Luxfer Group (NYSE:LXFR), a global materials technology company,
today issued its unaudited financial results for the three-month and
twelve-month periods ended December 31, 2013.
UNAUDITED FINANCIAL RESULTS FOR THE FOURTH QUARTER OF 2013
Results are summarized as follows:
Three-month periods ended December 31,
Twelve-month periodsended December 31,
Restated under IAS 19R
Net revenue (excluding surcharge below)
Rare earth chemical surcharge
Earnings per £1 ord. share - Basic (1)
Adjusted net income (2)
Adjusted earnings per £1 ord. share - Basic
Adjusted earnings per ADS - Basic (3)
Adjusted earnings per ADS - fully diluted
Adjusted EBITDA (4)
Adjusted EBITDA margin
£1 ordinary shares outstanding
LXFR - ADS equivalent outstanding (5)
Investor and news agency communications should initially be directed to Dan
Stracner, Director of Investor Relations, U.S. telephone number: +1
951 341 2375 ; email: email@example.com.
ABOUT LUXFER GROUP
Luxfer is a global materials technology company specializing in the
design and manufacture of high-performance materials, components and gas
cylinders for environmental, healthcare, protection and specialty
end-markets. Luxfer customers include both end-users of its products and
manufacturers that incorporate Luxfer products into finished goods. For
more information, visit www.luxfer.com.
Luxfer Group is listed on the New York Stock Exchange and its American
Depositary Shares (ADSs) trade under the symbol "LXFR".
Luxfer Group revenue for the fourth quarter of 2013 was $116.0m and net
revenue (revenue before rare earth surcharges, which was $1.0m in Q4
2013) was $115.0m, a decrease of $11.4m over Q4 2012 at constant
translation exchange rates. Translation differences were a further
positive $0.7m. Gas Cylinders Division revenue was down in the fourth
quarter of 2013 compared to the equivalent period in 2012 with sales of
industrial gas cylinders and composite life support cylinders lower in
both Europe and the United States. Our Superform business also had a
slightly weaker quarter compared to last year. Despite lower sales in
the quarter for the Gas Cylinders Division, the sales mix led to a
favorable operating margin compared to Q4 2012. In our Elektron
Division, revenues from high-performance aerospace alloys and
photo-engraving plate improved compared to Q4 2012. Sales of magnesium
powder for U.S. military counter-measure flares and catalysts sales for
European automotive both saw a small improvement in the quarter compared
with Q4 2012. Demand in both of these markets remained relatively weak,
but some signs of improvement were evident at the end of 2013. Sales of
our zirconium oxides and other non-military powders were lower compared
to Q4 2012. Although the revenue was lower in both Gas Cylinders and
Elektron, the improved sales mix meant an increased trading margin
compared to Q4 2012. Lower rare earth costs resulted in a reduced rare
earth surcharge: down to $1.0m in Q4 2013 from $4.3m in Q4 2012.
Overall, the Group's Q4 2013 revenue at $116.0m is lower than the
$130.0m for Q4 2012. The gross profit margin was 25.9%, compared to
24.5% for Q4 2012, reflecting the change in sales mix between divisions
but also a stronger quarter for product margins, despite lower volumes.
Trading profit was $15.0m for the fourth quarter of 2013 (Q4 2012 IAS
19R restated: $16.1m). The Gas Cylinders Division Q4 2013 trading
profit margin of 7.5% was higher than the 6.1% of Q4 2012, reflecting an
improved mix of sales. Elektron Division's 19.7% trading profit margin
was slightly lower than in Q4 2012 (19.9%) due to the lower capacity
utilization of our European zirconium operation. Group operating profit
(trading profit after the deduction of non-recurring trading items) was
$13.2m in Q4 2013 (Q4 2012 IAS 19R restated: $14.0m).
This report contains forward-looking statements.
Examples of such forward-looking statements include, but are not limited
(i) statements regarding the Group's results of operations and financial
(ii) statements of plans, objectives or goals of the Group or its
management, including those related to financing, products or services,
(iii) statements of future economic performance and
(iv) statements of assumptions underlying such statements. Words such as
"believes", "anticipates", "expects", "intends", "forecasts" and "plans"
and similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such
By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that the
predictions, forecasts, projections and other forward-looking statements
will not be achieved. The Group cautions that a number of important
factors could cause actual results to differ materially from the plans,
objectives, expectations, estimates and intentions expressed in such
forward-looking statements. These factors include, but are not limited
(i) future revenues being lower than expected; (ii) increasing
competitive pressures in the industry; (iii) general economic conditions
or conditions affecting demand for the services offered by us in the
markets in which we operate, both domestically and internationally,
being less favorable than expected; (iv) the amount of indebtedness we
have incurred and may incur and the obligations to service such
indebtedness and to comply with the covenants contained therein; (v)
fluctuations in the price of raw materials and utilities; (vi) currency
fluctuations and hedging risks; and (vii) worldwide economic and
business conditions and conditions in the industries in which we operate.
The Group cautions that the foregoing list of important factors is not
exhaustive. These factors are more fully discussed in the sections
"Forward-Looking Statements" and "Risk Factors" in our annual report on
form 20-F dated March 29, 2013 filed with the U.S. Securities and
Exchange Commission. When relying on forward-looking statements to make
decisions with respect to the Group, investors and others should
carefully consider the foregoing factors and other uncertainties and
events. Such forward-looking statements speak only as of the date on
which they are made, and the Group does not undertake any obligation to
update or revise any of them, whether as a result of new information,
future events or otherwise.
Divisional analysis of revenue and trading profit
Gas Cylinders Division revenue of $64.1m in Q4 2013 was $6.6m lower than
in Q4 2012. Underlying revenue (calculated as net revenue before FX
translation effects) decreased by $7.3m or 10.3%, and FX translation
differences were a positive $0.7m. Q4 2013 saw tougher trading
conditions in both the U.S. and European gas containment markets. While
we generated year-on-year sales growth in composite alternative fuel
(AF) cylinders for containment of compressed natural gas (CNG), sales in
other markets, in particular composite life-support (air) cylinders used
in self-contained breathing apparatus (SCBA) for emergency services and
aluminum cylinders used for industrial gas containment, were down. Sales
of large composite AF cylinders and systems were $13.2m in the quarter,
an improvement on the previous quarter. The division recently won its
first major contract to supply bulk gas transport modules for a virtual
pipeline: supplying CNG to an Australian mining community to allow
conversion of power generation from diesel to natural gas. Although
originally expected to commence in Q4 2013, the first deliveries are now
scheduled in March 2014, and the total contract value is expected to be
at least $10m during 2014, with the final value dependent on the volume
of gas required to be transported.
Trading profit for the fourth quarter of 2013 was $4.8m, an increase of
$0.5m or 11.6% over the $4.3m trading profit for the fourth quarter of
2012. We continued to make good progress on integrating the former
Dynetek plants into the division, and these facilities were profitable
in this quarter compared to losses in Q4 2012, the first quarter
following acquisition. Compared to Q4 2012, we also absorbed an
additional negative $0.2m from less favorable exchange rates on
import/export prices in Q4 2013. The higher Q4 2013 divisional margin of
7.5% resulted from an improved sales mix, tighter cost control and
improved manufacturing efficiencies.
Elektron Division's revenue was $51.9m for Q4 2013, a decrease of $7.4m
from Q4 2012. The continuing drop in rare earth costs allowed us to
reduce rare earth surcharges to customers by $3.3m in Q4 2013 to only
$1.0m compared to the equivalent period last year. Q4 2013 net revenue
(revenue before rare earth surcharges) was down $4.1m to $50.9m compared
to Q4 2012. There was no FX translation difference on prior year
revenue, so underlying revenue was down $4.1m or 7.5%. As previously
reported, two key markets, European automotive and U.S. defense,
remained weak, but with some signs of improvement in the automotive
market. Sales of Elektron high-performance alloys remained strong,
mainly because of higher North American demand in aerospace and high-end
engineering applications. We have also seen increased sales in Q4 2013
in the photo-engraving market, with revenues and volumes up from Q4 2012.
Elektron's trading profit of $10.2m in Q4 2013 was $1.6m lower than in
Q4 2012. Although sales margins were strong, profit fell due to the
lower sales in the quarter. FX transaction rates on imports and exports
had no impact in the quarter compared to the equivalent period in 2012.
Operating profit to net income for the period
Operating profit was $13.2m in Q4 2013 compared to $14.0m in Q4 2012. We
incurred a one-off $1.7m actuarial retirement benefit charge in Q4 2013
in relation to buying out accrued benefits of some of the deferred
members in a previously closed U.S. defined retirement benefit plan.
This was to reduce the risk of this plan by reducing its gross
liabilities by $11.2m. The charge has been included in our restructuring
and other income / (expense) and can be allocated as $1.2m to Gas
Cylinders Division and $0.5m to Elektron Division. In addition, there
was a $0.1m charge under IFRS 2 related to share options granted at the
time of the IPO, where the cost is spread over the vesting period. There
were charges of $2.1m in respect of restructuring and other income or
expense in the fourth quarter of 2012.
The net interest charge for Q4 2013 was $0.2m higher at $1.6m (Q4 2012:
As previously reported, a change to IAS 19, Employee Benefits Revised,
requires us to charge (in addition to normal current-year service costs)
scheme paid (and self-funded) administration costs to operating profit
and to make a notional finance charge, in respect of the level of
accounting pension deficit, based upon corporate bond yields. In the
fourth quarter of 2012, profit on operations before tax and net income
were impacted by charges of $0.9m and $0.7m, respectively. Results for
Q4 2012 have been restated to reflect these changes and make the
prior-year figures comparable to the current year (see Note 6 of the
attached unaudited financial statements for a summary of the 2012
restatement). These charges are non-cash changes to the accounting
presentation and do not affect pension deficit calculations, as the
additional charges are cancelled out by corresponding positive credits
in equity reserves, resulting in no change in the Group's net assets.
Profit on operations before tax was $10.5m for Q4 2013 (Q4 2012 IAS
19R restated: $10.7m). Tax expense was $1.7m (Q4 2012 IAS 19R
restated: $1.5m), and the effective tax rate was 16.2%, compared to
a Q4 2012 effective rate of 14.0%. The increase in the effective tax
rate can be attributed to a higher proportion of profits being in the
U.S., offset in part by U.K. Government tax initiatives reducing taxes
on profits from patented products and the utilization of brought-forward
Net income in the period was $8.8m (Q4 2012 IAS 19R restated:
$9.2m). Adjusting for non-trading items (IAS 19 retirement benefits
finance charge, acquisition costs, disposal costs of intellectual
property, restructuring and other income / (expense) and other
share-based compensation charges), adjusted net income in Q4 2013 was
$11.1m (Q4 2012 IAS 19R restated: $12.6m).
Earnings per £1 ordinary share for Q4 2013, unadjusted, was $0.66. Using
adjusted net income, earnings per £1 ordinary share was $0.83, and the
ADS equivalent was $0.41 for Q4 2013.
Cash flow and net debt
The Group achieved a $7.3m net cash inflow from operating activities in
Q4 2013 compared to the inflow of $17.3m in Q4 2012. There was a cash
outflow from higher working capital of $5.5m in Q4 2013 compared to an
inflow of $5.2m in Q4 2012, which reflects a build-up of
work-in-progress in the AF gas cylinder business and improved orders in
Elektron. Purchases of property, plant and equipment resulted in a cash
outflow of $10.1m in Q4 2013 (Q4 2012: $9.3m). We have increased the
rate of expenditure in the second half of 2013 with investments in
additional composite cylinder capacity as announced previously. Q4 2013
includes a cash outflow of $1.0m in relation to further investment in
our gas transportation joint venture in the USA, via debt to fund its
expansion. There was a net cash outflow before financing of $6.0m in Q4
2013, compared to an inflow of $8.7m in Q4 2012.
In Q4 2013, cash flows used in financing activities consisted of a net
outflow of $3.9m compared to cash flows from financing activities of
$10.7m in Q4 2012. The amount of interest paid to debt-holders was $1.3m
in Q4 2013, the same as in Q4 2012. In Q4 2013, we paid a quarterly
dividend of $2.7m (Q4 2012: $2.0m). Total cash flow movements were a net
outflow of $9.9m in Q4 2013 compared to an inflow of $19.4m in Q4 2012.
Luxfer Group had $28.4m of cash and cash equivalents as at December 31,
2013, compared to an equivalent figure of $40.2m as at December 31,
2012. As at December 31, 2013, net debt had increased to $35.4m from
$23.3m as at December 31, 2012, as a result of our investments in the
Twelve-month period - ended December 31, 2013
On an IFRS reported basis, revenues for the twelve-month period were
$481.3m compared to $511.6m for the same period of 2012. The decrease is
attributable to a significant reduction in surcharges on rare earths.
Net revenue for the twelve-month period was $472.9m for 2013, $1.8m
higher than the equivalent period in 2012 of $471.1m. Adjusting for an
adverse translation impact of $1.5m, underlying revenue increased by
$3.3m or 0.7% in 2013 compared to 2012. This related to increased sales
of large composite cylinders for CNG containment, along with strong
sales demand for composite SCBA cylinders, which offset weaker demand
for defense products and from other industrial sectors, mainly in
European markets, in both the Elektron and Gas Cylinders divisions. In
2013, we sold $50m of alternative fuel cylinders and systems.
Trading profit for the twelve-month period was $59.2m compared to $68.5m
for 2012, a decrease of 13.6%. Though overall net revenue was up, the
switch in the sales mix from Elektron to Gas Cylinders had an adverse
profit impact, with the fall in Elektron's sales having a greater profit
impact due to the typically higher operating margins of the Elektron
Division. Elektron Division's trading profit of $40.2m was down 23.9%,
with the largest reduction relating to a $10m adverse variance on sales
volume and mix changes. There was a further $2.7m adverse variance as a
result of reduced margins on lower pricing, net cost savings of $0.6m
and an adverse translation of $0.5m. Gas Cylinders Division's trading
profit of $19.0m was up 21.0%; the improvement resulted from a $6.6m
favorable trading variance from higher sales, offset by higher net costs
of $2.4m and a negative transaction FX variance of $1.0m, but a
favorable translation of $0.1m. Group operating profit for the
twelve-month period was $56.5m compared to $66.4m for the same period in
2012, operating profit being stated after restructuring costs and
one-off items, such as a charge under IFRS 2 related to share options
granted at the time of the IPO, where the cost is amortized over the
vesting period and the costs relating to the buy-out of pension
liabilities in the U.S.
Profit on operations before taxation for the twelve-month period ended
December 31, 2013, was $46.7m, which represented an $8.8m or 15.9%,
decrease from the same period in 2012. Net income for the twelve-month
period was $34.1m, down $5.4m from the same period in 2012.
The effective tax charge in 2013 was 27.0%, compared to 28.8% in 2012.
The reduction was achieved despite a greater proportion of the profits
being generated in the higher tax jurisdiction of the USA. This was
achieved through utilization of previously trapped losses in the U.K,
and the benefit of lower rates on U.K. profits generated from patented
products under the new U.K. "patent box" tax system.
Adjusted net income (as reconciled to net income in Note 4 of this
release) for the twelve-month period was $39.8m, compared to $44.7m for
the same period in 2012 (restated under IAS 19R).
Earnings per share
The basic EPS on our ordinary £1 shares was $2.54 per share and the ADS
equivalent was $1.27 per ADS. Adjusted income EPS per ADS was $1.48 and
the fully diluted equivalent was $1.42. This was at the top end of our
expectations and guidance provided after Q3 results and was achieved, in
part, through a reduction in our taxation costs.
Adjusted EBITDA (reconciliation in Note 4) for the twelve-month period
ended December 31, 2013 was $76.6m compared to $83.2m for the same
period in 2012. Net cash flows from operating activities for the
twelve-month period was $37.1m compared to $69.0m for the same period in
2012, after tax, but before investment and financing activities. The
reduced cash flow was a result of an increase in working capital
requirements near the end of 2013 due to higher work in progress, along
with increased investment in the operations, as well as the impact of
lower profits. In 2012 we also had a favorable effect from significantly
falling rare earth prices and inventory levels, following the price
spike in 2011.
Other corporate matters
Acquisition of additional CNG cylinder manufacturing facility
We have signed a purchase agreement to acquire a small composite
cylinder business and the associated under-utilized production assets in
Utah, subject to customary closing requirements. This will provide our
North American gas cylinder business with a facility purpose-built for
the manufacture of Type 4 (polymer-lined) composite cylinder products,
which will be targeted initially at the class 8 heavy-duty truck market,
where conversions from diesel to CNG are expected to increase. The
initial cost is $3m with a variable deferred consideration element,
estimated at $6m, linked largely to the success of the operation in the
next three years. We are in the final stages of developing a new range
of larger-diameter Type 4 cylinders for growing CNG markets to
complement our existing lightweight range of Type 3 (aluminum-lined)
cylinder products and systems, and our plan is for the new range to be
made in Utah. Available capacity is expected to be adequate for our
needs through 2015 and can be expanded further when required.
Transfer of ordinary shares to American Depositary Receipts ("ADRs")
The transfer of ordinary shares into the ADR program by the existing
holders of ordinary shares is progressing well. As at February 28, 2014,
the number of ADRs had increased to 24.8m, which compares to 9.2m at the
IPO, representing 92% of the total share capital.
Newly extended banking arrangements
The Group is in the process of amending and extending its banking
facilities, which are currently a £70m ($115m) revolving credit
facility. The new arrangements provide an expanded $150m of committed
revolving credit facilities, at slightly lower costs than previous
terms, and also provide up to an additional $50m via a standby accordion
facility. The current facilities were due to mature in early May 2015,
but the amended facility is to be extended to the end of April 2019.
Fees payable for this amendment and extension are expected to be $1.3m
plus legal costs.
Summary of 2013
Our European markets, especially automotive, were generally soft
throughout 2013. North America was generally much stronger, although
defense sales there were even more depressed than expected. The main
impact of this softness was felt by our Elektron Division, although the
aluminum cylinder business was also affected in Europe.
Overall, our Gas Cylinders business saw substantial growth in demand for
our ultra-lightweight composite cylinders, mainly driven by alternative
fuel, but sales of composite cylinders for SCBA kits were also stronger.
Q4 revenue was lower than we expected, with the single largest variance
being a delay in the receipt of a purchase order for a major AF "virtual
pipeline" project in Australia for which we are supplying bulk gas
transport modules and for which we expected to have shipped around half
prior to the year-end.
While the operating profit figures were below our expectations, we have
delivered our forecast EPS based on improvements to our use of historic
tax losses and UK government tax incentives, and there has been good
progress in a number of strategically-important areas:
Outlook for 2014
We expect the alternative fuel and SCBA markets to grow further in North
America during 2014, which we expect would have a positive influence on
our Gas Cylinders Division. Our objective is to increase our presence in
the alternative fuel market, and to that end we are in the process of
developing a range of Type 4 (polymer-lined) composite cylinders for
applications where larger-diameter cylinders are required. We have just
committed to the acquisition of additional CNG cylinder manufacturing
assets, which we expect to facilitate our entry into that product
sector. We expect to begin offering these products in Q2, with the full
range taking a few months to roll out.
For 2014, planned capacity increases in Type 3 (aluminum-lined)
composite cylinders come on-stream progressively through the year. In
Elektron, while we are not assuming any recovery in the defense market,
we do expect some recovery in European industrial markets, especially
automotive, over the course of the year, and we have won some additional
automotive business, which is scheduled to start in Q3.
The delayed shipments of modules for the Australian "virtual pipeline"
are now expected to be over March to June this year, subject to any
unforeseen further delays.
There are a few unexpected headwinds, however, to be faced in the first
half of the year. Firstly, there has been a delay in regulatory approval
of breathing air kits compliant with the new 2013 USA standard. This has
been made public by our customers, who are understandably upset with
this regulatory delay. While cylinders are still being taken by our
customers for a pre-build of 2013-compliant kits for the delayed launch,
there is a lull in sales until, it is expected, sometime during Q2. We
would expect the shortfall to be largely recovered in the balance of the
year, subject to capacity constraints.
Secondly, and sadly, on February 22nd one of our two key customers for
countermeasure flare material suffered a fatal explosion at its facility
in Tennessee. This is likely to result in a suspension of its production
for some months, resulting in a lower demand for our military-grade
magnesium powders. It is not yet clear whether the customer will attempt
to recover the shortfall once production resumes.
Overall, while these issues and the continuing weakness of European
markets are likely to hold us back in Q1 2014 and possibly Q2 2014, we
remain optimistic that, over the whole year, both divisions will improve
on 2013. The introduction of Type 4 (polymer-lined) composite cylinders
around the middle of the year will be an exciting addition to our
Twelve month periods ended December 31,
Restated underIAS 19R
NET INCOME FOR THE PERIOD
Total other comprehensive income movements for the period
ended December 31,
Twelve-month periods ended December 31,
1. Revenue and segmental analysis
For management purposes, the Group is organized into two operational
divisions, Gas Cylinders and Elektron. The tables below set out
information on the results of these two reportable segments. Management
monitors the operating results of its divisions separately for the
purpose of making decisions about resource allocation and performance
assessment. Segment performance is evaluated based on trading profit or
loss, defined as operating profit or loss before restructuring and other
expense. All inter-segment sales are made on an arm's length basis.
Three month period ended December 31, 2013
2. Calculation of net debt
3. Other income (expense) items
a) Restructuring and other income (expense)
b) Acquisitions and disposals
Three-month periodsended December 31,
Rationalization of operations
For the twelve-month period ended December 31, 2013, $0.2m and $0.3m of
costs were incurred in relation to rationalization costs in our Elektron
Division and Gas Cylinders Division, respectively. For the three-month
and twelve-month period ended December 31, 2012, $1.3m of costs were
incurred in relation to rationalization costs in our Gas Cylinders
I.P.O.-related share-based compensation charges
For the three-month period and twelve-month period ended December 31,
2013, a charge of $0.1m and $0.5m, respectively, was recognized in the
income statement under IFRS 2 in relation to share options granted as
part of the initial public offering in 2012. For the three-month and
twelve-month period ended December 31, 2012, the charge was $0.8m.
Charges on retirement benefit obligations
In the three-month period and twelve-month period ended December 31,
2013, deferred members of the U.S. pension plans were offered the option
of a lump sum in respect of their benefits in the plan. The settlement
of the pension liabilities resulted in a non-cash charge to the income
statement of $1.7m.
Net acquisition costs
For the twelve-month period ended December 31, 2013, net acquisition
costs of $0.1m were recognized by the Gas Cylinders Division in relation
to the acquisition of Dynetek Industries Limited (the costs for the
three-month period and twelve-month period ended December 31, 2012, were
$0.9m and $0.6m, respectively).
Disposal costs of intellectual property
For the three-month and twelve month period-ended December 31, 2012,
$0.1m and $0.2m, respectively, of costs were incurred by the Elektron
Division in relation to the costs of disposal of intellectual property.
4. Reconciliation of non-GAAP measures
The following table presents a reconciliation of Adjusted net income and
Adjusted EBITDA to net income for the period, the most comparable IFRS
under IAS 19R
Management believes that Adjusted net income and Adjusted EBITDA are key
performance indicators used by the investment community and that the
presentation of these items will enhance an investor's understanding of
our results of operations. Adjusted net income and Adjusted EBITDA
should not be considered in isolation by investors as an alternative to
net income for the period, as an indicator of our operating performance
or as a measure of our profitability.
5. Earnings per share
The Group calculates earnings per share in accordance with IAS 33. Basic
income per share is calculated based on the weighted average common
shares outstanding for the period presented. The weighted average number
of shares outstanding is calculated by time-apportioning the shares
outstanding during the year.
For the purpose of calculating diluted earnings per share, the weighted
average number of ordinary shares outstanding during the financial year
have been adjusted for the dilutive effects of all potential ordinary
shares and share options granted to employees.
American Depositary Shares (ADSs) of Luxfer Holdings PLC are listed on
the New York Stock Exchange following an initial public offering on
October 3, 2012. The company's £1 ordinary shares are not traded on any
recognized stock exchange. The Depository for the ADSs holds 1 £1
ordinary share for every 2 ADSs traded, through American Depositary
The Group reports earnings per ordinary share and also earnings per ADS
to enable both sets of equity holders to understand the Group's earnings
as a proportion of their equity investment held.
The weighted average methodology used to calculate the ordinary
shareholders for 2012 EPS on the £1 shares does not reflect a full-year
economic impact of a 35% increase in the share capital of the Group from
the IPO at October 3, 2012. ADS and ordinary £1 shareholders should
consider this impact when comparing the IFRS EPS to any ADS share price
or comparator companies earnings multiples for valuation purposes.
It should be noted that all EPS measures for prior periods have been
restated for the application of IAS 19 Revised due to the impact of the
accounting standard on the Group's net income.
Each £1 ordinary share is equal to 2 American Depositary Shares,
as listed and quoted on the New York Stock Exchange.
6. IAS 19 Employee Benefits Revised
Under the revised standard, the charge to the income statement in
relation to defined benefit costs has changed, with only current-period
service costs and administrative expenses being charged to operating
profit and a finance expense calculated on the outstanding accounting
deficit being charged to finance costs. The revised standard has not led
to changes on the balance sheet or the deficit, so movements in the
income statement have equal and opposite movements in Other
The following table summarizes the impact of the revision to the
standard to the income statement for the twelve-month period ended
December 31, 2012.
Previously published information
Based on the above table, the IAS 19 Revised impact can be summarized as
7. Retirement benefits
The principal defined benefit pension plan in the U.K. is the Luxfer
Group Pension Plan. The Group's other arrangements are less significant
than the Luxfer Group Pension Plan, the largest being the BA Holdings
Inc Pension Plan in the United States.
The actuarial assumptions used to estimate the IAS 19 accounting
position of the Group's defined benefit pension plans have been updated
for market conditions at December 31, 2013.
The discount rate for the U.K. plan has increased by 0.1% per annum from
4.4% at December 31, 2012, to 4.5% at December 31 2013. Long-term
inflation expectations have increased by 0.4% per annum from 3.0% at
December 31, 2012, to 3.4% at December 31, 2013. The combined effect of
the changes has been to increase the projected benefit obligation by
approximately $4m relative to that expected. There have also been
better-than-expected returns on U.K. plan assets of $15m, which,
combined with the change in the projected benefit obligation and the net
charges/contributions and translation impact of a positive $4m, has led
to the deficit on the U.K. plan decreasing by approximately $15m.
In the United States, the discount rate has increased by 0.7% from 4.2%
at December 31, 2012 to 4.9% at December 31, 2013. This has decreased
the projected benefit obligation by approximately $6m relative to that
expected. There were better-than-expected returns on U.S. plan assets of
$5m, which, combined with the change in the projected benefit obligation
and the net charges/contributions of the scheme of a positive $3m, has
led to the deficit on the U.S. plan decreasing by approximately $14m.
The movement in the pension liability is shown below:
8. Dividends paid and proposed
9. Share based compensation
Luxfer Holdings PLC Long-Term Umbrella Incentive Plan ("LTIP") and
Luxfer Holdings PLC Non-Executive Directors Equity Incentive Plan
In the first quarter of 2013, 306,200 Restricted Stock Units and Options
over ADSs equivalent to 153,100 ordinary shares, were granted under the
LTIP. In March 2013, 1,924 ADS Restricted Stock, equivalent to 962
ordinary shares, were granted and issued under the Director EIP, and
2,000 Options over ADSs, equivalent to 1,000 ordinary shares, lapsed
under the LTIP. In June 2013, 9,252 ADS Restricted Stock Units,
equivalent to 4,626 ordinary shares, were granted under the Director EIP.
The total fair value of the awards amounts to $2.3m, of which $1.3m has
been charged in the year ended December 31, 2013.
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