REG - Vesuvius plc - Half-year Report
01/08/2024 07:00
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RNS Number : 6791Y Vesuvius plc 01 August 2024
1 August 2024
Half Year Results for the six months ended 30 June 2024
Resilient results in line with expectations, despite subdued market conditions
Vesuvius plc, a global leader in molten metal flow engineering and technology,
announces its unaudited results for the six months ended 30 June 2024.
Financial summary H1 2024 H1 2023 Underlying change ((1)) Year-on-year change
(£m) (£m)
Headline (non-statutory)
Revenue 936.5 995.3 (2.0%) (5.9%)
Trading Profit ((2)) (adjusted EBITA) 97.2 104.9 (0.9%) (7.4%)
Return on Sales ((2)) 10.4% 10.5% +10bps (20 bps)
Headline basic EPS ((2)) (pence) 21.8 24.5 (2.9%) (11.2%)
Free cash-flow ((2) ) 17.8 42.1 NA (57.7%)
Net Debt / EBITDA ((2)) 1.2x 1.0x NA +0.2x
Statutory
Operating Profit 84.1 99.7 (9.4%) (15.6%)
Profit Before Tax 76.7 94.7 (11.3%) (19.0%)
Statutory basic EPS (pence) 18.1 23.2 (14.2%) (22.0%)
Cash generated from operations 94.0 106.8 NA (12.0%)
Dividend (pence per share) 7.1 6.8 NA 4.4%
((1)) Underlying basis is at constant currency and excludes separately
reported items and the impact of acquisitions and disposals.
((2)) For definitions of non-GAAP measures, refer to Note 15 in the Condensed
Group Financial Statements.
NB. The above table and other tables in this results statement contains
amounts and percentages derived from source data which was then rounded. The
margins and percentage change figures are based on source data, not the
rounded figures.
Highlights
· End markets weaker than anticipated, in particular Foundry
· Good performance of the Steel Division despite weak markets
o Positive net pricing performance overall
o Flow Control continues to gain market share
o Advanced Refractories achieved market share gains in Asia, with 17% of
sales now from India
o Return on Sales increased to 11.2%
· Lower performance of the Foundry division despite progress in
strategic initiatives
o Positive net pricing overall
o Market share gains in all major regions
o Significantly lower volumes reduced Return on Sales to 8.2%
· Good progress in the implementation of our cost reduction
programme; in-year savings estimate increasing to £6m, 2024 exit rate
confirmed at £10-15m and projects fully identified to support our £30m
target in 2026
· Working capital intensity has improved in H1 reducing to 23.2% vs.
24.1%
· Capacity expansion programme on track and will be largely complete
by the end of the year
· Continued progress in R&D efficiency with Group new product
sales ratio up to 17.9% with Flow Control now exceeding 20%
· Continued progress towards our CO(2)e intensity reduction targets with
the inauguration of our first entirely carbon neutral manufacturing plant for
Flow Control and Advanced Refractories products in Brazil
· Strong Safety performance in H1 with a record low level of
accidents confirming the structural improvements achieved in our operations
· Interim dividend per share of 7.1p, +4.4% reflecting confidence in
the business
Comment from Patrick André, CEO:
"Our end markets remained subdued during the first half with, in particular,
significant weakness in Foundry. Despite these unfavourable market conditions,
the Steel Division achieved a good performance, demonstrating the strength of
its business model with continued market share gains in Flow Control and
positive net pricing performance overall. In the Foundry Division however,
good performances in market share gains, pricing management and cost
reductions could not offset the negative impact of volume reduction due to
market conditions.
We no longer expect a significant improvement in our end markets in the second
half, with most external forecasts predicting end market recovery being
postponed to 2025. Accordingly, we now expect our full year headline trading
profit for the year to be only slightly ahead of last year on a constant
currency basis(()*()).
Beyond 2024, we remain confident in the growth potential of our steel and
foundry markets and remain very well positioned to benefit from the recovery
in these markets once it materialises. Irrespective of the timing of market
recovery, we continue to anticipate progress in our results supported by the
growing benefits of our cost reduction programme, our continued investment in
innovation and our capacity investments in India. For these reasons, we remain
confident in the achievement of our 2026 objectives as communicated during our
Capital Market Day last November."
(*) FY23 trading profit was £200m reported and is £192m retranslated at H1
2024 FX rates.
Presentation of Half Year 2024 Results
Vesuvius management will make a presentation to analysts and investors on 1
August 2024 at 09:00 UK time at the London Stock Exchange, 10 Paternoster
Square, London EC4M 7LS. For those unable to attend, the event will be
livestreamed and can be accessed by clicking here
(https://www.lsegissuerservices.com/spark/Vesuvius/events/0a85847a-de95-4816-a1fc-e1937059c423)
. Participants can also join via an audio conference call. Please click here
(https://registrations.events/direct/LON61028998) to register. Once
registered, you will be provided with the information needed to join the
conference, including dial-in numbers and passcodes. Be sure to save this
information in your calendar.
For further information, please contact:
Shareholder/analyst enquiries:
Vesuvius plc Patrick André, Chief Executive +44 (0) 207 822 0000
Mark Collis, Chief Financial Officer +44 (0) 207 822 0000
Rachel Stevens, Head of Investor Relations +44 (0) 7387 545 271
Media enquiries:
MHP Communications Rachel Farrington/Ollie Hoare +44 (0) 203 128 8570
About Vesuvius plc
Vesuvius is a global leader in molten metal flow engineering and technology
principally serving process industries operating in challenging
high‑temperature conditions.
We develop innovative and customised solutions, often used in extremely
demanding industrial environments, which enable our customers to make their
manufacturing processes safer, more efficient and more sustainable. These
include flow control solutions, advanced refractories and other consumable
products and increasingly, related technical services including data capture.
We have a worldwide presence. We serve our customers through a network of
cost-efficient manufacturing plants located close to their own facilities, and
embed our industry experts within their operations, who are all supported by
our global technology centres.
Our core competitive strengths are our market and technology leadership,
strong customer relationships, well established presence in developing markets
and our global reach, all of which facilitate the expansion of our addressable
markets.
Our ultimate goal is to create value for our customers, and to deliver
sustainable, profitable growth for our shareholders giving a superior return
on their investment whilst providing each of our employees with a safe
workplace where they are recognised, developed and properly rewarded.
We think beyond today to create solutions that will shape the future
for everyone.
Forward looking statements
This announcement contains certain forward looking statements which may
include reference to one or more of the following: the Group's financial
condition, results of operations, cash flows, dividends, financing plans,
business strategies, operating efficiencies or synergies, budgets, capital and
other expenditures, competitive positions, growth opportunities for existing
products, plans and objectives of management and other matters.
Statements in this announcement that are not historical facts are hereby
identified as "forward looking statements". Such forward looking statements,
including, without limitation, those relating to the future business
prospects, revenue, working capital, liquidity, capital needs, interest costs
and income, in each case relating to Vesuvius, wherever they occur in this
announcement, are necessarily based on assumptions reflecting the views of
Vesuvius and involve a number of known and unknown risks, uncertainties and
other factors that could cause actual results, performance or achievements to
differ materially from those expressed or implied by the forward looking
statements. Such forward looking statements should, therefore, be considered
in light of various important factors that could cause actual results to
differ materially from estimates or projections contained in the forward
looking statements. These include without limitation: economic and business
cycles; the terms and conditions of Vesuvius' financing arrangements; foreign
currency rate fluctuations; competition in Vesuvius' principal markets;
acquisitions or disposals of businesses or assets; and trends in Vesuvius'
principal industries.
The foregoing list of important factors is not exhaustive. When considering
forward looking statements, careful consideration should be given to the
foregoing factors and other uncertainties and events, as well as factors
described in documents the Company files with the UK regulator from time to
time including its annual reports and accounts.
You should not place undue reliance on such forward looking statements which
speak only as of the date on which they are made. Except as required by the
Rules of the UK Listing Authority and the London Stock Exchange and applicable
law, Vesuvius undertakes no obligation to update publicly or revise any
forward looking statements, whether as a result of new information, future
events or otherwise. In light of these risks, uncertainties and assumptions,
the forward looking events discussed in this announcement might not occur.
Vesuvius plc, 165 Fleet Street, London EC4A 2AE
Registered in England and Wales No. 8217766
LEI: 213800ORZ521W585SY02
www.vesuvius.com (http://www.vesuvius.com)
Vesuvius plc
Half Year Results for the six months ended 30 June 2024
Resilient results in line with expectations, despite subdued market conditions
£m H1 2024 H1 2023 Reported Currency H1 2023 Underlying H2 2023 Underlying % Change
Reported H1 '24 vs. H1 '23
Underlying Reported
Revenue 936.5 995.3 (40.1) 955.2 923.0 (2.0%) (5.9%)
Trading Profit 97.2 104.9 (6.8) 98.1 94.1 (0.9%) (7.4%)
Return on Sales 10.4% 10.5% - 10.3% 10.2% +10bps (20bps)
End markets remained weak
As anticipated, Steel markets remained weak in H1. Steel production in the
world excluding China, Iran, Russia and Ukraine, which accounts for
approximately 90% of Vesuvius' Steel Division sales, marginally improved by
1.4% in H1 2024 compared with the prior period.
Steel market production varied by region. India was the stand-out growth
region, up 7.4% on the comparative half-year period. South-East Asia also
showed consistent growth in the half-year period, up 12.2% vs. prior year.
North America and North Asia showed declines of -3.3% and -3.8% vs H1 2023,
respectively. In EMEA, EU27+UK remained broadly flat, while EEMEA excluding
Russia, Iran and Ukraine grew +8.4% in H1 vs prior year, although Turkish
volume growth was measured against a depressed Q1 2023 due to the earthquake
there. (Source: World Steel Association)
Foundry end markets remained challenging and worse than anticipated in all
regions except India. The EU+UK, North America, and North Asia markets,
which together account for approximately 60% of Foundry sales, showed
significant weakness. The automotive end market, which until now had shown
better resilience than other Foundry end markets also weakened during the
first half.
Group trading performance
Market share gains in both the Steel and Foundry divisions
In this weak market environment, the business performed well, with the Group
generating revenue of £936.5m, a decrease of 2.0% on an underlying basis
compared to H1 2023 and 5.9% on a reported basis. The Steel Division performed
particularly well, with Flow Control gaining market share overall and in all
major regions except the EU+UK where we continue to manage our exposure
carefully to certain customers assessed to be a credit risk. In Advanced
Refractories, our market share has increased in Asia with a particularly
strong performance in India and China. In Foundry, we gained market share in
most regions, but this was not sufficient to offset the very negative market
impact on volumes.
Positive pricing performance in both divisions
We achieved a positive contribution from net pricing in both the Steel and
Foundry Divisions, reflecting the value-added by our technologically
differentiated products and the clear value proposition that these provide to
our customers. This continues the same trend seen in 2022 and 2023, which sits
alongside ongoing market share gains.
Implementation of our cost savings programme fully on track
The programme to deliver £30m annual cost savings in FY26, announced at our
Capital Markets Day in November 2023, continues at pace, and we are on track
to deliver an initial £6m in 2024, and to achieve a run-rate of £10m - 15m
by the end of this financial year. We remain confident of delivering the
target of £30m annualised saving by 2026.
Resilient results
As a result of these good performances in market share gains, pricing and cost
reductions, our trading profit (adjusted EBITA) in H1 2024 was in line with
our expectations despite the unfavourable market conditions. Our trading
profit, at £97.2m, shows a reduction of 0.9% on an underlying basis as
compared with H1 2023 and a reduction of 7.4% on a reported basis. The Group
delivered a Return on Sales of 10.4%, up 10bps on an underlying basis and
within this, the Steel division increased its RoS to 11.2% while the Foundry
RoS fell to 8.2%.
Further improvement in our health and safety performance
The protection of the health and safety of our employees and contractors
remains our first priority and we have an overall objective of zero accidents.
In the half-year, we achieved a Lost Time Injury Frequency Rate (LTIFR) per
million hours worked of 0.64, a further reduction compared to 0.72 in H1 2023,
itself a significant reduction versus our historic performance.
Efficient R&D drives technological differentiation and value to customers
Our focused and efficient R&D is key to maintaining technological
differentiation. This is critical to our value-add proposition to customers
and to growing market share and margin. We launched 18 new products in the
period and delivered a new product sales ratio (defined as the percentage of
sales derived from products launched in the previous 5 years) of 17.9%. This
is a further improvement compared to 17.6% delivered in FY 2023 and has been
driven in particular by Flow Control, which is now deriving over 20% of its
sales from new products.
In addition, the interest of our customer base in our robotics offering is
accelerating, with 6 projects agreed in the past 6 months vs. 7 in FY 23.
These installations add significant value to customers by improving the
quality of their steel output, the efficiency of their operations, and the
safety of their employees.
Capital investment projects continue at pace, to support growth
2024 is the final year of the growth capex programme which was initiated in
2021. In the coming years, this investment will support our long-term growth
in the fastest growing regions of the world, especially in India South-East
Asia and Middle East Africa.
Our strategic expansion in Flow Control is progressing well. In addition to
the VISO capacity in Kolkata (India) and in Skawina (Poland) completed in
2023, the slide gate capacity increase in Skawina (Poland) and the mould flux
site in Vizag (India) will be fully operational in the second half of the
year. The new Advanced Refractories AlSi monolithics and basic monolithics
lines in Vizag will also be operational in the second half.
Capex, excluding leases, in FY24 is expected to be c. £100 - 120m (>1.6x
depreciation) of which approximately half is allocated to growth projects and
customer installations, the latter driving the use of our refractories.
Cost saving programme on track
We incurred costs of £8.0 million in H1 relating to the cost-saving
programme, which are non-recurring and therefore a separately reported item.
The majority relate to redundancy costs; we took the decision to close our
last plant in the UK, a Foundry site. The expected total cash cost of the
cost-saving programme remains at £40m, with the total one-off cash costs
relating to the programme in 2024 expected to be between £8m and £10m.
Robust cashflow
Working capital intensity continues to improve, with the 12-month average
trade working capital to sales ratio to 30 June 2024 at 23.2%, down 20bps from
31 December 2023 and down 90bps from 30 June 2023. The improvement was
particularly driven by focused debtor and inventory management in our Advanced
Refractories business unit. In H1, there was a cash outflow in respect of
trade working capital of £34.2m (H1 2023: £31.3m), reflecting business
seasonality.
The Group generated adjusted operating cashflow of £47.9m, representing cash
conversion of 49%. We continued to have elevated levels of capital expenditure
in the period (H1 2024: £50.5m vs. H1 2023: £41.9m), from our ongoing
investment expenditure in growth projects. This investment for the growth
programme is expected to complete in 2024, at which point capex will reduce.
Free cashflow of £17.8m (H1 2023: £42.1m) reflects the additional capital
investment in the period, as described above.
The share buyback of up to £50m, which began in December 2023, has continued
steadily and £33.1m of the programme was completed by 30 June 2024 (of which
£30.2m fell in H1 2024). £16.9m remains to be executed before December 2024.
As at 30 June 2023, net debt stood at £315.2m (31 December 2023: £237.5m)
and net debt / EBITDA at 1.2x (31 December 2023: 0.9x), reflecting the reduced
free cashflow, the cash outflow from the share buy-back, and the H1 payment of
the full year dividend.
Interim Dividend
The Board has declared an interim dividend of 7.1 pence per share, which is a
4.4% increase on the interim dividend for 2023 of 6.8 pence per share.
The interim dividend will be paid on 13 September 2024 to shareholders on the
register at the close of business on 9 August 2024. The ex-dividend date will
be 8 August 2024. Any shareholder wishing to participate in the Vesuvius
Dividend Reinvestment Plan (DRIP) needs to have submitted their election to do
so by 23 August 2024. The DRIP is provided by Equiniti Financial Services
Limited and enables the Company's shareholders to elect to have their cash
dividend payments used to purchase the Company's shares. More information can
be found at www.shareview.co.uk/info/drip
(https://nam02.safelinks.protection.outlook.com/?url=http%3A%2F%2Fwww.shareview.co.uk%2Finfo%2Fdrip&data=05%7C02%7CRachel.Stevens%40vesuvius.com%7Cc1f7321871214b7c0fa608dcac7f83dc%7C9316d1d247f84c56924f2ccb9bde9ac9%7C0%7C0%7C638574910886915875%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C0%7C%7C%7C&sdata=KiKKqvDX8lYhOJ6Czo%2FcRXCa9%2BMFiHCewwz5VGoZvtY%3D&reserved=0)
Current trading and outlook
Our end markets remained subdued during the first half, with in particular
significant weakness in Foundry. Despite these unfavourable market conditions,
the Steel Division achieved a good performance, demonstrating the strength of
its business model with continued market share gains in Flow Control and
positive net pricing performance overall. In the Foundry Division however,
good performances in market share gains, pricing management and cost
reductions could not offset the negative impact of volume reduction due to
market conditions.
We no longer expect a significant improvement in our end markets in the second
half, with most external forecasts predicting end market recovery being
postponed to 2025. Accordingly, we now expect our full year headline trading
profit for the year to be only slightly ahead of last year on a constant
currency basis.
Beyond 2024, we remain confident in the growth potential of our steel and
foundry markets and remain very well positioned to benefit from the recovery
in these markets once it materialises. Irrespective of the timing of market
recovery, we continue to anticipate progress in our results supported by the
growing benefits of our cost reduction programme, our continued investment in
innovation and our capacity investments in India. For these reasons, we remain
confident in the achievement of our 2026 objectives as communicated during our
Capital Market Day last November.
Operating and Financial Review
Operating review
Vesuvius comprises two Divisions, Steel and Foundry. The Steel Division
operates as three business units, Flow Control, Advanced Refractories and
Sensors & Probes. Changes described are versus H1 2023 on an underlying
basis, excluding the impact of FX, unless otherwise noted. There were no
acquisitions or disposals in 2023 or H1 2024 and hence no such adjustments
were required.
See Note 15.1 to the Group Financial Statements for the definition of headline
performance and Note 15.2 to the Group Financial Statements for the definition
of underlying performance.
Steel Division
Steel Division H1 2024 (£m) H1 2023 (£m) H1 2023 (£m) Change % underlying
reported underlying
Flow Control Revenue 393.7 401.8 383.6 2.6%
Advanced Refractories Revenue 270.3 289.6 279.3 (3.2%)
Steel Sensors & Probes Revenue 21.7 20.1 19.6 10.9%
Total Steel Revenue 685.7 711.5 682.5 0.5%
Steel Trading profit 76.5 74.8 69.7 9.7%
Steel RoS 11.2% 10.5% 10.2% +100bps
Steel revenue grew modestly reflecting volume growth of c. 1% partially offset
by declines in pricing, reflecting reductions in raw material prices. Revenue
growth in the Steel Division was principally driven by Flow Control, which
gained market share, with a contribution from Sensors and Probes, which
improved profitability. Revenue in Advanced Refractories fell, reflecting the
pass-back of reduced raw material costs.
Trading profit in Steel grew 9.7% principally reflecting positive net pricing
and cost savings. As a result, Return on Sales for the Steel Division
increased 100bps to 11.2%
Flow Control
Flow Control Revenue H1 2024 (£m) H1 2023 (£m) reported H1 2023 (£m) underlying Change % underlying
Americas 157.6 163.0 154.7 1.9%
Europe, Middle East & Africa (EMEA) 123.7 126.8 122.7 0.8%
Asia-Pacific 112.4 112.1 106.1 5.9%
Total Flow Control Revenue 393.7 401.8 383.6 2.6%
Flow Control grew revenue and gained market share in all major regions apart
from the EU+UK. In North America, the market contracted by 3.3% in the period,
while our sales volumes contracted by a smaller amount, and in South America
the market contracted modestly while Vesuvius grew volume. In EMEA, we
outperformed the market in the fast-growing EEMEA area (EMEA excluding EU+UK,
Russia, Iran and Ukraine) but underperformed the market in EU+UK where we
selectively chose to reduce our presence with customers with a high credit
risk.
In Asia-Pacific we out-performed in the major markets of India and China. In
India, the market grew +7.4%, which we materially exceeded. In China, we grew
volumes by mid-single-digit despite the market contracting, reflecting our
focus on higher-quality steel production. (Market data source: World Steel
Association)
Advanced Refractories
Advanced Refractories Revenue H1 2024 (£m) H1 2023 (£m) reported H1 2023 (£m) underlying Change % underlying
Americas 98.5 113.7 109.7 (10.2%)
Europe, Middle East & Africa (EMEA) 83.5 94.4 92.5 (9.7%)
Asia-Pacific 88.3 81.5 77.1 14.4%
Total Advanced Refractories Revenue 270.3 289.6 279.3 (3.2%)
In Advanced Refractories our market share was positive in Asia, both in India
and China, and in EEMEA, which was offset by a slight market share decline in
North America and EU+UK.
Sensors & Probes
Sensors & Probes Revenue H1 2024 (£m) H1 2023 (£m) reported H1 2023 (£m) underlying Change % underlying
Americas 15.3 13.9 13.5 13.4%
Europe, Middle East & Africa (EMEA) 6.1 5.9 5.8 6.7%
Asia-Pacific 0.2 0.3 0.3 (20.5%)
Total Sensors & Probes Revenue 21.7 20.1 19.6 10.9%
Sensors and Probes has had a strong H1 trading period with high revenue growth
reflecting a number of new projects in the Americas and the EMEA region.
Foundry Division
Foundry Division H1 2024 (£m) H1 2023 (£m) reported H1 2023 (£m) underlying Change % underlying
Americas 63.7 73.0 71.1 (10.3%)
Europe, Middle East & Africa (EMEA) 101.6 120.5 117.7 (13.7%)
Asia-Pacific 85.5 90.3 84.0 1.8%
Total Foundry Revenue 250.8 283.8 272.8 (8.0%)
Foundry Trading Profit 20.7 30.1 28.4 (27.1%)
Foundry Return on Sales 8.2% 10.6% 10.4% -220bps
Foundry end markets were negative in all major regions with the exception of
India. Consistent with third party data, we estimate there were double-digit
percentage market declines in EMEA and North America, our largest regions.
North Asia, another key region for us, also saw significant market declines,
with a drop in ferrous castings of 8.4% in the period. The light vehicle end
market, which up until now had been more resilient than the other Foundry end
markets, also showed signs of weakness in all regions.
As a consequence of these negative market conditions and despite market share
gains in all regions, Foundry revenue fell 8.0% as compared with H1 2023.
Positive performance in net pricing and cost reduction efforts could not
compensate for the large negative volume impact and the Division's trading
profit fell 27.1% versus H1 2023 and Return on Sales reduced to 8.2%.
Financial Review
H1 2024 performance overview
Income statement
Group revenue of £936.5m is down 5.9% on a reported basis (H1 2023: £995.3m)
and trading profit fell 7.4% on a reported basis to £97.2m (H1 2023:
£104.9m), as set out in the operating review above.
Operating profit decreased 15.6% on a reported basis to £84.1m (H1 2023:
£99.7m), reflecting the changes in trading profit described above, net of
amortisation of acquired intangible assets of £5.1m (H1 2023: £5.2m) and
cost-reduction programme expenses, treated as a separately reported item, of
£8.0m (H1 2023: £nil). In H1 2023, we spent £19.7m on R&D activities
(H1 2023: £18.0m), which represents 2.1% of our revenue (H1 2023: 1.8%).
Headline PBT was £89.8m (H1 2023: £99.9m), a reduction of 10.1% on a
reported basis, reflecting the reduction in operating profit and an increase
in net finance cost. The net finance cost of £8.0m vs. £5.5m in H1 2023
increased principally due to a reduction in finance income, reflecting a drop
in finance income from deposits held in Argentina, due both to lower rates
this financial period and a lower cash balance in that country.
PBT including amortisation of acquired intangibles was £76.7m (H1 2023:
£94.7m), 19.0% lower on a reported basis.
Headline EPS from continuing operations fell 11.0% to 21.8p (H1 2023: 24.5p)
on a reported basis, reflecting the lower trading profit described above and
the increase in the non-controlling interest from £6.6m in H1 2023 to £7.6m
in H1 2024, which principally relates to our growing business in India. This
was partially offset by a reduction in our average number of shares in issue
from 269.1m to 264.7m, due to the ongoing £50m share buy-back.
Taxation
The Group's effective tax rate is the income tax associated with headline
performance of H1 2024: £24.5m, (H1 2023: £27.3m), divided by the headline
profit before tax and before the Group's share of post-tax profit of joint
ventures. The Group's headline effective tax rate was 27.5% in H1 2024 as
previously guided (H1 23: 27.5%). We expect the Group's effective tax rate to
be 27.5% for the full year 2024.
Cash flow
The Group generated adjusted operating cash flows of £47.9m, representing a
32% decrease versus H1 2023 (£70.7m). This implies a cash conversion rate in
H1 2024 of 49% (H1 23: 67%). H1 2024 cash conversion reflected continued
planned higher levels of investment in capex of £50.5m (H1 23: £41.9m). Free
cash flow was £17.8m in H1 2024 (H1 23: £42.1m).
Working capital
Trade working capital, measured as a percentage of sales on a 12-month moving
average basis, has shown progressive improvement, at 23.2% as at 30 June 2024
(30 June 2023: 24.1%; 31 Dec 2023 23.4%). On a 3-month moving average basis,
this ratio has fallen from 23.5% at 31 December 2023 to 22.4% at 30 June 2024
reflecting the progress made in the half-year.
In absolute terms, on a constant currency basis, trade working capital
increased by £29.4m in H1 2024 to £439.1m compared to the balance as at 31
December 2023. The increase was due to a rise in inventory (+£23.2m) and
debtors (+£21.4m), partially offset by an increase in creditors (+£15.2m).
Capital expenditure
Cash capital expenditure in H1 2024 was £50.5m (H1 2023: £41.9m). After
also taking into account additional fixed assets resulting from capitalised
leases and the net repayment of capital expenditure creditors, total capital
expenditure additions were £47.9m (H1 2023: £45.2m), of which £39.2m (H1
2023: 33.5m) related to the Steel Division and £8.7m (H1 2023: £11.7m)
related to the Foundry Division.
Balance sheet
Financial position
At 30 June 2024, Net Debt was £315.2m, (31 December 2023: £237.5m), as free
cash flow of £17.8m was offset by dividend payments (£44.2m), the share
buyback (£30.2m), purchases for the ESOP (£17.1m), additional right-of-use
assets (£7.6m) and other factors including FX (£3.6m).
The net debt to EBITDA ratio increased slightly to 1.2x versus 31 December
2023 (0.9x), principally reflecting the increase in net debt, and to a lesser
extent, the fall in EBITDA. EBITDA to interest was 23.2x (31 December 2023:
31.5x). The Group had committed borrowing facilities of £672.6m as at 30th
June 2024 (31 December 2023: £685.8m), of which £222.7m was undrawn (31
December 2023: £333.4m). Liquidity stood at £402.7m on 30 June 2024 (31
December 2023: £487.6m), defined as undrawn committed debt facilities plus
our cash on balance sheet, less cash used as collateral against loans.
The Group's debt facilities have two financial covenants: the ratios of net
debt to EBITDA (maximum 3.25x limit) and EBITDA to interest (minimum 4x
limit). Certain adjustments are made to the net debt calculations for bank
covenant purposes, the most significant of which is to exclude the impact of
IFRS 16.
Return on Invested Capital
ROIC is calculated as trading profit less amortisation of acquired intangibles
plus share of post-tax profit of joint ventures and associates for the
previous 12 months after tax, divided by the average (being the average of the
opening and closing balance sheet) invested capital (defined as: total assets
excluding cash plus non-interest-bearing liabilities), at the average foreign
exchange rate for the year. In the period, ROIC was 8.4%, down from 8.9% at 31
December 2023, principally reflecting the reduction in rolling 12-month
trading profit.
Pensions
The Group has a limited number of historical defined benefit plans located
mainly in the UK, USA, Germany and Belgium. The main plans in the UK and USA
are closed to further benefits accrual. In the funded UK plan, an insurance
asset from PIC matches the remaining pension liabilities of the UK Plan, with
the result that the Company no longer bears any investment, longevity,
interest rate or inflation risks in respect of this UK Plan. The Group's net
pension liability on 30 June 2024 was £38.5m (2023 full year: £46.3m).
There is no one driver for the reduction in liability as movements in all
plans remained relatively flat.
Principal Risks and Uncertainties
The Board exercises oversight of the Group's Principal Risks and reviews the
way in which the Group manages those risks. The Board takes overall
responsibility for establishing and maintaining a system of risk management
and internal control and for reviewing its effectiveness.
The Board has reviewed the Principal Risks and Uncertainties facing the Group
and consider that these remain unchanged compared with those published in the
Annual Report for the year ended 31 December 2023.
The Principal Risks which could have a material impact on the Group's
performance for the remainder of the financial year are as follows:
- End-market risks
- Protectionism and globalisation
- Product quality failure
- Complex and changing regulatory environment
- Failure to secure innovation
- Business interruption
- People, culture and performance
- Health and safety
- Environmental, Social and Governance criteria
Further information on these Principal Risks and the way in which the Group
manages them is detailed on pages 72-78 of the 2023 Annual Report.
Risk update
Whilst there are no changes to the Principal Risks and Uncertainties facing
the Group, it is noted that current geo-political risk remains elevated and
the threat from cyber security attacks continues to evolve. Each of these
risks has the potential to impact the Principal Risks facing the Group;
specifically End-market risks, Protectionism and globalisation, Complex and
changing regulatory environment and the risk of Business interruption.
Half Year Results for the six months ended 30 June 2024
Directors' responsibility statement
The Directors confirm that these condensed interim financial statements have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority and that
the interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
1) an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
2) material related-party transactions in the first six months and
any material changes in the related-party transactions described in the last
annual report.
The names and functions of the Directors of Vesuvius plc are as follows:
Carl-Peter Forster Chairman
Patrick André Chief Executive
Mark Collis Chief Financial Officer
Eva Lindqvist Independent Non-executive Director and
Senior Independent Director
Kath Durrant Independent Non-executive Director and
Chair of the Remuneration Committee
Robert MacLeod Independent Non-executive Director and
Chair of the Audit Committee
Carla Bailo Independent Non-executive Director
Italia Boninelli Independent Non-executive Director
Dinggui Gao Independent Non-executive Director
Friederike Helfer Non-executive Director
On behalf of the Board
Mark Collis
Chief Financial Officer
31 July 2024
Independent review report to Vesuvius plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Vesuvius plc's condensed consolidated interim financial
statements (the "interim financial statements") in the Half Year Results of
Vesuvius plc for the 6 month period ended 30 June 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed Group Balance Sheet as at 30 June 2024;
· the Condensed Group Income Statement and Condensed Group Statement
of Comprehensive Income for the period then ended;
· the Condensed Group Statement of Cash Flows for the period then
ended;
· the Condensed Group Statement of Changes in Equity for the period
then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Half Year Results of Vesuvius
plc have been prepared in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Half Year Results and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Half Year Results, including the interim financial statements, is the
responsibility of, and has been approved by the directors. The directors are
responsible for preparing the Half Year Results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority. In preparing the Half Year Results, including the
interim financial statements, the directors are responsible for assessing the
group's ability to continue as a going concern, disclosing, as applicable,
matters related to going concern and using the going concern basis of
accounting unless the directors either intend to liquidate the group or to
cease operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Half Year Results based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
31 July 2024
Vesuvius plc
Condensed Group Income Statement
For the six months ended 30 June 2024
Half year 2024 (Unaudited) Half year 2023 (Unaudited) Full year 2023
Headline performance((1)) Separately reported items((1)) Total Headline performance((1)) Separately reported items((1)) Total Headline performance((1)) Separately reported items((1)) Total
Notes £m £m £m £m £m £m £m £m £m
Revenue 2 936.5 - 936.5 995.3 - 995.3 1,929.8 - 1,929.8
Manufacturing costs (666.9) - (666.9) (712.7) - (712.7) (1,391.9) - (1,391.9)
Administration, selling & distribution costs (172.4) - (172.4) (177.7) - (177.7) (337.5) - (337.5)
Trading profit((2)) 2 97.2 - 97.2 104.9 - 104.9 200.4 - 200.4
Cost reduction programme expenses 3 - (8.0) (8.0) - - - - - -
Amortisation of acquired intangible assets - (5.1) (5.1) - (5.2) (5.2) - (10.3) (10.3)
Operating profit/(loss) 2 97.2 (13.1) 84.1 104.9 (5.2) 99.7 200.4 (10.3) 190.1
Finance expense (13.3) - (13.3) (12.7) - (12.7) (28.2) - (28.2)
Finance income 5.3 - 5.3 7.2 - 7.2 16.6 - 16.6
Net finance costs 4 (8.0) - (8.0) (5.5) - (5.5) (11.6) - (11.6)
Share of post-tax profit of joint ventures and associates 0.6 - 0.6 0.5 - 0.5 0.9 - 0.9
Profit/(loss) before tax 2 89.8 (13.1) 76.7 99.9 (5.2) 94.7 189.7 (10.3) 179.4
Income tax (charge)/credits 5 (24.5) 3.2 (21.3) (27.3) 1.5 (25.8) (51.9) 3.1 (48.8)
Profit/(loss) 65.3 (9.9) 55.4 72.6 (3.7) 68.9 137.8 (7.2) 130.6
Profit/(loss) attributable to:
Owners of the parent 57.7 (9.9) 47.8 66.0 (3.7) 62.3 125.7 (7.2) 118.5
Non-controlling interests 7.6 - 7.6 6.6 - 6.6 12.1 - 12.1
Profit/(loss) 65.3 (9.9) 55.4 72.6 (3.7) 68.9 137.8 (7.2) 130.6
Earnings per share - pence Note 6
Total operations - basic 21.8((1)) 18.1 24.5((1)) 23.2 46.7((1)) 44.0
- diluted 21.6((1)) 17.9 24.3((1)) 23.0 46.2((1)) 43.6
(1) Headline performance and separately reported items are non-GAAP
measures. Headline performance is defined in Note 15.1 and separately reported
items are defined in Note 1.5.
(2) Trading profit is a non-GAAP measure and is defined in Note 15.4.
The above results were derived from continuing operations. Manufacturing costs
are costs of goods sold. The pre-tax separately reported items would form part
of Administration, selling & distribution costs if classified within
headline performance, which including these amounts would total £185.5m (2023
half year: £182.9m, 2023 full year: £347.8m).
Condensed Group Statement of Comprehensive Income
For the six months ended 30 June 2024
Unaudited Unaudited
Half year Half year Full year
2024 2023 2023
Notes £m £m £m
Profit 55.4 68.9 130.6
Items that will not subsequently be reclassified to income statement:
Remeasurement of defined benefit assets/liabilities 7.0 3.8 8.4
Income tax relating to items not reclassified 5 (2.5) (1.1) (2.0)
Items that may subsequently be reclassified to income statement:
Exchange differences on translation of the net assets of foreign (31.9) (82.6) (84.3)
Operations
Exchange differences arising on translation of net investment hedges 6.0 10.4 7.9
Net change in costs of hedging 0.1 (1.2) 0.4
Change in the fair value of the hedging instrument 0.6 (2.0) (4.2)
Amounts reclassified from Net finance costs (0.5) 3.4 3.5
Other comprehensive (loss)/ income, net of income tax (21.2) (69.3) (70.3)
Total comprehensive income/(loss) 34.2 (0.4) 60.3
Total comprehensive income attributable to:
Owners of the parent 26.7 (4.5) 51.7
Non-controlling interests 7.5 4.1 8.6
Total comprehensive income/(loss) 34.2 (0.4) 60.3
The above results were derived from continuing operations.
Condensed Group Statement of Cash Flows
For the six months ended 30 June 2024
Unaudited Unaudited
Half year Half year Full year
2024 2023 2023
Notes £m £m £m
Cash flows from operating activities
Cash generated from operations 9 94.0 106.8 272.0
Interest paid (8.9) (8.4) (16.8)
Interest received 4.4 6.0 14.1
Income taxes paid (20.3) (23.2) (52.8)
Net cash inflow from operating activities 69.2 81.2 216.5
Cash flows from investing activities
Capital expenditure (50.5) (41.9) (92.6)
Proceeds from the sale of property, plant and equipment 0.6 4.2 5.4
Acquisition of subsidiaries and joint ventures, net of cash acquired - - -
Dividends received from joint ventures - - 1.0
Net cash outflow from investing activities (49.9) (37.7) (86.2)
Net cash inflow before financing activities 19.3 43.5 130.3
Cash flows from financing activities
Proceeds from borrowings 8 111.7 16.0 -
Repayment of borrowings 8 (10.0) (2.3) (37.1)
Payment of lease liabilities (8.4) (8.5) (24.2)
Purchase of ESOP Shares (17.1) (1.1) (1.1)
Share buyback (30.2) - (3.1)
Dividends paid to equity shareholders 7 (42.7) (42.4) (60.7)
Dividends paid to non-controlling shareholders (1.5) (1.4) (2.1)
Net cash inflow / (outflow) from financing activities 1.8 (39.7) (128.3)
Net increase in cash and cash equivalents 8 21.1 3.8 2.0
Cash and cash equivalents at 1 January 160.8 179.8 179.8
Effect of exchange rate fluctuations on cash and cash equivalents (3.2) (13.3) (21.0)
Cash and cash equivalents at the end of the reporting period 8 178.7 170.3 160.8
Free cash flow 15.11
Net cash inflow from operating activities 69.2 81.2 216.5
Capital expenditure (50.5) (41.9) (92.6)
Proceeds from the sale of property, plant and equipment 0.6 4.2 5.4
Dividends received from joint ventures - - 1.0
Dividends paid to non-controlling shareholders (1.5) (1.4) (2.1)
Free cash flow(1) 15.11 17.8 42.1 128.2
((1))For definitions of alternative performance measures, refer to Note 15
Condensed Group Balance Sheet
As at 30 June 2024
Unaudited Unaudited
Half year Half year Full year
2024 2023 2023
Notes £m £m £m
Assets
Property, plant and equipment 464.1 414.1 460.8
Intangible assets 692.6 703.3 706.0
Employee benefits - surpluses 10 35.5 28.3 34.6
Interests in joint ventures and associates 11.2 12.3 11.3
Investments 0.7 0.7 0.3
Deferred tax assets 112.4 112.3 114.6
Other receivables 27.9 32.4 26.8
Derivative financial instruments 14 0.6 1.2 0.6
Total non-current assets 1,345.0 1,304.6 1,355.0
Cash and short-term deposits 8 180.0 173.2 164.2
Inventories 309.1 318.4 291.0
Trade and other receivables 468.0 485.3 460.5
Income tax receivable 14.0 8.7 11.5
Derivative financial instruments 14 1.8 0.1 -
Total current assets 972.9 985.7 927.2
Total assets 2,317.9 2,290.3 2,282.2
·
Condensed Group Balance Sheet (continued)
As at 30 June 2024
Unaudited Unaudited
Half year Half year Full year
2024 2023 2023
Notes £m £m £m
Equity
Issued share capital 27.1 27.8 27.7
Retained earnings 2,658.2 2,649.6 2,691.2
Other reserves (1,490.2) (1,460.9) (1,464.6)
Equity attributable to the owners of the parent 1,195.1 1,216.5 1,254.3
Non-controlling interests 71.9 62.1 65.9
Total equity 1,267.0 1,278.6 1,320.2
Liabilities
Interest-bearing borrowings 8 276.2 320.2 326.4
Employee benefits - liabilities 10 74.0 79.1 80.9
Other payables 8.8 10.5 9.1
Provisions 13 48.0 47.7 47.6
Deferred tax liabilities 23.9 21.9 23.5
Derivative financial instruments - - -
Total non-current liabilities 430.9 479.4 487.5
Interest-bearing borrowings 8 221.2 122.1 75.8
Trade and other payables 374.7 383.8 377.8
Income tax payable 13.0 11.3 9.8
Provisions 13 10.9 14.9 11.0
Derivative financial instruments 14 0.2 0.2 0.1
Total current liabilities 620.0 532.3 474.5
Total liabilities 1,050.9 1,011.7 962.0
Total equity and liabilities 2,317.9 2,290.3 2,282.2
Condensed Group Statement of Changes in Equity
For the six months ended 30 June 2024
Issued share capital Other reserves Retained earnings Owners of the parent Non-controlling interests Total equity
£m £m £m £m £m £m
As at 1 January 2024 27.7 (1,464.6) 2,691.2 1,254.3 65.9 1,320.2
Profit - - 47.8 47.8 7.6 55.4
Remeasurement of defined benefit assets/liabilities - - 7.0 7.0 - 7.0
Income tax relating to items not reclassified - - (2.5) (2.5) - (2.5)
Exchange differences on translation of the net assets of foreign operations - (31.8) - (31.8) (0.1) (31.9)
Exchange differences arising on translation of net investment hedges - 6.0 - 6.0 - 6.0
Net change in costs of hedging - 0.1 - 0.1 - 0.1
Change in the fair value of the hedging instrument - 0.6 - 0.6 - 0.6
Amounts reclassified from Net finance costs - (0.5) - (0.5) - (0.5)
Other comprehensive (loss)/income, net of income tax - (25.6) 4.5 (21.1) (0.1) (21.2)
Total comprehensive (loss)/income - (25.6) 52.3 26.7 7.5 34.2
Recognition of share-based payments - - 4.1 4.1 - 4.1
Purchase of ESOP shares - - (17.1) (17.1) - (17.1)
Share buyback (0.6) - (29.6) (30.2) - (30.2)
Dividends paid (Note 7) - - (42.7) (42.7) (1.5) (44.2)
Total transactions with owners (0.6) - (85.3) (85.9) (1.5) (87.4)
As at 30 June 2024 27.1 (1,490.2) 2,658.2 1,195.1 71.9 1,267.0
Vesuvius plc announced the commencement of a share buyback programme of up to
£50m on 4 December 2023. The programme began on that date and will end no
later than 4 December 2024. The maximum number of ordinary shares that can be
bought back is 27,121,389 at an aggregate purchase price of £50m (excluding
stamp duty and expenses). All ordinary shares acquired under the programme
will be cancelled.
There is no minimum committed quantity of shares to be bought back and the
Company is able to terminate the arrangement at its discretion and without any
penalty.
During the half year, Vesuvius plc has bought back 6.3m shares (2023 half
year, nil; 2023 full year, 0.6m). The cash outflow was £30.2m (2023 half year
£nil; 2023 full year £3.1m).
Condensed Group Statement of Changes in Equity (continued)
For the six months ended 30 June 2024
Issued share capital Other reserves Retained earnings Owners of the parent Non-controlling interests Total equity
£m £m £m £m £m £m
As at 1 January 2023 27.8 (1,391.4) 2,623.8 1,260.2 59.4 1,319.6
Profit - - 62.3 62.3 6.6 68.9
Remeasurement of defined benefit assets/liabilities - - 3.8 3.8 - 3.8
Income tax relating to items not reclassified - - (1.1) (1.1) - (1.1)
Exchange differences on translation of the net assets of foreign operations - (80.1) - (80.1) (2.5) (82.6)
Exchange differences arising on translation of net investment hedges - 10.4 - 10.4 - 10.4
Net change in costs of hedging - (1.2) - (1.2) - (1.2)
Change in the fair value of the hedging instrument - (2.0) - (2.0) - (2.0)
Amounts reclassified from Net finance costs - 3.4 - 3.4 - 3.4
Other comprehensive income/(loss), net of income tax - (69.5) 2.7 (66.8) (2.5) (69.3)
Total comprehensive income/(loss) - (69.5) 65.0 (4.5) 4.1 (0.4)
Recognition of share-based payments - - 4.3 4.3 - 4.3
Purchase of ESOP shares - - (1.1) (1.1) - (1.1)
Dividends paid (Note 7) - - (42.4) (42.4) (1.4) (43.8)
Total transactions with owners - - (39.2) (39.2) (1.4) (40.6)
As at 30 June 2023 27.8 (1,460.9) 2,649.6 1,216.5 62.1 1,278.6
Within other reserves as at 30 June 2024 is £1,499.0m (2023: 30 June and 31
December, £1,499.0m) arising from the demerger of Cookson Group plc, being
the excess of the Vesuvius plc share capital of £1,777.9m over the total
share capital and share premium of Cookson Group plc as at 14 December 2012 of
£278.9m.
Notes to the Condensed Group Financial Statements
1. Basis of preparation
1.1 Basis of accounting
These Condensed Group Financial Statements of Vesuvius plc ("Vesuvius" or the
"Company") and its subsidiary and joint venture companies (the "Group") have
been prepared in accordance with UK adopted International Accounting Standard
34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct Authority.
These Condensed Group Financial Statements have been prepared using the same
accounting policies as used in the preparation of the Group's Annual financial
statements for the year ended 31 December 2023, except for taxes on income in
the interim period which are accrued using the tax rate that would be
applicable to the expected total annual profit or loss. The assessment of the
Group's critical accounting estimates and judgements remain consistent with
the 2023 Annual Report and Financial Statements. The Group's Annual report
and financial statements for the year ended 31 December 2023 were prepared in
accordance with UK-adopted international accounting standards (IFRS) and the
requirements of the Companies Act 2006.
The Condensed Group Financial Statements do not include all of the information
required for full annual financial statements, and should be read in
conjunction with the consolidated financial statements of the Group for the
year-ended 31 December 2023. The financial information presented in this
document is unaudited but has been reviewed by the Company's auditor.
The comparative figures for the financial year ended 31 December 2023 have
been extracted from the Group's Annual Report and Financial Statements for
that financial year. Those accounts have been reported on by the Company's
auditor and delivered to Companies House. The report of the auditor was
unqualified, did not include reference to any matters to which the auditor
drew attention by way of emphasis without qualifying its report and did not
contain a statement under section 498(2) or (3) of the Companies Act 2006.
These sections address whether proper accounting records have been kept,
whether the Company's accounts are in agreement with those records and whether
the auditor has obtained all the information and explanations necessary for
the purposes of its audit.
1.2 Basis of consolidation
The Condensed Group Financial Statements incorporate the financial statements
of the Company and entities controlled by the Company (its "subsidiaries").
Control exists when the Company has the power to direct the relevant
activities of an entity that significantly affect the entity's return so as to
have rights to the variable return from its activities. In assessing whether
control exists, potential voting rights that are currently exercisable are
taken into account. The results of subsidiaries acquired or disposed of during
the period are included in the Condensed Group Income Statement from the
effective date of acquisition or up to the effective date of disposal, as
appropriate.
The principal accounting policies applied in the preparation of these
Condensed Group Financial Statements are set out in the Notes. These policies
have been consistently applied to all of the years presented, unless otherwise
stated. Where necessary, adjustments are made to the financial statements of
subsidiaries to bring their accounting policies into line with those detailed
herein to ensure that the Condensed Group Financial Statements are prepared on
a consistent basis. All intra-Group transactions, balances, income and
expenses are eliminated on consolidation.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's interest therein. Non-controlling
interests consist of the amount of those interests at the date of the original
business combination together with the non-controlling interests' share of
profit or loss and each component of other comprehensive income less their
dividends since the date of the combination. Their share of comprehensive
income/(loss) is attributed to the non-controlling interests even if this
results in the non-controlling interests having a deficit balance.
1.3 Going concern
The Directors have prepared cash flow scenarios for the Group for a period of
at least 12 months from the date of approval of the 2024 Interim Condensed
Financial Statements. These forecasts reflect an assessment of current and
future end market conditions, and their impact on the Group's future trading
performance.
The analysis includes a severe but plausible downside scenario which assumes
for H2 2024 a 6% decline in business activity combined with a reduction of
Return on Sales to 8.0% and an increase in working capital intensity as a % of
sales. For the period in 2025, the H2 2024 performance was annualised. Debt
maturing during the period is assumed to be re-financed, a consistent level of
dividend payments continues, and the current share buyback programme is
completed.
In this scenario, the forecast shows that the Group maintains considerable
headroom against its pre-IFRS 16 covenants. The Net debt / EBITDA leverage
ratio never exceeds 1.4x, compared to a covenant of 3.25x and the interest
coverage covenant (EBITDA / interest, never falls below 14.8x compared to a
covenant of 4.0x. The analysis also included a stress test to determine how
much the Group's revenues could decrease before breaching at least one of the
debt covenants.
Based on the exercise described above and the Group's available committed
liquidity which currently stands at £402.7m, the Directors consider that the
Group and the Company have adequate resources to continue in operational
existence for a period of at least 12 months from the date of signing of these
Interim Condensed Financial Statements. Accordingly, they continue to adopt a
going concern basis in preparing the Condensed Financial statements of the
Group and the Company.
1.4 Functional and presentational currency
The financial statements are presented in millions of pounds sterling, which
is the functional currency of the Company, and rounded to one decimal place.
1.5 Disclosure of "separately reported items"
Columnar presentation
The Group has adopted a columnar presentation for its Condensed Group Income
Statement, to separately identify headline performance results, as the
Directors consider that this gives a useful view of the underlying results of
the ongoing business. As part of this presentation format, the Group has
adopted a policy of disclosing separately on the face of its Group Income
Statement, within the column entitled 'Separately reported items', the effect
of any components of financial performance for which the Directors consider
separate disclosure would assist users both in a useful understanding of the
financial performance achieved for a given year and in making projections of
future results.
Separately reported items
Both materiality and the nature of the components of income and expense are
considered in deciding upon such presentation. Such items may include, inter
alia, the financial effect of exceptional items which occur infrequently, such
as major restructuring activity (which may require more than one year to
complete), significant movement in the Group's deferred tax balances, items
reported separately for consistency, such as amortisation charges relating to
acquired intangible assets, profits or losses arising on the disposal of
continuing or discontinued operations and the taxation impact of the
aforementioned items reported separately.
The amortisation charge in respect of intangible assets recognised on business
combinations is excluded from the trading results of the Group since they are
non-cash charges and are not considered reflective of the core trading
performance of the Group.
In its adoption of this policy, the Company applies an even-handed approach to
both gains and losses and aims to be both consistent and clear in its
accounting and disclosure of such items.
1.6 New and revised IFRS
Certain new accounting standards and interpretations have been published that
are applicable for periods commencing 1 January 2024 and others that are not
mandatory for reporting periods commencing on 1 January 2024 and have not been
early adopted by the Group.
The new standards applicable for periods commencing 1 January 2024 are not
expected to have a significant impact on the Group's financial position,
performance, cash flows and disclosures.
OECD Pillar two model
The Group is within the scope of the OECD Pillar two model rules. Pillar two
legislation was recently substantively enacted in some of the territories in
which the Group operates and came into effect in these territories from 1
January 2024. The Group will continue to monitor the development and
implementation of these rules globally. Based upon our latest understanding,
the current estimate of additional tax payable is not expected to have a
material impact on the Group.
On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK,
introducing a global minimum effective tax rate of 15%. The legislation
implements a domestic top-up tax and a multinational top-up tax, effective for
accounting periods starting on or after 31 December 2023. The Group does not
account for deferred tax on top-up taxes and therefore, there was no impact on
the recognition and measurement of deferred tax balances as a result of the
legislation being substantively enacted.
2 Segment information
Operating segments for continuing operations
The Group's operating segments are determined taking into consideration how
the Group's components are reported to the Group's Chief Executive Officer,
who makes the key operating decisions and is responsible for allocating
resources and assessing performance of the components. Taking into account the
Group's management and internal reporting structure, the operating segments
are Steel Flow Control, Steel Advanced Refractories, Steel Sensors &
Probes and the Foundry Division. The principal activities of each of these
segments are described in the Operating Review.
The Steel Flow Control, Steel Advanced Refractories and Steel Sensors &
Probes operating segments are aggregated into the Steel reportable segment. In
determining that aggregation is appropriate, judgement is applied which takes
into account the economic characteristics of these operating segments which
include a similar nature of products, customers, production processes and
margins.
Revenue from contracts with customers
Revenue comprises the fair value of the consideration received or receivable
for goods supplied and services rendered to customers after deducting rebates,
discounts and value-added taxes, and after eliminating sales within the Group.
Revenue from contracts with customers is recognised when control of the goods
or services are transferred to the customer, upon the completion of specified
performance obligations, at an amount that reflects the considerations to
which the Group expects to be entitled to in exchange for these consumable
products and associated services.
The revenue recognition policy applicable to the current and comparative
periods and information about the Group's performance obligations was
disclosed in Note 4 of the 2023 Annual Report and Financial Statements.
Segmental analysis
Unaudited Half Year 2024
Flow Control Advanced Refractories Sensors Steel Foundry Total
& Probes
£m £m £m
Segment revenue 393.7 270.3 21.7 685.7 250.8 936.5
at a point in time 684.4 250.8 935.2
Over time 1.3 - 1.3
Segment adjusted EBITDA ((1)) 98.0 29.4 127.4
Segment depreciation and amortisation (21.5) (8.7) (30.2)
Segment trading profit 76.5 20.7 97.2
Return on sales % ((2)) 11.2% 8.2% 10.4%
Amortisation of acquired intangible assets (5.1)
Cost reduction programme expenses (8.0)
Vacant site remediation costs -
Operating profit 84.1
Net finance costs (8.0)
Share of post-tax profit of joint ventures 0.6
Profit before tax 76.7
Capital expenditure additions 39.2 8.7 47.9
Inventory 256.9 52.2 309.1
Trade debtors 278.2 93.0 371.2
Trade creditors (186.3) (60.5) (246.8)
Unaudited Half Year 2023
Flow Control Advanced Refractories Sensors Steel Foundry Total
& Probes
£m £m £m
Segment revenue 401.8 289.6 20.1 711.5 283.8 995.3
at a point in time 710.7 283.8 994.5
Over time 0.8 - 0.8
Segment adjusted EBITDA ((1)) 94.3 38.6 132.9
Segment depreciation and amortisation (19.5) (8.5) (28.0)
Segment trading profit 74.8 30.1 104.9
Return on sales % ((2)) 10.5% 10.6% 10.5%
Amortisation of acquired intangible assets (5.2)
Operating profit 99.7
Net finance costs (5.5)
Share of post-tax profit of joint ventures 0.5
Profit before tax 94.7
Capital expenditure additions 33.5 11.7 45.2
Inventory 259.5 58.9 318.4
Trade debtors 286.4 103.0 389.4
Trade creditors (183.5) (62.3) (245.8)
Full Year 2023
Flow Control Advanced Refractories Sensors Steel Foundry Total
& Probes
£m £m £m
Segment revenue 793.0 567.9 39.1 1,400.0 529.8 1,929.8
at a point in time 1,396.6 529.8 1,926.4
Over time 3.4 - 3.4
Segment adjusted EBITDA ((1)) 187.9 70.3 258.2
Segment depreciation and amortisation (40.3) (17.5) (57.8)
Segment trading profit 147.6 52.8 200.4
Return on sales % ((2)) 10.5% 10.0% 10.4%
Amortisation of acquired intangible assets (10.3)
Operating profit 190.1
Net finance costs (11.6)
Share of post-tax profit of joint ventures 0.9
Profit before tax 179.4
Capital expenditure additions 93.2 32.1 125.3
Inventory 239.5 51.5 291.0
Trade debtors 267.6 89.3 356.9
Trade creditors (177.7) (58.7) (236.4)
((1)) Adjusted EBITDA is defined in note 15.13
((2)) Return on sales is defined in note 15.3
External revenue Non-current assets
Unaudited Half year Unaudited Half year Full year Unaudited Half year Unaudited Half year Full year
2024 2023 2023 2024 2023 2023
£m £m £m £m £m £m
EMEA 315.0 347.5 669.6 510.9 486.0 500.0
Asia 286.4 284.2 565.6 232.2 216.7 237.2
North America 254.4 277.9 528.7 407.3 410.0 384.3
South America 80.7 85.7 165.9 46.2 50.1 44.3
Continuing operations 936.5 995.3 1,929.8 1,196.6 1,162.8 1,165.8
External revenue disclosed in the table above is based upon the geographical
location from which the products and services are invoiced. Non-current assets
exclude employee benefits net surpluses, deferred tax assets and derivative
financial instruments. Information relating to the Group's products and
services is given in the Strategic Report as disclosed in the 2023 Annual
Report and Financial Statements. The Group is not dependent on any single
customer for its revenue and no single customer, for the periods / years
presented in the tables above, accounts for more than 10% of the Group's total
external revenue. £29.7m (2023 half year £34.8m; 2023 full year £66.5m) of
revenue was generated from the UK, and total non-current assets in the UK
amounted to £89.1m (2023 half year £76.4m; 2023 full year £101.5m).
3 Cost reduction programme expenses
In November 2023 we initiated an efficiency programme with the aim of
realising recurring cash cost savings of £30m per annum by 2026.
The programme will cover all of our activities worldwide and will focus on
operational improvement, lean initiatives, automation and digitalisation as
well as further optimisation of the manufacturing footprint.
Cost saving programme expenses are excluded from underlying performance,
allowing for a clear measure of our operating performance. These are shown as
a separately reported item outside of Trading Profit and shown on the face of
the Income statement below Trading Profit.
During 2024, cost reduction programme expenses reported as separately reported
items were £8.0m (2023 half year £nil; full year: £nil). The charges
reflect redundancy costs £4.9m (2023 half year £nil; full year: £nil),
plant closure costs £2.3m (2023 half year £nil; full year: £nil), and
non-cash asset impairments £0.8m (2023 half year £nil; full year: £nil).
The net tax credit attributable to these cost reduction programme expenses was
£1.9m (2023 half year £nil; full year: £nil).
4 Net finance costs
Unaudited Half year Unaudited Half year Full year
2024 2023 2023
£m £m £m
Interest payable on borrowings
Loans and overdrafts 9.3 8.9 20.1
Interest on lease liabilities 1.5 1.0 2.4
Amortisation of capitalised arrangement costs 0.5 0.5 1.0
Total interest payable on borrowings 11.3 10.4 23.5
Interest on net retirement benefits obligations 0.8 1.1 2.3
Adjustments to discounts on provisions and other liabilities 1.2 1.2 2.4
Adjustments to discounts on receivables (0.6) (0.7) (1.3)
Finance income (4.7) (6.5) (15.3)
Total net finance costs 8.0 5.5 11.6
Within the table above, total finance costs are £13.3m (2023 half year:
£12.7m, 2023 full year: £28.2m) and total finance income is £5.3m (2023
half year: £7.2m, 2023 full year: £16.6m).
5 Income tax
A key measure of the Group's tax burden is the headline effective tax rate,
which the Group calculates on the income tax associated with headline
performance, divided by the headline profit before tax excluding the Group's
share of post-tax profit of joint ventures. The Group's headline effective tax
rate was in-line with expectations at 27.5% in H1 2024 (2023 half year 27.5%;
2023 full year 27.5%) based on the income tax charge associated with headline
performance of £24.5m (2023 half year £27.3m; 2023 full year £51.9m).
The Group's total net income tax charge reflected in the Condensed Group
Income Statement includes a credit of £3.2m (2023 half year £1.5m; 2023 full
year £3.1m) relating to separately reported items comprising a credit of
£1.3m (2023 half year £1.5m; 2023 full year £2.7m) relating to the
amortisation of intangible assets and the rest relating to the anticipated
current and deferred tax impact of accrued cost reduction programme expenses.
The Group's total net income tax charge reflected in the Condensed Group
Statement of Comprehensive Income was £2.5m (2023 half year £1.1m; 2023 full
year: £2.0m). It was in respect of tax on net actuarial gains and losses on
employee benefits.
6 Earnings per share ("EPS")
6.1 Earnings for EPS
Basic and diluted EPS from continuing operations are based upon the profit
attributable to owners of the parent, as reported in the Condensed Group
Income Statement. The table below reconciles these different profit measures.
Unaudited Half year Unaudited Half year Full year
2024 2023 2023
£m £m £m
Profit attributable to owners of the parent 47.8 62.3 118.5
Adjustments for separately reported items:
Cost reduction programme expenses 8.0 - -
Amortisation of acquired intangible assets 5.1 5.2 10.3
Income tax (credit)/charge (3.2) (1.5) (3.1)
Headline profit attributable to owners of the parent 57.7 66.0 125.7
6.2 Weighted average number of shares
Unaudited Half year Unaudited Half year Full year
2024 2023 2023
millions millions millions
For calculating basic and headline EPS 264.7 269.0 269.1
Adjustment for potentially dilutive ordinary shares 3.0 2.1 3.0
For calculating diluted and diluted headline EPS 267.7 271.1 272.1
For the purposes of calculating diluted and diluted headline EPS, the weighted
average number of ordinary shares is adjusted to include the weighted average
number of ordinary shares that would be issued were all outstanding share
options to vest in full, relating to the Company's share-based payment plans.
Potential ordinary shares are only treated as dilutive when their conversion
to ordinary shares would decrease EPS or increase loss per share.
6.3 Per share amounts
Unaudited Half year Unaudited Half year Full year 2023
2024 2023
Pence Pence pence
Earnings per share - reported basic 18.1 23.2 44.0
- 17.9 23.0 43.6
reported diluted
- 21.8 24.5 46.7
headline basic((1))
- headline diluted((1)) 21.6 24.3 46.2
((1)) For definition of headline earnings per share, refer to Note 15.8
7 Dividends
Unaudited Half year Unaudited Half year Full year
2024 2023 2023
£m £m £m
Amounts recognised as dividends and paid to equity shareholders
during the period
Final dividend for the year ended 31 December 2022 of 15.75p per ordinary - 42.4 42.4
share
Interim dividend for the year ended 31 December 2023 of 6.8p per ordinary - - 18.3
share
Final dividend for the year-ended 31 December 2023 of 16.20p per ordinary 42.7 - -
share
42.7 42.4 60.7
The Directors have declared an interim dividend of 7.1p in respect of the
year-ending 31 December 2024.
8 Reconciliation of movement in net debt
Balance as at Foreign exchange adjustments Fair value gains/ Non-cash movements(*) Cash flow(**) Balance as at 30 June 2024
1 Jan 2024 (losses)
£m £m £m £m £m
Cash and cash equivalents
Cash at bank and in hand 164.2 (3.2) - - 19.0 180.0
Short term deposits - - - - - -
Bank overdrafts (3.4) - - - 2.1 (1.3)
160.8 (3.2) - - 21.1 178.7
Borrowings, excluding bank overdrafts (400.6) 5.6 - (9.1) (93.3) (497.4)
Capitalised arrangement costs 1.8 - - (0.5) - 1.3
Derivative financial instruments 0.5 - 1.7 - - 2.2
Net debt (237.5) 2.4 1.7 (9.6) (72.2) (315.2)
* £7.6m (2023 half year: £10.8m) of new leases were entered into during the
period.
** Borrowings, excluding bank overdrafts include proceeds from borrowings,
repayment of borrowings and payment of lease liabilities.
( )
Balance as at Foreign exchange adjustments Fair value gains/ Non-cash movements(*) Cash flow(**) Balance as at 30 June 2023
1 Jan 2023 (losses)
£m £m £m £m £m
Cash and cash equivalents
Cash at bank and in hand 184.2 (13.4) - - 2.4 173.2
Short term deposits - - - - - -
Bank overdrafts (4.4) 0.1 - - 1.4 (2.9)
179.8 (13.3) - - 3.8 170.3
Borrowings, excluding bank overdrafts (440.2) 14.5 - (10.8) (5.2) (441.7)
Capitalised arrangement costs 2.7 - - (0.4) - 2.3
Derivative financial instruments 2.7 - (1.6) - - 1.1
Net debt (255.0) 1.2 (1.6) (11.2) (1.4) (268.0)
* £10.8m (2022 half year: £5.5m) of new leases were entered into during the
period.
** Borrowings, excluding bank overdrafts include proceeds from borrowings,
repayment of borrowings and payment of lease liabilities.
( )
Net debt is a measure of the Group's net indebtedness to banks and other
external financial institutions and comprises the total of cash and short-term
deposits, current and non-current interest-bearing borrowings, derivative
financial instruments and lease liabilities.
Cash is held both centrally and in operating territories. There is no
restricted cash. For certain territories including Argentina, China, Egypt,
India and Russia cash is more readily used locally than for broader group
purposes.
9 Cash Generated from Operations
Unaudited Unaudited
Half year Half year Full year
2024 2023 2023
£m £m £m
Operating profit 84.1 99.7 190.1
Adjustments for:
Amortisation of acquired intangible assets 5.1 5.2 10.3
Cost reduction programme expenses 8.0 - -
Trading Profit 97.2 104.9 200.4
Profit on disposal of non-current assets (0.4) (2.3) (2.5)
Depreciation and amortisation 30.2 28.0 57.8
Defined benefit retirement plans net charge 2.9 3.0 5.2
Net increase in inventories (24.5) (18.1) 9.9
Net increase in trade receivables (24.3) (31.3) 2.6
Net increase in trade payables 14.6 18.1 8.3
Net decrease in other working capital 5.5 9.3 (0.5)
Outflow related to cost reduction programme (3.2) - -
Outflow related to restructuring charges (0.1) (1.0) (0.8)
Defined benefit retirement plans cash outflows (3.4) (3.2) (7.4)
Vacant site remediation costs paid (0.5) (0.6) (1.0)
Cash generated from operations 94.0 106.8 272.0
10 Employee benefits
The net employee benefits liability as at 30 June 2024 was £38.5m (2023 half
year: £50.8m; 2023 full year: £46.3m) derived from an actuarial valuation of
the Group's defined benefit pension and other post-retirement obligations as
at that date.
All the liabilities in the UK were insured following a buy-in agreement with
Pension Insurance Corporation plc ("PIC") in 2021. This buy-in agreement
secured an insurance asset from PIC that matches the remaining pension
liabilities of the UK Plan, with the result that the Company no longer bears
any investment, longevity, interest rate or inflation risks in respect of the
UK Plan.
As disclosed in note 25 of the 2023 Annual Report and Financial Statements,
the above amounts may materially change in the next 12 months if there is a
change in assumptions.
Unaudited Unaudited Full year
Half year Half year
2024 2023 2023
£m £m £m
Employee benefits - net surpluses
UK defined benefit pension plans 33.7 26.7 32.5
ROW defined benefit pension plans 1.8 1.6 2.1
35.5 28.3 34.6
Employee benefits - net liabilities
UK defined benefit pension plans (1.1) (1.1) (1.1)
US defined benefit pension plans (14.3) (19.8) (18.2)
Germany defined benefit pension plans (38.2) (37.2) (41.3)
ROW defined benefit pension plans (10.7) (11.2) (10.4)
Other post-retirement benefit plans (9.7) (9.8) (9.9)
(74.0) (79.1) (80.9)
Net liabilities (38.5) (50.8) (46.3)
The expense recognised in the Condensed Group Income Statement in respect of
the Group's defined benefit retirement plans and other post-retirement benefit
plans is shown below.
Unaudited Half year Unaudited Half year 2023 Full year 2023
2024
£m £m £m
In arriving at trading profit - within other manufacturing costs 0.6 0.7 1.3
(as defined in Note 15.4)
- within administration, selling and distribution costs 2.3 2.3 3
.
9
In arriving at profit before tax - within net finance costs 0.8 1.1 2.3
Total net charge 3.7 4.1 7.5
11 Contingent liabilities
Vesuvius has extensive international operations and
is subject to various legal and regulatory regimes, including those covering
taxation and environmental matters.
Certain of Vesuvius' subsidiaries are subject to legacy matter lawsuits,
predominantly in the US, relating to a small number of products containing
asbestos manufactured prior to the acquisition of those subsidiaries by
Vesuvius. These suits usually also name many other product manufacturers. To
date, Vesuvius is not aware of there being any liability verdicts against any
of these subsidiaries. Each year a number of these lawsuits are withdrawn,
dismissed or settled. The amount paid, including costs, in relation to this
litigation has not had a material adverse effect on Vesuvius' financial
position or results of operations.
As the settlement of many of the obligations for which reserve is made is
subject to legal or other regulatory process, the timing and amount of the
associated outflows is subject to some uncertainty (see Note 29 of the 2023
Annual Report and Financial Statements for further information). The amount
paid, including costs in relation to this litigation, has not had a material
effect on Vesuvius' financial position or results of operations in the current
period.
12 Related parties
The nature of related party transactions in H1 2024 are in line with those
transactions disclosed in Note 33 of the 2023 Annual Report and Financial
Statements. All transactions with related parties are conducted on an arm's
length basis and in accordance with normal business terms. Transactions with
joint ventures and associates are consistent with those disclosed in Note 32
of the 2023 Annual Report and Financial Statements. Transactions between
related parties that are Group subsidiaries are eliminated on consolidation.
Unaudited Half year Unaudited Half year
2024
2023
Transactions with joint ventures and associate £m £m
Sales to joint ventures 2.0 2.1
Purchases from joint ventures 13.6 14.5
Dividends received from joint ventures - -
Trade payables owed to joint ventures 12.1 9.9
Trade receivables owed by joint ventures 1.3 1.0
13 Provisions
Disposal, closure and environmental costs Restructuring charges Other Total
£m £m £m £m
As at 1 January 2024 51.9 2.4 4.3 58.6
Exchange adjustments 0.4 - - 0.4
Charge to Condensed Group Income Statement 2.6 (0.2) 4.1 6.5
Adjustment to discount 1.1 - - 1.1
Cash spend (2.7) (0.1) (4.4) (7.2)
Transferred to other balance sheet accounts (0.5) - - (0.5)
As at 30 June 2024 52.8 2.1 4.0 58.9
Disposal, closure and environmental costs Restructuring charges Other Total
£m £m £m £m
As at 1 January 2023 57.7 3.6 5.4 66.7
Exchange adjustments (2.7) 0.2 (0.1) (2.6)
Charge to Condensed Group Income Statement 0.6 - 4.1 4.7
Adjustment to discount 1.2 - - 1.2
Cash spend (2.7) (1.0) (3.7) (7.4)
As at 30 June 2023 54.1 2.8 5.7 62.6
Of the total provision balance at 30 June 2024 of £58.9m (30 June 2023:
£62.6m), £48.0m (30 June 2023: £47.7m) is recognised in the Group Balance
Sheet within non-current liabilities and £10.9m (30 June 2022: £14.9m)
within current liabilities.
In assessing the probable costs and realisation certainty of provisions,
reasonable assumptions are made. Changes to the assumptions used could
significantly alter the Directors' assessment of the value, timing or
certainty of the costs. The nature of the provisions held remains consistent
with those held at 31 December 2023 and further description is set out within
Note 29 of the 2023 Annual Report and Financial Statements.
14 Financial instruments
The condensed interim financial statements do not include all financial risk
management information and disclosures required in the annual financial
statements; they should be read in conjunction with the Group's 2023 Annual
Report and Financial Statements, in which further details of these financial
risks were disclosed in Note 24. There have been no changes in the risk
management policies and in the method in which financial assets and financial
liabilities are measured and presented since year end.
The following table summarises Vesuvius' financial instruments measured at
fair value, and shows the level within the fair value hierarchy in which the
financial instruments have been classified:
Unaudited Unaudited
Half year 2024 Half year 2023 Full year 2023
Assets Liabilities Assets Liabilities Assets Liabilities
£m £m £m £m £m £m
Investments (Level 2) 0.7 - 0.7 - 0.3 -
Derivatives not designated for hedge - (0.2) 0.1 (0.2) - (0.1)
accounting purposes (Level 2)
Derivatives designated for hedge 2.4 - 1.2 - 0.6 -
accounting purposes (Level 2)
All of the derivative financial instruments not designated for hedge
accounting purposes reported in the table above will mature within a year of
the balance sheet date and have been booked through the Income Statement.
There were no transfers between fair value hierarchies during the period. Fair
value disclosures have not been made in respect of other financial assets and
liabilities on the basis that the carrying amount is deemed to be a reasonable
approximation of fair value.
The fair value attributable to the Group's $86m CCIRS of £1.8m is presented
within current assets (2023 half year: nil; full year: nil) with the remaining
£0.6m presented within non-current assets (2023 half year: £1.2m; full year:
£0.6m).
As at 30 June 2024, €338.6m (2023 half year: €320.6m; full year:
€322.6m) and $30.0m (2023 half year: $60.0m; full year: $30.0m) of
borrowings were designated as hedges of net investments in overseas foreign
operations of equivalent worth. All net investment hedges are 100% effective
with no ineffectiveness.
As at 30 June 2024, the Group had an equivalent of £287.6m (2023 half year:
£313.0m; full year: £290.8m) of US Private Placement Loan Notes (USPP)
outstanding, which carry a fixed rate of interest, representing 64% (2023 half
year: 78%; full year: 82%) of the Group's total borrowings outstanding at that
date.
15 Alternative Performance Measures
The Company uses a number of Alternative Performance Measures (APMs) in
addition to those reported in accordance with IFRS. The Directors believe that
these APMs, listed below, are important when assessing the underlying
financial and operating performance of the Group and its Divisions, providing
management with key insights and metrics in support of the ongoing management
of the Group's performance and cash flow. A number of these align with KPI's
and other key metrics used in the business and therefore are considered useful
to also disclose to the users of the financial statements. The following APMs
do not have standardised meaning prescribed by IFRS and therefore may not be
directly comparable to similar measures presented by other companies.
15.1 Headline performance
Headline performance, reported separately on the face of the Condensed Group
Income Statement, is from continuing operations and before items reported
separately on the face of the Condensed Group Income Statement.
15.2 Underlying revenue, underlying trading profit and underlying return
on sales
Underlying revenue, underlying trading profit and underlying return on sales
are the headline equivalents of these measures after adjustments to exclude
the effects of changes in exchange rates, business acquisitions and disposals.
Reconciliations of underlying revenue and underlying trading profit can be
found in the Financial Summary. Underlying revenue growth is one of the
Group's key performance indicators and provides an important measure of
organic growth of Group businesses between reporting periods, by eliminating
the impact of exchange rates, acquisitions and disposals.
15.3 Return on Sales ('ROS')
ROS is calculated as trading profit divided by revenue. It is one of the
Group's key performance indicators and is used to assess the trading
performance of Group businesses. A calculation of ROS is included in Note 2.
15.4 Trading profit/adjusted EBITA
Trading profit/adjusted EBITA is defined as operating profit before separately
reported items. It is one of the Group's key performance indicators and is
used to assess the trading performance of Group businesses. It is also used as
one of the targets against which the annual bonuses of certain employees are
measured.
15.5 Headline profit before tax
Headline profit before tax is calculated as the net total of trading profit,
plus the Group's share of post-tax profit of joint ventures and total net
finance costs associated with headline performance. It is one of the Group's
key performance indicators and is used to assess the financial performance of
the Group as a whole.
15.6 Headline effective tax rate ('ETR')
The Group's headline ETR is calculated on the income tax costs associated with
headline performance, divided by headline profit before tax and before the
Group's share of post-tax profit of joint ventures.
15.7 Headline earnings
Headline earnings is profit after tax before separately reported items
attributable to owners of the parent.
15.8 Headline earnings per share
Headline earnings per share is calculated by dividing headline profit before
tax less associated income tax costs, attributable to owners of the parent by
the weighted average number of ordinary shares in issue during the year. It is
one of the Group's key performance indicators and is used to assess the
underlying earnings performance of the Group as a whole. It is also used as
one of the targets against which the annual bonuses of certain employees are
measured. Headline earnings per share is disclosed in Note 6.
15.9 Adjusted operating cash flow
Adjusted operating cash flow is cash generated from operations before
restructuring, cost reduction programme expenses and vacant site remediation
costs but after deducting capital expenditure net of asset disposals. It is
used in calculating the Group's cash conversion.
Unaudited Half year Unaudited Half year Full year
2024 2023 2023
£m £m £m
Cash generated from continuing operations 94.0 106.8 272.0
Add: Outflows relating to restructuring charges 0.1 1.0 0.8
Add: Outflows relating to cost reduction programme expenses 3.2 - -
Add: Vacant site remediation costs paid 0.5 0.6 1.0
Less: Capital expenditure (50.5) (41.9) (92.6)
Add: Proceeds from the sale of property, plant and equipment 0.6 4.2 5.4
Adjusted operating cash flow 47.9 70.7 186.6
Trading Profit 97.2 104.9 200.4
Cash Conversion 49% 67% 93%
15.10 Cash conversion
Cash conversion is calculated as adjusted operating cash flow divided by
trading profit. It is useful for measuring the rate at which cash is generated
from trading profit. It is also used as one of the targets against which the
annual bonuses of certain employees are measured. The calculation of cash
conversion is detailed in Note 15.9 above.
15.11 Free cash flow
Free cash flow is defined as net cash flow from operating activities after net
outlays for the purchase and sale of property, plant and equipment, dividends
from joint ventures and dividends paid to non-controlling shareholders. It is
one of the Group's key performance indicators and is used to assess the
underlying cash generation of the Group and is one of the measures used in
monitoring the Group's capital. A reconciliation of free cash flow is included
underneath the Condensed Group Statement of Cash Flows.
15.12 Average trade working capital to sales ratio
The average trade working capital to sales ratio is calculated as the
percentage of average trade working capital balances to the total revenue for
the previous 12 months, at constant currency. Average trade working capital
(comprising inventories, trade receivables and trade payables) is calculated
as the average of the 13 previous month-end balances. It is one of the Group's
key performance indicators and is useful for measuring the level of working
capital used in the business and is one of the measures used in monitoring the
Group's capital.
Unaudited Half year Unaudited Half year Full year
2024 2023
£m £m 2023
£m
Average trade working capital 431.5 480.4 451.8
Last 12 months total revenue 1,859.6 1,989.9 1,929.8
Average trade working capital to sales ratio 23.2% 24.1% 23.4%
15.13 Adjusted earnings before interest, tax, depreciation and amortisation
(adjusted EBITDA)
Adjusted EBITDA is calculated as the total of trading profit before
depreciation and amortisation of non-acquired intangible assets. It is used in
the calculation of the Group's interest cover and net debt to adjusted EBITDA
ratios. A reconciliation of adjusted EBITDA is included in Note 2.
15.14 Net interest payable on borrowings
Net interest payable on borrowings is calculated as total interest payable on
borrowings less finance income, excluding interest on net retirement benefit
obligations, adjustments to discounts and any item separately reported. It is
used in the calculation of the Group's interest cover ratio.
Unaudited Half year Unaudited Half year Full year
2024 2023
£m £m 2023
£m
Total interest payable on borrowings (note 4) 11.3 10.4 23.5
Finance income (note 4) (4.7) (6.5) (15.3)
Net interest payable on borrowings 6.6 3.9 8.2
15.15 Interest cover
Interest cover is the ratio of adjusted EBITDA for the last 12 months to net
interest payable on borrowings for the last 12 months. This measure is also a
component of the Group's covenant calculations.
Unaudited Half year Unaudited Half year Full year
2024 2023
£m £m 2023
£m
Last 12 months adjusted EBITDA 252.7 262.0 258.2
Last 12 months net interest payable on borrowings 10.9 7.7 8.2
Interest cover 23.2x 34.0x 31.5x
15.16 Net debt
Net debt comprises the net total of current and non-current interest-bearing
borrowings (including IFRS16 lease liabilities), cash and short-term deposits
and derivative financial instruments. Net debt is a measure of the Group's net
indebtedness to banks and other external financial institutions. A
reconciliation of the movement in net debt is included in Note 8.
15.17 Net debt to adjusted EBITDA
Net debt to adjusted EBITDA is the ratio of net debt at the period-end to
adjusted EBITDA for the last 12 months. It is one of the measures used in
monitoring the Group's capital measure and is also a component of the Group's
covenant calculations.
Unaudited Half year Unaudited Half year Full year
2024 2023
£m £m 2023
£m
Net debt (note 8) 315.2 268.0 237.5
Last 12 months adjusted EBITDA 252.7 262.0 258.2
Net debt to adjusted EBITDA 1.2x 1.0x 0.9x
15.18 Return on invested capital (ROIC)
The Group has adopted ROIC as its key measure of return from the Group's
invested capital. The RONA performance measure has been replaced with ROIC
which provides a more complete measure of Vesuvius's returns. ROIC is
calculated as trading profit less amortisation of acquired intangibles plus
share of post-tax profit of joint ventures and associates for the previous 12
months after tax, divided by the average (being the average of the opening and
closing balance sheet) invested capital (defined as: total assets excluding
cash plus non-interest-bearing liabilities), at the average foreign exchange
rate for the year.
Unaudited Unaudited Full year
Half year Half year
2024 2023 2023
£m £m £m
Average invested capital 1,574.2 1,574.4 1,558.5
Trading profit (note 15.4) 191.2 196.8 200.4
Amortisation of acquired intangible assets (10.1) (10.4) (10.3)
Share of post-tax profit of joint ventures and associates 0.9 0.7 0.9
Tax on trading profit and amortisation of acquired intangible assets (49.8) (51.3) (52.3)
132.2 135.8 138.7
ROIC 8.4% 8.6% 8.9%
15.19 Constant currency
Figures presented at constant currency represent 2023 amounts retranslated at
average 2024 exchange rates.
15.20 Liquidity
Liquidity is the Group's cash and short-term deposits plus undrawn committed
debt facilities less cash used as collateral on loans and any gross up of cash
in notional cash pools.
Unaudited Half year Unaudited Half year Full year
2024 2023
£m £m 2023
£m
Cash and short term deposits 180.0 173.2 164.2
Undrawn committed debt facilities 222.7 309.5 333.4
Cash used as collateral on loans - (11.5) (10.0)
Liquidity 402.7 471.2 487.6
16 Exchange rates
The Group reports its results in pounds sterling. A substantial portion of the
Group's revenue and profits are denominated in currencies other than pounds
sterling. It is the Group's policy to translate the income statements and cash
flow statements of its overseas operations into pounds sterling using average
exchange rates for the year reported (except when the use of average rates
does not approximate the exchange rate at the date of the transaction, in
which case the transaction rate is used) and to translate balance sheets using
period end rates. The principal exchange rates used were as follows:
Income and expense
Average rates
Half year 2024 Half year 2023 Half year to Half year change Full year to Half year change
Full year 2023
US Dollar 1.27 1.23 1.24 3.3% 2.4%
Euro 1.17 1.14 1.15 2.6% 1.7%
Chinese Renminbi 9.14 8.56 8.82 6.8% 3.6%
Japanese Yen 192.54 166.52 174.87 15.6% 10.1%
Brazilian Real 6.43 6.25 6.21 2.9% 3.5%
Indian Rupee 105.27 101.37 102.68 3.8% 2.5%
South African Rand 23.68 22.48 22.95 5.3% 3.2%
Assets and liabilities
Period end rates
Half year 2024 Half year 2023 Half year to Half year change Full year to Half year change
Full year 2023
US Dollar 1.26 1.27 1.27 -0.8% -0.8%
Euro 1.18 1.16 1.15 1.7% 2.6%
Chinese Renminbi 9.23 9.23 9.07 0.0% 1.8%
Japanese Yen 203.32 183.34 179.56 10.9% 13.2%
Brazilian Real 7.07 6.08 6.18 16.3% 14.4%
Indian Rupee 105.38 104.29 105.89 1.0% -0.5%
South African Rand 22.99 23.92 23.27 -3.9% -1.2%
17 Events after the balance sheet date
In June 2023, the High Court judged in the Virgin Media vs NTL Pension Trustee
case that certain amendments made to the NTL Pension Plan were invalid because
the scheme's actuary had not provided the necessary confirmations (Section 37
Certificates). This decision was upheld in July 2024. It could have wider
ranging implications affecting other schemes that were contracted-out on a
salary related basis and made amendments between April 1997 and April 2016.
Due to the timing of the Appeals judgment, the Group and the Trustees of the
Group's UK Pension Plan have not investigated the potential implications (if
any) in detail and hence no allowance for this case has been made in
calculating the defined benefit obligations at the reporting date. The Group
and the Trustees will consider the Appeals judgment in due course and
investigate the potential implications (if any) of this ruling for the
year-end reporting.
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