |  |                 | 2  |       |  |  |   |   |  |  | 6   |  
|                             
|                             
|                             
|                             
|Employee contributions        |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1   |  
|                             
|                             
|                             
|                             
|Interest cost                 |  |                      | 4  |         |  |                 | 4  |       |  |  | 1  |   |  |  | 9   |  
|                             
|                             
|                             
|                             
|Benefit payments              |  |                      | (1 | )       |  |                 | (3 | )     |  |  | (1 | ) |  |  | (5  | )
|                             
|                             
|                             
|                             
|Transfer                      |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1   |  
|                             
|                             
|                             
|                             
|Net actuarial loss            |  |                      |   |         |  |                 | 7  |       |  |  | 2  |   |  |  | 9   |  
|                             
|                             
|                             
|                             
|Exchange gain                 |  |                      |   |         |  |                 | (3 | )     |  |  | (1 | ) |  |  | (4  | )
|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|PBO/APBO at December 31, 2002 |  |                      | 73 |         |  |                 | 58 |       |  |  | 10 |   |  |  | 141 |  
|                              |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  

The change in plan assets during the year to December 31, 2001 was as follows:

|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |    |  
|---------------------------------------------- |  | -------------------- | -- | ------- |  | --------------- | -- | ----- |  |  | -- | - |  |  | -- | -
|                                               |  | At December 31, 2001
|                                               |  |                     
|                                               |  |                      |    |         |  | US              |    |       |  |  |    |   |  | 
|                                               |  | UK                   |    | Pension |  | US              |    |       |  | 
|                                               |  | Pension Fund         |    | Plan    |  | Healthcare Plan |    | Total
|                                               |  | £'m                  |    | £'m     |  | £'m             |    | £'m  
|                                               |  |                      |    |         |  |                 |    |      
|Fair value of plan assets at December 31, 2000 |  |                      | 55 |         |  |                 | 40 |       |  |  |   |   |  |  | 95 |  
|                                              
|                                              
|                                              
|                                              
|Employer contributions                         |  |                      | 3  |         |  |                 |   |       |  |  | 1  |   |  |  | 4  |  
|                                              
|                                              
|                                              
|                                              
|Employee contributions                         |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1  |  
|                                              
|                                              
|                                              
|                                              
|Benefit payments                               |  |                      | (1 | )       |  |                 | (3 | )     |  |  | (1 | ) |  |  | (5 | )
|                                              
|                                              
|                                              
|                                              
|Investment returns                             |  |                      | (6 | )       |  |                 | (1 | )     |  |  |   |   |  |  | (7 | )
|                                              
|                                              
|                                              
|                                              
|Exchange gain                                  |  |                      |   |         |  |                 | 2  |       |  |  |   |   |  |  | 2  |  
|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |    |  
|Fair value of plan assets at December 31, 2001 |  |                      | 52 |         |  |                 | 38 |       |  |  |   |   |  |  | 90 |  
|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |    |  

F-48



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

The change in plan assets during the year to December 31, 2002 was as follows:

|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|---------------------------------------------- |  | -------------------- | -- | ------- |  | --------------- | -- | ----- |  |  | -- | - |  |  | --- | -
|                                               |  | At December 31, 2002
|                                               |  |                     
|                                               |  |                      |    |         |  | US              |    |       |  |  |    |   |  | 
|                                               |  | UK                   |    | Pension |  | US              |    |       |  | 
|                                               |  | Pension Fund         |    | Plan    |  | Healthcare Plan |    | Total
|                                               |  | £'m                  |    | £'m     |  | £'m             |    | £'m  
|                                               |  |                      |    |         |  |                 |    |      
|Fair value of plan assets at December 31, 2001 |  |                      | 52 |         |  |                 | 38 |       |  |  |   |   |  |  | 90  |  
|                                              
|                                              
|                                              
|                                              
|Employer contributions                         |  |                      | 3  |         |  |                 |   |       |  |  | 1  |   |  |  | 4   |  
|                                              
|                                              
|                                              
|                                              
|Employee contributions                         |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1   |  
|                                              
|                                              
|                                              
|                                              
|Benefit payments                               |  |                      | (1 | )       |  |                 | (3 | )     |  |  | (1 | ) |  |  | (5  | )
|                                              
|                                              
|                                              
|                                              
|Transfer                                       |  |                      | 1  |         |  |                 |   |       |  |  |   |   |  |  | 1   |  
|                                              
|                                              
|                                              
|                                              
|Investment returns                             |  |                      | (9 | )       |  |                 | (4 | )     |  |  |   |   |  |  | (13 | )
|                                              
|                                              
|                                              
|                                              
|Exchange loss                                  |  |                      |   |         |  |                 | (3 | )     |  |  |   |   |  |  | (3  | )
|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  
|Fair value of plan assets at December 31, 2002 |  |                      | 47 |         |  |                 | 28 |       |  |  |   |   |  |  | 75  |  
|                                               |  |                      |    |         |  |                 |    |       |  |  |    |   |  |  |     |  

The assumptions used to determine the pension and post retirement costs for the
principal plans for the year to December 31, 2001 were:

|                                          |  |         |     |         |  |            |      |  |  |  |      | 
|----------------------------------------- |  | ------- | --- | ------- |  | ---------- | ---- |  |  |  | ---- | 
|                                          |  | UK      |     | US      |  | US        
|                                          |  | Pension |     | Pension |  | Healthcare
|                                          |  | Fund    |     | Plan    |  | Plan      
|                                          |  | %       |     | %       |  | %         
|                                          |  |         |     |         |  |           
|Interest rate for discounting liabilities |  |         | 6.0 |         |  |            | 7.25 |  |  |  | 7.25 | 
|                                         
|                                         
|                                         
|                                         
|Expected rate of return on assets         |  |         | 7.0 |         |  |            | 10.0 |  |  |  |     | 
|                                         
|                                         
|                                         
|                                         
|Rate of compensation increase             |  |         | 3.9 |         |  |            | 4.5  |  |  |  |     | 
|                                         
|                                         
|                                         
|                                         
|Rate of increase to pensions in payment   |  |         | 2.5 |         |  |            |     |  |  |  |     | 
|                                          |  |         |     |         |  |            |      |  |  |  |      | 

The assumptions used to determine the pension and post retirement costs for the
principal plans for the year to December 31, 2002 were:

|                                          |  |         |     |         |  |            |      |  |  |  |      | 
|----------------------------------------- |  | ------- | --- | ------- |  | ---------- | ---- |  |  |  | ---- | 
|                                          |  | UK      |     | US      |  | US        
|                                          |  | Pension |     | Pension |  | Healthcare
|                                          |  | Fund    |     | Plan    |  | Plan      
|                                          |  | %       |     | %       |  | %         
|                                          |  |         |     |         |  |           
|Interest rate for discounting liabilities |  |         | 5.6 |         |  |            | 6.75 |  |  |  | 6.75 | 
|                                         
|                                         
|                                         
|                                         
|Expected rate of return on assets         |  |         | 7.3 |         |  |            | 9.00 |  |  |  |     | 
|                                         
|                                         
|                                         
|                                         
|Rate of compensation increase             |  |         | 3.8 |         |  |            | 4.50 |  |  |  |     | 
|                                         
|                                         
|                                         
|                                         
|Rate of increase to pensions in payment   |  |         | 2.3 |         |  |            |     |  |  |  |     | 
|                                          |  |         |     |         |  |            |      |  |  |  |      | 

Sensitivity disclosures for the US Healthcare plan are as follows:

A 1% increase in the health cost trend rates would increase the service and
interest cost components of the net periodic post-retirement benefit cost by a
total of approximately £42,000. It would increase the accumulated
post-retirement benefit obligation by approximately £550,000.

A 1% decrease in the health cost trend rates would decrease the service and
interest cost components of the net periodic post-retirement benefit cost by a
total of approximately £42,000. It would decrease the accumulated
post-retirement benefit obligation by approximately £500,000.

F-49



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)



|(iii) |  | Capitalisation of interest
|----- |  | --------------------------

Under UK GAAP the Company does not capitalise interest in its financial
statements. Under US GAAP, SFAS No 34 Capitalisation of Interest Cost,
interest incurred as part of the cost of constructing fixed assets is required
to be capitalised and amortised over the life of the asset.



|(iv) |  | Capitalisation of loan issue fees less amortisation
|---- |  | ---------------------------------------------------

Under UK GAAP issue costs on the arrangement of new debt facilities which have
not been drawn down are written off to the profit and loss account in the
period in which the fees were occurred. Under US GAAP such debt issue costs are
capitalised as an asset and reported in deferred charges in the balance sheet
and are amortised over the life of the facilities.



|(v) |  | Foreign exchange loss on debt
|--- |  | -----------------------------

Under UK GAAP the company treats loans, including the Euro denominated loans,
as an effective hedge of net investment in foreign subsidiaries which are
primarily US$ denominated. The currency translation loss on loans is offset
to the extent of the currency translation gain on net investments.

Under US GAAP hedging of a net investment in a foreign subsidiary with a
currency other than the currency of the subsidiary is generally not permitted.

For US GAAP purposes, the company has included the translation gain on the
Euro denominated loan as a component of net loss.



|(vi) |  | Income taxes
|---- |  | ------------

Under UK GAAP deferred tax assets are accounted for only to the extent that it
is more likely than not that there will be suitable sustainable taxable
surpluses from which the future reversal of the underlying timing differences
can be deducted. Under US GAAP, in accordance with SFAS No 109 Accounting for
Income Taxes, deferred taxes are accounted for on all timing differences,
including those arising from US GAAP adjustments to UK GAAP; a valuation
allowance is established in respect of those deferred tax assets, where it is
more likely than not that some portion will not be realised.

The US GAAP provision for income taxes differs from the amount of income taxes
determined by applying the applicable UK statutory income tax rate to pre-tax
increases, as a result of the following differences:

|                                                |  |              |     |              |  |              |     |   |  |  |     |  
|----------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                |  | Year ended   |     | Year ended   |  | Year ended  
|                                                |  | December 31, |     | December 31, |  | December 31,
|                                                |  | 2000         |     | 2001         |  | 2002        
|                                                |  | £'m          |     | £'m          |  | £'m         
|                                                |  |              |     |              |  |             
|UK statutory income tax rate                    |  |              | 30  | %            |  |              | 30  | % |  |  | 30  | %
|                                                |  |              |     |              |  |              |     |   |  |  |     |  
|Income tax expenses/benefit at UK rate          |  |              | (7  | )            |  |              | (3  | ) |  |  | (5  | )
|                                               
|                                               
|                                               
|                                               
|Local taxes                                     |  |              | 1   |              |  |              | 2   |   |  |  | 1   |  
|                                               
|                                               
|                                               
|                                               
|Prior year tax                                  |  |              |    |              |  |              |    |   |  |  | (7  | )
|                                               
|                                               
|                                               
|                                               
|Utilisation of b/f losses not provided          |  |              |    |              |  |              | (1  | ) |  |  |    |  
|                                               
|                                               
|                                               
|                                               
|Permanent differences                           |  |              | (9  | )            |  |              | (8  | ) |  |  | (9  | )
|                                               
|                                               
|                                               
|                                               
|Other                                           |  |              | 1   |              |  |              |    |   |  |  |    |  
|                                                |  |              |     |              |  |              |     |   |  |  |     |  
|Tax on income before income taxes
under US GAAP |  |              | (14 | )            |  |              | (10 | ) |  |  | (20 | )
|                                                |  |              |     |              |  |              |     |   |  |  |     |  

To the extent that dividends remitted from overseas subsidiaries are expected
to result in additional taxes, appropriate amounts have been provided. No
taxes have been provided for unremitted earnings of subsidiaries when such
amounts are considered permanently re-invested.

F-50



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

|                                           |  |      |     |      |  |  |     |  
|------------------------------------------ |  | ---- | --- | ---- |  |  | --- | -
|                                           |  | 2001 |     | 2002
|                                           |  | £'m  |     | £'m 
|                                           |  |      |     |     
|Deferred tax assets:                       |  |      |     |      |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|Pensions                                   |  |      | 2   |      |  |  | 2   |  
|                                          
|                                          
|                                          
|                                          
|Inventories                                |  |      | 3   |      |  |  | 2   |  
|                                          
|                                          
|                                          
|                                          
|Fixed assets                               |  |      | 4   |      |  |  | 4   |  
|                                          
|                                          
|                                          
|                                          
|Losses                                     |  |      | 40  |      |  |  | 56  |  
|                                          
|                                          
|                                          
|                                          
|Other                                      |  |      | 7   |      |  |  | 12  |  
|                                           |  |      |     |      |  |  |     |  
|                                           |  |      | 56  |      |  |  | 76  |  
|                                          
|                                          
|                                          
|                                          
|Deferred tax liabilities:                  |  |      |     |      |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|Accelerated depreciation and amortisation: |  |      |     |      |  |  |     |  
|                                          
|                                          
|                                          
|                                          
|UK fixed assets                            |  |      | (15 | )    |  |  | (6  | )
|                                          
|                                          
|                                          
|                                          
|Non-UK fixed assets                        |  |      | (28 | )    |  |  | (35 | )
|                                           |  |      |     |      |  |  |     |  
|Net deferred tax asset                     |  |      | 13  |      |  |  | 35  |  
|                                           |  |      |     |      |  |  |     |  



|(d) |  | US GAAP cash flow information
|--- |  | -----------------------------

The definition of cash flows differs between UK and US GAAP. Cash flow
under UK GAAP represents increases or decreases in cash, which is comprised
of cash in hand and repayable on demand less overdrafts. Under US GAAP cash
flow represents increases or decreases in cash and cash equivalents, which
include short term, highly liquid investments with remaining maturities of
less than 90 days when acquired, and excludes overdrafts. As at all of the
balance sheet dates included in these financial statements there is no
difference in the definition of cash between UK GAAP and US GAAP.

There are also certain differences in classification of items within the cash
flow statement between UK and US GAAP. Under UK GAAP, cash flows are
presented in the following categories; (i) operating activities; (ii) returns
on investments and servicing of finance; (iii) taxation; (iv) capital
expenditure; (v) acquisitions and disposals; (vi) management of liquid
resources; and (vii) financing activities. Under US GAAP cashflows are
presented as either
(i) operating activities (ii) investing or (iii) financing activities.

Cash flows from taxation, returns on investments, and servicing of finance net
of capitalised interest would be included as operating activities under US
GAAP. Capitalised interest would be included under investing activities for
US GAAP. Additionally, under US GAAP cash flows from the purchase and sale of
tangible fixed assets and the sale of debt and equity investments would be
shown within investing activities.

F-51



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Under US GAAP, the following amounts would have been reported:

|                                                                                            |  |              |     |              |  |              |     |   |  |  |     |  
|------------------------------------------------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                                                            |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                                            |  | December 31, |     | December 31, |  | December 31,
|                                                                                            |  | 2000         |     | 2001         |  | 2002        
|                                                                                            |  | £'m          |     | £'m          |  | £'m         
|                                                                                            |  |              |     |              |  |             
|Net cash provided by operating activities                                                   |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Under UK GAAP                                                                               |  |              | 56  |              |  |              | 83  |   |  |  | 57  |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Taxation paid                                                                               |  |              | (1  | )            |  |              | (3  | ) |  |  | (4  | )
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Returns from investments and servicing of
finance (excluding interest paid and
capitalised) |  |              | (27 | )            |  |              | (31 | ) |  |  | (26 | )
|                                                                                            |  |              |     |              |  |              |     |   |  |  |     |  
|Under US GAAP                                                                               |  |              | 28  |              |  |              | 49  |   |  |  | 27  |  
|                                                                                            |  |              |     |              |  |              |     |   |  |  |     |  
|Net cash used in investing activities                                                       |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Capitalised interest                                                                        |  |              | 2   |              |  |              | 2   |   |  |  | 2   |  
|                                                                                           
|                                                                                           
|                                                                                           
|                                                                                           
|Capital expenditure and financial investment                                                |  |              | 28  |              |  |              | 26  |   |  |  | 28  |  
|                                                                                            |  |              |     |              |  |              |     |   |  |  |     |  
|Under US GAAP                                                                               |  |              | 30  |              |  |              | 28  |   |  |  | 30  |  
|                                                                                            |  |              |     |              |  |              |     |   |  |  |     |  



|(e) |  | Lucite International Share Option Plan
|--- |  | --------------------------------------

Under the Lucite International Employee Share Plan, as described elsewhere in
this document, Charterhouse made available 550,000 ordinary one pence shares
in the company to employees (the employee shares). Shares will be allocated
between employees based on business performance criteria at a future date when
Charterhouse sells all or a substantial portion of its remaining investment in
the ordinary shares in Lucite International Limited. These shares have been
put into trust for the employees during 2002.

In December 2002 the Company issued rights to the US employees to purchase
restricted ordinary D shares under the US employee share scheme. These
restricted ordinary D shares will be redeemed by the company and replaced with
ordinary B shares in the event of Charterhouse selling all or a substantial
portion of its remaining investment in the ordinary shares in Lucite
International Limited.

No charge in respect of the grant of options to the employees under the
employee share option plan has been made in the financial statements under
both UK GAAP and US GAAP due to the uncertainty of the timing of the sale of
Charterhouses investment.



|(f) |  | Additional US GAAP disclosures
|--- |  | ------------------------------

Accounting estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from these estimates.

Debt issue costs

Under UK GAAP issued debt is stated on the balance sheet net of the associated
unamortised issue costs.

Under US GAAP such debt issue costs are capitalised as an asset and reported
as deferred charges in the balance sheet. Therefore an adjustment to gross up
the debt liability and to show the £7 million asset as at December 31, 2002
(2001  £9million) separately in debtors would have to be made.

F-52



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Exceptional items

Under UK GAAP exceptional items are items which derive from events or
transactions that fall within the ordinary activities of the reporting entity
which individually or, if of a similar type, in aggregate, need to be
disclosed by virtue of their size or incidence. Under US GAAP only items which
are deemed unusual in nature and infrequent in occurrence (not reasonably
expected to recur in the foreseeable future) qualify for presentation as
extraordinary items. Extraordinary items are presented below income before
extraordinary items in the statement of profit and loss. Under US GAAP,
restructuring and integration costs do not meet the criteria for presentation
as an extraordinary item.

Concentrations

The Company obtains a significant proportion of its raw materials and certain
services from a small number of key suppliers. Supply agreements are
currently in place but if any of these suppliers is unable to meet raw
material demand then alternative suppliers may not easily be found and as a
result, operations could be materially impacted. The Companys largest
supplier of raw materials is also its largest customer. This supplier
accounted for approximately 20% of the cost of sales and approximately 8% of
sales for the years ended December 31, 2000 through to 2002. Raw materials
from this supplier are subject to a supply contract, which expires in June
2003. The Company has agreed terms for the continuation of supply for the next
five years following this date. The Company is the natural supplier of the
key customer referred to above given that the Company and this customer are
located within the same chemical complexes in the United States and share
supplies and services for those complexes. However, if the Company were to
lose the business from this key customer, then operations could be materially
impacted.

Guarantees

In November 2002, the FASB issued FIN No. 45, Guarantors Accounting and
Disclosure requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. The company has adopted the disclosure requirements of
the Interpretation as of December 31, 2002. Disclosures about each group of
similar guarantees are provided below:

Product warranty liability

The company warrants to the original purchaser of its products that it will, at
its option, repair or replace, without charge, such products if they fail due
to a manufacturing defect. The term of these warranties are typically up to
twelve months after sale. The company accrues for product warranties when,
based on available information, it is probable that customers will make claims
under warranties relating to products that have been sold, and a reasonable
estimate of the costs (based on historical claims experience relative to sales)
can be made. The cost of claims made under product warranties for the year
ended December 31, 2002 were not material to the business, consequently we have
not provided a reconciliation of the movement in product warrant liabilities
for the year ended December 31, 2002.

Contingencies

Litigation

We are from time to time involved in various legal proceedings of a nature
considered normal to our business. In the event of adverse outcomes of these
proceedings, we believe that resulting liabilities are either covered by
insurance, guarantee, established reserves or would not have a material adverse
effect on our financial condition or our results of operations.

Environmental contingencies

The chemicals business is highly regulated in many countries. Increasingly
stringent regulations govern our manufacturing processes, wastes and emissions
in all of the jurisdictions in which we do business and will continue to
require material ongoing costs. Given the nature of our business, violations of
environmental laws may result in substantial fines, penalties, damages or other
costs, restrictions or civil or criminal sanctions imposed on our operating
activities. In addition, potentially significant expenditures could be
necessary in order to comply with existing or future environmental laws.

F-53



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Under some environmental laws, we may be liable for the costs of investigating
and cleaning up environmental contamination on or from our properties or at
off-site locations where, for example, we disposed of or arranged for the
disposal or treatment of hazardous wastes. We are aware that there is or may be
soil or groundwater contamination at some of our facilities resulting from past
operations at these or neighbouring facilities. We may need to remediate soil
and groundwater contaminated with hazardous substances to ensure that they pose
no unacceptable risk to human health and the environment.

The acquisition agreement relating to the acquisition of ICI Acrylics provides
for indemnification of Lucite International Investment Limited by ICI and
specified affiliated companies for some of these environmental liabilities,
costs, and other matters, provided that various requirements and procedures
specified in the acquisition agreement are satisfied. The extent of the
indemnification depends on the nature of the matter being indemnified, the time
from the closing of the acquisition at which the indemnification claim is made,
and other considerations and may be subject to certain deductibles and maximum
amounts, such as an aggregate deductible of £1 million and an aggregate cap of
£94 million, both of which apply to certain claims that would otherwise be
indemnifiable.

Purchase commitments

We have certain purchase contracts in existence of a take or pay nature that
require us to take minimum volumes of certain raw materials such as HCN,
methanol and acetone. The HCN contract requires us to take minimum volumes
until the end of June 2008, in the event of taking less than this minimum
volume a penalty directly linked to the volume shortfall is payable. The
minimum volume is less than our current production volume requirements. This
penalty is not chargeable should we need to declare Force Majeur.

The purchase commitments that we have for other raw materials require us to
take minimum volumes in the current year only or pay the full price for the
volume of material not taken. The minimum volumes are less than our current
production requirements.

Details of the financial obligations arising from these purchase commitments
can be seen on section B Liquidity and Capital Resources on page 36.

New US Financial Accounting Standards and pronouncements not yet effective

In June 2002 the Financial Accounting Standards Board issued FAS 146 Accounting
for the Costs Associated with Exit or Disposal Activities.This standard will
require companies to recognise costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. The provisions of this standard are effective for exit
or disposal activities that are initiated after December 31, 2002. This is not
expected to have a material impact on the group.

In April 2002 the Financial Accounting Standards Board issued FAS 145
Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections.This statement eliminates the automatic classification of gain or
loss on extinguishment of debt as an extraordinary item of income and requires
that such gain or loss be evaluated for extraordinary classifications under the
criteria of Accounting Principles Board No. 30 Reporting the Results of
Operations.This statement also requires sales-leaseback accounting for
certain lease modifications that have economic effects that are similar to
sales-leaseback transactions, and makes various other technical corrections to
existing pronouncements. This statement will be effective for the Company for
the year ending December 31, 2003. The adoption of this statement will not have
a material effect on the Companys results of operations or financial position.

In August 2001 the Financial Accounting Standards Board issued FAS 143
Accounting For Assets Retirement Obligations-effective for financial
statements issued for the fiscal years after June 15, 2002. The Provisions of
FAS 143 require companies to record an asset and related liability for the
costs associated with the retirement of long-lived tangible assets if a legal
liability to retire the asset exists. The adoption is not expected to have a
significant impact on the Companys financial results of operations.

F-54



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Recently Issued US Financial Accounting Standards

On January 17, 2003, the Financial Accounting Standards Board (FASB or the
Board) issued FASB Interpretation No. 46 (FIN 46 or the Interpretation),
Consolidation of Variable Interest Entities, an interpretation of ARB 51.The
primary objectives of FIN 46 are to provide guidance on the identification of
entities for which control is achieved through means other than through voting
rights (variable interest entities or VIEs) and how to determine when and
which business enterprise should consolidate the VIE (the primary
beneficiary). This consolidation model applies to an entity which either (1)
the equity investors (if any) do not have a controlling interest or (2) the
equity investment at risk is insufficient to finance that entitys activities
without receiving additional subordinated financial support from other parties.
In addition FIN 46 requires that both the primary beneficiary and all other
enterprises with a significant variable interest in a VIE make additional
disclosures. The effective date relating to implementation and disclosure
requirements included in the Interpretation (although early adoption is
permitted), are for VIEs created before February 1, 2003, effective no later
than the beginning of the first interim or annual reporting period beginning
after June 15, 2003 and for VIEs created after January 31, 2003, effective
immediately. For those variable interest entities which are in existence prior
to January 31, 2003 and where the Company has a significant variable interest
or it is reasonably possible that the Company would have to consolidate the
entity on application of FIN 46, a transitional disclosure is required which
quantifies the maximum exposure to loss as a consequence of the Companys
involvement with the entity. The maximum exposure to loss represents a worst
case scenario in the event that all such vehicles simultaneously fail. The
Group adopted the transitional disclosure requirements of the Interpretation
for the fiscal year ended December 31, 2002. There was no material impact on
the financial statements.

On November 25, 2002 the FASB issued FASB Interpretation No. 45 (FIN 45 or
the Interpretation), Guarantors Accounting and Disclosure Requirements for
Guarantees of Indebtedness of Others (an interpretation of FASB Statements No.
5, 57 and 107 and rescission of FASB Interpretation No. 34).FIN 45 clarifies
the requirements of FASB Statement No. 5 (FAS 5), Accounting for Contingencies,
relating to a guarantors accounting for, and disclosure of, the issuance of
certain types of guarantees. The Interpretations provisions for initial
recognition and measurement are to be applied on a prospective basis to
guarantees issued or modified after December 31, 2002, irrespective of the
guarantors fiscal year end. The guarantors previous accounting for guarantees
that were issued before the date of FIN 45s initial application may be revised
or restated to reflect the effect of the recognition and measurement provisions
of the Interpretation. The disclosure requirements have been adopted by the
Group for the fiscal year ended December 31, 2002 as disclosed on page F-53.

In June 2002 the Financial Accounting Standards Board issued FAS 146 Accounting
for the Costs Associated with Exit or Disposal Activities.This standard will
require companies to recognise costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. The provisions of this standard are effective for exit
or disposal activities that are initiated after December 31, 2002. This is not
expected to have a material impact on the group.

In June 2001 the Financial Accounting Standards Board issued FAS 142 Goodwill
and Other Intangible Assets.This standard addresses how goodwill and other
intangible assets should be accounted for in financial statements upon their
acquisition. The standard also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognised in the
financial statements. Where goodwill and intangibles were previously
considered to be wasting assets, instead those that have indefinite useful
lives will not be amortised but rather will be tested at least annually for
impairment. Intangibles with finite lives will continue to be amortised over
their useful lives but without any constraint of an arbitrary ceiling on the
life given to them.

The Company has adopted the provisions of FAS 142 effective January 1, 2002.
In connection with the adoption of FAS 142, the company has reclassified
approximately £12 million related to assembled workforce previously regarded as
an intangible asset into goodwill as it does not meet one of the FAS 141
criteria for recognition apart from goodwill. In accordance with FAS 142
goodwill has ceased to be amortised as of January 1, 2002. The company does not
have any intangible assets that would be classified as indefinite-lived under
FAS 142.

F-55



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

The Company has identified its two reporting units as its upstream and its
downstream business and has assigned £25 million and £10 million of goodwill to
its upstream and downstream reporting units respectively. The Company has
tested the goodwill at each reporting unit for impairment by comparing the fair
value of the reporting unit to its carrying value. If the fair value of the
reporting unit is less that its carrying value, then a goodwill impairment loss
will be recognised equal to the excess, if any, of the net carrying value of
the reporting units goodwill over its implied fair value. The implied fair
value of the reporting units goodwill would be the amount equal to the excess
of the estimated fair value of the reporting unit, over the amount that would
be allocated to the tangible and intangible net assets of the reporting unit
(including unrecognised intangible assets) as if such reporting unit had been
acquired in a purchase business combination as of the date of the impairment
testing.

The initial impairment test was carried out as at January 1, 2002, as required
under FAS 142. The results of this transitional test indicated that no
impairment was deemed to exist at January 1, 2002. This test was then updated
as at June 30, 2002 and again the results indicated that no impairment existed.
The annual review of impairment will take place as at June 30 each year.

A reconciliation of the US GAAP net income (loss) amounts reported in the
income statement for each of the three years ended December 31, 2002 to the
amounts that would have been reported under FAS 142 is presented below:

|                                          |  |                   |    |                   |  |                   |   |  |  |  |   | 
|----------------------------------------- |  | ----------------- | -- | ----------------- |  | ----------------- | - |  |  |  | - | 
|                                          |  | Year ended        |    | Year ended        |  | Year ended       
|                                          |  | December 31, 2000 |    | December 31, 2001 |  | December 31, 2002
|                                          |  | £'m               |    | £'m               |  | £'m              
|                                          |  |                   |    |                   |  |                  
|US GAAP net loss as reported              |  |                   | (6 | )                 |  |                   | 2 |  |  |  |  | 
|                                         
|                                         
|                                         
|                                         
|Amortisation of goodwill, net of tax      |  |                   | 2  |                   |  |                   | 2 |  |  |  |  | 
|                                         
|                                         
|                                         
|                                         
|Net income (loss) as adjusted for FAS 142 |  |                   | (4 | )                 |  |                   | 4 |  |  |  |  | 

Intangible asset carrying values and accumulated amortisation in total and by
each major class of intangible asset:

|                                      |  |                   |     |                 |  |                     |    |  |  |  |    | 
|------------------------------------- |  | ----------------- | --- | --------------- |  | ------------------- | -- |  |  |  | -- | 
|                                      |  |                   |     |                 |  | Accumulated         |    |  |  | 
|                                      |  | Gross Carrying    |     | amortisation as |  |                     |    | 
|                                      |  | value as at       |     | at December 31, |  | Weighted average   
|                                      |  | December 31, 2002 |     | 2002            |  | amortisation period
|                                      |  | £m                |     | £m              |  | Years              
|                                      |  |                   |     |                 |  |                    
|Amortised intangible assets           |  |                   |     |                 |  |                     |    |  |  |  |    | 
|                                     
|                                     
|                                     
|                                     
|Core and patented technology          |  |                   | 55  |                 |  |                     | 18 |  |  |  | 10 | 
|                                     
|                                     
|                                     
|                                     
|Trade names                           |  |                   | 7   |                 |  |                     | 1  |  |  |  | 20 | 
|                                     
|                                     
|                                     
|                                     
|Customer relationships                |  |                   | 21  |                 |  |                     | 3  |  |  |  | 20 | 
|                                     
|                                     
|                                     
|                                     
|Non-compete agreements                |  |                   | 26  |                 |  |                     | 17 |  |  |  | 5  | 
|                                      |  |                   |     |                 |  |                     |    |  |  |  |    | 
|Total amortised intangible assets     |  |                   | 109 |                 |  |                     | 39 |  |  |  |    | 
|                                     
|                                     
|                                     
|                                     
|Unamortised intangible assets         |  |                   |     |                 |  |                     |    |  |  |  |    | 
|                                     
|                                     
|                                     
|                                     
|Goodwill                              |  |                   | 45  |                 |  |                     | 5  |  |  |  |    | 
|                                      |  |                   |     |                 |  |                     |    |  |  |  |    | 
|Total intangible assets under US GAAP |  |                   | 154 |                 |  |                     | 44 |  |  |  |    | 
|                                      |  |                   |     |                 |  |                     |    |  |  |  |    | 

Amortisation expense for the year ended December 31, 2002 and estimated
aggregate amortisation expense for each of the five succeeding years;

|                                          |  |    |    | 
|----------------------------------------- |  | -- | -- | 
|                                          |  | £m
|                                          |  |   
|Aggregate amortisation expense:           |  |    |    | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2002      |  |    | 13 | 
|                                         
|                                         
|                                         
|                                         
|Estimated aggregate amortisation expense: |  |    |    | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2003      |  |    | 13 | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2004      |  |    | 12 | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2005      |  |    | 8  | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2006      |  |    | 8  | 
|                                         
|                                         
|                                         
|                                         
|For the year ended December 31, 2007      |  |    | 8  | 

There were no changes to the carrying value of goodwill during the year ended
December 31, 2002.

F-56



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)



| |  | 28 List of principal subsidiary companies included in the Lucite
International Group Holdings Limited consolidated financial statements at
December 31, 2002
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            |  |                            |  |            |     | 
|----------------------------------------------------------- |  | -------------------------- |  | ---------- | --- | 
|                                                            |  | County of incorporation or |  | Percentage
|                                                            |  | registration               |  | holding   
|                                                            |  |                            |  |           
|Lucite International Investment Limited                     |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holdings Limited                       |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Finance PLC                            |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Dutch Overseas Holdco BV               |  | Netherlands                |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Thai Poly Acrylic PLC                                       |  | Thailand                   |  |            | 59  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Japan Limited                          |  | Japan                      |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Finco Limited                          |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International France SAS                             |  | France                     |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Netherlands BV                         |  | Netherlands                |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holland BV                             |  | Netherlands                |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International UK Limited                             |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International, Inc.                                  |  | USA                        |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Mexico SA de C.V.                      |  | Mexico                     |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holdco Limited                         |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Canada, Inc.                           |  | Canada                     |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Trading Limited                        |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International UK Overseas Holdco1 Limited            |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnership Holdings Inc               |  | USA                        |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holdco Inc                             |  | USA                        |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnerco1 Limited                     |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnerco2 Limited                     |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Speciality Polymers and Resins Limited |  | UK                         |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International South Africa (Pty) Limited             |  | South Africa               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Asia Pacific Pte Limited               |  | Singapore                  |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Kaohsiung Monomer Company                                   |  | Taiwan                     |  |            | 60  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Alpha BV                               |  | Netherlands                |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Perspex Distribution Limited                                |  | UK                         |  |            | 100 | 

29 Controlling parties

The intermediate holding company of Lucite International Group Holdings
Limited is Lucite International Limited, a company registered in England. The
ultimate controlling party of Lucite International Group Holdings Limited are
funds managed by Charterhouse Development Capital Limited, 85 Watling Street,
London, EC4M 9BX.

F-57



---



##### Table of Contents



30 Supplemental consolidated financial statements

Lucite International Group Holdings and the wholly owned guarantor subsidiary
of Lucite International Group Holdings, Lucite International Investments
Limited jointly and severally, fully and unconditionally guarantee Lucite
International Finance plcs debt securities. Lucite International Holdings
Limited and Lucite International Holdco Limited have also guaranteed Lucite
International Finance plcs debt securities on a subordinated basis.

Presented below is consolidating information for Lucite International Finance
plc, the issuer of debt securities, its parent guarantor, Lucite International
Group Holdings Limited (carrying investments in subsidiaries at equity), Lucite
International Investments Limited, the wholly owned guarantor subsidiary of
Group Holdings Limited, Lucite International Holdings Limited and Lucite
International Holdco Limited the wholly owned subsidiaries of Lucite
International Investments Limited which have guaranteed the debt securities of
Lucite International Finance plc on a conditional basis.

The Company has not provided a reconciliation from UK GAAP for the columns
relating to the guarantor entities as such a reconciliation would not
materially affect an investors understanding of the nature of the guarantee.
The majority of the reconciling items between UK GAAP and US GAAP relate to
the operating activities of the non-guarantor subsidiaries and these amounts
would only affect the guarantors investment in subsidiaries and equity
earnings of subsidiaries.

F-58



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating balance sheets as at December 31, 2001

|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|------------------------------------------------------- |  | ------------------- | --- | ---------------- |  | ---------------- | ---- | ------------- |  | ------------ | --- | ------------------- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                                        |  |                     |     |                  |  | Issuer and       |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  | 
|                                                        |  | Lucite              |     | unconditional    |  | Subordinated     |      |               |  |              |     |                     |  |  |      |   |  | 
|                                                        |  | International Group |     | guarantor        |  | guarantor        |      | Non-guarantor |  |              |     |                     |  |  |      |  
|                                                        |  | Holdings Limited    |     | subsidiaries (1) |  | subsidiaries (2) |      | subsidiaries  |  | Eliminations |     | Consolidated totals
|                                                        |  | £'m                 |     | £'m              |  | £'m              |      | £'m           |  | £'m          |     | £'m                
|                                                        |  | as restated         |     | as restated      |  | as restated      |      | as restated   |  | as restated  |     | as restated        
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                    
|Fixed assets                                            |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets                                       |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 88   |   |  |  |     |   |  |  | 88   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Tangible assets                                         |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 390  |   |  |  |     |   |  |  | 390  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Investments                                             |  |                     | 152 |                  |  |                  | 158  |               |  |              | 115 |                     |  |  |     |   |  |  | (425 | ) |  |  |     |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                        |  |                     | 152 |                  |  |                  | 158  |               |  |              | 115 |                     |  |  | 478  |   |  |  | (425 | ) |  |  | 478  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Current assets                                          |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Stocks                                                  |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 69   |   |  |  |     |   |  |  | 69   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debtors                                                 |  |                     |    |                  |  |                  | 144  |               |  |              | 54  |                     |  |  | 96   |   |  |  | (198 | ) |  |  | 96   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Cash at bank and in
hand                                |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 20   |   |  |  |     |   |  |  | 20   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                        |  |                     |    |                  |  |                  | 144  |               |  |              | 54  |                     |  |  | 185  |   |  |  | (198 | ) |  |  | 185  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total assets                                            |  |                     | 152 |                  |  |                  | 302  |               |  |              | 169 |                     |  |  | 663  |   |  |  | (623 | ) |  |  | 663  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Creditors: amounts
falling due within
one year          |  |                     |    |                  |  |                  | (38  | )             |  |              | (17 | )                   |  |  | (135 | ) |  |  | 79   |   |  |  | (111 | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Net current assets/
(liabilities)                       |  |                     |    |                  |  |                  | 106  |               |  |              | 37  |                     |  |  | 50   |   |  |  | (119 | ) |  |  | 74   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total assets less
current liabilities                   |  |                     | 152 |                  |  |                  | 264  |               |  |              | 152 |                     |  |  | 528  |   |  |  | (544 | ) |  |  | 552  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Creditors: amounts
falling due after
more than one year |  |                     |    |                  |  |                  | (118 | )             |  |              |    |                     |  |  | (343 | ) |  |  | 125  |   |  |  | (336 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Provisions for
liabilities and
charges                  |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | (48  | ) |  |  |     |   |  |  | (48  | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Net assets                                              |  |                     | 152 |                  |  |                  | 146  |               |  |              | 152 |                     |  |  | 137  |   |  |  | (419 | ) |  |  | 168  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Shareholders equity                                    |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Called up equity
share capital                          |  |                     | 175 |                  |  |                  | 175  |               |  |              | 175 |                     |  |  | 143  |   |  |  | (493 | ) |  |  | 175  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Reserves                                                |  |                     | (23 | )                |  |                  | (29  | )             |  |              | (23 | )                   |  |  | (20  | ) |  |  | 74   |   |  |  | (21  | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total equity
shareholders funds                        |  |                     | 152 |                  |  |                  | 146  |               |  |              | 152 |                     |  |  | 123  |   |  |  | (419 | ) |  |  | 154  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity minority
interests                               |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 14   |   |  |  |     |   |  |  | 14   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Capital employed                                        |  |                     | 152 |                  |  |                  | 146  |               |  |              | 152 |                     |  |  | 137  |   |  |  | (419 | ) |  |  | 168  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.         
|--- |  | -----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and Lucite International Holdco Limited.
|   
|   
|   
|   
|(3) |  | The numbers in the table above have been restated for the effects of
FRS19 deferred taxation                   

F-59



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating balance sheets as at December 31, 2002

|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|------------------------------------------------------- |  | ------------------- | --- | ---------------- |  | ---------------- | ---- | ------------- |  | ------------ | --- | ------------------- |  |  | ---- | - |  |  | ---- | - |  |  | ---- | -
|                                                        |  |                     |     |                  |  | Issuer and       |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  | 
|                                                        |  | Lucite              |     | unconditional    |  | Subordinated     |      |               |  |              |     |                     |  |  |      |   |  | 
|                                                        |  | International Group |     | guarantor        |  | guarantor        |      | Non-guarantor |  |              |     |                     |  |  |      |  
|                                                        |  | Holdings Limited    |     | subsidiaries (1) |  | subsidiaries (2) |      | subsidiaries  |  | Eliminations |     | Consolidated totals
|                                                        |  | £'m                 |     | £'m              |  | £'m              |      | £'m           |  | £'m          |     | £'m                
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     | 
|Fixed assets                                            |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets                                       |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 83   |   |  |  |     |   |  |  | 83   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Tangible assets                                         |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 358  |   |  |  |     |   |  |  | 358  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Investments                                             |  |                     | 149 |                  |  |                  | 154  |               |  |              | 112 |                     |  |  |     |   |  |  | (415 | ) |  |  |     |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                        |  |                     | 149 |                  |  |                  | 154  |               |  |              | 112 |                     |  |  | 441  |   |  |  | (415 | ) |  |  | 441  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Current assets                                          |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Stocks                                                  |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 75   |   |  |  |     |   |  |  | 75   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debtors                                                 |  |                     |    |                  |  |                  | 166  |               |  |              | 54  |                     |  |  | 96   |   |  |  | (220 | ) |  |  | 96   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Cash at bank and in
hand                                |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 11   |   |  |  |     |   |  |  | 11   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                        |  |                     |    |                  |  |                  | 166  |               |  |              | 54  |                     |  |  | 182  |   |  |  | (220 | ) |  |  | 182  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total assets                                            |  |                     | 149 |                  |  |                  | 320  |               |  |              | 166 |                     |  |  | 623  |   |  |  | (635 | ) |  |  | 623  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Creditors: amounts
falling due within
one year          |  |                     |    |                  |  |                  | (52  | )             |  |              | (17 | )                   |  |  | (140 | ) |  |  | 90   |   |  |  | (119 | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Net current assets/
(liabilities)                       |  |                     |    |                  |  |                  | 114  |               |  |              | 37  |                     |  |  | 42   |   |  |  | (130 | ) |  |  | 63   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total assets less
current liabilities                   |  |                     | 149 |                  |  |                  | 268  |               |  |              | 149 |                     |  |  | 483  |   |  |  | (545 | ) |  |  | 504  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Creditors: amounts
falling due after
more than one year |  |                     |    |                  |  |                  | (126 | )             |  |              |    |                     |  |  | (334 | ) |  |  | 130  |   |  |  | (330 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Provisions for
liabilities and
charges                  |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | (32  | ) |  |  |     |   |  |  | (32  | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Net assets                                              |  |                     | 149 |                  |  |                  | 142  |               |  |              | 149 |                     |  |  | 117  |   |  |  | (415 | ) |  |  | 142  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Shareholders equity                                    |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Called up equity
share capital                          |  |                     | 175 |                  |  |                  | 175  |               |  |              | 175 |                     |  |  | 132  |   |  |  | (482 | ) |  |  | 175  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Reserves                                                |  |                     | (26 | )                |  |                  | (33  | )             |  |              | (26 | )                   |  |  | (27  | ) |  |  | 67   |   |  |  | (45  | )
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Total equity
shareholders funds                        |  |                     | 149 |                  |  |                  | 142  |               |  |              | 149 |                     |  |  | 105  |   |  |  | (415 | ) |  |  | 130  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity minority
interests                               |  |                     |    |                  |  |                  |     |               |  |              |    |                     |  |  | 12   |   |  |  |     |   |  |  | 12   |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  
|Capital employed                                        |  |                     | 149 |                  |  |                  | 142  |               |  |              | 149 |                     |  |  | 117  |   |  |  | (415 | ) |  |  | 142  |  
|                                                        |  |                     |     |                  |  |                  |      |               |  |              |     |                     |  |  |      |   |  |  |      |   |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.         
|--- |  | -----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and Lucite International Holdco Limited.

F-60



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating profit and loss accounts for the year to December
31, 2000

|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|-------------------------------------------------------------------------------------------------- |  | ------------------- | --- | ---------------- |  | ---------------- | --- | ------------- |  | ------------ | --- | ------------------- |  |  | ---- | - |  |  | -- |  |  |  | ---- | -
|                                                                                                   |  |                     |     |                  |  | Issuer and       |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  | 
|                                                                                                   |  | Lucite              |     | unconditional    |  | Subordinated     |     |               |  |              |     |                     |  |  |      |   |  | 
|                                                                                                   |  | International Group |     | guarantor        |  | guarantor        |     | Non-guarantor |  |              |     |                     |  |  |      |  
|                                                                                                   |  | Holdings Limited    |     | subsidiaries (1) |  | subsidiaries (2) |     | subsidiaries  |  | Eliminations |     | Consolidated totals
|                                                                                                   |  | £'m                 |     | £'m              |  | £'m              |     | £'m           |  | £'m          |     | £'m                
|                                                                                                   |  | as restated         |     | as restated      |  | as restated      |     | as restated   |  | as restated  |     | as restated        
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                    
|Turnover including share of
joint venture                                                          |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | 581  |   |  |  |   |  |  |  | 581  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Less: share of joint
ventures turnover                                                            |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (21  | ) |  |  |   |  |  |  | (21  | )
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|Group turnover                                                                                     |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | 560  |   |  |  |   |  |  |  | 560  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Operating costs before
exceptional operating
expenses and amortisation and
intangible fixed assets |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (525 | ) |  |  |   |  |  |  | (525 | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Exceptional operating expenses                                                                     |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (14  | ) |  |  |   |  |  |  | (14  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Amortisation of goodwill and
other intangible fixed assets                                         |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (5   | ) |  |  |   |  |  |  | (5   | )
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|Total operating costs                                                                              |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (544 | ) |  |  |   |  |  |  | (544 | )
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|Group operating profit                                                                             |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | 16   |   |  |  |   |  |  |  | 16   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Share of operating profit
from joint venture and
investments                                       |  |                     | (12 | )                |  |                  | (12 | )             |  |              | (12 | )                   |  |  | 2    |   |  |  | 36 |  |  |  | 2    |  
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|Operating profit including
joint venture                                                           |  |                     | (12 | )                |  |                  | (12 | )             |  |              | (12 | )                   |  |  | 18   |   |  |  | 36 |  |  |  | 18   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Net interest payable                                                                               |  |                     |    |                  |  |                  | (5  | )             |  |              | 2   |                     |  |  | (37  | ) |  |  |   |  |  |  | (40  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss on ordinary activities
before taxation                                                        |  |                     | (12 | )                |  |                  | (17 | )             |  |              | (10 | )                   |  |  | (19  | ) |  |  | 36 |  |  |  | (22  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Taxation on loss on ordinary
activities                                                            |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | 10   |   |  |  |   |  |  |  | 10   |  
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  
|Loss on ordinary activities
after taxation                                                         |  |                     | (12 | )                |  |                  | (17 | )             |  |              | (10 | )                   |  |  | (9   | ) |  |  | 36 |  |  |  | (12  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Equity minority interests                                                                          |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |     |   |  |  |   |  |  |  |     |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss for the financial period                                                                      |  |                     | (12 | )                |  |                  | (17 | )             |  |              | (10 | )                   |  |  | (9   | ) |  |  | 36 |  |  |  | (12  | )
|                                                                                                   |  |                     |     |                  |  |                  |     |               |  |              |     |                     |  |  |      |   |  |  |    |  |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.         
|--- |  | -----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and Lucite International Holdco Limited.
|   
|   
|   
|   
|(3) |  | The numbers in the table above have been restated for the effects of
FRS19 deferred taxation                   

F-61



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating profit and loss accounts for the year to December
31, 2001

|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|-------------------------------------------------------------------------------------------------- |  | ------------------- | -- | ---------------- |  | ---------------- | -- | ------------- |  | ------------ | -- | ------------------- |  |  | ---- | - |  |  | - |  |  |  | ---- | -
|                                                                                                   |  |                     |    |                  |  | Issuer and       |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  | 
|                                                                                                   |  | Lucite              |    | unconditional    |  | Subordinated     |    |               |  |              |    |                     |  |  |      |   |  | 
|                                                                                                   |  | International Group |    | guarantor        |  | guarantor        |    | Non-guarantor |  |              |    |                     |  |  |      |  
|                                                                                                   |  | Holdings Limited    |    | subsidiaries (1) |  | subsidiaries (2) |    | subsidiaries  |  | Eliminations |    | Consolidated totals
|                                                                                                   |  | £'m                 |    | £'m              |  | £'m              |    | £'m           |  | £'m          |    | £'m                
|                                                                                                   |  | as restated         |    | as restated      |  | as restated      |    | as restated   |  | as restated  |    | as restated        
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                    
|Turnover including share of
joint venture                                                          |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 589  |   |  |  |  |  |  |  | 589  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Less: share of joint
ventures turnover                                                            |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (12  | ) |  |  |  |  |  |  | (12  | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Group turnover                                                                                     |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | 577  |   |  |  |   |  |  |  | (577 | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Operating costs before
exceptional operating
expenses and amortisation
and intangible fixed assets |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (550 | ) |  |  |  |  |  |  | (550 | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Exceptional operating
expenses                                                                     |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (4   | ) |  |  |  |  |  |  | (4   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Amortisation of goodwill and
other intangible fixed
assets                                         |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (5   | ) |  |  |  |  |  |  | (5   | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Total operating costs                                                                              |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (559 | ) |  |  |  |  |  |  | (559 | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Group operating profit                                                                             |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 18   |   |  |  |  |  |  |  | 18   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Share of operating profit
from joint venture and
investments                                       |  |                     | (3 | )                |  |                  | (3 | )             |  |              | (3 | )                   |  |  | 2    |   |  |  | 9 |  |  |  | 2    |  
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Operating profit including
joint venture                                                           |  |                     | (3 | )                |  |                  | (3 | )             |  |              | (3 | )                   |  |  | 20   |   |  |  | 9 |  |  |  | 20   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Net interest payable                                                                               |  |                     |   |                  |  |                  | (1 | )             |  |              |   |                     |  |  | (27  | ) |  |  |  |  |  |  | (28  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss on ordinary activities
before taxation                                                        |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | (7   | ) |  |  | 9 |  |  |  | (8   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Taxation on loss on ordinary
activities                                                            |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 6    |   |  |  |  |  |  |  | 6    |  
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Loss on ordinary activities
after taxation                                                         |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | (1   | ) |  |  | 9 |  |  |  | (2   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Equity minority interests                                                                          |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (1   | ) |  |  |  |  |  |  | (1   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss for the financial period                                                                      |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | (2   | ) |  |  | 9 |  |  |  | (3   | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.         
|--- |  | -----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and Lucite International Holdco Limited.
|   
|   
|   
|   
|(3) |  | The numbers in the table above have been restated for the effects of
FRS19 deferred tax.                       

F-62



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating profit and loss accounts for the year to December
31, 2002

|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|-------------------------------------------------------------------------------------------------- |  | ------------------- | -- | ---------------- |  | ---------------- | -- | ------------- |  | ------------ | -- | ------------------- |  |  | ---- | - |  |  | - |  |  |  | ---- | -
|                                                                                                   |  |                     |    |                  |  | Issuer and       |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  | 
|                                                                                                   |  | Lucite              |    | unconditional    |  | Subordinated     |    |               |  |              |    |                     |  |  |      |   |  | 
|                                                                                                   |  | International Group |    | guarantor        |  | guarantor        |    | Non-guarantor |  |              |    |                     |  |  |      |  
|                                                                                                   |  | Holdings Limited    |    | subsidiaries (1) |  | subsidiaries (2) |    | subsidiaries  |  | Eliminations |    | Consolidated totals
|                                                                                                   |  | £'m                 |    | £'m              |  | £'m              |    | £'m           |  | £'m          |    | £'m                
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                    
|Turnover                                                                                           |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 582  |   |  |  |  |  |  |  | 582  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Operating costs before
exceptional operating
expenses and amortisation
and intangible fixed assets |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (550 | ) |  |  |  |  |  |  | 550  |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Amortisation of goodwill and
other intangible fixed
assets                                         |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (5   | ) |  |  |  |  |  |  | (5   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Total operating costs                                                                              |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  | (555 | ) |  |  |   |  |  |  | (555 | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Group operating profit                                                                             |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 27   |   |  |  |  |  |  |  | 27   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Share of operating profit
from investments                                                         |  |                     | (3 | )                |  |                  | (3 | )             |  |              | (3 | )                   |  |  |     |   |  |  | 9 |  |  |  |     |  
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Operating profit including
joint venture                                                           |  |                     | (3 | )                |  |                  | (3 | )             |  |              | (3 | )                   |  |  | 27   |   |  |  | 9 |  |  |  | 27   |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Net interest payable                                                                               |  |                     |   |                  |  |                  | (1 | )             |  |              |   |                     |  |  | (28  | ) |  |  |  |  |  |  | (29  | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss on ordinary activities
before taxation                                                        |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | (1   | ) |  |  | 9 |  |  |  | (2   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Taxation on loss on ordinary
activities                                                            |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | 2    |   |  |  |  |  |  |  | 2    |  
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  
|Loss on ordinary activities
after taxation                                                         |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | 1    |   |  |  | 9 |  |  |  |     |  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Equity minority interests                                                                          |  |                     |   |                  |  |                  |   |               |  |              |   |                     |  |  | (3   | ) |  |  |  |  |  |  | (3   | )
|                                                                                                  
|                                                                                                  
|                                                                                                  
|                                                                                                  
|Loss for the financial period                                                                      |  |                     | (3 | )                |  |                  | (4 | )             |  |              | (3 | )                   |  |  | (2   | ) |  |  | 9 |  |  |  | (3   | )
|                                                                                                   |  |                     |    |                  |  |                  |    |               |  |              |    |                     |  |  |      |   |  |  |   |  |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.         
|--- |  | -----------------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and Lucite International Holdco Limited.

F-63



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating cash flow statements for the year to December 31,
2000

|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|---------------------------------------------- |  | ------------------- | - | ---------------- |  | ---------------- | ---- | ------------- |  | ------------ | --- | ------------------- |  |  | --- | - |  |  | -- | - |  |  | ---- | -
|                                               |  |                     |   |                  |  | Issuer and       |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  | 
|                                               |  | Lucite              |   | unconditional    |  | Subordinated     |      |               |  |              |     |                     |  |  |     |   |  | 
|                                               |  | International Group |   | guarantor        |  | guarantor        |      | Non-guarantor |  |              |     |                     |  |  |     |  
|                                               |  | Holdings Limited    |   | subsidiaries (1) |  | subsidiaries (2) |      | subsidiaries  |  | Eliminations |     | Consolidated totals
|                                               |  | £'m                 |   | £'m              |  | £'m              |      | £'m           |  | £'m          |     | £'m                
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                    
|Cash flow from operating
activities            |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | 56  |   |  |  |   |   |  |  | 56   |  
|                                              
|                                              
|                                              
|                                              
|Returns on investment and
servicing of finance |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  |    |   |  |  |   |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Net external interest paid                     |  |                     |  |                  |  |                  | (13  | )             |  |              |    |                     |  |  | (16 | ) |  |  |   |   |  |  | (29  | )
|                                              
|                                              
|                                              
|                                              
|Inter-group interest paid                      |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (7  | ) |  |  | 7  |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Inter-group interest received                  |  |                     |  |                  |  |                  | 7    |               |  |              |    |                     |  |  |    |   |  |  | (7 | ) |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Taxation                                       |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (1  | ) |  |  |   |   |  |  | (1   | )
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|                                               |  |                     |  |                  |  |                  | (6   | )             |  |              |    |                     |  |  | 32  |   |  |  |   |   |  |  | 26   |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure and
financial investment:  |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|                                              
|                                              
|                                              
|                                              
|Acquisitions and disposals:                    |  |                     |  |                  |  |                  |     |               |  |              | (4  | )                   |  |  | (24 | ) |  |  |   |   |  |  | (28  | )
|                                              
|                                              
|                                              
|                                              
|Capital expenditure                            |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (28 | ) |  |  |   |   |  |  | (28  | )
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|                                               |  |                     |  |                  |  |                  | (6   | )             |  |              | (4  | )                   |  |  | (20 | ) |  |  |   |   |  |  | (30  | )
|                                              
|                                              
|                                              
|                                              
|Cash payments against
provisions               |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (11 | ) |  |  |   |   |  |  | (11  | )
|                                              
|                                              
|                                              
|                                              
|Financing                                      |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|                                              
|                                              
|                                              
|                                              
|Revolver drawdown                              |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | 32  |   |  |  |   |   |  |  | 32   |  
|                                              
|                                              
|                                              
|                                              
|Issuance of notes                              |  |                     |  |                  |  |                  | 113  |               |  |              |    |                     |  |  |    |   |  |  |   |   |  |  | 113  |  
|                                              
|                                              
|                                              
|                                              
|Reimbursement of Bridge loan                   |  |                     |  |                  |  |                  | (121 | )             |  |              |    |                     |  |  |    |   |  |  |   |   |  |  | (121 | )
|                                              
|                                              
|                                              
|                                              
|Forward exchange contracts                     |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (10 | ) |  |  |   |   |  |  | (10  | )
|                                              
|                                              
|                                              
|                                              
|Senior reimbursement                           |  |                     |  |                  |  |                  |     |               |  |              |    |                     |  |  | (4  | ) |  |  |   |   |  |  | (4   | )
|                                              
|                                              
|                                              
|                                              
|Intra-group loans issued                       |  |                     |  |                  |  |                  | (1   | )             |  |              | 1   |                     |  |  |    |   |  |  |   |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Intra-group current account                    |  |                     |  |                  |  |                  | 20   |               |  |              | (4  | )                   |  |  | (16 | ) |  |  |   |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Issue costs paid                               |  |                     |  |                  |  |                  | (5   | )             |  |              | (3  | )                   |  |  |    |   |  |  |   |   |  |  | (8   | )
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|                                               |  |                     |  |                  |  |                  | 6    |               |  |              | (6  | )                   |  |  | 2   |   |  |  |   |   |  |  | 2    |  
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  
|Increase in cash                               |  |                     |  |                  |  |                  |     |               |  |              | (10 | )                   |  |  | (29 | ) |  |  |   |   |  |  | (39  | )
|                                               |  |                     |   |                  |  |                  |      |               |  |              |     |                     |  |  |     |   |  |  |    |   |  |  |      |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.
|--- |  | --------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and US Acrylics Holdco Limited.

F-64



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating cash flow statements for the year to December 31,
2001

|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|---------------------------------------------- |  | ------------------- | - | ---------------- |  | ---------------- | --- | ------------- |  | ------------ | - | ------------------- |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                                               |  |                     |   |                  |  | Issuer and       |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  | 
|                                               |  | Lucite              |   | unconditional    |  | Subordinated     |     |               |  |              |   |                     |  |  |     |   |  | 
|                                               |  | International Group |   | guarantor        |  | guarantor        |     | Non-guarantor |  |              |   |                     |  |  |     |  
|                                               |  | Holdings Limited    |   | subsidiaries (1) |  | subsidiaries (2) |     | subsidiaries  |  | Eliminations |   | Consolidated totals
|                                               |  | £'m                 |   | £'m              |  | £'m              |     | £'m           |  | £'m          |   | £'m                
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                    
|Cash flow from operating
activities            |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | 83  |   |  |  |    |   |  |  | 83  |  
|                                              
|                                              
|                                              
|                                              
|Returns on investment and
servicing of finance |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Net external interest paid                     |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | (33 | ) |  |  | 13  |   |  |  | (33 | )
|                                              
|                                              
|                                              
|                                              
|Inter-group interest paid                      |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Inter-group interest received                  |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Taxation                                       |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (3  | ) |  |  |    |   |  |  | (3  | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | 47  |   |  |  | 13  |   |  |  | 47  |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure and
financial investment:  |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Acquisitions and disposals:                    |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | 4   |   |  |  |    |   |  |  | 4   |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure                            |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (26 | ) |  |  |    |   |  |  | (26 | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | 25  |   |  |  | 13  |   |  |  | 25  |  
|                                              
|                                              
|                                              
|                                              
|Financing                                      |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Revolver drawdown                              |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (10 | ) |  |  |    |   |  |  | (10 | )
|                                              
|                                              
|                                              
|                                              
|Senior
reimbursement                           |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (13 | ) |  |  |    |   |  |  | (13 | )
|                                              
|                                              
|                                              
|                                              
|Intra-group loans issued                       |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Intra-group current account                    |  |                     |  |                  |  |                  | 13  |               |  |              |  |                     |  |  |    |   |  |  | (13 | ) |  |  |    |  
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|                                               |  |                     |  |                  |  |                  | 13  |               |  |              |  |                     |  |  | (23 | ) |  |  | (13 | ) |  |  | (23 | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|Increase in cash                               |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | 2   |   |  |  |    |   |  |  | 2   |  
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.
|--- |  | --------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and US Acrylics Holdco Limited.

F-65



---



##### Table of Contents



LUCITE INTERNATIONAL GROUP HOLDINGS LIMITED
NOTES TO THE FINANCIAL STATEMENTS -(Continued)

Supplemental consolidating cash flow statements for the year to December 31,2002

|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|---------------------------------------------- |  | ------------------- | - | ---------------- |  | ---------------- | --- | ------------- |  | ------------ | - | ------------------- |  |  | --- | - |  |  | --- | - |  |  | --- | -
|                                               |  |                     |   |                  |  | Issuer and       |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  | 
|                                               |  | Lucite              |   | unconditional    |  | Subordinated     |     |               |  |              |   |                     |  |  |     |   |  | 
|                                               |  | International Group |   | guarantor        |  | guarantor        |     | Non-guarantor |  |              |   |                     |  |  |     |  
|                                               |  | Holdings Limited    |   | subsidiaries (1) |  | subsidiaries (2) |     | subsidiaries  |  | Eliminations |   | Consolidated totals
|                                               |  | £'m                 |   | £'m              |  | £'m              |     | £'m           |  | £'m          |   | £'m                
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                    
|Cash flow from operating
activities            |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | 57  |   |  |  |    |   |  |  | 57  |  
|                                              
|                                              
|                                              
|                                              
|Returns on investment and
servicing of finance |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Net external interest paid                     |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | (28 | ) |  |  | 13  |   |  |  | (28 | )
|                                              
|                                              
|                                              
|                                              
|Inter-group interest paid                      |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Inter-group interest received                  |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Taxation                                       |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (4  | ) |  |  |    |   |  |  | (4  | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | 25  |   |  |  | 13  |   |  |  | 25  |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure and
financial investment:  |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Acquisitions and disposals:                    |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure                            |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (28 | ) |  |  |    |   |  |  | (28 | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                     |  |                  |  |                  | (13 | )             |  |              |  |                     |  |  | (3  | ) |  |  | 13  |   |  |  | (3  | )
|                                              
|                                              
|                                              
|                                              
|Financing                                      |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Revolver drawdown                              |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | 15  |   |  |  |    |   |  |  | 15  |  
|                                              
|                                              
|                                              
|                                              
|Senior reimbursement                           |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (20 | ) |  |  |    |   |  |  | (20 | )
|                                              
|                                              
|                                              
|                                              
|Intra-group loans issued                       |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  |    |   |  |  |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Intra-group current account                    |  |                     |  |                  |  |                  | 13  |               |  |              |  |                     |  |  |    |   |  |  | (13 | ) |  |  |    |  
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|                                               |  |                     |  |                  |  |                  | 13  |               |  |              |  |                     |  |  | (5  | ) |  |  | (13 | ) |  |  | (5  | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  
|Increase in cash                               |  |                     |  |                  |  |                  |    |               |  |              |  |                     |  |  | (8  | ) |  |  |    |   |  |  | (8  | )
|                                               |  |                     |   |                  |  |                  |     |               |  |              |   |                     |  |  |     |   |  |  |     |   |  |  |     |  



---

|(1) |  | Unconditional Guarantor subsidiaries consist of the Issuer and Lucite
International Investments Limited.
|--- |  | --------------------------------------------------------------------------------------------------------
|   
|   
|   
|   
|(2) |  | Subordinated Guarantors consist of Lucite International Holdings Limited
and US Acrylics Holdco Limited.

F-66



---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Lucite International Holdings
Limited

We have audited the accompanying consolidated balance sheets of Lucite
International Holdings Limited (the Company) as of December 31, 2002 and
2001, and the related consolidated profit and loss accounts, cash flow
statements, total recognised gains and losses and reconciliation of movements
in shareholders funds for each of the three years ended December 31, 2002.
These financial statements are the responsibility of the Companys management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years ended December 31, 2002, in conformity with
accounting principles generally accepted in the United Kingdom.

As discussed on page F-72 to the financial statements, the Company changed its
method of accounting for deferred taxation in 2002.

Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected
results of operations for each of the three years ended December 31, 2002 and
consolidated shareholders funds at December 31, 2002, 2001, to the extent
summarised in Note 27 to the financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants
London, England
April 11, 2003

F-67



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  
|------------------------------------------------------------------------------------------------- |  | ----- | --- | ------------ |  | ------------ | ---- | ------------ |  | ---------- | ---- | - |  |  | ---- | -
|                                                                                                  |  |       |     |              |  | Year ended   |      | Year ended   |  | Year ended
|                                                                                                  |  | Notes |     | December 31, |  | December 31, |      | December 31,
|                                                                                                  |  |       |     | 2000         |  | 2001         |      | 2002        
|                                                                                                  |  |       |     | £'m          |  | £'m          |      | £'m         
|                                                                                                  |  |       |     | as restated  |  | as restated  |      |             
|                                                                                                  |  |       |     |              |  |              |      |             
|Turnover including share of joint venture                                                         |  |       |     |              |  |              | 581  |              |  |            | 589  |   |  |  | 582  |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Less: share of joint ventures turnover                                                           |  |       |     |              |  |              | (21  | )            |  |            | (12  | ) |  |  |     |  
|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  
|Group turnover                                                                                    |  |       | 4,5 |              |  |              | 560  |              |  |            | 577  |   |  |  | 582  |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Operating costs before exceptional
operating expenses and amortisation of
intangible fixed assets |  |       |     |              |  |              | (525 | )            |  |            | (550 | ) |  |  | (550 | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Exceptional operating expenses                                                                    |  |       | 6   |              |  |              | (14  | )            |  |            | (4   | ) |  |  |     |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Amortisation of goodwill and other
intangible fixed assets                                        |  |       | 10  |              |  |              | (5   | )            |  |            | (5   | ) |  |  | (5   | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Total operating costs                                                                             |  |       |     |              |  |              | (544 | )            |  |            | (559 | ) |  |  | (555 | )
|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  
|Group operating profit                                                                            |  |       | 4.5 |              |  |              | 16   |              |  |            | 18   |   |  |  | 27   |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Share of operating profit from joint
venture                                                      |  |       |     |              |  |              | 2    |              |  |            | 2    |   |  |  |     |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Operating profit including joint venture                                                          |  |       |     |              |  |              | 18   |              |  |            | 20   |   |  |  | 27   |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Net interest payable                                                                              |  |       | 8   |              |  |              | (40  | )            |  |            | (28  | ) |  |  | (29  | )
|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  
|Loss on ordinary activities before
taxation                                                       |  |       | 6   |              |  |              | (22  | )            |  |            | (8   | ) |  |  | (2   | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Taxation on loss on ordinary activities                                                           |  |       | 9   |              |  |              | 10   |              |  |            | 6    |   |  |  | 2    |  
|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  
|Loss on ordinary activities after taxation                                                        |  |       |     |              |  |              | (12  | )            |  |            | (2   | ) |  |  |     |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Equity minority interests                                                                         |  |       |     |              |  |              |     |              |  |            | (1   | ) |  |  | (3   | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Loss for the financial year                                                                       |  |       |     |              |  |              | (12  | )            |  |            | (3   | ) |  |  | (3   | )
|                                                                                                  |  |       |     |              |  |              |      |              |  |            |      |   |  |  |      |  

Group turnover and group operating profit relate entirely to continuing operations.

The accompanying notes are an integral part of these financial statements.

F-68



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|-------------------------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | -- | - |  |  | --- | -
|                                                                     |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                     |  | December 31, |     | December 31, |  | December 31,
|                                                                     |  | 2000         |     | 2001         |  | 2002        
|                                                                     |  | £'m          |     | £'m          |  | £'m         
|                                                                     |  | as restated  |     | as restated  |  |             
|                                                                     |  |              |     |              |  |             
|Loss for the financial year                                          |  |              | (12 | )            |  |              | (3 | ) |  |  | (3  | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Currency translation differences on foreign
currency net investments |  |              |    |              |  |              | 2  |   |  |  | (21 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Total recognised losses relating to the
year/period                  |  |              | (12 | )            |  |              | (1 | ) |  |  | (24 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Prior year adjustment for deferred tax (page
F-72)                   |  |              |     |              |  |              |    |   |  |  | 5   |  
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Total gains and losses recognised since last
annual report           |  |              |     |              |  |              |    |   |  |  | (19 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  

The accompanying notes are an integral part of these financial statements.

F-69



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2002 AND 2001

|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|------------------------------------------------------- |  | ----- | -- | ----------- |  | ---- | ---- | - |  |  | ---- | -
|                                                        |  |       |    |             |  | 2001 |      |   |  | 
|                                                        |  | Notes |    | as restated |  | 2002
|                                                        |  |       |    | £'m         |  | £m  
|                                                        |  |       |    |             |  |     
|Fixed assets                                            |  |       |    |             |  |      |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets                                       |  |       | 10 |             |  |      | 94   |   |  |  | 89   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Negative goodwill                                       |  |       | 10 |             |  |      | (6   | ) |  |  | (6   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Tangible assets                                         |  |       | 11 |             |  |      | 390  |   |  |  | 358  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|                                                        |  |       |    |             |  |      | 478  |   |  |  | 441  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Current assets                                          |  |       |    |             |  |      |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Stocks                                                  |  |       | 12 |             |  |      | 69   |   |  |  | 75   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debtors                                                 |  |       | 13 |             |  |      | 96   |   |  |  | 96   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Cash at bank and in hand                                |  |       |    |             |  |      | 20   |   |  |  | 11   |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|                                                        |  |       |    |             |  |      | 185  |   |  |  | 182  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Total assets                                            |  |       |    |             |  |      | 663  |   |  |  | 623  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Creditors: amounts falling due within one year          |  |       | 14 |             |  |      | (111 | ) |  |  | (119 | )
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Net current assets                                      |  |       |    |             |  |      | 74   |   |  |  | 63   |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Total assets less current liabilities                   |  |       |    |             |  |      | 552  |   |  |  | 504  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Creditors: amounts falling due after more than
one year |  |       | 15 |             |  |      | (336 | ) |  |  | (330 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Provisions for liabilities and charges                  |  |       | 18 |             |  |      | (48  | ) |  |  | (32  | )
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Net assets                                              |  |       |    |             |  |      | 168  |   |  |  | 142  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Shareholders equity                                    |  |       |    |             |  |      |      |   |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Called up equity share capital                          |  |       | 19 |             |  |      | 175  |   |  |  | 175  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Profit and loss account                                 |  |       |    |             |  |      | (21  | ) |  |  | (45  | )
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Total equity shareholders funds                        |  |       |    |             |  |      | 154  |   |  |  | 130  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity minority interests                               |  |       |    |             |  |      | 14   |   |  |  | 12   |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  
|Capital employed                                        |  |       |    |             |  |      | 168  |   |  |  | 142  |  
|                                                        |  |       |    |             |  |      |      |   |  |  |      |  

The accompanying notes are an integral part of these financial statements.

F-70



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

CASH FLOW STATEMENT

|                                               |  |       |    |              |  |              |     |              |  |            |     |   |  |  |     |  
|---------------------------------------------- |  | ----- | -- | ------------ |  | ------------ | --- | ------------ |  | ---------- | --- | - |  |  | --- | -
|                                               |  |       |    |              |  | Year ended   |     | Year ended   |  | Year ended
|                                               |  | Notes |    | December 31, |  | December 31, |     | December 31,
|                                               |  |       |    | 2000         |  | 2001         |     | 2002        
|                                               |  |       |    |              |  |              |     |             
|                                               |  |       |    |              |  | £m          |     | £m          |  | £m       
|Cash flow from operating activities            |  |       | 21 | (a)          |  |              | 56  |              |  |            | 83  |   |  |  | 57  |  
|                                              
|                                              
|                                              
|                                              
|Return on investments and servicing
of
Finance |  |       | 21 | (b)          |  |              | (29 | )            |  |            | (33 | ) |  |  | (28 | )
|                                              
|                                              
|                                              
|                                              
|Taxation                                       |  |       |    |              |  |              | (1  | )            |  |            | (3  | ) |  |  | (4  | )
|                                               |  |       |    |              |  |              |     |              |  |            |     |   |  |  |     |  
|                                               |  |       |    |              |  |              | 26  |              |  |            | 47  |   |  |  | 25  |  
|                                              
|                                              
|                                              
|                                              
|Capital expenditure and financial
investment   |  |       | 21 | (c)          |  |              | (28 | )            |  |            | (26 | ) |  |  | (28 | )
|                                              
|                                              
|                                              
|                                              
|Acquisitions and disposals                     |  |       | 21 | (d)          |  |              |     |              |  |            |     |   |  |  |     |  
|                                              
|                                              
|                                              
|                                              
|Acquisition of ICI Acrylics                    |  |       |    |              |  |              | (9  | )            |  |            | (1  | ) |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Other acquisition                              |  |       |    |              |  |              | (20 | )            |  |            | 5   |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Proceeds from sale of business                 |  |       |    |              |  |              | 1   |              |  |            |    |   |  |  |    |  
|                                              
|                                              
|                                              
|                                              
|Cash payments against provisions               |  |       |    |              |  |              | (11 | )            |  |            |    |   |  |  |    |  
|                                               |  |       |    |              |  |              |     |              |  |            |     |   |  |  |     |  
|                                               |  |       |    |              |  |              | (41 | )            |  |            | 25  |   |  |  | (3  | )
|                                              
|                                              
|                                              
|                                              
|Financing                                      |  |       | 21 | (e)          |  |              | 2   |              |  |            | (23 | ) |  |  | (5  | )
|                                               |  |       |    |              |  |              |     |              |  |            |     |   |  |  |     |  
|Increase / (decrease) in cash                  |  |       | 21 | (f)          |  |              | (39 | )            |  |            | 2   |   |  |  | (8  | )
|                                               |  |       |    |              |  |              |     |              |  |            |     |   |  |  |     |  

The accompanying notes are an integral part of these financial statements.

F-71



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

RECONCILIATION OF MOVEMENTS IN EQUITY SHAREHOLDERS FUNDS

|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|------------------------------------ |  | ------- | --- | ------------ |  | ----------- | --- | - |  |  | --- | -
|                                     |  | Share   |     | Profit and   |  |             |     |  
|                                     |  | capital |     | loss account |  | Total      
|                                     |  | £'m     |     | £'m          |  | £'m        
|                                     |  |         |     | as restated  |  | as restated
|                                     |  |         |     |              |  |            
|Balance at December 31, 1999         |  |         | 175 |              |  |             | (8  | ) |  |  | 167 |  
|                                    
|                                    
|                                    
|                                    
|Retained loss for the financial year |  |         |    |              |  |             | (12 | ) |  |  | (12 | )
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2000      |  |         | 175 |              |  |             | (20 | ) |  |  | 155 |  
|                                    
|                                    
|                                    
|                                    
|Retained loss for the financial year |  |         |    |              |  |             | (3  | ) |  |  | (3  | )
|                                    
|                                    
|                                    
|                                    
|Currency translation adjustment      |  |         |    |              |  |             | 2   |   |  |  | 2   |  
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2001      |  |         | 175 |              |  |             | (21 | ) |  |  | 154 |  
|                                    
|                                    
|                                    
|                                    
|Retained loss for the financial year |  |         |    |              |  |             | (3  | ) |  |  | (3  | )
|                                    
|                                    
|                                    
|                                    
|Currency translation adjustment      |  |         |    |              |  |             | (21 | ) |  |  | (21 | )
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2002      |  |         | 175 |              |  |             | (45 | ) |  |  | 130 |  
|                                     |  |         |     |              |  |             |     |   |  |  |     |  

There are no significant statutory or contractual restrictions on the
distribution of current year income of subsidiary undertakings. Undistributed
profits are, in the main, employed in the business of these companies. The
undistributed income of the business overseas may be liable to overseas taxes
and/or United Kingdom taxation, after allowing for double taxation relief, if
they were to be distributed as dividends.

The cumulative exchange gains and losses on the translation of foreign currency
financial statements into pounds sterling are taken into account in the above
reconciliation of movements in combined net investment and consolidated
shareholders funds.

Changes to accounting policies

The company has adopted FRS19 Deferred Tax in these financial statements.
The adoption of this standard represents a change in accounting policy and the
comparative figures have been restated accordingly. The impact of this change
in accounting policy is to reduce the provision for deferred tax at December
31, 2000 by approximately £2 million and as at December 31, 2001 by a further
£3 million, due to the recognition of certain losses within the United States
that are anticipated to be recoverable.

A prior year adjustment has been made to the 2000 and 2001 figures as a result
of the adoption of FRS19 deferred tax. The amounts as previously stated
before the prior year adjustment, are set out below:

|                                |  |               |     |                         |  |       |     |   |  |  |     |  
|------------------------------- |  | ------------- | --- | ----------------------- |  | ----- | --- | - |  |  | --- | -
|                                |  | Share capital |     | Profit and loss account |  | Total
|                                |  | £m           |     | £m                     |  | £m  
|                                |  |               |     |                         |  |       |     |   |  |  |     |  
|Balance at December 31, 1999    |  |               | 175 |                         |  |       | (8  | ) |  |  | 167 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |                         |  |       | (14 | ) |  |  | (14 | )
|                                |  |               |     |                         |  |       |     |   |  |  |     |  
|Balance at December 31, 2000    |  |               | 175 |                         |  |       | (22 | ) |  |  | 153 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |               |    |                         |  |       | (6  | ) |  |  | (6  | )
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |               |    |                         |  |       | 2   |   |  |  | 2   |  
|                                |  |               |     |                         |  |       |     |   |  |  |     |  
|Balance at December 31, 2001    |  |               | 175 |                         |  |       | (26 | ) |  |  | 149 |  
|                                |  |               |     |                         |  |       |     |   |  |  |     |  

F-72



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1.    BUSINESS DESCRIPTION

Lucite International Holdings Limited (the Company) is a wholly owned
subsidiary of Lucite International Investment Limited and Lucite International
Investment Limited is a wholly owned subsidiary of Lucite International Group
Holdings Limited. The separate financial statements of the Company have been
included since the Company has guaranteed the 10.25% Senior Notes of its parent
companies on a subordinated basis. The consolidated financial statements of
Lucite International Group Holdings Limited are included on pages F-2 to F-57.
The parent companies of the Company, Lucite International Investment Limited
and Lucite International Group Holdings Limited have no operations, assets, or
liabilities of their own other than investments in subsidiaries. As a result,
the financial statement footnotes 2 through 29 of Lucite International Group
Holdings Limited as presented on pages F-8 through F-57 are equally applicable
to the Company as are references to Lucite International Group Holdings
Limited in those footnotes.

Lucite International Holdings Limited and subsidiary companies are engaged in
the production and distribution of methacrylate monomers, the principal
building block of acrylic, and the production and distribution of acrylic based
polymers, resins, sheet and composites. These products are manufactured at
facilities located in the Americas, Europe and Asia and are sold throughout the
world.

As discussed above, for all financial statement footnotes listed below, please
refer to the respective footnote contained in the financial statements of
Lucite International Group Holdings Limited which are contained on pages F-2 to
F-56.



|1  |  | PRINCIPAL ACCOUNTING POLICIES                                              
|-- |  | ---------------------------------------------------------------------------
|  
|2  |  | BUSINESS DESCRIPTION                                                       
|  
|3  |  | SEGMENTAL REPORTING                                                        
|  
|4  |  | COST OF SALES, GROSS PROFIT, DISTRIBUTION COSTS AND ADMINISTRATIVE
EXPENSES
|  
|5  |  | EXCEPTIONAL OPERATING EXPENSES                                             
|  
|6  |  | LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                                
|  
|7  |  | STAFF COSTS                                                                
|  
|8  |  | NET INTEREST PAYABLE                                                       
|  
|9  |  | TAXATION ON LOSS ON ORDINARY ACTIVITIES                                    
|  
|10 |  | INTANGIBLE FIXED ASSETS                                                    
|  
|11 |  | TANGIBLE FIXED ASSETS                                                      
|  
|12 |  | STOCKS                                                                     
|  
|13 |  | DEBTORS                                                                    
|  
|14 |  | CREDITORS-AMOUNTS FALLING DUE WITHIN ONE YEAR                              
|  
|15 |  | CREDITORS-AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR                     
|  
|16 |  | BANK AND OTHER BORROWINGS                                                  
|  
|17 |  | FINANCE LEASES                                                             
|  
|18 |  | PROVISIONS FOR LIABILITIES AND CHARGES                                     
|  
|19 |  | CALLED UP EQUITY SHARE CAPITAL                                             
|  
|20 |  | FINANCIAL INSTRUMENTS                                                      
|  
|21 |  | NOTES TO THE CASH FLOW STATEMENTS                                          
|  
|22 |  | PENSIONS AND OTHER POST RETIREMENT BENEFITS                                
|  
|23 |  | RELATED PARTY TRANSACTIONS                                                 
|  
|24 |  | FINANCIAL RISK MANAGEMENT                                                  
|  
|25 |  | CONTINGENT LIABILITIES AND COMMITMENTS                                     
|  
|26 |  | SUBSEQUENT EVENTS                                                          
|  
|27 |  | SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US ACCOUNTING
PRINCIPLES 

F-73



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDINGS LIMITED

NOTES TO THE FINANCIAL STATEMENTS



|28 |  | LIST OF PRINCIPAL SUBSIDIARY COMPANIES INCLUDED IN THE LUCITE INTERNATIONAL HOLDINGS LIMITED CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2002
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------

|                                                            |  |                  |  |            |     |  |  | 
|----------------------------------------------------------- |  | ---------------- |  | ---------- | --- |  |  | 
|                                                            |  | County of        |  |            |     | 
|                                                            |  | incorporation or |  | Percentage
|                                                            |  | registration     |  | holding   
|                                                            |  |                  |  |           
|Lucite International Finance PLC                            |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Finco Limited                          |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Dutch Overseas Holdco BV               |  | Netherlands      |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Thai Poly Acrylic PLC                                       |  | Thailand         |  |            | 59  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Japan Limited                          |  | Japan            |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International France SAS                             |  | France           |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Netherlands BV                         |  | Netherlands      |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holland BV                             |  | Netherlands      |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International UK Limited                             |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International, Inc.                                  |  | USA              |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Mexico SA de C.V.                      |  | Mexico           |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holdco Limited                         |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Canada, Inc.                           |  | Canada           |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Trading Limited                        |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International UK Overseas Holdco1 Limited            |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnership Holdings Inc               |  | USA              |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Holdco Inc                             |  | USA              |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnerco1 Limited                     |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Partnerco2 Limited                     |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Speciality Polymers and Resins Limited |  | UK               |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International South Africa (Pty) Limited             |  | South Africa     |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Asia Pacific Pte Limited               |  | Singapore        |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Kaohsiung Monomer Company                                   |  | Taiwan           |  |            | 60  | 
|                                                           
|                                                           
|                                                           
|                                                           
|Lucite International Alpha BV                               |  | Netherlands      |  |            | 100 | 
|                                                           
|                                                           
|                                                           
|                                                           
|Perspex Distribution Limited                                |  | UK               |  |            | 100 | 

29CONTROLLING PARTIES

Refer to footnote 29 of the financial statements of Lucite International
Group Holdings Limited.

F-74



---



##### Table of Contents



REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of Lucite International Holdco
Limited

We have audited the accompanying consolidated balance sheets of Lucite
International Holdco Limited (the Company) as of December 31, 2002 and 2001,
and the related consolidated profit and loss accounts, cash flow statements,
total recognised gains and losses and reconciliation of movements in
shareholders funds for each of the three years ended December 31, 2002. These
financial statements are the responsibility of the Companys management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of 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 financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Company at
December 31, 2002 and 2001, and the results of its operations and its cash
flows for each of the three years ended December 31, 2002, in conformity with
accounting principles generally accepted in the United Kingdom.

As discussed on page F-79 to the financial statements, the Company changed its
method of accounting for deferred taxation in 2002.

Accounting principles generally accepted in the United Kingdom vary in certain
significant respects from accounting principles generally accepted in the
United States of America. The application of the latter would have affected
results of operations for each of the three years ended December 31, 2002 and
consolidated shareholders funds at December 31, 2002, 2001, to the extent
summarised in Note 27 to the financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants
London, England
April 11, 2003

F-75



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

CONSOLIDATED PROFIT AND LOSS ACCOUNTS

|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|------------------------------------------------------------------------------------------------- |  | ----- | --- | ----------- |  | ----------- | ---- | ---------- |  | ---------- | ---- | - |  |  | ---- | -
|                                                                                                  |  |       |     |             |  | Year ended  |      | Year ended |  | Year ended
|                                                                                                  |  |       |     |             |  | December    |      | December   |  | December  
|                                                                                                  |  | Notes |     | 31,         |  | 31,         |      | 31,       
|                                                                                                  |  |       |     |             |  |             |      |           
|                                                                                                  |  |       |     | 2000        |  | 2001        |      | 2002      
|                                                                                                  |  |       |     | £'m         |  | £'m         |      | £'m       
|                                                                                                  |  |       |     | as restated |  | as restated |      |           
|                                                                                                  |  |       |     |             |  |             |      |           
|Turnover including share of joint venture                                                         |  |       |     |             |  |             | 581  |            |  |            | 589  |   |  |  | 582  |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Less share of joint ventures turnover                                                            |  |       |     |             |  |             | (21  | )          |  |            | (12  | ) |  |  |     |  
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Group turnover                                                                                    |  |       | 4,5 |             |  |             | 560  |            |  |            | 577  |   |  |  | 582  |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Operating costs before exceptional
operating expenses and amortisation of
intangible fixed assets |  |       |     |             |  |             | (525 | )          |  |            | (550 | ) |  |  | (550 | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Exceptional operating expenses                                                                    |  |       | 6   |             |  |             | (14  | )          |  |            | (4   | ) |  |  |     |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Amortisation of goodwill and other
intangible fixed assets                                        |  |       | 10  |             |  |             | (5   | )          |  |            | (5   | ) |  |  | (5   | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Total operating costs                                                                             |  |       |     |             |  |             | (544 | )          |  |            | (559 | ) |  |  | (555 | )
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Group operating profit                                                                            |  |       | 4.5 |             |  |             | 16   |            |  |            | 18   |   |  |  | 27   |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Share of operating profit from joint
venture                                                      |  |       |     |             |  |             | 2    |            |  |            | 2    |   |  |  |     |  
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Operating profit including joint venture                                                          |  |       |     |             |  |             | 18   |            |  |            | 20   |   |  |  | 27   |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Net interest payable                                                                              |  |       | 8   |             |  |             | (40  | )          |  |            | (28  | ) |  |  | (29  | )
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Loss on ordinary activities before
taxation                                                       |  |       | 6   |             |  |             | (22  | )          |  |            | (8   | ) |  |  | (2   | )
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Taxation on loss on ordinary activities                                                           |  |       | 9   |             |  |             | 10   |            |  |            | 6    |   |  |  | 2    |  
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Loss on ordinary activities after taxation                                                        |  |       |     |             |  |             | (12  | )          |  |            | (2   | ) |  |  |     |  
|                                                                                                 
|                                                                                                 
|                                                                                                 
|                                                                                                 
|Equity minority interests                                                                         |  |       |     |             |  |             |     |            |  |            | (1   | ) |  |  | (3   | )
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  
|Loss for the financial year/period                                                                |  |       |     |             |  |             | (12  | )          |  |            | (3   | ) |  |  | (3   | )
|                                                                                                  |  |       |     |             |  |             |      |            |  |            |      |   |  |  |      |  

Group turnover and group operating profit relate entirely to continuing
operations.

The accompanying notes are an integral part of these financial statements.

F-76



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES

|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|-------------------------------------------------------------------- |  | ------------ | --- | ------------ |  | ------------ | -- | - |  |  | --- | -
|                                                                     |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                     |  | December 31, |     | December 31, |  | December 31,
|                                                                     |  | 2000         |     | 2001         |  | 2002        
|                                                                     |  | £'m          |     | £'m          |  | £'m         
|                                                                     |  | as restated  |     | as restated  |  |             
|                                                                     |  |              |     |              |  |             
|Loss for the financial year                                          |  |              | (12 | )            |  |              | (3 | ) |  |  | (3  | )
|                                                                    
|                                                                    
|                                                                    
|                                                                    
|Currency translation differences on foreign
currency net investments |  |              |    |              |  |              | 2  |   |  |  | (21 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Total recognised losses relating to the year                         |  |              | (12 | )            |  |              | (1 | ) |  |  | (24 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Prior year adjustment for deferred tax (Page
F-80)                   |  |              |     |              |  |              |    |   |  |  | 5   |  
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  
|Total gains and losses recognised since last
annual report           |  |              |     |              |  |              |    |   |  |  | (19 | )
|                                                                     |  |              |     |              |  |              |    |   |  |  |     |  

The accompanying notes are an integral part of these financial statements.

F-77



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

CONSOLIDATED BALANCE SHEETS AT DECEMBER 31, 2002 AND 2001

|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|------------------------------------------------------- |  | ----- | -- | ----------- |  | ---- | ---- | -- |  |  | ---- | -
|                                                        |  |       |    |             |  | 2001 |      |    |  | 
|                                                        |  | Notes |    | as restated |  | 2002
|                                                        |  |       |    |             |  |     
|                                                        |  |       |    |             |  | £m   |      | £m
|Fixed assets                                            |  |       |    |             |  |      |      |    |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Intangible assets                                       |  |       | 10 |             |  |      | 94   |    |  |  | 89   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Negative goodwill                                       |  |       | 10 |             |  |      | (6   | )  |  |  | (6   | )
|                                                       
|                                                       
|                                                       
|                                                       
|Tangible assets                                         |  |       | 11 |             |  |      | 390  |    |  |  | 358  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|                                                        |  |       |    |             |  |      | 478  |    |  |  | 441  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Current assets                                          |  |       |    |             |  |      |      |    |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Stocks                                                  |  |       | 12 |             |  |      | 69   |    |  |  | 75   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Debtors                                                 |  |       | 13 |             |  |      | 96   |    |  |  | 96   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Cash at bank and in hand                                |  |       |    |             |  |      | 17   |    |  |  | 7    |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|                                                        |  |       |    |             |  |      | 182  |    |  |  | 178  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Total assets                                            |  |       |    |             |  |      | 660  |    |  |  | 619  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Creditors: amounts falling due within one
year          |  |       | 14 |             |  |      | (141 | )  |  |  | (148 | )
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Net current assets                                      |  |       |    |             |  |      | 41   |    |  |  | 30   |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Total assets less current liabilities                   |  |       |    |             |  |      | 519  |    |  |  | 471  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Creditors: amounts falling due after more
than one year |  |       | 15 |             |  |      | (336 | )  |  |  | (330 | )
|                                                       
|                                                       
|                                                       
|                                                       
|Provisions for liabilities and charges                  |  |       | 18 |             |  |      | (48  | )  |  |  | (32  | )
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Net assets                                              |  |       |    |             |  |      | 135  |    |  |  | 109  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Shareholders equity                                    |  |       |    |             |  |      |      |    |  |  |      |  
|                                                       
|                                                       
|                                                       
|                                                       
|Called up equity share capital                          |  |       | 19 |             |  |      | 115  |    |  |  | 115  |  
|                                                       
|                                                       
|                                                       
|                                                       
|Share Premium                                           |  |       | 19 |             |  |      | 27   |    |  |  | 27   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Profit and loss account                                 |  |       |    |             |  |      | (21  | )  |  |  | (45  | )
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Total equity shareholders funds                        |  |       |    |             |  |      | 121  |    |  |  | 97   |  
|                                                       
|                                                       
|                                                       
|                                                       
|Equity minority interests                               |  |       |    |             |  |      | 14   |    |  |  | 12   |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  
|Capital employed                                        |  |       |    |             |  |      | 135  |    |  |  | 109  |  
|                                                        |  |       |    |             |  |      |      |    |  |  |      |  

The accompanying notes are an integral part of these financial statements.

F-78



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

CASH FLOW STATEMENT

|                                                                       |  |       |    |      |  |              |     |              |  |              |     |   |  |  |     |  
|---------------------------------------------------------------------- |  | ----- | -- | ---- |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                                                       |  |       |    |      |  | Year ended   |     | Year ended   |  | Year ended  
|                                                                       |  |       |    |      |  | December 31, |     | December 31, |  | December 31,
|                                                                       |  | Notes |    | 2000 |  | 2001         |     | 2002        
|                                                                       |  |       |    | £'m  |  | £'m          |     | £'m         
|                                                                       |  |       |    |      |  |              |     |             
|Cash flow from operating activities                                    |  |       | 21 | (a)  |  |              | 56  |              |  |              | 83  |   |  |  | 57  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Return on investments and servicing
of Finance                         |  |       | 21 | (b)  |  |              | (29 | )            |  |              | (33 | ) |  |  | (28 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Taxation                                                               |  |       |    |      |  |              | (1  | )            |  |              | (3  | ) |  |  | (4  | )
|                                                                       |  |       |    |      |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                       |  |       |    |      |  |              | 26  |              |  |              | 47  |   |  |  | 25  |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Capital expenditure and financial
investment                           |  |       | 21 | (c)  |  |              | (28 | )            |  |              | (26 | ) |  |  | (28 | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Acquisitions and disposals                                             |  |       | 21 | (d)  |  |              |     |              |  |              |     |   |  |  |     |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Acquisition of ICI Acrylics                                            |  |       | 21 | (d)  |  |              | (9  | )            |  |              | (1  | ) |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Other acquisition                                                      |  |       | 21 | (d)  |  |              | (20 | )            |  |              | 5   |   |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Proceeds from sale of business                                         |  |       | 21 | (d)  |  |              | 1   |              |  |              |    |   |  |  |    |  
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Cash payments against provisions                                       |  |       |    |      |  |              | (11 | )            |  |              |    |   |  |  |    |  
|                                                                       |  |       |    |      |  |              |     |              |  |              |     |   |  |  |     |  
|Net cash (outflow)/inflow before use
of liquid resources and financing |  |       |    |      |  |              | (41 | )            |  |              | 25  |   |  |  | (3  | )
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Financing                                                              |  |       | 21 | (e)  |  |              | 28  |              |  |              | (19 | ) |  |  | (6  | )
|                                                                       |  |       |    |      |  |              |     |              |  |              |     |   |  |  |     |  
|(Decrease)/increase in cash                                            |  |       | 21 | (f)  |  |              | (13 | )            |  |              | 6   |   |  |  | (9  | )
|                                                                       |  |       |    |      |  |              |     |              |  |              |     |   |  |  |     |  

The accompanying notes are an integral part of these financial statements.

F-79



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

RECONCILIATION OF MOVEMENTS IN NET INVESTMENT AND
CONSOLIDATED SHAREHOLDERS FUNDS

|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|------------------------------------ |  | ------- | --- | ------------ |  | ----------- | --- | - |  |  | --- | -
|                                     |  | Share   |     | Profit and   |  |             |     |  
|                                     |  | capital |     | loss account |  | Total      
|                                     |  | £'m     |     | £'m          |  | £'m        
|                                     |  |         |     | as restated  |  | as restated
|                                     |  |         |     |              |  |            
|Balance at December 31, 1999         |  |         | 142 |              |  |             | (8  | ) |  |  | 134 |  
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Retained loss for the financial year |  |         |    |              |  |             | (12 | ) |  |  | (12 | )
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2000      |  |         | 142 |              |  |             | (20 | ) |  |  | 122 |  
|                                    
|                                    
|                                    
|                                    
|Retained loss for the financial year |  |         |    |              |  |             | (3  | ) |  |  | (3  | )
|                                    
|                                    
|                                    
|                                    
|Currency translation adjustment      |  |         |    |              |  |             | 2   |   |  |  | 2   |  
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2001      |  |         | 142 |              |  |             | (21 | ) |  |  | 121 |  
|                                    
|                                    
|                                    
|                                    
|Retained loss for the financial year |  |         |    |              |  |             | (3  | ) |  |  | (3  | )
|                                    
|                                    
|                                    
|                                    
|Currency translation adjustment      |  |         |    |              |  |             | (21 | ) |  |  | (21 | )
|                                     |  |         |     |              |  |             |     |   |  |  |     |  
|Balance as at December 31, 2002      |  |         | 142 |              |  |             | (45 | ) |  |  | 97  |  
|                                     |  |         |     |              |  |             |     |   |  |  |     |  

There are no significant statutory or contractual restrictions on the
distribution of current year income of subsidiary undertakings. Undistributed
profits are, in the main, employed in the business of these companies. The
undistributed income of the business overseas may be liable to overseas taxes
and/or United Kingdom taxation, after allowing for double taxation relief, if
they were to be distributed as dividends.

The cumulative exchange gains and losses on the translation of foreign currency
financial statements into pounds sterling are taken into account in the above
reconciliation of movements in combined net investment and consolidated
shareholders funds.

Changes to accounting policies

The company has adopted FRS19 Deferred Tax in these financial statements.
The adoption of this standard represents a change in accounting policy and the
comparative figures have been restated accordingly. The impact of this change
in accounting policy is to reduce the provision for deferred tax at December
31, 2000 by approximately £2 million and as at December 31, 2001 by a further
£3 million, due to the recognition of certain losses within the United States
that are anticipated to be recoverable.

A prior year adjustment has been made to the 2000 and 2001 figures as a result
of the adoption of FRS19 deferred tax. The amounts as previously stated
before the prior year adjustment, are set out below:

|                                |  |         |     |                 |  |       |     |   |  |  |     |  
|------------------------------- |  | ------- | --- | --------------- |  | ----- | --- | - |  |  | --- | -
|                                |  | Share   |     | Profit and loss |  |       |     |  
|                                |  | capital |     | account         |  | Total
|                                |  | £'m     |     | £'m             |  | £'m  
|                                |  |         |     |                 |  |      
|Balance at December 31, 1999    |  |         | 142 |                 |  |       | (8  | ) |  |  | 134 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |         |    |                 |  |       | (14 | ) |  |  | (14 | )
|                                |  |         |     |                 |  |       |     |   |  |  |     |  
|Balance at December 31, 2000    |  |         | 142 |                 |  |       | (22 | ) |  |  | 120 |  
|                               
|                               
|                               
|                               
|Loss for the financial year     |  |         |    |                 |  |       | (6  | ) |  |  | (6  | )
|                               
|                               
|                               
|                               
|Currency translation adjustment |  |         |    |                 |  |       | 2   |   |  |  | 2   |  
|                                |  |         |     |                 |  |       |     |   |  |  |     |  
|Balance at December 31, 2001    |  |         | 142 |                 |  |       | (26 | ) |  |  | 116 |  
|                                |  |         |     |                 |  |       |     |   |  |  |     |  

The accompanying notes are an integral part of these financial statements.

F-80



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED

NOTES TO THE FINANCIAL STATEMENTS



|1 |  | BUSINESS DESCRIPTION
|- |  | --------------------

Lucite International Holdco Limited (the ''Company) is a wholly owned
subsidiary of Lucite International Holdings Limited. Lucite International
Holdings Limited is indirectly 100% owned by Lucite International Group
Holdings Limited, the consolidated financial statements of which are located on
pages F-2 through F-57. The parent companies of the Company have no operations,
assets or liabilities of their own other than cash of £3 million, investments
in subsidiaries, and liabilities which are reflected on a ''pushdown basis in
the financial statements of the Company as discussed in Note 16. As a result,
many of the financial statement footnotes of Lucite International Group
Holdings Limited as presented on pages F-8 through F-57 are equally applicable
to the Company. References to ''Lucite International Group Holdings Limited
in those footnotes are also equally applicable to the Company.

Lucite International Holdco Limited and subsidiary companies (together referred
to as Lucite or ''the Company) are engaged in the production and
distribution of methacrylate monomers, the principal building block of acrylic,
and the production and distribution of acrylic based polymers, resins, sheet
and composites. These products are manufactured at facilities located in the
Americas, Europe and Asia and are sold throughout the world.



|1 |  | PRINCIPAL ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                        
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| 
|  |  | Refer to footnote 1 of the Financial Statements of Lucite International Group Holdings Limited                                                                                                                                                                                                                                       
| 
|2 |  | BUSINESS DESCRIPTION                                                                                                                                                                                                                                                                                                                 
| 
|  |  | Refer to footnote 2 of the Financial Statements of Lucite International Group Holdings limited                                                                                                                                                                                                                                       
| 
|3 |  | SEGMENTAL REPORTING                                                                                                                                                                                                                                                                                                                  
| 
|  |  | For a description of the Companys business and an analysis of turnover,
operating profit and capital expenditure attributable to each different
class of business and a geographical analysis of turnover and tangible
fixed assets, refer to footnote 3 of the financial statements of Lucite
International Group Holdings Limited.

F-81



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS(Continued)

Total assets less current liabilities attributable to each different class of
business are as follows:

|                                                                                      |                                     |  |             |     |      |  |     |     |  
|------------------------------------------------------------------------------------- | ----------------------------------- |  | ----------- | --- | ---- |  | --- | --- | -
|                                                                                      |                                     |  | 2001        |     | 2002
|                                                                                      |                                     |  | as restated |     |     
|                                                                                      |                                     |  |             |     |     
|                                                                                      |                                     |  | £'m         |     | £'m 
|Total assets less current liabilities                                                 |                                     |  |             |     |      |  |     |    
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Upstream                                                                              |                                     |  | 360         |     |      |  | 336 |    
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Downstream                                                                            |                                     |  | 167         |     |      |  | 162 |    
|                                                                                      |                                     |  |             |     |      |  |     |    
|Net operating assets                                                                  |                                     |  | 527         |     |      |  | 498 |    
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|Elimination of assets and liabilities that are not attributable to types of
business: |                                     |  |             |     |      |  |     |    
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Cash at bank and in hand            |  |             | 17  |      |  |     | 7   |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Deferred taxation asset             |  |             | 18  |      |  |     | 12  |  
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                     
|                                                                                      | Bank and other borrowings (Note 16) |  |             | (43 | )    |  |     | (46 | )
|                                                                                      |                                     |  |             |     |      |  |     |    
|                                                                                      |                                     |  | 519         |     |      |  | 471 |    
|                                                                                      |                                     |  |             |     |      |  |     |    



|4 |  | COST OF SALES, GROSS PROFIT, DISTRIBUTION COSTS AND ADMINISTRATIVE
EXPENSES                    
|- |  | -----------------------------------------------------------------------------------------------
| 
|  |  | Refer to footnote 4 of the financial statements of Lucite International Group Holdings Limited.
| 
|5 |  | EXCEPTIONAL OPERATING EXPENSES                                                                 
| 
|  |  | Refer to footnote 5 of the financial statements of Lucite International Group Holdings Limited.
| 
|6 |  | LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION                                                    
| 
|  |  | Refer to footnote 6 of the financial statements of Lucite International Group Holdings Limited.
| 
|7 |  | STAFF COSTS                                                                                    
| 
|  |  | Refer to footnote 7 of the financial statements of Lucite International Group Holdings Limited.
| 
|8 |  | NET INTEREST PAYABLE                                                                           
| 
|  |  | Refer to footnote 8 of the financial statements of Lucite International Group Holdings Limited 
| 
|9 |  | TAXATION ON PROFIT/LOSS ON ORDINARY ACTIVITIES                                                 
| 
|  |  | Refer to footnote 9 of the financial statements of Lucite International
Group Holdings Limited 

F-82



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS(Continued)



|10 |  | INTANGIBLE FIXED ASSETS                                                                             
|-- |  | ----------------------------------------------------------------------------------------------------
|  
|   |  | Refer to footnote 10 of the financial statements of Lucite International Group Holdings Limited.    
|  
|11 |  | TANGIBLE FIXED ASSETS                                                                               
|  
|   |  | Refer to footnote 11 of the financial statements of Lucite International Group Holdings Limited.    
|  
|12 |  | STOCKS                                                                                              
|  
|   |  | Refer to footnote 12 of the financial statements of Lucite International Group Holdings Limited.    
|  
|13 |  | DEBTORS                                                                                             
|  
|   |  | Refer to the footnote 13 of the financial statements of Lucite International Group Holdings Limited.
|  
|14 |  | CREDITORSAMOUNTS FALLING DUE WITHIN ONE YEAR                                                       

|                                    |  |      |     |      |  |  |     | 
|----------------------------------- |  | ---- | --- | ---- |  |  | --- | 
|                                    |  | 2001 |     | 2002
|                                    |  | £'m  |     | £'m 
|                                    |  |      |     |     
|Bank and other borrowings (note
17) |  |      | 13  |      |  |  | 17  | 
|                                   
|                                   
|                                   
|                                   
|Trade creditors                     |  |      | 63  |      |  |  | 58  | 
|                                   
|                                   
|                                   
|                                   
|Finance leases (note 18)            |  |      | 1   |      |  |  |    | 
|                                   
|                                   
|                                   
|                                   
|Intra-Group financing               |  |      | 30  |      |  |  | 29  | 
|                                   
|                                   
|                                   
|                                   
|Other creditors                     |  |      | 16  |      |  |  | 23  | 
|                                   
|                                   
|                                   
|                                   
|Accruals                            |  |      | 18  |      |  |  | 21  | 
|                                    |  |      |     |      |  |  |     | 
|                                    |  |      | 141 |      |  |  | 148 | 
|                                    |  |      |     |      |  |  |     | 

F-83



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS(Continued)



|15 |  | CREDITORSAMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Refer to footnote 15 of the financial statements of Lucite International Group Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|16 |  | BANK AND OTHER BORROWINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|  
|   |  | The Senior Credit Facilities as described in footnote 16 of the financial
statements of Lucite International Group Holdings Limited are obligations
of the parent companies of the Company. These credit facilities are
reflected in the financial statements of the Company on a ''push down
basis as the Companys assets are pledged as security against the Senior
Credit Facilities. The remaining obligations as described in footnote 16
to the financial statements of Lucite International Group Holdings
Limited are obligations of the Company. Refer to footnote 16 of the
financial statements of Lucite International Group Holdings Limited for a
complete description of Bank and Other Borrowings.
|  
|17 |  | FINANCE LEASES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | Refer to footnote 17 of the financial statements of Lucite International Group Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|18 |  | PROVISIONS FOR LIABILITIES AND CHARGES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | Refer to footnote 18 of the financial statements of Lucite International Group Holdings Limited.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|  
|19 |  | CALLED UP EQUITY SHARE CAPITAL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

|                           |  |        |             |     |  |  |     | 
|-------------------------- |  | ------ | ----------- | --- |  |  | --- | 
|                           |  | Number |             | £'m
|Ordinary shares of £1 each |  |        | 115,300,999 |     |  |  | 115 | 
|                          
|                          
|                          
|                          
|Share premium              |  |        |             |     |  |  | 27  | 
|                           |  |        |             |     |  |  |     | 
|                           |  |        |             |     |  |  | 142 | 
|                           |  |        |             |     |  |  |     | 



|20  |  | FOREIGN EXCHANGE AND INTEREST RATE DISCLOSURE                                                      
|--- |  | ---------------------------------------------------------------------------------------------------
|   
|    |  | Refer to footnote 19 of the financial statements of Lucite International Group Holdings Limited.   
|   
|21  |  | NOTES TO THE CASH FLOW STATEMENT                                                                   
|   
|(a) |  | Net cash inflow from operating activities                                                          
|   
|    |  | Refer to footnote 21(a) of the financial statements of Lucite
International Group Holdings Limited.
|   
|(b) |  | Returns on investments and servicing of finance                                                    
|   
|    |  | Refer to footnote 21(b) of the financial statements of Lucite
International Group Holdings Limited.
|   
|(c) |  | Capital expenditure and financial investment                                                       
|   
|    |  | Refer to footnote 21(c) of the financial statements of Lucite
International Group Holdings Limited.

F-84



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS(Continued)



|(d) |  | Acquisitions and disposals                                                                         
|--- |  | ---------------------------------------------------------------------------------------------------
|   
|    |  | Refer to footnote 21(d) of the financial statements of Lucite
International Group Holdings Limited.
|   
|(e) |  | Financing                                                                                          

|                                           |  |              |     |              |  |              |     |   |  |  |     |  
|------------------------------------------ |  | ------------ | --- | ------------ |  | ------------ | --- | - |  |  | --- | -
|                                           |  | Year ended   |     | Year ended   |  | Year ended  
|                                           |  | December 31, |     | December 31, |  | December 31,
|                                           |  | 2000         |     | 2001         |  | 2002        
|                                           |  | £'m          |     | £'m          |  | £'m         
|                                           |  |              |     |              |  |             
|Movement in debt due within 1 year         |  |              | (99 | )            |  |              | (4  | ) |  |  | (17 | )
|                                          
|                                          
|                                          
|                                          
|Movement in debt due after one year        |  |              |    |              |  |              | (15 | ) |  |  | (6  | )
|                                          
|                                          
|                                          
|                                          
|Exchange movement                          |  |              |    |              |  |              |    |   |  |  |    |  
|                                          
|                                          
|                                          
|                                          
|Equity issue costs paid                    |  |              | (3  | )            |  |              |    |   |  |  |    |  
|                                          
|                                          
|                                          
|                                          
|Settlement of Exchange contract            |  |              | (10 | )            |  |              |    |   |  |  |    |  
|                                          
|                                          
|                                          
|                                          
|Issue of debt due after more than one
year |  |              | 145 |              |  |              |    |   |  |  | 15  |  
|                                          
|                                          
|                                          
|                                          
|Debt issue costs paid                      |  |              | (5  | )            |  |              |    |   |  |  |    |  
|                                           |  |              |     |              |  |              |     |   |  |  |     |  
|Cash (outflow)/inflow from financing       |  |              | 28  |              |  |              | (19 | ) |  |  | (8  | )
|                                           |  |              |     |              |  |              |     |   |  |  |     |  



|(f) |  | Analysis of net debt
|--- |  | --------------------

|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  
|---------------------- |  | ----------- | -- | --------- |  | ---------- | ---- | ------- |  | ---- | --- | - |  |  | -- | - |  |  | ---- | -
|                       |  | Cash at     |    | Debt      |  | Debt       |      |         |  |      |     |   |  | 
|                       |  | bank and in |    | due after |  | due within |      | Finance |  | Net 
|                       |  | hand        |    | 1 year    |  | 1 year     |      | Leases  |  | Debt
|                       |  | £'m         |    | £'m       |  | £'m        |      | £'m     |  | £'m 
|                       |  |             |    |           |  |            |      |         |  |     
|At January 1, 2001     |  |             | 12 |           |  |            | (362 | )       |  |      | (33 | ) |  |  | (5 | ) |  |  | (388 | )
|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  
|Cash flow              |  |             | 6  |           |  |            | 15   |         |  |      | 4   |   |  |  |   |   |  |  | 25   |  
|                      
|                      
|                      
|                      
|Other non-cash changes |  |             |   |           |  |            | 12   |         |  |      | (13 | ) |  |  |   |   |  |  | (1   | )
|                      
|                      
|                      
|                      
|Exchange movement      |  |             | (1 | )         |  |            | 4    |         |  |      | (1  | ) |  |  |   |   |  |  | 2    |  
|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  
|At 1 January 2002      |  |             | 17 |           |  |            | (331 | )       |  |      | (43 | ) |  |  | (5 | ) |  |  | (362 | )
|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  
|Cash flow              |  |             | (9 | )         |  |            | (8   | )       |  |      | 14  |   |  |  |   |   |  |  | (3   | )
|                      
|                      
|                      
|                      
|Other non-cash changes |  |             | (1 | )         |  |            | 16   |         |  |      | (17 | ) |  |  |   |   |  |  | (2   | )
|                      
|                      
|                      
|                      
|Exchange movement      |  |             |   |           |  |            | (3   | )       |  |      |    |   |  |  | 1  |   |  |  | (2   | )
|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  
|At December 31, 2002   |  |             | 7  |           |  |            | (326 | )       |  |      | (46 | ) |  |  | (4 | ) |  |  | (369 | )
|                       |  |             |    |           |  |            |      |         |  |      |     |   |  |  |    |   |  |  |      |  

F-85



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE FINANCIAL STATEMENTS(Continued)

|                                                      |  |              |      |              |  |              |      |   |  |  |      |  
|----------------------------------------------------- |  | ------------ | ---- | ------------ |  | ------------ | ---- | - |  |  | ---- | -
|                                                      |  | Year ended   |      | Year ended   |  | Year ended  
|                                                      |  | December 31, |      | December 31, |  | December 31,
|                                                      |  | 2000         |      | 2001         |  | 2002        
|                                                      |  | £'m          |      | £'m          |  | £'m         
|                                                      |  |              |      |              |  |             
|Increase/ (decrease) in cash in the year              |  |              | (13  | )            |  |              | 6    |   |  |  | (9   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from movements in debt and lease
financing |  |              | (15  | )            |  |              | 23   |   |  |  | 5    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Cash flows from inter-group financing                 |  |              | (26  | )            |  |              | (4   | ) |  |  | 1    |  
|                                                     
|                                                     
|                                                     
|                                                     
|Exchange movement                                     |  |              | (24  | )            |  |              | 2    |   |  |  | (2   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Other non-cash changes                                |  |              | 2    |              |  |              | (1   | ) |  |  | (2   | )
|                                                      |  |              |      |              |  |              |      |   |  |  |      |  
|Movement in net debt                                  |  |              | (76  | )            |  |              | 26   |   |  |  | (7   | )
|                                                     
|                                                     
|                                                     
|                                                     
|Opening net debt                                      |  |              | (312 | )            |  |              | (388 | ) |  |  | (362 | )
|                                                      |  |              |      |              |  |              |      |   |  |  |      |  
|Closing net debt                                      |  |              | (388 | )            |  |              | (362 | ) |  |  | (369 | )
|                                                      |  |              |      |              |  |              |      |   |  |  |      |  



|22  |  | PENSIONS AND OTHER POST RETIREMENT BENEFITS                                                                                 
|--- |  | ----------------------------------------------------------------------------------------------------------------------------
|   
|    |  | Refer to footnote 22 of the financial statements of Lucite International Group Holdings Limited.                            
|   
|23  |  | RELATED PARTY TRANSACTIONS                                                                                                  
|   
|    |  | Refer to footnote 23 of the financial statements of Lucite International Group Holdings Limited.                            
|   
|24  |  | FINANCIAL RISK MANAGEMENT                                                                                                   
|   
|    |  | Refer to footnote 24 of the financial statements of Lucite International Group Holdings Limited.                            
|   
|25  |  | CONTINGENT LIABILITIES AND COMMITMENTS                                                                                      
|   
|    |  | Refer to footnote 25 of the financial statements of Lucite International Group Holdings Limited.                            
|   
|26  |  | SUBSEQUENT EVENTS                                                                                                           
|   
|    |  | Refer to footnote 26 of the financial statements of Lucite International
Group Holdings Limited.                            
|   
|27  |  | SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN UK AND US ACCOUNTING
PRINCIPLES                                                  
|   
|(a) |  | Approximate effect on the profit/loss for the financial year/period (net
income) of differences between UK GAAP and US GAAP.
|   
|    |  | Refer to footnote 27(a) of the financial statements of Lucite
International Group holdings Limited.                         

F-86



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|(b) |  | Approximate effect on and consolidated shareholders funds of differences
between UK GAAP and US GAAP
|--- |  | -----------------------------------------------------------------------------------------------------

|                                               |  |       |  |             |  |      |     |   |  |  |     |  
|---------------------------------------------- |  | ----- |  | ----------- |  | ---- | --- | - |  |  | --- | -
|                                               |  | Notes |  | 2001        |  | 2002
|                                               |  |       |  |             |  |     
|                                               |  |       |  | £'m         |  |     
|                                               |  |       |  | as restated |  | £'m 
|                                               |  |       |  |             |  |      |     |  
|Consolidated shareholders funds under UK
GAAP |  |       |  |             |  |      | 121 |   |  |  | 97  |  
|                                              
|                                              
|                                              
|                                              
|Purchase accounting adjustments                |  |       |  |             |  |      | (18 | ) |  |  | (20 | )
|                                              
|                                              
|                                              
|                                              
|Exchange revaluation of US intangibles         |  |       |  |             |  |      | 12  |   |  |  | 2   |  
|                                              
|                                              
|                                              
|                                              
|Pensions                                       |  |       |  |             |  |      | 7   |   |  |  | (3  | )
|                                              
|                                              
|                                              
|                                              
|Capitalisation of interest less
amortisation   |  |       |  |             |  |      | 4   |   |  |  | 7   |  
|                                              
|                                              
|                                              
|                                              
|Capitalisation of loan arrangement fees        |  |       |  |             |  |      |    |   |  |  | 1   |  
|                                              
|                                              
|                                              
|                                              
|Deferred taxation                              |  |       |  |             |  |      | 11  |   |  |  | 28  |  
|                                               |  |       |  |             |  |      |     |   |  |  |     |  
|Shareholders funds under US GAAP              |  |       |  |             |  |      | 137 |   |  |  | 112 |  
|                                               |  |       |  |             |  |      |     |   |  |  |     |  



|(c) |  | US GAAP cash-flow information                                                                      
|--- |  | ---------------------------------------------------------------------------------------------------
|   
|    |  | Refer to footnote 27(d) of the financial statements of Lucite
International Group Holdings Limited.
|   
|(d) |  | Additional US GAAP disclosures                                                                     
|   
|    |  | Refer to footnote 27(e) of the financial statements of Lucite
International Group Holdings Limited.

F-87



---



##### Table of Contents



LUCITE INTERNATIONAL HOLDCO LIMITED
NOTES TO THE COMBINED AND CONSOLIDATED FINANCIAL STATEMENTS(Continued)



|28 |  | LIST OF PRINCIPAL SUBSIDIARY COMPANIES INCLUDED IN THE LUCITE
INTERNATIONAL HOLDCO LIMITED CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER
31, 2002
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------

|                                                  |                  |                    |     |  |     |  |  | 
|------------------------------------------------- | ---------------- | ------------------ | --- |  | --- |  |  | 
|                                                  | Country of      
|                                                  | incorporation or
|Company                                           | registration     | Percentage holding
|                                                  |                  |                   
|Lucite International Dutch Overseas Holdco BV     |                  | Netherlands        |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Thai Poly Acrylic PLC                             |                  | Thailand           |     |  | 59  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Japan Limited                |                  | Japan              |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International France SAS                   |                  | France             |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Netherlands BV               |                  | Netherlands        |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Holland BV                   |                  | Netherlands        |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International UK Limited                   |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Newton Aycliffe Limited      |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Inc                          |                  | USA                |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Mexico SA de C.V             |                  | Mexico             |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Holdco Limited               |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Canada, Inc                  |                  | Canada             |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International UK Trader Holdco Limited     |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International UK Overseas Holdco 1 Limited |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Partnership Holdings Inc     |                  | USA                |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Holdco Inc                   |                  | USA                |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Partner 1 limited            |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Partnerco 2 limited          |                  | UK                 |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International South Africa (Pty) Limited   | South Africa     |                    | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Lucite International Asia Pacific Pte Limited     |                  | Singapore          |     |  | 100 | 
|                                                 
|                                                 
|                                                 
|                                                 
|Kaohsiung Monomer Company                         |                  | Taiwan             |     |  | 60  | 
|                                                 
|                                                 
|                                                 
|                                                 
|Perspex Distribution Limited                      |                  | UK                 |     |  | 100 | 



|29 |  | CONTROLLING PARTIES                                                                             
|-- |  | ------------------------------------------------------------------------------------------------
|  
|   |  | Refer to footnote 29 of the financial statements of Lucite International
Group Holdings Limited.

F-88