Unique Chemistry,

Sustainable

Solutions

Annual Report and Accounts 2022

CAUTIONARY STATEMENT

The Annual Report and Accounts for the financial year ended 31 December 2022, as contained in this document (‘Annual Report’), contains information which viewers or readers

might consider to be forward looking statements relating to or in respect of the financial condition, results, operations or businesses of Elementis plc. Any such statements involve

risk and uncertainty because they relate to future events and circumstances. There are many factors that could cause actual results or developments to differ materially from those

expressed or implied by any such forward looking statements. Nothing in this Annual Report should be construed as a profit forecast.

Making a difference through Innovation, Growth and Efficiency.

CONTENTS

STRATEGIC REPORT

Elementis today

Our business at a glance 2

2022 highlights 3

Purpose 4

Chair’s statement 6

Chief Executive Officer’s review 8

Our investment case 12

Our market environment 14

Supply chain in action 16

Our business model 18

Innovation at Elementis 22

Our strategy 24

Key performance indicators 32

Sustainability 34

Materiality 39

Climate strategy 42

Protecting the environment 57

Supportive culture 61

Responsible business 68

Non-financial information statement 71

Stakeholder engagement 72

Section 172(1) statement 74

Finance report 76

Operating review 82

Risk management 86

Principal risks and uncertainties 90

Viability and going concern statement 95

CORPORATE GOVERNANCE

Chair’s introduction

to governance 96

Board of Directors 98

Executive Leadership team 100

The UK Corporate

Governance Code 102

Division of responsibilities 103

Board leadership and

Company purpose 104

Stakeholder engagement 106

Workforce engagement 107

Shareholder engagement 110

Board responsibilities 111

Composition, succession

and evaluation 113

Nomination Committee report 115

Audit Committee report 119

Directors’ Remuneration report 124

Directors’ report 152

Directors’ responsibilities 155

FINANCIAL STATEMENTS

Independent auditor’s report 156

Consolidated income statement 164

Consolidated statement of

comprehensive income 164

Consolidated balance sheet 165

Consolidated statement of

changesinequity 166

Consolidated cash flow statement 167

Notes to the consolidated

financialstatements 168

Company balance sheet 215

Company statement of changes

in equity 216

Notes to the company financial

statements of Elementis plc 217

SHAREHOLDER INFORMATION

Alternative performance measures

andunaudited information 222

Five year record 224

Shareholder services 225

Corporate information 226

GRI index 227

Glossary 230

Elementis is a global specialty chemicals

company. We deliver unique chemistry,

sustainable solutions; our products

makeour customers’ formulations

look,feel and perform at their best.

Our purpose

At Elementis, we bring a distinctive combination

ofexpertise, innovation and teamwork to every

formulation challenge. We create high-value specialty

additives that enhance the performance of our

customers’ products and make a positive change

inthe world.

SUPPLY CHAIN

Our response to ongoing challenges

SUSTAINABILITY

Improved outcomes

INNOVATION

Key pillar for growth

WORKFORCE ENGAGEMENT

Programme of visits to the Company’s operations

107

Annual Report and Accounts 2022

Elementis plc

How is Elementis delivering

onyour commitments,

nurturing your people and

livingyourpurpose?

At Elementis, we collaborate with our

customers to develop innovative and

sustainable solutions, while caring for our

people and protecting the environment.

Combining our leading positions in

rheology, surface modification and

formulation, access to unique natural

materials and global footprint, we create

high-value specialty additives that

enhance the performance of our

customers’ products and make a positive

change in the world.

We manufacture safely, responsibly and

effectively; we provide opportunities for

everyone at Elementis to connect to

others; to grow their experience and to

make a real impact.

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Our business at a glance

Who we are

Elementis is a specialty chemicals company with

over 1,300 employees, operating at 17 manufacturing

sites across the globe.

†

Founded in 1844, we are listed on the London Stock

Exchange and are a constituent of the FTSE 250 index.

What we do

We create specialty chemicals that deliver

crucial end product attributes across a range

of industries including cosmetics, coatings and

long life plastics. Innovation is at the heart of

what we do; our focus is on creating solutions that

deliver performance improvements and enhanced

sustainability credentials.

How we do it

Combining our leading positions in rheology

◊

, surface

modification and formulation, access to unique

natural materials and global footprint, we deliver

Enhanced Performance Through Applied Innovation

to our customers around the world.

†

Figures are post Chromium sale, which took place on 31 January 2023.

◊

Learn more about rheology and our technical expertise on pages 22-23.

* Effective 1 January 2023, the results of the Coatings and Talc

segmentswill be reported under a new segment called Performance

Specialties, which reflects a change in the internal organisation structure

used for management, internal reporting purposes and the allocation

ofstrategic resources.

PERSONAL CARE

OVERVIEW

We are a leading global supplier of rheology

◊

modifiers

and anti-perspirant actives to personal care product

manufacturers. Our products help make skin creams

smooth, nail polish glow and anti-perspirants work.

COATINGS*

OVERVIEW

We supply rheology

◊

modifiers and other complementary

specialty additives to manufacturers of industrial coatings

and decorative paints. Our products help make industrial

coatings last longer, decorative paints more stain

resistant and sealants apply evenly.

TALC*

OVERVIEW

We are the second largest global supplier of talc

basedadditives to industrial end markets including

longlife plastics, technical ceramics and packaging

manufacturers. Talc helps to make long life plastics

stronger and lighter, gasoline particulate filters work

andfood packaging recyclable.

Sales

$212m

Adjusted operating

profit

$53m

Sales

$389m

Adjusted operating

profit

$73m

Sales

$136m

Adjusted operating

profit

$nil

Working with our customers across

theworldtosolve their product performance

and sustainability challenges

Read more p24

Our Values

Our Values are core to our high-performance

culture and reflectedin everything that we do.

Our purpose

Unique Chemistry,

SustainableSolutions

At Elementis, we bring a distinctive

combination of expertise, innovation

and teamwork to every formulation

challenge. We create high-value

specialty additives that enhance

theperformance of our customers’

products and make a positive

changeinthe world.

Annual Report and Accounts 2022

Elementis plc

How we are delivering on our purpose

MONTH OF INCLUSION

In 2022, we celebrated our multicultural

organisation through special events during

the month of October. Each week, senior

leaders recorded personal videos of what

inclusion meant to them, and sites from

every region participated with their own

stories, videos and activities. A few

highlights included roundtable discussions,

a speaker from the LGBTQ+ community,

aglimpse into the experiences of a new

employee in China and learning about

theindigenous communities in Taiwan.

See pages 61-67

formoreinformation.

LOWER CLIMATE IMPACTS

Many of our products help our customers

to use less energy and their operations

emit less greenhouse gas. For example,

our talc helps to use more lightweight

plastic components to improve vehicle

energy and fuel efficiency, while our

naturally-derived rheology modifiers can

be incorporated into final formulations at

low temperatures. We back up the impacts

our products have by improving our own

energy efficiency and emissions, lowering

our global Scope 1 and Scope 2 (market-

based) emissions in continuing operations

by 91,359 tonnes CO

eq(58%) between

2019 and 2022.

See pages 42-56

formoreinformation.

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Chair’s statement

“

I am very pleased to report on a successful year for Elementis in 2022. The business

delivered a strong financial performance, with significant growth in revenue and

adjusted operating profit, and the sale of the Chromium business announced in

November completed the transition of Elementis into a pure specialty chemicals

company with a much enhanced environmental footprint. This progress reflects the

talent, commitment and hard work of all our people, and gives your Board of Directors

confidence in the future prospects of our company.

BUSINESS PERFORMANCE

Elementis delivered a strong financial performance in 2022,

asthebusiness continued to deliver successfully on our strategy

ofInnovation, Growth and Efficiency. Sales grew by 4% to $736m,

driven by higher demand in many end markets, delivery of major

new business opportunities, and proactive pricing actions to offset

inflationary cost pressures.

The performance highlights were in Personal Care, where we saw

strong growth in revenue and margins as demand recovered in both

the cosmetics and anti-perspirant actives markets, and in Coatings,

where we won substantial new business with key customers and

increased our operating margins. The performance of our Talc

business was held back by the continuing weakness, particularly

inthe European automotive sector during the second half. In that

context, a weaker profitability outlook was a contributing factor to

the impairment charge in 2022. We are confident that the recovery

plan for Talc will result in near-term progress. Atthe end of the year

the Talc business was combined with the Coatings business to

create a new Performance Specialties division, that will enable us

todeliver further operational efficiencies and focus better on our

endmarkets. The simplification of Elementis into two Segments

(Personal Care and Performance Specialties) will better leverage

management resources, improving both the efficiency and

effectivenessof Elementis.

Global macroeconomic conditions deteriorated during the

secondhalf of 2022, leading to weaker demand in a number

ofourmarkets. We expect this slowdown to continue into early

2023,holding back our sales and margin growth in some markets.

However, we are confident that a combination of distinctive products,

expertise and compelling competitive positions can drive further

growth, enabling Elementis to continue to make good progress

towards the medium term financial goals we have set for the Group.

STRATEGIC PRIORITIES

The Group has a clear and consistent strategy, built around

thethree pillars of Innovation, Growth and Efficiency. Effective

execution of this strategy delivered the strong performance

wesawin 2022 and the Group remains on course to be able

toachieve the medium term financial targets of 17% adjusted

operating profit margin, 90% cash conversion and net debt/

EBITDA of under 1.5x.

In line with this strategy, in 2022 our Personal Care, Coatings and

Talc businesses continued to develop and launch new, distinctive,

high-value products, and to identify and convert attractive new

business opportunities. Our focus on continuous operational

improvement delivered sustainable cost savings during the year,

helping to offset the cost inflation that all our businesses faced.

Strong performance and strategic progress

Annual Report and Accounts 2022

Elementis plc

Chromium is an attractive business with a strong market position,

but it no longer fitted strategically within the Group. The Board

therefore concluded that the Chromium business should be

divested, and we announced in November that agreement had been

reached to sell this business to the Yildirim Group for an enterprise

value of $170m. The transaction completed in January 2023, resulting

in total cash proceeds of $119m after the transfer to the buyer of all

material liabilities and after transaction costs. I would like to thank

the executive team and the Chromium division leadership for their

professionalism which led to this successful sale process.

The proceeds of the Chromium business divestiture will

significantly reduce the Group’s net debt and will, in the future,

enable Elementis to deliver higher margins with lower cyclicality.

BALANCE SHEET AND SHAREHOLDER RETURNS

The Board remains very conscious of the need for the Group to be

soundly financed, and is pleased to report solid progress in 2022

in respect of our financing objectives.

Net debt at the end of 2022 was $367m, down from $401m at thestart

of the year. This reduction in our net debt, along with the growth of our

earnings, resulted in the reduction of our financial leverage to 2.2x* net

debt to EBITDA. Shortly after the year end, our net debt was further

reduced on receipt of the Chromium disposal proceeds. Our term loans

were refinanced successfully with effect from 1 July and the Group

has ample liquidity and headroom against its banking covenants.

The Elementis dividend was suspended in 2020 during the COVID

crisis in order to preserve cash and provide additional financial

headroom for the business. However, our improved business

performance, and the receipt of the Chromium sale proceeds,

hasresulted in the Group’s financial leverage moving significantly

closer to our medium term target of 1.5x net debt to EBITDA.

The Board will look to reinstate the payment of ordinary dividends

toshareholders later in 2023, assuming business performance is in

line withexpectations.

GOVERNANCE AND BOARD

There were a number of Board changes in 2022, which will ensure

that the Board retains the right skills and capabilities to support

our strategic delivery.

Dr Geertrui (Trudy) Schoolenberg was appointed to the Board

inMarch and joined the Audit, Nomination and Remuneration

Committees, also assuming the role of Senior Independent

Director from April, which had been carried out by Steve Good

from September 2021. Trudy has over 30 years’ experience of

working in the chemicals, engineering and high performance

products sectors, including over 20 years with Royal Dutch Shell.

After 9 years on the Board, Anne Hyland stepped down as Chair of

the Audit Committee and retired from the Board at the Company’s

Annual General Meeting in April. Anne was replaced as Chair of the

Audit Committee by Christine Soden. I would like to thank Anne for

her wise and insightful guidance during her time on the Board.

In December, Clement Woon was appointed to the Board and joined

the Audit, Nomination and Remuneration Committees. Clement is a

non-independent non executive director of PFI Food Industries Pte

Ltd and a non-executive director ofMorgan Advanced Materials. He

had previously been CEO of a textile machinery and components

business listed on the Shanghai Stock Exchange, and served in

senior executive positions in public listed companies based in

Singapore and Switzerland.

We will continue to monitor the effectiveness and diversity of the

Board and ensure that we have the right mix of competent, diverse

and engaged members, able to focus effectively on both the short

term performance of the Group and our longer term strategy.

SUSTAINABILITY

The Board maintains full ownership and oversight of the Group’s

sustainability strategy, the risks and opportunities faced, and the

progress made towards achieving the targets that we have set.

Thestrategy shapes and drives the sustainability programme

developed and delivered by the Executive Leadership team,

withthe Sustainability Director and Environmental Sustainability

Council responsible for embedding sustainability across all the

Group’s operations.

Our products demonstrate our commitment to sustainability in

society, enabling more efficient use of resources, reducing energy

requirements and minimising pollution. The sale of the Chromium

business substantially reduces our greenhouse gas emissions and

enhances the Group’s sustainability profile. At the end of 2022, the

Board approved the Group’s commitment to science based targets

and to a long term ambition to achieve Net Zero by 2050.

OUR PEOPLE

People are at the core of our success as a business and our

Values–Safety, Solutions, Ambition, Respect, Team – drive

everything that wedo. The policies that put these Values into

practice underpin the Board’s commitment to provide equal

opportunities in a work environment where everyone is treated

withdignity and respect.

We are committed to a high level of employee engagement, and

the Board’s oversight of the Group’s policies and progress in this

area is led by Christine Soden, the Designated Non-Executive

Director for workforce engagement. In 2022, an Employee Value

Proposition, ‘Connect. Grow. Make an Impact’ was launched

aiming to ensure that Elementis remains a satisfying and engaging

place to work, for all our employees.

Membership of the Board is 37.5% female and the Board seeks

tofoster Diversity, Equity and Inclusion (DE&I) at Elementis,

receiving regular updates on the implementation of DE&I policies

and delivery of our objectives in this area.

STAKEHOLDER ENGAGEMENT

As Chair, I maintain an active dialogue with our shareholders and

other stakeholders. During the year, I had meetings with a number

of our largest institutional shareholders, seeking their views on a

range of issues affecting the future prospects of the company, and

addressing any specific issues they raised.

LOOKING TO THE FUTURE

Following the sale of the Chromium business Elementis is now a

pure specialty chemicals company, able to generate higher quality

earnings and margins, and subject to lower end-market cyclicality.

The business remains well financed and strongly cash generative,

with a substantially enhanced sustainability profile.

Our strategy is clear and compelling, focusing on Innovation, Growth

and Efficiency, and we have a portfolio of differentiated, high-value

products and attractive new business development opportunities.

Some of our end markets are currently subdued due to adverse

macroeconomic conditions, but our businesses are strong and

resilient, and we have been proactive in managing those areas of

thebusiness most affected. I am therefore confident that Elementis

can make further progress in 2023 towards our medium term goals.

On behalf of the entire Board, I would like to thank all of our people

for their hard work and dedication.

John O’Higgins

Chair

* This is on a pre-IFRS 16 basis.

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Chief Executive Officer’s review

“

In 2022 we made significant progress towards our strategic

and financial goals. In an inflationary and increasingly uncertain

macroeconomic environment, Elementis delivered robust revenue

growth and higher adjusted operating margins. This was driven by our

portfolio of advantaged, high-value specialty products, augmented

by new product launches and new business wins, and our continually

improving operational efficiency. The sale of the Chromium business

will reduce the volatility of our earnings and margins, and improve

the sustainability profile of our business. Trading conditions remain

subdued in many of our markets, but Iam confident that continued

application of our Innovation, Growth and Efficiency strategy will enable

us to make further progress in 2023.

PERFORMANCE

Elementis delivered a strong financial performance in 2022,

withrevenue from continuing operations growing by 4% to $736m

and the adjusted operating margin increasing to 13.6% from 12.4%

inthe prior year. Continuing operations comprises the Coatings,

Personal Care and Talc businesses*, all focused on our clear strategy

of Innovation, Growth and Efficiency. Implementing this strategy,

these businesses together launched 18 new products and generated

almost $60m from new business opportunities**, andmade

progress towards $10m of sustainable operating cost savings

fordelivery by 2023.

Including discontinued operations, Group revenue grew to

$921.4m from $880.1m in 2021, and adjusted operating profit

was$123.7m compared with $107m in the prior year.

Coatings, our largest business, performed well, delivering both

higher sales and margins despite weaker trading conditions in

some markets, especially during the latter part of the year. Sales

grew strongly in the Americas region, with healthy decorative

demand as well as higher sales of industrial coatings, especially

inthe first half. In EMEA, sales of industrial coatings were solid

during the first half of the year. Sales were weaker in the decorative

sector, as the post-COVID surge in demand receded, and

European coatings markets overall weakened during the second

half,as the macroeconomic environment deteriorated. Our salesin

Asia are mainly industrial coatings, with China typically accounting

for around 70% of our total regional sales, and this market was

weak during the year due to the economic impact ofCOVID

lockdowns. Coatings continued to successfully leverage its new

product pipeline and global key account management programme

to deliver significant sales and profit growth. In addition, continuing

to focus on higher value products enabled usto increase the value

of our product mix and to capture this inour pricing, delivering

higher operating margins.

Focused strategy driving growth and

marginexpansion

Annual Report and Accounts 2022

Elementis plc

SUSTAINABILITY

Our aim is to develop high performance additives that deliver

positive, sustainable outcomes for the environment and for

society. To this end we seek to design products that use fewer

resources and create less pollution. Our areas of focus include

reducing GHG emissions with an ambition to reach Net Zero by

2050; water, waste and energy management; and product

design for better lifecycle impacts.

Specific sustainability related applications benefits delivered

byElementis products include additives working at lower

temperatures, which reduce customers’ energy consumption;

additives supporting formulation of low VOC paints, which

create less air pollution; and the use of talc in lightweight

plastics in vehicles, which improves their energy efficiency.

We continue to understand our carbon footprint better

andthevalue-creating opportunities reducing it can unlock.

Wecompleted our first assessment of value chain (Scope 3)

GHGemissions in 2022, and committing to adopt a science-

based target viatheScience Based Targets initiative, aligning

our strategy to reduce GHG emissions across our operations

andvaluechains with the 2015 ParisAgreement.

In 2022, for our continuing operations, 69%

of our revenue

camefrom natural or naturally-derived (as defined by ISO16128)

chemistries, while we increased our purchased energy from

renewable or low carbon sources to 77%, contributing to our

58%reduction in Scope 1 and 2 (market based) GHG emissions

since 2019. Since 2019, we have reduced water withdrawal per

tonne of product made by 18%, and waste sent to third parties per

tonne of product made by 13% across our continuing operations.

We believe clear disclosure of our ESG data is important,

andin 2022, we improved our climate rating at the Climate

Disclosure Project (CDP) to B in 2022, and increased our

EcoVadis Gold rating score compared with the prior year.

Scope 1 and 2 (market

based) GHG reduction

across our continuing

operations

58% since 2019

Read more p36-38

Personal Care performed strongly during the year, with good sales

growth and higher operating margins in both Cosmetics and AP

Actives. Demand for colour cosmetics grew across all our regional

markets, as COVID related social and travel restrictions were lifted.

New product launches and conversion of targeted new business

opportunities also delivered with sales. Sales growth in AP Actives

was also driven by strong demand across all regions. Volume

growth, along with product mix improvements and price rises that

more than offset raw material and other cost increases, delivered

substantially higher operating margins in Personal Care. Our new

AP Actives plant in India was completed and commissioned on

schedule, withcustomer qualification achieved and full commercial

operation initiated shortly after the end of the year.

The Talc business struggled due to a combination of significant

demand weakness in its principal end markets and substantially

higher European energy costs. The weak financial performance of

the business, combined with an increasing discount rate, contributed

to a non-cash goodwill impairment of $103m. More than80% of

Talc’s sales are to customers in Europe, with the automotive sector

being its largest end market sector. Significantly weaker demand

inthe plastics, coatings and technical ceramics market segments

could be only partially offset by a higher value product mix and

pricing actions. Sales were also negatively impacted by the loss of

business in Russia and neighbouring countries due to the Russian

invasion of Ukraine, as well as by a strike at Talc’s major paper sector

customer in the first half of 2022. In recent years, Talc had been

successfully growing sales in China, but this area was affected bythe

COVID lockdowns there during 2022. Talc also faced substantial and

fast rising energy costs as the year progressed with second half

impact being particularly pronounced. Asa result of these factors,

Talc sales and margins were materially lower than in the prior year.

At the end of the year, we merged theTalc and Coatings businesses

to create the Performance Specialties division. This will enable

acceleration of the significant revenue synergies that we have

achieved and facilitate the delivery of additional operating cost

savings in 2023 and beyond.

PORTFOLIO

The divestment of the Chromium business was announced in

November and completed in January 2023. Chromium had been

part of Elementis since 2002 and enjoyed a strong competitive

position inNorth America. However, the business increasingly

satoutside our ‘Innovation, Growth and Efficiency’ strategic

framework and ourstrategic review concluded that the interests

ofall stakeholders would be best served by a sale of the business.

The enterprise value achieved was $170m and the total cash

proceeds of $119m, aftertransfer of all US material environmental

and other liabilities and transaction costs.

Our continuing portfolio of businesses have a compelling purpose

and strategic rationale. Elementis is now a pure specialty chemicals

company, focused on adding value by making our customers’

formulations look, feel and perform better. This focus on advantaged,

high value products will enable us to deliver higher quality earnings

and margins, with lower volatility, and generate significant shareholder

value. In addition, the Chromium operations accounted for a large

portion of our environmental impact (e.g. 69% of the Group’s

greenhouse gas (GHG) Scope 1 and Scope 2 (location-based)

emissions in 2022 were from our Chromium sites), and the divestment

significantly enhances our corporate sustainability profile.

How we are embedding

sustainability intoour business

* Effective 1 January 2023, the results of the Coatings and Talc

segmentswill be reported under a new segment called Performance

Specialties, which reflects a change in the internal organisation structure

used for management, internal reporting purposes and the allocation

ofstrategic resources.

** Clearly defined share of wallet gains linked to product portfolio additions,

marketing or sales efforts.

For continuing operations only. It is 55% when including the divested

Chromium business revenue.

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Chief Executive Officer’s review continued

SAFETY

Safety is fundamental to the success of Elementis and a core part

of our culture. Our goal is to eliminate injuries completely and we

continue to drive our TogetherSAFE campaign across the Group

toachieve this. In 2022, we made progress on this Journey to Zero,

reporting an improvement in our safety performance compared

withthe previous year, with 75% of our facilities reporting no

injuries. The number of recorded employee injuries fell by 25% to

9, with the number of hand injuries falling to 3, from 6 in the prior

year. Wesaw a positive trend in the use of ‘Stop Work’ authority.

Our new Taloja anti-perspirant actives plant in India was completed

and brought into production having recorded more than

1.56 million safe working hours.

PEOPLE

In 2022, we took material action to strengthen our culture,

andmade good progress in living our Values, launching a new

Code ofConduct and revitalising our approach to compliance

andethics, tomaintain and improve employee engagement

andcommitment.

During the year we launched our Employee Value Proposition,

‘Connect. Grow. Make a Difference’, based on employee

input,andsupported the rollout with a series of workshops.

Wecontinued to drive Diversity, Equity and Inclusion across the

Group, through a DE&I Leadership Council, training programmes

and specialist external trainers, and employee resource groups,

such as the global Women in Leadership group. We also held

aseries of events in October focusing on inclusion, followed

upbythelaunch of an inclusion newsletter.

People are the bedrock on which our success depends, and

thepast three years have been challenging for everyone, firstly

managing the impact of the COVID pandemic, then navigating our

way out of this and learning to live with a ‘new normal’. I would like

to thank the whole Elementis team for their fortitude, adaptability

and commitment during this period and look forward to together

creating a successful future for the Company.

“

“Trading conditions remain subdued in many of our

markets, but energy prices are moderating from the

peaks of last year. We have a strong pipeline of sales

opportunities and are applying our Innovation, Growth

and Efficiency strategy to drive further improvement.

Despite the continued uncertainty in global demand,

we remain confident that Elementis is well placed

forfuture growth.”

CODE OF CONDUCT LAUNCH

Relaunch of our Code of Conduct and Ethics, entitled ‘Integrity is

ourSpecialty’.

OUTLOOK

The global macroeconomic environment weakened during the

second half of 2022, particularly in Europe. This created tougher

trading conditions in almost all of our markets. In China, while the

year has started slowly, there remains a reasonable expectation

forsome demand improvement as the year progresses.

Elementis is well positioned to weather this global market uncertainty

and to benefit as trading conditions improve. We have a portfolio

ofhigh quality businesses, implementing a strategy based on

Innovation, Growth and Efficiency in order to develop and deliver

distinctive, advantaged products and technologies. We have

astrong pipeline of new products and new business opportunities.

Moreover, the sale of the Chromium business has enhanced our

portfolio quality – reducing the volatility of our earnings, improving

margins and transforming the sustainability profile of our business.

Our streamlined operating structure with two segments, Personal

Care and Performance Specialties, allows us to focus on attractive

end markets and deliver further efficiencies as we integrate the

Talc and Coatings businesses.

The balance sheet continues to strengthen, with net debt to EBITDA

ratio approaching our medium-term leverage target, whilst our

operations remain highly cash generative.

Elementis is now well placed for both improved returns and growth.

Paul Waterman

CEO

Annual Report and Accounts 2022

Elementis plc

Answering key stakeholder questions

What impact will the sale of the Chromium business

have on the future prospects of Elementis?

The sale of Chromium will affect the Group in three ways.

First, it transforms Elementis into a pure specialty

chemicals business, that uses our unique chemistry

todevelop and supply distinctive, advantaged additives

to our customers. This focus on high value products

willenable us to deliver higher quality earnings and

margins, and with less volatility due to exposure to

commodity cycles.

Second, the proceeds of the sale significantly reduce our

net debt and strengthen our balance sheet. That gives us

a solid platform on which to drive further growth, and

also enables us to look to resume the payment of

dividends to our shareholders.

Third, the sale of Chromium enhances the environmental

profile of the Elementis. Chromium accounted for almost

three quarters of the Group’s greenhouse gas emissions

and the transaction therefore represents a major step

forward towards our long term sustainability targets.

Can Elementis achieve its medium term target

ofa17% adjusted profit margin?

We are confident that consistent and effective execution

of our strategy of Innovation, Growth and Efficiency can

enable us to achieve this target margin.

By continuing to invest in innovation, we create new

higher-value products that deliver higher margins.

Thestrong relationships that develop out of our close

collaboration with customers enables us to grow our

share of their business, and also opens up significant

new opportunities. This innovation-led growth – selling

more, higher-value products, in all of our businesses –

drives us towards our medium-term target.

At the same time, we continue to focus on the efficiency

ofour own operations, ensuring that we optimise our

procurement, manufacturing and logistics functions. Our AP

Actives plant in India is an example where we have invested

to substantially lower the cost base of the business, with

both manufacturing and logistics benefits that underpin our

margins. Across the business we have a rolling programme

of continuous improvement that is delivering sustainable

cost savings in all areas of our operations.

We are seeing evidence of progression. Our adjusted

operating margins have improved from 12.1% in 2021 to

13.6% in 2022. Our Personal Care and Coatings businesses

represent more than 80% of our revenues and these

already deliver margins above our 17% target. We are

confident that the recovery plan being implemented in our

Talc business, which is now part of our new Performance

Specialties business unit, can drive improvement in Talc

margins. With this context, we believe the Group as a

whole can achieve and sustain our medium-term target

of17% adjusted operating margins.

How do you plan to turn around the fortunes of the Talc

business and how long do you think this will take?

Talc had a tough year in 2022 due to a range of external

factors, which led to lower sales volumes, higher

operating costs and a significant profit decline.

The European automotive sector is our biggest market

sector and demand was weak, due to subdued levels of

vehicle production and customers destocking. Talc sales

were also impacted by a prolonged strike at a major

customer in the paper sector, weakness in our markets in

China due to COVID lockdowns, and the loss of customers

inRussia and adjoining countries because of the Russian

invasion ofUkraine. Talc is a big user of electricity and the

major warrelated increase in European energy prices had

a big impact on our financial performance.

We have responded to these challenges in several

ways.We have taken a number of pricing actions that

have offset the cost increases. The new Performance

Specialties management structure will allow us to deploy

capability better and to have a single, integrated global

sales force as well as a simplified route to market. We

continue to pursue a value focused strategy, and are

looking to reduce complexity and rationalise SKUs.

Talchas had an encouraging start to the year in 2023

andwe are confident of a turn around in performance.

How can you ensure that sustainability becomes

embedded into all aspects of your business, and that

you really do deliver ‘sustainable solutions’ for your

customers and for society?

We are making continuous progress on this journey.

Forus, embedding means making balanced business

and strategy decisions that incorporate sustainability

risks and opportunities alongside more established

financial considerations. To help this, we are continually

improving sustainability-related data and how we assess

potential future risks and opportunities. For example, in

2022 we developed our first quantified understanding of

greenhouse gas emissions in the value chain (Scope 3)

which helped us prioritise development activities to

replace specific raw materials with alternatives with

alower carbon footprint. Wealso adoptstandardised

frameworks when they are of relevance to our business

activities. They help us better assess sustainability topics

and to credibly communicate outcomes to customers

and otherstakeholders.

STAKEHOLDERS KEY Customers Suppliers

Employees

Investors

Regulatory

authorities

Communities and

the environment

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Our investment case

Reasons to invest

Elementis is a global specialty chemicals business providing innovative solutions

for some of the biggest challenges facing industries and companies today.

Ourbusiness model is built on differentiated premium assets, an innovation

focus, clear growth opportunities and strong cash generation.

Differentiated premium assets Innovation focus

Growth opportunities supported

bystructural growth trends

Strong cash generation

The fundamentals of our business are strong, focused on high

quality, high margin activities in Personal Care and Performance

Specialties. These premium performance additives businesses are

centred on long duration and differentiated resources, including

the only high quality hectorite clay mine in the world in California,

and high quality talc deposits in Finland. Together with our unique

technology and market leading formulation capabilities, these

create compelling competitive advantages.

Innovation is at the heart of what we do. Leveraging our

capabilities in rheology, surface chemistry and formulation, we

help our customers respond to their biggest challenges through

deep partnerships, ongoing technical support and consistent

quality, service and delivery. We are customer driven, solutions

focused and fast moving. This focus drives our growth and returns.

Across our premium performance additive businesses, we

seeover $100m of revenue growth opportunities supported

bystructural megatrends. In Personal Care, we are well positioned

toserve the growth of premium cosmetics in Asia and demand

fornatural skin care ingredients. In Performance Specialties, our

technologies enable the creation of more environmentally friendly

industrial coatings and higher performance decorative paints.

Inaddition, the need to reduce vehicle emissions and single use

plastic consumption will drive demand for our talc based additives.

Strong cash generation is a hallmark of Elementis. Looking

forward, we target operating cash conversion of at least 90% and,

supported by our Innovation, Growth and Efficiency priorities, this

will facilitate sustained reinvestment for organic growth, financial

deleveraging and, in due course, the reinstatement of dividend

payments to shareholders. Our medium term financial leverage

target is under 1.5x net debt/EBITDA, compared with 2.2x* today,

and delivery of this target is anticipated to drive significant

shareholder returns.

Read more about our Finance report

onpages 76-81

Number of assets

Spent on R&D

$8m

Products launched in 2022

average three year

operating cashconversion

87%

* This is on a pre-IFRS 16 basis.

Annual Report and Accounts 2022

Elementis plc

Differentiated premium assets Innovation focus Growth opportunities supported

bystructural growth trends

Strong cash generation

The fundamentals of our business are strong, focused on high

quality, high margin activities in Personal Care and Performance

Specialties. These premium performance additives businesses are

centred on long duration and differentiated resources, including

the only high quality hectorite clay mine in the world in California,

and high quality talc deposits in Finland. Together with our unique

technology and market leading formulation capabilities, these

create compelling competitive advantages.

Innovation is at the heart of what we do. Leveraging our

capabilities in rheology, surface chemistry and formulation, we

help our customers respond to their biggest challenges through

deep partnerships, ongoing technical support and consistent

quality, service and delivery. We are customer driven, solutions

focused and fast moving. This focus drives our growth and returns.

Across our premium performance additive businesses, we

seeover $100m of revenue growth opportunities supported

bystructural megatrends. In Personal Care, we are well positioned

toserve the growth of premium cosmetics in Asia and demand

fornatural skin care ingredients. In Performance Specialties, our

technologies enable the creation of more environmentally friendly

industrial coatings and higher performance decorative paints.

Inaddition, the need to reduce vehicle emissions and single use

plastic consumption will drive demand for our talc based additives.

Strong cash generation is a hallmark of Elementis. Looking

forward, we target operating cash conversion of at least 90% and,

supported by our Innovation, Growth and Efficiency priorities, this

will facilitate sustained reinvestment for organic growth, financial

deleveraging and, in due course, the reinstatement of dividend

payments to shareholders. Our medium term financial leverage

target is under 1.5x net debt/EBITDA, compared with 2.2x* today,

and delivery of this target is anticipated to drive significant

shareholder returns.

Read more about our Finance report

onpages 76-81

Number of assets

Spent on R&D

$8m

Products launched in 2022

average three year

operating cashconversion

87%

* This is on a pre-IFRS 16 basis.

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Our market environment

Our market drivers

Demographics Premiumisation Sustainability Transparency

TREND

The UN expects the world’s population to increase

by2 billion in the next 30 years, to 9.7 billion people.

Most of this increase will be in the developing world, driving

further urbanisation and investment in infrastructure.

Economic development, an expanding middle class and

growing levels of western style consumerism will generate

demand for products that improve living standards in

thesemarkets.

TREND

Premiumisation is bridging the gap between luxury and

mass market – offering all consumers access to unique

orinnovative products that promise more.

Consumers are willing to pay premium prices on value

added products with real benefits.

Premium is not just about price. It is the promise of

exceptional quality and experience, fuelling the growth

ofunique, value added products.

As a result, the premium segment is experiencing strong

growth, outpacing total category sales in many markets.

TREND

The recognition that resources are finite, and there are

wide,complex planetary and societal impacts related

tohowresources are used, is driving change across the

socio-economic system.

Consumers want products that have low negative impact on

theenvironment, nature, communities and workers in the value-

chain. It is increasingly important that claimed product benefits

are based on credible, science-based evidence and standards.

Businesses that embed future sustainability-related

outcomes into strategic decisions will find new opportunities

and have greater resilience in a changing world.

TREND

In an ever more connected world, customers and employees

want more transparency from the organisations that serve

and employ them.

Consumers and stakeholders want to know how goods

andservices are delivered to their door, how items are

manufactured and what happens to their personal data.

Organisations of all kinds must establish and maintain trust,

as the basis for successful collaboration and innovation.

WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY

Increasing demand for construction and infrastructure

related solutions

Rising demand for personal care products such as

colour cosmetics and skin creams

Increased demand for longer lasting and more

technologically advanced products

Demand for products that make

consumers’ lives easier

Demand for products with feel good

and premium characteristics

Demand for natural or naturally-derived products

Increased desire for solutions that contribute

positively to the health and wellbeing of society

Demand for solutions that increase production yields

and contribute towards the circular economy

Pressure to minimise social and environmental impact

of production throughout supply chains

Consistent and transparent communication

of activities throughout the value chain

Clear evidence of ethical and social

considerations in decision making

Open and frequent consultation with all stakeholders

OUR OPPORTUNITIES OUR OPPORTUNITIES OUR OPPORTUNITIES OUR OPPORTUNITIES

New geographic markets for consumer and industrial

products that require premium performance additives

Opportunities to innovate and serve local market needs

Higher demand for additives that deliver premium

product performance characteristics

Opportunities for natural or naturally-derived

ingredients (e.g. hectorite, talc or castor wax based

additives) which represent 69%* of our total sales

Increased use of our naturally-derived products for

better resource efficiency

Products that lower energy demands and minimise

pollution in downstream applications

Innovative product designs, manufacturing processes

and supply chain management to result in better

outcomes for all stakeholders

Help customers make informed purchasing

decisions through clear scientific evidence and supply

chain transparency

Improved reporting and disclosure

of corporate activities

OUR RESPONSE

Capital investment in manufacturing assets in India

toenhance our efficiency and bring our products closer

to our customers in high growth geographies

Launch of ingredients to combat signs of damaged

skin(through e.g. air pollution)

Addressing regional needs such as Japanese Standards

of Quasi-drug Ingredients (JSQI) or halalcertification

Expand resources/investment to generate more insights

on local market needs and deepen innovation dialogue

Upgrade offering for waterbased, high solid and

solventfree formulations, with higher durability

formulation for cities’ sustainable growth.

OUR RESPONSE

Focused innovation targeting technologies

thatdeliverimproved product performance, lower

operationalcosts and enhanced sustainability claims

The launch of 18 new products in areas

such as premium decorative paints, natural

skin care ingredients and high efficacy

anti-perspirant actives

Product launches that are suitable for the ‘masstige’

market and reduce time to market

Product solution for better durability, workability and

aesthetics for the Deco and Construction markets

OUR RESPONSE

The launch of products that reduce

transportation emissions, that lower

customers’ energy requirements and

enable food packaging recycling

Aim to reach Net Zero by 2050 and

committed to set ascience-based GHG

emission reduction target

Progress towards our 2030

environmental targets

Carbon neutral Bentone Gel

production at Livingston

OUR RESPONSE

Further investment in digital capabilities including

online customer ordering, tracking and fulfilment,

along with access to product safety data

Verification against demanding labelling standards

such as ISO, COSMOS and Ecolabeltohighlight

thecredentials of our products

Launch of our new Code

of Conduct

Increased our EcoVadis Gold rating and

CDP Climatescore compared to the

prior year

* For continuing operations only. It is 55% when including the divested Chromium business revenue.

Annual Report and Accounts 2022

Elementis plc

Demographics Premiumisation Sustainability Transparency

TREND

The UN expects the world’s population to increase

by2 billion in the next 30 years, to 9.7 billion people.

Most of this increase will be in the developing world, driving

further urbanisation and investment in infrastructure.

Economic development, an expanding middle class and

growing levels of western style consumerism will generate

demand for products that improve living standards in

thesemarkets.

TREND

Premiumisation is bridging the gap between luxury and

mass market – offering all consumers access to unique

orinnovative products that promise more.

Consumers are willing to pay premium prices on value

added products with real benefits.

Premium is not just about price. It is the promise of

exceptional quality and experience, fuelling the growth

ofunique, value added products.

As a result, the premium segment is experiencing strong

growth, outpacing total category sales in many markets.

TREND

The recognition that resources are finite, and there are

wide,complex planetary and societal impacts related

tohowresources are used, is driving change across the

socio-economic system.

Consumers want products that have low negative impact on

theenvironment, nature, communities and workers in the value-

chain. It is increasingly important that claimed product benefits

are based on credible, science-based evidence and standards.

Businesses that embed future sustainability-related

outcomes into strategic decisions will find new opportunities

and have greater resilience in a changing world.

TREND

In an ever more connected world, customers and employees

want more transparency from the organisations that serve

and employ them.

Consumers and stakeholders want to know how goods

andservices are delivered to their door, how items are

manufactured and what happens to their personal data.

Organisations of all kinds must establish and maintain trust,

as the basis for successful collaboration and innovation.

WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY WHAT THIS MEANS FOR OUR INDUSTRY

Increasing demand for construction and infrastructure

related solutions

Rising demand for personal care products such as

colour cosmetics and skin creams

Increased demand for longer lasting and more

technologically advanced products

Demand for products that make

consumers’ lives easier

Demand for products with feel good

and premium characteristics

Demand for natural or naturally-derived products

Increased desire for solutions that contribute

positively to the health and wellbeing of society

Demand for solutions that increase production yields

and contribute towards the circular economy

Pressure to minimise social and environmental impact

of production throughout supply chains

Consistent and transparent communication

of activities throughout the value chain

Clear evidence of ethical and social

considerations in decision making

Open and frequent consultation with all stakeholders

OUR OPPORTUNITIES OUR OPPORTUNITIES OUR OPPORTUNITIES OUR OPPORTUNITIES

New geographic markets for consumer and industrial

products that require premium performance additives

Opportunities to innovate and serve local market needs

Higher demand for additives that deliver premium

product performance characteristics

Opportunities for natural or naturally-derived

ingredients (e.g. hectorite, talc or castor wax based

additives) which represent 69%* of our total sales

Increased use of our naturally-derived products for

better resource efficiency

Products that lower energy demands and minimise

pollution in downstream applications

Innovative product designs, manufacturing processes

and supply chain management to result in better

outcomes for all stakeholders

Help customers make informed purchasing

decisions through clear scientific evidence and supply

chain transparency

Improved reporting and disclosure

of corporate activities

OUR RESPONSE

Capital investment in manufacturing assets in India

toenhance our efficiency and bring our products closer

to our customers in high growth geographies

Launch of ingredients to combat signs of damaged

skin(through e.g. air pollution)

Addressing regional needs such as Japanese Standards

of Quasi-drug Ingredients (JSQI) or halalcertification

Expand resources/investment to generate more insights

on local market needs and deepen innovation dialogue

Upgrade offering for waterbased, high solid and

solventfree formulations, with higher durability

formulation for cities’ sustainable growth.

OUR RESPONSE

Focused innovation targeting technologies

thatdeliverimproved product performance, lower

operationalcosts and enhanced sustainability claims

The launch of 18 new products in areas

such as premium decorative paints, natural

skin care ingredients and high efficacy

anti-perspirant actives

Product launches that are suitable for the ‘masstige’

market and reduce time to market

Product solution for better durability, workability and

aesthetics for the Deco and Construction markets

OUR RESPONSE

The launch of products that reduce

transportation emissions, that lower

customers’ energy requirements and

enable food packaging recycling

Aim to reach Net Zero by 2050 and

committed to set ascience-based GHG

emission reduction target

Progress towards our 2030

environmental targets

Carbon neutral Bentone Gel

production at Livingston

OUR RESPONSE

Further investment in digital capabilities including

online customer ordering, tracking and fulfilment,

along with access to product safety data

Verification against demanding labelling standards

such as ISO, COSMOS and Ecolabeltohighlight

thecredentials of our products

Launch of our new Code

of Conduct

Increased our EcoVadis Gold rating and

CDP Climatescore compared to the

prior year

STRATEGIC REPORT CORPORATE GOVERNANCE

FINANCIAL STATEMENTS SHAREHOLDER INFORMATION

Annual Report and Accounts 2022

Elementis plc

Supply chain in action

Responding to global supply chain challenges

Global supply chains remained challenged in the first half of 2022, starting with

accumulated backlogs and staffing shortages, then facing intensified delays due

to the impact of the Russian invasion of Ukraine and China widening the COVID-19

curbs. While the supply constraints eased in the second half, manufacturing was

being hit by rising prices, weakening demand, and a shift of sentiment. These tested

the resilience and agility of our global supply chain and manufacturing.

Demand Raw materials Logistics Energy

A high level of backlog orders was carried over at the beginning

of 2022 due to significant disruptions to our supply chain in

the prior year. We effectively prioritise orders, increase

production capacity, and communicate with customers. We also

optimise the supply chain and streamline the process, including

automating the order entry and inventory management process

to reduce errors and speed up order processing. Those

efficiency improvements help us process orders more quickly.

As a result, we decreased 85% of backlogs and minimised the

order pushed out due to no inventory availability.

Demand for raw materials remained high at the beginning of

the year and inflation continued to be a significant factor. We

continued to develop alternative supply chains and implement

price increases, as necessary. In addition, during 2022 we

configured the supplier bases for our new plant in India which

was commissioned in Q4. In the last quarter of the year the

sourcing environment began to shift with demand in global

supply chains softening and availability improving.

The logistics challenges in 2022 shifted from tackling

transportation bottlenecks and extended transit time,

especially in ocean freight, to battling over-the-road

transportation costs and warehousing space availability, which

impact customer satisfaction and our financial performance.

We established the logistics management function and installed

the logistics management programme to oversee the logistics

related service, efficiency, and network optimisation

improvements globally. We also partner with leading third party

logistics providers to deploy new technologies for better

visibility and to optimise routing and scheduling.

Supply constraints resulted in record high, volatile energy

prices around the globe. In Europe, 2022 natural gas prices

reached a record peak of €340/MWh (Dutch TTF) on

26 August, 3,531% above the average price in 2020, as

northern Europe prepared for winter with significantly

reduced access to Russian gas. Effective hedging policies

limited business impact, and our global process improvement

teams continued to deliver energy efficiency projects.

OUR RESPONSE

Customer fulfilment excellence from the supply chain agility

A US customer needed an urgent delivery of a specialty rheology additive from the manufacturing facility at Livingston, UK, to respond

quickly to the end market demand changes. But the Livingston plant capacity was sold out due to a critical raw material supply under

force majeure. In the meantime, the trial production of the same rheology additive at the New Martinsville, US manufacturing facility

wasplanned to be completed after a scheduled maintenance outage in the next three weeks. The commercial, supply chain and

manufacturing teams collaborated immediately to bring forward the trial at the New Martinsville plant and to re-prioritise other customers’

orders. The production trial generated the on-spec materials at the first pass thanks to the productivity and flexibility enabled at the New

Martinsville plant. The supply chain operations team secured the carriers and delivered the products immediately after the successful

production run, thanks to the automated process to speed up order-to-delivery. By building an agile supply chain with quick response

time and high level flexibility, collaboration and visibility, we can improve our ability to respond to changing market conditions and

customer needs while reducing costs and improving efficiency. This is becoming increasingly important as we face greater levels

ofuncertainty and volatility in the global marketplace.

OUR RESPONSE

Logistics cost visibility

One of the logistics management initiatives we implemented in 2022 was logistics cost visibility. We teamed up with a leading

logistics service provider and conducted the process mapping and design for a logistics visibility platform. We built a centralised

data repository of shipments with all modes and the transportation, warehousing and customer fulfilment costs associated with

those shipments. We developed analytics and visualisation in Tableau to help businesses monitor transportation costs by factors

such as fuel costs, carrier rates, transit times and customer fulfilment costs, including warehousing and service expenses. The

logistics visibility platform enables businesses to make informed decisions, reduce costs, and improve supply chain efficiency.

Utilising the logistics visibility platform, we identified cost-saving opportunities by optimising the carrier networks and negotiating

better rates. We also identified inefficiencies in their fulfilment operations and took steps to optimise processes and reduce costs.