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Table of Contents
Index to Consolidated Financial Statements_1
Index to Consolidated Financial Statements_2

As filed with the United States Securities and Exchange Commission on September 19, 2012

Registration No. 333-178278

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549



Amendment No. 7
to
FORM F-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933



LUXFER HOLDINGS PLC
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant's name into English)

England and Wales
(State or other jurisdiction of
incorporation or organization)
  2810
(Primary Standard Industrial
Classification Code Number)
  98-1024030
(I.R.S. Employer
Identification Number)

Anchorage Gateway
5 Anchorage Quay
Salford M50 3XE England
(44) 161 300-0600

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant's Principal Executive Offices)



Corporation Service Company
1180 Avenue of the Americas, Suite 210
New York, NY 10036
(800) 927-9801

(Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent For Service)



Copies to:
Sebastian R. Sperber, Esq.
Cleary Gottlieb Steen & Hamilton LLP
City Place House
55 Basinghall Street
London EC2V 5EH England
Phone: (44) 20 7614-2200
Fax: (44) 20 7600-1698
  Marc D. Jaffe, Esq.
Erika L. Weinberg, Esq.
Latham & Watkins LLP
885 Third Avenue
New York, NY 10022
Phone: (1) 212 906-1200
Fax: (1) 212 751-4864

          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

          If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.    o

          If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

          If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o



CALCULATION OF REGISTRATION FEE

       
 
Title of each class of securities to be registered
  Proposed maximum aggregate
offering price(1)

  Amount of registration fee
 

Ordinary Shares of £1 per share(2)(3)

  $128,800,000   $14,760(4)

 

(1)
Estimated solely for the purpose of determining the amount of registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

(2)
Includes ordinary shares that the underwriters may purchase solely to cover overallotments, if any.

(3)
American Depositary Shares evidenced by American Depositary Receipts issuable on deposit of the ordinary shares registered hereby have been registered under a separate registration statement on Form F-6. Each American depositary share will represent one-half of an ordinary share.

(4)
The Registrant previously paid $26,000.

          The Registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the registration statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine.


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The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED SEPTEMBER 19, 2012

8,000,000 American Depositary Shares

GRAPHIC

LUXFER HOLDINGS PLC
(incorporated in England and Wales)

Representing 4,000,000 Ordinary Shares

        We are offering 6,400,000 American Depositary Shares (each, an "ADS" and, collectively "ADSs"), and the selling shareholders are offering an additional 1,600,000 ADSs. Each ADS will represent one-half of an ordinary share of £1 per share. We expect that the initial public offering price will be between $12.00 and $14.00 per ADS.

        Prior to the offering, there has been no public market for the ADSs or our ordinary shares. We have applied to list the ADSs on the New York Stock Exchange under the symbol "LXFR." We are an "emerging growth company" as such term is used in the Jumpstart Our Business Startups Act of 2012.

        The underwriters have an option to purchase a maximum of 600,000 additional ADSs from us and 600,000 additional ADSs from the selling shareholders to cover over-allotments of ADSs.

        Investing in the ADSs involves a high degree of risk. See "Risk Factors" beginning on page 17 of this prospectus for certain factors you should consider before investing in the ADSs.

 
  Price
to Public
  Underwriting
Discounts and
Commissions
  Proceeds
to Us
  Proceeds to
Selling
Shareholders
 

Per ADS

  $     $     $     $    

Total

  $     $     $     $    

        Delivery of the ADSs will be made against payment in New York, New York on or about                  , 2012.

        Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense.

 
   

Credit Suisse

 

Jefferies

KeyBanc Capital Markets

 

Oppenheimer & Co.

The date of this prospectus is                           , 2012.


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GRAPHIC


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TABLE OF CONTENTS

 
  Page  

PROSPECTUS SUMMARY

    1  

THE OFFERING

    8  

SUMMARY CONSOLIDATED FINANCIAL DATA

    11  

RISK FACTORS

    17  

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

    39  

FORWARD-LOOKING STATEMENTS

    40  

USE OF PROCEEDS

    42  

CAPITALIZATION

    43  

UNAUDITED PRO FORMA FINANCIAL DATA

    45  

DILUTION

    50  

EXCHANGE RATES

    52  

SELECTED CONSOLIDATED FINANCIAL DATA

    53  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

    57  

BUSINESS

    108  

MANAGEMENT

    133  

PRINCIPAL AND SELLING SHAREHOLDERS

    146  

OUR HISTORY AND RECENT CORPORATE TRANSACTIONS

    151  

RELATED PARTY TRANSACTIONS

    156  

DIVIDENDS AND DIVIDEND POLICY

    157  

DESCRIPTION OF SHARE CAPITAL

    158  

DESCRIPTION OF AMERICAN DEPOSITARY SHARES

    172  

SHARES AND ADSS ELIGIBLE FOR FUTURE SALE

    179  

TAXATION

    181  

UNDERWRITING

    189  

NOTICE TO CANADIAN RESIDENTS

    195  

EXPENSES OF THE OFFERING

    198  

LEGAL MATTERS

    198  

EXPERTS

    198  

SERVICE OF PROCESS AND ENFORCEMENT OF JUDGMENTS

    199  

WHERE YOU CAN FIND MORE INFORMATION

    200  

INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS

    F-1  

INDEX TO UNAUDITED INTERIM FINANCIAL STATEMENTS

    F-64  

        We, the selling shareholders and the underwriters have not authorized anyone to provide any information other than that contained in this prospectus or in any free writing prospectus prepared by or on behalf of us or to which we may refer you. We take no responsibility for, and can provide no assurance as to the reliability of, any other information that others may give you. We, the selling shareholders and the underwriters have not authorized any other person to provide you with different or additional information. If anyone provides you with different or additional information, you should not rely on it. Neither we nor the underwriters are making an offer to sell the ADSs in any jurisdiction where their offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or any sale of the ADSs. Our business, financial condition, results of operations and prospects may have changed since the date on the front cover of this prospectus.



        No offer or sale of the ADSs may be made in the United Kingdom except in circumstances that will not result in an offer to the public in the United Kingdom within the meaning of the United Kingdom Financial Services and Markets Act 2000 (as amended) or the Prospectus Rules published by the United Kingdom Listing Authority. Persons outside the United States who come into possession of this prospectus must inform themselves about and observe any restrictions relating to the offering of the securities and the distribution of the prospectus outside the United States.

        Until 25 days after the date of this prospectus, all dealers that buy, sell, or trade the ADSs, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers' obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.


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Prospectus Summary

        This summary highlights selected information about us and the ADSs that we and the selling shareholders are offering. It may not contain all of the information that may be important to you. Before investing in the ADSs, you should read this entire prospectus carefully for a more complete understanding of our business and this offering, including our audited consolidated financial statements and the related notes, and the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this prospectus. In this prospectus, "Luxfer," the "Group," the "company," "we," "us" and "our" refer to Luxfer Holdings PLC and its consolidated subsidiaries. Luxfer Holdings PLC is a holding company that conducts its operations through its subsidiaries.

Our Company

        We are a global materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders to customers in a broad range of growing end-markets. Our key end-markets are environmental technologies, healthcare technologies, protection and specialty technologies. Our customers include both end-users of our products and manufacturers that incorporate our products into their finished goods. Our products include specialty chemicals used as catalysts in automobile engines to remove noxious gases; corrosion, flame and heat-resistant magnesium alloys used in safety-critical, aerospace, automotive and defense applications; photo-sensitive plates used for embossing and gold-foiling in the luxury packaging and greetings card industries; high-pressure aluminum and composite gas cylinders used by patients with breathing difficulties for mobile oxygen therapy, by firefighters in breathing apparatus equipment and by manufacturers of vehicles that run on compressed natural gas ("CNG"); and metal panels that can be "superformed" into complex shapes to provide additional design freedom for a wide variety of industries, including aerospace, high-end automotive and rail transportation.

        Our area of expertise covers the chemical and metallurgical properties of aluminum, magnesium, zirconium, rare earths and certain other materials, and we have pioneered the application of these materials in certain high-technology industries. For example, we were the first to develop and patent a rare earth containing magnesium alloy (EZ33A) for use in high-temperature aerospace applications such as helicopter gearboxes; we are at the forefront of the commercial development of zirconia-rich mixed oxides for use in automotive catalysis; we were the first to manufacture a high-pressure gas cylinder out of a single piece of aluminum using cold impact extrusion; and we developed and patented the superforming process and the first superplastic aluminum alloy (AA2004) and were the first to offer superformed aluminum panelwork commercially. We have a long history of innovation derived from our strong technical base, and we work closely with customers to apply innovative solutions to their most demanding product needs. Our proprietary technology and technical expertise, coupled with best-in-class customer service and global presence provide significant competitive advantages and have established us as leaders in the markets in which we operate. We believe that we have leading positions, technically and by market share, in key product areas, including magnesium aerospace alloys, photo-engraving plates, zirconium chemicals for automotive catalytic converters and aluminum and composite cylinders for breathing applications.

        We have always recognized the importance of research in material science and innovation in the development of our products, collaborating with universities around the world and our industry business partners and customers. Some of our key new development projects with our business partners include working within the Seat Committee of the U.S. Federal Aviation Administration and several aircraft seat manufacturers to introduce lightweight seats containing magnesium alloys into civil aircraft; with the benefit of funding from the U.S. Army Research Labs, developing a magnesium alloy for use as lightweight armor plates on personnel carriers, which funding will also support our internal development of commercial production capabilities for the alloy; the Intelligent Oxygen System, or IOS,

 

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developed in consultation with BOC Linde to deliver medical oxygen; a bio-absorbable magnesium alloy developed for a biotechnology customer for use in cardiovascular applications; utilizing our large alternative fuel cylinder technology, the development of bulk gas transportation modules to facilitate the capture and transport of gases; and catalytic material developed jointly with Rhodia to meet the anticipated needs of automotive manufacturers for more effective diesel catalysis to satisfy new environmental regulations as they come into effect in Europe and the United States.

        We have a global presence, employing approximately 1,630 people on average in 2011, and operating 16 manufacturing plants in the United Kingdom, United States, Canada, France, the Czech Republic and China. We also have joint ventures in Japan and India. Our total revenue, Adjusted EBITDA and profit for the period in the first six months of 2012 were $267.1 million, $43.5 million and $22.0 million, respectively. Our total revenue, Adjusted EBITDA and profit for the year in 2011 were $510.8 million, $80.5 million and $43.4 million, respectively. See "Summary Consolidated Financial Data" for the definition of Adjusted EBITDA and reconciliations to profit for the year. In 2011, we manufactured and sold approximately 16,000 metric tons of our magnesium products, approximately 3,400 metric tons of our zirconium products and approximately 2.3 million gas cylinders.

        Our company is organized into two operational divisions, Elektron and Gas Cylinders, which represented 56% and 44%, respectively, of our total revenue in 2011.

    Elektron

        The Elektron division focuses on specialty materials based on magnesium, zirconium and rare earths. Within this division, we sell our products through two brands. Under our Magnesium Elektron brand, we develop and manufacture specialist lightweight, corrosion-resistant and flame-resistant magnesium alloys, extruded magnesium products, magnesium powders, magnesium plates and rolled sheets and photo-engraving plates for the aerospace (light-weight alloys and components), automotive (lightweight alloys and components), defense (powders for countermeasure flares) and printing (photo-engraving sheets) industries. Under our MEL Chemicals brand, we develop and manufacture specialty zirconium compounds for use in automotive applications (exhaust catalysts), electronics (ceramic sensors), structural ceramics (dental crowns), aerospace (thermal barrier coatings) and chemical synthesis (industrial catalysts).

    Gas Cylinders

        The Gas Cylinders division focuses on products based on aluminum, composites and other metals using technically advanced processes. Within this division, we sell our products through two brands. Under our Luxfer Gas Cylinders brand, we develop and manufacture advanced high-pressure aluminum and composite aluminum/carbon fiber gas containment cylinders for use in healthcare (oxygen), breathing apparatus (air), electronics (industrial gas), fire-fighting (carbon dioxide) and transportation (CNG) applications. Under our Superform brand, we design and manufacture highly complex shaped, sheet-based products for a wide range of industries, including aerospace (engine air intakes), specialist automotive (body panels and door inners), rail transport (train fronts and window frames) and healthcare (non-magnetic equipment casings).

Our End-Markets

        The key end-markets for our products fall into four categories:

    Environmental technologies:  we believe many of our products serve a growing need to protect the environment and conserve its resources. Increasing environmental regulation, "green" taxes and the increasing cost of fossil fuels are driving growth in this area and are expected to drive growth in the future. For example, our products are used to reduce weight in vehicles

 

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      improving fuel efficiency, in catalytic converters in automotive engines, removing noxious gases and to remove heavy metals from drinking water and industrial effluent.

    Healthcare technologies:  we have a long history in the healthcare end-market, and see this as a major growth area through the introduction of new product technologies. Our products, among other applications, contain medical gases, are featured in medical equipment and are used in medical treatment. For example, our more recent innovations include the lightweight IOS medical oxygen delivery system featuring our patented L7X higher-strength aluminum alloy and carbon composite cylinders integrated with our patented SmartFlow valve-regulator technology.

    Protection technologies:  we offer a number of products that are used to protect individuals and property. Principal factors driving growth in this end-market include increasing societal expectations regarding the protection of individuals and armed forces personnel, tightening health and safety regulations and the significant cost of investing in and replacing technologically-advanced military property. Our products are used in the protection of emergency services personnel, the protection of military vehicles, aircraft and personnel. For example, we manufacture ultra-lightweight breathing-air cylinders that lighten the load on emergency services personnel working in dangerous environments.

    Specialty technologies:  our core technologies have enabled us to exploit various other niche and specialty markets and applications. Our products include photo-engraving plates and etching chemicals used to produce high-quality packaging, as well as cylinders used for high-purity gas applications, beverage dispensing and leisure applications such as paintball.

Our Strengths

        Market leading positions.    We believe all of our main brands, Magnesium Elektron, MEL Chemicals, Luxfer Gas Cylinders and Superform, are market leaders and strive to achieve best-in-class performance and premium price positions. We believe we are the leading manufacturer in the western world of high-performance magnesium alloys, powders, plates, and rolled sheets used in the aerospace, defense, and photo-engraving industries. We believe we are a leading manufacturer of specialty zirconium compounds for use in the global market for washcoats of catalytic converters in gasoline engine vehicles. In addition, we believe we are (i) the most global manufacturer of high pressure aluminum and composite gas cylinders; (ii) a leading global supplier of cylinders for medical gases, fire extinguishers and breathing apparatus; and (iii) the largest manufacturer of portable high pressure aluminum and composite cylinders in the world. Drawing on our expertise in the metallurgy of aluminum, we invented the superplastic forming process, and we believe we are the largest independent supplier of superplastically-formed aluminum components in the western world.

        Focus on innovation and product development for growing specialist end-markets.    We recognize the importance of fostering the creative ability of our employees and have developed a culture where any employee can take an active involvement in the innovation process. As a result of this culture of ingenuity, we have, in close collaboration with research departments in universities around the world, developed and continue to develop a steady stream of new products, including carbon composite ultra-lightweight gas cylinders, L7X extra high pressure aluminum gas cylinders, fourth generation (G4) doped zirconium chemicals for automotive and chemical catalysis, Isolux zirconium-based separation products used in water purification and ELEKTRON magnesium alloys for advanced aerospace and specialty automotive applications.

        We have benefited and expect to continue to benefit from growth in demand in each of our key end-markets. Our product development is focused mainly on environmental, healthcare and protection technologies. Demand for these specialist technologies is increasing due to the growing focus on protecting the environment and conserving its resources, finding better healthcare solutions and

 

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providing maximum protection for people and equipment. Tightening emission controls for the aerospace, automotive and chemical industries, increasing demand for lightweight materials to improve fuel economy and the use of increasingly sophisticated catalytic chemistry to convert harmful emissions have also led to a number of significant new product development opportunities in our environmental end-markets. Additionally, given favorable end-market dynamics including aging populations in the world's developed economies, along with increasing awareness of the importance of good healthcare in emerging markets that are driving an increase in the use of various medical technologies and applications, including oxygen therapy and the treatment of cardiovascular diseases, we have targeted new product development in the healthcare end-market. Protection technologies are also an important area for us, supported by increased demand for protection equipment after the terrorist attacks of 9/11.

        Strong technical expertise and know-how.    Our highly qualified and experienced metallurgists and engineers collaborate closely with our customers to design, develop and manufacture technically complex products. This technical expertise enables us to design and manufacture sophisticated materials and components that are embedded in our customers' products and services. To support and sustain such a high level of technological innovation, many of our sales personnel have doctorate degrees, and our product development departments work closely with our sales departments, often reporting directly to the relevant sales director. This structure enables us to provide high quality technical support to our customers and ensure that product development is closely linked to end-market requirements. This high level of integration into our customers' supply chains and their research and development functions constitutes a significant competitive advantage over new market entrants, particularly when matched by best-in-class customer service and on-going technical support.

        We specialize in advanced materials where our expertise in metallurgy and material science enables us to develop products and materials with superior performance to satisfy the most demanding requirements in the most extreme environments. We design some products to withstand temperatures of absolute zero and others to withstand contact with molten steel. We produce sheet materials that operate in a complete vacuum and cylinders that safely contain gases at over 300 atmospheres of pressure. Our technical excellence is driven in part by safety-critical products, including aerospace alloys and high-pressure gas cylinders, that are subject to extensive regulation and are approved only after an extensive review process that in some cases can take years. Further, we benefit from the fact that a growing number of our products, including many of the alloys and zirconium compounds we sell, are patented.

        Diversified blue chip customer base with long-standing relationships.    We have developed and seek to maintain and grow our long-term and diverse customer base of global leaders. We put the customer at the heart of our strategy and we have long-standing relationships with many of our customers including global leaders such as 3M, Air Liquide, Aston Martin, BAE Systems, BASF, BOC Linde, Bombardier, Esterline, Honeywell, Johnson Matthey, MSA, Tyco, Umicore and United Technologies. Our businesses have cultivated a number of these relationships over the course of many decades. The diversity and breadth of our customer base also mitigates our reliance on any one customer. In 2011, our ten largest customers represented 39% of our total revenue. In 2011, our ten largest customers for the Elektron division represented 54% of its revenue, and our ten largest customers for the Gas Cylinders division represented 45% of its revenue.

        Resilient business model.    Although the recent downturn in the global economy represented one of the most challenging economic environments for manufacturers in decades, our operating profit rebounded in 2010 by 64% as compared to 2009 to $44.9 million and further increased in 2011 by 47% to $66.2 million. Notwithstanding the downturn, in 2009, we generated cash and made a net profit every quarter. We have protected our margins to a large extent by successfully passing on to customers increases in raw material cost and overhead expense. We have also increased our margins over time by (i) disposing of low margin and cash intensive operations such as the Elektron division's magnesium

 

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and zinc die casting operations in 2006, and the BA Tubes aluminum tubes business in 2007; (ii) increasing our focus on high-performance value-added product lines and markets; and (iii) investing in automation and operational efficiencies at our manufacturing facilities. Our return on sales ratio, which is operating profit divided by sales revenue, was 8.3% in 2008, fell only to 7.4% during the 2009 economic downturn and improved to 11.1% in 2010 and 13.0% in 2011.

        Highly experienced and effective management team.    We are led by an experienced executive management board, many of whom have been with us since Luxfer Holdings PLC was formed in 1998, which followed the management buy-in (the "Management Buy-In") of certain downstream assets of British Alcan Aluminium Plc ("British Alcan") in 1996. Our current executive management board has played a significant role in developing our strategy and in delivering our stability and growth in recent years. We also highly value the quality of our local senior management teams and have recruited highly experienced managing directors for each of our business streams. Each of the managing directors for our business streams has been in their current roles for at least five years and has substantial industry experience. Our board of directors actively supports our business and contributes a wealth of industrial and financial experience.

Our Business Strategy

        Our business strategy is underpinned by the "Luxfer Model" which consists of five key themes:

    Maintaining technical excellence relating both to our products and to the processes needed to make them

    Building and maintaining strong, long-term customer relationships

    Selling high performance products into specialty markets that require products with high technology content where customers are willing to pay premium prices

    A commitment to innovation of products that are well-equipped to address opportunities created by heightened chemical emissions controls, global environmental concerns, public health legislation and the need for improved protection technology

    Achieving high levels of manufacturing excellence by improving processes and reducing operating costs, thus insulating us against competitors in low labor cost economies

        Each of our businesses has developed a strategic roadmap, based on a balanced scorecard methodology and driven by the Luxfer Model. These strategic roadmaps contain business-specific initiatives, actions and measures necessary to guide the businesses towards achieving financial objectives set by our board of directors. With the Luxfer Model as its backbone, our company-wide strategy includes the following key elements:

        Continued focus on innovation, R&D and protection of intellectual property.    We have always recognized the importance of research in material science and innovation in the development of our products. We plan to continue this history of innovation through investment in our own research and development teams, as well as through extensive collaboration with universities, industry partners and customers around the world. Further, given the high level of research and development and technology content inherent in our products, we intend to aggressively protect our inventions and innovations by patenting them when appropriate and by actively monitoring and managing our existing intellectual property portfolio.

        Increase the flow of innovative, higher value-added products targeting specialist markets.    We plan to continue to focus on high growth, specialist end-markets, including environmental, healthcare and protection technologies. In response to increasing demand in these markets for higher value-added products, we plan to utilize our metallurgical and chemical expertise to develop new products and

 

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applications for existing products in these markets. We also seek to identify alternative applications for our products that leverage the existing capabilities of our products and our existing customer base.

        Enhance awareness of Luxfer brands.    We intend to maintain and improve global awareness of our four brands: Magnesium Elektron, MEL Chemicals, Luxfer Gas Cylinders and Superform. Our efforts will include promoting our leading technologies at trade shows, industry conferences and other strategic forums. We also plan to expand our online presence by maximizing the visibility and utility of our website. Whenever possible, we insist that our corporate logos are visible on products sold by our customers, especially products such as medical cylinders that remain in active circulation and tend to be widely visible in the public domain.

        Focus on continued gains in operational and manufacturing efficiencies.    We plan to continuously improve operational and manufacturing efficiencies, investing in modern enterprise resource planning systems and using external auditors to measure our performance against rigorous, world-class standards. In order to do so, we seek to continuously find ways to automate our processes to provide protection against competition based in low labor-cost economies. While we plan to maintain our focus on ways to reduce our operational and manufacturing costs, we also seek to modernize machinery and equipment at minimal costs when necessary to prevent bottlenecks in the manufacturing process.

        Selectively pursue value-enhancing acquisitions.    We have undertaken several successful complementary acquisitions over the past fifteen years, and we believe there will be opportunities to pursue synergistic acquisitions at attractive valuations in the future. We plan to assess these opportunities with a focus on broadening our product and service offerings, expanding our technological capabilities and capitalizing on potential operating synergies.

Recent Developments

        On July 31, 2012, we entered into an arrangement agreement with Dynetek Industries Ltd. ("Dynetek"), a Canadian business listed on the Toronto Stock Exchange, to acquire all of the common shares of Dynetek at a price of CAD$0.24 per share, for a total equity value of CAD$5 million. We assumed approximately CAD$7 million of bank debt, for a total purchase cost of approximately CAD$12 million. The acquisition closed on September 17, 2012. Dynetek designs and manufactures high-pressure aluminum and carbon fiber gas cylinders and systems for compressed natural gas, low emission vehicles and compressed hydrogen, zero-emission fuel cell vehicles. Dynetek's system applications include, but are not limited to, passenger automobiles, light and heavy-duty trucks, transit vehicles and school buses, bulk hauling of compressed gases and stationary storage or ground storage refueling applications. Its publicly reported 2011 sales revenue was CAD$19.8 million, generated from two manufacturing sites in Calgary, Canada and Ratingen, Germany, near Dusseldorf.

Risk Factors

        We face numerous risks and uncertainties that may affect our future financial and operating performance, including, among others, the following:

    We depend on customers in certain industries, and an economic downturn in any of those industries could reduce sales;

    Our global operations expose us to economic conditions, political risks and specific regulations in the countries in which we operate;

    Our operations rely on a number of large customers in certain areas of our business, and the loss of any of our major customers could hurt our sales;

    Competitive pressures can negatively impact our sales and profit margins;

 

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    We depend upon our larger suppliers for a significant portion of our input components, and a loss of one of these suppliers or a significant supply interruption could negatively impact our financial performance;

    We are exposed to fluctuations in the prices of the raw materials and utilities that are used to manufacture our products, and we can incur unexpected costs; and

    Changes in foreign exchange rates could cause sales to drop or costs to rise.

        One or more of these matters could negatively affect our business or financial performance as well as our ability to successfully implement our strategy. This list of risks is not comprehensive, and you should see the section entitled "Risk Factors" for a more detailed discussion of the risks associated with an investment in the ADSs.

History and Structure

        Although the origins of some of our operations date back to the early part of the 19th century, we trace our business as it is today back to the 1982 merger of The British Aluminium Company Limited and Alcan Aluminium U.K. Limited, which created British Alcan. The original Luxfer Group Limited was formed in 1996 in connection with a transaction that resulted in the Management Buy-In of certain downstream assets of British Alcan. All of the share capital of Luxfer Group Limited was later acquired by Luxfer Holdings PLC in 1999, which became the parent holding company of our operating subsidiaries around the world.

        In February 2007, Luxfer Holdings PLC completed a reorganization of its capital structure under two schemes of arrangement (the "2007 Capital Reorganization"), which substantially reduced its debt burden and realigned its share capital. A key part of this reorganization was the release and cancellation of the Senior Notes due 2009 in consideration for, among other things, the issuance of a lower principal amount of new Senior Notes due 2012. Senior noteholders, other than Luxfer Group Limited, also acquired 87% of the voting share capital of Luxfer Holdings PLC in the reorganization from exiting shareholders, with management and an employee benefit trust (the "ESOP") retaining 13% of the voting share capital. For more information on our corporate history, see "Our History and Recent Corporate Transactions."

        Luxfer Holdings PLC is a holding company that conducts its operations through its subsidiaries. For a list of our subsidiaries, including the country of incorporation and our ownership interest, see "Our History and Recent Corporate Transactions—Our Corporate Structure."

Corporate Information

        Our registered and principal executive offices are located at Anchorage Gateway, 5 Anchorage Quay, Salford M50 3XE England, and our general telephone number is +44-161-300-0600. We maintain a number of web sites, including www.luxfer.com. The information on, or accessible through, our web sites is not part of this prospectus. Our agent for service of process in the United States is Corporation Service Company, 1180 Avenue of the Americas, Suite 210, New York, New York 10036.

 

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The Offering

Issuer   Luxfer Holdings PLC

ADSs offered by us

 

6,400,000 ADSs

ADSs offered by the selling shareholders

 

1,600,000 ADSs

Overallotment option

 

We and the selling shareholders have granted the underwriters an option for a period of 30 days from the date of this prospectus to purchase up to 600,000 additional ADSs from us and 600,000 additional ADSs from the selling shareholders to cover overallotments, if any.

ADSs to be outstanding immediately after this offering

 

8,000,000 ADSs

Ordinary shares outstanding immediately after this offering

 

13,103,613 ordinary shares

The ADSs

 

Each ADS represents one-half of an ordinary share.

 

 

The depositary will hold the ordinary shares underlying your ADSs. You will have rights as provided in the deposit agreement. You may turn in your ADSs to the depositary in exchange for ordinary shares. The depositary will charge you fees for any exchange. We may amend or terminate the deposit agreement without your consent. If you continue to hold your ADSs, you agree to be bound by the deposit agreement as amended.

 

 

Except for ordinary shares deposited by us, the selling shareholders, the underwriters or their affiliates in connection with this offering, no ordinary shares will be accepted for deposit with the depositary during a period of 180 days after the date of this prospectus.

 

 

To better understand the terms of the ADSs, you should carefully read the "Description of American Depositary Shares" section of this prospectus. You should also read the deposit agreement, which is filed as an exhibit to the registration statement that includes this prospectus.

Depositary

 

The Bank of New York Mellon

Proposed New York Stock Exchange symbol

 

"LXFR"

Shareholder approval of offering

 

Pursuant to our current articles of association (the "Current Articles"), this offering requires the approval in writing of holders of at least two-thirds of our ordinary shares. In addition, under English law, certain other steps necessary for the consummation of this offering, including the adoption of the new amended and restated articles of association (the "Amended Articles"), require the approval of holders of 75% of our ordinary shares voting at our general meeting of shareholders. We have received all such required approvals from holders.

 

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Lockup agreements   We expect to enter into an agreement with the underwriters, subject to certain exceptions, not to sell or dispose of any ordinary shares or ADS or securities convertible into or exchangeable or exercisable for any of these securities until 180 days after the date of this prospectus. Our selling shareholders, directors, members of our executive management board and certain of our shareholders have agreed to similar lockup restrictions for a period of 180 days. See "Underwriting."

Use of proceeds

 

We expect to receive total estimated net proceeds from this offering of approximately $73.0 million, after deducting estimated underwriting discounts and offering expenses and assuming no exercise of the overallotment option by the underwriters. We will not receive any proceeds from the sale of ADSs by the selling shareholders. We intend to use the net proceeds of this offering received by us (i) to repay the entire amount outstanding under our senior term loan (the "Term Loan"), which was $46.6 million as of June 30, 2012 and (ii) for other general corporate purposes.

Dividend Policy

 

We did not declare or pay any dividends on our ordinary shares in 2009, 2010 or 2011. In July 2012, our board of directors declared an interim dividend for the first six months of 2012 of £0.25 per ordinary share (equal to $0.39 per ordinary share at an exchange rate of $1.56:£1), totaling $3.9 million, which was paid on August 10, 2012. Following this offering, we intend to pay quarterly cash dividends. We expect that our first quarterly dividend will be declared in relation to the third quarter of 2012, will be paid in the fourth quarter of 2012 to holders of our ordinary shares as of September 30, 2012 and will be $0.20 per ordinary share ($0.10 per ADS).

 

 

The declaration and payment of this dividend and any future dividends will be at the discretion of our board of directors and will depend upon our results of operations, cash requirements, financial condition, contractual restrictions, restrictions imposed by our indebtedness, any future debt agreements or applicable laws and other factors that our board of directors may deem relevant. See "Dividends and Dividend Policy."

Risk factors

 

You should carefully read the information set forth under "Risk Factors" beginning on page 17 of this prospectus and the other information set forth in this prospectus before investing in the ADSs.

The number of ordinary shares that will be outstanding immediately after this offering:

includes 18,087 ordinary shares expected to be transferred from the ESOP upon exercise of options to purchase ordinary shares concurrent with or prior to this offering;

excludes, following the exercise of options to purchase ordinary shares concurrent with or prior to this offering, the remaining 96,387 ordinary shares issued to and held by the ESOP as of the consummation of this offering, which are reserved to satisfy options to purchase 68,223 ordinary shares granted under our Luxfer Holdings PLC Executive Share Option Plan (the "Option Plan");

 

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does not give effect to (i) any future grants under the proposed Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan or any other employee share incentive plans we adopt, which will represent up to a maximum of 10% of our outstanding share capital following this offering or (ii) the proposed award by us to non-executive directors and certain of our key executives in connection with this offering of standalone grants of options to buy ADSs representing in the aggregate up to a maximum of 3% of our outstanding share capital following this offering; and

includes 800,000 restricted ordinary shares subject to the terms of our Management Incentive Plan (the "MIP").

The trustee for the ESOP has waived its right to receive dividends on shares held in the trust, and the trustee may vote or abstain from voting the shares. See "Management—Compensation."

Unless otherwise indicated, all information contained in this prospectus assumes:

no exercise of the underwriters' option to purchase up to 1,200,000 additional ADSs to cover overallotments of ADSs, if any; and

the ADSs to be sold in this offering will be sold at $13.00, which is the midpoint of the range set forth on the cover page of this prospectus.

 

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Summary Consolidated Financial Data

        The following summary consolidated financial data of Luxfer as of June 30, 2012 and 2011 and for the six month periods ended June 30, 2012 and 2011 have been derived from our unaudited interim financial statements and the related notes appearing elsewhere in this prospectus, which have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS-IASB"). The following summary consolidated financial data of Luxfer as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009 have been derived from our audited consolidated financial statements and the related notes appearing elsewhere in this prospectus, which have also been prepared in accordance with IFRS-IASB. The following summary consolidated financial data of Luxfer as of December 31, 2009 have been derived from our audited consolidated financial statements and the related notes, which have also been prepared in accordance with IFRS-IASB and are not included in this prospectus.

        Our historical results are not necessarily indicative of results to be expected for future periods.

        This financial data should be read in conjunction with our unaudited interim financial statements and the related notes, our audited consolidated financial statements and the related notes and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this prospectus.

 

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Consolidated Statement of Income Data

 
  Six Months Ended
June 30,
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009  
 
  (in $ millions, except
share and per share data)
(unaudited)

  (in $ millions, except share
and per share data)
(audited)

 

Revenue:

                               

Elektron

    $149.0     $133.3     $287.5     $203.5     $184.8  

Gas Cylinders

    118.1     110.4     223.3     199.2     186.5  
                       

Total revenue from continuing operations

    $267.1     $243.7     $510.8     $402.7     $371.3  

Cost of sales

    (201.9 )   (185.8 )   (390.4 )   (305.1 )   (295.7 )
                       

Gross profit

    65.2     57.9     120.4     97.6     75.6  

Other income

        0.8     2.0     0.1     0.1  

Distribution costs

    (3.4 )   (4.2 )   (7.3 )   (7.4 )   (6.8 )

Administrative expenses

    (25.5 )   (24.1 )   (48.9 )   (44.5 )   (40.4 )

Share of start-up costs of joint venture

        (0.1 )   (0.2 )   (0.1 )   (0.1 )
                       

Trading profit

    $36.3     $30.3     $66.0     $45.7     $28.4  

Restructuring and other income (expense)(1)

            0.2     (0.8 )   (1.1 )
                       

Operating profit

    $36.3     $30.3     $66.2     $44.9     $27.3  

Acquisition costs(1)

                    (0.5 )

Disposal costs of intellectual property(1)

    (0.1 )   (0.1 )   (0.2 )   (0.4 )    

Finance income:

                               

Interest received

        0.1     0.2     0.2     0.2  

Gain on purchase of own debt(1)

                0.5      

Finance costs:

                               

Interest costs

    (3.6 )   (4.8 )   (9.2 )   (9.6 )   (11.8 )
                       

Profit on operations before taxation

    $32.6     $25.5     $57.0     $35.6     $15.2  

Tax expense

    (10.6 )   (7.5 )   (13.6 )   (9.9 )   (5.7 )
                       

Profit after taxation on continuing operations

    22.0     18.0     43.4     25.7     9.5  
                       

Profit for the period and year

    $22.0     $18.0     $43.4     $25.7     $9.5  
                       

Profit for the period and year attributable to controlling interests

    $22.0     $18.0     $43.4     $25.7     $9.5  

Profit for the period and year attributable to non controlling interest

                     

Profit from continuing and discontinued operations per ordinary share(2):

                               

Basic

    $2.23     $1.82     $4.39     $2.61     $0.97  

Diluted

    $2.21     $1.81     $4.35     $2.59     $0.96  

Profit from continuing operations per ordinary share(2):

                               

Basic

    $2.23     $1.82     $4.39     $2.61     $0.97  

Diluted

    $2.21     $1.81     $4.35     $2.59     $0.96  

Weighted average ordinary shares outstanding(2):

                               

Basic

    9,885,526     9,884,026     9,884,145     9,851,204     9,824,326  

Diluted

    9,971,836     9,951,926     9,980,055     9,919,104     9,894,726  

 

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Consolidated Balance Sheet Data

 
  As of June 30,   As of December 31,  
 
  2012   2011   2011   2010   2009  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

Total assets

  $ 353.8   $ 337.3   $ 364.3   $ 296.6   $ 273.7  

Total liabilities

    272.6     249.7     299.5     231.4     238.0  

Total equity

    81.2     87.6     64.8     65.2     35.7  

Cash and short term deposits

    32.9     20.9     22.2     10.3     2.9  

Non-current bank and other loans

    104.8     146.4     129.4         10.1  

Senior Loan Notes due 2012

                106.3     115.8  

Current bank and other loans

    3.1     1.6     3.1     9.6      

Consolidated Other Data

 
  Six Months
Ended
June 30,
  Year Ended
December 31,
 
 
  2012   2011   2011   2010   2009  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

Adjusted EBITDA(3)

  $ 43.5   $ 37.4   $ 80.5   $ 59.6   $ 42.2  

Trading profit(4):

                               

Elektron

  $ 28.8   $ 24.2   $ 54.1   $ 33.5   $ 23.3  

Gas Cylinders

    7.5     6.1     11.9     12.2     5.1  

Purchase of property, plant and equipment

    5.8     5.8     21.2     15.9     12.5  

 

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Consolidated Quarterly Statement of Income Data

        The following summary consolidated quarterly financial data have been prepared on the same basis as the audited consolidated financial statements of Luxfer Holdings PLC and include all adjustments necessary for the fair presentation of the information for the quarters presented.

 
  Three Months Ended  
 
  June 30,
2012
  March 31,
2012
  December 31,
2011
  September 30,
2011
  June 30,
2011
  March 31,
2011
  December 31,
2010
  September 30,
2010
  June 30,
2010
 
 
  (in $ millions)
(unaudited)

 

Revenue:

                                                       

Elektron

    $68.7     $80.3     $68.9     $85.3     $69.7     $63.6     $52.2     $52.1     $49.1  

Gas Cylinders

    57.0     61.1     57.0     55.9     54.4     56.0     49.0     52.4     50.7  
                                       

Total revenue from continuing operations

    $125.7     $141.4     $125.9     $141.2     $124.1     $119.6     $101.2     $104.5     $99.8  

Cost of sales

    (94.2 )   (107.7 )   (100.1 )   (104.5 )   (93.2 )   (92.6 )   (77.2 )   (79.0 )   (73.1 )
                                       

Gross profit

    31.5     33.7     25.8     36.7     30.9     27.0     24.0     25.5     26.7  

Other income

            1.2         0.8             0.1      

Distribution costs

    (1.7 )   (1.7 )   (1.5 )   (1.6 )   (2.2 )   (2.0 )   (1.8 )   (2.0 )   (2.0 )

Administrative expenses

    (11.8 )   (13.7 )   (10.9 )   (13.9 )   (13.4 )   (10.7 )   (12.1 )   (11.5 )   (10.7 )

Share of start-up costs of joint venture

            (0.1 )           (0.1 )   (0.1 )        
                                       

Trading profit

    $18.0     $18.3     $14.5     $21.2     $16.1     $14.2     $10.0     $12.1     $14.0  

Restructuring and other income (expense)(1)

            (1.4 )   1.6             (0.6 )   0.1      
                                       

Operating profit

    $18.0     $18.3     $13.1     $22.8     $16.1     $14.2     $9.4     $12.2     $14.0  

Disposal costs of intellectual property(1)

    (0.1 )           (0.1 )   (0.1 )       0.2     (0.2 )   (0.4 )

Finance income:

                                                       

Interest received

            0.1         0.1         0.1          

Gain on purchase of own debt(1)

                                0.1      

Finance costs:

                                                       

Interest costs

    (1.9 )   (1.7 )   (2.1 )   (2.3 )   (2.3 )   (2.5 )   (2.4 )   (2.5 )   (2.0 )

Profit on operations before taxation

    $16.0     $16.6     $11.1     $20.4     $13.8     $11.7     $7.3     $9.6     $11.6  

Tax expense

    (5.1 )   (5.5 )   0.1     (6.2 )   (4.3 )   (3.2 )   (1.0 )   (3.7 )   (3.5 )
                                       

Profit after taxation on continuing operations

    10.9     11.1     11.2     14.2     9.5     8.5     6.3     5.9     8.1  
                                       

Profit for the period

    $10.9     $11.1     $11.2     $14.2     $9.5     $8.5     $6.3     $5.9     $8.1  
                                       

Consolidated Quarterly Other Data

 
  Three Months Ended  
 
  June 30,
2012
  March 31,
2012
  December 31,
2011
  September 30,
2011
  June 30,
2011
  March 31,
2011
  December 31,
2010
  September 30,
2010
  June 30,
2010
 
 
  (in $ millions)
(unaudited)

 

Adjusted EBITDA(3)

    $21.5     $22.0     $18.3     $24.8     $19.7     $17.7     $13.8     $15.5     $17.3  

Trading profit(4):

                                                       

Elektron

    $14.6     $14.2     $10.3     $19.6     $12.7     $11.5     $6.9     $9.3     $9.7  

Gas Cylinders

    3.4     4.1     4.2     1.6     3.4     2.7     3.1     2.8     4.3  

Purchase of property, plant and equipment

    2.7     3.1     9.9     5.5     3.6     2.2     7.4     3.2     2.5  

(1)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements and "Note 4—Other income (expense) items" to our unaudited interim financial statements.

(2)
For further information, see "Note 10—Earnings per share" to our audited consolidated financial statements and "Note 5—Earnings per share" to our unaudited interim financial statements. We calculate earnings per share in accordance with IAS 33. Basic earnings per share is calculated based on the weighted average ordinary shares outstanding for the period presented. The weighted average of ordinary 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 ordinary shares outstanding during the period presented has been adjusted for the dilutive effect of all share

 

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    options granted to employees. In calculating the diluted weighted average ordinary shares outstanding, there are no shares that have not been included for anti-dilution reasons.

(3)
Adjusted EBITDA consists of profit for the period and year before tax expense, interest costs, gain on purchase of own debt, interest received, acquisition costs, disposal costs of intellectual property, redundancy and restructuring costs, income and costs relating to demolition of vacant property, non-trade legal and professional costs, past service credit on retirement benefit obligations, depreciation and amortization and loss on disposal of property, plant and equipment. Depreciation and amortization amounts include impairments to fixed assets, and they are reflected in our financial statements as increases in accumulated depreciation or amortization. We prepare and present Adjusted EBITDA to eliminate the effect of items that we do not consider indicative of our core operating performance. Management believes that Adjusted EBITDA is a key performance indicator used by the investment community and that the presentation of Adjusted EBITDA will enhance an investor's understanding of our results of operations. However, Adjusted EBITDA should not be considered in isolation by investors as an alternative to profit for the period and year, as an indicator of our operating performance or as a measure of our profitability. Adjusted EBITDA is not a measure of financial performance under IFRS-IASB, may not be indicative of historic operating results and is not meant to be predictive of potential future results. Adjusted EBITDA measures presented herein may not be comparable to other similarly titled measures of other companies. While Adjusted EBITDA is not a measure of financial performance under IFRS-IASB, the Adjusted EBITDA amounts presented have been computed using IFRS-IASB amounts.

    The following tables present a reconciliation of Adjusted EBITDA to profit for the period and year, the most comparable IFRS-IASB measure, for each of the periods indicated:

   
  Six Months
Ended
June 30,
  Year Ended
December 31,
 
   
  2012   2011   2011   2010   2009  
   
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 
 

Profit for the period and year

    $22.0     $18.0     $43.4     $25.7     $9.5  
 

Tax expense

    10.6     7.5     13.6     9.9     5.7  
 

Interest costs

    3.6     4.8     9.2     9.6     11.8  
 

Gain on purchase of own debt(a)

                (0.5 )    
 

Interest received

        (0.1 )   (0.2 )   (0.2 )   (0.2 )
 

Acquisition costs(a)

                    0.5  
 

Disposal costs of intellectual property(a)

    0.1     0.1     0.2     0.4      
 

Operating profit

    $36.3     $30.3     $66.2     $44.9     $27.3  
 

Redundancy and restructuring costs(a)

                0.2     1.1  
 

Income and costs relating to demolition of vacant property(a)

                0.6      
 

Non-trade legal and professional costs

            1.4          
 

Past service credit on retirement benefit obligations(a)

            (1.6 )        
 

Depreciation and amortization

    7.2     7.1     14.5     13.8     13.7  
 

Loss on disposal of property, plant and equipment

                0.1     0.1  
 

Adjusted EBITDA

    $43.5     $37.4     $80.5     $59.6     $42.2  

 

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  Three Months Ended  
   
  June 30,
2012
  March 31,
2012
  December 31,
2011
  September 30,
2011
  June 30,
2011
  March 31,
2011
  December 31,
2010
  September 30,
2010
  June 30,
2010
 
   
  (in $ millions)
(unaudited)

 
 

Profit for the period and year

    $10.9     $11.1     $11.2     $14.2     $9.5     $8.5     $6.3     $5.9     $8.1  
 

Tax expense

    5.1     5.5     (0.1 )   6.2     4.3     3.2     1.0     3.7     3.5  
 

Interest costs

    1.9     1.7     2.1     2.3     2.3     2.5     2.4     2.5     2.0  
 

Gain on purchase of own debt(a)

                                (0.1 )    
 

Interest received

            (0.1 )       (0.1 )       (0.1 )        
 

Disposal costs of intellectual property(a)

    0.1             0.1     0.1         (0.2 )   0.2     0.4  
 

Operating profit

    $18.0     $18.3     $13.1     $22.8     $16.1     $14.2     $9.4     $12.2     $14.0  
 

Redundancy and restructuring costs(a)

                                (0.1 )    
 

Income and costs relating to demolition of vacant property(a)

                            0.6          
 

Non-trade legal and professional costs

            1.4                          
 

Past service credit on retirement benefit obligations(a)

                (1.6 )                    
 

Depreciation and amortization

    3.5     3.7     3.8     3.6     3.6     3.5     3.7     3.4     3.3  
 

Loss on disposal of property, plant and equipment

                            0.1          
                                         
 

Adjusted EBITDA

    $21.5     $22.0     $18.3     $24.8     $19.7     $17.7     $13.8     $15.5     $17.3  

(a)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements and "Note 4—Other income (expense) items" to our unaudited interim financial statements.
(4)
Trading profit is defined as operating profit before restructuring and other income (expense). Trading profit is the "segment profit" performance measure used by our chief operating decision maker as required under IFRS 8 for divisional segmental analysis. See "Note 2—Revenue and segmental analysis" to our unaudited interim financial statements and our audited consolidated financial statements.

 

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Risk Factors

        Investing in the ADSs involves a high degree of risk. You should carefully consider the following risk factors and all other information contained in this prospectus, including our financial statements and the related notes, before making an investment decision regarding our securities. The risks and uncertainties described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment in our securities. If any of these risks materialize, our business, financial condition or results of operations could suffer, the price of the ADSs could decline and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us and adversely affect your investment in the ADSs.

Risks relating to our operations

We depend on customers in certain end-markets, including the automotive, self-contained breathing apparatus, aerospace, defense, medical and industrial gas end-markets, and an economic downturn in any of those end-markets could reduce sales.

        We have significant exposures to certain key end-markets, including some end-markets that are cyclical in nature. To the extent that any of these cyclical end-markets are at a low point in their economic cycle, sales may be adversely affected and thereby negatively affect our ability to fund our business operations and service our indebtedness. It is possible that all or most of these end-markets could be in decline at the same time, such as during a recession, which could significantly harm our financial condition and result of operations due to decreased sales. For example, 31% of our 2011 sales were related to the automotive end-markets, 11% to self-contained breathing apparatus ("SCBA"), 12% to the aerospace and defense markets, 9% to medical markets (including portable oxygen) and 9% to the printing and paper markets. Together, these five markets accounted for approximately 72% of our 2011 revenues. Dependence of either of our divisions on certain end-markets is even more pronounced. For example, in 2011, 47% of the Elektron division's sales were to customers in the automotive end-market.

Our global operations expose us to economic conditions, political risks and specific regulations in the countries in which we operate, which could have a material adverse impact on our business, financial condition and results of operations.

        We derive our revenues and earnings from operations in many countries and are subject to risks associated with doing business internationally. We have wholly-owned facilities in the United States, Canada, France, the Czech Republic and China and joint venture facilities in India and Japan. Doing business in foreign countries has risks, including the potential for adverse changes in the local political, financial or regulatory climate; difficulty in staffing and managing geographically diverse operations; and the costs of complying with a variety of laws and regulations. Because we have operations in many countries, we are also liable to pay taxes in many fiscal jurisdictions. The tax burden on us depends on the interpretation of local tax regulations, bilateral or multilateral international tax treaties and the administrative doctrines in each one of these jurisdictions. Changes in these tax regulations could have an impact on our tax burden.

        Moreover, the principal markets for our products are located in North America, Europe and Asia, and any financial difficulties experienced in these markets may have a material adverse impact on our businesses. The maturity of some of our markets, particularly the U.S. medical market and the European fire extinguisher market, could require us to increase sales in developing regions, which may involve greater economic and political risks. We cannot provide any assurances that we will be able to expand sales in these regions.

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Our operations rely on a number of large customers in certain areas of our business, and the loss of any of our major customers could negatively impact our sales.

        If we fail to maintain our relationships with our major customers, or fail to replace lost customers, or if there is reduced demand from our customers or for the products produced by our customers, it could reduce our sales and have a material adverse effect on our financial condition and results of operations. In addition, we could experience a reduction in sales if any of our customers fail to perform or default on any payment pursuant to our contracts with them. Long-term relationships with customers are especially important for suppliers of intermediate materials and components, where we work closely with customers to develop products that meet particular specifications as part of the design of a product intended for the end-user market, and the bespoke nature of many of our products could make it difficult to replace lost customers. Our top ten customers accounted for 39% of our revenue in 2011.

Competitive pressures can materially and adversely affect our sales, profit margins, financial condition and results of operations.

        The markets for many of our products are now increasingly global and highly competitive, especially in terms of quality, price and service. We could lose market share as a result of these competitive pressures, which could materially and adversely affect our sales, profit margins, financial condition and results of operations.

        Because of the highly competitive nature of some of the markets in which we operate, we may have difficulty raising customer prices to offset increases in costs of raw materials. For example, the U.S. medical cylinder market has a number of dedicated producers with excess capacity, making it very difficult for us to raise customer prices to offset aluminum cost increases. In addition, rising aluminum prices could lead to the development of alternative products that use lower cost materials and that could become favored by end-market users.

        More generally, we may face potential competition from producers that manufacture products similar to our aluminum-, magnesium- and zirconium-based products using other materials, such as steel, plastics, composite materials or other metals, minerals and chemicals. Products manufactured by competitors using different materials might compete with our products in terms of price, weight, engineering characteristics, recyclability or other grounds.

        Other parts of our operations manufacture and sell products that satisfy customer specifications. Competitors may develop lower cost or better-performing products and customers may not be willing to pay a premium for the advantages offered by our products, even if they are technically superior to competing technologies.

        In recent years, we have also experienced increased competition from new geographic areas, including Asia, where manufacturers can benefit from lower labor costs. Competitors with operations in these regions may be able to produce goods at a lower cost than us, enabling them to compete more effectively in terms of price. Competition with respect to less complex zirconium chemicals has been particularly intense, with Chinese suppliers providing low cost feedstock to specialist competitors, making it especially difficult to compete in commodity products such as paint dryers. Chinese magnesium also continues to be imported into Europe in large volumes, which may impact our competitive position in Europe regarding magnesium alloys. We are also impacted by a trend for Western-based competitors to relocate production to Asia to take advantage of the lower production costs.

        In addition, governments may impose import and export restrictions, grant subsidies to local companies and implement tariffs and other trade protection regulations and measures that may give competitive advantages to our competitors and adversely affect our business.

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We depend upon our larger suppliers for a significant portion of our raw materials, and a loss of one of these suppliers or a significant supply interruption could negatively impact our financial performance.

        If we fail to maintain relationships with key suppliers or fail to develop relationships with other suppliers, it could have a negative effect on our financial condition or results of operations. We rely, to varying degrees, on major suppliers for some of the principal raw materials of our engineered products, including aluminum, zirconium and carbon fiber. For example, in 2011, we obtained 72% of our aluminum, the largest single raw material purchased by the Gas Cylinders division, from Rio Tinto Alcan and its associated companies. Moreover, carbon fiber has been in short supply in recent years, with a number of expanding applications competing for the same supply of this specialized raw material. We currently purchase most of our carbon fiber from Toray and Grafil, a subsidiary of Mitsubishi Chemical. In addition, since mid-2010, the Chinese government has been constraining the supply of rare earths, resulting in a shortage of such materials.

        We generally purchase raw materials from suppliers on a spot basis, under standard terms and conditions. We have recently negotiated a two-year supply contract with Rio Tinto Alcan for a portion of our aluminum requirements. We also have a five-year magnesium supply contract for a portion of our magnesium requirements with U.S. Magnesium that expires on December 31, 2014. Other than under 'force majeure' conditions, neither Rio Tinto Alcan nor U.S. Magnesium may terminate the respective contracts other than as a result of our breach of the terms.

        We have made efforts to build close commercial relationships with key suppliers to meet growing demand for our products. However, an interruption in the supply of essential materials used in our production processes, or an increase in the prices of materials due to market shortages, government quotas or natural disturbances, could significantly affect our ability to provide competitively priced products to customers in a timely manner, and thus have a material adverse effect on our business, results of operations or financial condition. In the event of a significant interruption in the supply of any materials used in our production processes, or a significant increase in their prices (as we have experienced, for example, with aluminum, magnesium and rare earths), we may have to purchase these materials from alternative sources, build additional inventory of the raw materials, increase our prices, reduce our profit margins or possibly fail to fill customer orders by the deadlines required in contracts. We can provide no assurance that we would be able to obtain replacement materials quickly on similar or not materially less favorable terms or at all.

We are exposed to fluctuations in the prices of the raw materials that are used to manufacture our products, and such fluctuations in raw material prices could lead us to incur unexpected costs and could affect our margins or our results of operations.

        The primary raw material used in the manufacturing of gas cylinders and superformed panels is aluminum. The price of aluminum is subject to both short-term price fluctuations and to longer-term cyclicality as a result of international supply and demand relationships. Aluminum prices have increased significantly in recent years, with the London Metal Exchange ("LME") three-month price of aluminum increasing from an average of $1,701 per metric ton in 2009 to $2,198 per metric ton in 2010 and $2,419 per metric ton in 2011. We have also experienced significant price increases in other raw material costs such as primary magnesium, carbon fiber, zircon sand and rare earths. For example, starting in mid-2010, Chinese authorities greatly reduced the export quota for rare earths, which resulted in an increase in the price of cerium carbonate, priced in rare earth oxide contained weight, from $10 per kilogram in May 2010 to a peak of $270 per kilogram in July 2011. By the end of 2011, the price of cerium carbonate had decreased to approximately $80 per kilogram and, by June 30, 2012, to approximately $45 per kilogram. See "Business—Suppliers and Raw Materials."

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        Fluctuations in the prices of these raw materials could affect margins in the businesses in which we use them. We cannot always pass on price increases or increase our prices to offset increases in raw material immediately or at all, whether because of fixed price agreements with customers, competitive pressures that restrict our ability to pass on cost increases or increase prices, or other factors. It can be particularly difficult to pass on price increases or increase prices in product areas such as gas cylinders, where competitors offer similar products made from alternative materials, such as steel, if those materials are not subject to the same cost increases. As a result, a substantial increase in raw material could have a material adverse effect on our financial condition and results of operations. In such an event, there might be less cash available than necessary to fund our business operations effectively or to service our indebtedness. In addition, higher prices necessitated by large increases in raw material costs could make our current, or future, products unattractive compared to competing products made from alternative materials that have not been so affected by raw material cost increases or compared to products produced by competitors who have not incurred such large increases in raw material costs.

        Historically, we have used derivative financial instruments to hedge our exposures to fluctuations in aluminum prices. Currently, our main method of hedging against this risk is to agree to forward prices with our largest supplier of aluminum billet for manufacturing gas cylinders and to agree to some fixed pricing for up to twelve months from more specialist superform sheet suppliers. We also use LME-based derivative contracts to supplement our fixed price agreement strategy. Although it is our treasury policy to enter into these transactions only for hedging, and not for speculative purposes, we are exposed to market risk and credit risk with respect to the use of these derivative financial instruments. If the price of aluminum were to continue to rise, our increased exposure to changes in aluminum prices could have a material adverse impact on our results of operations to the extent that we cannot pass price increases on to our customers or manage exposure effectively through hedging instruments. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure About Market Risk." In addition, if we have hedged our metal position, and have forward price agreements, a fall in the price of aluminum might give rise to hedging margin calls to the detriment of our borrowing position.

        In the past few years, when appropriate, we have made additional purchases of large stocks of magnesium and some rare earth chemicals to delay the impact of potentially higher prices in the future. However, these strategic purchases have increased our working capital needs, reducing our liquidity and cash flow and increasing our reliance on our £40 million revolving credit facility (the "Revolving Credit Facility").

We are exposed to fluctuations in the prices of utilities that are used in the manufacture of our products, and such fluctuations in utility prices could lead us to incur unexpected costs and could affect our margins or our results of operations.

        Our utility costs, which constitute another major input cost of our total expenses and include costs related to electricity, natural gas, and water, may be subject to significant variations. In recent years, the emergence of financial speculators in energy, increased taxation and other factors have contributed to a significant increase in utility costs for us, particularly with respect to the price that we pay for our U.K. energy supplies, which have been subject to a number of significant price increases.

        Fluctuations in the prices of these utility costs could affect margins in the businesses in which we use them. We cannot always pass on price increases or increase our prices to offset increases in utility costs immediately or at all, whether because of fixed price agreements with customers, competitive pressures that restrict our ability to pass on cost increases or increase prices, or other factors. It can be particularly difficult to pass on price increases or increase prices in product areas such as gas cylinders, where competitors offer similar products made from alternative materials, such as steel, if those materials are not subject to the same cost increases. As a result, a substantial increase in utility costs could have a material adverse effect on our financial condition and results of operations. In such an

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event, there might be less cash available than necessary to fund our business operations effectively or to service our indebtedness.

Changes in foreign exchange rates could reduce margins on our sales, reduce the reported revenues of our non-U.S. operations and have a material adverse effect on our results of operations.

        We conduct a large proportion of our commercial transactions, purchases of raw materials and sales of goods in various countries and regions, including the United Kingdom, United States, continental Europe, Australia and Asia. Our manufacturing operations based in the United States, continental Europe and Asia, usually sell goods denominated in their main domestic currency, but our manufacturing operations in the United Kingdom purchase raw materials and sell products often in currencies other than pound sterling. Changes in the relative values of currencies can decrease the profits of our subsidiaries when they incur costs in currencies that are different from the currencies in which they generate all or part of their revenue. These transaction risks principally arise as a result of purchases of raw materials in U.S. dollars, coupled with sales of products to customers in continental European currencies, principally denominated in euros. This impact is most pronounced in our exports to continental Europe from the United Kingdom. In 2011, our U.K. operations sold €48.5 million of goods into the euro zone. Our policy is to hedge a portion of our net exposure to fluctuations in exchange rates with forward foreign currency exchange contracts. Therefore, we are exposed to market risk and credit risk through the use of derivative financial instruments. Any failure of hedging policies could negatively impact our profits, and thus damage our ability to fund our operations and to service our indebtedness.

        In addition to subsidiaries in the United States, we have subsidiaries located in the United Kingdom, France, the Czech Republic, Canada and China, as well as joint ventures in Japan and India, whose revenue, costs, assets and liabilities are denominated in local currencies. Because our consolidated accounts are reported in U.S. dollars, we are exposed to fluctuations in those currencies when those amounts are translated for purposes of reporting our consolidated accounts, which may cause declines in results of operations as results denominated in different currencies are translated to U.S. dollars for reporting purposes. The largest risk is from our operations in the United Kingdom, which in 2011 generated operating profits of $26.3 million from sales revenues of $186.4 million. Fluctuations in exchange rates, particularly between the U.S. dollar and the pound sterling, can have a material effect on our consolidated income statement and balance sheet. In 2011, the weakening of the average U.S. dollar exchange rate had a positive impact on reported revenues of $9.9 million while in 2010 the strengthening of the average U.S. dollar exchange rate had a negative impact on reported revenues of $4.7 million. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Quantitative and Qualitative Disclosure About Market Risk."

Our defined benefit pension plans have significant funding deficits that could require us to make increased ongoing cash contributions in response to changes in market conditions, actuarial assumptions and investment decisions and that could expose us to significant short-term liabilities if a wind-up trigger occurred in relation to such plans, each of which could have a material adverse effect on our financial condition and results of operations.

        We operate defined benefit arrangements in the United Kingdom, the United States and France. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Retirement Benefit Arrangements." Our largest defined benefit plan, the Luxfer Group Pension Plan, which closed to new members in 1998 but remains open for accrual of future benefits based on career-average salary, is funded according to the regulations in effect in the United Kingdom and, as of December 31, 2011 and June 30, 2012, had an IAS 19 accounting deficit of $58.5 million and $61.3 million, respectively. Luxfer Group Limited is the principal employer under the Luxfer Group Pension Plan, and other subsidiaries also participate under the plan. Our other defined benefit plans

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are less significant than the Luxfer Group Pension Plan and, as of December 31, 2011 and June 30, 2012, had an IAS 19 accounting deficit of $23.9 million and $21.9 million, respectively. The largest of these additional plans is the BA Holdings, Inc. Pension Plan in the United States, which was closed to further benefit accruals in December 2005. According to the actuarial valuation of the Luxfer Group Pension Plan as at April 5, 2009, the Luxfer Group Pension Plan had a deficit of £55.2 million on the plan specific basis. The plan's actuaries performed an update of the actuarial valuation in respect of 2009 and estimated that as at December 31, 2009, the deficit in the Luxfer Group Pension Plan had decreased from £55.2 million to £36.9 million on the plan specific basis. The improved position was primarily due to a recovery in global stock markets since the valuation date, partially offset by the increased expectation of future inflation. Should a wind-up trigger occur in relation to the Luxfer Group Pension Plan, the buy-out deficit of that plan will become due and payable by the employers. The aggregate deficit of the Luxfer Group Pension Plan on a buy-out basis was estimated at £144.4 million as at April 5, 2009. The trustees have the power to wind-up the Luxfer Group Pension Plan if they consider that in the best interests of members there is no reasonable purpose in continuing the Luxfer Group Pension Plan.

        We are exposed to various risks related to our defined benefit plans, including the risk of loss of market value of the plan assets, the risk of actual investment returns being less than assumed rates of return, the trustees of the Luxfer Group Pension Plan switching investment strategy (which does require consultation with the employer) and the risk of actual experience deviating from actuarial assumptions for such things as mortality of plan participants. In addition, fluctuations in interest rates may cause changes in the annual cost and benefit obligations. As a result of the actuarial valuation as at April 5, 2009, we are required to make increased ongoing cash contributions, over and above the normal contributions required to meet the cost of future accrual, to the Luxfer Group Pension Plan. These additional payments are intended to reduce the funding deficit. We have agreed with the trustees to a schedule of payments to reduce the deficit. This schedule has been provided to the UK Pensions Regulator (the "Pensions Regulator"), and the Pensions Regulator has confirmed that it does not propose to take any plan funding actions. The schedule of payments provides for minimum annual contributions of £2.25 million per year, together with additional variable contributions based on one-third of net earnings of Luxfer Holdings PLC in excess of £6 million. The total contributions are currently subject to an annual cap of £4 million, which will increase to £5 million from 2013-14 onwards. These contribution rates are to apply until the deficit is eliminated (expected to take between nine and 15 years, depending on the variable contributions), but in practice the schedule will be reviewed, and may be revised, following the next actuarial valuation. Increased regulatory burdens have also proven to be a significant risk, such as the United Kingdom's Pension Protection Fund ("PPF") Levy, which was $1.6 million in 2011. Following closure of the defined benefit plans described above, we have offered new employees membership in defined contribution pension arrangements or 401(k) arrangements, and these do not carry the same risks to the company as the defined benefit plans.

The Pensions Regulator in the United Kingdom has power in certain circumstances to issue contribution notices or financial support directions which, if issued, could result in significant liabilities arising for us.

        The Pensions Regulator may issue a contribution notice to the employers that participate in the Luxfer Group Pension Plan or any person who is connected with or is an associate of these employers where the Pensions Regulator is of the opinion that the relevant person has been a party to an act, or a deliberate failure to act, which had as its main purpose (or one of its main purposes) the avoidance of pension liabilities or where such act has a materially detrimental effect on the likelihood of payment of accrued benefits under the Luxfer Group Pension Plan being received. A person holding alone or together with his or her associates directly or indirectly one-third or more of our voting power could be the subject of a contribution notice. The terms "associate" and "connected person," which are taken from the Insolvency Act 1986, are widely defined and could cover our significant shareholders and

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others deemed to be shadow directors. If the Pensions Regulator considers that a plan employer is "insufficiently resourced" or a "service company" (which have statutory definitions), it may impose a financial support direction requiring it or any member of the Group, or any person associated or connected with an employer, to put in place financial support in relation to the Luxfer Group Pension Plan. Liabilities imposed under a contribution notice or financial support direction may be up to the difference between the value of the assets of the Luxfer Group Pension Plan and the cost of buying out the benefits of members and other beneficiaries of the Luxfer Group Pension Plan. In practice, the risk of a contribution notice being imposed may restrict our ability to restructure or undertake certain corporate activities. Additional security may also need to be provided to the trustees of the Luxfer Group Pension Plan before certain corporate activities can be undertaken (such as the payment of an unusual dividend) and any additional funding of the Luxfer Group Pension Plan may have an adverse effect on our financial condition and the results of our operations.

Our ability to remain profitable depends on our ability to protect and enforce our intellectual property, and any failure to protect and enforce such intellectual property could have a material adverse impact on our business, financial condition and results of operations.

        We cannot ensure that we will always have the ability to protect proprietary information and our intellectual property rights. We protect our intellectual property rights (within the United States, Europe and other countries) through various means, including patents and trade secrets. For example, most of our sales of automotive catalysis products are now subject to patent protection and new product developments such as more advanced lightweight alloys used in medical gas cylinders are patent protected. In particular, we patent products and processes (or certain parts of them) that could also be easily duplicated, while protecting other products and most of our processes as trade secrets. Because of the difference in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in other countries as they would in the United States or the United Kingdom. The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Further, we cannot assure you that competitors will not infringe our patents, or that we will have adequate resources to enforce our patents. Our failure to obtain or maintain adequate protection of our intellectual property rights for any reason could have a material adverse effect on our business, results of operations and financial condition. In addition, our patents will only be protected for the duration of the patent. The minimum amount of time remaining in respect to any of our material patents is three years (which relates to certain patents used in our gas cylinder business).

        With respect to our unpatented proprietary technology, it is possible that others will independently develop the same or similar technology or obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. We cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. If we are unable to maintain the proprietary nature of our technologies, we could be materially adversely affected. We rely on our trademarks, trade names, and brand names to distinguish our products from the products of our competitors, and have registered or applied to register many of these trademarks. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition, and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks, or that we will have adequate resources to enforce our trademarks.

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Expiration or termination of our right to use certain intellectual property granted by third parties, the right of those third parties to grant the right to use the same intellectual property to our competitors and the right of certain third parties to use certain intellectual property used as part of our business could have a material adverse impact on our business, financial condition and results of operations.

        We have negotiated, and may from time to time in the future negotiate, licenses with third parties with respect to third-party proprietary technologies used in certain of our manufacturing processes. If any of these licenses expires or terminates, we will no longer retain the rights to use the relevant third-party proprietary technologies in our manufacturing processes, which could have a material adverse effect on our business, results of operations and financial condition. Further, the rights granted to us might be nonexclusive, which could result in our competitors gaining access to the same intellectual property.

        Some of our patents may cover inventions that were conceived or first reduced to practice under, or in connection with, government contracts or other government funding agreements or grants. With respect to inventions conceived or first reduced to practice under such government funding agreements, a government may retain a nonexclusive, irrevocable, royalty-free license to practice or have practiced for or on behalf of the relevant country the invention throughout the world. In addition, if we fail to comply with our reporting obligations or to adequately exploit the developed intellectual property under these government funding agreements, the relevant country may obtain additional rights to the developed intellectual property, including the right to take title to any patents related to government funded inventions or to license the same to our competitors. Furthermore, our ability to exclusively license or assign the intellectual property developed under these government funding agreements to third parties may be limited or subject to the relevant government's approval or oversight. These limitations could have a significant impact on the commercial value of the developed intellectual property.

        We often enter into research and development agreements with academic institutions where they generally retain certain rights to the developed intellectual property. The academic institutions generally retain rights over the technology for use in non-commercial academic and research fields, including in some cases the right to license the technology to third parties for use in those fields. It is difficult to monitor and enforce such noncommercial academic and research uses, and we cannot predict whether the third party licensees would comply with the use restrictions of these licenses. We could incur substantial expenses to enforce our rights against such licensees. In addition, even though the rights that academic institutions obtain are generally limited to the noncommercial academic and research fields, they may obtain rights to commercially exploit developed intellectual property in certain instances. Furthermore, under research and development agreements with academic institutions, our rights to intellectual property developed thereunder is not always certain, but instead may be in the form of an option to obtain license rights to such intellectual property. If we fail to timely exercise our option rights and/or we are unable to negotiate a license agreement, the academic institution may offer a license to the developed intellectual property to third parties for commercial purposes. Any such commercial exploitation could adversely affect our competitive position and have a material adverse effect on our business.

If third parties claim that intellectual property used by us infringes upon their intellectual property, our operating profits could be adversely affected.

        We may, from time to time, be notified of claims that we are infringing upon patents, copyrights, or other intellectual property rights owned by third parties, and we cannot provide assurances that other companies will not, in the future, pursue such infringement claims against us or any third-party proprietary technologies we have licensed. If we were found to infringe upon a patent or other intellectual property right, or if we failed to obtain or renew a license under a patent or other intellectual property right from a third party, or if a third party which we were licensing technologies

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from was found to infringe upon a patent or other intellectual property rights of another third party, we may be required to pay damages, suspend the manufacture of certain products or reengineer or rebrand our products, if feasible, or we may be unable to enter certain new product markets. Any such claims could also be expensive and time consuming to defend and divert management's attention and resources. Our competitive position could suffer as a result. In addition, if we have omitted to enter into a valid non-disclosure or assignment agreement for any reason, we may not own the invention or our intellectual property and may not be adequately protected.

Any failure of our research and development activity to improve our existing products and develop new products could cause us to lose market share and impact our financial position.

        Our products are highly technical in nature, and in order to maintain and improve our market position, we depend on successful research and development activity to continue to improve our existing products and develop new products. We cannot be certain that we will have sufficient research and development capability to respond to changes in the industries in which we operate. These changes could include changes in the technological environment in which we currently operate, increased demand for products or the development of alternatives to our products. For example, the development of lighter-weight steel has made the use of steel in gas cylinders a more competitive alternative to aluminum than it had been previously. In addition, our superformed aluminum components compete with new high-performance composite materials developed for use in the aerospace industry. Without the timely introduction of new products or enhancements to existing products, our products could become obsolete over time, in which case our business, results of operations and financial condition could be adversely affected. In our efforts to develop and market new products and enhancements to our existing products, we may fail to identify new product opportunities successfully or develop and timely bring new products to market. We may also experience delays in completing development of, enhancements to or new versions of our products. In addition, product innovations may not achieve the market penetration or price stability necessary for profitability. In addition to benefiting from our research collaboration with universities, we spent $8.5 million, $8.9 million and $6.3 million in 2011, 2010 and 2009, respectively, on our own research and development activities. We expect to fund our future capital expenditure requirements through operating profit cash flows and restricted levels of indebtedness, but if operating profit decreases, we may not be able to invest in research and development or continue to develop new products or enhancements.

Some of our key operational equipment is relatively old and may need significant capital expenditures for repair or replacement.

        High levels of maintenance and repair costs could result from the need to maintain our older plants, property and equipment, and machinery breakdowns could result in interruptions to the business causing lost production time and reduced output. Machinery breakdowns or equipment failures may hamper or cause delays in the production and delivery of products to our customers and increase our operating costs, thus reducing cash flow from operations. Any failure to deliver products to our customers in a timely manner could adversely affect our customer relationships and reputation. We already incur considerable expense on maintenance, including preventative maintenance, and repairs. Any failure to implement required investments, whether because of requirements to divert funds to repair existing physical infrastructure, debt service obligations, unanticipated liquidity constraints or other factors, could have a material effect on our business and on our ability to service our indebtedness. The breakdown of some of our older equipment, such as the rolling mill at our Madison, Illinois plant, would be very difficult to repair and costly should it need to be replaced.

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Our operations may prove harmful to the environment, and any clean-up or other related costs could have a material adverse effect on our operating results or financial condition.

        We are exposed to substantial environmental costs and liabilities, including liabilities associated with divested assets and prior activities performed on sites before we acquired an interest in them. Our operations, including the production and delivery of our products, are subject to a broad range of continually changing environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations increasingly impose more stringent environmental protection standards on us and affect, among other things, air emissions, waste-water discharges, the use and handling of hazardous materials, noise levels, waste disposal practices, soil and groundwater contamination and environmental clean-up. Complying with these regulations involves significant and recurring costs. We have spent approximately $3.0 million between 2009 and 2011 on environmental remediation efforts, including with respect to investigations at the Redditch, United Kingdom site of our closed tubes plant and a landfill at our Swinton, United Kingdom site. See "Business—Environmental Matters." We estimate that environmental compliance and related matters at these and other sites will cost $1.9 million in 2012. See "Business— Environmental Matters" for details of our environmental management program and the environmental issues that we are currently addressing.

        We cannot predict our future environmental liabilities and cannot assure investors that our management is aware of every fact or circumstance regarding potential liabilities or that the amounts provided and budgeted to address such liabilities will be adequate for all purposes. In addition, future developments, such as changes in regulations, laws or environmental conditions, may increase environmental costs and liabilities and could have a material adverse effect on our operating results and consolidated financial position in any given financial year, which could negatively affect our cash flows and hinder our ability to service our indebtedness.

        The health and safety of our employees and the safe operation of our businesses is subject to various health and safety regulations in each of the jurisdictions in which we operate. These regulations impose various obligations on us, including the provision of safe working environments and employee training on health and safety matters. Complying with these regulations involves recurring costs.

Certain of our operations are highly regulated by different agencies, which require products to comply with their rules and procedures and can subject our operations to penalties or adversely affect production.

        Certain of our operations are in highly regulated industries, which require us to maintain regulatory approvals and, from time to time, obtain new regulatory approvals from various countries. This can involve substantial time and expense. In turn, higher costs reduce our cash flow from operations. For example, manufacturers of gas cylinders throughout the world must comply with high local safety and health standards and obtain regulatory approvals in the markets where they sell their products. In addition, military organizations require us to comply with applicable government regulations and specifications when providing products or services to them directly or as subcontractors. In addition, we are required to comply with U.S. and other export regulations with respect to certain products and materials. The European Union has also passed legislation governing the registration, evaluation and authorization of chemicals, known as REACH, pursuant to which we are required to register chemicals and gain authorization for the use of certain substances. The European Union has also set out certain safety requirements for pressure equipment, with which we are required to comply in the manufacture of our portable fire extinguishers. Although we make reasonable efforts to obtain all the licenses and certifications that are required by countries in which we operate, there is always a risk that we may be found not to comply with certain required procedures. This risk grows with increased complexity and variance in regulations across the globe. Because the regulatory schemes vary by country, we may also be subject to regulations of which we are not presently aware and could be subject to sanctions by a foreign government that could materially and adversely affect our operations

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in the relevant country. For example, while our portable fire extinguishers are compliant with British safety standards, concerns have been raised by the Swedish and Danish authorities over whether they fulfill the requirements of the relevant European Union directive, which could result in our products being withdrawn from the market.

        Governments and their agencies have considerable discretion to determine whether regulations have been satisfied. They may also revoke or limit existing licenses and certifications or change the laws and regulations to which we are subject at any time. If our operations fail to obtain, experience delays in obtaining or lose a needed certification or approval, we may not be able to sell our products to our customers, expand into new geographic markets or expand into new product lines, which will ultimately have a material adverse effect on our business, financial position and results of operations. In addition, new or more stringent regulations, if imposed, could have an adverse effect on our results of operations because we may experience difficulty or incur significant costs in connection with compliance with them. Non-compliance with these regulations could result in administrative, civil, financial, criminal or other sanctions against us, which could have negative consequences on our business and financial position. Furthermore, as we begin to operate in new countries, we may need to obtain new licenses, certifications and approvals.

New and pending legislation or regulation of carbon dioxide and other greenhouse gas emissions may have a material adverse impact on our results of operations, financial condition and cash flows.

        Although we have a long-term strategy to improve our energy efficiency, our manufacturing processes, and the manufacturing processes of many of our suppliers and customers, are still energy intensive and use or generate, directly or indirectly, greenhouse gases, including carbon dioxide and sulphur hexafluoride. Political and scientific debates related to the impacts of emissions of carbon dioxide and other greenhouse gases on the global climate are ongoing. In recent years, new U.S. Environmental Protection Agency ("USEPA") rules, the European Union Emissions Trading Scheme and the CRC Energy Efficiency Scheme in the United Kingdom, each of which regulates greenhouse gas emissions from certain large industrial plants, have come into effect. While the ultimate impact of the new greenhouse gas emissions rules on our business is not yet known, it is possible that these new rules could have a material adverse effect on our results of operations and financial condition because of the costs of compliance. Additional regulation or legislation aimed at reducing carbon dioxide and greenhouse gas emissions, such as a "cap-and-trade program," is currently being considered, or has been adopted, by several states in the United States and globally. Such regulation or legislation, if adopted or enacted in a more demanding form, could also have a material adverse effect on our business, results of operations and financial condition.

Because of the nature and use of the products that we manufacture, we may in the future face large liability claims.

        We are subject to litigation in the ordinary course of our business, which could be costly to us and which may arise in the future. We are exposed to possible claims for personal injury, death or property damage, which could result from a failure of a product manufactured by us or of a product integrating one of our products. For example, improperly manufactured gas cylinders may explode because of their failure to contain gases at high pressure, which can cause substantial personal and property damage. We also supply many components into aerospace applications, where the potential for significant liability exposures necessitates additional insurance costs.

        Many factors beyond our control could lead to liability claims, including:

    The failure of a product manufactured by a third party that incorporated components manufactured by us;

    The reliability and skills of persons using our products or the products of our customers; and

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    The use by customers of materials or products that we produced for applications for which the material or product was not designed.

        If we cannot successfully defend ourselves against claims, we may incur substantial liabilities. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:

    Decreased demand for our products;

    Reputational injury;

    Initiation of investigation by regulators;

    Costs to defend related litigation;

    Diversion of management time and resources;

    Compensatory damages and fines;

    Product recalls, withdrawals or labeling, marketing or promotional restrictions;

    Loss of revenue;

    Exhaustion of any available insurance and our capital resources; and

    A decline in our stock price.

        We could be required to pay a material amount if a claim is made against us that is not covered by insurance or otherwise subject to indemnification, or that exceeds the insurance coverage that we maintain. Moreover, we do not currently carry insurance to cover the expense of product liability recalls, and litigation involving significant product recalls or product liability could have a material adverse effect on our financial condition or results of operations.

Our businesses could suffer if we lose certain of our employees or cannot attract and retain qualified employees.

        We rely upon a number of key executives and employees, particularly Brian Purves, our Chief Executive, and other members of the executive management board. If these and certain other employees ceased to work for us, we would lose valuable expertise and industry experience and could become less profitable. In addition, future operating results depend in part upon our ability to attract and retain qualified engineering and technical personnel. As a result of intense competition for talent in the market, we cannot ensure that we will be able to continue to attract and retain such personnel. While our key employees are generally subject to non-competition agreements for a limited period of time following the end of their employment, if we were to lose the services of key executives or employees, it could have an adverse effect on operations, including our ability to maintain our technological position. We do not carry "key-man" insurance covering the loss of any of our executives or employees.

Any expansion or acquisition may prove risky.

        As part of our strategy, we have and may continue to supplement organic growth by acquiring companies or operations engaged in similar or complementary businesses. If the consummation of acquisitions and integration of acquired companies and businesses diverts too much management attention from the operations of our core businesses, operating results could suffer. Any acquisition made could be subject to a number of risks, including:

    Failing to discover liabilities of the acquired company or business for which we may be responsible as a successor owner or operator, including environmental costs and liabilities;

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    Difficulties associated with the assimilation of the operations and personnel of the acquired company or business;

    The loss of key personnel in the acquired company or business; and

    A negative impact on our financial statements resulting from an impairment of acquired intangible assets, the creation of provisions or write-downs.

        We cannot ensure that every acquisition will ultimately provide the benefits originally anticipated.

        We also face certain challenges as a result of organic growth. For example, in order to grow while maintaining or decreasing per unit costs, we will need to improve efficiency, effectively manage operations and employees and hire enough qualified technical personnel. We may not be able to adequately meet these challenges. Any failure to do so could result in costs increasing more rapidly than any growth in sales, thus resulting in lower operating income from which to finance operations and indebtedness. In addition, we may need to borrow money to complete acquisitions or finance organic growth, which will increase our debt service requirements. There can be no assurance that we will be able to do so in the future on favorable terms or at all.

We could suffer a material interruption in our operations as a result of unforeseen events or operating hazards.

        Our production facilities are located in a number of different locations throughout the world. Any of our facilities could suffer an interruption in production, either at separate times or at the same time, because of various and unavoidable occurrences, such as severe weather events (e.g., hurricanes, floods and earthquakes), from casualty events (e.g., explosions, fires or material equipment breakdown), from acts of terrorism, from pandemic disease, from labor disruptions or from other events (e.g., required maintenance shutdowns). For example, we incurred an estimated $0.3 million cost for roof repairs following storm damage at our Madison, Illinois plant, and our operations in California are subject to risks related to earthquakes. In addition, some of our products are highly flammable, and there is a risk of fire inherent in their production process. For example, in 2010, two furnaces were destroyed in a fire at our Madison, Illinois plant. Certain residents of the area near the plant recently filed claims against us in relation to damages allegedly resulting from the fire, and we have responded to these claims. In addition, the Illinois Attorney General filed a complaint against us in 2010 in relation to the incident that we have been responding to since then. Such hazards could cause personal injury or death, serious damage to or destruction of property and equipment, suspension of operations, substantial damage to the environment and/or reputational harm. This risk is particularly high in the production of fine magnesium powders, which are highly flammable and explosive in certain forms. Similar disruptions in the operations of our suppliers could materially affect our business and operations. Although we carry certain levels of business interruption insurance, the coverage on certain catastrophic events or natural disasters, including earthquakes, a failure of energy supplies and certain other events, is limited, and it is possible that the occurrence of such events may have a significant adverse impact on our business and, as a result, on our cash flows.

Employee strikes and other labor-related disruptions may adversely affect our operations.

        Our business depends on a large number of employees who are members of various trade union organizations. Strikes or labor disputes with our employees may adversely affect our ability to conduct business. We cannot assure you that there will not be any strike, lock-out or material labor dispute in the future. Work interruptions or stoppages could have a material adverse effect on our business, results of operations and financial condition.

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We could incur future liability claims arising from previous businesses now closed or sold.

        We previously operated Baco Contracts, a building cladding contracting business, and although now closed, the warranties on several of the business' contracts have many years remaining, thereby exposing us to potential liabilities.

As a holding company, our main source of cash is distributions from our operating subsidiaries.

        We, Luxfer Holdings PLC, conduct all of our operations through our subsidiaries. Accordingly, our main cash source is dividends from these subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary has from its operations in excess of the funds necessary for its operations, obligations or other business plans. Since our subsidiaries are wholly-owned by us, our claims will generally rank junior to all other obligations of the subsidiaries. If our operating subsidiaries are unable to make distributions, our growth may slow after the proceeds of this offering are exhausted, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.

Our failure to perform under purchase or sale contracts could result in the payment of penalties to customers or suppliers, which could have a negative impact on our results of operations or financial condition.

        A failure to perform under purchase or sale contracts could result in the payment of penalties to suppliers or customers, which could have a negative impact on our results of operations or financial condition. Certain contracts with suppliers may also obligate us to purchase a minimum product volume (clauses known as "take or pay") or contracts with customers may impose firm commitments for the delivery of certain quantities of products within certain time periods. The risk of incurring liability under a "take-or-pay" supply contract would be increased during an economic crisis, which would increase the likelihood of a sharp drop in demand for our products.

We could be adversely affected by violations of the U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.

        The U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making or, in the case of the U.K. Bribery Act, receiving, improper payments to, or from, government officials or, in the case of the U.K. Bribery Act, third parties, for the purpose of obtaining or retaining business. Failing to prevent bribery is also an offence under the U.K. Bribery Act. Our policies mandate compliance with these laws. Despite our compliance program, we cannot assure you that our internal control policies and procedures will always protect us from reckless, negligent or improper acts committed by our employees or agents. The costs of complying with these laws or violations of these laws, or allegations of such violations, could have a negative impact on our business, results of operations and reputation.

We have a significant amount of indebtedness, which may adversely affect our cash flow and our ability to operate our business, remain in compliance with debt covenants, make payments on our indebtedness, pay dividends and respond to changes in our business or take certain actions.

        As of December 31, 2011, we had approximately $133 million of indebtedness on a consolidated basis under our Term Loan, Revolving Credit Facility and senior secured notes due 2018 (the "Loan Notes due 2018"), all of which was secured debt.

        Our indebtedness could have important consequences to you. For example, it could make it more difficult for us to satisfy obligations with respect to indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could

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result in an event of default under agreements governing our indebtedness. Further, our indebtedness could require us to dedicate a substantial portion of available cash flow to pay principal and interest on our outstanding debt, which would reduce the funds available for working capital, capital expenditures, dividends, acquisitions and other general corporate purposes. Our indebtedness could also limit our ability to operate our business, including the ability to engage in strategic transactions or implement business strategies. Factors related to our indebtedness could materially and adversely affect our business and our results of operations. Furthermore, our interest expense could increase if interest rates rise because certain portions of our debt bear interest at floating rates. If we do not have sufficient cash flow to service our debt, we may be required to refinance all or part of our existing debt, sell assets, borrow more money or sell securities, none of which we can guarantee we will be able to do.

        In addition, the agreements that govern the terms of our indebtedness contain, and any future indebtedness would likely contain, a number of restrictive covenants imposing significant operating and financial restrictions on us, including restrictions that may limit our ability to engage in acts that may be in our long-term best interests, including:

    Incur or guarantee additional indebtedness;

    Pay dividends (including to fund cash interest payments at different entity levels), or make redemptions, repurchases or distributions, with respect to ordinary shares or capital stock;

    Create or incur certain security interests;

    Make certain loans or investments;

    Engage in mergers, acquisitions, amalgamations, asset sales and sale and leaseback transactions; and

    Engage in transactions with affiliates.

        These restrictive covenants are subject to a number of qualifications and exceptions. The operating and financial restrictions and covenants in our existing debt agreements and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities.

        We may be able to incur significant additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on the incurrence of certain additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. If we incur new indebtedness, the related risks, including those described above, could intensify.

Risks related to the ADSs and this offering

As a new investor, you will experience substantial dilution as a result of this offering.

        The public offering price per ADS will be substantially higher than the net tangible book value per ADS prior to the offering. Consequently, if you purchase ADSs in this offering at an assumed public offering price of $13.00, which is the midpoint of the price range set forth on the cover of this prospectus, you will incur immediate dilution of $8.60 per ADS as of June 30, 2012. For further information regarding the dilution resulting from this offering, please see the section entitled "Dilution." In addition, you may experience further dilution to the extent that additional ordinary shares are issued upon exercise of outstanding options. This dilution is due in large part to the fact that our earlier investors paid substantially less than the assumed initial public offering price when they purchased their ordinary shares. In addition, if the underwriters exercise the overallotment option, you will experience additional dilution.

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There is no established trading market for the ADSs or ordinary shares.

        This offering constitutes our initial public offering of ADSs, and no public market for the ADSs or ordinary shares currently exists. We have applied to list the ADSs on the New York Stock Exchange, and we expect our ADSs to be quoted on the New York Stock Exchange, subject to completion of customary procedures in the United States. Any delay in the commencement of trading of the ADSs on the New York Stock Exchange would impair the liquidity of the market for the ADSs and make it more difficult for holders to sell the ADSs.

        If the ADSs are listed on the New York Stock Exchange and quoted on the New York Stock Exchange, there can be no assurance that an active trading market for the ADSs will develop or be sustained after this offering is completed. The initial offering price has been determined by negotiations among the selling shareholders, the lead underwriters and us. Among the factors considered in determining the initial offering price were our future prospects and the prospects of our industry in general, our revenue, net income and certain other financial and operating information in recent periods, and the financial ratios, market prices of securities and certain financial and operating information of companies engaged in activities similar to ours. However, there can be no assurance that following this offering the ADSs will trade at a price equal to or greater than the offering price.

        In addition, the market price of the ADSs may be volatile. The factors below may have a material adverse effect on the market price of the ADSs:

    Fluctuations in our results of operations;

    Negative publicity;

    Changes in stock market analyst recommendations regarding our company, the sectors in which we operate, the securities market generally and conditions in the financial markets;

    Regulatory developments affecting our industry;

    Announcements of studies and reports relating to our products or those of our competitors;

    Changes in economic performance or market valuations of our competitors;

    Actual or anticipated fluctuations in our quarterly results;

    Conditions in the industries in which we operate;

    Announcements by us or our competitors of new products, acquisitions, strategic relations, joint ventures or capital commitments;

    Additions to or departures of our key executives and employees;

    Fluctuations of exchange rates;

    Release or expiry of lock-up or other transfer restrictions on our outstanding ordinary shares or ADSs; and

    Sales or perceived sales of additional shares of the ADSs.

        During recent years, securities markets in the United States and worldwide have experienced significant volatility in prices and trading volumes. This volatility could have a material adverse effect on the market price of the ADSs, irrespective of our results of operations and financial condition.

Substantial future sales of the ADSs in the public market, or the perception that these sales could occur, could cause the price of the ADSs to decline.

        Additional sales of our ordinary shares or ADSs in the public market after this offering, or the perception that these sales could occur, could cause the market price of the ADSs to decline. Upon

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completion of this offering, we will have 13,103,613 ordinary shares outstanding. All ADSs sold in this offering will be freely transferable without restriction or additional registration under the U.S. Securities Act of 1933 (the "Securities Act"). A limited number of ordinary shares will be available for sale shortly after this offering since they are not subject to existing contractual and legal restrictions on resale. The remaining ordinary shares outstanding after this offering will be available for sale upon the expiration of a lock-up period, which we expect will expire 180 days after the date of this prospectus, subject to volume and other restrictions as applicable under Rule 144 under the Securities Act. Any or all of these shares may be released prior to expiration of the lock-up period at the discretion of the lead underwriters for this offering. To the extent shares are released before the expiration of the lock-up period and these shares are sold into the market, the market price of the ADSs could decline.

The concentration of our share ownership upon the completion of this offering will likely limit your ability to influence corporate matters.

        We anticipate that our directors, members of our executive management board and significant shareholders will together beneficially own approximately 56% of our ordinary shares outstanding after this offering. As a result, these shareholders, acting together, could have control over matters that require approval by our shareholders, including the election of directors and approval of certain corporate actions. Corporate action might be taken even if other shareholders, including those who purchase ADSs in this offering, oppose them. This concentration of ownership might also have the effect of delaying or preventing a change of control of our company that other shareholders may view as beneficial.

Our management will have broad discretion over the use and investment of the net proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment.

        You will not have the opportunity, as part of your investment decision, to assess whether we use the net proceeds appropriately. Our management will have considerable discretion in the application of the net proceeds from this offering. We intend to use the proceeds from this offering (i) to repay the entire amount outstanding under our Term Loan, which was $46.6 million as of June 30, 2012 and (ii) for other general corporate purposes. The net proceeds received by us from this offering may be used in acquisitions or investments that do not produce income or which lose value, or could be applied in other ways that do not improve our operating results or increase the value of your investment in the ADSs.

Our ability to pay regular dividends on our ordinary shares is subject to the discretion of our board of directors and will depend on many factors, including our results of operations, cash requirements, financial condition, contractual restrictions, applicable laws and other factors, and may be limited by our structure and statutory restrictions and restrictions imposed by the Revolving Credit Facility, Term Loan and Loan Notes due 2018 as well as any future agreements.

        Following completion of this offering, we intend to declare cash dividends on our ordinary shares as described in "Dividends and Dividend Policy." However, the payment of future dividends will be at the discretion of our board of directors. Any recommendation by our board to pay dividends will depend on many factors, including our results of operations, cash requirements, financial condition, contractual restrictions, applicable laws and other factors. In addition, our Revolving Credit Facility, Term Loan and Loan Notes due 2018 limit our ability to pay dividends or make other distributions on our shares, and in the future we may become subject to debt instruments or other agreements that further limit our ability to pay dividends. Under English law, any payment of dividends would be subject to the Companies Act 2006 of England and Wales (the "Companies Act"), which requires, among other things, that we can only pay dividends on ordinary shares out of profits available for distribution determined in accordance with the Companies Act. Accordingly, the sale of ADSs after any

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price appreciation might be the only way to generate cash flow from your investment. Additionally, any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our ADSs.

You may not have the same voting rights as the holders of our ordinary shares and may not receive voting materials in time to be able to exercise your right to vote.

        Except as described in this prospectus, holders of the ADSs will not be able to exercise voting rights attaching to the ordinary shares evidenced by the ADSs on an individual basis. Holders of the ADSs will appoint the depositary or its nominee as their representative to exercise the voting rights attaching to the ordinary shares represented by the ADSs. You may not receive voting materials in time to instruct the depositary to vote, and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

You may not receive distributions on our ordinary shares represented by the ADSs or any value for them if it is illegal or impractical to make them available to holders of ADSs.

        The depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on our ordinary shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of our ordinary shares your ADSs represent. However, the depositary may decide that it is unlawful or impractical to make a distribution available to any holders of ADSs. We have no obligation to take any other action to permit the distribution of the ADSs, ordinary shares, rights or anything else to holders of the ADSs. This means that you may not receive the distributions we make on our ordinary shares or any value from them if it is illegal or impractical to make them available to you. These restrictions may have a material adverse effect on the value of your ADSs.

You may be subject to limitations on the transfer of your ADSs.

        Your ADSs, which may be evidenced by American depositary receipts ("ADRs"), are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may refuse to deliver, transfer or register transfers of your ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary think it is advisable to do so because of any requirement of law, government or governmental body, or under any provision of the deposit agreement, or for any other reason.

As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the Securities and Exchange Commission than a U.S. company. This may limit the information available to holders of the ADSs.

        We are a "foreign private issuer," as defined in the Securities and Exchange Commission's ("SEC") rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the United States. For example, we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers and directors are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.

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As a foreign private issuer, we are not subject to certain New York Stock Exchange corporate governance rules applicable to U.S. listed companies.

        We rely on a provision in the New York Stock Exchange's Listed Company Manual that allows us to follow English corporate law and the Companies Act with regard to certain aspects of corporate governance. This allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the New York Stock Exchange.

        For example, we are exempt from New York Stock Exchange regulations that require a listed U.S. company, among other things, to:

    Have a majority of the board of directors consist of independent directors;

    Require non-management directors to meet on a regular basis without management present;

    Establish a nominating and compensation committee composed entirely of independent directors, although recently proposed SEC rules will likely require us to establish an independent compensation committee in the near future;

    Adopt and disclose a code of business conduct and ethics for directors, officers and employees; and

    Promptly disclose any waivers of the code for directors or executive officers that should address certain specified items.

        In accordance with our New York Stock Exchange listing, our Audit Committee is required to comply with the provisions of Section 301 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and Rule 10A-3 of the Exchange Act, both of which are also applicable to New York Stock Exchange-listed U.S. companies. Because we are a foreign private issuer, however, our Audit Committee is not subject to additional New York Stock Exchange requirements applicable to listed U.S. companies, including:

    An affirmative determination that all members of the Audit Committee are "independent," using more stringent criteria than those applicable to us as a foreign private issuer;

    The adoption of a written charter specifying, among other things, the audit committee's purpose and including an annual performance evaluation; and

    The review of an auditor's report describing internal quality-control issues and procedures and all relationships between the auditor and us.

        Furthermore, the New York Stock Exchange's Listed Company Manual requires listed U.S. companies to, among other things, seek shareholder approval for the implementation of certain equity compensation plans and issuances of common stock.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

        We are a "foreign private issuer," as such term is defined in Rule 405 under the Securities Act, and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer's most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2013. There is a risk that we will lose our foreign private issuer status.

        In the future, we would lose our foreign private issuer status if, for example, more than 50% of our assets are located in the United States and we continue to fail to meet additional requirements

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necessary to maintain our foreign private issuer status. As of June 30, 2012, 45.7% of our assets were located in the United States. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We would be required under current SEC rules to prepare our financial statements in accordance with U.S. generally accepted accounting principles and modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers such as the ones described above and exemptions from procedural requirements related to the solicitation of proxies.

If we fail to establish or maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our shares may, therefore, be adversely impacted.

        We will be subject to reporting obligations under U.S. securities laws. Our reporting obligations as a public company will place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Our management and our independent registered public accounting firm will be required to report on the effectiveness of our internal controls over financial reporting as required by Section 404 of the Sarbanes-Oxley Act, in preparation for which we will need to perform system and process evaluation and testing of our internal controls over financial reporting.

        Prior to this offering, we have been an unlisted public company with a limited number of accounting personnel and other resources with which to address our internal controls and procedures. In connection with the offering, we have been implementing a number of measures to improve our internal control over financial reporting in order to obtain reasonable assurance regarding the reliability of our financial statements. Although we have not, using our current procedures, identified any material weaknesses or significant deficiencies relating to our internal controls over financial reporting, we have not yet fully implemented a system of internal controls over financial reporting that complies with the requirements of Section 404 of the Sarbanes-Oxley Act. We do not currently have a full-time internal audit function.

        We intend to implement measures to improve our internal controls over financial reporting to meet the deadline imposed by Section 404 of the Sarbanes-Oxley Act. If we fail to timely implement, and maintain the adequacy of, our internal controls, we may not be able to conclude that we have effective internal control over financial reporting. Moreover, effective internal control over financial reporting is necessary for us to produce reliable financial reports and is important to help prevent fraud. As a result, our failure to achieve and maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements, which in turn could harm our business and negatively impact the market price of the ADSs or ordinary shares. Furthermore, we anticipate that we will incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act.

        Finally, on April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the "JOBS Act"). The JOBS Act contains provisions that, among other things, relax certain reporting requirements for qualifying public companies. We are an "emerging growth company," as defined in the JOBS Act and, for as long as we continue to be an emerging growth company, we may choose to take advantage of exemptions from various reporting requirements applicable to other public companies but not to emerging growth companies, including an exemption from the requirement to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act. We will remain an emerging growth company up to the last day of the fifth fiscal year following the date of the

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offering, although (i) if the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of any June 30 before that time, we would cease to be an emerging growth company as of the following December 31; (ii) if our annual gross revenues are $1 billion or more during any fiscal year before that time, we would cease to be an emerging growth company as of the last day of such fiscal year; and (iii) if during any three-year period before that time we issue an aggregate of over $1 billion in non-convertible debt, we would cease to be an emerging growth company upon the date of such issuance.

We will incur significant increased costs as a result of operating as a company whose shares are publicly traded in the United States, and our management will be required to devote substantial time to new compliance initiatives.

        As a company whose ADSs will be publicly traded in the United States, we will incur significant legal, accounting, insurance and other expenses that we did not previously incur. In addition, the Sarbanes-Oxley Act, Dodd Frank Wall Street Reform, Consumer Protection Act and related rules implemented by the SEC and the New York Stock Exchange, have imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel will need to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the same or similar coverage. These laws and regulations could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as our executive officers. Furthermore, if we are unable to satisfy our obligations as a public company, we could be subject to delisting of the ADSs, fines, sanctions and other regulatory action and potentially civil litigation.

U.S. investors may have difficulty enforcing civil liabilities against our company, our directors or members of senior management and the experts named in this prospectus.

        A number of our directors and members of senior management, those of certain of our subsidiaries and the experts named in this prospectus are non-residents of the United States, and all or a substantial portion of the assets of such persons are located outside the United States. As a result, it may not be possible to serve process on such persons or us in the United States or to enforce judgments obtained in U.S. courts against them or us based on civil liability provisions of the securities laws of the United States. Cleary Gottlieb Steen & Hamilton LLP, our English solicitors, has also advised us that there is doubt as to whether English courts would enforce certain civil liabilities under U.S. securities laws in original actions or judgments of U.S. courts based upon these civil liability provisions. In addition, awards of punitive damages in actions brought in the United States or elsewhere may be unenforceable in the United Kingdom. An award for monetary damages under the U.S. securities laws would be considered punitive if it does not seek to compensate the claimant for loss or damage suffered and is intended to punish the defendant. The enforceability of any judgment in the United Kingdom will depend on the particular facts of the case as well as the laws and treaties in effect at the time. The United States and the United Kingdom do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration awards) in civil and commercial matters.

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The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation.

        We are incorporated under English law. The rights of holders of ordinary shares and, therefore, certain of the rights of holders of ADSs, are governed by English law, including the provisions of the Companies Act, and, upon adoption, by our Amended Articles. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations. See "Description of Share Capital—Differences in Corporate Law" for a description of the principal differences between the provisions of the Companies Act applicable to us and, for example, the Delaware General Corporation Law relating to shareholders' rights and protections.

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Presentation of Financial and Other Information

Financial Statements

        Our consolidated financial statements as of December 31, 2011 and 2010 and for each of the years ended December 31, 2011, 2010 and 2009 have been audited, as stated in the report appearing herein, and are included in this prospectus and referred to as our audited consolidated financial statements. Our consolidated financial statements as of June 30, 2012 and June 30, 2011 and for the six month periods ended June 30, 2012 and June 30, 2011 are unaudited, and are included in this prospectus and referred to as our unaudited interim financial statements. We have prepared these financial statements and other financial data included herein in accordance with IFRS-IASB for those periods.

Market Share and Other Information

        Statements we make in this prospectus concerning our market position are not based on independent, public reports or data. Instead, such statements are based on internal company analyses that we believe are reliable. While we are not aware of any misstatements regarding any industry or similar data presented herein, such data involve risks and uncertainties and are subject to change based on various factors, including those discussed under the "Risk Factors" section in this prospectus.

Trademarks

        We have proprietary rights to trademarks used in this prospectus, which are important to our business. We have omitted the "®" and "™" designations for certain trademarks, but nonetheless reserve all rights to them. Each trademark, trade name or service mark of any other company appearing in this prospectus belongs to its respective holder.

Terms

        In this prospectus, unless the context otherwise requires, the terms:

    "billet" means ingots cast into a round form suitable for processing on an extrusion press.

    "extrusions" mean lengths of aluminum or magnesium of constant cross-section formed by squeezing heated billets through a steel die. The cross-section can be a complex profile, tube, rod or bar.

    "ingot" means a metal that is cast into a shape suitable for further processing.

    "Luxfer," the "Group," the "company," "we," "us" and "our" refer to Luxfer Holdings PLC and its consolidated subsidiaries.

    "primary aluminum" means aluminum, usually in ingot form, that has been produced from alumina in a smelting process; also known as "virgin" aluminum.

    "primary magnesium" means magnesium, usually in ingot form, produced from ore in a smelting process, or electrolytically from salt water.

    "U.S. dollar" or "$" means the legal currency of the United States.

    "western world" means all countries in the world except those in Asia.

    "zirconium compounds" mean reactive zirconium chemicals and chemically-derived oxides manufactured from zircon sand.

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Forward-Looking Statements

        This prospectus contains estimates and forward-looking statements, principally in "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Business." Some of the matters discussed concerning our operations and financial performance include estimates and forward-looking statements within the meaning of the Securities Act and the Exchange Act.

        These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. These forward-looking statements are based on assumptions regarding our present and future business strategies and the environment in which we expect to operate in the future. Important factors that could cause those differences include, but are not limited to:

    future revenues being lower than expected;

    increasing competitive pressures in the industry;

    general economic conditions or conditions affecting demand for the services offered by us in the markets in which it operates, both domestically and internationally, being less favorable than expected;

    the significant amount of indebtedness we have incurred and may incur and the obligations to service such indebtedness and to comply with the covenants contained therein;

    contractual restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries;

    fluctuations in the price of raw materials and utilities;

    currency fluctuations and hedging risks;

    worldwide economic and business conditions and conditions in the industries in which we operate;

    relationships with our customers and suppliers;

    increased competition from other companies in the industries in which we operate;

    changing technology;

    claims for personal injury, death or property damage arising from the use of products produced by us;

    the occurrence of accidents or other interruptions to our production processes;

    changes in our business strategy or development plans, and our expected level of capital expenditures;

    our ability to attract and retain qualified personnel;

    regulatory, environmental, legislative and judicial developments;

    our intention to pay dividends; and

    factors that are not known to us at this time.

        Additional factors that could cause actual results, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results to differ materially include, but are not

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limited to, those discussed under "Risk Factors." Additional risks that we may currently deem immaterial or that are not presently known to us could also cause the forward-looking events discussed in this prospectus not to occur. The words "believe," "may," "will," "estimate," "continue," "anticipate," "intend," "expect" and similar words are intended to identify estimates and forward-looking statements. Estimates and forward-looking statements speak only at the date they were made, and we undertake no obligation to update or to review any estimate and/or forward-looking statement because of new information, future events or other factors. Estimates and forward-looking statements involve risks and uncertainties and are not guarantees of future performance. Our future results may differ materially from those expressed in these estimates and forward-looking statements. In light of the risks and uncertainties described above, the estimates and forward-looking statements discussed in this prospectus might not occur and our future results and our performance may differ materially from those expressed in these forward-looking statements due to, inclusive, but not limited to, the factors mentioned above. Because of these uncertainties, you should not make any investment decision based on these estimates and forward-looking statements.

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Use of Proceeds

        We expect to receive total estimated net proceeds from this offering of approximately $73.0 million, based on the midpoint of the range set forth on the cover page of this prospectus, or $80.3 million if the underwriters exercise the overallotment option in full, in each case after deducting estimated underwriting discounts and estimated expenses of the offering payable by us. Each $1.00 increase (decrease) in the public offering price per ADS would increase (decrease) our net proceeds, after deducting estimated underwriting discounts and offering expenses, by approximately $6.0 million (assuming no exercise of the overallotment option by the underwriters). We will not receive any proceeds from the sale of ADSs by the selling shareholders.

        We intend to use the net proceeds of this offering received by us (i) to repay the entire amount outstanding under our Term Loan, which was $46.6 million as of June 30, 2012 and (ii) for other general corporate purposes.

        Loans drawn under our Term Loan are repayable in full on or before May 6, 2015. Our indebtedness under the Term Loan bears interest at EURIBOR, in the case of amounts drawn in euros, or LIBOR, in the case of amounts drawn in pound sterling or U.S. dollars, plus an applicable margin that is set at 2.5% per annum until June 15, 2012 and then every quarter end thereafter at between 1.75% and 2.75% per annum depending on Luxfer Holdings PLC's net debt to EBITDA ratio plus mandatory costs (if any).

        The amount of net proceeds devoted to the foregoing uses may vary from these amounts, and we may devote some or all of the net proceeds of the offering to other uses as a result of changing business conditions or other developments subsequent to the offering. See "Risk Factors—Risks related to the ADSs and this offering—Our management will have broad discretion over the use and investment of the net proceeds we receive in this offering and might not apply the proceeds in ways that increase the value of your investment."

        See "Capitalization" for information on the impact of the net proceeds of this offering on our financial condition.

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Capitalization

        The following table presents our cash and cash equivalents and consolidated capitalization as of June 30, 2012:

    on an actual basis derived from our unaudited interim financial statements; and

    on an as adjusted basis to give effect to (i) the sale by us of 6,400,000 ADSs in this offering at an offering price of $13.00 per ADS (the midpoint of the range set forth on the cover page of this prospectus), after deduction of the underwriting discount and estimated offering expenses payable by us in connection with this offering and assuming no exercise of the overallotment option by the underwriters and (ii) the repayment of the entire outstanding amount under our Term Loan, assuming the outstanding amount of $46.6 million as of June 30, 2012. We have shown the net proceeds of the offering after repayment of the outstanding amount under our Term Loan in the line items cash and short term deposits and total equity pending the application of such proceeds by us.

        The following table does not give effect to the interim dividend declared in July 2012 or the quarterly dividends we intend to declare following the offering. See "Dividends and Dividend Policy." You should read this table in conjunction with our financial statements and the related notes and with the sections entitled "Selected Consolidated Financial Data," "Unaudited Pro Forma Financial Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in this prospectus.


 
  As of June 30,
2012
 
 
  Actual   As Adjusted  
 
  (in $ millions)
(unaudited)

 

Cash and short term deposits

  $32.9   $59.3  
           

Current bank and other loans:

         

Term Loan(3)

  3.1    

Revolving Credit Facility

     

Non-current bank and other loans:

         

Loan Notes due 2018

  63.5   63.5  

Term Loan(3)

  41.9    

Revolving Credit Facility

  (0.6 ) (0.6 )
           

Total non-current bank and other loans(1)(2)(3)

  104.8   62.9  
           

Equity:

         

Ordinary share capital(4)

  19.6   24.7  

Deferred share capital

  150.9   150.9  

Share premium account(5)

    67.9  

Retained earnings(3)

  277.2   275.6  

Own shares held by ESOP

  (0.6 ) (0.6 )

Hedging reserve

  (0.1 ) (0.1 )

Translation reserve

  (32.0 ) (32.0 )

Merger reserve(6)

  (333.8 ) (333.8 )
           

Total equity

  81.2   152.6  
           

Total capitalization

  $186.0   $215.5  
           

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(1)
No third party has guaranteed any of our debt. The amounts shown for our Loan Notes due 2018, Term Loan and Revolving Credit Facility are net of deferred finance costs.

(2)
Our Loan Notes due 2018, Term Loan and Revolving Credit Facility are secured.

(3)
The as adjusted column reflects the repayment of the full amount drawn on the Term Loan of $46.6 million as of June 30, 2012. In addition, the as adjusted column reflects the deferred finance costs relating to the Term Loan of $1.6 million being recorded against retained earnings.

(4)
The as adjusted ordinary share capital of $24.7 million reflects the increase for the issuance and sale by us of 6,400,000 ADSs pursuant to this initial public offering based on a nominal value of £1 per ordinary share ($1.6 per ordinary share at the assumed exchange rate of £1: $1.60). The adjusted ordinary share capital does not reflect (i) any future grants under the proposed Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan or any other employee share incentive plans we adopt, which will represent up to a maximum of 10% of our outstanding share capital following this offering or (ii) the proposed award by us to non-executive directors and certain of our key executives in connection with this offering of standalone grants of options to buy ADSs representing in the aggregate up to a maximum of 3% of our outstanding share capital following this offering.

(5)
The as adjusted share premium account of $67.9 million includes the premium arising from the issuance and sale by us of 6,400,000 ADSs pursuant to this offering based on the initial public offering price of $13.00 per ADS (the midpoint of the range set forth on the cover page of this prospectus) (total premium of $78.1 million) after deduction of the underwriting discount and estimated offering expenses payable by us in connection with the offering of new ADSs of $10.2 million.

(6)
The merger reserve relates to the recapitalization of the original Luxfer Group Limited in April 1999 (the "1999 Recapitalization"). See "Note 18—Reserves" to our audited consolidated financial statements.

        A $1.00 increase or decrease in the assumed initial public offering price per ADS would increase or decrease as adjusted total equity and total capitalization by approximately $6.0 million, after deducting the underwriting discounts and commissions and estimated offering expenses payable by us.

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Unaudited Pro Forma Financial Data

        The following unaudited pro forma financial data presents our pro forma unaudited consolidated statements of income data for the year ended December 31, 2011 and the six-month period ended June 30, 2012. The pro forma consolidated statement of income data for these periods is presented showing adjustments for (1) the sale by us of ADSs pursuant to this offering and (2) the application of the estimated net proceeds from this offering to repay $46.6 million of indebtedness as if this offering and the repayment of such amount of indebtedness had occurred on January 1, 2011.

        This financial data should be read in conjunction with our unaudited interim financial statements and the related notes, our audited consolidated financial statements and the related notes, "Selected Consolidated Financial Data," "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds" included in this prospectus.

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Pro Forma Consolidated Statement of Income Data

    Year Ended December 31, 2011

 
  Year Ended
December 31,
2011
   
  Year Ended
December 31,
2011
 
 
  Pro Forma
Adjustments(1)(2)(3)
 
 
  Historical   Pro Forma  
 
  (in $ millions, except share and per share data)
 
 
  (audited)
  (unaudited)
  (unaudited)
 

Revenue:

             

Elektron

  $287.5     $287.5  

Gas Cylinders

  223.3     223.3  
               

Total revenue from continuing operations

  $510.8     $510.8  

Cost of sales

  (390.4 )   (390.4 )
               

Gross profit

  120.4     120.4  

Other income/(costs)

  2.0     2.0  

Distribution costs

  (7.3 )   (7.3 )

Administrative expenses

  (48.9 )   (48.9 )

Share of start-up costs of joint venture

  (0.2 )   (0.2 )
               

Trading profit

  $66.0     $66.0  

Restructuring and other income (expense)(4)

  0.2     0.2  
               

Operating profit

  $66.2     $66.2  

Disposal costs of intellectual property(4)

  (0.2 )   (0.2 )

Exceptional gain on Senior Note exchange

       

Finance income:

             

Interest received

  0.2     0.2  

Finance costs:

             

Interest costs(5)

  (9.2 ) 2.3   (6.9 )

Preference share dividend

       
               

Profit on operations before taxation

  $57.0   $2.3   $59.3  

Tax expense(6)

  (13.6 ) (0.6 ) (14.2 )
               

Profit after taxation on continuing operations

  43.4   1.7   45.1  

Loss from discontinued activities

       
               

Profit for the period and year

  $43.4   $1.7   $45.1  
               

Profit for the period and year attributable to controlling interests

  $43.4   $1.7   $45.1  

Profit for the period and year attributable to non controlling interest

       

Profit from continuing and discontinued operations per ordinary share(7)(8):

             

Basic

  $4.39       $3.76  

Diluted

  $4.35       $3.73  

Profit from continuing operations per ordinary share(7)(8):

             

Basic

  $4.39       $3.76  

Diluted

  $4.35       $3.73  

Weighted average ordinary shares outstanding(7)(8):

             

Basic

  9,884,145   2,109,181   11,993,326  

Diluted

  9,980,055   2,109,181   12,089,236  

(1)
Assumes that the following transactions had occurred on January 1, 2011: (a) the issuance and sale by us of 6,400,000 ADSs (representing 3,200,000 ordinary shares) pursuant to this offering based on the initial public offering price of $13.00 per ADS (the midpoint of the range set forth on the cover page of this prospectus), raising $73.0 million of net proceeds after deducting estimated underwriting discounts and offering expenses of $10.2 million and assuming no exercise of the overallotment option by the underwriters and (b) the

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    repayment of $46.6 million of indebtedness with the proceeds from (a) above, which for the purposes of this pro forma financial data is assumed to be a part repayment in the amount of $46.6 million of the Senior Notes due 2012 that were redeemed on June 15, 2011 rather than the repayment of the Term Loan as described under "Use of Proceeds" for the period January 1, 2011 to June 15, 2011 and the repayment of the Term Loan of $46.6 million for the period June 15, 2011 to December 31, 2011. The Term Loan was entered into as part of a refinancing that closed on June 15, 2011, and its proceeds were used towards the redemption of the Senior Notes due 2012. The pro forma adjustments do not reflect (i) any future grants under the proposed Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan or any other employee share incentive plans we adopt, which will represent up to a maximum of 10% of our outstanding share capital following this offering or (ii) the proposed award by us to non-executive directors and certain of our key executives in connection with this offering of standalone grants of options to buy ADSs representing in the aggregate up to a maximum of 3% of our outstanding share capital following this offering.

(2)
The pro forma financial data does not include the potential beneficial effects of any investment income received on any surplus proceeds from the initial public offering, nor reduced interest costs from the use of surplus proceeds to reduce any outstanding drawings under the Revolving Credit Facility.

(3)
As of December 31, 2011, following the June 15, 2011 refinancing, deferred finance costs relating to the Term Loan of $1.8 million have been included on the historical balance sheet under "current bank and other loans" and "non-current bank and other loans." On repayment of the full amount of the Term Loan as described in (1) above, the deferred costs of $1.8 million will be charged to our consolidated income statement.

(4)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements.

(5)
Reflects an effective interest rate on the Senior Notes due 2012 for the period January 1, 2011 to June 15, 2011 of 6.5525%, which was based on six-month LIBOR plus a margin of 5.5%. The pro forma effect of repaying $46.6 million of the Senior Notes due 2012 during this period was to reduce interest costs by $1.4 million. In addition, the repayment of the Term Loan of $46.6 million for the period June 15, 2011 to December 31, 2011 was to reduce further interest costs by $0.9 million, reflecting an effective interest rate of 3.2570%.

(6)
Assumes an effective tax rate of 23.9% for the year ended December 31, 2011 for the related income tax effect. The effective tax rate of 23.9% was our historic effective tax rate during the year ended December 31, 2011.

(7)
For further information, see "Note 10—Earnings per share" to our audited consolidated financial statements. We calculate earnings per share in accordance with IAS 33. Basic earnings per share is calculated based on the weighted average ordinary shares outstanding for the period presented. The weighted average of ordinary 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 ordinary shares outstanding during the period presented has been adjusted for the dilutive effect of all share options granted to employees. In calculating the diluted weighted average ordinary shares outstanding, there are no shares that have not been included for anti-dilution reasons.

(8)
With respect to the pro forma earnings per share data, the pro forma adjustment to the weighted average ordinary shares outstanding represents the number of ordinary shares that would need to be issued to raise sufficient proceeds to repay $46.6 million of indebtedness. The proceeds required to repay $46.6 million of indebtedness would be $54.8 million before deducting related underwriting discounts and offering expenses of $8.2 million, and would therefore require 4,218,362 ADSs (or 2,109,181 ordinary shares) based on the initial public offering price of $13.00 per ADS (or $26.00 per ordinary share), which is the midpoint of the range set forth on the cover page of this prospectus.

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    Six Months Ended June 30, 2012

 
  Six Months
Ended
June 30,
2012
   
  Six Months
Ended
June 30,
2012
 
 
  Pro Forma
Adjustments(1)(2)(3)
 
 
  Historical   Pro Forma  
 
  (in $ millions, except share and per share data)
 
 
  (unaudited)
  (unaudited)
  (unaudited)
 

Revenue:

             

Elektron

  $149.0     $149.0  

Gas Cylinders

  118.1     118.1  
               

Total revenue from continuing operations

  $267.1     $267.1  

Cost of sales

 
(201.9

)

 
(201.9

)
               

Gross profit

  65.2     65.2  

Distribution costs

  (3.4 )   (3.4 )

Administrative expenses

  (25.5 )   (25.5 )
               

Trading profit

  $36.3     $36.3  

Restructuring and other income (expense)

       
               

Operating profit

  $36.3     $36.3  

Disposal costs of intellectual property(4)

  (0.1 )   (0.1 )

Finance costs:

             

Interest costs(5)

  (3.6 ) 0.7   (2.9 )
               

Profit on operations before taxation

  $32.6   0.7   $33.3  

Tax expense(6)

  (10.6 ) (0.2 ) (10.8 )
               

Profit after taxation on continuing operations

  22.0   0.5   22.5  

Loss from discontinued activities

       
               

Profit for the period and year

  $22.0   0.5   $22.5  
               

Profit for the period and year attributable to controlling interests

  $22.0   $0.5   $22.5  

Profit for the period and year attributable to non controlling interest

       

Profit from continuing and discontinued operations per ordinary share(7)(8):

             

Basic

  $2.23       $1.88  

Diluted

  $2.21       $1.86  

Profit from continuing operations per ordinary share(7)(8):

             

Basic

  $2.23       $1.88  

Diluted

  $2.21       $1.86  

Weighted average ordinary shares outstanding(7)(8):

             

Basic

  9,885,526   2,109,181   11,994,707  

Diluted

  9,971,836   2,109,181   12,081,017  

(1)
Assumes that the following transactions had occurred on January 1, 2011: (a) the issuance and sale by us of 6,400,000 ADSs (representing 3,200,000 ordinary shares) pursuant to this offering based on the initial public offering price of $13.00 per ADS (the midpoint of the range set forth on the cover page of this prospectus), raising $73.0 million of net proceeds after deducting estimated underwriting discounts and offering expenses of $10.2 million and assuming no exercise of the overallotment option by the underwriters and (b) the repayment of $46.6 million of indebtedness with the proceeds from (a) above, which for the purposes of this pro forma financial data is assumed to be the repayment of the Term Loan of $46.6 million. The pro forma adjustments do not reflect (i) any future grants under the proposed Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan or any other employee share incentive plans we adopt, which will represent up to a maximum of 10% of our outstanding share capital following this offering or (ii) the proposed award by us to non-executive directors and certain of our key executives in connection with this

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    offering of standalone grants of options to buy ADSs representing in the aggregate up to a maximum of 3% of our outstanding share capital following this offering.

(2)
The pro forma financial data does not include the potential beneficial effects of any investment income received on any surplus proceeds from the initial public offering, nor reduced interest costs from use of surplus proceeds to reduce any outstanding drawings under the Revolving Credit Facility.

(3)
As of June 30, 2012, following the June 15, 2011 refinancing, deferred finance costs relating to the Term Loan of $1.6 million have been included on the historical balance sheet under "current bank and other loans" and "non-current bank and other loans." On repayment of the full amount of the Term Loan as described in (1) above, the deferred costs of $1.6 million will be charged to our consolidated income statement.

(4)
For further information, see "Note 4—Other income (expense) items" to our unaudited interim financial statements.

(5)
The pro forma effect of repaying the Term Loan of $46.6 million for the period January 1, 2012 to June 30, 2012 was to reduce interest costs by $0.7 million, reflecting an effective interest rate of 3.1491%.

(6)
Assumes an effective tax rate of 32.5% for the six months ended June 30, 2012 for the related income tax effect. The effective tax rate of 32.5% was our historic effective tax rate during the six months ended June 30, 2012.

(7)
For further information, see "Note 5—Earnings per share" to our unaudited interim consolidated financial statements. We calculate earnings per share in accordance with IAS 33. Basic earnings per share is calculated based on the weighted average ordinary shares outstanding for the period presented. The weighted average of ordinary 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 ordinary shares outstanding during the period presented has been adjusted for the dilutive effect of all share options granted to employees. In calculating the diluted weighted average ordinary shares outstanding, there are no shares that have not been included for anti-dilution reasons.

(8)
With respect to the pro forma earnings per share data, the pro forma adjustment to the weighted average ordinary shares outstanding represents the number of ordinary shares that would need to be issued to raise sufficient proceeds to repay $46.6 million of indebtedness. The proceeds required to repay $46.6 million of indebtedness would be $54.8 million before deducting related underwriting discounts and offering expenses of $8.2 million, and would therefore require 4,218,362 ADSs (or 2,109,181 ordinary shares) based on the initial public offering price of $13.00 per ADS (or $26.00 per ordinary share), which is the midpoint of the range set forth on the cover page of this prospectus.

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Dilution

        If you invest in the ADSs, your interest will be diluted to the extent of the difference between the initial public offering price per ADS and our net tangible book value per ADS after this offering. Dilution results from the fact that the initial public offering price per ordinary share underlying our ADSs is substantially in excess of the net tangible book value per ordinary share. Our net tangible book value as of June 30, 2012 was approximately $4.44 per ordinary share and $2.22 per ADS. Net tangible book value per share represents the amount of total tangible assets, minus the amount of total liabilities, divided by the total number of ordinary shares outstanding. Dilution is determined by subtracting net tangible book value per ordinary share from the assumed initial public offering price per ordinary share, which is the midpoint of the estimated initial public offering price range set forth on the cover page of this prospectus and after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        Without taking into account any other changes in such net tangible book value after June 30, 2012, other than to give effect to our sale of ADSs offered in this offering at the assumed initial public offering price of $13.00 per ADS after deduction of underwriting discounts and commissions and estimated offering expenses payable by us, our adjusted net tangible book value as of June 30, 2012 would have been $8.81 per outstanding ordinary share, including ordinary shares underlying our outstanding ADSs, or $4.40 per ADS. This represents an immediate increase in net tangible book value of $4.36 per ordinary share, or $2.18 per ADS, to existing shareholders and an immediate dilution in net tangible book value of $17.19 per ordinary share, or $8.60 per ADS, to purchasers of ADSs in this offering. The following table presents this dilution to new investors purchasing ADSs in the offering:

 
  As of
June 30,
2012
 
 
  (per ADS)
(in $)

 
 
  (unaudited)
 

Initial public offering price

  $ 13.00  

Net tangible book value as of June 30, 2012

    2.22  

Increase in net tangible book value attributable to new investors

    2.18  

As adjusted net tangible book value immediately after the offering

    4.40  

Dilution to new investors

    8.60  

        Each $1.00 increase (decrease) in an assumed public offering price of $13.00 per ADS after deducting underwriting discounts and commissions and estimated offering expenses payable by us would increase (decrease) the net tangible book value after this offering by $0.45 per ordinary share and $0.23 per ADS assuming no exercise of the overallotment option granted to the underwriters and the dilution to investors in the offering by $1.55 per ordinary share and $0.77 per ADS.

        The following table summarizes, on a pro forma basis as of June 30, 2012, the differences between the shareholders as of June 30, 2012 and the new investors with respect to the number of ordinary shares purchased from us, the total consideration paid to us and the average price per ordinary share paid at an assumed initial public offering price of $13.00 per ADS before deducting underwriting discounts and commissions and estimated offering expenses payable by us. The total number of

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ordinary shares does not include 1,200,000 ADSs issuable pursuant to the exercise of the overallotment option granted to the underwriters.

 
  Ordinary Shares
Purchased
   
   
   
   
 
 
  Total Consideration    
   
 
 
  Average Price
Per Ordinary
Share
  Average Price
Per ADS
 
 
  Number   %   Amount   %  
 
  (In thousands, except percentages and per share data)
(unaudited)

 

Existing shareholders

  9,904   76%   $19,411   19%   $1.96   $0.98  

New investors

  3,200   24%   $83,200   81%   $26.00   $13.00  
                           

Total

  13,104   100%   $102,611   100%   $7.83   $3.92  
                           

        Sales by the selling shareholders in this offering will reduce the number of ordinary shares held by existing shareholders to 9,103,613, or approximately 69%, and will increase the number of ordinary shares to be purchased by new investors to 4,000,000, or approximately 31%, of the total ordinary shares outstanding after the offering.

        Each $1.00 increase (decrease) in the assumed public offering price of $13.00 per ADS would increase (decrease) total consideration paid by new investors, average price per ordinary share and per ADS paid by all shareholders by $6.4 million, $0.49 per ordinary share and $0.24 per ADS, respectively, assuming sale of 6,400,000 ADSs by us at an assumed initial public offering price of $13.00 per ADS before deducting underwriting discounts and commissions and estimated offering expenses payable by us.

        The share information above:

    includes 18,087 ordinary shares expected to be transferred from the ESOP upon exercise of options to purchase ordinary shares concurrent with or prior to this offering;

    excludes, following the exercise of options to purchase ordinary shares concurrent with or prior to this offering, the remaining 96,387 ordinary shares issued to and held by the ESOP as of the consummation of this offering, which are reserved to satisfy options to purchase 68,223 ordinary shares granted under our Option Plan;

    does not give effect to (i) any future grants under the proposed Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan or any other employee share incentive plans we adopt, which will represent up to a maximum of 10% of our outstanding share capital following this offering or (ii) the proposed award by us to non-executive directors and certain of our key executives in connection with this offering of standalone grants of options to buy ADSs representing in the aggregate up to a maximum of 3% of our outstanding share capital following this offering; and

    includes 800,000 restricted ordinary shares subject to the terms of our MIP.

        See "Management—Compensation."

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Exchange Rates

        Fluctuations in the exchange rate between the pound and the U.S. dollar will affect the U.S. dollar amounts received by owners of the ADSs on conversion of dividends, if any, paid in pounds on the ordinary shares and will affect the U.S. dollar price of the ADSs on the New York Stock Exchange. The table below shows the average and high and low exchange rates of U.S. dollars per pound for the periods shown. Average rates are computed by using the noon buying rate of the Federal Reserve Bank of New York for the U.S. dollar on the last business day of each month during the relevant year indicated or the six month period ended June 30, 2012 or each business day during the relevant month indicated. The rates set forth below are provided solely for your convenience and may differ from the actual rates used in the preparation of our audited consolidated financial statements included in this prospectus and other financial data appearing in this prospectus.


 
  Noon Buying Rate  
 
  Period End   Average(1)   High   Low  

Period:

                         

2007

    1.9843     2.0073     2.1104     1.9235  

2008

    1.4619     1.8424     2.0311     1.4395  

2009

    1.6167     1.4499     1.6977     1.3658  

2010

    1.5392     1.5415     1.6370     1.4344  

2011

    1.5537     1.6105     1.6691     1.5358  

Six months ended June 30, 2012

    1.5686     1.5834     1.6239     1.5301  

Month:

                         

January 2012

    1.5754     1.5524     1.5754     1.5301  

February 2012

    1.5951     1.5804     1.5951     1.5677  

March 2012

    1.5985     1.5824     1.5985     1.5615  

April 2012

    1.6225     1.6000     1.6239     1.5822  

May 2012

    1.5405     1.5924     1.6221     1.5405  

June 2012

    1.5686     1.5556     1.5750     1.5355  

July 2012

    1.5686     1.5593     1.5728     1.5425  

August 2012

    1.5864     1.5722     1.5882     1.5500  

(1)
The average of the noon buying rate for pounds on the last day of each full month during the relevant year or the six month period ended June 30, 2012 or each business day during the relevant month.

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Selected Consolidated Financial Data

        The following selected consolidated financial data of Luxfer as of June 30, 2012 and 2011 and for the six month periods ended June 30, 2012 and 2011 have been derived from our unaudited interim financial statements and the related notes appearing elsewhere in this prospectus, which have been prepared in accordance with IFRS-IASB. The following selected consolidated financial data of Luxfer as of December 31, 2011 and 2010 and for the years ended December 31, 2011, 2010 and 2009 have been derived from our audited consolidated financial statements and the related notes appearing elsewhere in this prospectus, which have also been prepared in accordance with IFRS-IASB. The following summary consolidated financial data of Luxfer as of December 31, 2009 have been derived from our audited consolidated financial statements and the related notes, which have also been prepared in accordance with IFRS-IASB and are not included in this prospectus. The following selected consolidated financial data as of December 31, 2008 and 2007 and for the years ended December 31, 2008 and 2007 have been derived from our audited consolidated financial statements and the related notes, which have been prepared in accordance with International Financial Reporting Standards as adopted by the European Union ("IFRS-EU") and are not included in this prospectus. There are no differences, applicable to Luxfer, between IFRS-IASB and IFRS-EU for any of the periods presented that were prepared in accordance with IFRS-EU. Our historical results are not necessarily indicative of results to be expected for future periods.

        This financial data should be read in conjunction with our unaudited interim financial statements and the related notes, our audited consolidated financial statements and the related notes, "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Use of Proceeds" included in this prospectus.

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Consolidated Statement of Income Data

 
  Six Months Ended
June 30,
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (in $ millions,
except share and
per share data)
(unaudited)

  (in $ millions, except share and per share data)
(audited)

 

Revenue:

                             

Elektron

  $149.0   $133.3   $287.5   $203.5   $184.8   $241.5   $209.4  

Gas Cylinders

  118.1   110.4   223.3   199.2   186.5   234.4   217.4  
                               

Total revenue from continuing operations

  $267.1   $243.7   $510.8   $402.7   $371.3   $475.9   $426.8  

Cost of sales

 
(201.9

)

(185.8

)

(390.4

)

(305.1

)

(295.7

)

(381.8

)

(344.6

)
                               

Gross profit

  65.2   57.9   120.4   97.6   75.6   94.1   82.2  

Other income

    0.8   2.0   0.1   0.1   0.5   0.2  

Distribution costs

  (3.4 ) (4.2 ) (7.3 ) (7.4 ) (6.8 ) (8.3 ) (7.9 )

Administrative expenses

  (25.5 ) (24.1 ) (48.9 ) (44.5 ) (40.4 ) (44.4 ) (39.2 )

Share of start-up costs of joint venture

    (0.1 ) (0.2 ) (0.1 ) (0.1 )    
                               

Trading profit

  $36.3   $30.3   $66.0   $45.7   $28.4   $41.9   $35.3  

Restructuring and other income (expense)(1)

      0.2   (0.8 ) (1.1 ) (3.2 ) (12.7 )
                               

Operating profit

  $36.3   $30.3   $66.2   $44.9   $27.3   $38.7   $22.6  

Acquisition costs(1)

          (0.5 )    

Disposal costs of intellectual property(1)

  (0.1 ) (0.1 ) (0.2 ) (0.4 )      

Exceptional gain on Senior Note exchange

              109.7  

Finance income:

                             

Interest received

    0.1   0.2   0.2   0.2   0.3   0.1  

Gain on purchase of own debt(1)

        0.5        

Finance costs:

                             

Interest costs

  (3.6 ) (4.8 ) (9.2 ) (9.6 ) (11.8 ) (17.7 ) (21.0 )

Preference share dividend

              (1.1 )
                               

Profit on operations before taxation

  $32.6   $25.5   $57.0   $35.6   $15.2   $21.3   $110.3  

Tax expense

  (10.6 ) (7.5 ) (13.6 ) (9.9 ) (5.7 ) (8.2 ) (5.2 )
                               

Profit after taxation on continuing operations

  22.0   18.0   43.4   25.7   9.5   13.1   105.1  

Loss from discontinued activities(2)

              (3.8 )
                               

Profit for the period and year

  $22.0   $18.0   $43.4   $25.7   $9.5   $13.1   $101.3  
                               

Profit for the period and year attributable to controlling interests

  $22.0   $18.0   $43.4   $25.7   $9.5   $12.9   $101.3  

Profit for the period and year attributable to non controlling interest

            0.2    

Profit from continuing and discontinued operations per ordinary share(3):

                             

Basic

  $2.23   $1.82   $4.39   $2.61   $0.97   $1.31   $11.31  

Diluted

  $2.21   $1.81   $4.35   $2.59   $0.96   $1.30   $11.22  

Profit from continuing operations per ordinary share(3):

                             

Basic

  $2.23   $1.82   $4.39   $2.61   $0.97   $1.31   $11.73  

Diluted

  $2.21   $1.81   $4.35   $2.59   $0.96   $1.30   $11.64  

Weighted average ordinary shares outstanding(3):

                             

Basic

  9,885,526   9,884,026   9,884,145   9,851,204   9,824,326   9,824,326   8,959,585  

Diluted

  9,971,836   9,951,926   9,980,055   9,919,104   9,894,726   9,894,726   9,029,985  

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Consolidated Balance Sheet Data

 
  As of
June 30,
  As of December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

Total assets

  $353.8   $337.3   $364.3   $296.6   $273.7   $298.8   $320.4  

Total liabilities

  272.6   249.7   299.5   231.4   238.0   264.8   275.6  

Total equity

  81.2   87.6   64.8   65.2   35.7   34.0   44.8  

Cash and short term deposits

  32.9   20.9   22.2   10.3   2.9   2.9   4.4  

Non-current bank and other loans

  104.8   146.4   129.4     10.1      

Senior Loan Notes due 2012

        106.3   115.8   104.7   141.7  

Current bank and other loans

  3.1   1.6   3.1   9.6     39.3   48.9  

Consolidated Other Data

 
  Six Months
Ended
June 30,
  Year Ended December 31,  
 
  2012   2011   2011   2010   2009   2008   2007  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

Adjusted EBITDA(4)

  $43.5   $37.4   $80.5   $59.6   $42.2   $56.6   $49.8  

Trading profit(5):

                             

Elektron

  $28.8   $24.2   54.1   33.5   23.3   28.4   29.2  

Gas Cylinders

  7.5   6.1   11.9   12.2   5.1   13.5   6.1  

Purchase of property, plant and equipment

  5.8   5.8   21.2   15.9   12.5   20.9   19.3  

(1)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements and "Note 4—Other income (expense) items" to our unaudited interim financial statements.

(2)
In December 2007, we agreed to sell our BA Tubes manufacturing operation. The sale was completed in January 2008. See "Our History and Recent Corporate Transactions—Acquisitions and Dispositions."

(3)
For further information, see "Note 10—Earnings per share" to our audited consolidated financial statements and "Note 5—Earnings per share" to our unaudited interim financial statements. We calculate earnings per share in accordance with IAS 33. Basic earnings per share is calculated based on the weighted average ordinary shares outstanding for the period presented. The weighted average of ordinary 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 ordinary shares outstanding during the period presented has been adjusted for the dilutive effect of all share options granted to employees. In calculating the diluted weighted average ordinary shares outstanding, there are no shares that have not been included for anti-dilution reasons.

(4)
Adjusted EBITDA consists of profit for the period and year before tax expense, interest costs, gain on purchase of own debt, interest received, acquisition costs, disposal costs of intellectual property, redundancy and restructuring costs, income and costs relating to demolition of vacant property, non-trade legal and professional costs, past service credit on retirement benefit obligations, depreciation and amortization and loss on disposal of property, plant and equipment. Depreciation and amortization amounts include impairments to fixed assets, and they are reflected in our financial statements as increases in accumulated depreciation or amortization. We prepare and present Adjusted EBITDA to eliminate the effect of items that we do not consider indicative of our core operating performance. Management believes that Adjusted EBITDA is a key performance indicator used by the investment community and that the presentation of Adjusted EBITDA will enhance an investor's understanding of our results of operations. However, Adjusted EBITDA should not be considered in isolation by investors as an alternative to profit for the period and year, as an indicator of our operating performance or as a measure of our profitability. Adjusted EBITDA is not a measure of financial performance under IFRS-IASB, may not be indicative of historic operating results and is not meant to be predictive of potential future results. Adjusted EBITDA measures presented herein may not be comparable to other similarly titled measures of other companies. While Adjusted EBITDA is not a measure of financial performance under IFRS-IASB, the Adjusted EBITDA amounts presented have been computed using IFRS-IASB amounts.

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        The following table presents a reconciliation of Adjusted EBITDA to profit for the period and year, the most comparable IFRS-IASB measure, for each of the periods indicated:

   
  Six Months
Ended
June 30,
  Year Ended December 31,  
   
  2012   2011   2011   2010   2009   2008   2007  
   
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 
 

Profit for the period and year

  $22.0   $18.0   $43.4   $25.7   $9.5   $13.1   $101.3  
 

Discontinued activities

              3.8  
 

Tax expense

  10.6   7.5   13.6   9.9   5.7   8.2   5.2  
 

Interest costs

  3.6   4.8   9.2   9.6   11.8   17.7   21.0  
 

Preference share dividend

              1.1  
 

Gain on purchase of own debt(a)

        (0.5 )      
 

Interest received

    (0.1 ) (0.2 ) (0.2 ) (0.2 ) (0.3 ) (0.1 )
 

Exceptional gain on senior note exchange

              (109.7 )
 

Acquisition costs(a)

          0.5      
 

Disposal costs of intellectual property(a)

  0.1   0.1   0.2   0.4        
 

Loss on disposal of business

               
                                 
 

Operating profit

  $36.3   $30.3   $66.2   $44.9   $27.3   $38.7   $22.6  
 

Redundancy and restructuring costs(a)

        0.2   1.1   2.0   7.6  
 

Income and costs relating to demolition of vacant property(a)

        0.6        
 

Provision for environmental costs

            0.3   2.0  
 

Non trade legal and professional costs

      1.4          
 

Past service credit on retirement benefit obligations(a)

      (1.6 )        
 

Depreciation and amortization

  7.2   7.1   14.5   13.8   13.7   14.7   14.5  
 

Loss on disposal of property, plant and equipment

        0.1   0.1   0.9   3.1  
                                 
 

Adjusted EBITDA

  $43.5   $37.4   $80.5   $59.6   $42.2   $56.6   $49.8  

(a)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements and "Note 4—Other income (expense) items" to our unaudited interim financial statements.
(5)
Trading profit is defined as operating profit before restructuring and other income (expense). Trading profit is the "segment profit" performance measure used by our chief operating decision maker as required under IFRS 8 for divisional segmental analysis. See "Note 2—Revenue and segmental analysis" to our unaudited interim financial statements and our audited consolidated financial statements.

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Management's Discussion and Analysis of Financial Condition and Results of Operations

        The following discussion of our financial condition and results of operations should be read in conjunction with "Selected Consolidated Financial Data," our audited consolidated financial statements and accompanying notes and our unaudited interim financial statements and accompanying notes appearing elsewhere in this prospectus. Our audited consolidated financial statements and unaudited interim financial statements have been prepared in accordance with IFRS-IASB.

        The preparation of our audited consolidated financial statements and unaudited interim financial statements required the adoption of assumptions and estimates that affect the amounts recorded as assets, liabilities, revenue and expenses in the years and periods addressed and are subject to certain risks and uncertainties. Our future results may vary substantially from those indicated because of various factors that affect our business, including, among others, those identified under "Forward-Looking Statements" and "Risk Factors" and other factors discussed in this prospectus.

Overview

        We are a global materials technology company specializing in the design, manufacture and supply of high-performance materials, components and gas cylinders to customers in a broad range of growing end-markets. Our key end-markets are environmental technologies, healthcare technologies, protection and specialty technologies. Our customers include both end-users of our products and manufacturers that incorporate our products into their finished goods. Our products include specialty chemicals used as catalysts in automobile engines to remove noxious gases; corrosion, flame and heat-resistant magnesium alloys used in safety-critical, aerospace, automotive and defense applications; photo-sensitive plates used for embossing and gold-foiling in the luxury packaging and greetings card industries; high-pressure aluminum and composite gas cylinders used by patients with breathing difficulties for mobile oxygen therapy, by firefighters in breathing apparatus equipment and by manufacturers of vehicles that run on CNG; and metal panels that can be "superformed" into complex shapes to provide additional design freedom for a wide variety of industries, including aerospace, high-end automotive and rail transportation.

Key Factors Affecting our Results

        A number of factors have contributed to our results of operations during recent periods, including the effects of fluctuations in raw material prices, effects of fluctuations in foreign exchange rates, changes in market sector demand, our development of new products, the global nature of our operations, our ability to improve operating efficiencies and costs associated with our retirement benefit arrangements.

Raw Material Prices

        We are exposed to commodity price risks in relation to the purchases of our raw materials. The key raw materials we use include primary magnesium, zircon sand, zirconium oxychloride intermediates, rare earths and other metal and chemical inputs for the Elektron division and primary aluminum and carbon fiber for the Gas Cylinders division. The average prices of all of these raw materials have generally been increasing over the last five years, many of them substantially. We take certain actions to attempt to manage the impact of fluctuations in the prices of these commodities, including passing commodity prices through to certain customers through increasing prices and surcharges on certain products, entering into forward fixed purchase contracts and engaging in some hedging of aluminum prices. Changes in the prices of raw materials can nevertheless have a significant impact on our results of operations. For more information on the effect of commodity price movements on our results of operations, see "—Quantitative and Qualitative Disclosure about Market Risk—Effect of Commodity Price Movements on Results of Operations."

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Exchange Rates

        As a result of our international operations, we are subject to risks associated with the fluctuations between different foreign currencies. This affects our consolidated financial statements and results of operations in various ways.

    As part of our consolidation each period, we translate the financial statements of those entities in our group that have functional currencies other than U.S. dollars into U.S. dollars at the period-end exchange rates (in the case of the balance sheet amounts) and the average exchange rates for the period (in the case of income statement and cash flow amounts). The translated values in respect of each entity fluctuate over time with the movement of the exchange rate for the entity's functional currency against the U.S. dollar. We refer to this as the currency translation risk.

    Our operating subsidiaries make purchases and sales denominated in a number of currencies, including currencies other than their respective functional currencies. To the extent that an entity makes purchases in a currency that appreciates against its functional currency, its cost basis expressed in its functional currency will increase, or decrease, if the other currency depreciates against its functional currency. Similarly, for sales in a currency other than the entity's functional currency, its revenues will increase to the extent that the other currency appreciates against the entity's functional currency and decrease to the extent that currency depreciates against the entity's functional currency. These movements can have a material effect on the gross profit margin of the entity concerned and on our consolidated gross profit margin. We refer to this as the currency transaction risk.

    After a purchase or sale is completed, the currency transaction risk continues to affect foreign currency accounts payable and accounts receivable on the books of those entities that made purchases or sales in a foreign currency. These entities are required to remeasure these balances at market exchange rates at the end of each period.

    To mitigate our exposure to currency transaction risk, we operate a policy of hedging all contracted commitments in foreign currency, and we also hedge a substantial portion of non-contracted forecast currency receipts and payments for up to twelve months forward.

        For more information on the effect of currency movement on our results of operations, see "—Quantitative and Qualitative Disclosure about Market Risk—Effect of Currency Movement on Results of Operations." We evaluate our results of operations on both an as-reported basis and a constant translation exchange rate basis. The constant translation exchange rate presentation is a non-IFRS-IASB financial measure, which excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant translation exchange rate percentages by converting our prior-period local currency financial results using the current period foreign currency exchange rates and comparing these adjusted amounts to our current period reported results. This calculation may differ from similarly-titled measures used by others and, accordingly, the constant translation exchange rate presentation is not meant to be a substitution for recorded amounts presented in conformity with IFRS-IASB nor should such amounts be considered in isolation.

Demand in End-Markets

        Our sales are driven by demand in the major end-markets for our products, which are environmental technologies, healthcare technologies, protection technologies and specialty technologies.

    In environmental technologies, we believe many of our products serve a growing need to protect the environment and conserve its resources. Increasing environmental regulation,

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      "green" taxes and the increasing cost of fossil fuels are driving growth in this area and are expected to drive growth in the future. For example, our products are used to reduce weight in vehicles improving fuel efficiency, in catalytic converters in automotive engines, removing noxious gases and to remove heavy metals from drinking water and industrial effluent.

    In healthcare technologies, we have a long history in the healthcare end-market, and see this as a major growth area through the introduction of new product technologies. Our products, among other applications, contain medical gases, are featured in medical equipment and are used in medical treatment. For example, our more recent innovations include the lightweight IOS medical oxygen delivery system featuring our patented L7X higher-strength aluminum alloy and carbon composite cylinders integrated with our patented SmartFlow valve-regulator technology.

    In protection technologies, we offer a number of products that are used to protect individuals and property. Principal factors driving growth in this end-market include increasing societal expectations regarding the protection of individuals and armed forces personnel, tightening health and safety regulations and the significant cost of investing in and replacing technologically-advanced military property. Our products are used in the protection of emergency services personnel, the protection of military vehicles, aircraft and personnel. For example, we manufacture ultra-lightweight breathing-air cylinders that lighten the load on emergency services personnel working in dangerous environments.

    In specialty technologies, our core technologies have enabled us to exploit various other niche and specialty markets and applications. Our products include photo-engraving plates and etching chemicals used to produce high-quality packaging, as well as cylinders used for high-purity gas applications, beverage dispensing and leisure applications such as paintball.

        Changes in the dynamics of any of these key end-markets could have a significant effect on our results of operations. For instance, governmental regulation, including government spending, may affect our results of operations in any of these end-markets. For a more detailed discussion of our key end-markets and the factors affecting our results of operations in each market, see "Business—Our Key End-Markets."

Product Development

        Part of our strategy is to increase our focus on high-performance value-added product lines and markets, and every year we make a major investment in product development. In collaboration with universities and our customers, we have developed a steady stream of new products in recent years. In the near-term, we plan to focus on maximizing the potential of the following products that we have already introduced into the market: large alternative fuel cylinders for CNG buses and trucks, industrial catalysts using our zirconia-based materials, L7X higher-pressure medical oxygen cylinders, superplastic magnesium and titanium sheet-based components and extruded magnesium alloy shapes.

Global Operations

        We are a global company with operations and customers around the world. In 2011, our sales to Europe (including the United Kingdom), North America and the rest of the world accounted for 37%, 41% and 22% of our revenues, respectively. In 2011, sales to Portugal, Italy, Ireland, Greece and Spain, included within our sales to Europe above, accounted for only 3.4% of our revenues. Changes in global economic conditions have impacted, and will continue to impact, demand for our products. The recession in 2008 and 2009 had a significant impact on our financial results, even though we remained profitable in each quarter through the recession. Further, our geographic diversity exposes us to a range of risks, such as compliance with different regulatory and legal regimes, exchange controls and regional economic conditions. See "Risk Factors—Risks relating to our operations—Our global

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operations expose us to economic conditions, political risks and specific regulations in the countries in which we operate which could have a material adverse impact on our business, financial condition and results of operations" for more information about potential risks we may face.

        We believe, however, that our geographic diversity also allows us to take advantage of opportunities arising in individual countries or regions. As a result of this diversity, demand for our products across the sectors in which we operate can vary depending on the economic health and demographic shifts of our geographic markets. These macro factors can have a significant effect on our financial results. For instance, aging populations in the world's developed economies, along with increasing awareness of the importance of good healthcare in emerging markets, are driving an increase in the use of various medical technologies and applications, creating a growth opportunity for us. Economic expansion in developing economies such as Brazil, Russia, India and China has created increased demand in areas such as auto-catalysis chemicals and gas cylinders.

Operating Efficiency

        Our management seeks to continue to improve long-term profitability and operating efficiencies to maintain our competitive position. These efforts include identifying operations whose costs are disproportionate to related revenues, especially operations with significant fixed costs that could negatively impact gross profit margin. In the past few years, in part due to the recession in 2008 and 2009, we have taken more aggressive rationalization measures. Initiatives have included automation projects, eliminating certain employee redundancies and undertaking temporary and permanent facility closings. The total charge for rationalization was $nil, $0.2 million and $1.1 million in 2011, 2010 and 2009, respectively.

Retirement Benefit Arrangements

        We operate defined benefit arrangements in the United Kingdom, the United States and France. The funding levels are determined by periodic actuarial valuations. Further, we also operate defined contribution plans in the United Kingdom, the United States and Australia. The assets of the plans are generally held in separate trustee administered funds. We incur costs related to these retirement benefit arrangements, which can vary from year to year depending on various factors such as interest rates, valuations, regulatory burdens, life expectancy and investment returns. The total charge we incurred for all retirement benefit arrangements was $2.1 million, $6.6 million and $7.8 million in 2011, 2010 and 2009, respectively.

Key Line Items

Revenue

        We generate revenue through sales of products that we have developed and manufactured for our customers. The main products that we sell are magnesium alloy powders, ingot, bar, extruded product, rolled plates and thin sheets, engraving plates, zirconium compounds in powder form, various forms of aluminum and carbon composite gas cylinders and superplastically-formed parts pressed using our vacuum pressing technology. We also generate revenue from designing and manufacturing special tools used with our superform presses to make the formed parts and from recycling magnesium alloy scrap for customers, along with sales of scrapped aluminum arising from the manufacture of gas cylinders. In general, for our magnesium and zirconium products, we charge our customers by weight sold, while for our gas cylinder and Superform products, we charge our customers by units and parts sold. For a description of our products, see "Business."

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Cost of Sales

        Our cost of sales primarily consists of a complex set of materials, energy, water and steam, direct shop-floor labor costs, supervisory management costs at our manufacturing facilities, engineering and maintenance costs, depreciation of property, plant and equipment, factory rents, security costs, property taxes and factory consumables, including machinery oils and protective equipment for employees. For a description of the raw materials we use, see "—Key Factors Affecting Our Results—Raw Material Prices" and "Business—Suppliers and Raw Materials."

Distribution Costs

        As a global business, we transport and deliver our products to customers around the world. While some customers pay for their own transport, we can also organize the transportation through third parties. These distribution costs are recovered in the product price included in our revenue.

Administrative Expenses

        Our administrative expenses primarily consist of costs for staff working in sales, marketing, research and development, human resources, accounting, legal, information technology and general management. Administrative expenses also include sales commissions to agents, pension administration costs, legal costs, audit fees, directors' fees, taxation consultancy fees and other advisory costs. We also buy office consumables such as stationery, computer equipment and telecommunications equipment.

Restructuring and other income (expense)

        Our restructuring and other income (expense) primarily consist of items of income and expense, which, because of their one-off nature, merit separate presentation. In the past, these expenses have included costs related to redundancies, restructuring of manufacturing operations, demolition and environmental remediation, among others.

Other income (expense)

        Other income (expense) consists of costs related to corporate finance activities, including business acquisitions, disposals such as the sale of intellectual property and financing income and costs. Our finance costs consist of interest costs representing amounts accrued and paid on the outstanding balances under our indebtedness.

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Results of Operations for the Six Months Ended June 30, 2012 and 2011

        The table below summarizes our consolidated results of operations for the six months ended June 30, 2012 and 2011, both in U.S. dollars and as a percentage of total revenue. For more detailed segment information, see "Note 2—Revenue and segmental analysis" to our unaudited interim financial statements.

 
  Six Months Ended June 30,  
 
  2012   2011  
 
  Amount   Percentage of
Revenue
  Amount   Percentage of
Revenue
 
 
  (in $ millions)
(unaudited)

  (%)
  (in $ millions)
(unaudited)

  (%)
 

Revenue

  $267.1   100.0 % $243.7   100.0 %

Cost of sales

  (201.9 ) (75.6 )% (185.8 ) (76.2 )%
                   

Gross profit

  65.2   24.4 % 57.9   23.8 %

Other income

      0.8   0.3 %

Distribution costs

  (3.4 ) (1.3 )% (4.2 ) (1.7 )%

Administrative expenses

  (25.5 ) (9.5 )% (24.1 ) (9.9 )%

Share of start-up costs of joint venture

      (0.1 ) (0.1 )%
                   

Trading profit(1)

  $36.3   13.6 % $30.3   12.4 %

Restructuring and other income (expense)

         
                   

Operating profit

  $36.3   13.6 % $30.3   12.4 %

Other income (expense):

                 

Disposal costs of intellectual property(2)

  (0.1 ) (0.0 )% (0.1 ) (0.0 )%

Finance income:

                 

Interest received

      0.1   0.1 %

Finance costs:

                 

Interest costs

  (3.6 ) (1.4 )% (4.8 ) (2.0 )%
                   

Profit on operations before taxation

  $32.6   12.2 % $25.5   10.5 %

Tax expense

  (10.6 ) (4.0 )% (7.5 ) (3.1 )%
                   

Profit for the period

  $22.0   8.2 % $18.0   7.4 %
                   

(1)
Trading profit is the "segment profit" performance measure used by our chief operating decision maker as required under IFRS 8 for divisional segmental analysis. Management also believes that the presentation of group trading profit is useful to investors because it is a key performance indicator used by management to measure financial performance. Trading profit is defined as operating profit before restructuring and other income (expense). See "Note 2—Revenue and segmental analysis" to our unaudited interim financial statements. There were no restructuring and other expenses or income in the period and so no reconciling differences.

(2)
For further information, see "Note 4—Other income (expense) items" to our unaudited interim financial statements included elsewhere in this prospectus.

Six Months Ended June 30, 2012 Compared to Six Months Ended June 30, 2011

        Revenue.    Our revenue from continuing operations was $267.1 million in the first six months of 2012, an increase of $23.4 million from $243.7 million in the first six months of 2011. The increase included an additional $6.5 million of revenue, excluding the adverse impact of exchange rate translation differences of $0.3 million, from the Elektron division in relation to surcharges for rare earth costs. In the first six months of 2011, the rare earth surcharge was $24.7 million. During 2011, as the cost of rare earths increased, the surcharge we levied to recover these higher costs rose as well,

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peaking at $28.0 million for the third quarter of 2011. In late 2011, as the cost of rare earths began to fall, the level of the surcharge we levied was also reduced, and the surcharge we levied in the first and second quarter of 2012 was $20.4 and $10.5 million, respectively. Excluding this surcharge and the impact of exchange rate translation (a $4.8 million loss on revenue attributable to a stronger average U.S. dollar rate used to translate revenues from operations outside the United States), the increase in revenue at constant translation exchange rates was $21.7 million or 10.1%. This increase was due to increased sales volumes combined with changes in sales mix and pricing across a range of major market sectors, which is explained below in more detail by division.


Analysis of revenue variances from first six months of 2011 to first six months of 2012
for continuing operations

 
  Elektron   Gas Cylinders   Group  
 
  (in $ millions)
 
 
  (unaudited)
 

First six months of 2011 revenue—as reported under IFRS-IASB

  $ 133.3   $ 110.4   $ 243.7  

FX Translation impact—on non-U.S. operating results

    (2.7 )   (2.1 )   (4.8 )
               

First six months of 2011 revenue—adjusted for FX translation

  $ 130.6   $ 108.3   $ 238.9  

Trading variances for ongoing operations—first six months of 2012 v first six months of 2011

    18.4     9.8     28.2  
               

First six months of 2012 revenue—as reported under IFRS-IASB

  $ 149.0   $ 118.1   $ 267.1  
               

        The above table shows the change in each division's revenue between the first six months of 2012 and the first six months of 2011. It separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results. The following discussion provides an explanation of our increase in revenue by division.

    Elektron

        The Elektron division's revenue was $149.0 million in the first six months of 2012, an increase of $15.7 million from $133.3 million in the first six months of 2011. The adverse impact of exchange rate translation differences was $2.7 million. There was a $6.5 million increase in relation to higher rare earth surcharges in the first six months of 2012 as compared to the first six months of 2011. Revenue (excluding the rare earth surcharges) increased by an additional $11.9 million, or 11.2%, as a result of favorable underlying trading variances helped by achieving higher sales prices and a favorable change in sales mix, along with growth in some newer product areas. Zirconium underlying revenue grew 13.0% and magnesium revenue by 10.0%. The revenue growth was driven by new business in areas of zirconium-based industrial catalysts and specialty ceramic applications and higher demand for our light-weight magnesium alloys and high-performance powders.

        While total volume measured by tonnage of zirconium and magnesium products sold across the division was slightly down in the first six months of 2012 compared to the first six months of 2011, the change in sales mix contributed to the increase in revenue. Higher sales volume of industrial catalysts and ceramic oxides replaced some automotive catalysis sales. Also, higher sales volume of the more specialist magnesium alloys and powders replaced lower grade commercial alloys and powders.

    Gas Cylinders

        The Gas Cylinder division's revenue was $118.1 million in the first six months of 2012, an increase of $7.7 million from $110.4 million in the first six months of 2011. Excluding a $2.1 million adverse impact of exchange rate translation, revenue grew by $9.8 million, or 9.0%. This growth was driven by

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higher gas cylinders revenue, which grew by 11.0%. Superform revenue in the first six months of 2012 was equal to the revenue in the first six months of 2011.

        In some traditional aluminum cylinder markets we have focused on improving our sales mix, shifting sales from lower-priced sectors to more niche area applications. In the medical market, our focus continued to be on growing sales of the higher-pressure L7X aluminum cylinders, with some change in our sales mix moving away from lower-pressure small cylinders. These strategies improved the margins we achieved for a similar number of cylinder sales, and enabled better utilization of production capacity.

        Sales volumes of our composite cylinders increased significantly in the first six months of 2012 compared to the first six months of 2011. The healthcare sector proved to be a strong area of growth, with increased sales of composite medical cylinders. This included more than doubling the sales of our patented L7X composite cylinders in Europe, when compared to the first six months of 2011. Demand has been helped by the finalization of U.K. National Health Service tenders in the fourth quarter of 2011 to supply the homecare oxygen market, and we have won cylinder supply contracts with all the newly-appointed U.K. home oxygen service providers. In the first six months of 2012, we completed our largest order to date for cylinders used in gas transportation modules. Superform sales volumes of formed components showed modest growth in the first six months of 2012 compared to the first six months of 2011, mainly as a result of increased demand from the civil aerospace sector in the United States, although sales to the European automotive and rail markets were lower.

        Cost of Sales.    Our cost of sales was $201.9 million in the first six months of 2012, an increase of $16.1 million from $185.8 million in the first six months of 2011. Excluding a $4.1 million translation gain on cost of sales of non-U.S. operations, cost of sales increased $20.2 million, or 11%, from the first six months of 2011. The main reason for the increase was higher rare earth and other material costs and the higher sales volumes in the first six months of 2012 when compared to the first six months of 2011.

        Gross Profit.    Gross profit was $65.2 million in the first six months of 2012, an increase of $7.3 million from $57.9 million in the first six months of 2011. Overall gross profit margin increased slightly to 24.4% in the first six months of 2012 from 23.8% in the first six months of 2011, which was mainly a result of the favorable sales mix changes achieved in the period.

        Distribution Costs.    Distribution costs were $3.4 million in the first six months of 2012, a decrease of $0.8 million, or 19%, from $4.2 million in the first six months of 2011. The decrease is mainly attributable to the change in mix of sales in the first six months of 2012 compared to the first six months of 2011.

        Administrative Expenses.    Our administrative expenses were $25.5 million in the first six months of 2012, an increase of $1.4 million, or 5.8%, from $24.1 million in the first six months of 2011. The translation to U.S. dollars of costs from our non-U.S. operations at weaker exchange rates decreased the costs by $0.4 million. The other increase in costs of $1.8 million was due to higher retirement benefit costs, increased spending on new product marketing, research and development and other general inflationary increases.

        Share of start-up costs of joint venture.    Our gas cylinders joint venture in India broke-even in the first six months of 2012, compared to incurring start up costs of $0.1 million for the first six months of 2011. The operation is currently in a start up phase and remains small compared to our other cylinder operations.

        Operating and Trading Profit.    Our operating profit was $36.3 million in the first six months of 2012, an increase of $6.0 million, or 19.8%, from $30.3 million in the first six months of 2011. Trading

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profit was $36.3 million in the first six months of 2012, an increase of $6.0 million, or 19.8%, from $30.3 million in the first six months of 2011.


Analysis of trading profit and operating profit variances from first six months of 2011
to first six months of 2012 for continuing operations

 
  Elektron Trading Profit   Gas Cylinders Trading Profit   Group Trading Profit   Restructuring and other income (expense)   Group Operating Profit  
 
  (in $ millions)
 
 
  (unaudited)
 

First six months of 2011—as reported under IFRS-IASB

  $ 24.2   $ 6.1   $ 30.3       $ 30.3  

FX Translation impact—on non-U.S. operating results

    (0.2 )       (0.2 )       (0.2 )
                       

First six months of 2011—adjusted for FX translation

  $ 24.0   $ 6.1   $ 30.1       $ 30.1  

Trading variances for ongoing operations—first six months of 2012 v first six months of 2011

    4.8     1.4     6.2         6.2  
                       

First six months of 2012—as reported under IFRS-IASB

  $ 28.8   $ 7.5   $ 36.3       $ 36.3  
                       

        The above table shows the change in each division's trading profit, group trading profit and operating profit between the first six months of 2012 and the first six months of 2011. The table also provides a reconciliation of group trading profit to group operating profit. The table separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results.

        Translating our non-U.S. operations into U.S. dollars resulted in a decrease of $0.2 million in both our trading profit and operating profit in the first six months of 2012. This decrease represented 3.3% of the change in both trading profit and operating profit for the first six months of 2012. At constant exchange rates, both trading profit and operating profit increased by $6.2 million, or 20.6%.

        Higher sales volumes, a better sales pricing mix of our products, as explained above under our discussion of revenue, and a favorable impact from our increases in sales prices had a positive impact of $12.5 million on our trading profit and operating profit in the first six months of 2012 when compared to the first six months of 2011.

        We had a number of cost changes that together resulted in reducing the increase in trading profit and operating profit by a net $6.3 million in the first six months of 2012. Such cost changes were as follows:

    There was $1.5 million of higher accounting charges for our defined benefit plans in the first six months of 2012, as a result of a higher deficit position at the start of the financial year.

    The overall impact of foreign exchange transaction rates on sales and purchases in the first six months of 2012 compared to the first six months of 2011 was a negative $0.2 million, net of the benefit of utilizing foreign currency derivative contracts.

    Employment and other costs increased by a net $4.6 million in the first six months of 2012, reflecting additional costs in product development, maintenance and general inflationary

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      increases of our operations. There were also higher accruals for profit related bonuses across our business due to significantly improved profits.

        The segment trading profit results by division are further explained in more detail below:

    Elektron

        The Elektron division's trading profit of $28.8 million in the first six months of 2012 was an increase of $4.6 million, or 19.0%, from $24.2 million in the first six months of 2011. Changes in exchange rates used to translate segment profit into U.S. dollars led to a $0.2 million decrease in the first six months of 2012. Profits at constant exchange rates therefore increased by $4.8 million, or 20%.

        The main contributing factor in the higher trading profit was the underlying growth in revenue as explained in the revenue analysis above. Underlying trading performance in sales revenue increased profits by $7.9 million. The cost of magnesium in the first six months of 2012 was slightly lower than the first six months of 2011, while the cost of zirconium raw materials was significantly higher due to the increased rare earth and other material costs in the first six months of 2012 compared to the first six months of 2011. The scale of the rare earth increases required that we levy a surcharge on our customers, reviewed quarterly, to prevent any negative impact on the profit and loss account. We also implemented price increases to cover other inflationary costs, including other raw material costs, maintenance and employment costs. These actions enabled the business to maintain its profit margin.

        For the first six months of 2012, the foreign exchange transaction rates on sales and purchases had a negative impact of $0.2 million, net of the benefit of utilizing foreign currency exchange derivative contracts, compared to the first six months of 2011.

        The increase in retirement benefit charges cost allocated to the Elektron division was $1.0 million in the first six months of 2012. The allocation for the Elektron division was more than the allocation for the Gas Cylinders division because the former had more members in the relevant plans.

        Other costs increased by a net $1.9 million, which include increased expenditures on research and development, maintenance, bonus provisions and general inflationary pressures.

    Gas Cylinders

        The Gas Cylinders division's trading profit of $7.5 million in the first six months of 2012 represents an increase of $1.4 million, or 23.0%, from $6.1 million in the first six months of 2011.

        Increased sales volumes together with increased selling prices and an improved sales mix offset an increase in raw material prices, such as carbon fiber. The net impact of these factors was to increase trading profit by $4.6 million.

        The division's allocation of the higher retirement benefit charges was $0.5 million in the first six months of 2012. The allocation for the Gas Cylinders division was less than the allocation for the Elektron division because the former had fewer members in the relevant plans.

        Other costs increased by a net $2.7 million, which include increased expenditures on research and development and maintenance, a small increase in bad debts and other general inflationary pressures.

        Finance costs—interest costs.    The finance costs of $3.6 million that we incurred in the first six months of 2012 decreased from $4.8 million in the first six months of 2011. This was a result of the lower cost of the new finance facilities secured in June 2011 and the falling level of net debt.

        The finance costs we incurred in the first six months of 2012 included $2.8 million of interest payable on our new financing facilities, $0.3 million of interest payable on our Revolving Credit Facility and $0.5 million of amortization relating to finance costs. The finance costs that we incurred in the first six months of 2011 included $3.3 million of interest payable on our Senior Notes due 2012, $0.5 million

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of interest payable on our former revolving credit facility (the "Previous Credit Facility"), $0.7 million of amortization related to historic finance costs and $0.3 million interest payable on our new financing facilities.

        Taxation.    In the first six months of 2012, our tax expense was $10.6 million on profit before tax of $32.6 million. The effective tax rate was 32.5%. Of the charge of $10.6 million, $7.4 million related to current cash taxes payable (an effective rate of 22.7%) and $3.2 million was a deferred taxation charge (an effective rate of 9.8%).

        In the first six months of 2011, our tax expense was $7.5 million on profit before tax of $25.5 million. The effective tax rate was 29.4%. Of the charge of $7.5 million, $6.0 million related to current taxes payable (an effective rate of 23.5%) and $1.5 million was a deferred taxation charge (an effective rate of 5.9%).

        The level of current tax payable, which results in an obligation to pay taxes in the current or following year, is suppressed due to the high proportion of profits being generated by U.K. operations, which have a lower corporation tax rate than most other jurisdictions we operate in. Current tax payable is also reduced by certain expenses that are allowable for U.K. tax purposes, and these include "tax deductible" cash contributions to the U.K. retirement benefit plan, R&D tax credits and utilization of excess capital allowances. These allowances do result in a non-cash based deferred tax charge, which has increased the overall IFRS effective rate of tax for the period to 32.5% from 29.4% and the deferred tax effective rate from 5.9% to 9.8%.

        Profit for the period.    As a result of the above factors, our profit in the first six months of 2012 was $22.0 million, an increase of $4.0 million, or 22.2%, from $18.0 million in the first six months of 2011. Based on the continued strong profit performance, our Board of Directors declared an interim dividend for the first six months of 2012 of £0.25 per £1 ordinary share ($0.39 per ordinary share at an exchange rate of $1.56:£1), totaling $3.9 million. The interim dividend was paid on August 10, 2012.

Results of Operations for the Years Ended December 31, 2011, 2010 and 2009

        The table below summarizes our consolidated results of operations for the years ended December 31, 2011, 2010 and 2009, both in U.S. dollars and as a percentage of total revenue. For more

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detailed segment information, see "Note 2—Revenue and Segmental Analysis" to our audited consolidated financial statements.

 
  Year Ended December 31,  
 
  2011   2010   2009  
 
  Amount   Percentage
of Revenue
  Amount   Percentage
of Revenue
  Amount   Percentage
of Revenue
 
 
  (in $ millions)
(audited)

  (%)
  (in $ millions)
(audited)

  (%)
  (in $ millions)
(audited)

  (%)
 

Revenue

  $510.8   100.0 % $402.7   100.0 % $371.3   100.0 %

Cost of sales

  (390.4 ) (76.4 )% (305.1 ) (75.8 )% (295.7 ) (79.6 )%
                           

Gross profit

  120.4   23.6 % 97.6   24.2 % 75.6   20.4 %

Other income

  2.0   0.4 % 0.1   0.0 % 0.1   0.0 %

Distribution costs

  (7.3 ) (1.4 )% (7.4 ) (1.8 )% (6.8 ) (1.8 )%

Administrative expenses

  (48.9 ) (9.6 )% (44.5 ) (11.1 )% (40.4 ) (10.9 )%

Share of start-up costs of joint venture

  (0.2 ) (0.0 )% (0.1 ) (0.0 )% (0.1 ) (0.0 )%
                           

Trading profit(1)

  $66.0   13.0 % $45.7   11.3 % $28.4   7.7 %

Restructuring and other expense(2)

  0.2   0.0 % (0.8 ) (0.2 )% (1.1 ) (0.3 )%
                           

Operating profit

  $66.2   13.0 % $44.9   11.1 % $27.3   7.4 %

Other income (expense):

                         

Acquisition Costs(2)

          (0.5 ) (0.1 )%

Disposal costs of intellectual property(2)

  (0.2 ) (0.0 )% (0.4 ) (0.1 )%    
                           

Finance income:

                         

Interest received

  $0.2   0.0 % $0.2   0.1 % $0.2   0.1 %

Gain on purchase of own debt(2)

      0.5   0.1 %    

Finance costs:

                         

Interest costs

  (9.2 ) (1.8 )% (9.6 ) (2.4 )% (11.8 ) (3.2 )%
                           

Profit on operations before taxation

  $57.0   11.2 % $35.6   8.8 % $15.2   4.1 %

Tax expense

 
(13.6

)

(2.7

)%

(9.9

)

(2.5

)%

(5.7

)

(1.5

)%
                           

Profit for the year

  $43.4   8.5 % $25.7   6.4 % $9.5   2.6 %
                           

(1)
Trading profit is the "segment profit" performance measure used by our chief operating decision maker as required under IFRS 8 for divisional segmental analysis. Management also believes that the presentation of group trading profit is useful to investors because it is a key performance indicator used by management to measure financial performance. Trading profit is defined as operating profit before restructuring and other income (expense). See "Note 2—Revenue and segmental analysis" to our unaudited interim financial statements.

(2)
For further information, see "Note 5—Other income (expense) items" to our audited consolidated financial statements included elsewhere in this prospectus.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010

        Revenue.    Our revenue from continuing operations was $510.8 million in 2011, an increase of $108.1 million from $402.7 million in 2010. Included in this increase was $66.4 million of additional revenue charged by the Elektron division to zirconium chemical customers in the form of a surcharge in the face of a steep increase in the cost of rare earths as a result of export restrictions imposed by the Chinese government. Excluding the rare earth surcharge and impact of exchange rate translation (a $9.9 million gain on revenue attributable to a weaker average U.S. dollar exchange rate used to translate revenues from operations outside the United States), the increase in revenue at constant translation exchange rates was $31.8 million or 7.7%. This increase was a result of increased sales

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volumes combined with changes in sales mix, pricing and transactional exchange differences on export sales across a range of major market sectors.

Analysis of revenue variances from 2010 to 2011 for continuing operations

 
  Elektron   Gas
Cylinders
  Group  
 
  (in $ millions)
(audited)

 

2010 revenue—as reported under IFRS-IASB

  $203.5   $199.2   $402.7  

FX Translation impact—on non-U.S. operating results

  5.1   4.8   9.9  
               

2010 revenue—adjusted for FX translation

  $208.6   204.0   $412.6  

Trading variances for ongoing operations—2011 v 2010

  78.9   19.3   98.2  
               

2011 revenue—as reported under IFRS-IASB

  $287.5   $223.3   $510.8  
               

        The above table shows the change in each division's revenue between 2011 and 2010. It separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results. The following discussion provides an explanation of our increase in revenue by division.

    Elektron

        The Elektron division's revenue was $287.5 million in 2011, an increase of $84.0 million from $203.5 million in 2010. Excluding the $5.1 million favorable translation exchange rate impact on revenue and excluding the $66.4 million increase in revenue relating to the rare earth surcharge, the increase in revenue at constant translation exchange rates was $12.5 million, or 6.0%, from 2010.

        In late 2010, we applied a rare earth surcharge on various products, primarily impacting the sales of auto-catalysis chemicals used in catalytic converters. We used these rare earth surcharges to protect our business from increased rare earth costs that we incurred during the period. Throughout 2011, management of the rare earth pricing bubble was critical to ensuring we maintained and grew operating profits. Higher sales prices were also needed to fully recover other inflationary costs, including energy, other raw material costs, including magnesium, zirconium compounds and other chemicals, increased labor costs and maintenance expenditure.

        Out of the total revenue growth of 6.0% in 2011 when compared to 2010, our magnesium revenue grew by 4.9% and our zirconium revenue grew by 8.0%. Magnesium revenue growth was driven by an increase in recycle volumes with increased demand from the die-casting market servicing the German export-driven premium branded automotive industry. Demand for our high-performance aerospace alloys remained strong in the United States, and we started to benefit from being able to offer extruded parts from our newly commissioned extrusion press. Sales to Japan were impacted by reduced demand from customers as a result of the events following the earthquake and resulting tsunami earlier in the year. Sales of wrought and rolled products increased significantly as we expanded sales for our specialty industrial and aerospace applications.

        Sales volumes of our own-manufactured magnesium photo-engraving plate remained similar to those achieved in 2010, while sales volumes of our traded non-magnesium photo-engraving plate, such as zinc and copper, decreased over the same period. Our primary focus continues to be promoting the benefits of our magnesium photo-engraving plate products, and although it is a mature market in western economies, growth in demand is driven by developing economies as they increase both the manufacture and sales of premium consumer products requiring high quality engraved packaging.

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        Though sales volume of zirconium products reduced in 2011, revenues were helped by higher selling prices. After a strong increase in volumes in 2010 and a further increase in the first half of 2011, zirconium volumes reduced in the second half of 2011, particularly as customers reacted to the high price of product containing rare earths. Further, there was a noticeable destocking by customers later in the year that impacted sales in the fourth quarter of 2011. The environmental auto-catalyst market was the main sector impacted by the rare earth surcharge and inventory destocking in the fourth quarter of 2011. New business development included areas away from auto-catalyst markets, such as industrial scale catalysis, where there is new demand and interest rose in our environmentally friendly zirconium technologies.

    Gas Cylinders

        The Gas Cylinder division's revenue was $223.3 million in 2011, an increase of $24.1 million from $199.2 million in 2010. Excluding a $4.8 million favorable impact on revenue attributable to exchange rate translation, the increase in revenue at constant translation exchange rates was $19.3 million, or 9.5%, from 2010. This increase was primarily due to an increase in sales volumes.

        Sales volumes of our aluminum gas cylinders increased by 5% in 2011. Sales volumes of our patented L7X aluminum cylinders for the medical market increased by 9% and sales volumes in some traditional applications like aluminum fire extinguisher cylinders, beverage cylinders and scuba cylinders also increased. There were some reductions in sales volumes of our aluminum industrial cylinders and our traditional aluminum medical cylinders.

        Sales volumes of our composite cylinders increased by 6% in 2011 compared to 2010, the main growth coming from alternative fuel systems, medical oxygen, breathing apparatus and emergency escape sets, which are targeted at our strategic end-markets of Environmental, Healthcare and Protection Technologies, respectively.

        Superform sales volumes of formed components (as opposed to tooling) increased by 13% in 2011 compared to 2010. This was mainly due to operational expansions over the past few years, driven by innovation in the size and complexity of superformed shapes that we can now provide and the demand for our specialized lightweight material solutions. New tooling design sales remained strong, giving us opportunities for future growth, and we have a number of new projects providing customers with superformed magnesium solutions using our Elektron division's alloys.

        Cost of Sales.    Our cost of sales was $390.4 million in 2011, an increase of $85.3 million from $305.1 million in 2010. Excluding a translation loss of $7.8 million on cost of sales of non-U.S. operations, our cost of sales at constant translation exchange rates increased $77.5 million, or 25%, from 2010. The main reason for the increase was higher rare earth and other material costs and higher sales volumes in 2011 when compared to 2010.

        Gross Profit.    Gross profit was $120.4 million in 2011, an increase of $22.8 million from $97.6 million in 2010. Overall gross profit margin decreased slightly to 23.6% in 2011 from 24.2% in 2010, which was a favorable result given the significant increase in raw material costs.

        Distribution Costs.    Distribution costs were $7.3 million in 2011, a decrease of $0.1 million, or 1.4%, from $7.4 million in 2010. There was a translation loss on costs for non-U.S. operations of $0.3 million, and the underlying movement in costs at constant translation exchange rates was a decrease of $0.4 million, or 5.2%, despite the increased sales activity and more goods being transported to customers.

        Administrative Expenses.    Our administrative expenses were $48.9 million in 2011, an increase of $4.4 million, or 9.9%, from $44.5 million in 2010. The translation to U.S. dollars of costs from our non-U.S. operations at weaker exchange rates increased the costs by $1.0 million. The other increase in

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costs of $3.4 million was due to increased spending on research and development and marketing and advertising and general inflationary increases.

        Share of start-up costs of joint venture.    In late 2009, we entered into a joint venture agreement to establish a manufacturing facility to produce gas cylinders in India. The joint venture has been accounted for using the equity method, as the partners have a contractual agreement that establishes joint control over the economic activities of the entity. The loss attributable to the start-up costs of the joint venture in 2011 was $0.2 million compared to $0.1 million in 2010. The joint venture commenced its operations and trading in 2011.

        Operating and Trading Profit.    Our operating profit was $66.2 million in 2011, an increase of $21.3 million, or 47.4%, from $44.9 million in 2010. Our trading profit was $66.0 million in 2011, an increase of $20.3 million, or 44.4%, from $45.7 million in 2010.

Analysis of trading profit and operating profit variances from 2010 to 2011 for continuing operations

 
  Elektron
Trading
Profit
  Gas
Cylinders
Trading
Profit
  Group
Trading
Profit
  Restructuring
and other
expense
  Group
Operating
Profit
 
 
  (in $ millions)
(audited)

 

2010—as reported under IFRS-IASB

  $33.5   $12.2   $45.7   $(0.8 ) $44.9  

FX Translation impact—on non-U.S. operating results

  0.6   0.2   0.8     0.8  
                       

2010—adjusted for FX translation

  $34.1   $12.4   $46.5   $(0.8 ) $45.7  

Trading variances for ongoing operations—2011 v 2010

  20.0   (0.5 ) 19.5   1.0   20.5  
                       

2011—as reported under IFRS-IASB

  $54.1   $11.9   $66.0   $0.2   $66.2  
                       

        The above table shows the change in each division's trading profit, group trading profit and operating profit between 2011 and 2010. The table also provides a reconciliation of group trading profit to group operating profit, which were not significantly different given the small level of cost and expense differences. The table separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results.

        Translating our non-U.S. operations into U.S. dollars has resulted in an incremental increase in our trading profit and operating profit of $0.8 million and $0.8 million, respectively, in 2011. This increase represented 4% of the change in both trading profit and operating profit from 2010. At constant translation exchange rates, our trading profit increased by $19.5 million or 41.9% and our operating profit increased by $20.5 million or 44.9% in 2011. The level of operating and trading profit growth experienced was exceptionally high, with an unusually strong third quarter 2011 level of profitability in the Elektron division, and is not indicative of management's on-going organic growth expectations.

        Revenue growth through both favorable pricing and volume changes had a significant benefit in 2011 when compared to 2010. The use of a surcharge mechanism ensured we were able to recover the significantly higher rare earth costs and maintain profit margins. We also were able to achieve better underlying pricing across a wide range of products through a focus on both price increases and mix of products sold. Where new products have been introduced, we have tried to position pricing of these to help enhance our profitability. The volume and mix changes are further discussed by division below and in the revenue discussion. Together, these factors had a positive impact of $22.1 million on our trading profit and operating profit in 2011.

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        We had a number of cost changes that together resulted in reducing the increase in trading profit and operating profit by a net $2.6 million in 2011. The main reasons for these changes were as follows:

    We had a decrease in central costs of $1.1 million, which related to the levy charged on the U.K. Luxfer Group Pension Plan by the PPF. The PPF applies a levy on all U.K. defined benefit pension plans to pay for the cost of U.K. plans that it has taken over after a sponsor has gone into insolvency when a plan is underfunded. The cost of the PPF levy for us was $1.6 million in 2011, a decrease of $1.1 million from 2010.

    Our accounting charges for our defined benefit plans decreased in 2011. The total impact on trading profit and operating profit was a $1.3 million gain when compared to 2010. The reduction in retirement benefit costs reflects the decreased actuarial costs of the U.K. and U.S. plans under IAS 19 accounting.

    The overall impact of foreign exchange transaction rates on sales and purchases was $1.1 million, net of the benefit of utilizing foreign currency exchange derivative contracts.

    There was a benefit of $0.1 million in 2011 in relation to a bad debt expense incurred in 2010.

    Employment and other costs have increased by a net $6.2 million in 2011, reflecting additional costs in marketing, product development and maintenance of our operations. There were also higher performance related accruals for bonuses across our business due to significantly improved profits.

        The segment trading profit results by division are further explained in more detail below:

    Elektron

        The Elektron division's trading profit of $54.1 million in 2011 was an increase of $20.6 million from $33.5 million in 2010. Changes in exchange rates used to translate segment trading profit into U.S. dollars led to a $0.6 million increase in 2011, and therefore profits at constant translation exchange rates increased by $20.0 million, or 59%.

        The resulting improvement in trading profit from the positive trading activities in the division was $20.0 million. This resulted from better underlying selling prices, as well as both volume and mix changes. The cost of magnesium in 2011 was higher than 2010, while the cost of zirconium raw materials increased significantly due to restrictions imposed by the Chinese government on the export of rare earths that commenced during late 2010. Price increases, along with operational efficiency measures, were implemented not only to offset higher raw material costs, but also to provide an adequate return in relation to higher levels of capital employed in the business due to a significant knock-on increase in working capital levels. As well as rare earths, we had other cost increases in areas such as zircon sand, energy, magnesium and regulatory costs around sourcing materials, which not only led to additional external costs, but also took up the valuable time of senior technical staff. Price increases and operational improvements became essential. The scale of the rare earth increases required that we levy a surcharge on our customers, reviewed quarterly, to prevent any negative impact on the profit and loss account. We also implemented price increases to cover other inflationary costs, including energy, maintenance and employment costs.

        For 2011, the foreign exchange transaction rates on sales and purchases had a positive impact of $0.5 million, net of the benefit of utilizing foreign currency exchange derivative contracts, compared to 2010.

        The decrease in retirement benefit charges and PPF levy cost allocated to the Elektron division was $1.7 million in 2011. The allocation for the Elektron division was more than the allocation for the Gas Cylinders division because the former had more members in the relevant plans.

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        The division experienced a gain of $0.1 million in 2011 in relation to a bad debt expense that was incurred during 2010.

        Other costs increased by a net $2.9 million in 2011 compared to 2010 and these include increased expenditures on research and development, maintenance, bonus provisions and marketing costs.

    Gas Cylinders

        The Gas Cylinders division's trading profit of $11.9 million in 2011 was a reduction of $0.3 million from $12.2 million in of 2010, a decrease of 2.5%. Changes in exchange rates used to translate segment profit into U.S. dollars led to a $0.2 million increase in 2011, and therefore profits at constant translation exchange rates decreased by $0.5 million, or 4.0%.

        As discussed above, increased sales volumes, together with increased average sales prices and an improved sales mix partly offset an increase in raw material prices and utility costs. The net impact of these factors was to increase trading profit by $1.5 million.

        In 2011, the foreign exchange transaction rates on sales and purchases had a positive impact of $0.6 million, net of the benefit of utilizing foreign currency exchange derivative contracts, compared to 2010.

        The division's allocation of the lower retirement benefit charges and lower PPF levy cost was $0.7 million in 2011. The allocation for the Gas Cylinders division was less than the allocation for the Elektron the former had fewer members in the relevant plans.

        Other costs increased by a net $3.3 million, which include increased expenditures on research and development, maintenance, sales and marketing costs.

        Restructuring and other income (expense).    In 2011 there was a credit of $0.2 million to restructuring and other income (expense), compared to a charge of $0.8 million in 2010. A past service credit of $1.6 million was recognized in 2011 in relation to pension plan changes undertaken by the Luxfer Group Pension Plan. In 2011, the Group incurred legal, audit and professional costs of $2.8 million in relation to the raising of equity funding. Of this, $1.4 million was expensed in the year mainly in relation to historical audit work and $1.4 million was deferred, which related to regulatory and legal documentation to support the transaction.

        During 2010 we incurred restructuring and other expense charges of $0.2 million in relation to rationalization activity at our Elektron division. There was also a charge in 2010 of $0.6 million relating to the demolition of a vacant property net of proceeds from a third party lessee of the building owned by the group undertaking Luxfer Group Services Limited.

        Disposal costs of intellectual property.    In 2011, we incurred a non-operating charge of $0.2 million compared to $0.4 million in 2010, all costs related to agreeing with the Federal Trade Commission ("FTC") to sell and license a subset of our U.S. photo-engraving business to a third party after the acquisition of Revere Graphics Worldwide ("Revere") in 2007. The sale and license mainly involves an intellectual property package and supply agreement for magnesium sheet.

        Finance income—interest received.    Interest received was $0.2 million in 2011 and 2010. Interest received is relatively low because we generally use surplus cash to repay debt and save on interest payment costs rather than placing cash on deposit. The interest received includes $0.1 million of interest received for 2011 and 2010 from the loan note due to us from the buyers of our Speciality Aluminium division.

        Finance income—Gain on purchase of own debt.    During 2010, we purchased $5.5 million of the then outstanding Senior Notes due 2012 ("Senior Notes due 2012") for $5.0 million through Luxfer

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Group Limited, a subsidiary of Luxfer Holdings PLC. The gain on the purchase of the Senior Notes due 2012 was $0.5 million and has been included within Finance Income.

        Finance costs—interest costs.    The finance costs of $9.2 million that we incurred in 2011 decreased slightly from $9.6 million in 2010.

        The finance costs we incurred in 2011 included $3.3 million of interest payable on our Senior Notes due 2012, $0.5 million of interest payable on our Previous Credit Facility, $3.8 million of interest payable on our new financing facilities and $1.6 million of amortization relating to finance costs. The finance costs that we incurred in 2010 included $7.5 million of interest payable on our Senior Notes due 2012, $0.8 million of interest payable on our Previous Credit Facility and $1.3 million of amortization related to historic finance costs.

        Taxation.    In 2011, our tax expense was $13.6 million on profit before tax of $57.0 million. The effective tax rate was 23.9%. Of the charge of $13.6 million, $11.8 million related to current tax payable and $1.8 million was a deferred taxation charge.

        In 2010, our tax expense was $9.9 million on profit before tax of $35.6 million. The effective tax rate was 27.8%. Of the charge of $9.9 million, $9.5 million related to current tax payable and $0.4 million was a deferred taxation charge.

        The overall rate is suppressed due to the high proportion of profits being generated by U.K. operations, due to certain expenses that are allowable for U.K. tax purposes, and these include losses arising on translation of loans mainly to our U.S. subsidiaries, "tax deductible" cash contributions to the U.K. retirement benefit plan and utilization of excess capital allowances. Despite these factors reducing our U.K. tax exposure, the increasing profitability of the U.K. businesses resulted in a tax charge of $1.0 million being charged to the income statement in respect of U.K. corporation tax in 2011, and this compared to $nil in 2010.

        Profit for the Financial Year.    As a result of the above factors, our profit for the financial year was $43.4 million in 2011, an increase of $17.7 million, or 68.9%, from $25.7 million in 2010.

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009

        Revenue.    Our revenue from continuing operations was $402.7 million in 2010, an increase of $31.4 million from $371.3 million in 2009. Excluding the impact of exchange rate translation (a $4.7 million adverse impact on revenue attributable to a stronger average U.S. dollar exchange rate used to translate revenues from operations outside the United States), the increase in revenue at constant translation exchange rates was $36.1 million or 9.7%. This increase was due mainly to increased sales volumes across a range of major market sectors. The increase in sales volumes increased revenue by $31.7 million in 2010 from 2009. Higher prices in 2010 that were on average 0.4% higher than in 2009 increased revenue by $1.4 million, and more favorable transaction exchange rates on export sales had a positive impact on revenue of $3.0 million.

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Analysis of revenue variances from 2009 to 2010 for continuing operations

 
  Elektron   Gas
Cylinders
  Group  
 
  (in $ millions)
(audited)

 

2009 revenue—as reported under IFRS-IASB

  $ 184.8   $ 186.5   $ 371.3  

FX Translation impact—on non-U.S. operating results

    (1.9 )   (2.8 )   (4.7 )
               

2009 revenue—adjusted for FX translation

  $ 182.9   $ 183.7   $ 366.6  

Trading variances for ongoing operations—2010 v 2009

    20.6     15.5     36.1  
               

2010 revenue—as reported under IFRS-IASB

  $ 203.5   $ 199.2   $ 402.7  
               

        The above table shows the change in each division's revenue between 2010 and 2009. It separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results. The following discussion provides an explanation of our increase in revenue by division.

    Elektron

        The Elektron division's revenue was $203.5 million in 2010, an increase of $18.7 million from $184.8 million in 2009. Excluding the impact of exchange rate translation (a $1.9 million adverse impact on revenue attributable to a stronger average U.S. dollar exchange rate used to translate revenues from operations outside the United States), the increase in revenue at constant translation exchange rates was $20.6 million, or 11.1%, from 2009, and was primarily due to an increase in sales volumes and partially due to higher pricing, as market demand recovered from the recession in 2008 and 2009. In late 2010, we imposed a rare earth surcharge on sales of various products, primarily impacting the sales of auto-catalysis chemicals used in catalytic converters. These rare earth surcharges equaled $3.2 million, and we used these surcharges to recover increased raw material costs that we incurred.

        Overall sales volumes of our magnesium operations increased by 5% in 2010 from 2009. This growth was primarily driven by a 41% increase in recycling volume, an 18% increase in high performance aerospace alloys volume and a 39% increase in commercial powders volume. Our increase in overall sales volumes was partially offset by a decrease in sales volumes of military powders of 9% in 2010, primarily due to reduced demand by the U.S. military for decoy flares.

        Demand for photo-engraving plates recovered in 2010, with sales volumes increasing by 17% in 2010. While there was some restocking of inventories in distribution chains in Western markets in 2010, sales in this market have been relatively stable. Sales in developing economies, such as Eastern Europe and the Middle East, increased due to growing demand in the graphic arts markets for high-end product packaging and printing.

        Due to general recessionary pressures and challenges in the automotive market, our zirconium chemical sales decreased sharply during the recession in 2008 and early 2009, particularly in automotive applications such as catalytic converters. Sales recovered, however, in the second half of 2009 and in 2010, with zirconium chemical sales volumes increasing by 24% in 2010. Sales volumes of our catalyst products for automotive engines increased by 6% in 2010, primarily driven by the re-stocking of the supply chain in the North American automotive industry and by increased demand from emerging economies, particularly China. Sales volumes of ceramic and reactive chemicals that are used in environmentally-friendly applications, such as sensors used in engine management systems and for improving energy efficiencies in electronics such as LED backlight technology, increased by over 50% in 2010.

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    Gas Cylinders

        The Gas Cylinder division's revenue was $199.2 million in 2010, an increase of $12.7 million from $186.5 million in 2009. Excluding the impact of exchange rate translation (a $2.8 million adverse impact on revenue attributable to a stronger average U.S. dollar exchange rate used to translate revenues from operations outside the United States), the increase in revenue at constant translation exchange rates was $15.5 million, or 8.4%, from 2009, and the increase was primarily due to an increase in sales volume, in particular in fire extinguisher and industrial cylinders, as market demand recovered from the recession in 2008 and 2009.

        The demand for composite cylinders decreased in 2010 from 2009, although sales of alternative fuel cylinders for CNG-powered vehicles continued to increase. Average prices remained relatively stable in 2010, with a modest average reduction in prices of less than 1% compared to 2009, which was not unusual given that there was a fall in average raw material prices.

        Unit sales of aluminum industrial gas cylinders increased by 15% in 2010 from 2009, with larger industrial cylinder sales recovering from the economic downturn in 2009 when gas companies supplying the semi-conductor markets reduced their purchases of new cylinder inventories. Unit sales of aluminum fire extinguisher cylinders increased by 25% in 2010 from 2009, primarily due to an increase in sales in the United Kingdom, where we won new accounts and demand from a major customer, UTC Chubb, was significantly higher than in 2009. In addition, unit sales of medical aluminum cylinders made from our lightweight high-strength alloy L7X increased by 30% in 2010 from 2009, primarily due to increasing demand for these cylinders by end-users and medical oxygen providers in the United Kingdom and other European markets, as customers valued their greater portability and ability to store more oxygen due to greater alloy strength when compared to a standard aluminum cylinder.

        Unit sales of composite cylinders decreased by 8% in 2010 from 2009, attributable primarily to decreased demand for composite medical cylinders, particularly in Europe. Although sales of L7X aluminum cylinders continued to grow, our sales of the higher priced composite cylinders were adversely impacted by reduced spending in the public service sector, as authorities deferred spending on ambulance and fire services. This decrease was partially offset by unit sales of larger alternative fuel composite cylinders for CNG-powered vehicles, which increased by 46% in 2010, primarily due to increasing investment in alternative fueled trucks and buses in North America.

        Superform sales at constant translation exchange rates increased by 12% in 2010 from 2009. While tooling sales decreased by 52% from 2009, forming sales increased by 37% in 2010 from 2009, as projects moved from the design stage into full production. Sales in the luxury specialty automotive sector increased as major new vehicles, incorporating specifically designed parts using the superforming process, entered full production in 2010. There was also significant growth in infrastructure investment projects, especially for the London Underground, which led to an increase in demand for rail transport rolling stock, a major end-application for our Superform technology.

        Cost of Sales.    Our cost of sales was $305.1 million in 2010, an increase of $9.4 million from 2009. There was a translation gain on costs of sales of non-U.S. operations of $3.8 million, with an increase in costs at constant translation exchange rates of $13.2 million, or 4.5%, from 2009. While higher sales volumes were a significant factor in this increase, other factors also affected the cost of sales.

        Aluminum and carbon fiber purchase prices were lower, reducing slightly the cost of manufacturing gas cylinders in 2010. There was little net change in the purchase price of the various sources of primary magnesium. Rare earth purchase prices used mainly in our zirconium catalysts, however, increased sharply at the end of 2010. Rare earth cost increases did not have a significant distorting impact on the cost of sales in 2010, because the major increase in price was primarily at the end of the year.

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        Gross Profit.    Gross profit was $97.6 million in 2010, an increase of $22 million from 2009. Overall gross profit margin improved to 24.2% in 2010 from 20.4% in 2009. The improvement was due to an improved mix of products shifting toward higher margin products. The improvement was also due to production efficiency benefits following an increase in volumes, including the reduction of both labor hours and material usage per unit of production, as well as automation projects in manufacturing facilities. Price changes had very little impact on the change in gross profit margins, with the rare earth surcharge covering the rise in cost of rare earths. We had a net decrease in other sales prices, this decrease was generally offset by cost saving through lower raw material costs.

        Distribution Costs.    Our distribution costs were $7.4 million in 2010, an increase of $0.6 million, or 8.8%, from $6.8 million in 2009. The increase was attributable to higher sales volumes resulting in more goods transported to customers.

        Administrative Expenses.    Our administrative expenses were $44.5 million in 2010, an increase of $4.1 million, or 10.1%, from $40.4 million in 2009, due to increased spending on research and development and marketing and advertising. However, the translation to U.S. dollars of business costs at different exchange rates decreased the costs by $0.5 million. Due to pay freezes, inflation had a limited impact on employment costs, but performance related employment bonuses were higher than 2009, as a result of improved financial results.

        Expenses related to research and development increased by $2.6 million to $8.9 million in 2010 from 2009. This increase in research and development expenses was partially offset by an increase in the amount funded from government grants and fees paid by customers, which amounted to $3.1 million in 2010 compared to $1.6 million in 2009. The largest third party grant was related to our work developing lightweight armor plating for the U.S. military, and we have been receiving funding for a number of years to support this project. As a result, the net amount relating to research and development costs charged to our income statement only increased to $5.8 million in 2010 from $4.7 million in 2009.

        Share of start-up costs of joint venture.    In late 2009, we entered into a joint venture agreement to establish a manufacturing facility to produce gas cylinders in India. The joint venture has been accounted for using the equity method, as the partners have a contractual agreement that establishes joint control over the economic activities of the entity. The loss attributable to the start-up costs of the joint venture in 2010 was $0.1 million, the same as in 2009. The joint venture has commenced its operations and trading in 2011.

        Operating and Trading Profit.    Our operating profit was $44.9 million in 2010, an increase of $17.6 million, or 64.5%, from $27.3 million in 2009. Our trading profit was $45.7 million in 2010, an increase of $17.3 million, or 60.9%, from $28.4 million in 2009.

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Analysis of trading profit and operating profit variances from 2009 to 2010 for continuing operations

 
  Elektron
Trading
Profit
  Gas
Cylinders
Trading
Profit
  Group
Trading
Profit
  Restructuring
and other
expense
  Group
Operating
Profit
 
 
  (in $ millions)
(unaudited)

 

2009—as reported under IFRS-IASB

  $ 23.3   $ 5.1   $ 28.4   $ (1.1 ) $ 27.3  

FX Translation impact—on non-U.S. operating results

    (0.3 )       (0.3 )       (0.3 )
                       

2009—adjusted for FX translation

  $ 23.0   $ 5.1   $ 28.1   $ (1.1 ) $ 27.0  

Trading variances for ongoing operations—2010 v 2009

    10.5     7.1     17.6     0.3     17.9  
                       

2010—as reported under IFRS-IASB

  $ 33.5   $ 12.2   $ 45.7   $ (0.8 ) $ 44.9  
                       

        The above table shows the change in each division's trading profit, group trading profit and operating profit between the 2010 and 2009. The table also provides a reconciliation of group trading profit to group operating profit. The table separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results.

        Translating our non-U.S. operations into U.S. dollars has resulted in an incremental decrease in our trading profit and operating profit of $0.3 million and $0.3 million, respectively, in 2010. The decrease represented 1% of the change in trading profit and 1% of the change in operating profit from 2009 due to both years having similar average exchange rates. At constant translation exchange rates, our trading profit increased by $17.6 million or 62.6% and our operating profit increased by $17.9 million or 66.3% in 2010.

        Higher sales volumes and a better sales mix of our products as explained above under our discussion of revenue, with little net impact from changes in sales prices and raw material costs, had a positive impact of $18.8 million on our trading profit and operating profit in 2010.

        We had a number of cost changes that together resulted in reducing trading profit and operating profit by $1.2 million in 2010. The main reasons for these changes were as follows:

    We had an increase in central costs of $0.2 million, which related to the levy charged on the U.K. Luxfer Group Pension Plan by the PPF. The PPF applies a levy on all U.K. defined benefit pension plans to pay for the cost of U.K. plans that it has taken over after a sponsor has gone into insolvency when a plan is underfunded. The cost of the PPF levy for us was $2.7 million in 2010, an increase of $0.2 million from 2009. The levy funding cost is usually known in advance of the following accounting year, and the levy formula includes a weighting for each company's relevant credit risk. We have worked to minimize our relevant risk rating, resulting in the reduction of the cost of this levy by $1.0 million in 2011 to $1.7 million.

    Although the PPF levy increased, accounting charges for our defined benefit plans decreased in 2010. The total impact on trading profit and operating profit was a $2.0 million gain when compared to 2009. The reduction in retirement benefit costs reflects the decreased actuarial costs of the U.K. and U.S. plans under IAS 19 accounting and, although this cost has decreased overall in 2010, it was also subject to market fluctuations during the period. We have been working to reduce our cost of defined benefit plans in the longer term, although most initiatives take a while to result in lower income statement charges. For example, all the major defined benefit plans are now closed to new members. The main U.K. plan has been changed to a career average plan, with a salary cap, and the U.S. plans are completely closed,

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      with no new benefit accruing to any members. Over time we believe these actions should help reduce the total cost of these plans.

    The foreign exchange transaction rates on sales and purchases had a positive impact of $2.0 million, net of the benefit of utilizing foreign currency exchange derivative contracts.

    Employment and other costs have increased by a net $5.1 million in 2010, reflecting inflation in non-employment areas, the reversal of certain short term cost saving measures achieved in 2009 and the impact of high bonuses awarded to management and shop floor staff in reward for the Group achieving the top end of its budget targets in 2010. These increases in costs were significantly mitigated by various production and other operational efficiencies, which together reduced the impact of the higher costs by approximately 50%.

        The segment trading profit results by division are further explained in more detail below:

    Elektron

        The Elektron division's trading profit of $33.5 million in 2010 was an increase of $10.2 million from $23.3 million in 2009. Changes in exchange rates used to translate segment profit into U.S. dollars led to a $0.3 million decrease in 2010, and therefore profits at constant translation exchange rates increased by $10.5 million, or 45.7%.

        As discussed above, sales volumes increased significantly for both our magnesium and zirconium products. The cost of magnesium in 2010 was slightly higher than 2009, while the cost of zirconium raw materials increased due to restrictions imposed by the Chinese government on the export of rare earths in the second half of 2010. The scale of these increases required that we pass them on to our customers by way of a surcharge, reviewed quarterly, to prevent any negative impact on the profit and loss account. Magnesium sales prices were slightly reduced, mainly due to market conditions and the renewal of long-term contracts, last negotiated during the rise in magnesium prices in 2008.

        The decrease in retirement benefit charges allocated to the Elektron division was $1.2 million in 2010. The allocation for the Elektron division was more than the allocation for the Gas Cylinders division because the former had more members in the relevant plans.

        The division incurred a bad debt in 2009, which resulted in a cost of $0.1 million. In 2010, there were no major bad debts, resulting in a favorable variance.

        Other costs increased by a net $1.9 million in 2010, consisting of $4.8 million of higher operating costs, offset by $2.9 million of efficiency savings. The division made substantial cost savings during 2009 as it reduced costs through temporary shutdowns targeted at various plants, which were primarily impacted by the dramatic fall in automotive production in Europe and the United States. In 2010, these plants were in full production and therefore costs have increased from 2009. We also incurred costs of $1.2 million relating to a fire in October 2010 at our U.S. magnesium rolling mill operation, which destroyed two ovens and part of the building. The costs include the write-off of plant and equipment, the insurance excess and legal and professional fees relating to the claim. The increase in volumes resulted in a much higher utilization of plant and equipment and this, together with improved productivity, has generated favorable production efficiency gains of $2.9 million in 2010.

    Gas Cylinders

        The Gas Cylinders division's trading profit of $12.2 million in 2010 was an increase of $7.1 million from $5.1 million in 2009, an increase of 139%. There was no translation impact of non-U.S. operating results due to only small changes in translation exchange rates.

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        As discussed above, increased sales volumes, an improved sales mix and reduced raw material costs benefited trading profit in 2010 by $7.2 million. Overall average sales prices decreased slightly but by less than the raw material cost reduction, thus resulting in an overall margin improvement.

        Although there was little change in the exchange rates between the major currencies in which the division buys and sells goods, foreign exchange transaction rates on sales and purchases had a positive impact of $2.5 million, net of the benefit of utilizing foreign currency exchange derivative contracts.

        Other costs increased by a net $3.2 million, which include the reversal of short-term savings made in 2009 and increased expenditures on research and development, maintenance, bonus provisions and marketing costs. In 2009, the Gas Cylinders division incurred an additional cost of $0.4 million relating to lost production time caused by the re-organization project of the previous year. In 2010, we realized the full benefit of the project as we improved production efficiencies by $2.2 million.

        The division's allocation of the lower retirement benefit charges net of the higher PPF levy cost was $0.6 million in 2010. This allocation for the Gas Cylinders division was less than the allocation for the Elektron division because the former had fewer members in the relevant plans.

        Restructuring and other expense.    We incurred restructuring and other expense charges of $0.8 million in 2010 compared to $1.1 million in 2009. These charges in 2010 consisted of a $0.2 million charge due to a rationalization exercise in our zirconium operations and $0.6 million charge related to the demolition of a vacant building in Redditch, United Kingdom that we own. We had previously used the building as part of our Speciality Aluminium division but, after the division's sale in December 2007, we leased the building to the new owners of the division. During 2010, we reached an agreement with the lessee's parent company to pay us $1.1 million to fund the demolition of the building in return for terminating the lease and agreeing to waive the guarantee of the lease. We incurred a total charge of $1.7 million in relation to the demolition, which included $0.6 million to write off the net book value of the buildings, $0.8 million in relation to demolition costs, and $0.3 million of environmental remediation costs.

        Disposal costs of intellectual property.    In 2010, we incurred a non-operating charge of $0.4 million for costs associated with a review during 2009 by the FTC concerning the impact of our acquisition of Revere in 2007 on competition in the magnesium photo-engraving market. In order to resolve expeditiously the FTC's review, we are working on a voluntary basis to sell and license certain intellectual property ("IP") rights specifically related to this acquired business. Using external consultants, we undertook a marketing exercise during 2010 to sell and license the IP rights, but we received little interest from third parties in entering this capital intensive, mature market. We are in negotiations with the one party currently expressing an interest and expect that a sale and license of the IP rights will take place in 2012. The sale and license will not include our own Magnesium Elektron IP rights, only rights in relation to the IP of the acquired business. We will not be required to sell any of the manufacturing assets that we need to run our business.

        Acquisition costs.    In 2009, we incurred a charge of $0.5 million for costs related to the Revere acquisition.

        Finance income—interest received.    Interest received was $0.2 million in 2010 and 2009. Interest received is relatively low because we generally use surplus cash to repay debt and save on interest payment costs rather than placing cash on deposit. The interest received includes $0.1 million of interest received for 2010 and $0.2 million for 2009 from the loan note due to us from the buyers of our Speciality Aluminium division.

        Finance income—Gain on purchase of own debt.    During 2010, we purchased $5.5 million of the then outstanding Senior Notes due 2012 for $5.0 million through Luxfer Group Limited, a subsidiary of

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Luxfer Holdings PLC. The gain on the purchase of the Senior Notes due 2012 was $0.5 million and has been included within Finance Income. No repurchase of debt was undertaken in 2009.

        Finance costs—interest costs.    The finance costs of $9.6 million that we incurred in 2010 decreased from $11.8 million in 2009, primarily due to our reduced level of debt and a lower floating interest rate on our then outstanding Senior Notes due 2012.

        The finance costs we incurred in 2010 included $7.5 million of interest payable on our Senior Notes due 2012, $0.8 million of interest payable on our Previous Credit Facility and $1.3 million of amortization related to historic finance costs. The finance costs that we incurred in 2009 included $9.5 million of interest payable on our Senior Notes due 2012, $1.3 million of interest payable on our Previous Credit Facility and $1.0 million of amortization related to historic finance costs. The finance costs have therefore fallen since 2009 due mainly to the reduced level of debt and the lower interest rate charged on our Senior Notes due 2012, which had a floating interest rate linked to six-month U.K. LIBOR.

        Taxation.    In 2010, our tax expense was $9.9 million on profit before tax of $35.6 million. The effective tax rate was 27.8%. Of the charge of $9.9 million, $9.5 million related to current tax payable and $0.4 million was a deferred taxation charge.

        In 2009, our tax expense was $5.7 million on profit before tax of $15.2 million. The effective tax rate was 37.5%. Of the charge of $5.7 million, $4.0 million related to current tax payable and $1.7 million was a deferred taxation charge.

        The reduction in the effective tax rate in 2010 was attributable to the increased profitability of the U.K. operations where, due to the interest burden of the Senior Notes due 2012 and certain tax allowances, no current tax was payable in 2010.

        Profit for the Financial Year.    As a result of the above factors, our profit for the financial year was $25.7 million in 2010, an increase of $16.2 million, or 170.5%, from $9.5 million in 2009.

Liquidity and Capital Resources

Liquidity

        Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks. We meet these requirements primarily through cash flow from operating activities, cash deposits and borrowings under our Revolving Credit Facility and accompanying ancillary hedging facilities. As of June 30, 2012, we had available $62.7 million under our Revolving Credit Facility. See "—Financing —Senior Facilities Agreement."

        From time to time, we consider acquisitions or investments in other businesses that we believe would be appropriate additions to our business. For example, we purchased Revere for $14.7 million in 2007 and we recently acquired Dynetek. Any such acquisitions or investments in the future may require additional funding, which may be restricted by the terms of our current or future debt arrangements.

        We believe that in the long term, cash generated from our operations will be adequate to meet our anticipated requirements for working capital, capital expenditures and interest payments on our indebtedness. In the short term, we believe we have sufficient credit facilities to cover any variation in our cash flow generation. However, any major repayments of indebtedness will be dependent on our ability to raise alternative financing or to realize substantial returns from the sale of operations. Also, our ability to expand operations through sales development and capital expenditures could be constrained by the availability of liquidity, which, in turn, could impact the profitability of our operations.

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        On May 13, 2011, we entered into a senior facilities agreement (the "Senior Facilities Agreement"), providing a Term Loan of £30 million ($49 million) and the Revolving Credit Facility of £40 million ($64 million). We refer to the Term Loan and the Revolving Credit Facility as the "New Bank Facilities." On May 13, 2011, we also issued $65 million principal amount of Loan Notes due 2018 in a private placement to an insurance company. In connection with this new financing, we issued a redemption notice for the Senior Notes due 2012, and they were repaid on June 15, 2011. We also fully repaid and cancelled our Previous Credit Facility on June 15, 2011. As of December 31, 2010, we were in compliance with the covenants under the Senior Notes due 2012 and the Previous Credit Facility.

        With our current levels of indebtedness, our cash flows may be restricted by the restrictive and financial maintenance covenants imposed by our indebtedness. Our total interest expense was $9.2 million in 2011, compared to $9.6 million in 2010. We expect to invest approximately $25 million in capital expenditures in 2012. We have also been managing the rising costs of retirement benefits, including higher government insurance levies and some historical environmental remediation requirements. Therefore, we cannot guarantee you that the current levels of liquidity we have available will be sufficient in all circumstances to adequately fund our expansion plans and long-term investment opportunities.

        We conduct all of our operations through our subsidiaries. Accordingly, our main cash source is dividends from our subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary has from its operations in excess of the funds necessary for its operations, obligations or other business plans. We have not historically experienced any material impediment to these distributions, and we do not expect any local legal or regulatory regimes to have any impact on our ability to meet our liquidity requirements in the future. In addition, since our subsidiaries are wholly-owned by us, our claims will generally rank junior to all other obligations of the subsidiaries. If our operating subsidiaries are unable to make distributions, our growth may slow after the proceeds of this offering are exhausted, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.

        Our ability to maintain or increase the generation of cash from our operations in the future will depend significantly on the competitiveness of and demand for our products, including our success in launching new products that we have been developing over many years. Achieving such success is a key objective of our business strategy. Due to commercial, competitive and external economic factors, however, we cannot guarantee you that we will generate sufficient cash flow from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness or make necessary capital expenditures.

        We are still vulnerable to external shocks because of our level of indebtedness and our fixed costs. In recent years, external economic shocks to oil prices, commodity prices and a weakening U.S. dollar have impacted our results. For example, in 2011, our continuing operations incurred over $13 million of energy costs, purchased over $52 million of primary aluminum and over $34 million of primary magnesium. In 2011, $39.5 million, or 60%, of our operating profit was derived from North American businesses. A significant economic shock that has a major impact on one or several of these risks simultaneously could have a severe impact on our financial position. Other factors could also impact our operations. For example, the Chinese government raised export taxes and cut export quotas on rare earth minerals in 2010. These materials are an important input for our zirconium operations, and due to these restrictions, we not only had to ensure that we had adequate supply of these materials but also had to pass on the severe increase in costs resulting from the reduced supply onto our customers by way of a surcharge. In addition, while we have a diverse set of operations, which protect us against individual market sector downturns, we are still vulnerable to a recession in a particular end-market such as aerospace and defense, medical or automotive.

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        We operate robust cash and trading forecasting systems that impose tight controls on our operating businesses with regard to cash management. We use regularly updated forecasts to plan liquidity requirements, including the payment of interest on our indebtedness, capital expenditures and payments to our suppliers. Although we have generated cash sufficient to cover most of our liability payments, we also rely on the Revolving Credit Facility to provide sufficient liquidity. Our banking facilities are further explained below under "—Financing—Senior Facilities Agreement." We are not dependent on this offering to meet our liquidity needs for the next twelve months.

Cash Flow

        The following table presents information regarding our cash flows, cash and cash equivalents for the six months ended June 30, 2012 and 2011 and the years ended December 31, 2011, 2010 and 2009:

 
  Six Months
Ended
June 30,
  Year Ended
December 31,
 
 
  2012   2011   2011   2010   2009  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

Net cash flows from operating activities

  $44.9   $(7.1 ) $29.1   $37.8   $55.5  

Net cash used in investing activities

  (5.6 ) (5.1 ) (21.2 ) (15.6 ) (11.9 )
                       

Net cash flow before financing activities

  39.3   (12.2 ) 7.9   22.2   43.6  

Net cash flows from financing activities

  (28.7 ) 23.4   5.4   (14.6 ) (43.7 )
                       

Net increase (decrease) in cash and cash equivalents

  $10.6   $11.2   $13.3   $7.6   $(0.1 )
                       

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    Cash flows from operating activities

 
  Six Months
Ended
June 30,
  Year Ended
December 31,
 
 
  2012   2011   2011   2010   2009  
 
  (in $ millions)
(unaudited)

  (in $ millions)
(audited)

 

CASH FLOWS FROM OPERATING ACTIVITIES

                     

Profit for the period and year

  $22.0   $18.0   $43.4   $25.7   $9.5  

Adjustments for:

                     

Income taxes

  7.4   6.0   11