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paAs filed with the Securities and Exchange Commission on March 19, 2018
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended December 31, 2017
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number 001-35370
LUXFER HOLDINGS PLC
(Exact name of Registrant as specified in its charter)
England and Wales
(Jurisdiction of incorporation or organization)
Lumns Lane, Manchester, M27 8LN
(Address of principal executive offices)
Heather Harding, Chief Financial Officer
Lumns Lane, Manchester, M27 8LN
Telephone No. 001 951 341 2375, E-Mail: investor.relations@luxfer.com
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
 
Name of each exchange on which registered
Ordinary Shares, nominal value £0.50 each
 
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:  None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:  None
Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report: 26,504,474 Ordinary Shares of £0.50 each and 769,413,708,000 Deferred Ordinary Shares of £0.0001 each.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes     o  No     x




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If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes     o  No     x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes     x  No     o  

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes     x  No     o  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of "large accelerated filer", "accelerated filer", and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer   o  
Accelerated filer   x
Non-accelerated filer   o  
Emerging growth company  o

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP   o  
International Financial Reporting Standards as issued
by the International Accounting Standards Board   x
Other   o  
If "Other" has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17     o   Item 18     o  
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes     o   No     x
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
 



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TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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GENERAL INFORMATION
In this Annual Report on Form 20-F ("Annual Report"), references to "Company," "Luxfer," "Group," "Luxfer Group," "we," "us" and "our" are to Luxfer Holdings PLC and, except as the context requires, its consolidated subsidiaries.
PRESENTATION OF FINANCIAL AND OTHER DATA
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") as they apply to the consolidated financial statements of the Group. The consolidated financial statements have been prepared on a historical cost basis, except where IFRS requires or permits fair value measurement.
All references in this Annual Report to (i) "U.S. dollar," "USD" or "$" are to the currency of the United States (the "U.S."), (ii) "pounds sterling," "GBP sterling," "pence," "p" or "£" are to the currency of the United Kingdom (the "U.K.") and (iii) "euro" or "€" are to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains certain statements, statistics and projections that are, or may be, forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The accuracy and completeness of all such statements, including, without limitation, statements regarding our future financial position, strategy, plans and objectives for the management of future operations, is not warranted or guaranteed. These statements typically contain words such as "believes," "intends," "expects," "anticipates," "estimates," "may," "will," "should" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors identified in "Risk factors," "Information on the Company" and "Operating and Financial Review and Prospects," or elsewhere in this Annual Report, as well as:
•
general economic conditions, or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected;
•
worldwide economic and business conditions and conditions in the industries in which we operate;
•
fluctuations in the cost of raw materials and utilities;
•
currency fluctuations and other financial risks;
•
our ability to protect our intellectual property;
•
the significant amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein;
•
relationships with our customers and suppliers;
•
increased competition from other companies in the industries in which we operate;
•
changing technology;
•
claims for personal injury, death or property damage arising from the use of products produced by us;
•
the occurrence of accidents or other interruptions to our production processes;
•
changes in our business strategy or development plans, and our expected level of capital expenditure;
•
our ability to attract and retain qualified personnel;
•
restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries;
•
regulatory, environmental, legislative and judicial developments; and
•
our intention to pay dividends.
You are urged to read the sections "Risk Factors," "Information on the Company" and "Operating and Financial Review and Prospects" of this Annual Report for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC.


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PART I
Item 1.
Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2.
Offer Statistics and Expected Timetable
Not applicable.
Item 3.
Key Information
A.     Selected financial data.
The following selected consolidated financial data of Luxfer as of December 31, 2017 , 2016 , 2015 , 2014 and 2013 , and for the years ended December 31, 2017 , 2016 , 2015 , 2014 and 2013 , have been derived from our consolidated financial statements and the related notes appearing elsewhere in this Annual Report (or prior Annual Reports), which have been prepared in accordance with IFRS as issued by the IASB. Our historical results are not necessarily indicative of results to be expected for future periods.
This financial data should be read in conjunction with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report (or prior Annual Reports) and Item 5, "Operating and Financial Review and Prospects" below.
Summary Consolidated Data
 
 
Year Ended December 31,
 
 
 
2017
 
2016
 
2015
 
2014
 
2013
 
 
 
(in $ million, except per share data)
 
 
Revenue
$
441.3

 
$
414.8

 
$
460.3

 
$
489.5

 
$
481.3

 
 
Trading profit (1) :
$
40.5

 
$
35.3

 
$
42.3

 
$
44.8

 
$
59.2

 
 
 Trading margin
9.2
%
 
8.5
%
 
9.2
%
 
9.2
%
 
12.3
%
 
 
Operating profit
$
19.3

 
$
35.8

 
$
37.9

 
$
40.9

 
$
56.5

 
 
Net income
$
11.5

 
$
21.9

 
$
16.1

 
$
29.2

 
$
34.1

 
 
 Earnings per share - basic (2)
0.43

 
0.83

 
0.60

 
1.09

 
1.27

 
 
 Earnings per share - diluted (2)
0.43

 
0.82

 
0.59

 
1.05

 
1.22

 
 
Net cash flows from operating activities
$
45.2

 
$
29.2

 
$
52.8

 
$
23.0

 
$
37.1

 

Segmental Information
 
 
As of December 31,
 
 
 
2017
 
2016
 
2015
 
2014
 
2013
 
 
 
(in $ million)
 
 
Revenue:
 

 
 

 
 

 
 

 
 

 
 
Elektron
$
221.1

 
$
189.0

 
$
221.2

 
$
230.6

 
$
219.7

 
 
Gas Cylinders
220.2

 
225.8

 
239.1

 
258.9

 
261.6

 
 
 
$
441.3

 
$
414.8

 
$
460.3

 
$
489.5

 
$
481.3

 
 
Trading profit (1) :
 

 
 

 
 

 
 

 
 

 
 
Elektron
$
31.8

 
$
23.9

 
$
33.7

 
$
38.9

 
$
40.2

 
 
Gas Cylinders
8.7

 
11.4

 
8.6

 
5.9

 
19.0

 
 
 
$
40.5

 
$
35.3

 
$
42.3

 
$
44.8

 
$
59.2

 





1
Table of Contents


Consolidated Balance Sheet Data
 
 
As of December 31,
 
 
 
2017
 
2016
 
2015
 
2014
 
2013
 
 
 
(in $ million)
 
 
Total assets
$
402.6

 
$
391.5

 
$
435.7

 
$
459.8

 
$
396.1

 
 
Total liabilities
(240.3
)
 
(249.6
)
 
(266.0
)
 
(284.4
)
 
(204.4
)
 
 
Total equity
$
162.3

 
$
141.9

 
$
169.7

 
$
175.4

 
$
191.7

 
 
Cash and cash equivalents
13.3

 
13.6

 
36.9

 
14.6

 
28.4

 
 
Overdrafts
(4.2
)
 
—

 
—

 
—

 
—

 
 
Restricted cash
(0.7
)
 
—

 
—

 
—

 
—

 
 
Bank and other loans
(108.8
)
 
(121.0
)
 
(131.6
)
 
(121.4
)
 
(63.8
)
 
 
Net debt (non-GAAP) (3)
$
(100.4
)
 
$
(107.4
)
 
$
(94.7
)
 
$
(106.8
)
 
$
(35.4
)
 
Non-GAAP Financial Measures
 
 
Year ended December 31,
 
 
 
2017
 
2016
 
2015
 
2014
 
2013
 
 
 
(in $ million, except per share data)
 
 
Adjusted EBITDA (3) :
 

 
 

 
 

 
 

 
 

 
 
Elektron
$
44.5

 
$
35.6

 
$
45.7

 
$
50.1

 
$
49.8

 
 
Gas Cylinders
17.3

 
19.7

 
16.5

 
14.7

 
26.8

 
 
 
$
61.8

 
$
55.3

 
$
62.2

 
$
64.8

 
$
76.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted net income (3)
$
27.6

 
$
24.7

 
$
29.5

 
$
30.9

 
$
39.8

 
 
Adjusted net income per ordinary share (4) :
 
 
 
 
 
 
 
 
 
 
 
Basic
$
1.04

 
$
0.93

 
$
1.10

 
$
1.15

 
$
1.48

 
 
Diluted
$
1.02

 
$
0.92

 
$
1.08

 
$
1.11

 
$
1.42

 

(1)  
Trading profit is defined as operating profit or loss before profit on sale of redundant site, changes to defined benefit pension plans and restructuring and other expense. For the purposes of our divisional segmental analysis, IFRS 8 requires the use of "segment profit" performance measures that are used by our chief operating decision maker. Trading profit is the "segment profit" measure used by our chief operating decision maker for divisional segmental analysis. See "Note 2—Revenue and segmental analysis" in our consolidated financial statements included elsewhere in this Annual Report (or prior Annual Reports).

(2)  
Basic and diluted earnings per ordinary share
For further information, see "Note 10—Earnings per share" to our consolidated financial statements. We calculate earnings per share in accordance with IAS 33. Basic earnings per share is calculated based on the weighted average of ordinary shares outstanding for the period presented. The weighted average of ordinary shares outstanding is calculated by time-apportioning the shares outstanding during the year. For the purpose of calculating diluted earnings per share, the weighted average of ordinary shares outstanding during the period presented has been adjusted for the dilutive effect of all share options granted to employees. In calculating the diluted weighted average of ordinary shares outstanding, there are no shares that have not been included for anti-dilution reasons.
(3)     Non-GAAP financial measures
The following table presents a reconciliation of adjusted net income and adjusted EBITDA to net income, the most comparable IFRS measure. A reconciliation of adjusted EBITDA to trading profit on a segmental basis is included in "Note 2—Revenue and segmental analysis" in our consolidated financial statements included elsewhere in this Annual Report (or prior Annual Reports).

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Table of Contents

 
 
Year Ended December, 31
 
 
 
2017
 
2016
 
2015
 
2014
 
2013
 
 
 
(in $ million)
 
 
Net income for the year
$
11.5

 
$
21.9

 
$
16.1

 
$
29.2

 
$
34.1

 
 
Acquisition and disposal charges
 
 
 
 
 
 
 
 
 
 
 
Unwind of discount on deferred contingent consideration from acquisitions
0.2

 
0.4

 
0.4

 
0.3

 
—

 
 
Net (gain) / loss on acquisitions and disposals
(1.3
)
 
(0.2
)
 
2.0

 
(4.5
)
 
0.1

 
 
Amortization on acquired intangibles
1.2

 
1.0

 
1.4

 
0.6

 
—

 
 
IAS 19R retirement benefits finance charge
1.8

 
2.1

 
3.0

 
2.7

 
3.8

 
 
Profit on sale of redundant site
(0.4
)
 
(2.1
)
 
—

 
—

 
—

 
 
Changes to defined benefit pension plans
—

 
(0.6
)
 
(18.0
)
 
—

 
1.7

 
 
Restructuring and other expense
21.6

 
2.2

 
22.4

 
3.9

 
1.0

 
 
Other share based compensation charges
2.2

 
1.4

 
1.3

 
1.6

 
1.3

 
 
Tax thereon
(3.2
)
 
(1.4
)
 
0.9

 
(2.9
)
 
(2.2
)
 
 
Impact of U.S. tax reform
(6.0
)
 
—

 
—

 
—

 
—

 
 
Adjusted net income
$
27.6

 
$
24.7

 
$
29.5

 
$
30.9

 
$
39.8

 
 
Add back:
 
 
 
 
 
 
 
 
 
 
 
Impact of U.S tax reform
6.0

 
—

 
—

 
—

 
—

 
 
Tax thereon
3.2

 
1.4

 
(0.9
)
 
2.9

 
2.2

 
 
Tax expense
0.4

 
6.0

 
9.5

 
7.1

 
12.6

 
 
Net interest costs
6.7

 
5.6

 
6.9

 
6.1

 
5.9

 
 
Depreciation and amortization
19.0

 
18.4

 
18.6

 
18.1

 
15.8

 
 
Amortization on acquired intangibles
(1.2
)
 
(1.0
)
 
(1.4
)
 
(0.6
)
 
—

 
 
Loss on disposal of property, plant and equipment
0.1

 
0.2

 
—

 
0.3

 
0.3

 
 
Adjusted EBITDA
$
61.8

 
$
55.3

 
$
62.2

 
$
64.8

 
$
76.6

 
Adjusted net income consists of net income for the period adjusted for the post tax impact of non-trading items, including certain accounting charges relating to acquisitions and disposals of businesses (comprising net gain / (loss) from acquisitions and disposals, the unwind of the discount on deferred contingent consideration from acquisitions and the amortization on acquired intangibles), IAS 19R retirement benefits finance charge, profit on sale of redundant site, changes to defined benefit pension plans, restructuring and other expense and other share based compensation charges.
Adjusted EBITDA is defined as net income for the period before income tax expense, finance income (which comprises interest receivable), finance costs (which comprises interest costs, IAS 19R retirement benefits finance charge, and the unwind of the discount on deferred contingent consideration from acquisitions), net gain / (loss) on acquisitions and disposals, profit on sale of redundant site, changes to defined benefit pension plans, restructuring and other expense, other share based compensation charges, depreciation and amortization and loss on disposal of property, plant and equipment.
We prepare and present adjusted net income and adjusted EBITDA to eliminate the effect of items that we do not consider indicative of our core operating performance. Management believes that adjusted net income and adjusted EBITDA are key performance indicators used by the investment community, and that the presentation of adjusted net income and adjusted EBITDA will enhance investors' understanding of our results of operations. However, adjusted net income and adjusted EBITDA should not be considered in isolation by investors as an alternative to net income for the year as an indicator of our operating performance or as a measure of our profitability. Adjusted net income and adjusted EBITDA are not measures of financial performance under IFRS, may not be indicative of historic operating results and are not meant to be predictive of potential future results. Adjusted net income and adjusted EBITDA measures presented herein may not be comparable to other similarly titled measures of other companies. While adjusted net income and adjusted EBITDA are not measures of financial performance under IFRS, adjusted net income and adjusted EBITDA presented have been computed using IFRS amounts.
We use net debt as a measure of our financial leverage. We believe that investors may also find net debt to be helpful in evaluating our financial leverage.



3
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(4)     Basic and diluted adjusted earnings per ordinary share
For further information, see "Note 10—Earnings per share" to our consolidated financial statements. We believe that the use of non-GAAP financial measures, such as adjusted earnings per ordinary share more closely reflects the underlying earnings per ordinary share performance and is a financial measure widely used by both investors and financial analysts of the Company's ordinary shares.
B.     Capitalization and indebtedness.
Not applicable.
C.     Reasons for the offer and use of proceeds.
Not applicable.
D.    Risk factors.
You should carefully consider the following risk factors described below, together with all of the other information in this Annual Report, including our consolidated financial statements and the related notes appearing elsewhere in this Annual Report, before investing in our ordinary shares. The risks and uncertainties described below are those significant risk factors currently known and specific to us that we believe are relevant to an investment in our securities. If any of these risks materialize, our business, financial position or results of operations could suffer, the price of our ordinary shares could decline and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or those we now deem immaterial, may also harm us and adversely affect your investment in our ordinary shares.
Risks Relating to Our Operations
We depend on certain end-markets, including automotive, alternative fuels, self-contained breathing apparatus, aerospace and defense, medical, and printing and paper. An economic downturn, or regulatory changes, in any of those end-markets, could reduce sales and margins on those sales.
We have significant exposures to certain key end-markets, including some end-markets that are cyclical in nature or subject to high levels of regulatory control. For example, 20% of our 2017 sales were related to automotive end-markets, 12% to the self-contained breathing apparatus ("SCBA") end-market, 21% to aerospace and defense end-markets, 6% to alternative fuel and 11% to printing and paper end-markets. Together, these five markets accounted for 70% of our 2017 revenue. Dependence of either of our divisions on certain end-markets is even more pronounced. For example, in 2017 , 34% of the Elektron Division's sales were to customers in aerospace and defense end-markets which were depressed during 2016 with partial recovery in 2017.
To the extent that any of these cyclical end-markets are in decline, at a low point in their economic cycle, or subject to regulatory change, sales and margins on those sales may be adversely affected. It is possible that all or most of these end-markets could be in decline at the same time, such as during a recession. Any significant reduction in sales could have a material adverse impact on our results of operations, financial position and cash flows.
Our global operations expose us to economic conditions, political risks and specific regulations in the countries in which we operate, which could have a material adverse impact on our results of operations, financial position and cash flows.
We derive our revenue and earnings from operations in many countries and are subject to risks associated with doing business internationally. We have wholly-owned operations in the U.S., the U.K., Canada, France, the Czech Republic, China and Australia; joint venture facilities in India, Japan and the U.S.; and an associate in Australia. Doing business in different countries has risks, including the potential for adverse changes in the local political, financial or regulatory climate, difficulty in staffing and managing geographically diverse operations, and the costs of complying with a variety of laws and regulations. For example the change in the political climate in the U.S. could make it more challenging or expensive to import products manufactured in Europe.

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Table of Contents

Due to the fact we have operations in many countries, we are also liable to pay taxes in many fiscal jurisdictions. Our tax burden depends on the interpretation of local tax regulations, bilateral or multilateral international tax treaties and the administrative doctrines in each jurisdiction. Changes in these tax regulations may increase our tax burden, or otherwise affect our accounting for taxes. For example, as a result of the reduction in the statutory corporate income tax rate in the U.S. pursuant to the tax reform bill enacted on December 22, 2017, discussed below, we have recorded a reduction in the value of our deferred tax assets in the U.S. of $6.0 million. Moreover, the principal markets for our products are located in North America, Europe and Asia, and any financial difficulties experienced in these markets may have a material adverse impact on our businesses. For example, the maturity of some of our markets, particularly the U.S. medical oxygen cylinder market and the European fire extinguisher market, could require us to increase sales in developing regions, which may involve greater economic and political risks. We cannot provide any assurances that we will be able to expand sales in these regions. Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows.
On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the European Union (the "E.U.")., commonly referred to as 'Brexit'. On March 29, 2017, the U.K. Government invoked Article 50 of the Treaty on the European Union, which is likely to result in the U.K. exiting the E.U. on March 29, 2019. The U.K. Government has commenced negotiating the terms of the U.K.'s future relationship with the E.U. although there is still considerable uncertainty as to the outcome. It is possible that there will be greater restrictions on imports and exports between the U.K. and other countries and increased regulatory complexity. These changes may adversely affect our operations and financial results. See also "—Changes in foreign exchange rates could reduce margins on our sales and reduce the reported revenue of our non-U.S. operations and have a material adverse effect on our results of operations."
On December 22, 2017, President Trump signed into law legislation known as the “Tax Cuts and Jobs Act” (the “Act”) that significantly reforms the Internal Revenue Code of 1986, as amended. The Act, among other things, reduces the U.S. federal corporate income tax rate from 35% to 21%, imposes new limitations on the deductibility of interest and net operating loss carry forwards, allows for the expensing of capital expenditures, and makes other significant changes to the U.S. international tax system. The U.S. Internal Revenue Service to date has issued only limited guidance with respect to certain of the new provisions, and there are numerous interpretive issues that are expected to require clarification. Such future guidance could significantly affect the impact of the Act on us.
Our operations rely on a number of large customers in certain areas of our business, and the loss of any of our major customers could negatively impact our results of operations.
If we fail to maintain our relationships with our major customers, or fail to replace lost customers, or if there is reduced demand from our customers or for products produced by our customers, such failures or reduced demand could materially reduce our sales. In addition, we could experience a reduction in sales if any of our customers fail to perform or default on any payment pursuant to our contracts with them. Long-term relationships with customers are especially important for suppliers of intermediate materials and components such as ourselves. We often work closely with customers to develop products that meet particular specifications as part of the design of a product intended for an end-user market. The bespoke nature of many of our products could make it difficult to replace lost customers. Our top 10 customers accounted for 25% of our revenue in 2017 . Any significant reduction in sales or customer payment default could have an adverse material impact on our results of operations, financial position and cash flows.
Competitive pressures could materially and adversely affect our sales and margins.
The markets for many of our products are now increasingly global and highly competitive, especially in terms of quality, price and service. Due to the highly competitive nature of some markets in which we operate, we may have difficulty raising customer prices to offset increases in the costs of raw materials. For example, the U.S. medical oxygen cylinder market has a number of dedicated producers with excess capacity, making it very difficult for us to raise customer prices to offset aluminum cost increases. In addition, rising aluminum costs could lead to the development of alternative products that use lower cost materials, which could become favored by end-market users.
We also experience competition from developing markets where manufacturers may benefit from lower labor costs. We are also affected by Western-based competitors that have chosen to relocate production to Asia to take advantage of lower labor costs. Competitors with operations in these regions may be able to produce goods at a relatively lower cost, which may enable them to offer highly competitive selling prices.
Competition with respect to less-complex zirconium chemicals has been particularly intense, with Chinese suppliers providing low-cost feedstock to specialist competitors, making it especially difficult to compete in commodity products such as paper-making additives. Chinese magnesium also continues to be imported into

5
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Europe in large volumes, which may impact our competitive position in Europe regarding certain magnesium alloys. More generally, we may face potential competition from producers that manufacture products similar to our aluminum-based, magnesium-based and zirconium-based products using other materials, such as steel, plastics, composite materials or other metals, minerals and chemicals. Products manufactured by competitors using different materials might compete with our products in terms of price, weight, engineering characteristics, recyclability or other grounds.
We may also enter new markets with established competitors. We expect to face new and significant challenges in our effort to enter into these highly competitive markets in which we did not have a presence historically. For example, in recent years, we have entered markets focused on the containment of compressed natural gas (CNG) and incurred startup costs along with strong competitive pressures from existing providers of similar cylinder technologies. Even if we are able to enter into these new markets initially, we may not be able to sustain the effort on a long-term basis or establish sufficient market share to achieve meaningful returns from our investment.
Other parts of our operations manufacture and sell products that satisfy customer specifications. Competitors may develop lower cost or better performing products, and customers may not be willing to pay a premium for advantages offered by our products.
In addition, governments may impose import and export restrictions, grant subsidies to local companies and implement tariffs and other trade protection regulations and measures that may give competitive advantages to certain of our competitors and adversely affect our business.
Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows.
We depend upon our larger suppliers for a significant portion of our raw materials, and a loss of one of these suppliers, or a significant supply interruption could negatively impact our financial performance.
We rely, to varying degrees, on major suppliers for some of the principal raw materials of our engineered products, including aluminum, zirconium and carbon fiber. For example, in 2017 , we obtained 73% of our aluminum, the largest single raw material purchased by the Gas Cylinders Division, from Rio Tinto Alcan and its associated companies. Moreover, demand for carbon fiber is increasing, which has led to occasional periods of short supply in recent years with a number of expanding applications competing for the same supply of this specialized raw material. Our largest suppliers of carbon fiber are Toray and Grafil, a subsidiary of Mitsubishi Chemical. For additional details of some of our major suppliers, see "Item 4.B. Business Overview."
We generally purchase raw materials from suppliers on a spot basis under standard terms and conditions. In 2017, we entered into a three-year supply contract with Rio Tinto Alcan for a substantial portion of our aluminum requirements. In addition, we have in place one-year and five-year magnesium supply contracts with U.S. Magnesium for a portion of our requirements that expire in December 2018 and December 2019 respectively.
An interruption in the supply of essential raw materials used in our production processes or an increase in the costs of raw materials due to market shortages, supplier financial difficulties, government quotas or natural disturbances, could significantly affect our ability to provide competitively priced products to customers in a timely manner. In the event of a significant interruption in the supply of any materials used in our production processes, or a significant increase in their prices (as we have experienced, for example, at different times with aluminum, magnesium and rare earths), we may have to purchase these materials from alternative sources, build additional inventory of raw materials, increase our prices, reduce our margins or possibly fail to fill customer orders by deadlines required in contracts, which could result in, among other things, contractual penalties. We can provide no assurance that we would be able to obtain replacement materials quickly on similar terms or at all. Failure to maintain relationships with key suppliers or to develop relationships with alternative suppliers could have a material adverse effect on our results of operations, financial position and cash flows.
We are exposed to fluctuations in the costs of the raw materials that are used to manufacture our products, and such fluctuations could lead us to incur unexpected costs and could affect our margins and / or working capital requirements.
The primary raw material we use to manufacture gas cylinders and superformed panels is aluminum supplied in billet and sheet form. The cost of aluminum is subject to both significant short-term price fluctuations and to longer-term cyclicality as a result of international supply and demand relationships. In 2017 , the London Metal Exchange ("LME") three month cost of aluminum reached a high of just below $2,300 per metric ton and a low of just below $1,700 per metric ton. The delivery premiums added by suppliers to the LME price also fluctuate, for example: the Midwest Aluminum Premium for physical supply of aluminum billet in the U.S. has historically averaged around $200 per metric ton, but in 2015 rose to a high of $535 per metric ton then fell to a low of $155

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per metric ton. We have experienced significant volatility in other raw material costs in the last few years, such as primary magnesium, carbon fiber, zircon sand and rare earths. See "Item 4.B. Business Overview."
Fluctuations in the costs of these raw materials could affect margins and working capital requirements in the businesses in which we use them. See "Item 5. Operating and Financial Review and Prospects." We cannot always pass on cost increases or increase our prices to offset these cost increases immediately or at all, whether because of fixed-price agreements with customers, competitive pressures that restrict our ability to pass on cost increases or increase prices, or other factors. It can be particularly difficult to pass on cost increases or increase prices in product areas such as gas cylinders, where competitors offer similar products made from alternative materials, such as steel, if those materials are not subject to the same cost increases. Higher prices necessitated by large increases in raw material costs could make our current or future products unattractive compared to competing products made from alternative materials that have not been so affected by raw material cost increases, or compared to products produced by competitors who have not incurred such large increases in their raw material costs.
In addition, pricing of raw materials, such as aluminum, may be impacted by the level of tariffs imposed on imports. President Trump announced in March, 2018 that the U.S. is to impose a 10% tariff on aluminum imported into the U.S. The Company uses a substantial amount of aluminum in its products, with imports into the U.S. primarily originating from Canada. Whilst details regarding the applicability of the tariffs have not been fully established at this time, we believe there will be no direct and immediate impact on our business since there will be an initial exemption for Canada (and Mexico) whilst the North American Free Trade Agreement (NAFTA) is renegotiated. If the exemption were to be lifted, then the price of such imported materials would increase substantially and the price of U.S.-made aluminum can also be expected to increase substantially.
If the cost of aluminum were to rise, we may not be able pass those cost increases on to our customers or manage the exposure effectively through hedging instruments. Currently we use derivative financial instruments to hedge our exposures to fluctuations in aluminum costs. Although it is our treasury policy to enter into these transactions only for hedging and not for speculative purposes, we are exposed to market risk and credit risk with respect to the use of these derivative financial instruments. See "Item 11. Quantitative and Qualitative Disclosures About Market Risk." In addition, if we have hedged our metal position, a fall in the cost of aluminum might give rise to hedging margin calls to the detriment of our borrowing position.
In the past several years we have made additional purchases of large stocks of magnesium chemicals in an effort to delay the effect of potentially increased costs in the future. However, even though such purchases are not made for speculative purposes, there can be no assurance that costs will move as expected.
Moreover, these strategic purchases increase our working capital needs, thus reducing our liquidity and cash flow.
Accordingly, a substantial increase in raw material costs could have a material adverse effect on our results of operations, financial position and cash flows.
We are exposed to fluctuations in costs of utilities that are used in the manufacture of our products, and such fluctuations could lead us to incur unexpected costs and could affect our margins and results of operations.
Our utility costs, which constitute another major input cost of our total expenses and include costs related to electricity, natural gas and water, may be subject to significant variations. Increased taxation and other factors have contributed in the past to a significant increase in utility costs for us, particularly with respect to the price that we pay for our U.K. energy supplies.
Fluctuations in the costs of these utilities could affect margins in our businesses in which we use them. We cannot always pass on cost increases or increase our prices to offset cost increases immediately or at all, whether because of fixed-price agreements with customers, competitive pressures that restrict our ability to pass on cost increases or increase prices, or other factors. It can be particularly difficult to pass on cost increases or increase prices in product areas such as gas cylinders, where competitors offer similar products made from alternative materials, such as steel, if those materials are not subject to the same cost increases. As a result, a substantial increase in utility costs could have a material adverse effect on our results of operations, financial position and cash flows.
Changes in foreign exchange rates could reduce margins on our sales and reduce the reported revenue of our non-U.S. operations and have a material adverse effect on our results of operations.
We conduct a large portion of our commercial transactions, purchases of raw materials and sales of goods in various countries and regions, including the U.S., the U.K., continental Europe, Australia and Asia. Our manufacturing operations based in the U.S., continental Europe and Asia usually purchase raw materials and

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sell goods denominated in their local currency, but our manufacturing operations in the U.K. often purchase raw materials and sell products in different currencies. Changes in the relative values of currencies can decrease the profits of our subsidiaries when they incur costs in currencies that are different from the currencies in which they generate all or part of their revenue. These transaction risks principally arise as a result of purchases of raw materials in U.S. dollars, coupled with sales of products to customers in euros. This impact is most pronounced in our exports to continental Europe from the U.K. In 2017, our U.K. operations sold approximately €46 million of goods into the Eurozone. Our policy is to hedge a portion of our net exposure to fluctuations in exchange rates with forward foreign currency exchange contracts. Therefore, we are exposed to market risk and credit risk through the use of derivative financial instruments. Moreover, any failure of hedging policies could negatively impact our profits, and thus damage our ability to fund our operations and to service our indebtedness. Whilst exchange rates have been more stable in 2017 than in 2016 (following the E.U. referendum in the U.K.), until the terms of the U.K.'s future relationship with the E.U. are known, further exchange rate volatility is to be expected.
In addition to subsidiaries and joint ventures in the U.S., we have subsidiaries located in the U.K., Canada, France, the Czech Republic, China, Germany and Australia, as well as joint ventures in Japan and India, and an associate in Australia, whose revenue, costs, assets and liabilities are denominated in local currencies. As our consolidated financial statements are reported in U.S. dollars, we are exposed to fluctuations in those currencies when those amounts are translated to U.S. dollars for purposes of reporting our consolidated financial statements, which may cause declines in results of operations. The largest risk is from our operations in the U.K., which in 2017 generated an operating loss of $5.1 million and sales revenue of $139.5 million . Fluctuations in exchange rates, particularly between the U.S. dollar and GBP sterling (which has been subject to significant fluctuations, as described above), can have a material effect on our consolidated income statement and consolidated balance sheet. In 2017, movements in the average U.S. dollar exchange rate had a positive impact on revenue of $6.4 million , while in 2016; movements in the average U.S. dollar exchange rate had a negative impact on reported revenue of $13.4 million. Changes in translation exchange rates increased net assets by $11.6 million in 2017, compared to a decrease of $13.1 million in 2016.
These foreign exchange risks could have a material adverse effect on our results of operations, financial position and cash flows. For additional information on these risks, and the historical impact on our results, see "Item 11. Quantitative and Qualitative Disclosure About Market Risk."
Our defined benefit pension plans have significant funding deficits and are exposed to market forces that could require us to make increased ongoing cash contributions in response to changes in market conditions, actuarial assumptions and investment decisions, and that could expose us to significant short-term liabilities if a wind-up trigger occurred in relation to such plans, each of which could have a material adverse impact on our results of operations and financial position.
We have defined benefit pension arrangements in the U.K., the U.S. and France. See "Note 29—Retirement benefits" of the consolidated financial statements appearing elsewhere in this Annual Report. Our largest defined benefit plan, the Luxfer Group Pension Plan, which closed to new members in 1998, remained open for accrual of future benefits based on career-average salary until April 5, 2016. However, following a consultation, it was agreed with the trustees and plan members to close the Luxfer Group Pension Plan in the U.K. to future accrual of benefits, effective from April 5, 2016. Moreover, for the purpose of increasing pensions in payment, it was agreed to use the CPI as the reference index, in place of the RPI where applicable. The Luxfer Group Pension Plan is funded according to the regulations in effect in the U.K. and, as of December 31, 2017, and December 31, 2016, had an IAS 19R accounting deficit of $43.4 million and $54.5 million, respectively. Luxfer Group Limited is the principal employer under the Luxfer Group Pension Plan, and other U.K. subsidiaries also participate under the plan. Our other defined benefit plans are less significant than the Luxfer Group Pension Plan and, as of December 31, 2017, and December 31, 2016, had aggregate IAS 19R accounting deficits of $11.9 million and $12.0 million, respectively. The largest of these additional plans is the BA Holdings, Inc. Pension Plan in the U.S., which was closed to further benefit accruals in December 2005, and merged with the much smaller Luxfer Hourly Pension Plan, effective January 1, 2016. According to the actuarial valuation of the Luxfer Group Pension Plan as of April 5, 2015, but after reflecting the reduction in liabilities from closing the plan to future accrual and changing the reference index (for the purpose of increasing pensions in payment), the Luxfer Group Pension Plan had a deficit of £32.5 million on a plan-specific basis. Should a wind-up trigger occur in relation to the Luxfer Group Pension Plan, the buy-out deficit of that plan will become due and payable by the employers. The aggregate deficit of the Luxfer Group Pension Plan on a buy-out basis was estimated at £117.0 million as of April 5, 2015. The trustees have the power to wind-up the Luxfer Group Pension Plan if they consider that in the best interests of members there is no reasonable purpose in continuing the Luxfer Group Pension Plan.
As a result of the actuarial valuation as of April 5, 2015, we are required to continue to make ongoing cash contributions, over and above normal contributions required to meet the cost of future accrual, to the Luxfer Group Pension Plan. These additional payments are intended to reduce the funding deficit. We have agreed with

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the trustees to a schedule of payments to reduce the deficit. This schedule has been provided to the U.K. Pensions Regulator (the "Pensions Regulator") and a response was received in 2016 stating there were no issues with the valuation methodology. The schedule of payments provides for minimum annual contributions of £3.8 million per year, together with additional variable contributions based on 15% of net earnings (in the previous calendar year) of Luxfer Holdings PLC between £12 million and £24 million, and 10% of net earnings (in the previous calendar year) of Luxfer Holdings PLC in excess of £24 million. The total contributions are not subject to an annual cap. These contribution rates are to apply until the deficit is eliminated (which is expected to take between 4 and 6 years from 2017, depending on variable contributions), but in practice the schedule will be reviewed and may be revised following the next triennial actuarial valuation. Regulatory burdens have also proven to be a significant risk, such as the U.K.'s Pension Protection Fund Levy, which was $0.3 million in 2017.
We are exposed to various risks related to our defined benefit plans, including the risk of loss of market value of the plan assets, the risk of actual investment returns being less than assumed rates of return, the trustees of the Luxfer Group Pension Plan switching investment strategy (which does require consultation with the employer) and the risk of actual experience deviating from actuarial assumptions for such things as mortality of plan participants. In addition, fluctuations in interest rates cause changes in the annual cost and benefit obligations. Any of these risks could have a material adverse impact on our results of operations, financial position and cash flows.
The Pensions Regulator in the U.K. has the power in certain circumstances to issue contribution notices or financial support directions that, if issued, could result in significant liabilities arising for us.
The Pensions Regulator may issue a contribution notice to the employers that participate in the Luxfer Group Pension Plan, or any person who is connected with, or is an associate of, these employers where the Pensions Regulator is of the opinion that the relevant person has been a party to an act, or a deliberate failure to act, which had as its main purpose (or one of its main purposes) the avoidance of pension liabilities or where such act has a materially detrimental effect on the likelihood of payment of accrued benefits under the Luxfer Group Pension Plan being received. A person holding alone or together with his or her associates, directly or indirectly, one-third or more of our voting power, could be the subject of a contribution notice. The terms "associate" and "connected person," which are taken from the Insolvency Act 1986, are widely defined and could cover our significant shareholders and others deemed to be shadow directors. If the Pensions Regulator considers that a plan employer is "insufficiently resourced" or a "service company" (which terms have statutory definitions), it may impose a financial support direction requiring such plan's employer or any member of the Group, or any person associated or connected with an employer, to put in place financial support in relation to the Luxfer Group Pension Plan. Liabilities imposed under a contribution notice or financial support direction may be up to the difference between the value of the assets of the Luxfer Group Pension Plan and the cost of buying out the benefits of members and other beneficiaries of the Luxfer Group Pension Plan. In practice, the risk of a contribution notice being imposed may restrict our ability to restructure or undertake certain corporate activities. Additional security may also need to be provided to the trustees of the Luxfer Group Pension Plan before certain corporate activities can be undertaken (such as the payment of an unusual dividend), and any additional funding of the Luxfer Group Pension Plan may have a material adverse effect on our financial position and cash flows.
Our ability to remain profitable depends on our ability to protect and enforce our intellectual property, and any failure to protect and enforce such intellectual property could have a material adverse impact on our results of operations and financial position.
We cannot ensure that we will always have the ability to protect proprietary information and our intellectual property rights. We protect our intellectual property rights (within the U.S., Europe and other countries) through various means, including patents and trade secrets. Due to the difference in foreign trademark, patent and other laws concerning proprietary rights, our intellectual property rights may not receive the same degree of protection in other countries as they would in the U.S. or the U.K. The patents we own could be challenged, invalidated or circumvented by others and may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage. Further, competitors may infringe our patents and the costs of protecting our patents could be significant. We cannot assure you that we will have adequate resources to enforce our patents. Our patents will only be protected for the duration of the patent. Some of our older key patents have expired, and others will expire over the next few years. As a result, our competitors may introduce products using the technology previously protected, and these products may have lower prices than our products, which may negatively affect our market share. To compete, we may need to reduce our prices for those products. Additionally, the expiry of certain of those patents has reduced, or will reduce, barriers to entry to possible competitors for certain products and end-markets. With respect to our unpatented proprietary technology, it is possible that others will independently develop the same or similar technology or obtain access to our unpatented technology. To protect our trade secrets and other proprietary information, we require employees, consultants, advisors and collaborators to enter into confidentiality agreements. Nevertheless, we cannot assure you that these agreements will provide meaningful protection for our trade secrets, know-how or other

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proprietary information in the event of any unauthorized use, misappropriation or disclosure of such trade secrets, know-how or other proprietary information. We rely on our trademarks, trade names and brand names to distinguish our products from the products of our competitors, and we have registered or applied to register many of these trademarks. Third parties may also oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Further, we cannot assure you that competitors will not infringe our trademarks or that we will have adequate resources to enforce our trademarks.
Any failure to maintain, protect and enforce our intellectual property or the expiry of patent protection could have a material adverse impact on our results of operations, financial position and cash flows.
Expiration or termination of our right to use certain intellectual property granted by third parties, the right of those third parties to grant the right to use the same intellectual property to our competitors, and the right of certain third parties to use certain intellectual property used as part of our business, could have a material adverse impact on our results of operations, financial position and cash flows.
We have negotiated, and may from time to time in the future negotiate, licenses with third parties with respect to third party proprietary technologies used in certain of our manufacturing processes and products. If any of these licenses expire or terminate, we will no longer retain the rights to use the relevant third party proprietary technologies in our manufacturing processes and products, which could have a material adverse effect on our results of operations, financial position and cash flows. Further, the rights granted to us might be non-exclusive, which could result in our competitors gaining access to the same intellectual property.
Some of our patents may cover inventions that were conceived or first reduced to practice under, or in connection with, government contracts or other government funding agreements or grants. With respect to inventions conceived or first reduced to practice under such government funding agreements, a government may retain a non-exclusive, irrevocable, royalty-free license to practice, or have practiced for or on behalf of the relevant country, the invention throughout the world. In addition, if we fail to comply with our reporting obligations, or to adequately exploit the developed intellectual property under these government funding agreements, the relevant country may obtain additional rights to the developed intellectual property, including the right to take title to any patents related to government funded inventions or to license the same to our competitors. Furthermore, our ability to exclusively license or assign the intellectual property developed under these government funding agreements to third parties may be limited or subject to the relevant government's approval or oversight. These limitations could have a significant impact on the commercial value of the developed intellectual property.
We often enter into research and development agreements with academic institutions whereby they generally retain certain rights to the developed intellectual property. The academic institutions generally retain rights over the technology for use in non-commercial academic and research fields, including in some cases the right to license the technology to third parties for use in those fields. It is difficult to monitor and enforce such non-commercial academic and research uses, and we cannot predict whether the third party licensees would comply with the use restrictions of these licenses. We could incur substantial expenses to enforce our rights against such licensees. In addition, even though the rights that academic institutions obtain are generally limited to the non-commercial academic and research fields, they may obtain rights to commercially exploit developed intellectual property in certain instances. Under research and development agreements with academic institutions, our rights to intellectual property developed thereunder are not always certain, but instead may be in the form of an option to obtain license rights to such intellectual property. If we fail to exercise our option rights in a timely way and / or we are unable to negotiate a license agreement, the academic institution may offer a license to the developed intellectual property to third parties for commercial purposes. Any such commercial exploitation could adversely affect our competitive position and have a material adverse effect on our business.
If third parties claim that intellectual property used by us infringes upon their intellectual property, our operating profits could be adversely affected.
We may, from time to time, be notified of claims that we are infringing upon patents, copyrights, or other intellectual property rights owned by third parties, and we cannot provide assurances that other companies will not in the future pursue such infringement claims against us or any third party proprietary technologies we have licensed. If we were found to infringe upon a patent or other intellectual property right, or if we failed to obtain or renew a license under a patent or other intellectual property right from a third party, or if a third party from whom we are licensing technologies was found to infringe upon a patent or other intellectual property rights of another third party, we may be required to pay damages, suspend the manufacture of certain products or re-engineer or rebrand our products, if feasible, or we may be unable to enter certain new product markets. Any such claims could also be expensive and time consuming to defend and could divert management's attention and resources. In addition, if we have omitted to enter into a valid non-disclosure or assignment agreement for any reason, we

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may not own the invention or our intellectual property and may not be adequately protected. Our competitive position could suffer as a result of any of these events and have a material adverse impact on our results of operations, financial position and cash flows.
Any failure of our research and development activity to improve our existing products and develop new products could cause us to lose market share.
Our products are highly technical in nature, and in order to maintain and improve our market position, we depend on successful research and development activity to continue to improve our existing products and develop new products. We cannot be certain that we will have sufficient research and development capability to respond to changes in the industries in which we operate. These changes could include changes in the technological environment in which we currently operate, increased demand for new products or the development of alternatives to our products. For example, the development of lighter weight steel alloys has made the use of steel in gas cylinders a more competitive alternative to aluminum than it had been previously. In addition, our superformed aluminum components compete with new high-performance composite materials developed for use in the aerospace industry. In our efforts to develop and market new products and enhancements to our existing products, we may fail to identify new product opportunities or timely bring new products to market. We may also experience delays in completing development of, enhancements to or new versions of our products and product innovations may not achieve the market penetration or price stability necessary for profitability. In addition to benefiting from our research collaboration with universities, we spent $7.8 million , $7.6 million and $8.3 million (including revenue and capital items but before funding grants received) in 2017, 2016 and 2015 respectively, on our own research and development activities. We expect to fund our future research and development expenditure requirements through operating cash flows and restricted levels of indebtedness, but if operating profit decreases, we may not be able to invest in research and development or continue to develop new products or enhancements.
Without the timely introduction of new products or enhancements to existing products, our products could become obsolete over time, in which case our results of operations, financial position and cash flows could be adversely affected.
Some of our key operational equipment is relatively old and may require significant capital expenditures for repair or replacement.
We incur considerable expense on maintenance, including preventative maintenance and repairs. Higher levels of maintenance and repair costs could result from the need to maintain our older plants, property and equipment, and machinery breakdowns could result in interruptions to the business, causing lost production time and reduced output. Machinery breakdowns or equipment failures may hamper or cause delays in the production and delivery of products to our customers and increase our operating costs, thus reducing cash flows from operations. In particular, the breakdown of some of our older equipment, such as the large hot-rolling mill at our Madison, Illinois plant, could be difficult to repair and would be very costly should it need to be replaced. Any failure to deliver products to our customers in a timely manner could adversely affect our customer relationships and reputation. Any failure to implement required investments, due to the need to divert funds to repair existing physical infrastructure, service debt obligations, unanticipated liquidity constraints or other factors, could have a material adverse effect on our results of operations, financial position and cash flows.
Our operations may prove harmful to the environment resulting in reputational damage and clean-up or other related costs.
We are exposed to substantial environmental costs and liabilities, including liabilities associated with divested assets and prior activities performed on sites before we acquired an interest in them. Our operations, including the production and delivery of our products, are subject to a broad range of continually changing environmental laws and regulations in each of the jurisdictions in which we operate. These laws and regulations increasingly impose more stringent environmental protection standards on us with respect to, among other things, air emissions, wastewater discharges, the use and handling of hazardous materials, noise levels, waste disposal practices, soil and groundwater contamination and environmental clean-up. Complying with these regulations involves significant and recurring costs. See "Item 4.B. Business Overview" for details of our environmental management program and the environmental issues that we are currently addressing.
We cannot predict our future environmental liabilities and cannot assure investors that our management is aware of every fact or circumstance regarding potential liabilities, or that the amounts provided and budgeted to address such liabilities will be adequate for all purposes. In addition, future developments, such as changes in regulations, laws or environmental conditions, may result in reputational damage or increase environmental costs and liabilities that could have a material adverse effect on our results of operations, financial position and cash flows.

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The health and safety of our employees and the safe operation of our business is subject to various health and safety regulations in each of the jurisdictions in which we operate. These regulations impose various obligations on us, including the provision of safe working environments and employee training on health and safety matters. Complying with these regulations involves recurring costs.
Certain of our operations are highly regulated by different agencies that require products to comply with their rules and procedures and can subject our operations to penalties or adversely affect production.
Certain of our operations are in highly regulated industries that require us to maintain regulatory approvals and, from time to time, obtain new regulatory approvals from various countries. This can involve substantial time and expense. In turn, higher costs of compliance reduce our cash flows from operations. For example, manufacturers of gas cylinders throughout the world must comply with high local safety and health standards and obtain regulatory approvals in the markets in which they sell their products. Furthermore, military organizations require us to comply with applicable government regulations and specifications when providing products or services to them directly or as subcontractors. In addition, we are required to comply with U.S. and other export regulations with respect to certain products and materials. The E.U. has also passed legislation governing the registration, evaluation and authorization of chemicals, known as REACH, pursuant to which we are required to register chemicals and gain authorization for the use of certain substances. In the U.S. there is similar legislation under the Toxic Substance Control Act 1976 ("TSCA") which was substantially amended in 2016. Although we make reasonable efforts to obtain all licenses and certifications that are required by countries in which we operate, there is always a risk that we may be found not to comply with certain required procedures. This risk grows with increased complexity and variance in regulations across the globe. As regulatory schemes vary by country, we may also be subject to regulations of which we are not presently aware and could be subject to sanctions by a foreign government that could materially and adversely affect our operations in the relevant country.
Governments and their agencies have considerable discretion to determine whether regulations have been satisfied. They may also revoke or limit existing licenses and certifications or change the laws and regulations to which we are subject at any time. If our operations fail to obtain, experience delays in obtaining or lose a needed certification or approval, we may not be able to sell our products to our customers, expand into new geographic markets or expand into new product lines. In addition, new or more stringent regulations, if imposed, could result in us incurring significant costs in connection with compliance. Non-compliance with these regulations could result in administrative, civil, financial, criminal or other sanctions against us, which could have negative consequences on our business and financial position. Furthermore, if we begin to operate in new countries, we may need to obtain new licenses, certifications and approvals.
Our customers are also often subject to similar regulations and risks. We therefore face the risk that our customers may have the demand for their products reduced as a result of regulatory matters that fall outside our direct control. This would in turn reduce demand for our products and have a negative financial impact on our operating results.
Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows.
We are subject to legislation and regulations to reduce carbon dioxide and other greenhouse gas emissions.
Although we are working to improve our energy efficiency, our manufacturing processes and the manufacturing processes of many of our suppliers and customers are still energy-intensive and use or generate, directly or indirectly, greenhouse gases ("GHGs"). Political and scientific debates related to the effects of emissions of carbon dioxide and other greenhouse gases on the global climate are ongoing. In recent years, current regulatory programs impacting GHG emissions from large industrial plants and other sources include the E.U. Emissions Trading Scheme, the CRC Energy Efficiency Scheme in the U.K. and certain federal and state programs in the U.S., including GHG reporting and permitting rules issued by the U.S.E.P.A and the California Cap and Trade Program. Moreover, in December 2015, 195 countries participating in the United Nations Framework Convention on Climate Change, at its 21st Conference of the Parties meeting held in Paris, adopted a new global agreement on the reduction of climate change (the "Paris Agreement"). The Paris Agreement sets a goal of holding the increase in global average temperature to well below 2 degrees Celsius and pursuing efforts to limit the increase to 1.5 degrees Celsius, to be achieved by commitments by the participating countries to set emissions reduction targets, referred to as "nationally determined contributions." The Paris Agreement came into effect on November 4, 2016, after it was ratified the previous month, with the intent that emissions reductions will occur beginning in 2020 or sooner. As it is implemented, the Paris Agreement is anticipated to result in more stringent requirements relating to greenhouse gas emissions. Due to the costs of compliance and the potential impact on our energy costs, these programs and additional future legislation and regulations aimed at reducing GHG emissions could have a material adverse effect on our results of operations, financial position and cash flows.

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Due to the nature and use of the products that we manufacture, we may in the future face large liability claims.
We are subject to litigation in the ordinary course of our business, which could be costly to us and which may arise in the future. We are exposed to possible claims for personal injury, death or property damage, which could result from a failure of a product manufactured by us or of a product integrating one of our products. For example, improperly manufactured gas cylinders could explode at high pressure, which can cause substantial personal and property damage. This risk may be increased through the use of new technologies, materials and innovations. We also supply many components into aerospace applications in which the potential for significant liability exposures necessitates additional insurance costs.
Many factors beyond our control could lead to liability claims, including:
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the failure of a product manufactured by a third party that incorporated components manufactured by us;
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the reliability and skills of persons using our products or the products of our customers; and
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the use by customers of materials or products that we produced for applications for which the material or product was not designed.
If we cannot successfully defend ourselves against claims, we may incur substantial liabilities. Even successful defense would require significant financial and management resources. Regardless of the merits or eventual outcome, liability claims may result in:
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decreased demand for our products;
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reputational injury;
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initiation of investigation by regulators;
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costs to defend related litigation;
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diversion of management time and resources;
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compensatory damages and fines;
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product recalls, withdrawals or labeling, marketing or promotional restrictions;
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loss of revenue;
•
exhaustion of any available insurance and our capital resources; and
•
a decline in our stock price.
We could be required to pay a material amount if a claim is made against us that is not covered by insurance or otherwise subject to indemnification or that exceeds the insurance coverage that we maintain. Moreover, we do not currently carry insurance to cover the expense of product recalls, and litigation involving significant product recalls or product liability could have a material adverse effect on our results of operations, financial position and cash flows.
Our businesses could suffer if we lose certain employees or cannot attract and retain qualified employees.
We rely upon a number of key executives and employees, particularly members of the Executive Leadership Team. If these and certain other employees ceased to work for us, we would lose valuable expertise and industry experience and could become less profitable. We do not carry "key-man" insurance covering the loss of any of our executives or employees.
In addition, future operating results depend in part upon our ability to attract and retain qualified engineering and technical personnel. As a result of intense competition for talent in the market, we cannot ensure that we will be able to continue to attract and retain such personnel. While our key employees are generally subject to non-competition agreements for a limited period of time following the end of their employment, if we were to lose the services of key executives or employees, it could adversely impact our ability to maintain our technological position, and / or have a material adverse effect on our results of operations, financial position and cash flows.
We may not be able to consummate, finance or successfully integrate future acquisitions into our business, or expand our existing business, which could hinder our strategy or result in unanticipated expenses, losses or charges.
As part of our strategy, we have supplemented and may continue to supplement organic growth by acquiring companies or operations engaged in similar or complementary businesses. If the consummation of acquisitions and integration of acquired companies and businesses excessively diverts management's attention from the operations of our core businesses, operating results could suffer. Any acquisition made could be subject to a number of risks, including:

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•
failing to discover liabilities of the acquired company or business for which we may be responsible as a successor owner or operator, including environmental costs and liabilities;
•
difficulties associated with the assimilation of operations and personnel of the acquired company or business;
•
increased debt service requirements as a result of increased indebtedness to complete acquisitions;
•
the loss of key personnel in the acquired company or business; and / or
•
a negative effect on our financial results resulting from an impairment of acquired intangible assets, the creation of provisions, or write downs.
Goodwill represents the amount of acquisition cost over the fair value of net assets we acquired in the purchase of other businesses. We review goodwill for impairment at least annually, or more frequently if events or changes in circumstances indicate the carrying amount of the asset might be impaired. We determine impairment by comparing the implied fair value of the reporting unit with the carrying amount of that reporting unit (including goodwill). If the carrying amount of the reporting unit (including goodwill) exceeds the implied fair value of that reporting unit, an impairment loss is recognized in an amount equal to that excess. Any such adjustments are reflected in our results of operations in the periods in which they become known. As of December 31, 2017, our goodwill totaled $ 59.6 million . While we have recorded few impairment charges since we initially recorded the goodwill, there can be no assurance that our future evaluations of goodwill will not result in findings of impairment and related write downs.
We cannot ensure that every acquisition will ultimately provide the benefits originally anticipated.
We also face certain challenges as a result of organic growth. For example, in order to grow while maintaining or decreasing per unit costs, we will need to improve efficiency, effectively manage operations and employees and hire enough qualified technical personnel. We may not be able to adequately meet these challenges. Any failure to do so could result in costs increasing more rapidly than any growth in sales, thus resulting in lower operating income from which to finance operations and indebtedness. In addition, we may need to incur indebtedness to finance organic growth, which will increase our debt service requirements. There can be no assurance that we will be able to incur indebtedness in the future on favorable terms or at all.
Any of these events could have a material adverse impact on our results of operations, financial position and cash flows.
We could suffer a material interruption in our operations as a result of unforeseen events or operating hazards.
Our production facilities are located in a number of different locations around the world. Any of our facilities could suffer an interruption in production, either at separate times or at the same time, because of various and unavoidable occurrences, such as severe weather events (for example, hurricanes and floods), earthquakes, casualty events (for example, explosions, fires or material equipment breakdowns), acts of terrorism, pandemic disease, labor disruptions or other events (for example, required maintenance shutdowns). For example, our operations in California are subject to risks related to earthquakes. Further disruption occurred during 2015 at our Riverside, California, facility when an electrical arc caused damage to electrical equipment which triggered a power outage at the facility. In addition, some of our products are highly flammable, and there is a risk of fire inherent in their production process. Such hazards could cause personal injury or death, serious damage to, or destruction of, property and equipment, suspension of operations, substantial damage to the environment and / or reputational harm. The risk is particularly high in the production of ultra-fine magnesium powders, which are highly flammable and explosive in certain situations. Similar disruptions in the operations of our suppliers and / or customers could materially affect our business and operations. Although we carry certain levels of business interruption insurance, the coverage on certain catastrophic events or natural disasters, including earthquakes, a failure of energy supplies and certain other events, is limited, and it is possible that the occurrence of such events may have a significant adverse impact on our results of operations, financial position and cash flows.
We are exposed to risks related to cybersecurity threats and general information security incidents which may also expose us to liability under data protection laws including the GDPR.
In the conduct of our business, we increasingly collect, use, transmit and store data on information technology systems. This data includes confidential information belonging to us our customers and other business partners, as well as personally identifiable information of individuals, including our employees. Like other global companies, we have experienced, and expect to continue to be subject to, cybersecurity threats and incidents, ranging from employee error or misuse to individual attempts to gain unauthorized access to information technology systems, to sophisticated and targeted measures known as advanced persistent threats, none of which have been material to the Group to date.

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Although we devote significant resources to network security, data encryption and other measures to protect our information technology systems and data from unauthorized access or misuse, including those measures necessary to meet certain information security standards that may be required by our customers, there can be no assurance that these measures will be successful in preventing a cybersecurity or general information security incident. We also rely in part on the reliability of certain tested third parties' cybersecurity measures, including firewalls, virus solutions and backup solutions, and our business may be affected if these third-party resources are compromised.
Cybersecurity incidents may result in business disruption, the misappropriation, corruption or loss of confidential information (including personally identifiable information) and critical data (ours or that of third parties), reputational damage, litigation with third parties, regulatory fines, diminution in the value of our investment in research and development and data privacy issues and increased information security protection and remediation costs. As these cybersecurity threats, and government and regulatory oversight of associated risks continue to evolve, we may be required to expend additional resources to remediate, enhance or expand upon the cybersecurity protection and security measures we currently maintain. For example, we are subject to the European Union’s General Data Protection Regulation ("GDPR"), which is enforceable from May 25, 2018. The GDPR introduces a number of new obligations for subject companies and over the coming months (as well as following May 25, 2018), we will need to continue dedicating financial resources and management time to GDPR compliance. Among other things, the GDPR places subject companies under obligations relating to the security of the personally identifiable information they process; while we have taken steps to ensure compliance with the GDPR, there can be no assurance that the measures we have taken will be successful in preventing an incident, including a cybersecurity incident or other data breach, which results in a breach of the GDPR. Fines for non-compliance with the GDPR may be levied by supervisory authorities in the European Union up to a maximum of €20,000,000 or 4% of the subject company’s annual, group-wide turnover (whichever is higher). Individuals who have suffered damage as a result of a subject company’s non-compliance with the GDPR also have the right to seek compensation from such a company.
Future cybersecurity breaches, general information security incidents, further increases in data protection costs or failure to comply with relevant legal obligations regarding protection of data could therefore have a material adverse effect on our results of operations, financial position and cash flows.
Employee strikes and other labor-related disruptions may adversely affect our operations.
Several of our production facilities depend on employees who are members of various trade union organizations. Strikes by, or labor disputes with, our employees may adversely affect our ability to conduct business. We cannot assure you that there will not be any strike, lock-out or material labor dispute in the future. Work interruptions or stoppages could have a material adverse effect on our results of operations, financial position and cash flows.
We could incur future liability claims arising from previous businesses now closed or sold.
We have sold or closed down a number of businesses over the years, but the products or services provided when the businesses were open and under our ownership could still result in potential liabilities which could have a material adverse effect on our operations, financial position and cash flows.
As a holding company, Luxfer Holdings PLC's main source of cash is distributions from our operating subsidiaries.
Our ultimate parent company, Luxfer Holdings PLC, conducts all of its operations through the subsidiaries of Luxfer Group. Accordingly, its main cash source is dividends from these subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary receives from its operations in excess of the funds necessary for its operations, obligations or other business plans. Since Luxfer Group subsidiaries are wholly-owned, claims of Luxfer Holdings PLC will generally rank junior to all other obligations of the subsidiaries. If Luxfer Group operating subsidiaries are unable to make distributions, Luxfer Group's growth may slow, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.
Our failure to perform under purchase or sale contracts could result in the payment of penalties to customers or suppliers, which could have a negative impact on our results of operations, financial position or cash flows.
A failure to perform under purchase or sale contracts could result in the payment of penalties to suppliers and / or customers, which could have a negative impact on our results of operations, financial position or cash flows. Certain contracts with suppliers could also obligate us to purchase a minimum product volume (clauses known as "take or pay") or contracts with customers may impose firm commitments for the delivery of certain quantities of products within certain time periods. The risk of incurring liability under a take or pay supply contract would increase during an economic crisis, which in turn would increase the likelihood of a sharp drop in demand for our

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products, which could have a material adverse effect on our results of operations, financial position and cash flows.
We could be adversely affected by violations of the U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws.
The U.K. Bribery Act, the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit companies and their intermediaries from making or receiving improper payments to, or from, government officials or, third parties, for the purpose of obtaining or retaining business. Failing to prevent bribery is also an offense under the U.K. Bribery Act. Our policies mandate compliance with these laws. Despite our compliance program, we cannot assure you that our internal control policies and procedures will always protect us from reckless, negligent or improper acts committed by our employees or agents. The costs of violations of these laws or allegations of such violations could have a material adverse effect on our results of operations, financial position and cash flows.
We have a significant amount of indebtedness, which may adversely affect our cash flows and our ability to operate our business, remain in compliance with debt covenants, make payments on our indebtedness, pay dividends and respond to changes in our business or take certain actions.
As of December 31, 2017 , we had $90.0 million of indebtedness under our senior notes (the "Loan Notes") divided into tranches of $15.0 million, $25.0 million, $25.0 million and $25.0 million due 2018, 2021, 2023 and 2026 respectively; and $ 21.3 million of indebtedness under the Revolving Credit Facility. See item 5 "Operating and Financial Review and Prospects—Financing."
Our indebtedness could have important consequences to you. For example, it could make it more difficult for us to satisfy obligations with respect to indebtedness, and any failure to comply with the obligations of any of our debt instruments, including financial and other restrictive covenants, could result in an event of default under agreements governing our indebtedness. Further, our indebtedness could require us to dedicate a substantial portion of available cash flows to pay principal and interest on our outstanding debt, which would reduce the funds available for working capital, capital expenditures, dividends, acquisitions and other general corporate purposes. Our indebtedness could also limit our ability to operate our business, including the ability to engage in strategic transactions or implement business strategies. Factors related to our indebtedness could materially and adversely affect our business and our results of operations. Furthermore, our interest expense could increase if interest rates rise, because certain portions of our debt facilities bear interest at floating rates. If we do not have sufficient cash flows to service our debt, we may be required to refinance all or part of our existing debt, sell assets, incur further indebtedness or sell securities, none of which we can guarantee we will be able to do.
In addition, the agreements that govern the terms of our indebtedness contain, and any future indebtedness would likely contain, a number of restrictive covenants imposing significant operating and financial restrictions on us, including restrictions that may limit our ability to engage in acts that may be in our long-term best interests, including:
•
incurring or guaranteeing additional indebtedness;
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capital expenditures;
•
paying dividends (including to fund cash interest payments at different entity levels) or making redemptions, repurchases or distributions with respect to ordinary shares or capital stock;
•
creating or incurring certain security interests;
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making certain loans or investments;
•
engaging in mergers, acquisitions, investment in joint ventures, amalgamations, asset sales and sale and leaseback transactions; and
•
engaging in transactions with affiliates.
These restrictive covenants are subject to a number of qualifications and exceptions. The operating and financial restrictions and covenants in our existing debt agreements and any future financing agreements may adversely affect our ability to finance future operations or capital needs or to engage in other business activities.
We may be able to incur significant additional indebtedness in the future. Although the agreements governing our indebtedness contain restrictions on the incurrence of certain additional indebtedness, these restrictions are subject to a number of important qualifications and exceptions, and the indebtedness incurred in compliance with these restrictions could be substantial. If we incur new indebtedness, the related risks, including those described above, could intensify.
Any of these factors could have a material adverse impact on our results of operations, financial position and cash flows.

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Certain factors beyond our control may affect the market price of our ordinary shares.
Certain factors, some of which are beyond our control, may have a material effect on the market price of our ordinary shares, including:
•
fluctuations in our results of operations;
•
negative publicity;
•
changes in stock market analyst recommendations regarding our company, sectors in which we operate, the securities market generally and conditions in the financial markets;
•
regulatory developments affecting our industry;
•
announcements of studies and reports relating to our products or those of our competitors;
•
changes in economic performance or market valuations of our competitors;
•
actual or anticipated fluctuations in our quarterly results;
•
conditions in industries in which we operate;
•
announcements by us or our competitors of new products, acquisitions, strategic relations, joint ventures or capital commitments;
•
additions to or departures of our key executives and employees;
•
fluctuations of exchange rates;
•
release of transfer restrictions on our outstanding ordinary shares; and
•
sales or perceived sales of additional ordinary shares.
During recent years, securities markets in the U.S. and worldwide have experienced significant volatility in prices and trading volumes. This volatility could have a material effect on the market price of our ordinary shares, which could adversely impact our ability to access equity markets and have a material adverse impact on our results of operations, financial position and cash flows.
Our ability to pay regular dividends on our ordinary shares is subject to the discretion of our Board of Directors and will depend on many factors, including our results of operations, cash requirements, financial position, contractual restrictions, applicable laws and other factors, and may be limited by our structure and statutory restrictions and restrictions imposed by the Revolving Credit Facility and the Loan Notes, as well as any future agreements.
We may declare cash dividends on our ordinary shares as described in "Item 8. Financial Information." However, the payment of future dividends will be at the discretion of our Board of Directors. Any recommendation by our Board to pay dividends will depend on many factors, including our results of operations, cash requirements, financial position, contractual restrictions, applicable laws and other factors, including availability of future debt facilities. Under English law, any payment of dividends would be subject to the Companies Act 2006 of England and Wales (the "Companies Act"), which requires, among other things, that we can only pay dividends on ordinary shares out of profits available for distribution determined in accordance with the Companies Act. Additionally, any change in the level of our dividends or the suspension of the payment thereof could adversely affect the market price of our ordinary shares.
As a foreign private issuer, we are exempt from a number of rules under the U.S. securities laws and are permitted to file less information with the Securities and Exchange Commission than a U.S. company. This may limit the information available to holders of the ordinary shares.
We are a "foreign private issuer," as defined in the Securities and Exchange Commission ("SEC") rules and regulations and, consequently, we are not subject to all of the disclosure requirements applicable to companies organized within the U.S. For example, we are exempt from certain rules under the U.S. Securities Exchange Act of 1934, as amended (the "Exchange Act"), that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act. In addition, our officers and directors are exempt from the reporting and "short-swing" profit recovery provisions of Section 16 of the Exchange Act and related rules with respect to their purchases and sales of our securities. Moreover, we are not required to file periodic reports and consolidated financial statements with the SEC as frequently or as promptly as U.S. public companies. Accordingly, there may be less publicly available information concerning our company than there is for U.S. public companies.
As a foreign private issuer, we are not subject to certain New York Stock Exchange corporate governance rules applicable to U.S. listed companies.
We rely on a provision in the New York Stock Exchange's Listed Company Manual that allows us to follow English corporate law and the Companies Act with regard to certain aspects of corporate governance. This

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allows us to follow certain corporate governance practices that differ in significant respects from the corporate governance requirements applicable to U.S. companies listed on the New York Stock Exchange ("NYSE").
For example, we are exempt from NYSE regulations that require a listed U.S. company, among other things, to:
•
have a majority of the board of directors consisting of independent directors;
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require non-management directors to meet on a regular basis without management present;
•
establish a nominating and compensation committee composed entirely of independent directors;
•
adopt and disclose a code of business conduct and ethics for directors, officers and employees; and
•
promptly disclose any waivers of the code for directors or executive officers that should address certain specified items.
In accordance with our NYSE listing, our Audit Committee is required to comply with the provisions of Section 301 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act") and Rule 10A-3 of the Exchange Act, both of which are also applicable to NYSE listed U.S. companies. As we are a foreign private issuer, however, our Audit Committee is not subject to additional NYSE requirements applicable to listed U.S. companies, including:
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an affirmative determination that all members of the Audit Committee are "independent," using more stringent criteria than those applicable to us as a foreign private issuer;
•
the adoption of a written charter specifying, among other things, the Audit Committee's purpose and including an annual performance evaluation; and
•
the review of an auditor's report describing internal quality control issues and procedures and all relationships between the auditor and us.
Furthermore, the New York Stock Exchange's Listed Company Manual requires listed U.S. companies to, among other things, seek shareholder approval for the implementation of certain equity compensation plans and issuances of common stock.
We expect to lose our foreign private issuer status which will require us to comply with the U.S. domestic reporting regime under the Exchange Act and result in significant additional compliance activity and increased costs and expenses.
We are currently a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act, and, therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2018. We expect to lose our foreign private issuer status on the next determination date as the majority of our executive officers and directors are U.S. citizens, which we do not expect this to change before the next determination date, and separately, we may have more than 50% of our assets located in the U.S. As a result, we expect to be required to comply with U.S. domestic issuer requirements, most of which will apply from January 1, 2019.
The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly more than costs we incur as a foreign private issuer. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive in certain respects than the forms available to a foreign private issuer. We will be required under current SEC rules to prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and modify certain of our policies to comply with corporate governance practices associated with U.S. domestic issuers; these requirements will be additional to, and not in place of, those under U.K. law to prepare consolidated financial statements under International Financial Reporting Standards as issued by the European Union ("IFRS") and comply with U.K. corporate governance laws. Such conversion and modifications will involve additional costs, both one‑off in nature on conversion and also extra ongoing costs to meet reporting in both U.S. GAAP and IFRS, which will reduce our operating profit. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, such as the ones described above, and exemptions from requirements related to the preparation and solicitation of proxies (including compliance with full disclosure obligations regarding executive compensation in proxy statements and the requirements of holding a nonbinding advisory vote on certain executive compensation matters, such as “say on pay” and “say on frequency”). Moreover, we will no longer be exempt from certain of the provisions of U.S. securities laws, such as Regulation FD (which restricts the selective disclosure of material information),

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exemptions for filing beneficial ownership reports under Section 16(a) for officers, directors and 10% shareholders and the Section 16(b) short swing profit rules. In light of our expectations, we have already started to prepare for the consequences of becoming a U.S. domestic issuer, including those described above, and we expect that the loss of foreign private issuer status will increase our legal and financial compliance costs and will make some activities highly time-consuming and costly. The additional costs could have an adverse impact on our results of operations, financial position and cash flows.
In addition, the transition to being treated as a U.S. domestic issuer may make it more difficult and expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
The City Code on Takeovers and Mergers no longer applies to us and we and you therefore do not have the benefit of the protections that the Code affords.
Although we are a public limited company incorporated in England and Wales, our securities are not admitted to trading on a regulated market in the U.K. (or the Channel Islands or the Isle of Man) and, therefore, the City Code on Takeovers and Mergers (the “Code”) only applies to us if we are considered by the Panel on Takeovers and Mergers (the “Panel”) to have our place of central management and control in the U.K. (or the Channel Islands or the Isle of Man). Under the Code, the Panel looks to where the majority of our directors are themselves resident, among other factors, for the purposes of determining where we have our place of central management and control. In January 2018, the Panel confirmed to us, based on the residency of the members of our board of directors, that the Code does not apply to us and we and you will therefore not have the benefit of the protections the Code affords, including, for example, the requirement that a person who acquires an interest in our shares carrying 30% or more of the voting rights must make a cash offer to all other shareholders at the highest price paid in the 12 months before the offer was announced.
If we fail to establish or maintain an effective system of internal controls, we may be unable to accurately report our financial results or prevent fraud, and investor confidence and the market price of our ordinary shares may, therefore, be adversely impacted.
We are subject to reporting obligations under U.S. securities laws. Our reporting obligations as a public company place a significant strain on our management, operational and financial resources and systems for the foreseeable future. Our management is required to report on the effectiveness of our internal control over financial reporting as required by Section 404(a) of the Sarbanes-Oxley Act, for which we perform system and process evaluation and testing of our internal control over financial reporting.
Over time we may identify and correct deficiencies or weaknesses in our internal controls and, where and when appropriate, report on the identification and correction of these deficiencies or weaknesses. However, the internal control procedures can provide only reasonable, and not absolute, assurance that deficiencies or weaknesses are identified. Deficiencies or weaknesses that have not been identified by us could emerge, and the identification and correction of these deficiencies or weaknesses could have a material adverse impact on our results of operations. If our internal control over financial reporting are not considered adequate, this may adversely affect our ability to report our financial results on a timely and accurate basis, which may result in a loss of public confidence or have an adverse effect on the market price of our ordinary shares, which could adversely impact our ability to access equity markets and could have a material adverse impact on our results of operations, financial position and cash flows.
We ceased to be an "emerging growth company" as defined under the JOBS Act on December 31, 2017, and therefore the reduced disclosure requirements applicable to emerging growth companies no longer apply to us.
We ceased to be an "emerging growth company" on December 31, 2017. We are therefore no longer able to rely on those exemptions to reporting requirements available to "emerging growth companies." As a result, we need to comply with certain more burdensome reporting requirements and devote substantial management effort toward ensuring compliance with these requirements. For example, we need to comply with the independent auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, relating to the effectiveness of our internal control over financial reporting, beginning with this Annual Report.
Our inability to continue to take advantage of these exemptions may place additional strain on our resources and divert our management's attention from other business concerns. Moreover, we may incur additional expenses toward ensuring compliance with the requirements applicable to non-emerging growth companies.



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It may be difficult to effect service of U.S. process and enforce U.S. legal process against the directors of Luxfer.
Luxfer is a public limited company incorporated under the laws of England and Wales. A number of our directors and officers reside outside of the U.S., principally in the U.K. A substantial portion of our assets, and the assets of such persons, are located outside of the U.S. Therefore, it may not be possible to effect service of process within the U.S. upon Luxfer or these persons in order to enforce judgments of U.S. courts against Luxfer or these persons based on the civil liability provisions of the U.S. federal securities laws. There is doubt as to the enforceability in England and Wales, in original actions or in actions for enforcement of judgments of U.S. courts, of civil liabilities solely based on the U.S. federal securities laws.


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Item 4.
Information on the Company
A.
History and development of the company.
General
Although the origins of some of our operations date back to the early part of the 19th century, we trace our business as it is today back to the 1982 merger of The British Aluminium Company Limited and Alcan Aluminium U.K. Limited, which created British Alcan. The original Luxfer Group was formed in February 1996 in connection with the management buy-in (the "Management Buy-in") of certain downstream assets of British Alcan. The Management Buy-in was financed by a syndicate of private equity investors. Largely through a leveraged reorganization in 1999, and finally a capital reorganization in 2007, these investors fully exited their original investments in the business.
Our company was incorporated on December 31, 1998, with the name Neverealm Limited (we re-registered as a public limited company and changed our name to Luxfer Holdings PLC on April 1, 1999), for the purpose of acquiring all of the outstanding share capital of the original Luxfer Group Limited in connection with a leveraged recapitalization that occurred in April 1999. As part of the 1999 recapitalization, Luxfer Holdings PLC became the parent holding company of our operating subsidiaries around the world. To facilitate the 1999 recapitalization, Luxfer Holdings PLC issued £160 million of Senior Notes due 2009 and took on £140 million of bank debt.
In February 2007, Luxfer Holdings PLC completed a capital reorganization, which reduced its debt burden and realigned its share capital. A key part of this reorganization was the release and cancellation of the Senior Notes due 2009 in consideration for, among other things, the issuance of a lower principal amount of new senior notes due 2012 (the "Senior Notes due 2012"). Senior noteholders, other than Luxfer Group Limited, also acquired 87% of the voting share capital of Luxfer Holdings PLC from existing shareholders with management and the employee share ownership plan ("ESOP") retaining 13% of the voting share capital.
Since the 2007 capital reorganization, we have considerably improved the profitability of our businesses and reduced debt, repaying the Senior Notes due 2012 early.
In October 2012, Luxfer Holdings PLC successfully listed its shares (in the form of American Depositary Shares evidenced by American Depositary Receipts) on the NYSE.
We have re-shaped the company since 1996 through a significant number of acquisitions and disposals. The main acquisitions which have been made include:
•
the agreement to purchase Dynetek Industries Ltd, a Canadian business listed on the Toronto Stock Exchange which closed in September 2012;
•
the acquisition of the assets and businesses of Truetech Inc. and Innotech Products Limited in July 2014. These entities produce magnesium-based flameless heating pads for self-heating meals used by the U.S. military and emergency relief agencies; an extensive line of self-heating meals, soups and beverages used by military and civilian end-users; chemical agent detection kits and chemical decontamination equipment; and seawater desalinization kits; and
•
the acquisition on December 5, 2017 of the trade and assets of Specialty Metals business of ESM Group Inc., including a manufacturing facility in Saxonburg, PA, U.S.A. ESM Group’s Saxonburg plant manufactures a range of magnesium-based chips, granules, ground powders and atomized powders.
On December 11, 2017, Luxfer Holdings PLC terminated its ADR facility and arranged for the exchange of outstanding ADSs for the underlying ordinary shares. The exchange allows Luxfer shareholders to directly own and publicly trade ordinary shares on the New York Stock Exchange under the symbol "LXFR".
Corporate
Luxfer Holdings PLC is registered as a public limited company under the laws of England and Wales with its registered office at Lumns Lane, Manchester, M27 8LN, England. Our telephone number is +44(0) 161 300 0600.
Our agent in the U.S. is Corporation Service Company, 2711 Centreville Road, Wilmington, Delaware 19808.

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B.    Business overview
Luxfer is a global materials technology company specializing in the innovation and manufacture of high-performance materials, components and devices for transportation, defense and emergency response, healthcare and general industrial applications. Our customers include both end-users of our products and manufacturers that incorporate our products into finished goods. Details about our products are found below in descriptions of our two reporting divisions and their brands.
We focus primarily on innovations related to magnesium alloys, zirconium alloys, aluminum alloys and carbon composites. For example, we were the first to develop and patent a rare-earth-containing magnesium alloy (EZ33A) for use in high-temperature aerospace applications, including helicopter gearboxes; we were at the forefront of the commercial development of zirconia-rich mixed oxides for use in automotive catalysis; we were the first to manufacture a high-pressure gas cylinder out of a single piece of aluminum using cold-impact extrusion; and we developed and patented the superforming process and the first superplastic aluminum alloy (AA2004). We have a long history of innovation derived from our strong technical expertise, and we work closely with customers to apply innovative solutions to their most demanding product needs. Our proprietary technologies and technical expertise, coupled with best-in-class customer service and global presence, provide significant competitive advantages and have established us as leaders in the global markets we serve. We believe that we have leading positions, technically and by market share, in key product areas, including magnesium aerospace alloys, photo-engraving plates, zirconium chemicals for automotive catalytic converters and high-pressure aluminum and composite cylinders for breathing applications and a wide variety of other uses.
We have a global presence, operating 23 manufacturing plants in the U.S., the U.K., Canada, France, the Czech Republic and China, and our average total headcount was 1,769 people, including temporary staff, in 2017 . We also have joint ventures in Japan, India, and the U.S. In 2017 , our total revenue was $441.3 million , net income was $11.5 million and our adjusted EBITDA was $61.8 million . See "Item 3A. Selected Financial Data" for the definition of adjusted EBITDA and reconciliations to net income for the year. In 2017 , we manufactured and sold approximately 16,600 metric tons of our magnesium products, approximately 3,300 metric tons of our zirconium products (excluding water weight as sold as a solution) and approximately 1.8 million high-pressure gas cylinders. For a breakdown of our total revenue in 2017 , 2016 and 2015 by segment and geographic origin, see "Note 2—Revenue and segmental analysis" to our consolidated financial statements included in this Annual Report.
Our company is organized into two reporting divisions, Elektron and Gas Cylinders, each of which produced 50% of our total revenue in 2017 . Elektron represented 79% of our total trading profit for the year, and Gas Cylinders represented 21% .
Elektron Division
Our Elektron Division focuses on specialty materials based primarily on magnesium and zirconium. Key product lines include:
•
Advanced lightweight, corrosion-resistant and heat- and flame-resistant magnesium alloys including our new bioresorbable SynerMag ® alloy and our dissolvable SoluMag ® alloy.
•
Magnesium powders used in countermeasure flares that protect aircraft from heat-seeking missiles and also for heating pads for self-heating meals used by the military and emergency-relief agencies.
•
Magnesium, copper, and zinc photoengraving plates for graphic arts and luxury packaging.
•
High-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advanced ceramics, fiber-optic fuel cells, and many other performance products.
Gas Cylinders Division
Our Gas Cylinders Division manufactures and markets specialized products using aluminum, titanium and carbon composites. Key product lines include:
•
Carbon composite cylinders for self-contained breathing apparatus (SCBA), used by firefighters and other emergency-responders. Our products are also used by scuba divers and personnel in potentially hazardous environments such as mines.
•
Aluminum and composite cylinders used for containment of oxygen and other medical gases used by patients, healthcare facilities and laboratories.
•
Carbon composite cylinders for compressed natural gas (CNG) and hydrogen containment in alternative fuel (AF) vehicles.
•
Lightweight aluminum cylinders for a variety of industrial applications such as fire extinguishers and containment of high-purity specialty gases.

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•
Lightweight aluminum and titanium panels superformed into highly complex shapes used mainly in the transportation industry.
Our end-markets
Key end-markets for Luxfer Group products fall into four categories:
Transportation ( 29% of 2017 revenue): Many Luxfer products serve a growing need to improve and safeguard the environment in the field of transportation, including our zirconium-based products that clean up automotive exhausts; our lightweight magnesium alloys used in fuel-efficient aerospace and automotive designs; and our lightweight, high-pressure carbon composite alternative fuel cylinders that contain clean-burning compressed natural gas. We also superform single sheets of aluminum, magnesium or titanium to create complex, three-dimensional shapes used in automotive, aerospace and rail components. As recycling metals is an essential environmental and economic practice, we have a dedicated site specifically for recycling magnesium alloys, as well as recycling capabilities at all our production sites.
 
Area of Focus
 
Product
 
End-market drivers
 
 
Alternative fuels
 
• Alternative fuel cylinders
 
• Exhaust catalysts
 
• Bulk gas transportation cylinders
 
• "Clean air" initiatives
 
• Abundance of natural gas
 
• Favorable tax treatment
 
• Increasing CNG filling infrastructure
 
 
Environmental catalysts (cleaning of exhaust emissions)
 
•    Zirconium compounds with specific properties used in auto-catalysis washcoats
 
• Emissions legislation generally
 
• Application of tighter regulations on diesel engines in U.S. and Europe
 
• Cost effective for vehicle manufacturers as they reduce the use of precious metals
 
 
Specialty / high-end automotive
 
•    Superformed complex body panels, doors and trunk assemblies and other high-strength components
 
• Magnesium extrusions
 
• Fuel efficiency for a given level of performance
 
• Increased flexibility for vehicle designers in terms of complex shapes and strength
 
• Strong demand for top-end cars from affluent customers, typically in emerging markets
 
 
Sensors, piezoelectrics and electro-ceramics
 
•    Zirconium-based ceramic materials used in sensors of engine management systems
 
• Engine efficiency
 
• Control of exhaust gases
 
 
Rail transport
 
•    Superformed train front-cab and internal components
 
• Government investment in public transport
 
• Fuel efficiency
 
• Safety requirements for moving from plastic to metal for internal components
 
 
Military and civil aerospace
 
•    Superform (wing leading edges, engine nacelle skins, winglets)
 
•    Elektron® aerospace alloys in cast, extruded, and sheet form
 
• Growing aircraft build rate
 
• Increasing cost of fuel
 
 
Helicopters
 
•    Magnesium sand-casting alloys, superformed panels
 
• Lightweighting
 
• Fuel efficiency
 
 
Recycling
 
•    Recycling service converting magnesium scrap into good die-casting ingot
 
• Marketing "whole-of-life" costing for vehicles
 
• Legislation requiring recycling at end of vehicle's life cycle
 


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Defense and emergency response ( 30% of 2017 revenue) : Luxfer offers a number of products that address principal factors driving growth in this market, such as heightened societal expectations regarding protection of people, equipment and property during conflicts and emergencies. Our products include magnesium powders for countermeasure flares that defend aircraft against heat-seeking missile attack, life-support cylinders for firefighters and other emergency-service personnel, fire extinguisher cylinders, and chemical agent detection and decontamination products.
 
Area of Focus
 
Product
 
End-market drivers
 
 
Life-support breathing apparatus
 
• Composite cylinders used in SCBA
 
• Increased awareness of importance of properly equipping firefighting services post 9/11
 
• Demand for lightweight products to upgrade from heavy all-metal cylinders
 
• Periodic upgrade of new U.S. National Institute for Occupational Safety and Health (NIOSH) standards and natural replacement cycles
 
• Asian and European fire services looking to adopt more modern SCBA equipment
 
 
Fire protection
 
• Cylinders (CO 2  fire extinguishers)
 
• New commercial buildings
 
• Cylinder replacement during annual servicing
 
 
Countermeasures
 
• Ultra-fine magnesium powders for flares used to protect aircraft from attack by heat-seeking missiles
 
• Use in combat and training
 
• Maintenance of countermeasures reserves (shelf-life restrictions)
 
 
Military vehicles
 
• Elektron® magnesium alloys in cast rolled, and extruded forms
 
• Maintaining high level of protection while reducing weight to improve maneuverability and fuel economy
 
 
Military personnel and emergency relief agencies
 
• Self-heating meals used by military personnel and emergency-relief agencies
 
• Chemical detection and chemical decontamination kits
 
• Ensuring protection and well-being for military personnel and victims of natural disasters
 
• Use in combat and training and in response to terrorist activities
 
Healthcare ( 8% of 2017 revenue): Luxfer has a long history in the healthcare end-market, and we see this as a major area for the introduction of new technologies. These include lightweight aluminum and composite cylinders for containment of medical and laboratory gases; magnesium powders for pharmaceutical products; magnesium materials for lightweight orthopedic devices; specialized magnesium alloys for cardiovascular stents and implants; and zirconium materials for biomedical applications and dental implants.
 
Area of Focus
 
Product
 
End-market drivers
 
 
Medical gases
 
•    Portable aluminum and composite cylinders

•    Portable oxygen concentrators
 
• Growing use of medical gases
 
• Shift to paramedics, who need portable, lightweight products
 
• Growing trend to provide oxygen therapy in the home and to keep patients mobile
 
• Increasingly aging population
 
• Increase in respiratory diseases
 
 
Medical equipment casings
 
•    Superformed panels (e.g., for MRI scanners)
 
• Growing use of equipment using powerful magnets and consequent need for non-ferrous, hygienic casings
 
 
Pharmaceutical industry
 
•    Magnesium powders as a catalyst for chemical synthesis (Grignard process)
 
• Growth in pharmaceutical industry
 
 
Orthopedics
 
•    Magnesium sheets
 
• Improved mobility through use of easy-to-wear, lightweight braces and trusses
 
 
Sorbents
 
•    MELsorb® material being developed as active ingredient in dialysis equipment and enterosorbents
 
• Growth in kidney problems
 
• New technologies to remove noxious elements from the body
 



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General industrial ( 33% of 2017 revenue): Our core technologies have enabled us to exploit various other niche markets and applications. Our products include zirconium-based compounds to purify drinking water and clean up industrial exhausts; magnesium alloys shaped for use in various general engineering applications; and high-pressure gas cylinders used for high-purity specialty gases, beverage dispensing, scuba diving and performance racing. Metal foil-stamping and embossing dies are used primarily for luxury packaging, labels and greeting cards. Our high-quality magnesium, copper and zinc plates are ideal for these and other graphic applications.
 
Area of Focus
 
Product
 
End-market drivers
 
 
Specialty gases
 
•    Inert-interior aluminum cylinders for high-purity gases
 
• Semiconductor and electronics industries
 
• Pharmaceutical industry growth
 
• Specialized laboratory requirements
 
• Oil exploration
 
 
Leisure activities
 
•    Cylinders for SCUBA diving, car and boat racing
 
• Leisure time
 
• Growth of middle class in emerging markets
 
 
General engineering
 
•    Magnesium billets, sheets, coil, tooling plates
 
•    Zirconium ceramic compounds for hard working components
 
• Economic growth
 
• Need for components to operate in more extreme environments for longer periods, such as underground or in the ocean
 
 
Water purification
 
•    Isolux® (removal of heavy metals from drinking water) and MELsorb® (wastewater treatment)
 
• Tightened World Health Organization guidelines on levels of heavy metals in water and associated legislation
 
 
Paper
 
•    Bacote™ and Zirmel™, both formaldehyde-free insolubilizers that aid high-quality printing
 
• Elimination of toxic chemicals
 
 
Graphic arts
 
•    Photo-engraving plates
 
• Luxury packaging as part of marketing high-end products
 

Our strengths
Focus on innovation and product development for growing specialized end-markets.       We continue to produce a steady stream of new products, including those developed in close collaboration with our customers.
Strong technical expertise and know-how.     Using our expertise in metallurgy and material science, we specialize in advanced materials, developing products and materials with superior performance to satisfy the most demanding requirements in the most extreme environments. Further, we benefit from the fact that a growing number of our products, including many of our alloys and compounds, are patented.
Diversified blue chip customer base with long-standing relationships.     We put the customer at the heart of our strategy, and we have long-standing relationships with many of our customers, including global leaders in our key markets.
Our Business Excellence Standard Toolkit. The "Luxfer B.E.S.T. Model," consists of the following key themes:
•
A common set of values that drives accountability, innovation, customer first, personal development, teamwork and integrity.
•
Disciplined capital allocation with the aim of maximizing organic growth and the product portfolio value through value-enhancing acquisitions and divestitures.
•
Balanced score-card used in an effort to continuously improve employee performance in an effort to help translate our vision into actionable individual goals and ensure that employee compensation is commensurate with individual performance.
•
A published Customer Charter designed to enable us to retain and grow our customer base and capture additional market share.
•
A lean enterprise philosophy that helps drive operational process excellence in all functions including, sales, marketing, innovation, human resources, supply, manufacturing, information technology and finance.


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Our business divisions
We are organized into two reporting divisions, Elektron and Gas Cylinders. The following tables illustrate the revenue, trading profit and adjusted EBITDA of each division in 2017 , 2016 and 2015 .
 
 
Year ended December 31, 2017
 
 
 
Revenue
 
Trading profit (1)
 
Adjusted EBITDA (2)
 
 
 
Amount
 
Percentage
 
Amount
 
Percentage
 
Amount
 
Percentage
 
 
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
 
Elektron
$
221.1

 
50.1
%
 
$
31.8

 
78.5
%
 
$
44.5

 
72.0
%
 
 
Gas Cylinders
220.2

 
49.9
%
 
8.7

 
21.5
%
 
17.3

 
28.0
%
 

 
 
Year ended December 31, 2016
 
 
 
Revenue
 
Trading profit (1)
 
Adjusted EBITDA (2)
 
 
 
Amount
 
Percentage
 
Amount
 
Percentage
 
Amount
 
Percentage
 
 
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
 
Elektron
$
189.0

 
45.6
%
 
$
23.9

 
67.7
%
 
$
35.6

 
64.4
%
 
 
Gas Cylinders
225.8

 
54.4
%
 
11.4

 
32.3
%
 
19.7

 
35.6
%
 

 
 
Year ended December 31, 2015
 
 
 
Revenue
 
Trading profit (1)
 
Adjusted EBITDA (2)
 
 
 
Amount
 
Percentage
 
Amount
 
Percentage
 
Amount
 
Percentage
 
 
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
 
Elektron
$
221.2

 
48.1
%
 
$
33.7

 
79.7
%
 
$
45.7

 
73.5
%
 
 
Gas Cylinders
239.1

 
51.9
%
 
8.6

 
20.3
%
 
16.5

 
26.5
%
 

(1)  
Trading profit is defined as operating profit before profit on sale of redundant site, changes to defined benefit pension plans and restructuring and other expense. For purposes of our divisional segmental analysis, IFRS 8 requires the use of "segment profit" performance measures that are used by our chief operating decision maker. Trading profit is the "segment profit" measure used by our chief operating decision maker for divisional segmental analysis. See "Note 2—Revenue and segmental analysis" in our consolidated financial statements included elsewhere in this Annual Report.

(2)  
Adjusted EBITDA is defined as net income for the period before income tax expense, finance income (which comprises interest receivable), finance costs (which comprises interest costs, IAS 19R retirement benefits finance charge, and the unwind of the discount on deferred contingent consideration from acquisitions), net gain / (loss) on acquisitions and disposals, profit on sale of redundant site, changes to defined benefit pension plans, restructuring and other expense, other share based compensation charges, depreciation and amortization and loss on disposal of property, plant and equipment. See footnote (3) of Item 3.A. ("Selected financial data") of this Annual Report for a reconciliation to net income.


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Elektron Division
The Elektron Division represented 50% of our total revenue and 79% of our trading profit in 2017 . The table below provides a summary of products, applications / principal markets and illustrative customers and end-users.
 
Products
 
Application / principal
markets supplied
 
Illustrative customers
and end-users
 
 
Magnesium alloys
 
Aerospace, oil and gas and specialist automotive
 
United Technologies, Fansteel-Wellman, Boeing, Lockheed Martin
 
 
Magnesium powders and powder-based products
 
Defense countermeasure flares and self-heating meals for military personnel and emergency-relief agencies

 
Esterline Defense Technologies, Chemring, US armed forces, FEMA, Red Cross, The Wornick Company, AmeriQual Group, LLC, Sopakco

 
 
Magnesium plates
 
Photo-engraving for packaging and decorative printing
 
American Greetings
 
 
Zirconium compounds
 
Catalysts
 
Umicore, Johnson Matthey, BASF, Sud Chemie, Dinex, UOP (Honeywell)
 
 
 
 
Ceramics
 
Bosch, EPCOS, Imerys, Oerlikon Metco, Ask-Hi Tech
 
 
 
 
Chemical synthesis
 
BASF
 
 
 
 
Reflective coatings
 
3M
 
The principal geographic markets for the Elektron Division are North America and Europe. Shown below are 2017  percentages of revenue by geographic destinations and geographic origins.
Elektron Division—Revenue by geographic destination
2017
 
Geographic Region
 
Percentage of Elektron revenue
 
 
North America
59
%
 
 
Europe, other than U.K.
25
%
 
 
Asia Pacific
9
%
 
 
U.K. 
4
%
 
 
Rest of World
3
%
 

Elektron Division—Revenue by geographic origin
2017
 
Geographic Region
 
Percentage of Elektron revenue
 
 
North America
64
%
 
 
U.K. 
28
%
 
 
Europe, other than U.K.
8
%
 
Magnesium alloys: These offer significant advantages over aluminum alloys, since magnesium alloys are approximately a third lighter in weight while exhibiting similar strength and stability. Customers typically use our specialized alloys when lightness of weight, high strength and high temperature stability are important, such as in jet fighters and helicopter gearboxes, which operate under extreme conditions.
We have developed a large percentage of high-performance magnesium alloys available in major markets, including the U.S. For example, we developed 12 of the 18 magnesium alloys approved by the American Society for Testing Material ("ASTM") Standard Specification for Magnesium-Alloy Sand Castings . In the last 30 years, we developed and patented five out of six new alloys added to the list. The ASTM Standard Specification for Magnesium-Alloy Extruded Bars, Rods, Profiles, Tubes, and Wire lists nine currently used alloys, and we developed five of them.
Recently we have commercialized two new alloys, SynerMag ® , for use in bioresorbable cardio stents and SoluMag ® , a dissolvable alloy for use in the oil and gas industry.
Magnesium powders and powder based products: We believe that we are the largest manufacturer of atomized magnesium powders in the U.S. Our magnesium powder facilities have been manufacturing ground magnesium powders since 1941 and atomized powders since 1966.

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We also produce magnesium-based flameless heating pads for self-heating meals used by the U.S. military and emergency relief agencies, as well as magnesium-based chemical agent detection kits and chemical decontamination equipment.
In 2017, we acquired the trade and assets of Specialty Metals business of ESM Group Inc., including a manufacturing facility in Saxonburg, PA. The acquired business is being integrated with our existing powder business that currently offers similar products.
Magnesium plates: We believe that we are the largest manufacturer of magnesium plates used for photo-engraving for packaging and decorative printing.
Our magnesium-based products serve a wide range of customers globally and we have close, collaborative relationships with our customers. We compete in various specialty niches, as highlighted above. Competition, which is fragmented and varies from sector to sector, includes Chinese suppliers of magnesium die-casting alloys. We do not normally compete directly against primary magnesium producers, which supply pure magnesium and simple alloys.
We have a number of patented and off-patent products that help us maintain our competitive position. Due to the significant complexity of producing our specific alloys, we believe that competitors are likely to have difficulty manufacturing these alloys even after our patents expire.
Zirconium chemicals : We believe that our zirconium chemicals business is a leader in the manufacture of specialty zirconium compounds. Chemically derived zirconium products are more versatile, pure and suitable for demanding applications than thermally derived products or natural zirconia, and our products consequently command significantly higher value-added premiums. Sold in powder and solution forms, these products are used in a broad range of applications, including wash coats for catalytic converters, functional ceramics, chemical catalysis, and solid-oxide fuel cells.
Our zirconium plants use a multi-stage process based on proprietary technology to produce zirconium salts and zirconium oxides differentiated by their chemical purity and unique physical properties. Zircon sand is often the base raw material in our manufacturing process, and we also use a number of rare earths and commodity chemical products to produce our zirconium compounds.
The demand for our products is mainly driven by environmental concerns and legislation, since our environmentally-friendly products can replace toxic chemicals in many applications.
With a leading position in the zirconium compounds market, we have established ourselves over a number of years as an approved supplier to a number of blue-chip customers. These relationships have, in turn, facilitated the sharing of technical knowledge to develop new products and applications.
We have experienced significant competition in simple zirconium compounds from Chinese suppliers, either directly or through the availability of low-cost Chinese zirconium stock used by specialty competitors. Markets with relatively low technological needs, such as lead-replacement products for paint drying, now offer lower margins due to aggressive pricing by Chinese suppliers. Rather than compete in such lower margin markets, we have shifted our focus to more advanced markets that require our advanced technologies and know-how, which we use to develop customized products that meet the specific needs of our customers. We have a limited number of direct competitors in our chosen specialized markets that require complex chemical compounds with advanced catalytic, electrical and ceramic properties. In these markets, we compete primarily with Daiichi Kigenso Kagaku Kogyo of Japan, Solvay of France, Neo Performance Materials of the U.S. and Tosoh of Japan.

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Gas Cylinders Division
The Gas Cylinders Division represented 50% of our total revenue and 21% of our trading profit in 2017 . The table below shows products, applications, principal markets and illustrative customers and end-users.
 
 
 
 
 
 
 
 
Products
 
Application / principal markets
supplied
 
Illustrative customers
and end-users
 
 
High-pressure aluminum and composite gas-containment cylinders and systems
 
Self-contained breathing apparatus (SCBA)
 
Scott Safety (3M), MSA, Honeywell
 
 
 
Alternative fuels
 
Creative Bus, MAN
 
 
 
Bulk gas transportation
 
GTM Technologies
 
 
 
Specialty gases
 
Linde, Air Liquide, Airgas
 
 
 
Medical
 
Linde, Air Products
 
 
 
Fire extinguisher
 
Ansul (Johnson Controls), Chubb / Kidde (UTC)
 
 
 
Beverage
 
Coca-Cola, Pepsi
 
 
 
Scuba
 
XS Scuba
 
 
 
Inflation (aerospace)
 
Goodrich (UTC)
 
 
Superplastically-formed aluminum, titanium and magnesium products
 
Aerospace
 
Exelis, Boeing, Bombardier, Honda, Spirit, UTC Aerospace, Honeywell, Embraer, Short Brothers Plc (Bombardier), BAE Systems, GKN Aerospace.
 
 
 
Automotive
 
Aston Martin, Morgan, Bentley (VW), Ferrari S.P.A., Chrysler / FnG, McLaren Automotive
 
 
 
Medical
 
Siemens, Varian
 
 
 
Rail
 
Bombardier, Kinki Sharyo, Hitachi, LUL.
 

The principal geographic markets for the Gas Cylinders Division are the U.S., Europe and Asia Pacific. Shown below are 2017 percentages of revenue by geographic destinations and geographic origins.

Gas Cylinders Division—Revenue by geographic destination
2017
 
Geographic Region
 
Percentage of Gas Cylinders revenue
 
 
North America
49
%
 
 
Europe, other than U.K.
21
%
 
 
Asia Pacific
12
%
 
 
U.K. 
14
%
 
 
Rest of World
4
%
 

Gas Cylinders Division—Revenue by geographic origin
2017
 
Geographic Region
 
Percentage of Gas Cylinders revenue
 
 
North America
61
%
 
 
U.K. 
27
%
 
 
Europe, other than U.K.
10
%
 
 
Asia Pacific
2
%
 
Luxfer Gas Cylinders manufactured and sold approximately 1.8  million cylinders in 2017 , and we believe that we remain the largest global manufacturer of portable high-pressure aluminum and composite cylinders. The business achieved its leadership position through a long history of innovation and a commitment to setting a leading worldwide standard in product innovation and customer service.
Historically, overall growth in the Luxfer Gas Cylinders business has been driven by inherent benefits of aluminum over steel for high-pressure cylinders. In 2017 , sales of aluminum cylinders accounted for approximately 34% of divisional revenue. Although steel was the first material used for the containment of high-pressure gas, aluminum cylinders have the following recognized benefits:
•
Aluminum cylinders are up to 40% lighter in weight than steel cylinders.

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•
Non-corroding and non-reactive aluminum cylinders are ideal for maintaining the purity of many specialty gases used in critical manufacturing and laboratory applications.
•
Considered by many to be more cosmetically attractive than steel, aluminum cylinders are desirable for fire extinguishers, medical and scuba applications.
•
Non-magnetic aluminum cylinders may be safely used near diagnostic medical equipment containing powerful magnets.
Luxfer Gas Cylinders is also a leading supplier of carbon composite cylinders, including thin-walled, aluminum-lined cylinders fully-wrapped with aerospace-grade carbon fiber. Luxfer developed both the world's highest-pressure and lightest-weight composite life-support cylinders. In 2017 , sales of composite cylinders accounted for approximately 44% of Gas Cylinders Division revenue. Over the last decade, our composite cylinder business has enjoyed higher growth rates and stronger margins than our aluminum cylinder business. We believe demand for carbon composite cylinders will continue to grow, driven by the following benefits when compared to aluminum and steel cylinders:
•
Carbon composite cylinders are about one-third the weight of comparable aluminum cylinders and about 70% lighter than comparable steel cylinders.
•
High strength-to-weight ratio enables increased pressure to be used for the same size cylinder, thereby increasing cylinder volume capacity.
Demand for composite cylinders has been driven in part by increased usage in the emergency services sector, which prefers lighter-weight, higher-pressure cylinders for life-support applications. The use of carbon composite cylinders to contain compressed natural gas (CNG) and other alternative fuels has also grown over the past decade. We make cylinders and systems for AF vehicles and for storage and transportation of bulk CNG, and we also specialize in cylinders and valves for hydrogen fuel-cell vehicles and other hydrogen applications. Our research shows further growth opportunities in composite cylinders and associated new specialty products.
Luxfer Gas Cylinders has a very broad customer base, both geographically and by number. Customers in medical, SCBA and fire extinguisher markets tend to be highly concentrated since there are relatively few end-user distributors. Within the SCBA market, we have achieved a very high level of market penetration by providing composite cylinders to the three major suppliers to the North American market: MSA, Scott Safety (3M) and Honeywell.
Due to our strong worldwide distribution network, we believe that Luxfer Gas Cylinders is the most global manufacturer of high-pressure aluminum and composite gas cylinders. Luxfer had specialized in Type 3 (aluminum-lined) composite cylinders for a number of years, but in 2014, we introduced a new line of Luxfer-designed Type 4 (polymer-lined) cylinders for the AF market.
In recent years, the high-pressure gas cylinder market has undergone some consolidation. Worthington Industries, originally a steel cylinder competitor in the U.S. and Europe, has over the past decade purchased composite cylinder manufacturers that compete directly with Luxfer Gas Cylinders. Other competitors include Catalina Cylinders, an aluminum cylinder manufacturer in the U.S.; Faber, a steel cylinder manufacturer in Italy; and MES Cylinders, an aluminum cylinder manufacturer based in Turkey. In the AF sector, our main competitor is the Norwegian-owned Hexagon Composites, which produces Type 4 composite cylinders for CNG containment and which has recently acquired Agility Fuel Solutions which competes in the same field.
In Asia, the market for aluminum cylinders is less developed, and larger competitors predominantly offer steel products. These include Everest Kanto Cylinder, based in India, and Beijing Tianhai Industry, based in China. However, the use of composite cylinders is growing in the Asia Pacific region, and several competitors are now also manufacturing composite cylinders.
Superform developed a superplastic-forming process that uses customized tooling and controlled heat and air pressure applied to special aluminum, magnesium or titanium alloy sheets to elongate and form them into complex, bespoke shapes. These lightweight components are principally used in automotive, aerospace, medical, rail transportation and architectural end-markets. Although these products currently represent a relatively small niche market, we believe that Superform, which has operations in England and the U.S., is the largest independent supplier of such components in the Western world. In 2017 , Superform sales accounted for approximately 16% of Gas Cylinders Division revenue.
In 2017 , we continued to develop new manufacturing processes and high-strength materials to form parts at faster speeds and also to form titanium parts. Complementary value-enhancing processes have been added to strengthen our customer offering. These new innovations are targeted at widening the sales potential of our technology.

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Due to the fact that Superform invented the superplastic-forming process, direct competition with our technology is limited. Competition mainly comes from alternative technologies, such as cold pressing (which Superform is investing in), hydroforming and composite technologies, including those using carbon fiber. Hydroforming is a specialized type of die forming that uses a high-pressure hydraulic fluid to press material into a die at room temperature. The process is slower than cold pressing, and tooling costs are generally higher than for superforming.
Competitors include KTK in China, Magna International in Ireland, EBP in Sweden, Fontana in Italy and Verbom in Canada. Boeing, which purchased a license from Superform in 1998, has in-house aluminum superplastic-forming capability.

Suppliers and raw materials
Elektron Division
Key raw materials used by our Elektron Division are magnesium, zircon sand and rare earths.
The world market for magnesium is around one million metric tons per year. China provides about 70% of the world supply. Western primary production is, however, significant, from North American suppliers, Dead Sea Magnesium in Israel, RIMA Industrial in Brazil and two smelters in Russia. We purchase approximately half of our magnesium needs from China. We use only U.S.-sourced materials for our products sold to the U.S. military, for which U.S. and Canadian sourcing is mandatory.
We purchase and process zircon sand, which is found in heavy-minerals sand, titanium dioxide and other products. Global production of zircon is estimated at approximately 1.6 million metric tons. We source premium-grade zircon sand from Rio Tinto in South Africa and Iluka in Australia. We also purchase intermediate zirconium chemicals from suppliers in China; the level of these purchases is based on a number of factors, including required properties and relative market prices.
There are 17 rare earth metals that are reasonably common in nature. Usually found mixed together with other mineral deposits, these rare earths have magnetic and light-emitting properties that make them invaluable to high-technology manufacturers. As they are key ingredients in the manufacturing of our zirconium chemical and magnesium alloy products, our use of rare earths has expanded over the last few years. Our main requirement is for cerium, which we use in automotive catalysis compounds because of its unique oxygen-storage capabilities.
Gas Cylinders Division
The largest single raw material purchased by the Gas Cylinders Division is aluminum. In 2017 , we purchased 73% of our aluminum from Rio Tinto Alcan and its associated companies, and aluminum represented 35% of the division's raw material costs in the year.
Since 2005, the price of aluminum has been somewhat volatile. While we pass on most price movements to our customers, sometimes through contractual cost-sharing formulas, doing so can be more difficult or time consuming with our higher-value products. Consequently, we have historically hedged a portion of our exposure to fluctuations in aluminum pricing.
As a means of hedging against aluminum price increases, we use LME derivative contracts. During 2017 , such contracts covered approximately 60% of our estimated primary aluminum needs for the year.
Another key material is high-strength carbon fiber used in our composite products. Our main suppliers are Toray and Mitsubishi. In recent years, carbon fiber shortages have occurred due to increased demand for commercial aerospace and military applications. Consequently, we have built up relationships with our suppliers, providing them predictable requirements and fixed-price annual contracts to encourage successful procurement of our required quota of carbon fiber.
Environmental matters
Like most manufacturing facilities, our operations are subject to a range of environmental laws and regulations, including those relating to air emissions, wastewater discharges, handling and disposal of solid and hazardous wastes and remediation of contamination associated with current and historic use of hazardous substances or materials. If release of hazardous substances or materials occurs on or from our properties, from our processes or at any off-site disposal location we have used, or if contamination from previous activities is discovered at any of our locations, we may be held liable for costs of remediation, including response costs, natural resource damage costs and associated transaction costs. We devote considerable efforts to complying with and reducing our risk of liability under environmental laws, including maintaining an environmental management system.

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Due to their long history of industrial use, some of our facilities have areas of soil and water contamination that require or are anticipated to require investigation or remediation, including:
Manchester, England.     A dedicated landfill has been adjacent to our Manchester plant for more than 60 years. Following a review, we decided to close the landfill and ship our continuing waste to commercial off-site landfills. A detailed closure plan for the landfill was approved in June 2011 with the U.K. Environment Agency as the relevant regulator. The remediation process has progressed well although progress in 2017 was slow due to the lack of availability of top-of-cap-grade material. This material has now been sourced and is on site. We have recognized a provision of $0.3 million that we estimate to be the cost to complete the closure, which we now expect to be realized during 2018.
Manchester, England.    In 1998, we identified radioactive scale in mineral buildup that was contaminating pipes, valves and tanks in a redundant ion-exchange plant. The zircon sand used by the operation contains low-level, naturally occurring radioactive material, which had concentrated in the scale. The ion-exchange plant has been assessed, and a disposal route for the contaminated pipes and valves has been identified. We have been advised that leaving the tanks in situ is a safe and suitable option with the building used for storage being isolated, clearly quarantined and declared off-limits to site personnel. The U.K. Environment Agency has been made aware of this and has confirmed that it does not have any objections to this proposal. We do not expect there to be any health or safety risks as long as the building remains sealed.
Saxonburg, Pennsylvania. As part of the due diligence regarding the acquisition of the Specialty Metals business of ESM Group Inc during 2017, we identified excess levels of manganese in water samples obtained from shallow depths. Even though this does not pose a health concern, we are going to participate in Pennsylvania Department of Environmental Protection's voluntary Act 2 program. As of December 31, 2017 , the provision recognized with respect to this matter was $0.4 million.
Flemington, New Jersey.     We have requested permission to close a disused settling pond at this location and as a pre-condition to this closure, a program of remediation work to remove small amounts of contaminated soil and return the area to commercial land condition has been proposed to the New Jersey Department of Environmental Protection (NJDEP). Pursuant to the Industrial Site Recovery Act, we are pursuing an agreement with the previous owners to share in remediation costs. We have an accrual of $0.4 million related to this matter.
Flemington, New Jersey.     We have been investigating the presence of dissolved salts in groundwater adjacent to our plant to determine whether it was caused by activity on our site. At this point, we believe that most of the salts are naturally occurring, emanating from the local type of ground rock, and our consultants have submitted a report to the NJDEP for acceptance.
Riverhead, New York.     This site contains a small, redundant laboratory once used for testing chemical decontamination products. It is currently sealed, but as part of our acquisition due diligence, we determined to have the facility professionally removed and cleansed. During 2016, the expected work began and is expected to be completed in 2018. As of December 31, 2017 , the remaining provision with respect to this matter was $0.1 million.
Redditch, England.     In 2000, civil works carried out at the BA Tubes plant in Redditch led to the discovery of significant sub-soil contamination. Further investigation suggested that two large trichloroethylene spillages had occurred before we owned the business. Over several years we have been implementing a long-term improvement plan at the site in line with an action plan for voluntary remediation that we presented to the U.K. Environment Agency. Since 2008, there has been no industrial activity on the Redditch site. On March 11, 2016, we sold our redundant Redditch site to a company that specializes in remediating contaminated land. The sale was with passage of statutory liability for environmental issues to the purchaser, but our protection from future liabilities was partly dependent on a pre-arranged insurance policy that came into force when the on-site remediation was completed. The on-site remediation was completed at the end of March 2017, and we consequently released a provision of $0.4 million held as at December 31, 2016, to cover potential future costs.
General Issues.    Under the U.S. Superfund Law or similar laws, we may be subject to liability with regard to on-site contamination and off-site waste disposals. The costs and liabilities associated with matters identified above are not currently expected to be material. However, because additional contamination could be discovered or more stringent remediation requirements could be imposed in the future, there can be no assurance that costs and liabilities associated with further environmental investigation and clean-up related to these matters will not be material.
We have made and will continue to make expenditures related to environmental compliance. In 2014, we spent $5.1 million on environmental remediation which included $4.0 million on the removal of sludge and clean-up of related contamination from a large pond at our Flemington, New Jersey, facility, which is now completed. We

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spent $0.3 million on environmental remediation in each of 2015 and 2016, but did not incur any environmental remediation related expenditures in 2017.
We estimate that our expenditures on general environmental matters could be approximately $0.7 million in 2018 . These expenditures include finalizing the closure of the Manchester landfill and completing the decommissioning of the laboratory in Riverhead, New York. The exact timing of these expenditures is still uncertain, and they may be delayed, reducing the expenditures in 2018 and pushing work into 2019 and later years. Since the magnitude of environmental problems often becomes clearer as remediation is under way, the actual cost of such remediation could be higher than our estimate. The nature of the cost is also difficult to fully ascertain, and we may capitalize some costs because the remediation work enhances the value of the land we own.
We have taken the future estimated environmental remediation expenditures into account in our ongoing financial planning, and we expect to fund expenditures from operating cash we generate. Based on information currently available to us, we do not believe that there are any other environmental liabilities or issues of non-compliance that will have a material adverse effect on our results of operations, financial position or cash flows. Future changes in environmental laws and regulations or other developments could, however, increase environmental expenditures and liabilities, and there can be no assurance that such costs and liabilities in any given year will not be material.
Environmental Management Systems.     Following completion of the Management Buy-in in 1996, we retained independent environmental consultants RPS to design and implement an Environmental Management System ("EMS") for the purpose of monitoring and taking remedial action related to issues identified in the course of the acquisition due diligence. This work led to the adoption of a corporate environmental policy and the development of an EMS manual used by all facilities acquired at that time. Subsequent to the original Management Buy-in, all acquired facilities have been the subject of appropriate environmental due diligence.
On all sites, we continued during 2017 to take a proactive approach to environmental issues, and we completed a number of projects to reduce potential environmental impacts of issues identified in previous base-line reviews. We intend to certify all our larger sites as ISO 14001-compliant. As of December 31, 2017 , 14 of our 23 sites had achieved this objective.
We report the proportion of our sales that comes from ISO 14001-compliant sites as a non-financial KPI. The figure for 2017 is 90% , which is 2% lower than in 2016 (92%).
Seasonality
In general, demand for our products is not seasonal. However, we have shutdown periods at most of our manufacturing sites during which we carry out important maintenance work. Shutdowns typically last two weeks in the summer and one to two weeks around the year-end holidays, resulting in reduced levels of activity in the second half of the year compared to the first half. Third-quarter and fourth-quarter revenue and operating profit can be affected by our own shutdowns and by shutdowns by various industrial customers. In particular, we have found that our fourth-quarter results are generally lower, since many customers reduce production activity from late November through December. However, less activity in December usually leads to lower levels of working capital and therefore stronger cash flows around year-end. We also operate in various areas that are susceptible to bad weather during winter months, such as Calgary, Canada, and various U.S. eastern states. Bad weather can unexpectedly disrupt production and shipments from our manufacturing facilities, which can lead to reduced sales revenue and operating profits. We also manufacture products used in graphic arts and premium packaging, demand for which increases in the run up to Christmas.

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C.    Organizational structure.
The following is a list of Luxfer Holdings PLC subsidiaries:
 
Name of company
 
Country of incorporation
 
Proportion of ownership interest
 
 
BA Holdings, Inc.*
U.S.
 
100
%
 
 
Biggleswick Limited*
England and Wales
 
100
%
 
 
Luxfer Group Services Limited*
England and Wales
 
100
%
 
 
LGL 1996 Limited*
England and Wales
 
100
%
 
 
BAL 1996 Limited*
England and Wales
 
100
%
 
 
Hart Metals, Inc.*
U.S.
 
100
%
 
 
Lumina Trustee Limited (1)
England and Wales
 
100
%
 
 
Luxfer Australia Pty Limited*
Australia
 
100
%
 
 
Luxfer Gas Cylinders Limited*
England and Wales
 
100
%
 
 
Luxfer Gas Cylinders China Holdings Limited*
England and Wales
 
100
%
 
 
Luxfer Gas Cylinders (Shanghai) Co., Limited*
People's Republic of China
 
100
%
 
 
Luxfer Group Limited
England and Wales
 
100
%
 
 
Luxfer Group 2000 Limited
England and Wales
 
100
%
 
 
Luxfer, Inc.*
U.S.
 
100
%
 
 
Luxfer Overseas Holdings Limited*
England and Wales
 
100
%
 
 
Magnesium Elektron Limited*
England and Wales
 
100
%
 
 
MEL Chemicals, Inc.*
U.S.
 
100
%
 
 
Magnesium Elektron North America, Inc.*
U.S.
 
100
%
 
 
Magnesium Elektron CZ s.r.o.*
Czech Republic
 
100
%
 
 
MEL Chemicals China Limited*
England and Wales
 
100
%
 
 
Niagara Metallurgical Products Limited*
Canada
 
100
%
 
 
Reade Manufacturing, Inc.*
U.S.
 
100
%
 
 
Luxfer Gas Cylinders S.A.S.*
France
 
100
%
 
 
Luxfer Canada Limited*
Canada
 
100
%
 
 
Luxfer Germany GmbH*
Germany
 
100
%
 
 
Luxfer Utah LLC*
U.S.
 
100
%
 
 
HyPerComp Engineering Inc.*
U.S.
 
100
%
 
 
Luxfer Magtech Inc.*
U.S.
 
100
%
 
 
Luxfer Magtech International Limited*
England and Wales
 
100
%
 
Other Investments:
 
Name of company
 
Country of incorporation
 
Proportion of voting rights and shares held
 
 
Nikkei-MEL Co Limited*
Japan
 
50
%
 
 
Luxfer Uttam India Private Limited*
India
 
51
%
 
 
Dynetek Cylinders India Private Ltd*
India
 
49
%
 
 
Dynetek Korea Co Limited*
South Korea
 
49
%
 
 
Luxfer Holdings NA, LLC*
U.S.
 
49
%
 
 
Sub161 Pty Limited*
Australia
 
26.4
%
 
Subsidiary undertakings are all held by the Company unless indicated.
*    Held by a subsidiary undertaking.
(1) Acts as bare trustee in connection with the 2007 share capital reorganization.

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D.    Property, plants and equipment
In 2017 , we operated from 23 manufacturing plants in the U.K., U.S., France, Czech Republic, Canada and China. We also had joint ventures in Japan, India and the U.S. Our manufacturing plants for our operations, as of December 31, 2017 , are shown in the table below:
 
Division
 
Property / Plant
 
Principal products
manufactured
 
Ownership
 
Approximate area (square feet)
 
 
Elektron
 
 
 
 
 
 
 
 
 
 
 
 
Manchester, England (3 plants)
 
Magnesium alloys / zirconium chemicals
 
Split Lease / Own
 
561,264

 
 
 
 
Madison, IL
 
Magnesium sheet
 
Lease
 
803,795

 
 
 
 
Findlay, OH
 
Photo-engraving sheet
 
Own
 
43,000

 
 
 
 
Tamaqua, PA
 
Magnesium powders
 
Own
 
64,304

 
 
 
 
Lakehurst, NJ
 
Magnesium powders
 
Own
 
78,926

 
 
 
 
Flemington, NJ
 
Zirconium chemicals
 
Own
 
65,000

 
 
 
 
Hamilton, Canada
 
Magnesium powders
 
Lease
 
16,335

 
 
 
 
Litvinov, Czech Republic
 
Magnesium recycling
 
Own
 
62,140

 
 
 
 
Riverhead, NY
 
Magnesium heating pads
 
Own
 
75,000

 
 
 
 
Cincinnati, OH
 
Magnesium heating pads
 
Lease
 
150,000

 
 
 
 
Saxonburg, PA
 
Magnesium powders
 
Own
 
68,000

 
 
Gas Cylinders
 
 
 
 
 
 
 
 

 
 
 
 
Nottingham, England
 
Aluminum cylinders
 
Lease
 
143,222

 
 
 
 
Gerzat, France
 
Cylinders
 
Own
 
327,535

 
 
 
 
Calgary, Canada
 
Composite cylinders
 
Lease
 
65,500

 
 
 
 
Worcester, England
 
Aluminum panels
 
Lease
 
97,315

 
 
 
 
Kidderminster, England
 
Aluminum panels
 
Lease
 
60,200

 
 
 
 
Riverside, CA
 
Composite cylinders
 
Lease / Own
 
125,738

 
 
 
 
Graham, NC
 
Aluminum cylinders
 
Own
 
121,509

 
 
 
 
Riverside, CA
 
Aluminum panels
 
Lease
 
68,240

 
 
 
 
Brigham City, UT
 
Cylinders
 
Lease
 
10,670

 
 
 
 
Shanghai, China
 
Cylinders
 
Lease
 
15,383

 
We also have locations in Australia and Italy that are involved in sales and distribution but not in manufacturing, as well as our headquarters in Salford, England. Our current headquarters office, which we hold under a short-term lease, is approximately 5,500 square feet, but is due to move to Manchester, England, in late March, 2018.
Utilization of our main production facilities is generally moderate to high across our businesses. We can adjust capacity relatively easily by varying shift patterns and / or manning levels, and we currently have few areas that require major capital investment to add capacity. Our strategic growth projects may require additional capacity over the next three years, depending on the degree to which these projects are successful.
Item 4A.
Unresolved Staff Comments
There are no written comments from the staff of the SEC that remain unresolved as of the date of filing this Annual Report with the SEC.

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Item 5.
Operating and Financial Review and Prospects
The following discussion of our financial position and results of operations should be read in conjunction with Item 3.A "Selected Financial Data", our consolidated financial statements and accompanying notes appearing elsewhere in this Annual Report. Our consolidated financial statements have been prepared in accordance with IFRS as issued by the IASB.
The preparation of our consolidated financial statements required the adoption of assumptions and estimates that affect the amounts recorded as assets, liabilities, revenue and expenses in the years and periods addressed and are subject to certain risks and uncertainties. See "Note 1—Accounting policies" to our consolidated financial statements included in this Annual Report for additional details on assumptions and estimates. Our future results may vary substantially from those indicated because of various factors that affect our business, including, among others, those identified under "Forward-Looking Statements" and "Risk factors" and other factors discussed in this Annual Report.
Overview
We are a global materials technology company specializing in the design, manufacture and supply of high-performance materials, components and high-pressure gas-containment devices for healthcare, environmental, protection and specialty end-markets. Our company is organized into two reporting divisions, Elektron and Gas Cylinders, which both represented 50% , of our total revenue in 2017 . Our Elektron Division focuses on specialty materials based primarily on magnesium, zirconium and rare earths. Our Gas Cylinders Division manufactures and markets specialized products using aluminum, magnesium, carbon composites and steel. For a description of our products, see Item 4.B "Business Overview." Our customers include both end-users of our products and manufacturers that incorporate our products into their finished goods.
Key Factors Affecting our Results
A number of factors have contributed to our results of operations during recent periods, including the effects of fluctuations in raw material costs, effects of fluctuations in foreign exchange rates, changes in market sector demand, our development of new products, the global nature of our operations, our ability to improve operating efficiencies and costs associated with our retirement benefit arrangements.
Raw material costs
We are exposed to commodity price risks in relation to purchases of our raw materials. Raw materials we use include primary magnesium, rare earth metals and chemical compounds, zircon sand, zirconium oxychloride intermediates and other chemical inputs like soda ash for the Elektron Division and aluminum log and sheet and carbon fiber for the Gas Cylinders Division. Many of these raw materials have been subject to price rises and volatility over the last few years, some of which were substantial. We take certain actions to attempt to manage the impact of fluctuations in the costs of these commodities, including passing commodity prices through to certain customers through increasing prices and surcharges on certain products, entering into forward fixed purchase contracts and engaging in some hedging of aluminum prices. Changes in the costs of raw materials can nevertheless have a significant impact on our results of operations. For more information on the effect of commodity price movements on our results of operations, see "Item 11. Quantitative and Qualitative Disclosure About Market Risk—Effect of Commodity Price Movements on Results of Operations."
Exchange rates
As a result of our international operations, we are subject to risks associated with fluctuations among different foreign currencies. This affects our consolidated financial statements and results of operations in various ways:
•
As part of our consolidation each period, we translate the financial statements of those entities in our group that have functional currencies other than U.S. dollars into U.S. dollars at the period-end exchange rates (in the case of the balance sheet amounts) and the average exchange rates for the period (in the case of income statement and cash flow amounts). The translated values in respect of each entity fluctuate over time with the movement of the exchange rate for the entity's functional currency against the U.S. dollar. We refer to this as the currency translation risk;
•
Our operating subsidiaries make purchases and sales denominated in a number of currencies, including currencies other than their respective functional currencies. To the extent that an entity makes purchases in a currency that appreciates against its functional currency, its cost basis expressed in its functional currency will increase (or decrease if the other currency depreciates against its functional currency). Similarly, for sales in a currency other than the entity's functional currency, its revenues will increase to the extent that the other currency appreciates against the entity's functional currency and decrease to the extent that the currency depreciates against the entity's functional currency. These

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movements can have a material effect on the gross profit margin of the entity concerned and on our consolidated gross profit margin. We refer to this as the currency transaction risk;
•
After a purchase or sale is completed, the currency transaction risk continues to affect foreign currency accounts payable and accounts receivable on the books of those entities that made purchases or sales in a foreign currency. These entities are required to remeasure these balances at market exchange rates at the end of each period; and
•
To mitigate our exposure to currency transaction risk, we have operated a policy of hedging all contracted commitments in foreign currency, although no new hedges were taken out in the second half of 2017. We also hedge a portion of non-contracted forecast currency receipts and payments for up to 12 months forward.
On June 23, 2016, the U.K. held a referendum in which voters approved an exit from the European Union (the "E.U."), commonly referred to as 'Brexit'. On March 29, 2017, the U.K. Government invoked Article 50 of the Treaty on the European Union, which is likely to result in the U.K. exiting the E.U. on March 29, 2019. The U.K. Government has commenced negotiating the terms of the U.K.'s future relationship with the E.U. although there is still considerable uncertainty as to the outcome. It is possible that there will be greater restrictions on imports and exports between the U.K. and other countries and increased regulatory complexity. These changes may adversely affect our operations and financial results.
In 2017, we sold €58.0 million from the U.K. into the Eurozone, and despite the fact that GBP sterling has remained weak against the euro, we were unable to take full advantage of this due to hedges being taken out during 2015 and the first half of 2016 at less favorable exchange rates (these hedges currently cover approximately 32% of 2018 forecast sales in euros). The Gas Cylinders Division, selling mainly aluminum cylinders priced in euros, is more affected than Elektron. Exports from U.S. business units, largely of composite cylinders, into Europe tend to be priced in U.S. dollars, as most of the competition also prices in dollars. However, if GBP sterling remains weak, we anticipate a potential transactional benefit once pre-existing hedges run off.
For more information on the effect of currency movement on our results of operations, and how we use foreign currency exchange derivative contracts to hedge this risk, see "Item 11. Quantitative and Qualitative Disclosure About Market Risk—Effect of Currency Movement on Results of Operations." We evaluate our results of operations on both an as-reported basis and a constant translation exchange rate basis. The constant translation exchange rate presentation is a non-GAAP measure, which excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant translation exchange rate percentages by converting our prior-period local currency financial results using the current-period foreign currency exchange rates and comparing these adjusted amounts to our current period reported results. This calculation may differ from similarly-titled measures used by others and, accordingly, the constant translation exchange rate presentation is not meant to be a substitution for recorded amounts presented in conformity with IFRS as issued by the IASB, nor should such amounts be considered in isolation.
Demand in end-markets
Our sales are driven by demand in the major end-markets for our products, which are transportation, defense and emergency response, healthcare and general industrial.
•
Transportation:   Many Luxfer products serve a growing need to improve and safeguard the environment in the field of transportation, including our zirconium-based products that clean up automotive exhausts; our lightweight magnesium alloys used in fuel-efficient aerospace and automotive designs; and our lightweight, high-pressure carbon composite alternative fuel cylinders that contain clean-burning compressed natural gas. We also superform single sheets of aluminum, magnesium or titanium to create a complex, three-dimensional shapes used in automotive, aerospace and rail components. As recycling metals is an essential environmental and economic practice, we have a dedicated site specifically for recycling magnesium alloys, as well as recycling capabilities at all our production sites.
•
Defense and emergency response: Luxfer offers a number of products that address principal factors driving growth in this market, such as heightened societal expectations regarding protection of people, equipment and property during conflicts and emergencies. Our products include magnesium powders for countermeasure flares that defend aircraft against heat-seeking missile attack, life-support cylinders for firefighters and other emergency-service personnel, inflation cylinders for aircraft escape slides and life rafts, fire extinguisher cylinders, and chemical agent detection and decontamination products.

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•
Healthcare: Luxfer has a long history in the healthcare end-market, and we see this as a major area for the introduction of new technologies. These include lightweight aluminum and composite cylinders for containment of medical and laboratory gases; magnesium powders for pharmaceutical products; magnesium materials for lightweight orthopedic devices; specialized magnesium alloys for cardiovascular stents and implants; and zirconium materials for biomedical applications and dental implants.
•
General industrial: Our core technologies have enabled us to exploit various other niche markets and applications. Our products include zirconium-based compounds to purify drinking water and clean up industrial exhausts; magnesium alloys shaped for use in various general engineering applications; and high-pressure gas cylinders used for high-purity specialty gases, beverage dispensing, scuba diving and performance racing. Metal foil-stamping and embossing dies are used primarily for luxury packaging, labels and greeting cards. Our high-quality magnesium, copper and zinc plates are ideal for these and other graphic applications.
Changes in the dynamics of any of these key end-markets could have a significant effect on our results of operations. For instance, governmental regulation, including government spending and delays in regulatory approvals, as well as decreased prices of substitute products, including falling oil prices, may affect our results of operations in any of these end-markets. See Item 3.D. " Risk factors—Risks Relating to Our Operations—We depend on certain end-markets, including automotive, alternative fuels, self-contained breathing apparatus, aerospace and defense, medical, and printing and paper. An economic downturn or regulatory changes in any of those end-markets could reduce sales, and margins on those sales. " and " Risk factors—Risks Relating to Our Operations—Certain of our operations are highly regulated by different agencies that require products to comply with their rules and procedures and can subject our operations to penalties or adversely affect production. " For a more detailed discussion of our key end-markets and the factors affecting our results of operations in each market, see Item 4 "Business Overview—Our End-markets."
Product development
Part of our strategy is to increase our focus on high-margin product lines and end-markets, and every year we re-evaluate and balance our investment in product development. In the near-term, we plan to focus on maximizing the potential of the following products that we have already introduced into the market: industrial catalysts and biomedical applications using our zirconia-based materials; L7X ® higher-pressure medical oxygen cylinders; extruded magnesium alloy shapes; and soluble magnesium alloys for the oil and gas industry.
Global operations
We are a global company with operations and customers around the world. In 2017 , our sales to Europe (including the U.K.), North America and the rest of the world accounted for 33% , 54% and 13% of our revenues respectively. Changes in global economic conditions have impacted, and will continue to impact, demand for our products. Further, our geographic diversity exposes us to a range of risks, such as compliance with different regulatory and legal regimes, exchange controls and regional economic conditions. For more information about potential risks we face, see Item 3.D. "Risk factors—Risks Relating to Our Operations—Our global operations expose us to economic conditions, political risks and specific regulations in the countries in which we operate, which could have a material adverse impact on our results of operations, financial position and cash flows."
We believe, however, that our geographic diversity also allows us to take advantage of opportunities arising in individual countries or regions. As a result of this diversity, demand for our products across sectors in which we operate can vary depending on the economic health and demographic shifts of our geographic markets. These macro factors can have a significant effect on our financial results. For instance, aging populations in the world's developed economies, along with increasing awareness of the importance of good healthcare in emerging markets, are driving an increase in the use of various medical technologies and applications, creating a growth opportunity for us. Economic expansion in developing economies such as Brazil, Russia, India and China has created increased demand in areas such as auto-catalysis chemicals and gas cylinders.
Operating efficiency
Our management seeks to improve long-term profitability and operating efficiencies to maintain our competitive position. These efforts include identifying operations with costs disproportionate to related revenues, especially operations with significant fixed costs that could negatively impact gross profit margin. In the past few years, we have taken more aggressive rationalization measures. Initiatives have included automation projects, employee redundancy exercises and undertaking temporary and permanent facility closings. Total charges for rationalization (which are a component of restructuring and other expenses) were $12.1 million , $0.4 million and $21.8 million in 2017 , 2016 and 2015 respectively.


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Retirement benefit arrangements
We operate defined benefit arrangements in the U.K., the U.S. and France. Funding levels are determined by periodic actuarial valuations. Further, we also operate defined contribution plans in the U.K., the U.S. and Australia. Assets of the plans are generally held in separate trustee administered funds. We incur costs related to these retirement benefit arrangements, which can vary from year to year depending on various factors such as interest rates, valuations, regulatory burdens, life expectancy and investment returns. Total charges we incurred for all retirement benefit arrangements were $6.6 million , $7.0 million and $8.9 million in 2017 , 2016 and 2015 , respectively.
Key Line Items
Revenue
We generate revenue through sales of products that we have developed and manufactured for our customers. The main products that we sell are magnesium alloy powders, ingot, bar, extruded product, rolled plates and thin sheets, engraving plates, zirconium compounds in powder form, various forms of aluminum and carbon composite gas cylinders and superplastically-formed parts pressed using our vacuum pressing technology. We also generate revenue from designing and manufacturing special tools used with our Superform presses to make formed parts and from recycling magnesium alloy scrap for customers, along with sales of scrapped aluminum arising from the manufacture of gas cylinders. In general, for our magnesium and zirconium products, we charge our customers by weight sold, while for our gas cylinder and Superform products, we charge our customers by units and parts sold. For a description of our products, see Item 4.B "Business Overview."
Cost of sales
Our cost of sales primarily consists of a complex set of materials, energy, water and steam, direct shop-floor labor costs, supervisory management costs at our manufacturing facilities, engineering and maintenance costs, depreciation of property, plant and equipment, factory rents, security costs, property taxes and factory consumables, including machinery oils and protective equipment for employees. For a description of raw materials we use, see "Key Factors Affecting Our Results—Raw material costs" and Item 4.B "Business Overview—Suppliers and Raw Materials."
Distribution costs
As a global business, we transport and deliver our products to customers around the world. While some customers pay for their own transport, we can organize transportation through third parties. These distribution costs are recovered in the product price included in our revenue.
Administrative expenses
Our administrative expenses primarily consist of costs for staff working in sales, marketing, research and development, human resources, accounting, legal, information technology and general management. Administrative expenses also include sales commissions to agents, pension administration costs, legal costs, audit fees, directors' fees, taxation consultancy fees and other advisory costs. We also buy office consumables such as stationery, computer equipment and telecommunications equipment.
Restructuring and other income / (expense)
Our restructuring and other income / (expense) primarily consist of items of income and expense, which, because of their infrequent nature, merit separate presentation. In the past, these expenses have included costs related to redundancies, restructuring / rationalization of manufacturing operations, demolition and environmental remediation, litigation settlements, among others.
Other income / (expense)
Other income / (expense) consists of costs related to corporate finance activities, including business acquisitions and financing income and costs. Our finance costs consist of interest costs representing amounts accrued and paid on the outstanding balances under our indebtedness.






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Critical Accounting Policies
Our consolidated financial statements are prepared in accordance with IFRS as issued by the IASB and the accounting policies that we use are set out under the heading "Note 1—Accounting policies" to our consolidated financial statements. In applying these policies, we make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, as well as our results of operations. The actual outcome could differ from these estimates. Some of these policies require a high level of judgment, either because they are especially subjective or complex. We believe that the most critical accounting policies and significant areas of judgment and estimation are with respect to impairment of goodwill, intangible assets and property, plant and equipment, retirement benefits, deferred income taxes, inventories obsolescence and write down and measurement of contingent consideration.
Impairment of goodwill, intangible assets and property, plant and equipment
Under IFRS as issued by the IASB, goodwill is held at cost less accumulated impairment and tested annually for impairment, or more frequently if events or changes in circumstances indicate the carrying amount of the asset might be impaired. Tests for impairment are based on discounted cash flow projections, which require us to estimate both future cash flows and an appropriate discount rate. Such estimates are inherently subjective.
For intangible assets other than goodwill, and property, plant and equipment, we assess whether there is any indication that an asset may be impaired at each balance sheet date or more frequently if events or changes in circumstances indicate the carrying amount of the asset might be impaired. If such an indication exists, we estimate the recoverable amount of the asset and charge any impairment directly to the income statement.
The process of reviewing and calculating impairments of fixed assets necessarily involves certain assumptions. It requires the preparation of cash flow forecasts for a particular set of assets, known as "cash generating units." These forecasts are based on, among other things, our current expectations regarding future industry conditions, our own operational plans and assumptions about the future revenues and costs of the unit under review. Accordingly, there can be no certainty that the cash flow forecasts are correct. Current turmoil in many financial and industrial markets will make this type of analysis far more difficult to perform and therefore subject to a greater risk of error.
Further analysis was performed to assess whether the remaining goodwill, intangible assets and property, plant and equipment in our consolidated balance sheet were impaired as of December 31, 2017 . It was concluded that based on the commercial information available and applying an average discount rate of 10.0% across the group, the Luxfer Czech Republic CGU was deemed impaired. As a result, an impairment of $2.2 million was recognized with regards to the property, plant and equipment.
Post-employment benefits
We account for the pension costs relating to our retirement plans under IAS 19R "Employee Benefits." In applying IAS 19R, we have recognized actuarial gains and losses in full through reserves. In all cases, the pension costs are assessed in accordance with the advice of independent qualified actuaries, but require the exercise of significant judgment in relation to assumptions for future salary and pension increases, long-term price inflation and investment returns. The most sensitive assumption is the long-term discount rate used to discount the net retirement benefit obligation.
Deferred income taxes
Deferred income tax assets are recognized for unabsorbed tax losses and unutilized capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilized. Judgment is required to determine the amount of deferred income tax assets that can be recognized, based upon the likely timing, level of future taxable profits and tax rates in various jurisdictions, together with future tax planning strategies.
Inventories obsolescence and inventories write down
Inventories are stated at the lower of cost and net realizable value and are reviewed on a regular basis. We will make allowance for excess or obsolete inventories and write down to net realizable value. This will be based primarily on committed sales prices and our estimates of expected and future product demand and related pricing.




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Other significant accounting policies
Other significant accounting policies not involving the same levels of measurement uncertainties as those discussed above are nevertheless important to an understanding of our consolidated financial statements. Policies related to financial instruments, the characterization of operating and finance leases and consolidation policy require difficult judgments on complex matters that are often subject to multiple sources of authoritative guidance. Certain of these matters are among topics currently under re-examination by accounting bodies and regulators. The new IFRS 16 accounting standard on leases is likely to have a material impact on our accounting policies and on our balance sheet as a result of having to bring, currently off-balance sheet, operating leases onto the balance sheet, with a corresponding liability also recorded. With regards to other policies, whilst material change appears unlikely, we cannot predict outcomes with confidence.
Recent Accounting Pronouncements
See "Note 1—Accounting policies" to our consolidated financial statements for a description of other recent accounting pronouncements, including the respective dates of effectiveness and effects on our results of operations.

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A.
Operating results.
Results of Operations for the Years Ended December 31, 2017 , 2016 and 2015
The table below summarizes our consolidated results of operations for the years ended December 31, 2017 , 2016 and 2015 , both in U.S. dollars and as a percentage of total revenue. For more detailed segment information, see "Note 2—Revenue and segmental analysis" to our consolidated financial statements included elsewhere in this Annual Report.
 
 
 
Year Ended December 31,
 
 
 
 
2017
 
2016
 
2015
 
 
 
 
Amount
 
Percentage
of
Revenue
 
Amount
 
Percentage
of
Revenue
 
Amount
 
Percentage
of
Revenue
 
 
 
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
(in $ million)
 
(%)
 
 
Revenue
 
$
441.3

 
100.0
 %
 
$
414.8

 
100.0
 %
 
$
460.3

 
100.0
 %
 
 
Cost of sales
 
(332.7
)
 
(75.4
)%
 
(321.4
)
 
(77.5
)%
 
(356.3
)
 
(77.4
)%
 
 
Gross profit
 
108.6

 
24.6
 %
 
93.4

 
22.5
 %
 
104.0

 
22.6
 %
 
 
Distribution costs
 
(9.3
)
 
(2.1
)%
 
(7.8
)
 
(1.9
)%
 
(7.9
)
 
(1.7
)%
 
 
Administrative expenses
 
(58.9
)
 
(13.3
)%
 
(50.8
)
 
(12.2
)%
 
(52.6
)
 
(11.4
)%
 
 
Share of results of joint ventures and associates
 
0.1

 
0.1
 %
 
0.5

 
0.1
 %
 
(1.2
)
 
(0.3
)%
 
 
Trading profit (1)
 
$
40.5

 
9.2
 %
 
$
35.3

 
8.5
 %
 
$
42.3

 
9.2
 %
 
 
Profit on sale of redundant site (2)
 
0.4

 
0.1
 %
 
2.1

 
0.5
 %
 
—

 
—

 
 
Changes to defined benefit pension plans (2)
 
—

 
—

 
0.6

 
0.1
 %
 
18.0

 
3.9
 %
 
 
Restructuring and other expense (2)
 
(21.6
)
 
(4.9
)%
 
(2.2
)
 
(0.5
)%
 
(22.4
)
 
(4.9
)%
 
 
Operating profit
 
$
19.3

 
4.4
 %
 
$
35.8

 
8.6
 %
 
$
37.9

 
8.2
 %
 
 
Other income / (expense):
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Net gain / (loss) on acquisitions and disposals (2)
 
1.3

 
0.3
 %
 
0.2

 
0.1
 %
 
(2.0
)
 
(0.4
)%
 
 
Finance income:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Interest received
 
0.5

 
0.1
 %
 
1.2

 
0.3
 %
 
0.5

 
0.1
 %
 
 
Finance costs:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Interest costs
 
(7.2
)
 
(1.6
)%
 
(6.8
)
 
(1.6
)%
 
(7.4
)
 
(1.6
)%
 
 
IAS 19R retirement benefits finance charge
 
(1.8
)
 
(0.4
)%
 
(2.1
)
 
(0.5
)%
 
(3.0
)
 
(0.7
)%
 
 
Unwind of discount on deferred contingent consideration from acquisitions
 
(0.2
)
 
0.1
 %
 
(0.4
)
 
(0.1
)%
 
(0.4
)
 
(0.1
)%
 
 
Total finance costs:
 
(9.2
)
 
(2.1
)%
 
(9.3
)
 
(2.2
)%
 
(10.8
)
 
(2.3
)%
 
 
Profit on operations before taxation
 
$
11.9

 
2.7
 %
 
$
27.9

 
6.7
 %
 
$
25.6

 
5.6
 %
 
 
Tax expense
 
(0.4
)
 
(0.1
)%
 
(6.0
)
 
(1.4
)%
 
(9.5
)
 
(2.1
)%
 
 
Net income for the year
 
$
11.5

 
2.6
 %
 
$
21.9

 
5.3
 %
 
$
16.1

 
3.5
 %
 
 
Non-GAAP measures:
 
 

 
 

 
 

 
 

 
 

 
 

 
 
Adjusted EBITDA (3)
 
$
61.8

 
14.0
 %
 
$
55.3

 
13.3
 %
 
$
62.2

 
13.5
 %
 
 
Adjusted net income for the year (4)
 
$
27.6

 
6.3
 %
 
$
24.7

 
6.0
 %
 
$
29.5

 
6.4
 %
 
(1)
Trading profit is defined as operating profit before profit on sale of redundant site, changes to defined benefit pension plans and restructuring and other expense. For the purposes of our divisional segmental analysis, IFRS 8 requires the use of "segment profit" performance measures that is used by our chief operating decision maker. Trading profit is the "segment profit" measure used by our chief operating decision maker for divisional segmental analysis. See "Note 2—Revenue and segmental analysis" in our consolidated financial statements included elsewhere in this Annual Report.
(2)
For further information, see analysis of trading profit and operating profit variances, below.
(3)
Adjusted EBITDA is defined as net income for the period before income tax expense, finance income (which comprises interest received) and finance costs (which comprises interest costs, IAS 19R retirement benefits finance charge and the

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unwind of the discount on deferred contingent consideration from acquisitions), net gain / (loss) on acquisitions and disposals, profit on sale of redundant site, changes to defined benefit pension plans, restructuring and other expense, other share based compensation charges, depreciation and amortization and loss on disposal of property, plant and equipment. See footnote (3) of Item 3.A. ("Selected financial data") of this Annual Report for a reconciliation to net income.
(4)
Adjusted net income is a non-GAAP financial measure and consists of net income for the period adjusted for the post-tax impact of non-trading items, including certain accounting charges relating to acquisitions and disposals of businesses (comprising net gain / (loss) on acquisitions and disposals, the unwind of the discount on deferred contingent consideration from acquisitions and the amortization on acquired intangibles), IAS 19R retirement benefits finance charge, profit on sale of redundant site, changes to defined benefit pension plans, restructuring and other expense and other share based compensation charges. See footnote (8) of Item 3.A. ("Selected financial data") of this Annual Report for a reconciliation to net income.
Year Ended December 31, 2017 Compared to Year Ended December 31, 2016
Revenue.     Our revenue from continuing operations was $441.3 million in 2017 , an increase of $26.5 million  from $414.8 million  million in 2016 . Compared to 2016 , revenue reflected a $6.4 million gain from more-favorable average exchange rates. Thus, underlying revenue, net of exchange rate effects, increased by $20.1 million . Reasons for the revenue change are discussed in detail by division, but in general, there were higher sales of Luxfer Magtech products, as well as of our SoluMag ® alloy in the Elektron Division, partially offset by reduced sales of composite AF and SCBA cylinders as well as a delay in Superform automotive tooling projects in the Gas Cylinders Division.
Analysis of revenue variances from 2016 to 2017 for continuing operations
 
 
Elektron
 
Gas Cylinders
 
Group
 
 
 
(in $ million)
 
 
2016 revenue—as reported under IFRS
$
189.0

 
$
225.8

 
$
414.8

 
 
FX impact
4.9

 
1.5

 
6.4

 
 
2016 revenue—adjusted for FX
$
193.9

 
$
227.3

 
$
421.2

 
 
Trading variances for underlying operations—2017 v 2016
27.2

 
(7.1
)
 
20.1

 
 
2017 revenue—as reported under IFRS
$
221.1

 
$
220.2

 
$
441.3

 
The above table shows the change in each division's revenue between 2017 and 2016 . It separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results and any trading variances which have been noted. The following discussion provides an explanation of our changes in revenue by division.
Elektron Division
Elektron Division revenue in 2017 was $221.1 million compared to $189.0 million in 2016 . Exchange rate differences were favorable by $4.9 million and underlying revenue was $27.2 million , or 14.0% , higher than 2016 .
Revenue was higher in the Division primarily due to increased sales for Flameless Ration Heaters (FRH), used in Meals, Ready-to-Eat TM , (MRE), which reflected increased disaster-relief shipments to hurricane affected areas in the United States and Caribbean during the second half of the year. Sales of our proprietary SoluMag ® alloy continued to grow as we gained traction in the oil and gas market, reflecting success in broadening the product line. The military powders business has experienced moderate growth as the budgetary pressure on U.S. defense spending loosened and the business recovered from an outage suffered by a key customer in 2016. Graphic Arts and zirconium products have also benefited from year-on-year increases in revenue.
Gas Cylinders Division
Gas Cylinders Division revenue was lower at $220.2 million compared to $225.8 million in 2016 . Exchange rate differences were favorable by $1.5 million , and underlying revenue was $7.1 million , or 3.1% , lower than 2016 .
Revenue was lower in the Division largely due to depressed sales of our AF cylinders following the loss of a major customer, and lower sales of SCBA cylinders, partially offset by an increase in European medical composite cylinders, as well as shipments of aluminum cylinders. Superform sales were also down in the year following unusually high tooling sales in 2016. Sales of formed parts remained relatively flat from 2016 as we continued to deliver our products pursuant to our existing contracts.

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Luxfer Group
Cost of sales.     Our cost of sales was $332.7 million  in 2017 , an increase of $11.3 million from $321.4 million in 2016 . Excluding an exchange rate gain of $1.6 million on cost of sales of non-U.S. operations, our cost of sales at constant exchange rates increased by $12.9 million, or 4.0%, from 2016 .
Gross profit.     Gross profit was $108.6 million in 2017 , an increase of $15.2 million from $93.4 million in 2016 resulting mainly due to increased sales, coupled with cost reductions. The gross margin percentage increased to 24.6% , compared with 22.5% in 2016 .
Distribution costs.     Distribution costs were $9.3 million in 2017 , an increase of $1.5 million from $7.8 million in 2016 . There was an exchange rate gain on distribution costs from non-U.S. operations of $0.1 million, and the underlying movement in distribution costs at constant exchange rates was an increase of $1.6 million, or 20.3%, reflecting increased levels of exports from the U.K. to the U.S., primarily as a result of the increased sales activity in 2017.
Administrative expenses.     Our administrative expenses were $58.9 million in 2017 , an increase of $8.1 million , from $50.8 million in 2016 . There was an exchange rate gain on administrative expenses from our non-U.S. operations of $0.4 million, at constant exchange rates, administrative expenses increased by $8.5 million, 16.9%, with the underlying increase due to increased employment costs and write off of bad debt.
Share of results of joint ventures and associates.     We have a number of joint venture operations and an associate, the most active being in the U.S. and India. The joint ventures have been accounted for using the equity method, as the partners have a contractual agreement that establishes joint control over the economic activities of the entities. In 2017 , a profit of $0.1 million was attributable to joint ventures and associates, compared to a profit of $0.5 million in 2016 . We also received interest income from the U.S. joint venture in 2017 and 2016 of $0.3 million, which under IFRS is recognized below operating profit.
Operating and trading profit.     Our operating profit was $19.3 million in 2017 , a decrease of $16.5 million , or 46.1% , from $35.8 million in 2016 . Our trading profit was $40.5 million in 2017 , an increase of $5.2 million , or 14.7% , from $35.3 million in 2016 .
Analysis of trading profit and operating profit variances from 2016 to 2017 for continuing operations
 
 
Elektron
Trading
Profit
 
Gas Cylinders Trading Profit
 
Group
Trading
Profit
 
Profit on sale of redundant site
 
Changes to Defined Benefit Pension Plans
 
Restructuring
and Other
Expense
 
Group
Operating
Profit
 
 
2016—as reported under IFRS
$
23.9

 
$
11.4

 
$
35.3

 
$
2.1

 
$
0.6

 
$
(2.2
)
 
$
35.8

 
 
FX impact
3.1

 
1.2

3.1

4.3

 
(0.3
)
 
—

 
(0.1
)
 
3.9

 
 
2016—adjusted for FX
27.0

 
12.6

 
39.6

 
1.8

 
0.6

 
(2.3
)
 
39.7

 
 
Trading variances for underlying operations—2016 v 2017
4.8

 
(3.9
)
 
0.9

 
(1.4
)
 
(0.6
)
 
(19.3
)
 
(20.4
)
 
 
2017—as reported under IFRS
$
31.8

 
$
8.7

 
$
40.5

 
$
0.4

 
$
—

 
$
(21.6
)
 
$
19.3

 
The above table shows the change in each division's trading profit, the Group trading profit and the Group operating profit between 2016 and 2017 . The table also provides a reconciliation of the Group trading profit to the Group operating profit. The table separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results.
Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate gain of $4.3 million in trading profit and $3.9 million in operating profit in 2017 . At constant exchange rates, our trading profit increased by $0.9 million , or 2.3% , and our operating profit decreased by $20.4 million , or 51.4% , in 2017 .
Trading profit in the Elektron Division was $31.8 million in 2017 , an increase of $7.9 million , or 33.1% , from $23.9 million in 2016 . Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate gain of $3.1 million in the Elektron Division's trading profit in 2017 . Trading profit variances in the Elektron Division were favorable by $4.8 million , or 17.8 %, compared to 2016 .
Trading profit in the Gas Cylinders Division was $8.7 million in 2017 , a decrease of $2.7 million , or 23.7% , from $11.4 million in 2016 . Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate gain of $1.2 million in the Gas Cylinders Division's trading profit in 2017 . Gas Cylinders Division's trading variances were unfavorable by $3.9 million , or 31.0 %. These trading variances are explained by division in more detail below.


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Operating profit was also impacted by several other non-trading items as follows:
•
In 2017 , there was a release of a provision in relation to the sale in 2016 of the redundant site at Redditch, resulting in a credit of $0.4 million compared to a $2.1 million profit on the sale itself in 2016.
•
The restructuring and other expense charge increased from $2.2 million in 2016 to $21.6 million in 2017 . The charge in 2017 relates predominantly to the rationalization of our operations, $12.1 million and non-current asset impairments, $3.7 million . We also incurred charges in relation to a litigation claim against a competitor ( $3.5 million ) and professional fees in connection to converting our ADR listing to a direct listing ( $2.3 million ).
The segment trading profit results by division are explained in more detail below:
Elektron Division
The increase in the Elektron Division's trading profit can be attributed, partially, to the increased sales in the Division, in particular, sales of FRHs relating to disaster-relief shipments, as explained above. There was a positive variance of $11.2 million from 2016 due to changes in sales volumes and mix across the division, coupled with a $4.6 million reduction in raw material and utility costs. These were partially offset by a $4.8 million adverse variance from price changes and $6.2 million adverse variance in depreciation, employment and other fixed costs included within cost of sales and administrative expenses.
Gas Cylinders Division
Sales of AF cylinders decreased significantly in the year, following the loss of a major customer, compared to 2016, and Superform tooling revenue was also down compared to 2016 when we recognized unusually high tooling revenue. Volume and sales mix variances had a total negative impact of $0.6 million compared to 2016 and depreciation, employment and other fixed costs expenses increased by $3.2 million which included a one-time bad debt expense in relation to one of our overseas customers. These were partially offset by pricing increases, resulting in a $0.3 million favorable effect on trading profit. Further adverse variances arose for $0.4 million as a result of production inefficiencies noted within our Superform division.
Luxfer Group
Profit on sale of redundant site.      In 2017, a credit of $0.4 million was recognized in relation to a provision that was no longer required. The provision was held pending completion of remediation works at the former Redditch site, which was sold during 2016 to a company that specializes in remediating contaminated land. Given the remediation works were completed at the end of March 2017, it was appropriate to release the provision.
In 2016, a profit of $2.1 million was recognized in relation to the sale of the redundant Redditch site.
Restructuring and other income / (expense).     In 2017, $21.6 million was charged to restructuring and other expense. $12.1 million of the charge related to rationalization of operations, of which $6.6 million of costs were incurred in relation to rationalization costs in the Gas Cylinders Division and $5.5 million in the Elektron Division. $2.2 million of the charge in the Gas Cylinders Division was in relation to an impairment of the investment in our associate, Sub 161 Pty Limited, $2.1 million was incurred following the decision to discontinue our Advanced Oxygen System (AOS) product line and $1.0 million following the announcement to exit our Luxfer HEI business. These were offset in part by a $0.4 million credit relating to sales of inventory that was previously written down as part of the closure of our German operation in 2015. In the Elektron Division, $1.7 million of the charge related to the rationalization of its Magtech operations, which includes $1.3 million in relation to the write down of land and buildings. Separately, we have recorded $0.6 million related to an onerous communications contract. There has also been a Group-wide effort to reduce headcount and streamline management that has resulted in a $1.5 million and $3.0 million charge within the Gas Cylinders and Elektron Divisions respectively. Other rationalization costs of $0.4 million has been incurred, split evenly between the two Divisions.
In addition to rationalization costs, we incurred $3.5 million of costs related to patent infringement litigation against a competitor. There was a charge of $3.7 million in relation to non-current asset write offs in the Elektron Division as well as $2.3 million of costs in relation to professional fees incurred in connection with converting our ADR listing to a direct listing of our ordinary shares, not allocated to a division.
In 2016, $2.2 million was charged to restructuring and other expense. We incurred rationalization costs of $0.4 million in the Elektron Division, in addition to $0.6 million of costs related to patent infringement litigation against a competitor. There was also a charge of $1.2 million in respect of a receivable impairment provision recognized in relation to an aerospace customer entering Chapter 11 protection.
Net gain / (loss) on acquisitions and disposals.     In 2017, we incurred a non-operating credit of $1.0 million related to the remeasurement of deferred contingent consideration arising from acquisitions, more specifically the acquisition of Luxfer Magtech in the Elektron Division, where an element of the deferred contingent

45
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consideration was no longer payable due to the acquired business failing to achieve a profit trigger as of December 31, 2017.
Furthermore, in 2017 we acquired the trade and assets of the Specialty Metals business of ESM Group Inc. On closing, an initial consideration of $4.3 million was paid including an amount placed in general escrow of $0.3 million as deferred consideration. The fair value of net assets acquired was been assessed as $5.8 million, resulting in a gain on bargain purchase balance of $1.2 million that was recognized as an non-operating credit.
There was also a $0.9 million of merger and acquisition costs in connection to the above acquisition. We incurred $0.5 million in acquisition-related expenses and a provision of $0.4 million was set up for the disbursement of environmental liabilities.
In 2016, the $0.5 million non-operating credit in relation to the remeasurement of deferred contingent consideration in relation to the acquisition of Luxfer Magtech was offset by a $0.3 million charge in relation to aborted acquisition costs.
Finance income—interest receivable.     Interest receivable was $0.5 million in 2017 , down from $1.2 million in 2016 . Interest received in 2017 included $0.3 million in respect of funding provided to our U.S. joint venture Luxfer-GTM Technologies (2016: $0.3 million) and $0.2 million generated by placing surplus cash on short-term deposit (2016: $0.2 million). There was also a $0.7 million exchange gain on the loan to Luxfer-GTM Technologies in 2016.
Finance costs—interest costs.     We incurred $7.2 million of finance costs in 2017 , up from $6.8 million in 2016 as a result of increased foreign exchange losses on financing activities. The finance costs we incurred in 2017 included $6.3 million (2016: $6.3 million) of interest payable on our current financing facilities, $0.6 million (2016: $0.5 million) of amortization relating to finance costs and $0.3 million (2016: $nil) of foreign exchange losses on the loan to Luxfer-GTM technologies.
Finance costs—IAS 19R retirement benefits finance charge.     The charge under IAS 19R in relation to our retirement benefit deficits was $1.8 million in 2017 , a decrease from $2.1 million in 2016 , as a result of the deficit being lower for the majority of 2017 than it was for 2016 and lower discount rates in the year.
Finance costs—unwind of discount on deferred contingent consideration from acquisitions.     In 2017 , there was a $0.2 million charge in relation to the unwind of discount on the deferred contingent consideration that arose from the acquisition of Luxfer Magtech in 2014 ($0.4 million in 2016).
Taxation.     In 2017 , our tax expense was $0.4 million on profit before tax of $11.9 million . The statutory effective tax rate was 3.4% on the profit before tax. Of the charge of $0.4 million , $5.2 million related to current tax payable and a credit of $4.8 million was related to deferred income tax. In 2016 , our tax expense was $6.0 million on profit before tax of $27.9 million . The statutory effective tax rate was 21.5% on the profit before tax. Of the charge of $6.0 million , $3.7 million related to current tax payable and $2.3 million was a deferred income tax charge. In recent years our statutory effective tax rate has been affected by various non-trading items, the largest of which was a $6.0 million credit related to the re-measurement of the deferred tax position as a result of U.S. tax reform.
in 2017 related to the decrease in the deferred tax asset of $6.0 million as a result of U.S. tax reform.
Net income for the financial year.     Net income for the year decreased to $11.5 million from $21.9 million in 2016 . The $10.4 million decrease can be attributed to an increase in restructuring and other expenses and a lower credit in relation to the previous sale of a redundant site. These were offset by the increased trading profit for the year, for reasons described above.

Year Ended December 31, 2016 Compared to Year Ended December 31, 2015
Revenue.     Our revenue from continuing operations was $414.8 million in 2016, a decrease of $45.5 million from $460.3 million in 2015. Compared to 2015, revenue reflected a $13.4 million loss from less-favorable average translation exchange rates. Thus, underlying revenue, net of exchange rate translation, fell by $32.1 million. Reasons for the revenue change are discussed in detail by division, but in general, there were lower sales of our automotive materials for catalysis and magnesium recycling services, along with lower sales of U.S. defense-related magnesium products following cuts to U.S. defense spending. Whilst medical cylinder demand was depressed we did achieve higher sales in the AF market, which is still subdued by the low oil price and following on from the launch of our SoluMag® alloy in 2015, sales of that have continued to improve throughout 2016.


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Analysis of revenue variances from 2015 to 2016 for continuing operations
 
 
Elektron
 
Gas Cylinders
 
Group
 
 
 
(in $ million)
 
 
2015 revenue—as reported under IFRS
$
221.2

 
$
239.1

 
$
460.3

 
 
FX translation impact—on non-U.S. operating results
(6.5
)
 
(6.9
)
 
(13.4
)
 
 
2015 revenue—adjusted for FX translation
$
214.7

 
$
232.2

 
$
446.9

 
 
Trading variances for underlying operations—2016 v 2015
(25.7
)
 
(6.4
)
 
(32.1
)
 
 
2016 revenue—as reported under IFRS
$
189.0

 
$
225.8

 
$
414.8

 
The above table shows the change in each division's revenue between 2016 and 2015. It separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results and any trading variances which have been noted. The following discussion provides an explanation of our changes in revenue by division.
Elektron Division
Elektron Division revenue in 2016 was $189.0 million compared to $221.2 million in 2015. Exchange rate translation differences were adverse by $6.5 million, and underlying revenue was $25.7 million, or 12.0%, lower than 2015.
Revenue was lower in the Division primarily due to reduced sales of automotive catalysis materials, currently in transition to a new generation of technology, and a reduction in lower-margin magnesium recycling services. In the second half of the year, sales of U.S. defense-related magnesium products were depressed reflecting budgetary pressure on U.S. defense spending. Revenue, however, from European high-performance aerospace alloys and industrial catalysis chemical products increased, as did sales of our new SoluMag® alloy. Photo-engraving revenue was impacted by de-stocking at distributors in the latter part of the year, as we made a transition to selling direct to certain customers instead of through distributors. This action will enable us to better support major customers and take cost out of the supply chain.
Gas Cylinders Division
Gas Cylinders Division revenue was lower at $225.8 million compared to $239.1 million in 2015. Exchange rate translation differences were adverse by $6.9 million, and underlying revenue was $6.4 million, or 2.8% lower than 2015.
Revenue was lower in the Division largely due to depressed medical cylinder demand, in part due to our customers reassigning stocks of cylinders between regions rather than buying new cylinders. On a positive note, the AF business continued to perform well with year-on-year growth and sales of industrial cylinders were also up.
Superform sales were down slightly on 2015 due to lower forming sales as existing contracts expire, but tooling sales on new long-term contracts have increased as a result of the new business won with Ferrari and other prestige car manufacturers.
Luxfer Group
Cost of sales.     Our cost of sales was $321.4 million in 2016, a decrease of $34.9 million from $356.3 million in 2015. Excluding an exchange rate translation gain of $10.3 million on cost of sales of non-U.S. operations, our cost of sales at constant translation exchange rates decreased by $24.6 million, or 7.1%, from 2015.
Gross profit.     Gross profit was $93.4 million in 2016, a decrease of $10.6 million from $104.0 million in 2015 resulting mainly due to weaker exchange rates (as compared to the dollar, our presentation currency), coupled with decreased sales. The gross margin percentage fell marginally to 22.5%, compared with 22.6% in 2015.
Distribution costs.     Distribution costs were $7.8 million in 2016, a decrease of $0.1 million from $7.9 million in 2015. There was an exchange rate translation gain on distribution costs from non-U.S. operations of $0.5 million, and the underlying movement in distribution costs at constant translation exchange rates was an increase of $0.4 million, or 5.4%, reflecting increased levels of exports from the U.K. to the U.S., which more than offset the lower sales activity in 2016.
Administrative expenses.     Our administrative expenses were $50.8 million in 2016, a decrease of $1.8 million, or 3.4%, from $52.6 million in 2015. There was an exchange rate translation gain on administrative

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expenses from our non-U.S. operations of $2.1 million, with a small underlying increase due to rising underlying costs.
Share of results of joint ventures and associates.     We have a number of joint venture operations and an associate, the most active being in India and the U.S. The joint ventures have been accounted for using the equity method, as the partners have a contractual agreement that establishes joint control over the economic activities of the entities. In 2016, a profit of $0.5 million was attributable to joint ventures and associates, compared to a loss of $1.2 million in 2015. We also received interest income from the U.S. joint venture in 2016 and 2015 of $0.3 million, which under IFRS would be recognized below operating profit. When calculating net profits after tax for the joint venture, this would also need to be included.
Operating and trading profit.     Our operating profit was $35.8 million in 2016, a decrease of $2.1 million, or 5.5%, from $37.9 million in 2015. Our trading profit was $35.3 million in 2016, a decrease of $7.0 million, or 16.5%, from $42.3 million in 2015.
Analysis of trading profit and operating profit variances from 2015 to 2016 for continuing operations
 
 
Elektron Trading Profit
 
Gas Cylinders Trading Profit
 
Group Trading Profit
 
Profit on sale of redundant site
 
Changes to Defined Benefit Pension Plans
 
Restructuring and Other Expense
 
Group Operating Profit
 
 
2015—as reported under IFRS
$
33.7

 
$
8.6

 
$
42.3

 
$
—

 
$
18.0

 
$
(22.4
)
 
$
37.9

 
 
FX translation impact—on non-U.S. operating results
(0.7
)
 
0.2

 
(0.5
)
 
—

 
(2.9
)
 
1.2

 
(2.2
)
 
 
2015—adjusted for FX translation
33.0

 
8.8

 
41.8

 
—

 
15.1

 
(21.2
)
 
35.7

 
 
Trading variances for underlying operations—2015 v 2016
(9.1
)
 
2.6

 
(6.5
)
 
2.1

 
(14.5
)
 
19.0

 
0.1

 
 
2016—as reported under IFRS
$
23.9

 
$
11.4

 
$
35.3

 
$
2.1

 
$
0.6

 
$
(2.2
)
 
$
35.8

 
The above table shows the change in each division's trading profit, the Group trading profit and the Group operating profit between 2015 and 2016. The table also provides a reconciliation of the Group trading profit to the Group operating profit. The table separates the impact of changes in average exchange rates on non-U.S. operations when translated into U.S. dollar consolidated results.
Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate translation loss of $0.5 million in our trading profit and $2.2 million loss in operating profit in 2016. The results were also negatively impacted by less favorable transaction exchange rates, which reduced trading and operating profit by $0.3 million. At constant exchange rates, our trading profit decreased by $6.2 million, or 14.9%, and our operating profit increased by $0.4 million, or 1.1%, in 2016.
Trading profit in the Elektron Division was $23.9 million in 2016, a decrease of $9.8 million, or 29.1%, from $33.7 million in 2015. Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate translation loss of $0.7 million in the Elektron Division's trading profit in 2016. Trading profit variances in the Elektron Division were adverse by $9.1 million, or 27.6%, compared to 2015. Trading profit in the Gas Cylinders Division was $11.4 million in 2016, an increase of $2.8 million, or 32.6%, from $8.6 million in 2015. Translating our non-U.S. operations into U.S. dollars resulted in an exchange rate translation gain of $0.2 million in the Gas Cylinders Division's trading profit in 2016. Gas Cylinders Division's trading variances were favorable by $2.6 million, or 29.5%. These trading variances are explained by division in more detail below. The fall in sales volumes and changes in the mix of sales, reduced trading profit by $13.4 million in the year.
In addition to the exchange rate and sales variances, we had a number of cost changes that together increased trading profit by a net $7.2 million in 2016. The main reasons for these changes were as follows:
•
Other trading variances net of price changes benefited the Group by $5.7 million.
•
Employment and other costs decreased by $1.5 million in 2016, driven by initiatives across the Group to reduce fixed costs.
•
Operating profit was also impacted by several other non-trading items as follows:
•
In 2016, the redundant site at Redditch was sold to a company that specializes in remediating contaminated land, realizing a profit of $2.1million.
•
During 2016, a net credit of $0.6million was recognized following the sale of $10.0 million of U.S. deferred pensioner liabilities to an insurer, and lump sum payments of $4.9 million offered to certain U.S. deferred pensioners.

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•
The restructuring and other expense charge decreased from $22.4 million in 2015 to $2.2 million in 2016. The charge in 2015 was higher primarily due to restructuring activity in the Gas Cylinders Division implemented to eliminate trading losses caused by the downturn in the CNG-AF market following the oil price collapse in 2015.
The segment trading profit results by division are explained in more detail below:
Elektron Division
Elektron Division trading profit of $23.9 million in 2016 was a decrease of $9.8 million from $33.7 million in 2015. Changes in exchange rates used to translate divisional trading profit into U.S. dollars led to a $0.7 million translation loss in 2016. Favorable transaction rates increased profits by $1.8 million, and trading profit at constant translation exchange rates therefore decreased by $10.9 million, or 31.3%.
The reduction in trading profit for the Elektron Division was primarily due to the challenges faced in the magnesium business highlighted above. However, zirconium has held up well during the transition in autocatalysis technologies, with trading profit being flat compared to the prior year, helped by the progress in chemical catalysis.
There was an adverse variance of $11.0 million from 2015 due to changes in sales volumes and mix across the division and other trading variances net of price changes were adverse by $0.4 million as a result of reduced selling prices on our zirconium products, net of reduced raw material costs. Employment and other costs decreased by a net $0.5 million, driven by cost-saving activities initiated in 2016.
Gas Cylinders Division
Gas Cylinders Division trading profit of $11.4 million in 2016 was an increase of $2.8 million from $8.6 million in 2015. Changes in exchange rates used to translate divisional trading profit into U.S. dollars led to a $0.2 million translation gain in 2016. Less-favorable transaction rates reduced profits by $2.1 million. Trading profit at constant exchange rates therefore increased by $4.7 million or 70.1%.
Sales of aluminum cylinders fell across all markets, other than industrial, while composite cylinder unit sales increased. Volume and sales mix variances had a total negative impact of $2.4 million compared to 2015, although material costs and sales prices offset this, being favorable by $6.1 million.
Savings of $1.0 million in employment and other costs were achieved in 2016 through a reduction of administrative headcount and various efficiency improvement projects.
Luxfer Group
Profit on sale of redundant site.     In 2016, a profit of $2.1 million has been recognized in relation to the sale of the redundant Redditch site to a company that specializes in remediating contaminated land.
Changes to defined benefit pension plans.     During 2016, we recognized a settlement credit of $0.6 million in respect of the U.S. defined benefit pension plan, see above for further details.
In 2015, due to the closure of the U.K. defined benefit pension plan to future accrual, and a move to CPI from RPI, for the purpose of increasing pensions in payment, we recognized a credit to the income statement of $18.0 million. This credit consisted of a non-cash curtailment gain of $3.3 million in respect of the closure of the plan to future accrual and a non-cash past service gain of $14.9 million in respect of the change in expected future pension increases in payment, offset by advisory costs of $0.2 million.
Restructuring and other income / (expense).     In 2016, $2.2 million was charged to restructuring and other expense (2015: $22.4 million). We incurred rationalization costs of $0.4 million in the Elektron Division, in addition to $0.6 million of costs related to patent infringement litigation against a competitor. There was also a charge of $1.2 million in respect of a receivable impairment provision recognized in relation to an aerospace customer entering Chapter 11 protection.
In 2015, we incurred rationalization costs of $21.8 million in the Gas Cylinders Division as we continued to restructure the division following the downturn in the AF market. In addition, we incurred $0.5 million of costs in the Elektron Division related to patent infringement litigation against a competitor. There was also a charge of $0.1 million to the income statement under IFRS 2 related to share options granted as part of the I.P.O.
Net gain / (loss) on acquisitions and disposals.     In 2016, we incurred a non-operating credit of $0.2 million compared to a $2.0 million charge in 2015. There was a $0.5 million credit related to the remeasurement of deferred contingent consideration arising from acquisitions, more specifically the acquisition of Luxfer Magtech in the Elektron Division, where an element of the deferred contingent consideration was no longer payable due to

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the acquired business failing to achieve a profit trigger as of December 31, 2016, offset by a $0.3 million charge in relation to aborted acquisition costs.
Of the charge in 2015, $1.8 million related to two approaches to acquire the company. Neither of these approaches resulted in an executable offer that could be put to shareholders. The balance of $0.2 million was incurred in connection with our investment in Sub161 Pty Limited. In 2014, we incurred $1.5 million of costs for the acquisition of Luxfer Magtech (attributable to the Elektron Division) and $0.3 million for the acquisition of Luxfer Utah (attributable to the Gas Cylinders Division). In 2014, a credit of $6.3 million was recognized in the income statement in relation to the remeasurement of deferred contingent consideration arising from acquisitions. Of the $6.3 million, $4.8 million related to the Elektron Division and $1.5 million related to the Gas Cylinders Division.
Finance income—interest received.     Interest received was $1.2 million in 2016, up from $0.5 million in 2015. Interest received in 2016 included $0.3 million in respect of funding provided to our U.S. joint venture Luxfer-GTM Technologies (equal to $0.3 million in 2015) and $0.2 million generated by placing surplus cash on short-term deposit (equal to $0.2 million in 2015). There was also a $0.7 million exchange gain on the loan to Luxfer-GTM Technologies.
Finance costs—interest costs.     We incurred $6.8 million of interest costs in 2016, down from $7.4 million in 2015. Costs were lower as a result of the refinancing exercise during the year. The finance costs we incurred in 2016 included $6.3 million of interest payable on our current financing facilities and $0.5 million of amortization relating to finance costs.
The finance costs we incurred in 2015 included $6.5 million of interest payable on our current financing facilities and $0.9 million of amortization relating to finance costs.
Finance costs—IAS 19R retirement benefits finance charge.     The charge under IAS 19R in relation to our retirement benefit deficits was $2.1 million in 2016, a decrease from $3.0 million in 2015, as a result of the deficit being lower for the majority of 2016 than it was for 2015.
Finance costs—unwind of discount on deferred contingent consideration from acquisitions.     In 2016, there was a $0.4 million charge in relation to the unwind of discount on the deferred contingent consideration that arose from the acquisitions of Luxfer Utah and Luxfer Magtech in 2014, ($0.4 million in 2015).
Taxation.     In 2016, our tax expense was $6.0 million on profit before tax of $27.9 million. The statutory effective tax rate was 21.5% on the profit before tax. Of the charge of $6.0 million, $3.7 million (13.3% effective rate) related to current tax payable and $2.3 million (8.2% effective rate) was a deferred income tax charge. In 2015, our tax expense was $9.5 million on profit before tax of $25.6 million. The statutory
effective tax rate was 37.1% on the profit before tax. Of the charge of $9.5 million, $6.1 million (23.8% effective rate) related to current tax payable and $3.4 million (13.3% effective rate) was a deferred income tax charge. In recent years our statutory effective tax rate has been affected by various non-trading items. The statutory effective tax rate for 2016 decreased to 21.5%. The 2015 effective tax rate was affected as nearly all of the $21.8 million of restructuring costs in the Gas Cylinder Division did not lead to a tax credit due to losses in AF operations. The effective rate excluding the effect of these losses in 2015 was 22.6%.
Net income for the financial year.     Net income for the year increased to $21.9 million from $16.1 million in 2015. The $5.8 million increase can be attributed to lower restructuring and other expenses, offset by a lower credit for changes to defined benefit pension plans, and net finance costs which are $2.2 million lower. This was offset by a reduction in trading profit for the year, for the reasons described above.
B.     Liquidity and capital resources.
Liquidity
Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, acquisitions, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks. We meet these requirements primarily through cash flows from operating activities, cash deposits and borrowings under the Revolving Credit Facility and accompanying ancillary hedging facilities and the Loan Notes due 2018, 2021, 2023 and 2026. Our principal liquidity needs are:
•
funding acquisitions, including deferred contingent consideration payments;
•
capital expenditure requirements;
•
payment of shareholder dividends;
•
servicing interest on the Loan Notes, which is payable at each quarter end, in addition to interest and / or commitment fees on the Senior Facilities Agreement (as defined below);

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•
working capital requirements, particularly in the short term as we aim to achieve organic sales growth;
•
hedging facilities used to manage our foreign exchange and aluminum purchase price risks.
From time to time, we consider acquisitions or investments in other businesses that we believe would be appropriate additions to our business. For example, in 2017, we acquired the trade and assets of the Specialty Metals business of ESM Group Inc., including a manufacturing facility in Saxonburg, PA.
We believe that, in the long term, cash generated from our operations will be adequate to meet our anticipated requirements for working capital, capital expenditures and interest payments on our indebtedness. In the short term, we believe we have sufficient credit facilities to cover any variation in our cash flow generation. However, any major repayments of indebtedness will be dependent on our ability to raise alternative financing or to realize substantial returns from operational sales. Also, our ability to expand operations through sales development and capital expenditures could be constrained by the availability of liquidity, which, in turn, could impact the profitability of our operations.
We have been in compliance with the covenants under the Loan Notes and the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2017 .
Luxfer Holdings PLC conducts all of its operations through its subsidiaries, joint ventures and associate. Accordingly, Luxfer Holdings PLC's main cash source is dividends from its subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary receives from its operations in excess of the funds necessary for its operations, obligations or other business plans. We have not historically experienced any material impediment to these distributions, and we do not expect any local legal or regulatory regimes to have any impact on our ability to meet our liquidity requirements in the future. In addition, since our subsidiaries are wholly-owned, our claims will generally rank junior to all other obligations of the subsidiaries. If our operating subsidiaries are unable to make distributions, our growth may slow, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.
Our ability to maintain or increase the generation of cash from our operations in the future will depend significantly on the competitiveness of and demand for our products, including our success in launching new products that we have been developing over many years. Achieving such success is a key objective of our business strategy. Due to commercial, competitive and external economic factors, however, we cannot guarantee that we will generate sufficient cash flows from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness or make necessary capital expenditures.
We are still vulnerable to external shocks relating to our fixed and variable cost of goods sold. In recent years, external economic shocks to oil prices, commodity prices and currency fluctuations have impacted our results. In 2017 , our continuing operations incurred over $13 million of energy costs, purchased over $31 million of primary aluminum and over $30 million of primary magnesium. In 2017 , $27.7 million of our operating profit was derived from North American businesses. A significant economic shock that has a major impact on one or more of these areas simultaneously could have a severe impact on our financial position.
We operate robust cash and trading forecasting systems that impose tight controls on our operating businesses with regard to cash management. We use regularly updated forecasts to plan liquidity requirements, including the payment of interest on our indebtedness, capital expenditures and payments to our suppliers. Although we have generated cash sufficient to cover most of our liability payments, we also rely on the Revolving Credit Facility to provide sufficient liquidity. Our banking facilities are further explained below under "—Financing—Senior Facilities Agreement."

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Cash Flow
The following table presents information regarding our cash flows, cash and cash equivalents for the years ended December 31, 2017 , 2016 and 2015 :
 
 
Year Ended December 31,
 
 
 
2017
 
2016
 
2015
 
 
 
(in $ million)
 
 
Net cash flows from operating activities
$
45.2

 
$
29.2

 
$
52.8

 
 
Net cash used in investing activities
(18.1
)
 
(15.1
)
 
(21.2
)
 
 
Net cash flows before financing activities
27.1

 
14.1

 
31.6

 
 
Net cash flows from financing activities
(33.6
)
 
(35.5
)
 
(9.2
)
 
 
Net (decrease) / increase in cash and cash equivalents
(6.5
)
 
(21.4
)
 
22.4

 
 
Net foreign exchange differences
2.0

 
(1.9
)
 
(0.1
)
 
 
Net movement in cash and cash equivalents
$
(4.5
)
 
$
(23.3
)
 
$
22.3

 
Cash flows from operating activities
 
 
Year Ended December 31,
 
 
 
2017
 
2016
 
2015
 
 
 
(in $ million)
 
 
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
 
 
 
 
Net income for the year
$
11.5

 
$
21.9

 
$
16.1

 
 
Adjustments to reconcile net income for the year to net cash flows from continuing operating activities:
 
 
 
 
 
 
 
Income tax expense
0.4

 
6.0

 
9.5

 
 
Depreciation and amortization
19.0

 
18.4

 
18.6

 
 
Loss on disposal of property, plant and equipment
0.1

 
0.2

 
—

 
 
Profit on sale of redundant site
(0.4
)
 
(2.1
)
 
—

 
 
Share based compensation charges net of cash settlement
1.7

 
1.1

 
1.3

 
 
Net interest costs
6.7

 
5.6

 
6.9

 
 
Non-cash restructuring charges
 
 
 
 
 
 
 
   Property, plant and equipment impairment
5.0

 
—

 
1.7

 
 
   Intangibles assets impairment
2.0

 
—

 
3.7

 
 
   Investment impairment
2.2

 
—

 
4.6

 
 
   Other non-cash restructuring charges
1.8

 
—

 
7.7

 
 
Curtailment and past service credits on retirement benefits obligations
—

 
(0.6
)
 
(18.2
)
 
 
IAS 19R retirement benefits finance charge
1.8

 
2.1

 
3.0

 
 
Acquisitions and disposals. 
(1.3
)
 
(0.2
)
 
2.0

 
 
Unwind of discount on deferred contingent consideration from acquisitions
0.2

 
0.4

 
0.4

 
 
Share of results of joint ventures and associates
(0.1
)
 
(0.5
)
 
1.2

 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
   Sale / (purchase) of assets classified as held for sale
—

 
—

 
1.2

 
 
   (Increase) / decrease in receivables
(9.1
)
 
(1.8
)
 
5.0

 
 
   Decrease in inventories
5.0

 
4.5

 
3.0

 
 
   Increase / (decrease) in payables
9.7

 
(10.3
)
 
(0.9
)
 
 
Movement in retirement benefits obligations
(8.0
)
 
(6.3
)
 
(8.6
)
 
 
Movement in provisions
1.1

 
(2.6
)
 
0.3

 
 
Acquisition approach costs paid
—

 
(1.2
)
 
(0.6
)
 
 
Income taxes paid
(4.1
)
 
(5.4
)
 
(5.1
)
 
 
 
$
45.2

 
$
29.2

 
$
52.8

 
In 2017 , net cash flows from operating activities increased by $16.0 million to $45.2 million from $29.2 million in 2016 . Net income in 2017 of $11.5 million decreased by $10.4 million from $21.9 million in 2016 . There was a

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net working capital (defined as, net movement in current receivables, current payables and inventories) inflow of $5.6 million in 2017 compared to an outflow of $7.6 million in 2016 , a favorable variance of $13.2 million . The decrease in inventories resulted in a cash inflow of $5.0 million in 2017 , a $0.5 million increase from a cash inflow of $4.5 million in 2016 . There was an outflow in receivables of $9.1 million in 2017 compared to an outflow of $1.8 million in 2016 , an unfavorable movement of $7.3 million . The average days taken to collect debt increased slightly in 2017 to 53 days, compared to 49 days in 2016 . There was also an inflow in payables of $9.7 million in 2017 , a favorable movement of $20.0 million from the $10.3 million outflow in 2016 . Net interest costs of $6.7 million in 2017 were $1.1 million higher than the $5.6 million in 2016 , primarily as a result of a $0.3 million foreign exchange loss on financing activities in 2017 compared to a $0.7 million gain in 2016. There was an inflow in relation to movement in provisions of $1.1 million in 2017 compared to an outflow of $2.6 million in 2016 , a favorable variance of $3.7 million . The non-cash restructuring charges of $10.4 million include impairments of property, plant and equipment, intangibles assets and investments, amongst other non-cash charges.
In 2016, net cash flows from operating activities decreased by $23.6 million to $29.2 million from $52.8 million in 2015. Net income in 2016 of $21.9 million increased by $5.8 million from $16.1 million in 2015. There was a net working capital (as defined as, net movement in current receivables, current payables and inventories) outflow of $7.6 million in 2016 compared to an inflow of $7.1 million in 2015, an unfavorable variance of $14.7 million. The decrease in inventories resulted in a cash inflow of $4.5 million in 2016, a $1.5 million increase from a cash inflow of $3.0 million in 2015. There was an outflow in receivables of $1.8 million in 2016 compared to an inflow of $5.0 million in 2015, an unfavorable movement of $6.8 million. The average days taken to collect debt increased slightly in 2016 to 49 days, compared to 46 days in 2015. There was also an outflow in payables of $10.3 million in 2016, an increase of $9.4 million from the $0.9 million outflow in 2015. Payable levels reduced in the latter part of 2016, with reduced purchasing of new raw materials, as a result of the decreased sales volumes. Lower average indebtedness, coupled with the refinancing of our private placement loans, resulted in the net interest costs of $5.6 million in 2016 being $1.3 million lower than the $6.9 million in 2015. The gain on the changes to defined benefit pension plans of $0.6 million in 2016 and $18.2 million in 2015 was non-cash. There was an outflow in provisions of $2.6 million in 2016 compared to an inflow of $0.3 million in 2015, an unfavorable variance of $2.9 million which related to the settlement of 2015 restructuring costs in the AF cylinder business. Neither the non-cash restructuring charges of $17.7 million nor the $1.2 million inflow from the sale of assets classified as held for sale, each recognized in 2015, recurred in 2016.
Cash flows from investing activities
 
 
Year Ended December 31,
 
 
 
2017
 
2016
 
2015
 
 
 
(in $ million)
 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 

 
 

 
 

 
 
Purchases of property, plant and equipment
$
(9.6
)
 
$
(16.5
)
 
$
(15.3
)
 
 
Purchases of intangible assets
(1.7
)
 
(2.4
)
 
(2.1
)
 
 
Proceeds from sale of redundant site
—

 
3.0

 
—

 
 
Receipts from sales of property, plant and equipment
0.1

 
0.4

 
—

 
 
Cash received from compensation for insured assets
—

 
0.2

 
—

 
 
Investment in joint ventures and associates
(1.0
)
 
0.2

 
(4.2
)
 
 
Interest income received from joint ventures
0.1

 
0.3

 
0.4

 
 
Net cash flows on purchase of businesses
(5.6
)
 
(0.3
)
 
—

 
 
Acquisition and disposal costs paid
(0.4
)
 
—

 
—

 
 
 
$
(18.1
)
 
$
(15.1
)
 
$
(21.2
)
 
Net cash used in investing activities increased by $3.0 million , or 19.9% , to $18.1 million in 2017 from $15.1 million in 2016 . Capital expenditure in 2017 was $9.6 million , a decrease of $6.9 million from the $16.5 million expenditure in 2016 . See "—Capital Expenditures—". In addition, we incurred $1.7 million of intangible capital expenditure in 2017 . We had an inflow of $0.1 million in 2017 in relation to sales of property, plant and equipment compared to an inflow of $0.4 million in 2016. Investment in joint ventures and associates was a $1.0 million outflow , compared with a $0.2 million inflow in 2016 . Interest income from joint ventures decreased to $0.1 million compared with $0.3 million in 2016 . We had a net cash outflow of $5.6 million in relation to the purchase of businesses compared to $0.3 million in 2016 . This outflow mainly related to the acquisition of the trade and assets of the Specialty Metals business of ESM Group Inc., for a initial consideration of $4.3 million. There was also $0.4 million of acquisition costs paid in respect to the aforementioned acquisition.

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Net cash used in investing activities decreased by $6.1 million, or 28.8%, to $15.1 million in 2016 from $21.2 million in 2015. Capital expenditure in 2016 was $16.5 million, an increase of $1.2 million from the $15.3 million expenditure in 2015. See "—Capital Expenditures—". In addition, we incurred $2.4 million of intangible capital expenditure in 2016. We had an inflow of $3.0 million and $0.4 million respectively in relation to proceeds from the sale of the redundant Redditch site and sales of property, plant and equipment. There was also $0.2 million received from compensation for insured assets. Investment in joint ventures and associates was a $0.2 million inflow, compared with a $4.2 million outflow in 2015. Interest income from joint ventures decreased to $0.3 million compared with $0.4 million in 2015. We had a net cash outflow of $0.3 million in relation to purchase of businesses.
Cash flows from financing activities
 
 
 
Year Ended December 31,
 
 
 
 
2017
 
2016
 
2015
 
 
 
 
(in $ million)
 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 

 
 

 
 

 
 
Interest and similar finance costs paid on banking facilities
 
$
(1.9
)
 
$
(1.9
)
 
$
(1.7
)
 
 
Interest paid on Loan Notes
 
(4.3
)
 
(4.5
)
 
(4.9
)
 
 
Bank interest received
 
0.2

 
0.2

 
0.2

 
 
(Repayment) / draw down on banking facilities
 
(13.4
)
 
(8.5
)
 
9.6

 
 
Extension to long-term debt—financing costs
 
(1.2
)
 
(0.2
)
 
—

 
 
Dividends paid
 
(13.3
)
 
(13.3
)
 
(10.8
)
 
 
ESOP cash movements
 
—

 
(1.0
)
 
0.1

 
 
Proceeds from issue of shares
 
—

 
—

 
0.2

 
 
Treasury share cash movements
 
0.3

 
(6.3
)
 
(1.9
)
 
 
 
 
$
(33.6
)
 
$
(35.5
)
 
$
(9.2
)
 
Net cash outflows from financing activities decreased by $1.9 million to a $33.6 million outflow in 2017 from a $35.5 million outflow in 2016 . Cash outflows in respect of dividend payments to holders of our ordinary shares were $13.3 million , in line with 2016 payments. Total interest paid on borrowings was $6.2 million , down $0.2 million on the $6.4 million paid in 2016 . Repayments of $13.4 million were made to the banking facilities, compared to $8.5 million of repayments in 2016 , a movement of $4.9 million . There were also $1.2 million of financing costs paid in relation to the extension of our long-term debt facility.
Net cash flows from financing activities decreased by $26.3 million to a $35.5 million outflow in 2016 from a $9.2 million outflow in 2015. Cash outflows in respect of dividend payments to holders of our ordinary shares were $13.3 million, $2.5 million up on 2015 as a result of the increase in the quarterly dividend from $0.10 per share to $0.125. Total interest paid on borrowings was $6.4 million, down $0.2 million on the $6.6 million paid in 2015. Repayments of $8.5 million were made to the banking facilities, compared to $9.6 million of drawdowns in 2015, a movement of $18.1 million. Following the approval of a share buy-back program at the 2014 Annual General Meeting, the purchase of 634,185 shares resulted in a cash outflow in 2016 of $6.3 million, compared with $1.9 million in 2015.
Decrease in cash and cash equivalents
Our net cash and cash equivalents decreased by $4.5 million to $9.1 million for the year ended December 31, 2017 , from $13.6 million at December 31, 2016 . As of December 31, 2017 , we held $2.4 million of net cash and cash equivalents denominated in GBP sterling, $2.4 million denominated in U.S. dollars, $1.0 million denominated in euros and $3.3 million of foreign cash and cash equivalents denominated in Australian dollars, Canadian dollars, Chinese renminbi, and Czech koruna.
Our cash and cash equivalents decreased by $23.3 million to $13.6 million for the year ended December 31, 2016, from $36.9 million at December 31, 2015. As of December 31, 2016, we held $9.1 million of cash and cash equivalents denominated in GBP sterling, $1.3 million denominated in U.S. dollars, $1.4 million denominated in euros and $1.8 million of foreign cash and cash equivalents denominated in Australian dollars, Canadian dollars, Chinese renminbi, and Czech koruna.


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Financing
Indebtedness and cash and cash equivalents
Our indebtedness under the Revolving Credit Facility and the Loan Notes was $111.3 million gross of issue costs, and reported under IFRS as $108.8 million (net of issue costs) as of December 31, 2017 , while our net cash and cash equivalents were $9.1 million , of which $0.7 million was restricted, as of December 31, 2017 . Our indebtedness under the Revolving Credit Facility and the Loan Notes was $122.8 million gross of issue costs, and reported under IFRS as $121.0 million (net of issue costs) as of December 31, 2016 , while our net cash and cash equivalents were $13.6 million as of December 31, 2016 .
As of December 31, 2017 , we also had utilized $1.4 million ( December 31, 2016 : $1.3 million ) of the ancillary facilities available under the Senior Facilities Agreement in connection with certain derivative financial instruments, letters of credit and bank guarantees.
Loan Notes due 2018, 2023 and 2026
On May 13, 2011, our subsidiary, BA Holdings, Inc., entered into a note purchase agreement (the "Note Purchase Agreement") among us, our subsidiaries and the note purchasers, to issue $65 million aggregate principal amount of senior notes due 2018 in a U.S. private placement to an insurance company and related parties (the "Loan Notes due 2018"). The Loan Notes due 2018 bore interest at a rate of 6.19% per annum, payable quarterly on the 15th day of September, December, March and June, commencing on September 15, 2011, and continuing until the principal amount of the Loan Notes due 2018 has become due and payable. The Loan Notes due 2018 were due to mature on June 15, 2018.
On June 29, 2016, Luxfer agreed with the lender under the Loan Notes due 2018 to extend the maturity date of $50 million of the outstanding $65 million principal amount. This was facilitated through the utilization of the Shelf Facility. The extension also includes a lower long-term fixed interest rate on the debt. The maturity date on $25 million was extended from June 2018 to June 2023 (the "Loan Notes due 2023") at a fixed interest rate of 4.88%; and the maturity date on $25 million was extended to June 2026 (the "Loan Notes due 2026") at a fixed interest rate of 4.94%. The revised loan documents also relaxed a number of provisions and covenants, including the removal of various restrictions on distributions, including dividends.
The Note Purchase Agreement contains customary covenants and events of default, in each case with customary and appropriate grace periods and thresholds. In addition, the Note Purchase Agreement requires us to maintain compliance with an interest coverage ratio and a leverage ratio. The interest coverage ratio measures our EBITDA (as defined in the Note Purchase Agreement) to Net Finance Charges (as defined in the Note Purchase Agreement). We are required to maintain an interest coverage ratio of 4.0:1. The leverage ratio measures our Total Net Debt (as defined in the Note Purchase Agreement) to Adjusted Acquisition EBITDA (as defined in the Note Purchase Agreement). We are required to maintain a leverage ratio of no more than 3.0:1. We have been in compliance with the covenants under the Note Purchase Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2017 .
The Loan Notes due 2018, 2023 and 2026 and the Note Purchase Agreement are governed by the law of the State of New York.
The Loan Notes due 2018, 2023 and 2026 are denominated in U.S. dollars, which creates a natural partial offset between the dollar-denominated net assets and earnings of our U.S. operations and the dollar-denominated debt and related interest expense of the notes. We have included the Note Purchase Agreement and a form of the Loan Notes due 2018, 2023 and 2026 as exhibits to this Annual Report and refer you to the exhibits for more information on the Note Purchase Agreement and the Loan Notes due 2018, 2023 and 2026.
Loan Notes due 2021 and Shelf Facility
On September 18, 2014, we entered into a note purchase and shelf facility agreement (the "Note Purchase and Private Shelf Agreement") among us, our subsidiaries and the note purchasers, to issue $25 million aggregate principal amount of senior notes due 2021 in a U.S. private placement to an insurance company and related parties (the "Loan Notes due 2021"). This arrangement also allows for a further $50 million of borrowing through an uncommitted three-year shelf facility with the insurance company (the "Shelf Facility"). The Loan Notes due 2021 bear interest at a rate of 3.67% per annum, payable quarterly on the 15th day of December, March, June and September, commencing on December 15, 2014, and continuing until the principal amount of the Loan Notes 2021 has become due and payable. The Loan Notes due 2021 mature on September 15, 2021.
The Note Purchase and Private Shelf Agreement contains the same customary covenants and events of default as for the Note Purchase Agreement. The Note Purchase and Private Shelf Agreement also requires us to maintain compliance with the same, interest and leverage ratios as for the Note Purchase Agreement. Amounts

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drawn under the Shelf Facility in June 2016 were used to facilitate an extension of the maturity of $50 million of the outstanding principal amount of the Loan Notes due 2018.
We have been in compliance with the covenants under the Note Purchase and Private Shelf Agreement throughout all of the quarterly measurement dates from and including September 30, 2014, to December 31, 2017 .
The Loan Notes due 2021 and Shelf Facility and the Note Purchase and Private Shelf Agreement are governed by the law of the State of New York.
Senior Facilities Agreement
Overview.     On May 13, 2011, we entered into the Senior Facilities Agreement with Lloyds TSB Bank plc, Clydesdale Bank PLC and Bank of America, N.A. Lloyds TSB Bank plc and Clydesdale Bank PLC were Mandated Lead Arrangers under the Senior Facilities Agreement. This agreement has been subject to a series of amendments. The most significant of these amendments were dated March 25, 2014, when two new banks, Santander U.K. plc and National Westminster Bank plc (a subsidiary of The Royal Bank of Scotland plc), joined the banking syndicate and July 31, 2017, when two banks left the banking syndicate, Santander U.K. plc and Bank of America, N.A., and were replaced by two new banks, Citibank, N.A and HSBC Bank plc.
The following is a summary of the terms of the Senior Facilities Agreement, as amended, that we believe are the most important. We have included the Senior Facilities Agreement as an exhibit to this Annual Report and refer you to the exhibit for more information on the Senior Facilities Agreement.
Structure.     The current Senior Facilities Agreement provides $150 million of committed debt facilities, in the form of a multi-currency (GBP sterling, U.S. dollars or euros) Revolving Credit Facility and an additional $50 million of uncommitted facilities through an accordion clause. The amended facilities mature July 31, 2022. As of December 31, 2017 , we had drawn down $21.3 million under the Revolving Credit Facility ( December 31, 2016 : $32.8 million ).
Availability.     The facility is used for loans and overdrafts. Amounts unutilized under the Revolving Credit Facility (or, if the case, under the revolving portion of the Accordion) are allocated to ancillary facilities available under the Senior Facilities Agreement in connection with overdraft facilities, bilateral loan facilities and letter of credit facilities. As of December 31, 2017 , we had drawn down $21.3 million under the ancillary facilities ( December 31, 2016 : $32.8 million ). We may use amounts drawn under the Revolving Credit Facility for our general corporate purposes and certain capital expenditures, as well as for the financing of permitted acquisitions and reorganizations. As of December 31, 2017 , $128.7 million was available under the Revolving Credit Facility. The last day we may draw funds from the Revolving Credit Facility is June 30, 2022.
The Company has a separate bonding facility for bank guarantees and documentary letters of credit denominated in GBP sterling of £10.0 million ( $13.6 million ), of which £1.0 million ( $1.4 million ) was drawn as of December 31, 2017 . The amount drawn on the bonding facility as of December 31, 2016 , was £1.0 million ( $1.3 million ).
Interest rates and fees.     Borrowings under the facility bears an interest rate equal to an applicable margin plus either EURIBOR, in the case of amounts drawn in euros, or LIBOR, in the case of amounts drawn in GBP sterling or U.S. dollars.
The applicable base margin for the Revolving Credit Facility is subject to adjustment each quarter end based on our leverage ratio, which is defined in the Senior Facilities Agreement as the ratio of the Total Net Debt to Adjusted Acquisition EBITDA (each as defined in the Senior Facilities Agreement) in respect of the rolling 12-month period ending on the last day of the relevant quarter.
The tables below sets out the range of ratios and the related margin percentage currently in effect.
 
Leverage
 
Margin
 
 
 
(% per annum)
 
 
Greater than 3.0:1
2.90

 
 
Less than or equal to 3.0:1, but greater than 2.5:1
2.50

 
 
Less than or equal to 2.5:1, but greater than 2.0:1
2.25

 
 
Less than or equal to 2.0:1, but greater than 1.5:1
2.00

 
 
Less than or equal to 1.5:1, but greater than 1.0:1
1.75

 
 
Less than or equal to 1.0:1
1.50

 

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As of December 31, 2017 , we had drawn down $21.3 million under the Revolving Credit Facility ( December 31, 2016 : $32.8 million ). A commitment fee is levied each quarter against any unutilized element of the Revolving Credit Facility, excluding overdraft or ancillary facilities. This was calculated at 40% of the applicable margin in force before the July 2017 amendment, following which it is now calculated at 35% of the applicable margin in force. During 2017 , this fee percentage ranged between 0.7% and 1.0%.
Guarantees and security.     The renegotiated Senior Facilities Agreement, agreed in November 2012, removed all U.K. and U.S. security debentures from the agreement together with the cancellation of all share pledges, with no change to this in the March 2014 and July 2017 amendments.
Repayment of principal.     Any amounts borrowed under the Revolving Credit Facility must be paid at the end of an interest period agreed between the borrower (and Luxfer Holdings PLC acting on its behalf) and the agent when the loan is made.
Change of control.     In the event of a sale of all or substantially all of our business and / or assets or if any person or group of persons acting in concert gains direct or indirect control (as defined in the Senior Facilities Agreement) of Luxfer Holdings PLC, we will be required to immediately repay all outstanding amounts under the Revolving Credit Facility (and, if the case, the Accordion) and the ancillary facilities under the Senior Facilities Agreement.
Certain covenants and undertakings.     The Senior Facilities Agreement contains a number of additional undertakings and covenants that, among other things, restrict, subject to certain exceptions, us and our subsidiaries' ability to:
•
engage in mergers, demergers, consolidations or deconstructions;
•
change the nature of our business;
•
make certain acquisitions;
•
participate in certain joint ventures;
•
grant liens or other security interests on our assets;
•
sell, lease, transfer or otherwise dispose of assets, including receivables;
•
enter into certain non-arm's-length transactions;
•
grant guarantees;
•
pay off certain existing indebtedness;
•
make investments, loans or grant credit;
•
repurchase our shares;
•
issue shares or other securities; and
•
redeem, repurchase, decease, retire or repay any of our share capital.
We are permitted to dispose of assets up to $25 million in aggregate until July 2022, without restriction as to the use of the proceeds under the Senior Facilities Agreement. Above this level, we would need to seek agreement from the majority of the lenders under the Senior Facilities Agreement. In addition, we may pay dividends, subject to certain limitations.
In addition, the Senior Facilities Agreement requires us to maintain compliance with an interest coverage ratio and a leverage ratio. The interest coverage ratio measures our EBITDA (as defined in the Senior Facilities Agreement) to Net Finance Charges (as defined in the Senior Facilities Agreement). We are required to maintain an interest coverage ratio of 4.0:1. The leverage ratio measures our Total Net Debt (as defined in the Senior Facilities Agreement) to the Relevant Period Adjusted Acquisition EBITDA (as defined in the Senior Facilities Agreement). We are required to maintain a leverage ratio of no more than 3.0:1.
Any breach of a covenant in the Senior Facilities Agreement could result in a default under the Senior Facilities Agreement, in which case lenders could elect to declare all borrowed amounts immediately due and payable if the default is not remedied or waived within any applicable grace periods. Additionally, our and our subsidiaries' ability to make investments, incur liens and make certain restricted payments is also tied to ratios based on EBITDA.
We have been in compliance with the covenants under the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2017 .
Events of default.     The Senior Facilities Agreement contains customary events of default, in each case with customary and appropriate grace periods and thresholds, including, but not limited to:
•
non-payment of principal, interest or commitment fee;

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•
violation of covenants or undertakings;
•
representations, warranties or written statements being untrue;
•
cross default and cross acceleration;
•
certain liquidation, insolvency, winding-up, attachment and bankruptcy events;
•
certain litigation, arbitration, administrative or environmental claims having a material adverse effect on us or any of our subsidiaries;
•
qualification by the auditors of our consolidated financial statements which is materially adverse to the interests of the lenders;
•
certain change of control events;
•
cessation of business;
•
material adverse change; and
•
certain ERISA matters.
Upon the occurrence of an event of default under the Senior Facilities Agreement, the lenders will be able to terminate the commitments under the senior secured credit facilities, and declare all amounts, including accrued interest, to be due and payable and to take certain other actions.
The Senior Facilities Agreement is governed by English law.
Capital Expenditures
Investment in upgrading and expanding our production facilities is a key part of our strategy. In 2015 and 2016 , we reaffirmed our commitment to capital expenditures by investing $15.3 million and $16.5 million, respectively. In 2017 , we spent a further $9.6 million on the purchase of property, plant and equipment. The projects conducted in 2017 , 2016 and 2015 included:
•
In 2017, we invested in a new assembly facility to increase the capacity of the Superform business within the U.K. We invested a total of $1.5 million in this project.
•
In 2016, we invested in a new restrike press at our Worcester site to expand the capability of the Superform business in the U.K. We invested a total of $2.2 million in this project.
•
In 2016 and 2015, we continued to expand and upgrade the cylinders lines in place at our facilities in Riverside, California, and Graham, North Carolina. We invested a total of $3.4 million in 2016 and $2.9 million in 2015 in this project.
•
In 2015, we invested in new ERP systems at our Madison, Illinois, and Findlay, Ohio, sites, and also upgraded key manufacturing equipment at both sites. We invested a total of $3.2 million in these projects.
C.    Research and development, patents and licenses, etc.
Research and Development
Luxfer has always recognized the importance of research in materials science and the need to develop innovative new products to meet future needs of customers and to continue providing growth opportunities for the business. Each year we make a major investment across the Group in the development of new products and processes directed towards transportation, defense and emergency response, healthcare and general industrial end-markets. Direct expenditure on research and development (including revenue and capital items and before funding grants received) amounted to $7.8 million in 2017 ( 2016 : $7.6 million ; 2015 : $8.3 million ). The wider cost of product development and our financial commitment to its success is much harder for us to measure, because our product development projects include utilizing skills of our wider commercial technical sales staff and general management, many of whom are highly qualified scientists and engineers. A large proportion of senior sales and management time is spent overseeing development of products and working with customers on integrating our technology into their product designs.
To provide customers with improving products and services, we continually invest in new technology and research and employ some of the world's leading specialists in materials science and metallurgy. Our engineers and metallurgists collaborate closely with our customers to design, develop and manufacture our products. We also co-sponsor ongoing research programs at major universities in the U.S., Canada and Europe. Thanks to the ingenuity of our own research and development teams, Luxfer has developed a steady stream of new products, most recently including:
•
soluble magnesium alloys, branded SoluMag ® , for down-well oil and gas applications;
•
ultra-lightweight large composite cylinders, branded G-Stor TM , for containment of CNG, hydrogen, helium and other gases;

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•
enabling technologies for AF systems, including high-pressure valves, branded G-Flo TM , and pressure- release devices;
•
new magnesium alloy variants such as in Elektron ® 43, designed for use in aircraft seating;
•
zirconium catalysts for large-scale industrial chemical applications;
•
L7X ® higher-strength aluminum alloy and carbon composite gas cylinders;
•
bioresorbable magnesium alloys, branded SynerMag ® ; and
•
zirconium sorbents, branded MELsorb ® , being developed for use as an active ingredient in kidney dialysis equipment.
We believe that our commitment to research and new product development, through dedicated resources and significant use of management's time, is the core of Luxfer Group's growth potential worldwide. This commitment reflects our strategy of focusing on high-performance, value-added product lines and markets and leveraging our collaboration with universities. We invest in developing products for end-markets that we believe have long-term growth potential. Although such products sometimes take considerable time to commercialize, when they succeed, they provide significant competitive advantages and opportunities for sustainable profit growth.
Intellectual Property
We rely on a combination of patents, trade secrets, copyrights, trademarks and design rights, together with non-disclosure agreements and technical measures, to establish and protect proprietary rights in our products. Our Elektron Division holds key patents related to protection applications, including numerous aerospace alloys and magnesium-gadolinium alloys, as well as patents related to environmental applications, including water-treatment products and our specialized G4 process used to manufacture zirconium-cerium oxides for emissions-control catalysts. The division also has patented technology for magnesium-based flameless heater pads used to heat meals and beverages. Key patents held by our Gas Cylinders Division relate to aluminum alloys for pressurized hollow bodies and superplastic-forming techniques.
In certain areas, we rely more heavily upon trade secrets and unpatented proprietary know-how than patent protection in order to establish and maintain our competitive advantage. We generally enter into non-disclosure and invention assignment agreements with our employees and subcontractors.
D.    Trend information.
Information required by this item is set forth in Item 5.A of this Annual Report, "Risk factors" and below.
The Group has a diversified portfolio of products and end-markets, and therefore it is not unusual for certain markets to be down or to be experiencing positive or negative trends. In particular, the level of sales of our Luxfer Magtech FRHs used in MRE can have a positive or negative impact on our Elektron Division. For example, 2017 saw increased demand within the defense and emergency responders end market, as a result of increased disaster-relief shipments to hurricane affected areas in the United States and Caribbean, whereas in 2016 sales were depressed due to reduced government spending.
Our strategy is focused around introducing new products into markets with expected strong growth trends. For example, we seek to respond to the need for more environmentally-friendly products resulting from stricter government regulations on emissions and the long-term view of the increasing cost of fossil fuels.
E.    Off-balance sheet arrangements.
In the ordinary course of business, we enter into operating lease commitments and capital commitments. These transactions are recognized in the consolidated financial statements in accordance with IFRS as issued by the IASB and are more fully disclosed therein.
As of December 31, 2017 , neither Luxfer Holdings PLC nor any of its subsidiaries has any off-balance sheet arrangements that currently have or are reasonably likely to have a future effect on the Group's financial position, changes in financial position, results of operations, liquidity, capital expenditure or capital resources.
F.     Tabular disclosure of contractual obligations.
We have various contractual obligations arising from both our continuing operations. The following table lists the aggregate maturities of various classes of obligations and expiration amounts of various classes of commitments related to our continuing operations as of December 31, 2017 . See "Note 26—Commitments and contingencies" and "Note 27—Financial risk management objectives and policies" to our consolidated financial statements attached to this Annual Report for additional details on these obligations and commitments.

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Payments Due by Period
 
 
 
Total
 
Less than
1 year
 
1 – 3
years
 
3 – 5
years
 
After
5 years
 
 
 
(in $ million)
 
 
Contractual cash obligations
 

 
 

 
 

 
 

 
 

 
 
Loan Notes due 2018 (1)
15.0

 
15.0

 
—

 
—

 
—

 
 
Loan Notes due 2021 (1)
25.0

 
—

 
—

 
25.0

 
—

 
 
Loan Notes due 2023 (1)
25.0

 
—

 
—

 
—

 
25.0

 
 
Loan Notes due 2026 (1)
25.0

 
—

 
—

 
—

 
25.0

 
 
Revolving Credit Facility
21.3

 
—

 
—

 
21.3

 
—

 
 
Deferred contingent consideration (2)
0.7

 
0.5

 
0.2

 
—

 
—

 
 
Deferred consideration (3)
0.3

 
0.3

 
—

 
 
 
 
 
 
Obligations under operating leases
34.4

 
5.4

 
8.0

 
6.5

 
14.5

 
 
Capital commitments
0.6

 
0.6

 
—

 
—

 
—

 
 
Interest payments (4)
24.6

 
4.5

 
8.3

 
6.9

 
4.9

 
 
Total contractual cash obligations
$
171.9

 
$
26.3

 
$
16.5

 
$
59.7

 
$
69.4

 
 
 
 
 
 
 
 
 
 
 
 
 


(1)  
The Loan Notes due 2018, 2021, 2023 and 2026 are gross of unamortized finance costs, which were nil , $0.1 million , $0.3 million and $0.3 million respectively, as of December 31, 2017 . As required by IFRS, the Loan Notes due 2018, 2021, 2023 and 2026 are disclosed in our consolidated balance sheet as $89.3 million , being net of these costs. The amounts to be repaid exclude interest payable on the indebtedness.
(2)  
The deferred contingent consideration relates to the 2014 acquisition of Luxfer Magtech. The amount is linked to its future expected profitability which, where appropriate is payable annually from 2015 to 2020.
(3)  
The deferred consideration relates to the 2017 acquisition of the trade and assets of the Specialty Metals business of ESM Group Inc.
(4)  
Interest payments include estimated interest payable on the Loan Notes due 2018, 2021, 2023 and 2026 at the fixed rates of 6.19%, 3.67%, 4.88% and 4.94% respectively. No interest payments have been included for the Revolving Credit Facility given that the level of debt under this facility is managed on an ongoing basis in conjunction with the level of cash and cash equivalents held by us.
Loan notes due 2018, 2023 and 2026.     See "—Financing—Loan Notes due 2018, 2023 and 2026" above for a detailed explanation of the Loan Notes due 2018, 2023 and 2026.
Loan notes due 2021.     See "—Financing—Loan Notes due 2021 and Shelf Facility" above for a detailed explanation of the Loan Notes due 2021.
Obligations under non-cancellable operating leases.     We lease certain land and buildings and a limited amount of plant and equipment pursuant to agreements that we cannot terminate prior to the end of their terms without incurring substantial penalties, absent breach by the counterparty. However, under the lease agreements, the risks and rewards of ownership have substantially remained with the lessors. In particular, the fair value of the future payments under these leases is significantly less than the value of the assets to which they relate, and the lease periods are significantly shorter than the estimated lives of the relevant assets. We therefore do not recognize the future lease obligations and the value of the assets leased in our consolidated balance sheet. The lease costs payable each year are charged to operating expenses during the year and amounted to $5.1 million in the year ended December 31, 2017 .
Foreign currency forward contracts.     We use forward contracts to hedge the risk of exchange movements of foreign currencies in relation to sales and purchases and their corresponding trade receivable or trade payable. Under IFRS, we recognize the value of these contracts at their fair value in our consolidated balance sheet. As of December 31, 2017 , we had outstanding contracts with a mark to market fair value loss of $0.7 million , calculated using exchange rates and forward interest rates compared to market rates as of December 31, 2017 . See "Item 11. Quantitative and Qualitative Disclosure About Market Risk—Effect of Currency Movement on Results of Operations."

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Aluminum forward contracts.     We may use LME forward purchase contracts to fix a portion of our aluminum purchase costs and thereby hedge against future price movements in the price of primary aluminum. In 2017 , we entered into a number of LME contracts to provide hedges against some of our aluminum price risks in 2017 . As of December 31, 2017 , we had outstanding contracts with a mark to market fair value gain of $1.2 million . See "Item 11. Quantitative and Qualitative Disclosure About Market Risk—Effect of Commodity Price Movements on Results of Operations."
We do not recognize the fair value of forward LME contracts in our income statement until we receive delivery of the underlying physical aluminum. The value of such contracts is recognized as an asset or liability in our consolidated balance sheet, with the profit or loss on effective hedges deferred in a hedging reserve account in equity until the underlying delivery of the physical aluminum. The fair value of the contracts is based on quoted forward prices from the LME.
Forward interest rate agreements.     There were no forward interest rate agreements in place as of December 31, 2017 .
Capital commitments.     From time to time, we have capital expenditure commitments when we have new plant and equipment on order. We treat these commitments as contingent liabilities, because they will not be recognized on the consolidated balance sheet until the capital equipment to which they relate has been delivered. As of December 31, 2017 , we had capital commitments of $0.6 million .
G.    Safe harbor.
See the section entitled "Information Regarding Forward-Looking Statements" at the beginning of this Annual Report.
Item 6.
Directors, Senior Management and Employees
A.     Directors and Senior Management
The Board of Directors
The following table presents information regarding the members of the Board of Directors during the year.
 
Name
 
Age
 
Position
 
 
Joseph A. Bonn (1)(2)(3)(4)
74

 
Non-Executive Chairman
 
 
Brian G. Purves (5)
63

 
Director and Chief Executive Officer (retired)
 
 
Alok Maskara (6)
46

 
Director and Chief Executive Officer
 
 
Andrew M. Beaden (7)
50

 
Director and Group Finance Director (resigned)
 
 
Kevin S. Flannery (1)(2)(3)(4)(8)
73

 
Non-Executive Director (retired)
 
 
David F. Landless (1)(2)(3)(4)
58

 
Non-Executive Director
 
 
Dr Brian Kushner (1)(2)(3)(4)
59

 
Non-Executive Director
 
 
Clive J. Snowdon (1)(2)(3)(4)
64

 
Non-Executive Director
 
 
Adam Cohn (2)(3)
46

 
Non-Executive Director
 
(1)  
Member of the Audit Committee during the year.
(2)  
Member of the Remuneration Committee during the year.
(3)  
Member of the Nominating and Governance Committee during the year.
(4)  
An "independent director" as such term is defined in Rule 10A-3 under the Exchange Act for Audit Committee purposes, having served on the Committee for all or part of the year.
(5)  
Brian G. Purves stepped down as Chief Executive Officer on July 1, 2017 and retired as a Director of Luxfer on September 25, 2017.
(6)  
Alok Maskara was appointed as a Director on May 23, 2017 and as the Chief Executive Officer on July 1, 2017.
(7)  
Andrew M. Beaden resigned as Group Finance Director on October 2, 2017.
(8)  
Kevin S. Flannery retired as a Director of Luxfer on May 23, 2017.


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Biographical information concerning the members of our Board of Directors is set forth below.
Joseph A. Bonn
Non-Executive Chairman
Joseph (Joe) was appointed as a Non-Executive Director on March 1, 2007, at which time he was also appointed to both the Audit and Remuneration Committees. He has also been a member of the Nominating Committee since its establishment in July 2013. Joe was appointed as Non-Executive Chairman on December 6, 2016. Joe was a member of the Audit Committee until and including January 30, 2017. He was also Chair of the Remuneration Committee until and including November 23, 2017 after which he stepped down as Chair, but remained a member of the Committee. Joe was Chair of the Nominating Committee until and including December 4, 2017 after which he stepped down as Chair, but remained a member of the Committee. Joe has informed the Board of his decision not to stand for re-election to the board at the AGM in 2019 and to step down as Chairman by early 2019.
Experience: Joe has extensive experience in the aluminum and specialty chemical industry, having worked for Kaiser Aluminum and Chemical Corporation for over 35 years in various senior capacities. Among other appointments in the U.S., he has served on the Board and Executive Committee of the Aluminum Association, the Board of the National Association of Purchasing Management and the International Primary Aluminium Institute Board. He is currently a consultant with Joseph Bonn RE&C Corp.
Joe holds a BS degree from Rensselaer Polytechnic Institute and an M.B.A. degree in Finance from Cornell University.
Brian G. Purves
Chief Executive Officer (Resigned as Chief Executive Officer July 1, 2017 and retired as Director September 25, 2017)
Brian was appointed as our Chief Executive Officer at the start of 2002 and was an Executive Director of the Company and its predecessor since 1996. He was one of the two-man management buy-in team that led the private equity-funded acquisition of British Aluminium (including the core or our current Group) from Alcan in 1996, serving as Finance Director from that date until 2001. Brian stepped down as Chief Executive Officer on July 1, 2017 and retired as a Director on September 25, 2017.
Experience:  Before joining the Company, Brian held several senior positions in the U.K. motor manufacturing industry covering various financial, commercial and general management responsibilities.
Brian has an honours degree in natural philosophy (physics) from the University of Glasgow and a Master of business studies degree from the University of Edinburgh. A Fellow of the Chartered Institute of Management Accountants, he is also a Companion of the Chartered Management Institute.
Alok Maskara
Chief Executive Officer
Alok was named as the Chief Executive Officer designate of Luxfer and appointed to the Board of Directors on May 23, 2017 and later became Chief Executive Officer on July 1, 2017.
Experience: Before joining Luxfer, Alok was a business segment President at Pentair Plc for eight years where he led businesses of progressively larger sizes. Prior to Pentair, he was at General Electric Corporation for four years. Alok has also worked at McKinsey & Company, a management consultancy firm in Chicago, Illinois.
Alok holds an M.B.A. from the Kellogg Graduate School of Management, an M.S. from the University of New Mexico and a Bachelor in Technology from the Indian Institute of Technology, Mumbai.
Andrew M. Beaden
Group Finance Director (Resigned October 2, 2017)
Andrew (Andy) was appointed as Group Finance Director in June 2011 prior to the I.P.O., at which time he was appointed to the Board as an Executive Director. Andy joined the Group in 1997 and became Group Financial Controller in 2002, becoming a member of the Executive Management Board in January 2006. He worked as Director of Planning and Finance from 2008 to 2011. Andy stepped down as Group Finance Director and as a Director on the Board on October 2, 2017
Experience:  Before joining the Company, Andy worked for KPMG, as well as several U.K. FTSE 100 companies in a variety of financial roles.

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Andy is a Chartered Accountant and holds a degree in economics and econometrics from Nottingham University.
Kevin S. Flannery
Non-Executive Director (Retired May 23, 2017)
Kevin was appointed as a Non-Executive Director on June 1, 2007, at which time he was also appointed to both the Audit and Remuneration Committees. He was appointed to the Nominating Committee on its establishment in July 2013, but stepped down on October 6, 2016. Kevin was a member of the Audit Committee until and including January 30, 2017 and reappointed to the Nominating Committee from January 31, 2017. He retired as a Director of Luxfer on May 23, 2017.
Experience:  Kevin has over 40 years of experience in both operational and financial management roles in a variety of industries and has also served in the capacities of Director, Chairman and Chief Executive Officer of several companies in the U.S. He is currently the President and Chief Executive Officer of Whelan Financial Corporation, a company he founded in 1993 that specializes in financial management and consulting. He was formerly the Chairman and Chief Executive Officer of several companies, including RoweCom, Inc., Telespectrum Worldwide and Rehrig United Inc. He also served as a director of a number of other corporations between 2005 and 2011. Kevin began his career at Goldman, Sachs & Co and was a senior managing partner of Bear Stearns & Co.
David F. Landless
Non-Executive Director
David was appointed as a Non-Executive Director in March 2013 and was appointed to the Audit Committee on March 28, 2013, and the Nominating Committee on July 23, 2013. He acts as the financial expert on the Audit Committee under the listing rules of the New York Stock Exchange. He was appointed as a member of the Remuneration Committee in January 2015 and on May 28, 2015, he was appointed Chair of the Audit Committee. David was a member of the Nominating Committee until and including January 30, 2017 and then from December 5, 2017. He was a member of the Remuneration Committee until and including November 23, 2017.
Experience: David started his career with Bowater and Carrington Viyella and joined Courtaulds Plc in 1984. He was appointed a Finance Director in the U.K. and U.S. divisions of Courtaulds Plc from 1989 to 1997 and Finance Director of Courtaulds Coatings (Holdings) Limited from 1997 to 1999. He was appointed Group Finance Director of Bodycote plc in 1999 until he retired from the position on January 1, 2017. He is a Non-Executive Director of Innospec, Inc. and was appointed a Non-Executive Director of Renold plc on January 9, 2017 and a Non-Executive Director of European Metal Recycling Limited on June 30, 2017.
David is a Chartered Management Accountant. He graduated from the University of Manchester Institute of Science and Technology.
Dr. Brian Kushner
Non-Executive Director
Brian was appointed as a Non-Executive Director on May 24, 2016, at which time he was also appointed to the Remuneration and Nominating committees. He was appointed to the Audit Committee on August 5, 2016. During 2017, Brian was a member of the Nominating Committee until and including January 30, 2017 and he was appointed Chair of the Remuneration Committee from November 24, 2017.
Experience: Brian co-founded CXO, LLC, a management consulting firm acquired by FTI Consulting, ("FTI", NYSE:FCN) a global business advisory firm in 2008. Brian is now Senior Managing Director at FTI, and leads the Private Capital practice. Over the past two decades, he has served as the CEO, Chief Restructuring Officer or non-executive Director of more than two dozen public and private technology, manufacturing, telecom and defense companies. Brian began his career in 1982 at BDM International, and was part of the management team that completed a leveraged buyout of BDM in 1990 by Carlyle.
Brian serves as a Non-Executive Director and Audit Committee Chair of Mudrick Capital Acquisition Corporation (NASDAQ:MUDS), Non-Executive Director and Audit Committee Chair of Dex Media (OTC: DMDA), and Non-Executive Director and member of the Audit and Governance Committees at Zodiac Interactive. Brian holds a doctorate in applied physics / electrical engineering from Cornell University.



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Clive J. Snowdon
Non-Executive Director
Clive was appointed as a Non-Executive Director on July 29, 2016, at which time he was also appointed to the Remuneration and Nominating Committees. He was appointed to the Audit Committee on August 5, 2016. Clive was a member of the Remuneration Committee until and including January 30, 2017 and became Chair of the Nominating Committee from December 5, 2017.
Experience:  Clive has served as Chairman of the Midlands Aerospace Alliance since 2007 and is a Trustee of the Stratford Town Trust. He is also the aerospace industry advisor to Cooper Parry Corporate Finance. In May 2016, Mr. Snowdon stepped down from the board of Hill & Smith Holdings PLC, where he had been Senior Non-Executive Director since May 2007 and chair of the remuneration committee, as well as a member of the Audit and Nominating Committees. Mr. Snowdon retired from Umeco PLC in June 2011 after serving as Chief Executive since April 1997, and he was Executive Chairman of Shimtech Industries Group Limited until the sale of the business in May 2015. From 1992 to 1997, Mr. Snowdon served as Managing Director of Burnfield PLC after being promoted to that position from Finance Director. He has also held senior positions with Vickers PLC, BTR PLC and Hawker Siddeley Group. Mr. Snowdon is qualified as a Chartered Accountant.
Adam Cohn
Non-Executive Director
Adam was appointed as a Non-Executive Director on July 18, 2016, at which time he was also appointed to the Remuneration Committee. Adam was appointed to the Nominating Committee from January 31, 2017.
Experience:  Adam is Co-CEO of Stone Canyon Industries LLC (SCI), a company he co-founded in September 2014. SCI has a small investment in Luxfer. Prior to SCI, from March 2000 to September 2014, Adam was a Partner at Knowledge Universe ("KU"), where he served as Head of Mergers and Acquisitions and Business Development for KU and its portfolio companies. Prior to joining KU, he was a Senior Associate with Whitney & Co., a private equity firm. Before that, Adam was an investment banker in the Financial Sponsors Group at Bankers Trust Company and Deutsche Bank. He has a B.S. in business from Skidmore College and an M.B.A. from Columbia University. Adam served on the board of k12, Inc, where he was also Chairman of the Compensation Committee. In addition, he serves on several other private company boards.
Executive Leadership Team
The members of the Executive Leadership Team (previously Executive Management Board) of Luxfer are responsible for the day-to-day management of our company.
The following table lists the names and positions of the current members of the Executive Leadership Team as well as those who served during the year.
 
Name
 
Age
 
Position
 
 
Brian G. Purves (1)
63

 
Director and Chief Executive Officer (retired)
 
 
Alok Maskara (2)
46

 
Director and Chief Executive Officer
 
 
Andrew M. Beaden (3)
50

 
Director and Group Finance Director (resigned)
 
 
Heather C. Harding (4)
49

 
Chief Financial Officer
 
 
Edward J. Haughey (5)
62

 
Divisional Managing Director of MEL Chemicals (retired)
 
 
David T. Rix (6)
49

 
Divisional Managing Director of Magnesium Elektron (resigned)
 
 
Andrew W. J. Butcher
49

 
President of Luxfer Gas Cylinders
 
 
Graham D. Wardlow (7)
50

 
Managing Director of Luxfer MEL Technologies
 
 
James G. Gardella (7)
61

 
President of Luxfer Magtech
 
 
Christopher A. Barnes (7)
63

 
President of Luxfer Graphic Arts
 
 
Simon P. Tarmey (7)
55

 
Managing Director of Luxfer Superform
 
 
Claire L. Swarbrick (7)
43

 
General Counsel and Legal Adviser
 
 
Peter N. Gibbons (7)
47

 
Director of Sourcing and IT
 
 
Peter S. Dyke (8)
47

 
Chief Human Resources Officer
 
(1)  
Brian G. Purves stepped down as Chief Executive Officer on July 1, 2017 and retired as a Director of Luxfer on September 25, 2017.
(2)  
Alok Maskara was appointed as a Director on May 23, 2017 and as the Chief Executive Officer on July 1, 2017.

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(3)  
Andrew M. Beaden resigned as Group Finance Director on October 2, 2017.
(4)  
Heather Harding was appointed as Chief Financial Officer on January 1, 2018.
(5)  
Edward J. Haughey retired from Luxfer during May 2017.
(6)  
David T. Rix resigned from Luxfer in June 2017.
(7)  
Appointed to the Executive Leadership Team during August 2017.
(8)  
Peter S. Dyke was appointed as a Chief Human Resources Officer on January 2, 2018.
Biographical information of the members of our Executive Leadership Team who are not members of our Board of Directors is set forth below.
Brian G. Purves, Alok Maskara and Andrew M. Beaden
Please refer to the Board of Directors biographies on page 62.
Heather C. Harding
Chief Financial Officer
Heather was named Chief Financial Officer of Luxfer on January 1, 2018.
Before joining Luxfer, Heather was vice president, finance, for Eaton Lighting, a business unit of Eaton Corporation. Prior to that, she was vice president, finance, for various operating units within Cooper Industries and Emerson Electric.
Heather is a Certified Public Accountant and has received a Bachelor of Science in accounting from Southern Illinois University at Carbondale.
Edward J. Haughey
Managing Director of MEL Chemicals (Retired)
Edward (Eddie) became a member of the Executive Management Board on his appointment as Managing Director of Luxfer's zirconium business in 2003. Prior to joining Luxfer Group, he was Managing Director of Croda Colloids Limited for Croda International Plc from 1994 to 2003, and has held a series of senior management positions in the Croda Group, BASF and Rhone Poulenc. He holds a BA (Honours) degree in Chemistry. Eddie retired from Luxfer in May 2017.
David T. Rix
Managing Director of Magnesium Elektron (Resigned)
David was appointed to the Executive Management Board in 2013 on assuming responsibility for Luxfer's magnesium businesses. He joined Alcan Wire and Conductor in 1991 and moved to Luxfer Gas Cylinders in 1994, holding various sales and marketing positions in Germany, France and Dubai, UAE, before returning to the U.K. He was appointed Managing Director of Luxfer Gas Cylinders in Europe after serving as European Sales Director and was also a member of the Gas Cylinders Divisional Team with strategic responsibility for global marketing. David holds a BA (Honours) degree in business studies and a diploma from the Chartered Institute of Marketing. David resigned from Luxfer in June 2017.
Andrew W. J. Butcher
President of Luxfer Gas Cylinders
Andrew (Andy) was appointed as President of Luxfer Gas Cylinders in April 2014. He became a member of the Executive Management Board on January 1, 2014, on his appointment as President designate. He joined Luxfer Gas Cylinders in Nottingham in 1991, before moving to California in 2002, where he led our composite businesses. He was President of Luxfer Gas Cylinders North America from 2009 to 2014. Andy holds an MA degree in Engineering from Cambridge University, and an M.B.A. from Keele University.
Graham D. Wardlow
Managing Director of Luxfer MEL Technologies
Graham was appointed Managing Director of Luxfer MEL Technologies during 2017 following the merger of MEL Chemicals with the Magnesium Elektron business. Graham joined Magnesium Elektron in 1991 and undertook a number of technical and commercial roles before becoming Managing Director of the Alloys business in 2008.

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Graham led the transformation of this business before his appointment to Divisional Managing Director of MEL Chemicals in May 2017, at which time he became a member of the Executive Management Board.
Graham holds a degree in Materials Engineering from Imperial College, University of London, and an M.B.A. from Keele University.
James G. Gardella
President of Luxfer Magtech
James (Jim) was appointed President of Luxfer Magtech and became a member of the Executive Leadership Team during August, 2017. Prior to that, he was appointed President of Magnesium Elektron Powders in 2007 which he originally joined in 1990 as Financial Controller.
Jim holds a B.S. Degree in Accounting from Villanova University, an M.B.A. in Finance and a Certified Public Accountant credential.
Christopher A. Barnes
President of Luxfer Graphic Arts
Christopher (Chris) was President of Magnesium Elektron North America, Inc. since 2009 and was appointed President of Luxfer Graphic Arts during 2017 and appointed to the Executive Leadership Team at that time. Prior to joining Magnesium Elektron in 2003, Chris held several key leadership positions in serving the Graphic Arts Market and manufacturing magnesium wrought products.
Chris has a Bachelor of Science Degree from Michigan State University and an M.B.A. from Washington University in St. Louis, Missouri.
Simon P. Tarmey
Managing Director of Luxfer Superform
Simon was initially appointed Managing Director of Superform Worcester and then took responsibility for both the Worcester and Riverside California plants in 2009 when he became the Divisional head. Simon was appointed a member of the Executive Leadership Team during August, 2017. After graduating from South Bank Polytechnic with a degree in Engineering, Simon has worked in R&D, Engineering and Operational management roles within GKN, Federal Mogul and Unipart before joining Luxfer Superform in 2004.
Claire L. Swarbrick
General Counsel and Legal Adviser
Claire has been legal adviser to the Luxfer Group since joining the business in January 2012. She was appointed general counsel in March 2016. After graduating from the University of Nottingham with a degree in law, Claire completed the legal practice course at Chester Law College and qualified as a solicitor in September 2000. Before taking the role at Luxfer, Claire spent 12 years in private practice, specializing in corporate and commercial law. Claire was appointed a member of the Executive Leadership Team during August, 2017.
Peter N. Gibbons
Director of Sourcing and IT
Peter was appointed Director of Sourcing and IT and became a member of the Executive Leadership Team during August, 2017. He joined Luxfer in 2003 as European Financial Controller at Magnesium Elektron, before moving to Group Head Office to take up the Group Financial Controller role. He returned to Magnesium Elektron in 2014 as Divisional Finance Director. Peter is a fellow of the Association of Chartered Certified Accountants.
Peter S. Dyke
Chief Human Resources Officer
Peter (Pete) was named Chief Human Resources Officer of Luxfer on January 2, 2018.
Before joining Luxfer, Pete was Vice President Human Resources for Pentair Water, a business segment of Pentair PLC. Prior to that, he served as Vice President Human Resources for various operating units within Pentair and as Senior Manager, Human Resources with General Electric’s Aircraft Engines Division.
Pete attended Michigan State University where he received a Masters of Labor and Industrial Relations degree and a Bachelor of Arts degree in International Relations and Economics.

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B.    Compensation
The total amount of compensation paid and benefits in kind granted to the Executive Directors and members of our Executive Leadership Team (previously Executive Management Board) for the 2017 fiscal year was $4.7 million . This amount includes bonuses paid to the Executive Directors and members of the Executive Leadership Team (previously Executive Management Board) under the annual cash bonus plan, which is described below in note 4, page 72 of the 2017 remuneration report (the "Remuneration Report") below. The annual bonus potential as a percentage of base salary of the members of our Executive Leadership Team ranged from 50% to 160%. Moreover, details of stock options granted to the Executive Directors and members of our Executive Leadership Team are provided in Item 6.E.
For the 2017 fiscal year, (i) we and our subsidiaries contributed a total of $0.3 million in respect of our contribution into money purchase plans to provide pension, retirement or similar benefits to our Directors and members of the Executive Leadership Team and (ii) the total increase in accrued pension benefits earned during the 2017 fiscal year (excluding any increase due to inflation) by our Directors and members of the Executive Leadership Team under the defined benefit plans was less than $0.1 million.
Service Contracts
Other than as mentioned below, the Executive Directors are not entitled to any special arrangements on termination, just their contractual rights and, if appropriate, the Company's standard redundancy policy for all senior management, which provides for compensation based on length of service.
The Company has entered into service contracts with the Executive Directors that are not for a fixed term. Brian Purves' service contract was dated April 9, 1999. His service contract expressly stated that he had continuity of employment from when he first joined the Group in March 1996. Andrew Beaden's service contract was dated August 5, 2011, and was effective from the date of his appointment as Group Finance Director on June 1, 2011. His service contract expressly stated that he had continuity of employment from when he first joined the Group in 1997. Alok Maskara's service contract is dated May 23, 2017, being when he first joined the Company.
The Executive Directors' service contracts are terminable by 12 months' notice from the Company, which notice can be given at any time. The contracts also provide for pay in lieu of notice, which include base salary, benefits and pension payable for the notice period. A bonus may be paid if the period for which pay in lieu of notice is made extends past the year end, subject to targets being met. In the event that an acquiring company does not assume their employment agreements or offers them a materially different position, they will be entitled to severance payments based on our standard severance policy, but calculated using two times their annual salary. Otherwise, the Executive Directors have the same employment rights as any other employee in the case of redundancy or if the termination of their employment was determined by a relevant tribunal to be unfair under English law.
The relevant rules for the Long-Term Umbrella Incentive Plan ("LTiP"), in which the Executive Directors participate, provide that upon a change in control, all unvested time-based awards will fully vest and become exercisable as applicable and unless determined by the Remuneration Committee, shall lapse on the first anniversary of the change of control if not exercised as applicable. Under the rules of the LTiP all performance-based awards will vest pro-rata based on the performance results to the date of change and the elapsed portion of the performance period.
The Company has entered into letters of appointment with the Non-Executive Directors that are not for a fixed term as it was inappropriate to engage them on a fixed term at the date of their appointment. The appointments are subject to termination with three months' notice to be given at any time by the Company except if they should fail to be re-elected at an AGM when their contract terminates immediately without notice or compensation. The Chairman, Joseph Bonn's letter of appointment is dated February 28, 2007, David Landless' is dated February 20, 2013, Brian Kushner's is dated May 24, 2016, Adam Cohn's is dated July 18, 2016, and Clive Snowdon's is dated July 29, 2016. Neither the Non-Executive Directors nor the Chairman has any employment rights.
The Remuneration Report was prepared in accordance with our U.K. home-country regulations and is reproduced hereunder in all material respects.

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DIRECTORS' REMUNERATION REPORT
Chairman's Letter
Dear Shareholder,
Following my appointment as Chairman of the Remuneration Committee in November 2017, I present my first report to the shareholders pursuant to U.K. regulations governing the way remuneration for directors of quoted U.K. companies is reported and voted upon.
During the year, the Remuneration Committee (“the Committee”) dedicated considerable time to the re-evaluation of its remuneration policy ("the Policy") with the help of independent external advisors. The updated Policy is to be presented to Shareholders for approval at the 2018 AGM and is enclosed as part of the Remuneration Report.
Major Decisions on Remuneration during the Year
Decisions made affecting 2017 remuneration
The Committee’s overall approach to remuneration packages remained the same and followed the Policy approved by shareholders in 2017.
Overall, 2017 was a strong year, with recoveries in both revenue and reported trading profit, from the previous year. The main targets of the annual bonus for 2017 related to management trading profit and net cash flow, weighted towards the management trading profit metric. For the new Chief Executive Officer, Alok Maskara, the bonus plan also contained a number of non‑financial objectives relating to the achievement of certain strategic milestones. These non-financial objectives were achieved in 2017 which generated a bonus payable of 50% of base salary (pro-rata) for the new CEO. For the main financial targets for 2017, trading profit in excess of budget was achieved, but less than the stretch target, and net cash flow in excess of the stretch target was achieved. The outgoing Executive Directors were entitled to the annual bonus for the achievement of the financial targets of the Company, pro-rata for their length of service during the year. The total annual bonus awarded to Alok Maskara was therefore 145% of his base salary, out of a potential 150%, pro-rata from the commencement of his employment. Further details of the bonus arrangements and the bonus paid can be found in Single Figure, Executive Directors’ Remuneration of the Remuneration Report on page 71 and note 4 to that table.
The Committee believe they set challenging targets for the performance‑based awards to motivate the executives and align the interests of the executive, with those of shareholders. Stretch targets required exceptional performance to be achieved. The budget target set for 2017 was achieved and therefore share awards are to be made in respect of this in 2018. The targets set for 2016 were not achieved and therefore no awards were made in 2017 in respect of these. Further details are set out in the section headed Remuneration Report, Awards Granted During the Year and the section headed Implementation of the Remuneration Policy for the Year Ending 31 December 2017 under Long Term Incentives and its associated Notes.
As part of his appointment, the Board approved the awarding of 225,000 share awards to the new Chief Executive Officer, Alok Maskara. These include a mix of time-based restricted stock units and performance-based restricted stock units. The time-based awards vest in equal tranches across three and four year periods and the performance-based awards would vest on the achievement of various earnings per share targets being met. Alok Maskara must achieve a shareholding in the Company equivalent to one hundred and fifty percent of his initial base salary within a three year period from the date of appointment to the Company, and the availability of these awards help facilitate this opportunity and in targeting the achievement of certain performance metrics. These awards were made in accordance with the ‘Approach to Recruitment Remuneration- Executive Directors’ section of the existing Policy. A summary of the Executive Directors’ outstanding share awards during 2017 can be found under the section headed Outstanding Share Awards During 2017 on page 77 of the Remuneration Report.
Decisions affecting 2018
The Committee reviewed the Executive Director's salary at its January 2018 meeting in accordance with the Policy. It was recognized that Alok Maskara had made a strong start in his role as Chief Executive Officer and had helped deliver the 2017 budget and the achievement of the Company’s non-financial objectives. On this basis, the Committee proposed and the Board agreed to increase his salary by 2.5% effective January 1, 2018. The new salary is still at or below the external benchmark as reported by our independent advisory consultants.
The Committee has also determined the Executive Director’s variable remuneration arrangements for 2018, with the maximum cash bonus award available increasing to 200% of base salary and the maximum share award available increasing to 220% of base salary. The focus very much remains on improving trading profit and net cash flow. A series of non-financial bonus targets have also been approved by the Board for 2018. A summary of

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the Executive Director's salary and incentive arrangements for the financial year 2018 can be found under the section headed Implementation of the Remuneration Policy for the Year Ending 31 December 2018 on pages 90 to 91 of the Remuneration Report.
The Committee has also reviewed the compensation of the Non-Executive Directors. As part of the proposed Board approved Remuneration Policy each Non-Executive Director, at their discretion, can forgo the proposed 2.5% increase in base fee, effective January 1, 2018, in lieu of equivalent value of share awards, valued at up to 55% of annual base fee, at the date of award. Pending shareholder approval, all Non-Executive Directors have elected to receive additional share awards in the Company and forgo the annual increase to their base fee in 2018.
The Committee looks forward to gaining your support for the updated Remuneration Policy and the Annual Remuneration Report at the 2018 AGM.
B G Kushner
CHAIRMAN OF THE REMUNERATION COMMITTEE
March 19, 2018

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Remuneration Report
2017 Remuneration Report
(subject to advisory vote by the shareholders at the 2018 AGM)
This report has been compiled in accordance with the U.K. ‘ The Large and Medium‑sized Companies and Groups (Accounts and Reports) (Amendments) Regulations 2013’. As required by the Regulations, the report will be proposed for an advisory vote at the 2018 AGM. The approved Remuneration Policy can be found on the Company’s website at www.luxfer.com/governance/.
The Remuneration Committee, its Activities and Responsibilities
The members of the Committee during the year are set out below.
 
Members of Committee during 2017
 
 
Meetings
attended
 
 
Joseph Bonn
Member throughout entire year and Chairman (Chair) until and including November 23, 2017
8
 
 
Brian Kushner
Member and Chairman (Chair) from November 24, 2017
8
 
 
Adam Cohn
Member
8
 
 
Kevin Flannery
Member until and including May 23, 2017
1
 
 
David Landless
Member until and including November 23, 2017
6
 
 
Total number of meetings in 2017
 
8
 
The Company Secretary acts as secretary to the Committee. The Chief Executive Officer normally attends all the meetings, at least in part.
The Committee is responsible for determining and agreeing with the Board the framework on executive remuneration and its costs. The Committee’s written Terms of Reference can be accessed in the Governance section of the Company’s website www.luxfer.com/governance/.
During 2017, the Committee dealt with some of the following matters:
 
January 2017
•
Consideration as to whether, and to what extent, the Executive Directors' bonus targets for 2016 had been met;
•
Determination of the Executive Directors' annual bonus targets for 2017;
•
Annual review of the Executive Directors' and Company Secretary salaries;
•
Setting of goals to be met by the Executive Directors and Senior Managers which if met would lead to time‑based share awards in 2018;
•
Delegation of authority to Chief Executive Officer to make awards under the LTiP over a defined number of shares to junior and middle management in his sole discretion;
•
Consideration of accelerating of vesting of LTiP awards and extension of exercise periods for IPO and LTiP awards held by impending retirees.
 
 
 
 
 
 
March 2017 (two meetings)
•
Review of 2016 Remuneration Report for subsequent approval by the Board;
•
Review of Revised Remuneration Policy for subsequent approval by the Board;
•
Review and approve remuneration package for new Managing Director at MEL Chemicals;
•
Review of Awards under the LTiP made to junior and middle management.
 
 
 
 
 
 
April 2017
•
Consideration of the remuneration package for the new Chief Executive Officer.
 
 
 
 
 
 
May 2017
•
Review the final remuneration package and contract of the new Chief Executive Officer prior to main Board approval.
 
 
 
 
 
 
October, November, December 2017
•
Consider a benchmarking study prepared by external consultants on Senior Executive Compensation. Review recommendations and formulate proposed framework.
•
Change in Remuneration Committee Chairman.
•
Consideration of changes to be made for newly proposed Remuneration Policy.
 

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Advisors to the Committee
The Committee has access to independent advice when it considers it requires such advice. PricewaterhouseCoopers LLP (“PwC”) HR Services provided a review of the revised Remuneration Policy, prior to it being put before Shareholders for approval at the 2017 AGM, and remuneration advice in respect of the Chief Executive Officer recruitment process. PwC were appointed as the Company’s auditor in the middle of 2015 after a competitive tender. Any work that PwC HR Services continues to provide is subject to a case‑by‑case independence review and the Company’s non‑audit service approval process. The cost of advice by PwC HR Services provided during 2017 was $8,635 (2016: $20,355). Although the Committee has not made a specific determination to the effect, they are satisfied that PwC HR Services provides independent and professional advice. PwC is a member of the Remuneration Consultants Group and is signed up to the Group’s Code of Conduct. The Company has also engaged with Meridian Compensation Partners, LLC ("Meridian") to provide advisory and benchmarking surveys with regards to its proposed Remuneration Policy. The cost of advice provided by Meridian during 2017 was $20,492.

REMUNERATION RECEIVED BY THE DIRECTORS FOR THE YEAR ENDED DECEMBER 31, 2017
(Up to and including page 81 is subject to audit unless stated otherwise)
Single Figure
The tables below set out an analysis of each Director’s total remuneration for 2017. Total remuneration reflects both the performance of the Company and the contribution made by each Director to the continued success of the Company during their period of tenure.
Executive Directors' Remuneration
Single Total Figure Table
 
U.S.$ (1)
 
Year
 
Salary (2)
 
Taxable
Benefits (3)
 
Annual
Bonus (4)
 
Long-Term Incentive Awards (5)
 
Other Share Awards (6)
 
Pensions
Contributions
 
Total
 
 
Brian Purves
2017
 
320,168

 
20,017

 
319,145

 
464,366

 
711

 
80,042

 
1,204,449

 
 
 
2016
 
534,802

 
27,635

 
—

 
135,134

 
1,236

 
137,510

 
836,317

 
 
Andrew Beaden (7)
2017
 
201,952

 
16,358

 
161,045

 
297,272

 
711

 
50,489

 
727,827

 
 
 
2016
 
281,114

 
22,492

 
—

 
56,456

 
1,159

 
70,674

 
431,895

 
 
Alok Maskara
2017
 
365,826

 
36,524

 
530,448

 
628,869

 
1,141,098

 
91,457

 
2,794,222

 
 

Table compiled in accordance with the U.K. 'The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', as amended by 'The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013'.
(1)  
Exchange rates -Salary, Taxable Benefits, Awards and Pension Contributions for Brian Purves and Andy Beaden are determined and paid in GBP sterling and translated into U.S. dollars at the average exchange rate for the first nine months of the year of $1.2877:£ as used for the Consolidated Financial Statements. For consistency, the 2016 amounts remain as reported last year translated at the average exchange rate used for that full year of $1.3444:£. The Salary, Taxable Benefits, Awards and Pension Contributions of Alok Maskara are determined and paid in U.S. dollars.
(2)  
Salaries -Brian Purves remained on the Board of Directors of the Company up to and including September 25, 2017. His salary in 2017 reflects the amounts paid in respect of his duties and responsibilities during this period. Andrew Beaden resigned from his position as Group Finance Director and as a director Luxfer Holdings PLC with effect from October 2, 2017. Alok Maskara was appointed as a director of Luxfer Holdings PLC on May 23, 2017 and upon the retirement of Brian Purves, he was appointed CEO of Luxfer Holdings PLC with effect from July 1, 2017. During 2017, the actual GBP sterling salary amount for Brian Purves was £248,625 (2016: £397,800) and for Andrew Beaden £156,825 (2016: £209,100).




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(3)  
Taxable Benefits -During the year an amount was paid to each director, pro rata to their period in office, in respect of expenses relating to car allowance, and medical and dental insurance. Taxable benefits for Brian Purves and Andrew Beaden are valued at their GBP sterling taxable value. During 2017, the actual GBP sterling amount for Brian Purves was £15,544 (2016: £20,556) and for Andrew Beaden £12,703 (2016: £16,730). All payments made to Alok Maskara in respect of these allowances were determined and paid in U.S. dollars.
(4)  
Annual Bonus -For the 2017 financial year, the annual bonus plan was based on the achievement of two financial performance goals, profit performance and cash performance (two of the key strategic performance indicators used by the Company to assess its development against its financial objectives during the year), measured against the annual budget. The bonus was weighted towards the achievement of the management profit target, which required a material improvement over the prior year outcome and a cash target which was equally set at a much higher level than achieved in 2016. Alok Maskara had also been set a further series of strategic project targets to achieve. These strategic project targets were achieved. In 2016, the main financial targets were not achieved and no bonus was payable. A number of the non-financial objectives were achieved during the year, however given that no bonus was generated from main financial targets, both Brian Purves and Andy Beaden thought it appropriate to waive any bonus payable in respect of the achievement of non-financial targets under the 2016 plan.

Summary of the annual bonus potential as a percentage of base salary of each of the Executive Directors for 2017:
 
 
 
 
 
Sliding scale between threshold, target and stretch
 
 
 
 
 
 
 
 
Maximum Annual bonus (number of points available and % of salary)
 
Management Trading Profit (3)
 
Net Cash Flow (after tax)
 
Non-
financial
objectives
 
Bonus
outcome
2017 (1)(2)
 
 
Number of points available
 
1,800

 
0 - 800
 
0 - 400
 
600

 
1,740

 
 
Alok Maskara
 
150
%
 
0.0% - 66.7%
 
0.0% - 33.3%
 
50.0
%
 
145.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of points available
 
1,200

 
0 - 800
 
0 - 400
 
—

 
1,140

 
 
Brian Purves
 
100
%
 
0.0% - 66.7%
 
0.0% - 33.3%
 
—

 
95.0
%
 
 
Andrew Beaden
 
80
%
 
0.0% - 53.3%
 
0.0% - 26.7%
 
—

 
76.0
%
 
(1)  
In 2017 Luxfer achieved a level of trading performance which resulted in 740 points being available in respect of the Management Trading Profit Target. Net cash flow generation in 2017 resulted in all 400 points being made available for the bonus calculations. In addition to these targets, Alok Maskara achieved all his non-financial targets in 2017.
(2)  
The level of bonus for 2017 has been calculated pro rata to the length of time in office during the year.
(3)  
Management trading profit is defined as operating profit or loss before profit on disposal of redundant site, restructuring expense, amortization on acquired intangibles and share based compensation charges.
In 2017 the Company generated a trading profit of $ 40.5 million (2016: $35.3 million) and net cash flows from continuing operations of $ 45.2 million (2016: $29.2 million).
The Board has considered whether to include in this report the targets which applied to the bonus arrangements for the Executive Directors in 2017 but has determined that these amounts are commercially sensitive.
(5)  
The Long Term Incentive Awards — the 2017 Single Figure:
In 2017, the Remuneration Committee targets for the year were based solely upon EPS targets as described in Executive Director Awards Under the LTiP on page 76. The target level was achieved in 2017 resulting in the granting of time-based awards, reduced on a pro-rated basis to the length of time served

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as an Executive Director in 2017, in 2018 as follows:
 
 
 
Number of Awards
 
 
 
 
 
 
 
 
Possible Awards
 
Awards to be made in 2018
 
% of possible awards made in 2018
 
Value of Awards
$ (1)
 
 
Alok Maskara
48,550

 
48,550

 
100.0
%
 
628,869

 
 
Brian Purves
53,780

 
35,850

 
66.7
%
 
464,366

 
 
Andrew Beaden
34,425

 
22,950

 
66.7
%
 
297,272

 
(1)     These awards will be granted in March 2018. The value of the awards in the above table has been estimated by using the average closing share price of the Company during the fourth quarter of 2017 ($13.63) and deducting the nominal cost value of £0.50 each share (68 cents each share at an exchange rate of $1.3512:£).
For Brian Purves and Andrew Beaden, as a result of their departure from the Board during 2017, the Remuneration Committee agreed that, in accordance with provisions in the Remuneration Policy, the above share awards will vest and be made fully available at the date of grant in 2018. For Alok Maskara, the share awards will commence vesting from the anniversary of their grant date, over the next three subsequent years.
In addition, upon appointment, Alok Maskara was awarded share options and was subsequently awarded further options upon attainment of a specified shareholding in the Company. For additional information refer to the section of this report headed Outstanding Share Awards During 2017 on page 77.
In 2016 the Remuneration Committee set profit, cash flow and EPS targets with all three metrics being measured at threshold, target and stretch. Greater weighting was assigned to the cash flow and EPS targets. None of the targets during 2016 were achieved so no awards in 2017 based on 2016 performance were granted. On attainment of the cash flow target for 2015 being met at the threshold level, an award under the LTiP was made in 2016 to Brian Purves and Andrew Beaden.
(6)  
Other Share Awards —The awards made to Brian Purves and Andrew Beaden relate to the value ascribed to the Matching Shares awarded under the Company’s U.K. All Employee Share Investment Plan (“SIP”), as further detailed below: ‑
 
 
Monthly contribution from salary during 2017 (£)
 
No. of Partnership Shares purchased June 2017 @ average price of $11.742 each ordinary share
 
No. of Matching Shares awarded June 2017
 
Dividends shares acquired from dividend reinvestment during 2017
 
Total shares accumulated in SIP during 2017
 
 
Brian Purves
150

 
95

 
47

 
33

 
175

 
 
Andrew Beaden
150

 
95

 
47

 
30

 
172

 

In May 2017 Alok Maskara was granted share options in respect of his appointment to the role of Chief Executive Officer. These time-based options were outside the terms of reference of the LTiP but granted in accordance with the provisions of the Remuneration Policy. The value of the grants appears in the Single Figure table for 2017. The number, and details of the terms, of the grants are set out in the table in Outstanding Share Awards During 2017 and the accompanying notes, on pages 77 to 78.

(7)  
Andrew Beaden resigned from his position as Group Finance Director and as a director of Luxfer Holdings PLC with effect from October 2, 2017. He received a compensation payment of $338,064 and the proportion of his outstanding awards under the LTiP were allowed to vest, as set out in the tables in Payment to Past Directors and Payment for Loss of Office on pages 79 to 80.
(8)  
For details of pension arrangements see page 79.


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Non-Executive Directors' Remuneration
None of the Non-Executive Directors (including the Chairman) received taxable benefits, annual bonus, long-term incentive awards (exceeding one year) or pension-related benefits during the year.
Single Total Figure Table
 
U.S.$ (1)
 
Year
 
Base Fee (1)
 
Other Fees (Fees in the form of share awards) (2)
 
Total
 
 
Joseph Bonn
2017
 
98,812

 
48,484

 
147,296

 
 
 
2016
 
80,702

 
38,704

 
119,406

 
 
Adam Cohn
2017
 
79,050

 
69,134

 
148,184

 
 
 
2016
 
32,940

 
—

 
32,940

 
 
Brian Kushner
2017
 
79,050

 
39,116

 
118,166

 
 
 
2016
 
46,116

 
37,246

 
83,362

 
 
David Landless
2017
 
79,050

 
39,116

 
118,166

 
 
 
2016
 
79,050

 
38,704

 
117,754

 
 
Clive Snowdon
2017
 
79,050

 
68,006

 
147,056

 
 
 
2016
 
32,940

 
—

 
32,940

 
 
Kevin Flannery
2017
 
32,940

 
1,623

 
34,563

 
 
 
2016
 
79,050

 
38,704

 
117,754

 
Table compiled in accordance with the U.K. 'The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', as amended by 'The Large and Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013'.
(1)  
Kevin Flannery did not offer himself for re-election to the Board at the 2017 AGM and consequently he ceased to be a Director of the Company with effect from May 23, 2017. His base fee in 2017 reflects the period of service as a Non-Executive Director.

The Chairman's fee of Joseph Bonn and the Non-Executive Directors' fees of Adam Cohn, Brian Kushner and Kevin Flannery are all determined in U.S. dollars.

The Non-Executive Directors' fees of David Landless and Clive Snowdon although determined in U.S. dollars, are paid in GBP sterling translated at the exchange rate reported in the Financial Times on the 5th of each month prior to payment. Actual payments received by David Landless and Clive Snowdon for 2017 aggregated to £61,245 (2016: £58,117) and £61,245 (2016: £25,739) respectively.

(2)  
2017 Single figure:
The value of the Other Fees in the Single Figure table is calculated as follows:
•
An element of the fees received by the Chairman and the other Non‑Executive Directors are delivered as time‑based restricted stock units (“RSUs”). The award value is a fixed percentage of their Base Fee (50%) as provided in the Director Equity Incentive Plan (“EIP”) less the issue price per share of £0.50 translated into U.S. dollars at the exchange rate on the grant date of $1.2949:£ (65 cents). Awards were made immediately after the 2017 AGM and vest immediately before the 2018 AGM. The number of RSUs was calculated using the closing share price on the NYSE ($12.52) the day before the award was made. Additional RSUs were awarded to Adam Cohn and Clive Snowdon to reflect the period from the date of their appointment until the date of the grant of the 2017 awards. The number of awards received by each Non‑Executive Director is set out in Awards Granted During the Year - Non‑Executive Directors Under the Director Equity Incentive Plan (EIP) on page 76 .
•
The RSU awards carry with them the right to receive accumulated dividends during the period of the award, in shares. The dividends are not credited until the award vests. The Other Fees amount includes the value of the dividends vested and paid on the 2016 RSU fee awards that vested immediately before the 2017 AGM. The value of the awards themselves were included in the Single Figure for 2016 as they were time‑based awards (see below). The dividend shares were valued at the closing share price on the NYSE on the date of vesting, being $12.50, less the issue price of £0.50 translated at the date of vesting at an exchange rate of $1.3016:£ (65 cents). The number of dividend shares allocated and their value were:

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Non-Executive Director
 
 
Dividend shares allocated
 
Value of dividend less nominal cost of share $
 
 
Joseph Bonn
 
137

 
1,623

 
 
Brian Kushner
 
137

 
1,623

 
 
David Landless
 
137

 
1,623

 
 
Kevin Flannery
 
137

 
1,623

 
LUXFER SHARE INCENTIVE PROGRAMS
Luxfer has a number of share incentive plans designed to align the interests of its Directors, managers and employees, with the interests of its shareholders, and to act as retention tools.
The plan under which awards are granted to the Executive Directors on an on‑going basis is the Luxfer Holdings PLC Long‑Term Umbrella Incentive Plan (“LTiP”). Awards, which are considered part of their fees, are made to the Non‑Executive Directors under the Non‑Executive Directors Equity Incentive Plan (“EIP”). The U.K. Executive Directors also participate in the Company’s All Employee Share Plan (“SIP”) open to all U.K. employees. In the U.S. the Company has established an Employee Share Purchase Plan (“ESPP”) which is open to all U.S. employees and U.S. based Executive Directors.
LTiP: The LTiP was adopted for the I.P.O. in 2012. It is used to grant awards not only to the Executive Directors but also senior and junior managers in the Luxfer Group. A variety of different awards can be granted under the LTiP. To date, it has been used to grant time‑based nominal cost options to U.K. employees including the Executive Directors, performance‑based nominal cost options and market value options to the Executive Directors and other senior U.K. employees and time‑based and performance restricted stock units to U.S. managers and managers from other countries in which the Luxfer Group operate. The maximum value of awards under the rules of the LTiP that can be granted to the Chief Executive Officer and Other Executive Directors are defined in the Remuneration Policy.
ESOP 2007: In 2007, prior to the 2012 I.P.O. and as part of the re‑organization the Company underwent in that year, it implemented The Luxfer Holdings Executive Share Options Plan (“ESOP 2007”). All the options made available under the 2007 Plan have been exercised. The Trustees have agreed to make available for use under the various LTiP grants the remaining shares held in the employee benefit trust (“EBT”). Further details on the EBT and the 2007 Plan can be found in Note 31 to the Consolidated Financial Statements .
I.P.O. Options: As part of the I.P.O. in October 2012, stand‑alone option grants were made over shares to the Executive Directors, Non‑Executive Directors and certain other key executives seen as critical to the Company’s future success on completion of the I.P.O. All these options have fully vested and are exercisable up to October 2019, being seven years from the date of grant. No dividend shares are allocated on these awards, either before or after vesting, whilst unexercised. Both Brian Purves and Andrew Beaden have I.P.O. options. The exercise price is the I.P.O. price of $10 per share.
EIP: Annual awards are made under the EIP to Non‑Executive Directors as part of their fees. The value of the award is 50% of the base fee of a Non‑Executive Director. These awards are made the day after the annual general meeting (“AGM”) of the Company in each year and vest the day before the following AGM. Annual awards are usually made as restricted stock units. They are paid out immediately on vesting, together with dividends which have been accumulated during the vesting period. New Non‑Executive Directors cannot participate in the annual awards until they have served six months, however, the awards they would have earned from the date of appointment are added to the next annual award provided they are re-elected at the AGM.
Copies of the LTiP, ESOP 2007, I.P.O. Options and EIP plans mentioned above are filed on the Company’s file at the SEC.







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AWARDS GRANTED DURING THE YEAR
Executive Directors' Awards Under the LTiP
The Remuneration Committee set a scorecard of goals for 2016 to assess performance consisting of net cash flow, accretive EBITDA generated by acquisitions in the year and fully diluted EPS, which if attained at the end of 2016, would have led to the granting of nominal cost options to both Brian Purves and Andrew Beaden in 2017. None of the threshold targets for any of the goals were achieved for 2016 so no awards were earned and granted.
The Remuneration Committee set Executive Directors performance targets for 2017 based solely upon the achievement of adjusted diluted EPS to be measured at threshold, target and stretch levels. The reported EPS for 2017 resulted in the target level being achieved which will result in Alok Maskara earning 100% of the available awards. Brian Purves and Andrew Beaden will also be eligible to receive awards under the LTiP for the attainment of the EPS metric at target, earning 66.6% of the total awards available. These awards will be made pro rata to the length of time served as an Executive Director during 2017. Estimates of the value of the grants to be made based on 2017 performance are included in the Single Figure table for 2017.
The Committee believe they set challenging targets to motivate the executives and align the interests of the executives with those of shareholders. Achievement of stretch targets would require exceptional performance.
Non-Executive Directors under the Director EIP
 
Chairman or Non-Executive Director
 
Date of Grant
 
Basis of Aggregate Awards Granted
 
Share Price at Date of Grant $
 
Type of Award
 
No. of Shares Granted
 
Face Value of Award $
 
(1) Issue Price per share & in Aggregate $
 
Vesting Date
 
% of Face Value That Vest
 
 
Joseph Bonn
 
May 24, 2017
 
50% of annual fee for 2017
 
12.52
 
Restricted Stock Unit
 
3,947
 
49,416
 
$0.65 each share
 
Day before 2018 AGM
 
On vesting date 100%
 
 
Adam Cohn
 
May 24, 2017
 
50% of annual fee for 2017 & from date of appointment in 2016
 
12.52
 
Restricted Stock Unit
 
5,823
 
72,904
 
$0.65 each share
 
Day before 2018 AGM
 
On vesting date 100%
 
 
Brian Kushner
 
May 24, 2017
 
50% of annual fee for 2017
 
12.52
 
Restricted Stock Unit
 
3,158
 
39,538
 
$0.65 each share
 
Day before 2018 AGM
 
On vesting date 100%
 
 
David Landless
 
May 24, 2017
 
50% of annual fee for 2017
 
12.52
 
Restricted Stock Unit
 
3,158
 
39,538
 
$0.65 each share
 
Day before 2018 AGM
 
On vesting date 100%
 
 
Clive Snowdon
 
May 24, 2017
 
50% of annual fee for 2017 & from date of appointment in 2016
 
12.52
 
Restricted Stock Unit
 
5,728
 
71,715
 
$0.65 each share
 
Day before 2018 AGM
 
On vesting date 100%
 

(1) The issue price of £0.50 each share has been translated at the U.S. dollar Financial Times exchange rate for 25 May 2017, the date of grant, of $1.2949:£.


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OUTSTANDING SHARE AWARDS DURING 2017
Executive and Non-Executive Directors
Awards will be granted in 2018 in respect of 2017 performance. No awards were made in 2017 in respect of 2016 performance.
 
Awards
 
Options
 
 
Awards
 
Available
Jan 1,
2017
 
Granted
During
Year
 
(Lapsed) /
(Exercised)
During
Year
 
Available
Dec 31,
2017
 
Vested
Awards
Jan 1,
2017
 
Vested
Awards
During
Year
 
(Lapsed) /
(Exercised)
During
Year
 
Vested
Awards
Dec 31,
2017
 
Available
Unvested
Awards
 
 
Brian Purves
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
IPO Options (1)
179,200

 
—

 
—

 
179,200

 
179,200

 
—

 
—

 
179,200

 
—

 
 
M.V. (2)
22,100

 
—

 
(22,100
)
 
—

 
22,100

 
—

 
(22,100
)
 
—

 
—

 
 
LTiP 2016 (4)
13,500

 
—

 
—

 
13,500

 
—

 
13,500

 
—

 
13,500

 
—

 
 
Totals
214,800

 
—

 
(22,100
)
 
192,700

 
201,300

 
13,500

 
(22,100
)
 
192,700

 
—

 
 
Andrew Beaden
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
IPO Options (1)
69,000

 
—

 
—

 
69,000

 
69,000

 
—

 
—

 
69,000

 
—

 
 
M.V. (2)
9,100

 
—

 
(9,100
)
 
—

 
9,100

 
—

 
(9,100
)
 
—

 
—

 
 
LTiP 2013 (3)
2,166

 
—

 
(2,166
)
 
—

 
2,166

 
—

 
(2,166
)
 
—

 
—

 
 
LTiP 2016 (4)
5,640

 
—

 
(5,640
)
 
—

 
—

 
5,640

 
(5,640
)
 
—

 
—

 
 
Totals
85,906

 
—

 
(16,906
)
 
69,000

 
80,266

 
5,640

 
(16,906
)
 
69,000

 
—

 
 
Alok Maskara
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
Upon Appointment (7)
—

 
45,000

 
—

 
45,000

 
—

 
—

 
—

 
—

 
45,000

 
 
Upon Appointment (8)
—

 
60,000

 
—

 
60,000

 
—

 
—

 
—

 
—

 
60,000

 
 
Upon Appointment (9)
—

 
120,000

 
—

 
120,000

 
—

 
—

 
—

 
—

 
120,000

 
 
Totals
—

 
225,000

 
—

 
225,000

 
—

 
—

 
—

 
—

 
225,000

 
 
Joseph Bonn
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
IPO Options (1)
20,000

 
—

 
—

 
20,000

 
20,000

 
—

 
—

 
20,000

 
—

 
 
EIP 2016 (5)
3,130

 
—

 
(3,130
)
 
—

 
—

 
3,130

 
(3,130
)
 
—

 
—

 
 
EIP 2017 (6)
—

 
3,947

 
—

 
3,947

 
—

 
—

 
—

 
—

 
3,947

 
 
Totals
23,130

 
3,947

 
(3,130
)
 
23,947

 
20,000

 
3,130

 
(3,130
)
 
20,000

 
3,947

 
 
Adam Cohn
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
EIP 2017 (6)
—

 
5,823

 
—

 
5,823

 
—

 
—

 
—

 
—

 
5,823

 
 
Totals
—

 
5,823

 
—

 
5,823

 
—

 
—

 
—

 
—

 
5,823

 
 
Brian Kushner
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
EIP 2016 (5)
3,130

 
—

 
(3,130
)
 
—

 
—

 
3,130

 
(3,130
)
 
—

 
—

 
 
EIP 2017 (6)
—

 
3,158

 
—

 
3,158

 
—

 
—

 
—

 
—

 
3,158

 
 
Totals
3,130

 
3,158

 
(3,130
)
 
3,158

 
—

 
3,130

 
(3,130
)
 
—

 
3,158

 
 
David Landless
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
EIP 2016 (5)
3,130

 
—

 
(3,130
)
 
—

 
—

 
3,130

 
(3,130
)
 
—

 
—

 
 
EIP 2017 (6)
—

 
3,158

 
—

 
3,158

 
—

 
—

 
—

 
—

 
3,158

 
 
Totals
3,130

 
3,158

 
(3,130
)
 
3,158

 
—

 
3,130

 
(3,130
)
 
—

 
3,158

 
 
Clive Snowdon
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
EIP 2017 (6)
—

 
5,728

 
—

 
5,728

 
—

 
—

 
—

 
—

 
5,728

 
 
Totals
—

 
5,728

 
—

 
5,728

 
—

 
—

 
—

 
—

 
5,728

 


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Key to table:
 
Award
 
Award Scheme, Type & Grant
 
Grant Date
 
Exercise Price / Nominal Cost Each Award
 
Remaining Vesting/ Settlement Dates
 
Exercise
Period
 
 
(1)
 
I.P.O. Options
 
Oct 2, '12
 
$10.00
 
All vested
 
To October 2019
 
 
(2)
 
Market Value
 
Jan 31, '13
 
$12.91
 
All vested
 
To Jan 30, 2018
 
 
(3)
 
LTiP 2013—Performance-based—EPS and TSR targets  (ii)
 
Jan 31, '13
 
£0.50 (i)
 
All lapsed
 
No longer applicable
 
 
(4)
 
LTiP 2016 Options—Time-based (iv)
 
Mar 21, '16
 
£0.50 (i)
 
Mar 21, 2017, 2018, 2019
 
To Mar 21, 2021
 
 
(5)
 
EIP 2016—Restricted Stock Units (iii)
 
May 25, '16
 
£0.50 (i)
 
Day before 2017 AGM
 
—
 
 
(6)
 
EIP 2017—Restricted Stock Units (iii)
 
May 24, '17
 
£0.50 (i)
 
Day before 2018 AGM
 
—
 
 
(7)
 
Upon appointment - Time-based Restricted Stock Units (v)
 
Aug 23, '17
 
£0.50 (i)
 
Jun 13, 2018, 2019, 2020
 
To Aug 12, 2020
 
 
(8)
 
Upon appointment - Time-based Restricted Stock Units (vi)
 
Aug 23, '17
 
£0.50 (i)
 
May 23, 2018, 2019, 2020, 2021
 
To Jul 22, 2021
 
 
(9)
 
Upon appointment - Performance-based - EPS Targets Restricted Stock Units (vii)
 
Aug 23, '17
 
£0.50 (i)
 
Achievement of EPS targets
 
To Mar 1, 2021, 2023, 2025
 


(i)  
Where the exercise price / nominal cost is indicated in GBP sterling, in so far as it is required to be translated into U.S. dollars for the purpose of the exercise / settlement, it is translated at the $:£ exchange rate reported in the Financial Times for the date of exercise / settlement.
(ii)  
LTiP 2013: One sixth of the total awards were granted based upon the achievement of the TSR goal in 2013. All options which vested due to the achievement of this goal have now been fully exercised. The remaining targets were not achieved and therefore all other options under this award have lapsed.
(iii)  
EIP 2016 and EIP 2017 annual awards are settled immediately on vesting, together with dividends which have been accumulated during the vesting period. The 2016 awards were settled in 2017 net of payroll taxes.
(iv)  
LTiP 2016: Awards made on attainment of 2015 performance goals and include “holding period” and “claw back” provisions. Time-based option awards accumulate dividend shares until vesting only; shares are then added to the award when the option is exercised. In respect of both Brian Purves and Andrew Beaden, who stepped down from their roles as Chief Executive Officer and Group Finance Director respectively during the year, the Remuneration Committee agreed to the acceleration of the unvested element of their awards, which allowed them to be made fully available following their departure.
(v)  
Upon Appointment - The Remuneration Committee determined that the new Chief Executive Officer should acquire a minimum quantity of 22,500 shares within twelve months of appointment. Upon the Chief Executive Officer acquiring the shares, the Company matched the purchase by granting an award over 45,000 nominal cost RSUs, to vest over three years.
(vi)  
Upon Appointment - The Remuneration Committee determined to make a one-off share award to the new CEO, outside the terms of the LTiP, over 60,000 time-based nominal cost RSUs, to vest over four years.
(vii)  
Upon Appointment - Performance-based Awards made to the new Chief Executive Officer vest upon achievement of attaining a specified adjusted diluted EPS target at each annual measurement date. Three levels of targets have been set:
•
The lower target must be achieved by the measurement date at the end of 2020 and will result in the vesting of 30,000 shares.
•
The mid-point target must be achieved by the measurement date at the end of 2022 and will result in the vesting of a further 40,000 shares.
•
The top target must be achieved by the measurement date at the end of 2024 and will result in the vesting of a further 50,000 shares.
If the targets are not achieved by the appropriate measurement date, the associated awards will lapse. For the Restricted Stock Units to vest following the achievement of the target, the Return on Capital Employed of the Company must equal or exceed 10% after tax in the calendar year for which the EPS achievement is measured. Any award grants are subject to “holding period” and “claw back” provisions. The Board has concluded that the targets set are commercially sensitive and should not be disclosed.
Kevin Flannery held options over 3,130 shares which were granted as part of the 2016 EIP awards. These vested the day before the 2017 AGM and were subsequently exercised and settled in 2017, net of payroll taxes. As he did not seek re-election as a Director at the AGM in 2017 no further awards have been made. At the end of 2017, Kevin also held 20,000 IPO $10.00 options.

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PENSION ARRANGEMENTS
Prior to April 5, 2016, the pensions for the Executive Directors were provided partly by the defined benefit and partly by registered defined contribution arrangements and an allocation to an unfunded unapproved retirement benefit plan (“UURBS”) accrued by the Company.
Benefits provided by the Luxfer Group Pension Plan (“the Plan”) ceased to accrue on  April 5, 2016, following the agreement, reached during 2015, to close the Plan to future accrual from this date. Following the closure of the Plan, the Company also decided members would cease to accrue further benefits in the UURBS. In lieu of contributions into these plans, the Company offers a salary supplement. Reflecting the cost of previous defined benefit arrangements, now withdrawn, Executive Directors are paid the equivalent of 25% of base salary, with additional funding into the U.S. funded defined contribution scheme for Alok Maskara.
Details of the payments made to the defined contribution arrangement and salary supplement during years 2017 and 2016, and the accrued pension entitlements for the Executive Directors under the defined benefit arrangement for 2016, are set forth in the tables below.
Directors' Remuneration and Benefits for the Year Ended December 31, 2017 and 2016
 
 
 
2017
 
 
Executive Directors
 
Defined
Benefit
 
Funded Defined
Contribution (1)
 
Unfunded Defined Contribution
 
Cash
Supplement
 
Total
 
 
Brian Purves
$
—

 
$
—

 
$
—

 
$
80,042

 
$
80,042

 
 
Andrew Beaden
$
—

 
$
9,658

 
$
—

 
$
40,831

 
$
50,489

 
 
Alok Maskara
 
$
—

 
$
16,200

 
$
—

 
$
75,257

 
$
91,457

 
 
 
 
2016
 
 
Executive Directors
 
Defined
Benefit
 
Funded Defined
Contribution (1)
 
Unfunded Defined
Contribution
 
Cash
Supplement
 
Total
 
 
Brian Purves
$
—

 
$
—

 
$
37,233

 
$
100,276

 
$
137,509

 
 
Andrew Beaden
$
6,536

 
$
17,702

 
$
3,809

 
$
42,627

 
$
70,674

 

Exchange rate used above: $1.2877:£ for the first nine months of 2017 and $1.3444:£ for the full year 2016.
(1)  
During 2017, the Funded Defined Contribution for Andrew Beaden was made through a salary sacrifice arrangement. The Funded Defined Contribution for Alok Maskara relates to amounts paid in respect of a 401K matching program.

Payment to Past Directors and Payment for Loss of Office
Group Finance Director, Andrew Beaden, resigned from the Board of Luxfer Holdings PLC on October 2, 2017. He was awarded a partial bonus for the period of his employment during 2017 and share awards will be granted in March 2018 based on the achievement of EPS during 2017, which are set out in the Single Total Figure Table on page 71, as well as compensation for the loss of office representing his salary and benefits for an eleven month period (as set forth in his service contact) and the early vesting of his outstanding long-term incentive awards under the LTiP, as agreed by the Remuneration Committee.
Andrew Beaden's Compensation Payment
 
Eleven months
 
 
 
 
Salary
 
$
255,167

 
 
Holidays accrued but not taken
 
$
3,205

 
 
Other benefits
 
$
79,692

 
 
Total paid in cash
 
$
338,064

 

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Early Vesting of LTiP Awards
 
Awards
 
% of Shares Vested and Exercised
 
% Balance of Award Accelerated
 
Number of Options Accelerated
 
Value of shares vested $ (2)
 
 
LTiP 2016 (1)
 
33.3

 
66.7
%
 
3,760 award shares plus 239 dividend shares
 
55,790

 
(1)  
All of the shares vested were exercised before the end of 2017. The value ascribed is calculated using the share price at the time of exercise, less the option cost. For further detail on the share awards, please see the table Outstanding Share Awards During 2017 on page 77.
(2)  
The value of the full award, calculated with reference to the share price at the time of grant, is disclosed in Single figure table under Long-Term Incentive Awards for 2016.
No payments to past Directors or payment for loss of office were made during 2016.
Directors' Interests in Shares in the Company
 
 
 
Number of Ordinary Shares
Held at Dec 31, 2017
 
Number of Ordinary Shares
Held at Jan 1, 2017
 
 
Joseph Bonn (1)
 
7,800

 
5,783

 
 
Adam Cohn (2)
 
—

 
—

 
 
Brian Kushner (3)
 
1,823

 
—

 
 
David Landless (4)
 
7,633

 
5,581

 
 
Alok Maskara (5)
 
25,712

 
—

 
 
Clive Snowdon ()
 
2,000

 
2,000

 
(1)  
The additional 2,017 shares acquired by Joseph Bonn during the year were as the result of his 2016 “Other Fees” award of 3,130 shares vesting prior to the 2017 AGM together with accrued dividend of 137 shares. He also purchased a further 213 shares on market. The shares delivered are net of those sold to pay the option costs and tax due on the value of the awards. Further details on these awards can be found in the Notes to Single Figure-Non‑Executive Directors’ Remuneration on pages 74 to 75.
(2)  
The additional 1,823 shares acquired by Brian Kushner during the year were as the result of his 2016 “Other Fees” award of 3,130 shares vesting prior to the 2017 AGM together with accrued dividend of 137 shares. The shares delivered are net of those sold to pay the option costs and tax due on the value of the awards. Further details on these awards can be found in the notes to Single Figure-Non‑Executive Directors’ Remuneration on pages 74 to 75.
(3)  
The additional 2,052 shares acquired by David Landless during the year were as the result of his 2016 “Other Fees” awards of 3,130 shares vesting prior to the 2017 AGM together with accrued dividend of 137 shares. The shares delivered are net of those sold to pay the option costs and tax due on the value of the awards. Additional shares were also acquired in the year through the operation of a Dividend Reinvestment Plan (DRIP) which allows the reinvestment of cash dividends to purchase additional shares. Further details of his awards can be found in Notes to Single Figure-Non‑Executive Directors’ Remuneration on pages 74 to 75.
(4)  
The shares held by Alok Maskara were all purchased on market in the period following his appointment as an Executive Director.
(5)  
The shares identified as held by Clive Snowdon are held by a connected person.

Executive Director Shareholding Requirements Upon Appointment
Upon appointment, an Executive Director is required to hold and maintain ordinary shares equal in value to 150% of base salary. The Director is allowed a period of three years from date of appointment to acquire the holding. Executive Directors are required to obtain the Chairman’s permission before they or their connected persons can deal in the Company’s shares providing an effective way of ensuring their shareholding requirements are maintained.



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Total Directors' Shareholdings and Interests at 31 December 2017
 
 
 
Shares Owned
Beneficially
 
Options Vested but not Exercised (1)
 
Restricted Stock Units Not Yet Vested (assuming will be settled in Shares not Cash) (1)
 
 
Alok Maskara
 
25,712

 
—

 
225,000

 
 
Non-Executive
 
 

 
 

 
 

 
 
Joseph Bonn
 
7,800

 
20,000

 
3,947

 
 
Adam Cohn
 
—

 
—

 
5,823

 
 
Brian Kushner
 
1,823

 
—

 
3,158

 
 
David Landless
 
7,633

 
—

 
3,158

 
 
Clive Snowdon
 
2,000

 
—

 
5,728

 

(1)  
A breakdown of the vested and unvested awards and brief details of the plans under which the awards were made can be found in Outstanding Share Awards During 2017 table on page 77 of this report.
Performance Graph (unaudited)
U.K. legislation requires the Annual Remuneration Report to contain a line graph that shows the total shareholder return (TSR) over a ten year period for both a holding of the Company’s listed shares and a hypothetical comparator holding of shares representing a specified broad equity market index. As the Company was only listed on the NYSE at the beginning of October 2012, we are only able to provide TSR for the Company’s shares in a listed environment for a period 3 October 2012 to 31 December 2017. We have used the S&P SmallCap 600 (Industrial) index as the most appropriate to where we are placed as a small cap company in the U.S. and the industrials sub‑sector includes most of our comparable companies. The graph shows the value of $100 vested in Luxfer in October 2012 at the I.P.O., compared to $100 invested in the S&P SmallCap 600 (Industrial) on the same date. The S&P SmallCap 600 (Industrial) was chosen as the index as it comprises companies that most closely resemble Luxfer. The TSR is calculated in U.S. dollars.
CHART-6720A2BD1204AD73856.JPG


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History of Total Remuneration Figure for Chief Executive Officer
We have included the total remuneration figure for the Chief Executive Officer for a seven year period as required by legislation despite the TSR graph only reflecting the TSR from the date of the I.P.O.
 
U.S.$
 
2011
 
2012
 
2013
 
2014
 
2015
 
2016
 
2017 (1)
 
 
Year ended December 31
 
 
 
 
 
 
 
 
 
Total remuneration
998,638

 
1,050,878

 
985,076

 
853,320

 
1,021,357

 
836,317

 
3,396,615

 
 
Annual bonus % (2)
100
%
 
71
%
 
—
%
 
—
%
 
39
%
 
—
%
 
124
%
 
 
Share awards vesting % (2)
N/A

 
100
%
 
59
%
 
59
%
 
21
%
 
—
%
 
37
%
 
(1)  
The 2017 figures include Brian Purves' remuneration for the first six months of 2017 and Alok Maskara's remuneration for the second six months of 2017.
(2)  
Percentage of salary.
Relative Importance of Spend on Pay
The following chart sets out the Group's actual spend on pay (for all employees) relative to dividends paid in the current and prior year.

CHART-EE7413E4D05F72E4731.JPG
(To assist with conformity and transparency we have used staff costs as set out in Note 6 to the Consolidated Financial Statements.)
Percentage Change in Chief Executive Officer's Remuneration
For 2017, we have selected U.S. employees as the most appropriate comparator as the Chief Executive Officer is based in the U.S. and the benefits structure is similar. The comparative information for 2016 is based on U.K. employees as during 2016 the Chief Executive Officer was based in the U.K. The 2016 amounts were adjusted for the impact of translation and have been calculated using the 2017 average exchange rate of $1.3018:£.
 
U.S.$
 
2017
 
2016
 
% change
 
 
Salary
 

 
 

 
 

 
 
Chief Executive Officer
557,744

 
534,802

 
4.3
 %
 
 
Employee average
65,953

 
42,535

 
55.1
 %
 
 
Benefits
 

 
 

 
 

 
 
Chief Executive Officer
44,980

 
27,635

 
62.8
 %
 
 
Employee average
635

 
639

 
(0.6
)%
 
 
Annual Bonus
 

 
 

 
 

 
 
Chief Executive Officer
690,316

 
—

 
n/a

 
 
Employee average
3,742

 
1,176

 
218.2
 %
 

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Table of Contents

Statement of voting at AGM
The Annual Remuneration Implementation Report and an updated Remuneration Policy was put to an advisory vote at the 2017 AGM.
 
 
 
Votes for (and
percentage of
votes cast)
 
Votes against (and
percentage of
votes cast)
 
Proportion of
share capital
voting
 
Shares on which votes were withheld
 
 
Annual Remuneration Implementation Report
 
16,654,955

 
2,609,852

 
72.50
%
 
5,231

 
 
 
 
86.45
%
 
13.55
%
 
 

 
 

 
 
Adoption of Revised Remuneraion Policy
 
16,703,150

 
2,556,852

 
72.50
%
 
10,036

 
 
 
 
86.72
%
 
13.28
%
 
 
 
 
 
The vote received in favor of the Remuneration Report was 86.45%, and the larger shareholders with whom the Directors liaise with from time to time did not make any negative comments in those conversations concerning Directors’ pay and incentives. As referred to in the Chairman's letter at the beginning of the Remuneration Report, an updated Remuneration Policy will be presented at the 2018 AGM for shareholder approval.

Remuneration Policy Report

The Remuneration Committee presents the proposed Executive Directors’ Remuneration Policy Report for 2018. This policy will take effect immediately, following approval at the 2018 annual general meeting and will apply until a further policy is approved by an ordinary resolution of the shareholders. The Committee believes that this Policy continues in being competitive for current and successor Executive Directors.
The Committee has determined that to maintain top performance levels in the Company they should be targeting at least median level remuneration packages for the Chief Executive Officer, other Executive Directors and Senior Management. However, the Committee recognizes that this will be achieved by adjusting remuneration packages over a number of years. The Committee has agreed that a competitive benchmarking study will be commissioned every three years in order to maintain independent guidance on the overall remuneration of the Chief Executive Officer, other Executive Directors and Senior Management.
Under the Remuneration Policy, the Committee has discretion in a number of areas as set out in the relevant section of the policy. In addition, certain operational and administrative discretions may be exercised under relevant standalone deeds of grant or plan rules, including LTiP and EIP implemented for the I.P.O., the rules of which we have previously filed with the SEC.
Proposed policy changes
The 2018 policy that is being presented to shareholders for approval has been drafted to take into account the latest findings from a recent competitive benchmarking study over the existing policy. The key changes from the 2017 policy, which are described in the chairman’s letter, can be summarized as follows:
•
The maximum annual cash bonus opportunity for the Chief Executive Officer is increased from 150% to 200% of base salary. Included within this, the Additional Percentage Bonus (APB) set at a maximum of 50% of base salary under the existing remuneration policy, attributable to the achievement of specific additional non-financial targets, will now be set at the start of each year at the discretion of the Remuneration Committee.
•
The maximum annual cash bonus opportunity for other Executive Directors remains unchanged at 120% of base salary. Included within this, the APB set at a maximum of 40% of base salary under the existing remuneration policy, attributable to the achievement of specific additional non-financial targets, will now be set at the start of each year at the discretion of the Remuneration Committee.
•
The maximum value of share incentive awards under the Company’s Long-term incentive plan (‘LTiP’) available for the achievement of certain financial targets for the Chief Executive Officer is increased from 150% to 220% of base salary and for the other Executive Directors increased from 120% to 150% of base salary.
•
The Non-Executive Directors, at their discretion, may choose to forgo annual or periodic increases to cash fee, in lieu of an equivalent value of share awards. Awards will continue to be made annually immediately after the annual general meeting, however, as a result, the maximum value of these awards will be

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increased from 50% up to 55% of the Non-Executive Directors existing annual fee. Pending shareholder approval, for 2018, all Non-Executive Directors have elected to receive additional share awards in the Company and forgo the annual increase to their base fee.
The above proposed changes to policy will be effective immediately following the 2018 annual general meeting. The impact of these changes to the remuneration of the Executive Directors is demonstrated in the illustrative remuneration chart on page 89.
The tables below sets out the main components of the remuneration packages for the Chief Executive Officer and other Executive Directors.
CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVE DIRECTORS Fixed Remuneration
Base salary
Purpose and Link to Strategy :
To attract, retain and incentivize high caliber individuals who can deliver the company’s strategy and reward performance.
To be competitive.
Operation:
Reviewed annually and normally fixed for 12 months from 1 January in each year. Paid in 12 equal monthly installments.
Reviews take account of a variety of different factors including:
- The rise in the cost of living, market rates, responsibility of the position, experience and contribution of the individual, the scale of the Group’s operations, group performance and affordability, remuneration levels and increases in the rest of the Group;
- The Executive pay packages of comparable companies; Pay and practices in both the US and the UK.
Maximum Opportunity:
No prescribed maximum to avoid setting expectations.
The Committee retain discretion to re-adjust salaries as part of the overall package to, at or about median of the external comparator group deemed appropriate by them to maximize the Group’s objective of top quartile performance. Where it is satisfied that salaries are at or about the median of the external comparator group, annual increases will normally be limited to the increases granted to the wider workforce, but may be higher in certain circumstances such as a change in the role or an increase in the responsibilities of the role where it will increase salaries in its discretion.
Benefits in kind
Purpose and Link to Strategy :
To aid recruitment and retention of high caliber individuals and to remain competitive in the market.
Operation:
Benefits received by directors will generally include car allowance or mileage reimbursement, medical and dental insurance. Additional benefits may be provided where required by legislation or to align the remuneration package with market practice where these are not significant in value.
The company may introduce new benefits that are or become prevalent in the jurisdiction in which it operates or in which the director is based.
Where an individual director is relocated benefits such as relocation expenses, travel expenses, accommodation, tax equalization; professional advice, and post-retirement medical expenses may be provided.
Benefits are reviewed annually.
Maximum Opportunity:
No maximum value is set but the Committee periodically monitors the overall cost of the benefits to ensure they are affordable, competitive and in line with market practice in the UK and the US.
Performance Metric:  

None
Provisions for Recovery or Withholding of Payment:

None
Pension or 401K Contributions
Purpose and Link to Strategy :
To provide funding for retirement and aid recruitment and retention of high caliber individuals.
Operation:
Following the closure of the defined benefits scheme to future accrual in April 2016, all Directors will have benefits provided by the registered defined contribution scheme.
For those directors whose pension planning is restricted by one or more tax allowance, an equivalent allocation or payment may be made to an unregistered alternative savings vehicle, or as a salary supplement in lieu of pension contributions.
Arrangements are reviewed annually to ensure consistency with market practice and take account of the effect of regulatory change on an individual’s benefits.
For directors based in other jurisdictions they will be offered arrangements appropriate to that jurisdiction.
Maximum Opportunity:
Under the Defined contribution arrangements  the Company makes an annual contribution into a personal pension plan, 401K plan or salary supplement in lieu of pension or 401K contributions up to a maximum of 25% of basic salary.

Performance Metric:  

None
Provisions for Recovery or Withholding of Payment:

None













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CHIEF EXECUTIVE OFFICER AND OTHER EXECUTIVE DIRECTORS Variable Remuneration
Annual bonus
Purpose and Link to Strategy :
To retain, motivate, incentivize high caliber individuals and promote the achievement of key financial and strategic goals and targets of the Company in the financial year to which it relates.
Operation:
Cash bonus for performance over the previous financial year.
Targets are set at the beginning of the financial year and normally based on achievement of a mix of financial targets (typically profit before tax and net cash flow) measured against the approved annual budget for the bonus year and usually awarded for achieving on a sliding scale between Threshold, Target, and Stretch. The Committee has retained the flexibility to determine one or more elements may be earned for attaining target and stretch or a single target.
The Remuneration Committee has flexibility to use non-financial and personal targets if deemed appropriate in addition to financial targets.
In addition the Committee has reserved discretion to offer an Additional Percentage Bonus (APB) on achievement of specific additional targets set by them at their discretion aligned with the strategic goals of the Company for that year.
The bonus for achieving threshold is at the discretion of the Committee but will normally be one quarter of the potential.
Maximum Opportunity:
Maximum bonus is capped (including APB) at:
- 200% of salary for the Chief Executive;
- 120% of salary for Other Executive Directors.

The APB discretionary award offered will be set at the start of each year at the discretion of the Remuneration Committee.
Performance Metric:  
Weighting of measures and between measures for achieving financial and non-financial targets are adjusted annually and are discretionary being driven by the Company’s strategy, financial goals and requirement to maintain and improve operating efficiencies.
The APB performance metric is discretionary based on the associated strategic objective for which the APB is offered.
Provisions for Recovery or Withholding of Payment:

None. If the Director qualifies as a “good leaver” during the year to which the bonus relates, it is payable retrospectively pro-rata to the time in service during the calendar year.
Long-term incentive plan (‘LTiP’)
Purpose and Link to Strategy :
Attract and retain high quality senior employees in an environment where compensation levels are based on a global market.
Align rewards for employees with returns to shareholders through personal financial investment.
Reward achievement of business targets and key strategic objectives.
Operation:
The type and level of award made and the criteria for vesting are considered annually to ensure they continue to support shareholder alignment and group strategy.
The LTiP provides the Remuneration Committee the discretion to grant time-based, market value or performance-based awards in the form of Options, Stock Appreciation Rights (SARs) Restricted Stock, Restricted Stock Units (RSUs) and Other stock based awards or a combination of such awards. The discretion over what type or combination of types of award to be made will be exercised by the Remuneration Committee based on what they consider to be the market norms in the UK and US and the particular circumstance in which the award is made.
Awards are made and are satisfied through the use of existing treasury shares or through the issue of new shares. Participants are required to pay at a minimum the nominal cost of the regular share.
The Committee has the discretion (which will be used as deemed appropriate to a good leaver in a particular circumstance, such as retirement of long serving employees or leaving due to sickness or disability) to:
- Accelerate vesting and exercise dates;
- Waive conditions to vesting or exercise or transferability;
- Extend exercise periods after termination of employment.

RSU’s can be settled in cash or shares or a combination of both at the discretion of the Committee. This discretion will be exercised based on what is in the best interests of the Company.
Awards may accrue dividends either under the rules of the Plan or at the discretion of the Committee, payable in cash or shares. Options and RSUs that vest accrue a dividend until vesting payable in cash or shares as determined at the discretion of the Committee.
Maximum Opportunity:
The LTiP maximum awards in any calendar year may not exceed:
- Chief Executive 220% of base salary;
- Other Executive Directors 150% of base salary.

The maximum amount of dividend paid will be the dividends paid on the regular share over which the awards are granted between grant and vesting.
Performance Metric:  
Under the LTiP the Committee has the discretion to use a range of performance targets. Performance targets for performance awards will be those deemed appropriate by the Committee to support the long term strategy of the group set at the time of grant and in the best interests of the Company. For recent performance awards the Committee has used profit, cash flow, EPS and TSR in various combinations of each.
Provisions for Recovery or Withholding of Payment
If, during the preparation of the current year’s accounts, a material misstatement of the previous year’s accounts is discovered, a clawback of the awards granted in respect of the misstated element of the previous year’s accounts shall apply.   Leavers are treated as set out in the section of this report titled Policy on Payment for Loss of Office.
All employee share incentive plans
Purpose and Link to Strategy :
To encourage share ownership by all employees in the group and increase alignment with shareholders.
Operation:
The UK all employee share incentive plan is an HMRC approved plan, subject to prescribed limits, to provide all eligible employees (including executive directors) with a tax-efficient way of purchasing regular shares out of monthly savings over a 6 monthly accumulation period. The Company currently provides 1 matching share free for every 2 share purchased.
A tax-efficient share purchase program is offered to our US colleagues, and additional share incentive schemes may be offered where practical on a cost-efficient basis.
Maximum Opportunity:
Participants in the UK plan, including the executive directors, can invest up to £150 per month (£1,800 p.a.) or 10% of salary, if lower, in any tax year to purchase regular stock shares. Regular shares are purchased using the participants’ contributions at the end of each accumulation period at the lower of the price at the start of the accumulation period and the price immediately before purchase. The maximum number of shares matched is 1:1, but the matching is currently 1:2. Dividends on both purchased shares and matching shares are used to purchase additional shares.
The plan or plans implemented for other jurisdictions in which the Group operates may have maximum opportunity commensurate with the UK plan or their legislation if deemed appropriate by the Committee.

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Performance Metric:  

None
Provisions for Recovery or Withholding of Payment:
Under the UK plan, matching shares are forfeited if not held for 3 years except if the participant leaves employment as a good leaver through redundancy, retirement, disability, or TUPE transfer.


Non-Executive Directors
Fees
Purpose and Link to Strategy :
Reflects the time commitment required for the role.
To attract and retain executive directors with the skill set and experience required by the Company.
To be in line with UK and US market practice.
Operation:
Fees may be paid in cash, shares or a combination of both cash and shares.

Neither the Board Chairman nor the Non-Executive Directors are paid supplemental fees for any of their committee responsibilities, however, the discretion is reserved to do so if it is deemed appropriate and in line with market practice.
The cash element of the fees is reviewed annually. Reviews take account of a variety of different factors including:
- Inflation, market rates, affordability, remuneration levels and increases in the rest of the Group;
- Pay and practices in both the US and the UK.

Non-Executive Directors may choose to forgo annual or periodic increases to their cash fee, in lieu of an equivalent value of share awards at their individual discretion.
Fees for the Non-Executive Directors and Chairman are denominated in USD.
The share based element of the fees is a non-discretionary grant of share awards in the form of options, restricted stock or restricted stock units.
Awards are made annually immediately after the Annual General Meeting (AGM) and vest the day before the following years AGM.
Maximum Opportunity:
There is no prescribed maximum for the cash element for the fees to avoid setting expectations. Fees are and will be increased in line with the market.
Non-Executive Directors serving for at least six months from appointment receive share based fee awards valued at up to 55% of annual fees at date of award.

Differences between Policy for Directors and Employees
There are differences in the remuneration policy for Executive Directors and the approach to remuneration of other employees which reflect differing levels of responsibility and seniority within the organization and market norms in the jurisdictions in which the employees are employed. The following are differences in the remuneration policy for Executive Directors and the approach to remuneration for other employees generally:
•
The bonus arrangements for the executives, directors and senior, middle and lower management are structured broadly on the same basis to ensure commonality of objectives but at a lower percentage level depending on the seniority of the manager in the group. There is a greater emphasis on performance-related pay for management levels, and lower levels of bonus opportunity or no bonus opportunity may apply to other employees in the group, depending on local policies;
•
Benefits are generally offered that meet market norms in the jurisdiction in which employees are employed and take into account the position in which they are employed;
•
Pension arrangements are offered where it is the market norm to offer such arrangements in the jurisdiction in which the employee is employed. Where such arrangements are in place membership is encouraged. Where local regulation permits, higher contributions may be put in place for more senior management if that is the market norm. The main pension plans that the group operates are described in Note 29 of the financial statements;
•
Participation in the LTiP is limited to Executive Directors and a selected number of senior officers and senior managers. At the discretion of the Committee, market value share awards or time-based share awards may be awarded to employees in recognition of outstanding performance or achievement and to encourage share ownership and retention. U.K. employees, if eligible, can participate in the U.K. SIP.
Approach to Recruitment Remuneration
Executive Directors
When setting a remuneration package for new Executive Directors, including internal promotions, the Committee will apply similar principles to those set out in the most recent approved remuneration policy for both short term and long term incentives depending on the experience of the new executive. The table below sets out the maximum variable pay opportunities.


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Maximum Variable Pay Opportunities
Element of Remuneration
Approach
Maximum Opportunity
Base salary
Set in line with policy at a level appropriate to the role and experience of the new executive. This may include, if appropriate, an agreement to increase base salary over a defined period up to a pre-defined level on acquiring experience and having delivered satisfactory performance in the role, in which case the salary increases may exceed inflation or increases given to the general work force in the country in which the executive is based.
In line with existing policy.
Benefits
In line with existing policy.
In line with existing policy.
Pension
In line with existing policy.
In line with existing policy.
Annual Bonus
In line with existing policy. May be pro-rated to reflect the proportion of the year served.
In line with existing policy
Long-term Incentives
In line with existing policy.
In line with existing policy
Upon Appointment
In relation to external appointments, the Committee may consider compensating candidates in cash or shares for remuneration relinquished on leaving their former employment if they consider it to be in the best interests of the Company and the shareholders. In considering such payments, the Committee would take into consideration the amount of remuneration forgone, the nature, vesting dates and performance requirements attached to the remuneration foregone.
If a new Executive Director (either an internal or external appointment) is required to relocate, relocation payments may be offered at the Committee’s discretion if they consider it to be in the best interests of the Company and the shareholders.
In respect of internal promotions, any commitments made to the new executive before his/her promotion will continue to be honored by the Committee even if not consistent with the approved policy outlined above in terms of short term and long term incentives awarded but yet to be earned.
New Executive Directors will be required to hold shares to the value of 150% of their annual basic salary. The Chief Executive Officer will be allowed a period of three years from date of appointment to acquire this holding.
The Committee may award an incoming Executive Director up to 100% of basic salary in time-based options outside of the terms of reference of the LTiP. These options would vest in three equal tranches over the three anniversaries of award.
The Committee may award an incoming Executive Director up to three hundred percent of basic salary in performance-based options outside of the terms of reference of the LTiP. These options may be made available in tranches with different performance targets and over a period of up to seven years to allow for the delivery of strategic objectives. Shares acquired under this element must be retained for a minimum of five years from date of appointment.
Non-Executive Directors
New Non-Executive Directors will be paid fees on the same basis as the existing Non-Executive Directors. They will also participate in the Non-Executive Directors Incentive Plan under which the annual awards are non-discretionary. The form of the award can be in the form of Options, Restricted Stock, or Restricted Stock Units, given at the discretion of the Board and based on the value of each type of award and the number of shares left in the plan. The vesting period is in the discretion of what the relevant committee of the Board believes is in the best interests of the Company.
Service Contracts
Executive Directors
The Company has entered into a service contract with the single current Executive Director that is not for a fixed term. Executive Directors have service contracts that ordinarily are terminable by twelve months’ notice by either the Company or the director, which notice can be given at any time. The Company may terminate an Executive Director’s contract without notice on the occurrence of certain events identified in their contract which would normally consist of conduct justifying summary dismissal, including gross misconduct.

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Executive Directors’ Service Contracts
Director
Date of Current Contract
Notice Period
Remuneration Entitlement
Alok Maskara
May 23, 2017
12 months
Payment in lieu of notice in the event of early termination. This may include base salary benefits and pension payable for the notice period. A bonus may be paid if the period for which pay in lieu of notice is made extends past the year end subject to targets being met.
Executive Directors have the same employment rights as any other employee in the case of redundancy or if the termination of their employment was determined by a relevant tribunal to be unfair under English law.
In the event of a change in control, and their contract is not assumed by the acquiring entity or a materially different position is offered to Executive Directors, on termination of their contract a severance payment based on the group standard severance policy will be payable, but calculated by doubling the highest annual base salary prior to the change of control instead of using the last twelve months’ salary under their normal notice provisions.
The LTiP provisions provide that upon a change in control, all unvested time-based awards will fully vest and become exercisable as applicable and unless determined by the Committee, shall lapse on the first anniversary of the change of control if not exercised as applicable. Under the rules of the LTiP all performance-based awards will vest pro-rata based on the performance results to the date of change and the elapsed portion of the performance period.
Service agreements for new recruits to the Board and internal promotions will be on the same basis as the current Executive Director with no fixed term and will be terminable by either party on twelve months’ notice. Executive Directors may make provision, at the discretion of the Company for pay in lieu of notice for early termination which will include base salary, benefit and pension contributions and may include payment of the annual bonus. They may also make provision for similar change of control provisions as offered to the current Executive Director if the Committee considers it is market practice or in the best interests of the Company.
Non-Executive Directors
The Company has entered into letters of appointment with the Non-Executive Directors and the Chairman that are not for a fixed term.
Non-Executive Directors’ Letters of Appointment
 
Date of Current Letter of Appointment
Notice Period and Entitlement to Fees
Joseph Bonn
February 28, 2007
3 months, except if the director fails to be re-elected at an AGM when the contract terminates immediately without notice or compensation.
David Landless
February 20, 2013
3 months, except if the director fails to be re-elected at an AGM when the contract terminates immediately without notice or compensation.
Brian Kushner
May 24, 2016
3 months, except if the director fails to be re-elected at an AGM when the contract terminates immediately without notice or compensation.
Adam Cohn
July 18, 2016
3 months, except if the director fails to be re-elected at an AGM when the contract terminates immediately without notice or compensation.
Clive Snowdon
July 29, 2016
3 months, except if the director fails to be re-elected at an AGM when the contract terminates immediately without notice or compensation.
The Chairman and the Non-Executive Directors do not have any employment rights. New appointees to the Board will generally be appointed on the same basis as the current Non-Executive Directors.
Directors’ service agreements and letters of appointment are available for inspection at the registered office of the Company.
Policy on Payment for Loss of Office
Contractual entitlements to the date of termination will be honored and the Company will pay any amounts it is required to pay in accordance with the directors statutory employment or contractual rights and to settle those rights. The Company will seek to apply the principles of mitigation to ensure it is not paying more than is required. In the event of a compromise or severance agreement, the Committee may make payments it considers reasonable in

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settlement of potential legal claims. It may include in such payments reasonable incidental and professional fees paid by a director.
There is generally no entitlement to annual bonus on cessation of employment for leavers in the first half of the calendar year. Good leavers in the second half of the calendar year may, at the Committee's discretion, be retrospectively paid a time pro-rated bonus. Leavers departing after the year-end, but before completion of the audit, will be paid the actual bonus earned on the normal bonus payment date. Leavers are not eligible for bonus payments if they are in breach of any obligations of their contract of employment, including the period of notice
On termination of employment, outstanding share awards will be treated in accordance with the relevant plan rules:
LTiP : The default treatment under the LTiP is that subject to the Committee’s discretion, after a participant ceases to be employed by the Company, for any reason other than termination for Cause, all unvested time-based awards will immediately lapse or be forfeited and all vested unexercised options and stock appreciation rights (SARs) will lapse on the first anniversary of the date of leaving. In the case of termination of the participant’s employment for Cause, all time-based awards will immediately lapse or be forfeited as at the date of termination and all unexercised options will immediately lapse or be forfeited as at the date of termination. If employment of a participant is terminated for any reason, other than for Cause, performance-based awards will vest on a pro-rated basis based on the performance results to the date of termination. In case of termination of employment for Cause, all unvested performance-based awards will lapse as of the date of termination.
IPO Options : The default treatment under the I.P.O. standalone option grants for both Executive and Non-Executive Directors is that subject to the relevant Committees’ discretion, after a participant's termination of employment for any reason other than for Cause, the vested unexercised portion of the options will lapse on the first anniversary of the date of termination unless exercised beforehand. If a participant’s employment is terminated for Cause, all unexercised options will immediately lapse.
The definition of Cause for both the LTiP and the IPO options is as defined in the participant's service contract or, if not so defined, would be conduct that would constitute grounds for summary dismissal.
The Committee has the discretion to accelerate vesting and exercise dates, waive conditions to vesting or exercise or extend exercise periods after termination of employment. The Committee may exercise their discretion to allow accelerated vesting or extended exercise periods, which discretion it will normally exercise in such circumstances as long serving directors retiring before the last vesting date or leaving employment through ill health or redundancy. This graph seeks to demonstrate how pay varies with performance. The graph is reflective of the remuneration policy that is being presented for approval at the 2018 AGM.
CHART-FF5DA4629CC9CCBDF67.JPG

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Notes:
1.
The base salary of the Executive Directors used is the 2018 confirmed salary in U.S. dollars for the year ending 31 December, 2018.
2.
The Remuneration Committee sets bonus targets early in 2018. Annual cash bonus is earned only when Company performance exceeds a threshold level. ‘On plan’ bonus is generally set to be half the potential and is paid for achievement of the annual budget. Maximum bonus is earned for hitting a stretch target considerably above the Board-approved budget, and represents exceptional performance.
3.
The LTiP is a combination of performance and time-based awards with targets being set by the Committee. Within each year, there is a threshold level, an 'on plan’; level, and a stretch level. Performance below the threshold would mean no performance element of the LTiP would be awarded in the following year. Hitting the plan targets would result in granting total awards at maximum value of 150% of base salary for the Chief Executive Officer and at 100% of base salary for the Other Executive Director. Each subsequent year’s target represents a material improvement on the prior-year target. Reaching stretch targets would mean that the Company had considerably out-performed the Board’s expectations, would result in a maximum granting at 220% of the value of base salary for the Chief Executive Officer and at 150% of the value of base salary for the Other Executive Director.
4.
The above illustration excludes remuneration in the form of taxable benefits and pension contributions.
Consideration of Conditions Elsewhere in the Group
While the major influence in setting the Executive Directors’ pay and benefits is benchmarking of comparable companies, consideration is given to pay and benefits throughout the Group, so that there is a clear structure of pay and benefits layer by layer. Benchmarking studies commissioned by the Committee normally include other senior executive positions. When undertaking annual reviews of basic salary, the general level of cost-of-living increases throughout the Group is taken into account.
The Committee does not consult with employees when drawing up the Directors’ Remuneration Policy. No internal comparison metrics were used, but the Committee is aware of average pay and benefits packages within the Group.
Shareholders’ Views
The Committee take into consideration the views expressed by institutional shareholder bodies when formulating the terms of the awards to Executive Directors.
Implementation of the Remuneration Policy for the Year Ending December 31, 2018
The proposed Directors’ Remuneration Policy is subject to a binding shareholder vote at the 2018 AGM. If approved, the Policy will take effect immediately and will continue to apply, unless the Company seeks shareholder approval for changes to the Policy in the meantime. If shareholders do not vote to approve the proposed new Policy then the current Policy will continue to apply.
Set out below is a summary of how the proposed Directors’ Remuneration Policy will be applied during the year ending 31 December 2018.
Base Salary
 
 
 
2018
 
2017
 
 
 
 
 
 
$
 
$
 
% increase (2)
 
 
Alok Maskara (1)
 
615,000

 
365,826

 
2.5
%
 
(1)  
The 2017 salary of Alok Maskara is for part year only, calculated from his date of appointment. The annualized salary for 2017 is $600,000 per annum.
(2)  
The increase in base salaries in 2018 over 2017 was approved by the Remuneration Committee.
Pension Arrangements
The Executive Director will receive a cash supplement calculated at a flat rate of 25% of base salary.
Annual Bonus
In accordance with the proposed Policy, the maximum annual bonus for Alok Maskara, as Chief Executive Officer, will be capped at 200% of base salary. Included within this is the Additional Percentage Bonus to be awarded on achievement of specific targets set by the Remuneration Committee. At the start of each year, the

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Remuneration Committee reserve the discretion to set the Additional Percentage Bonus and related specific targets that are aligned with the strategic goals of the Company.
As in previous years, the financial performance target element of the annual bonus will be based on a combination of two financial performance metrics, management EBITA (previously referred to as management trading profit) and the ratio of management EBITA to pre-interest cash flow conversion “Cash Conversion” (previously net cash flow after tax was used as the second performance target). It will be on a sliding scale that commences only once threshold has been achieved and rises through the target performance up to a stretch target. For management EBITA; threshold approximates to exceeding prior-year; target is the annual EBITA budget and stretch is exceeding the annual EBITA budget by at least a 10%. The financial performance award element of the annual bonus opportunity will be split evenly between the above two financial metrics:
 
 
 
 
Split; sliding scale between threshold,
target and stretch
 
 
Financial metric annual bonus opportunity
 
 
Management EBITA
 
Cash Conversion
 
 
Alok Maskara
 
 
0% - 50%
 
0% - 50%
 
Long Term Incentives
The Remuneration Committee has then set targets for 2018 which, if attained, would lead to the granting of nominal cost options for Alok Maskara in 2019. The Committee has set a scorecard of metrics to assess the performance of the Company based upon Total Shareholder Return (“TSR”) and a Group adjusted EPS. A greater weighting has been assigned to the attainment of the TSR target which earns 60% of the performance awards available, compared to the EPS target which has a 40% weighting.
The Remuneration Committee is also proposing that Alok Maskara be granted time-based nominal cost options, which vest in equal tranches commencing on the first anniversary of the grant date at the value of 40% of the total target share award available.
The options to be granted in 2019 based on the achievement of 2018 performance will be time-based nominal cost options which vest in equal tranches, commencing on the first anniversary of the grant date. The grants will incorporate “claw back” provisions in the event of a material misstatement in the consolidated financial statements on which the basis of the grant was made. The shares acquired from the granting of the awards to Alok Maskara must be held for a minimum of three years from the date of grant whether vested or not, effectively four years from the setting of the targets (other than to fund the exercise price and tax liabilities on a vesting or exercise).
The maximum value of awards that can be granted in accordance with the proposed Policy is up to 220% of base salary for the Chief Executive Officer.
Non-Executive Directors
Summary of how the Directors' Remuneration Policy for the Non-Executive Directors will be applied during the year ending December 31, 2018.
The Board decides the approach to compensating the Non‑Executive Directors. As part of the proposed Board approved Remuneration Policy each Non-Executive Director, at their discretion, can forgo the proposed 2.5% increase in base fee, effective 1 January 2018, in lieu of equivalent value of share awards, valued at up to 55% of their annual base fee, at the date of award.
 
 
 
2018
 
2017
 
%

 
Value of Share
 
Value of Share
 
 
 
 
$
 
$
 
Increase
 
Awards % of Base Fee
 
Awards % of Base Fee
 
 
 
 
Base Fee
 
Base Fee
 
Base Fee
 
2018
 
2017
 
 
Joseph Bonn (1)
 
98,812-101,282
 
98,812

 
2.5
%
 
50% - 55%
 
50
%
 
 
Adam Cohn
 
79,050-81,026
 
79,050

 
2.5
%
 
50% - 55%
 
50
%
 
 
Brian Kushner
 
79,050-81,026
 
79,050

 
2.5
%
 
50% - 55%
 
50
%
 
 
David Landless
 
79,050-81,026
 
79,050

 
2.5
%
 
50% - 55%
 
50
%
 
 
Clive Snowdon
 
79,050-81,026
 
79,050

 
2.5
%
 
50% - 55%
 
50
%
 

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(1)  
Base fee increase reflects additional supplement for Chairman Fees.

Pending shareholder approval, for 2018, all Non-Executive Directors have elected to receive additional share awards in the Company and forgo the annual increase to their base fee.
Approval of Report
Brian Kushner, the Chairman of the Committee, will attend the forthcoming AGM and will be available to answer any questions shareholders may have concerning the Directors' remuneration. This Remuneration Report will be submitted for approval by an advisory vote at the forthcoming AGM.
Signed on behalf of the Board by:

B G Kushner
CHAIRMAN OF THE RUMENERATION COMMITTEE
March 19, 2018
For and on behalf of the Board


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C.    Board Practices
Corporate Governance
In this section we explain our corporate governance and what informs and influences our corporate governance practices.
Overview of Corporate Governance
The Company is incorporated in England and Wales and has a single listing of ordinary shares on the NYSE. Accordingly, our corporate governance is informed by the relevant aspects of two regulatory regimes, the U.K. and the U.S.
As a company incorporated in England and Wales, our corporate governance practices primarily are governed by our articles of association (our "Articles") and the Companies Act 2006 (the "Companies Act"). For example, as a company listed on the NYSE we are a "quoted company" for the purposes of the Companies Act and therefore required to comply with its "quoted company" requirements. Significant aspects of these requirements include the production of a yearly report on Directors' remuneration, details of which are prescribed by English corporate law, an annual advisory shareholder vote on whether to approve such remuneration and a binding shareholder vote every three years on our remuneration policy with respect to the Directors. These requirements in turn influence aspects of how we report remuneration.
As we are not, however, listed on the London Stock Exchange, the Company is not required to comply with the U.K. Corporate Governance Code (the "Code"). Nevertheless, we choose to follow aspects of the Code, insofar as it is appropriate, relevant and practical to a company of the size and status of the Company.
In 2017 (as in 2016), we were a foreign private issuer (an "FPI") as defined in the SEC's rules and regulations, and consequently, in many aspects of corporate governance we rely on a provision in the NYSE's Listed Company Manual ("NYSE's Manual") that permits us to follow home-country practice in lieu of certain NYSE corporate governance requirements. For example, although each member of our Audit Committee must be independent within the meaning of Rule 10A-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), each such member does not need to satisfy the requirements for independence set out in Section 303A.02 of the NYSE's Manual. Our Nominating and Governance Committee and Remuneration Committee each consist entirely of Non-Executive Directors; however, each such Non-Executive Director is not required to satisfy the requirements for independence set out in Section 303A.02 of the NYSE's Manual. As an FPI we are not subject to all of the disclosure requirements applicable to companies organized within the U.S. that relate to corporate governance. For example, we are exempt from certain rules under the Exchange Act that regulate disclosure obligations and procedural requirements related to the solicitation of proxies, consents or authorizations applicable to a security registered under the Exchange Act.
However, because our shares are listed on the NYSE, we are required to comply with certain U.S. law requirements, including certain provisions of the Sarbanes-Oxley Act that affect our corporate governance. For example, Section 404(a) requires our management to identify in our Annual Report on Form 20-F a framework used by management to evaluate the effectiveness of our internal controls over financial reporting. Such evaluation must be based on a suitable, recognized control framework that is established by a body or group that has followed due-process procedures, such as the framework established in "Internal Control—Integrated Framework (2013)" issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "2013 COSO framework"). We are required to and have updated our framework for the evaluation of the effectiveness of our internal control over financial reporting in accordance with the 2013 COSO framework.
In developing corporate governance practices for the Group, the Directors have taken note of all of these different regulatory requirements, as well as reflecting best practice as the Directors consider appropriate.
Board Members
During 2017, the Board comprised a Non-Executive Chairman, between four and five Non-Executive Directors and between one and three Executive Directors. The maximum number of Directors permitted under the Articles is eight. All Directors have an interest in the shares of the Company as set out in the Remuneration Report on pages 70 to 92.
Our Articles contain a provision requiring a third of the Directors to retire by rotation each year. In line with best practice, the Nominating Committee has proposed and the Board has agreed that all directors should offer themselves for re-election at the 2018 annual general meeting ("AGM").
Brief biographical details of the Directors who served during 2017 are provided in Item 6.A, together with information on their Committee and other commitments.

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Roles
The Board
The Board has responsibility for the overall leadership of the Company, its long-term success and helping to develop and approve its strategic aims. The Directors have determined a schedule of matters reserved to the Board. Reserved matters are comprehensive and reviewed as the Board considers appropriate, normally annually. A review was undertaken during the year, following a comprehensive review in 2013 in the context of a newly listed company. The Directors determined no further amendments were necessary. Matters reserved to the Board are set out in the Governance section of the Company's website.
Executive Leadership Team
The Executive Leadership Team (previously Executive Management Board) meets at least four times a year in person, and hold a weekly conference call which are chaired by the Chief Executive Officer. The Executive Leadership Team consists of the Chief Financial Officer and senior management at group and divisional levels. The members of the Executive Leadership Team during 2017 are listed on page 64. The Executive Leadership Team acts in an advisory capacity to the Chief Executive Officer and provides a forum where matters of interest or concern to the Group can be reviewed and discussed, strategy debated, policies developed and agreed, best practice discussed and appropriate measures implemented. It also provides an opportunity for senior management to receive updates on progress in other areas of the Group outside their remit.
Division of Responsibilities
Due to the size of the Board, the Directors have determined it is not necessary to appoint a senior independent Director.
The division of responsibilities between the Chief Executive Officer and the Chairman is clear and it has not been considered necessary to record it in writing.
•
The Chief Executive Officer is responsible to the Board for the management and performance of the business within the framework of the matters reserved to the Board and for developing strategy and then implementing the strategy he has agreed with the Board; and
•
The Chairman is responsible for the leadership of the Board and ensuring its effectiveness. He ensures that Board discussions are conducted taking into account all views, promoting openness and debate by facilitating the effective contribution of the Non-Executive Directors and ensuring no individual or group dominates the Board.
The Chairman maintains a dialogue with the Non-Executive Directors in the absence of the Executive Directors, and where appropriate, canvasses their opinion on issues and meets with them in the absence of the Executive Directors on a regular basis.
The Nominating Committee annually reviews succession planning for senior appointments in the Group and to the Board, with recommendations made to the Board.
Meetings
There are normally five main scheduled meetings of the Board each year and additional scheduled telephone meetings timed to approve the release of financial information. Additional meetings are called as appropriate. The Board will normally meet at least twice a year at one of the Group's operational plants, including overseas locations, as part of their monitoring role and to ensure a better understanding of the Group's operations. At these meetings the Board tours the plant and has an opportunity to meet local and divisional management on both a formal and an informal basis and discuss the progress of their operations with them.








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Attendance at Board and Committee Meetings during 2017
 
 
Main Board
 
Telephone Board
 
Total Board
 
Audit Committee
 
Remuneration
Committee
 
Nominating and Governance
Committee
 
 
Joseph Bonn
6
 
3
 
9
 
- i
 
8
 
2
 
 
Andrew Beaden
4
 
3
 
7
 
Non-member ii
 
Non-member
 
Non-member
 
 
Adam Cohn
6
 
1
 
7
 
Non-member
 
8
 
1 vi
 
 
Kevin Flannery
1
 
—
 
1
 
- i
 
1
 
- iii
 
 
Brian Kushner
6
 
1
 
7
 
8
 
8
 
- i
 
 
David Landless
6
 
3
 
9
 
8
 
  6 iv
 
1 v
 
 
Alok Maskara
4
 
1
 
5
 
Non-member ii
 
Non-member ii
 
Non-member ii
 
 
Brian Purves
4
 
3
 
7
 
Non-member ii
 
Non-member ii
 
Non-member ii
 
 
Clive Snowdon
6
 
3
 
9
 
8
 
- i
 
2
 
 
Total number of meetings
6
 
3
 
9
 
8
 
8
 
2
 
 
No. of meetings held at operational sites in the U.K. or U.S. 
1
 
—
 
1
 
 
 
 
 
 
 

i The director was a member of the Committee until and including January 30, 2017. During his period of membership in 2017, no meetings were held.
ii Although not a member of the Committee the director attended the meeting to present to the Committee.
iii The director was a member of the Committee from January 31, 2017 until May 23, 2017. During his period of membership in 2017, no meetings were held.
iv The director was a member of the Committee until and including November 23, 2017.
v The director was a member of the Committee until and including January 30, 2017 and then from December 5, 2017.
vi The director was a member of the Committee from January 31, 2017.

See Item 6.A, as to when certain members of the Board and Committee members retired or resigned.
Information and Support
The Company Secretary normally distributes Board and Committee agendas and materials to the Board and Committees seven days before a scheduled meeting.
There is a written procedure for decisions to be taken between scheduled Board and Committee meetings that also deals with information distribution in such cases.
The Board receives both financial and operational information to assist it in discharging its duties. The Chief Executive Officer and the Chief Financial Officer provide monthly reports to the Board which together cover all aspects of the business and which are then elaborated or commented upon at scheduled Board Meetings as appropriate. Additional topics for review and discussion are added in these reports from time to time at the request of the Directors. In addition, specific items are scheduled into the Board agenda for report and review on a regular basis, such as health and safety and environmental matters and current topical issues.
There is a written procedure in place to cover circumstances when the Directors either individually or collectively determine that they require independent professional advice at the Company's expense.
The General Counsel updates the Board on issues and changes of a legal and regulatory nature of which it and the individual Directors should be aware to refresh their skills and knowledge. There is a culture of information exchange on various matters of interest to the Group and its operations between Directors and senior managers to keep Directors abreast of relevant developments. In addition to meetings held at sites as described above, the Non-Executive Directors may independently visit operational sites to enlarge their knowledge of the individual businesses that make up the Group. The Executive Directors have regular business reviews at operational sites throughout the year and any appropriate information gathered on those visits will be reported to the Board.
Newly appointed directors undergo an induction program.
The Board evaluates its information and support procedures periodically to ensure they remain appropriate.

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Audit Committee
The members of our Audit Committee during the year were:
 
 
 
Meetings attended
 
 
David Landless
Member and Chairman (Chair)
8
 
 
Joseph Bonn
Member until and including January 30, 2017
- i
 
 
Kevin Flannery
Member until and including January 30, 2017
- i
 
 
Brian Kushner
Member
8
 
 
Clive Snowdon
Member
8
 

i The director was a member of the Committee until and including January 30, 2017. During his period of membership in 2017, no meetings were held.
The Company Secretary acts as secretary to the Audit Committee. The Chief Financial Officer and the Chief Executive Officer attend as required. The Company's external auditor is invited to attend most meetings of the Committee.
The responsibility and duties of the Audit Committee are set out in written terms of reference which appear on the Company's website under the Governance section. The terms of reference were reviewed during the year. The Committee has the responsibility of overseeing corporate accounting and financial reporting in the Group.
Its duties include:
•
External Auditors:   Engagement and retention of our independent auditors, pre-approval of audit and non-audit services, approving fees paid, monitoring independence and performance, discussing audit findings with auditors;
•
Financial Reporting:   Monitoring the integrity of the financial information to be included in all consolidated financial statements and announcements, reviewing and challenging critical accounting policies, the manner in which major elements of judgment are reflected in the consolidated financial statements, disclosures, significant adjustments and compliance with standards;
•
Internal Controls and Risk Management System:   Reviewing systems of internal control and risk management and adequacy of disclosure controls and procedures. Maintaining a record of complaints regarding accounting and audit matters;
•
Whistleblowing:   Establishment and monitoring of the Group whistleblowing policy and procedures; and
•
Oversight of the Code of Ethics .
The Board considers that all the members have appropriate financial experience to enable them to contribute to the Audit Committee's work. The Board also considers that each member of the Audit Committee satisfies the requirements for independence set out in Section 303A.02 of the NYSE rules and Rules 10A-3 under the Exchange Act. David Landless is the 'Audit Committee Financial Expert' as defined in Item 407(d) of Regulation S-K.
Each year, normally prior to the commencement of the financial year, the Committee establishes a schedule of meetings to coincide with the key events in the Company's financial reporting and audit cycle to ensure it has sufficient time on its agendas to deal with matters for which it has responsibility. Agendas and appropriate papers are issued for each meeting. The Chairman speaks to the external auditors as he considers appropriate and necessary in preparation for meetings at which matters are discussed that have been identified by the Company's external auditors or are relevant to them.
The Audit Committee has adopted and implemented a 'Policy on the Provision of Audit and Non-Audit Services by Auditors' (the "Pre-approval Policy") to comply with auditor independence requirements contained in Rule 2-01 of Regulation S-X under the Exchange Act. The policy requires the Audit Committee to pre-approve all matters upon which the Company's external auditors are requested to advise (audit and non-audit work), including fees, subject to certain pre-approvals made annually by the Audit Committee. A pre-approved sum to be spent on audit and tax matters is delegated to the Chief Financial Officer (formerly Group Finance Director) and there is a procedure for approval of urgent items by the Chairman between meetings. The policy also affirmatively proscribes the Company's external auditors from advising on certain matters.
During the year the Audit Committee met on eight occasions and among other matters they undertook the following:

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•
A specific review of the Company's external auditors' independence with the Company's external auditors and the Company's management, which confirmed the independence of the external auditors;
•
A discussion of matters pertaining to and approval of work to be undertaken by the Company's external auditors under the Pre-approval Policy;
•
A review with the Head of Corporate Review and senior management of the internal audit work, the system of internal control and monitored the implementation of internal controls over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act and the progress of the update to the internal control over financial reporting framework to reflect the 2013 COSO framework throughout the Group;
•
A review of how Group risks are assessed, the Group's risk profile and how the Group mitigates its risks;
•
A review of the Company's annual SEC filing, statutory report and consolidated financial statements and the quarterly financial releases made by the Company;
•
An evaluation of the work of the Audit Committee.
Remuneration Committee
Membership of the Remuneration Committee and details of its work appear in the Remuneration Report on pages 70 to 92. Its terms of reference appear under the Governance section on the Company's website.
Nominating and Governance Committee
The members of our Nominating and Governance Committee during the year were:
 
 
 
Meetings attended
 
 
Joseph Bonn
Member throughout entire year and Chairman (Chair) until and including December 4, 2017
2
 
 
David Landless
Member
1 i
 
 
Kevin Flannery
Member until and including May 23, 2017
- ii
 
 
Brian Kushner
Member until and including January 30, 2017
- iii
 
 
Clive Snowdon
Member and Chairman (Chair) from December 5, 2017
2
 
 
Adam Cohn
Member
1
 
i The director was a member of the Committee until and including January 30, 2017 and from December 5, 2017.
ii The director was a member of the Committee from January 31, 2017 until May 23, 2017. During his period of membership in 2017, no meetings were held.
iii The director was a member of the Committee until and including January 30, 2017. During his period of membership in 2017, no meetings were held.
The Company Secretary acts as secretary to the Nominating and Governance Committee. The Chief Executive Officer attends as required.
The responsibility and duties of the Nominating and Governance Committee are set out in written terms of reference which appear on the Company's website under the Governance section. The terms of reference were reviewed during the year.
Its duties include:
•
Identify and review individuals qualified to become Directors and fill vacancies;
•
Select and approve Directors to stand for re-election pursuant to the retirement provisions under our Articles;
•
To identify and review individuals qualified to become Senior Officers of the Company, (other than its Board members), consistent with criteria approved by the Board;
•
Develop a process for annual evaluation of the Board and its Committees;
•
Develop and recommend to the Board a succession plan, and review management's succession plan;
•
Develop and recommend to the Board a set of corporate governance principles applicable to the Company;
•
Annually review the Company's corporate governance processes and its governance principles;
•
Play a leadership role in the Company's corporate governance.
Its terms of reference appear under the Governance section on the Company's website.


97

Whistleblowing Arrangements
We have established policies, subject to individual legal requirements in the countries in which the Group operates, which encourage and enable employees to report in confidence any possible impropriety in either financial reporting or, where permitted in the relevant jurisdiction, other matters. An independent third party telephone line is provided for reporting matters where the individual believes they cannot report any issue through their line management. The Audit Committee oversees the operation of the whistleblowing policy and receives a report from the Company Secretary at each meeting of the Audit Committee.
Anti-Corruption Policy
We have an established policy and procedures to enable compliance with current legislation.
Relations with Shareholders
Directors seek to develop an understanding of the views of our shareholders in various ways and from time to time engage with them on a one-to-one basis, as appropriate, taking into account the need to treat shareholders equally. The Chief Executive Officer holds quarterly investor conference calls as part of the Group's reporting cycle. From time to time we consult with our major shareholders in an effort to seek feedback on various matters of corporate governance, including our Director remuneration policy. The Chief Executive Officer and the Chief Financial Officer also attend investor conferences.
AGM documentation is normally sent out at least 20 working days before the meeting. Separate resolutions are proposed and proxy votes for our ordinary shares are recorded. Results for, against and withheld are posted to the Company's website. All Directors attend the AGM. Shareholders under the Company's all employee share plans are also given the opportunity to vote through procedures agreed with the Trustee or Agent of the scheme as appropriate.
D.    Employees
The average number of employees by division, function and geography for the years ended December 31, 2017 , 2016 and 2015 , were as follows:
 
 
2017
 
2016
 
2015
 
 
By Division:
 

 
 

 
 

 
 
Elektron
695

 
699

 
703

 
 
Gas Cylinders
963

 
988

 
1,003

 
 
Total
1,658

 
1,687

 
1,706

 
 
By Function:
 

 
 

 
 

 
 
Direct production and distribution
1,397

 
1,381

 
1,432

 
 
Indirect:
 

 
 

 
 

 
 
Sales and administration
204

 
246

 
218

 
 
Research and development
57

 
60

 
56

 
 
Total
1,658

 
1,687

 
1,706

 
 
By Geography:
 

 
 

 
 

 
 
Europe
823

 
844

 
870

 
 
North America
816

 
822

 
814

 
 
Rest of the World
19

 
21

 
22

 
 
Total
1,658

 
1,687

 
1,706

 
Employees at a number of our locations are members of various trade union organizations. We consider our employee relations to be good. We have experienced work stoppages in the past, but do not consider any of these work stoppages to have been material to our operations. We also employed on average 111 , 129 and 163 temporary contract and agency staff in 2017 , 2016 and 2015 , respectively. Our average total headcount, including employees and temporary contract and agency staff, was 1,769 , 1,816 and 1,869 in 2017 , 2016 and 2015 , respectively.

98

E.    Share Ownership
The following table shows the number of shares owned by our Directors as of December 31, 2017 .
 
Name of Beneficial Owner
 
Ordinary Shares Beneficially Owned (1)
 
Awards over Ordinary Shares (2)
 
 
Percentage
ownership
 
 
Joseph A. Bonn
7,800

 
24,021

(3)  
 
(*)
 
 
Alok Maskara
25,712

 
229,276

(4)  
 
(*)
 
 
Adam Cohn
—

 
5,933

(3)  
 
(*)
 
 
Brian G Kushner
1,823

 
3,217

(3)  
 
(*)
 
 
David F. Landless
7,633

 
3,217

(3)  
 
(*)
 
 
Clive J. Snowdon
2,000

 
5,836

(3)  
 
(*)
 
(*)  
Indicates beneficial ownership of less than one percent of our ordinary shares.
(1)  
Number of shares owned as shown both in this table and the accompanying footnotes and percentage of ownership are based upon 27,136,799 £0.50 ordinary shares outstanding as at December 31, 2017 .
(2)  
Awards comprise options and restricted stock units ("RSUs") over ordinary shares granted under the agreements or incentive plans described below:
I.P.O. Option Awards:     As part of the I.P.O. process in 2012, stand-alone options grants (each, an "I.P.O. option") were made over ordinary shares to the Executive Directors, Non-Executive Directors and certain other key executives. The I.P.O. options were granted on October 2, 2012, 40% of which vested on the date of grant and with the remainder vesting in equal tranches over three years from the date of grant. All options are now vested and exercisable. The I.P.O. options expire if not exercised on or prior to October 1, 2019, and have an exercise price of $10 per ordinary share.
LTiP Awards:     Awards granted under the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan ("LTiP") in 2017 ("2017 Grants") were made either as options or RSUs.
2017 Grants
Awards were granted on August 23, 2017, under the LTiP for the CEO of Luxfer Holdings plc.
Time-based options were granted on August 23, 2017, and vest annually in equal tranches over three years from the date on which the CEO purchased a required amount of shares ("time-based CEO 2017 options (1)"). The time-based CEO 2017 options (1) expire if not exercised on or prior to June 13, 2022. Time-based CEO 2017 options (1) have an exercise price of £0.50 per ordinary share.
Further time-based options were granted on August 23, 2017, and vest annually in equal tranches over four years from the date of the appointment of the CEO ("time-based CEO 2017 options (2)"). The time-based CEO 2017 options (2) expire if not exercised on or prior to May 23, 2023. Time-based CEO 2017 options (2) have an exercise price of £0.50 per ordinary share.
Performance-based options ("performance-based 2017 options") were granted on August 23, 2017. These performance-based awards are based on annual earnings per share ("EPS") targets, which are tested annually and which vest on the date the EPS is attained. Performance-based awards that do not vest by the end of the performance period are forfeited. Performance-based 2017 options expire if not exercised on or prior to December 31, 2024, and each has an exercise price of £0.50 per ordinary share.
EIP:     2017 awards granted under the EIP comprised RSUs ("EIP 2017 RSUs"), which were granted on May 24, 2017, and vest the day before the 2018 AGM of the Company. They are settled upon vesting and are subject to a nominal payment of £0.50 per ordinary share.
(3)  
Includes 20,000 I.P.O. options and 3,947 EIP 2017 RSUs granted to Mr. Bonn, 5,823 EIP 2017 RSUs granted to Mr. Cohn, 3,158 EIP 2017 RSUs granted to Dr. Kushner, 3,158 EIP 2017 RSUs granted to Mr. Landless and 5,728 EIP 2017 RSUs granted to Mr. Snowdon.
(4)  
Includes 45,000 time-based CEO 2017 options (1), 60,000 time-based CEO 2017 options (2) and 120,000 performance-based 2017 options.

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Item 7.
Major Shareholders and Related Party Transactions
A.
Major Shareholders.
The following table shows our major shareholders (shareholders that are beneficial owners of 5% or more of the Company's voting shares) as of December 31, 2017 , based on notifications made to the Company or public filings:
 
Shareholder
 
Number of Ordinary Shares Beneficially Owned
 
Percent (7)
 
 
Wellington Management Group LLP (1)
3,729,953

 
14.1
%
 
 
Nantahala Capital Management LLC (2)
2,587,341

 
9.8
%
 
 
FMR LLC (3)
2,290,632

 
8.6
%
 
 
T. Rowe Price Associates, Inc. (4)
2,057,890

 
7.8
%
 
 
Paradice Investment Management LLC (5)
2,026,960

 
7.6
%
 
 
DePrince, Race & Zollo, Inc (6)
1,724,650

 
6.5
%
 

(1)  
This information is based solely on the Schedule 13F filed on February 13, 2018, by Wellington Management Group LLP ("Wellington") (formerly known as Wellington Management Company, LLP), a Massachusetts limited liability partnership. Wellington is an investment adviser and may be deemed to beneficially own 3,729,953 ordinary shares held by its clients. Wellington's principal business address is c/o Wellington Management Company LLP, 280 Congress Street, Boston, MA 02210.
(2)  
This information is based solely on the Schedule 13G filed jointly on February 14, 2018, by Nantahala Capital Management LLC, a Massachusetts limited liability company, and Wilmot B. Harkey and Daniel Mack. Includes 2,587,341 ordinary shares beneficially owned by Nantahala LLC and (ii)  2,587,341 ordinary shares beneficially owned by each of Messrs. Harker and Mack ("Nantahala Management"). The principal business address of Nantahala LLC is 19 Old Kings Highway S, Suite 200, Darien, CT 06820.
(3)  
This information is based solely on the Schedule 13G filed jointly on February 13, 2018 by FMR LLC (‘‘FMR’’), a Delaware limited liability company, and Abigail P. Johnson. Includes 2,290,632 ordinary shares beneficially owned by FMR and (ii) 2,290,632 ordinary shares beneficially owned by Ms. Johnson (inclusive of the ordinary shares beneficially owned by FMR). The principal business address of each member of the Fidelity Group is 245 Summer Street, Boston, MA 02210.
(4)  
This information is based solely on the Schedule 13G filed on February 14, 2018, by T. Rowe Price Associates, Inc. ("Price Associates"), a Maryland corporation. Price Associates is an investment adviser and may be deemed to beneficially own 2,057,890 ordinary shares. Price Associates disclaims beneficial ownership of such ordinary shares. The principal business address of Price Associates is 100 E. Pratt Street, Baltimore, MD 21202.
(5)  
This information is based solely on the Schedule 13G filed jointly on February 13, 2018, by Paradice Investment Management LLC ("Paradice LLC"), a Delaware limited liability company, and Paradice Investment Management Pty Ltd ("Investment Pty"), a company incorporated in Australia. Includes 2,026,960 ordinary shares beneficially owned by Paradice LLC and (ii)  2,026,960 ordinary shares beneficially owned by Investment Pty (inclusive of the ordinary shares beneficially owned by Paradice LLC). The principal business address of Paradice LLC is 257 Fillmore Street, Suite 200, Denver, CO 80206. The principal business address of Paradice Investment Pty is Level 27, The Chifley Tower, 2 Chifley Square, Sydney NSW 2000, Australia.
(6)  
This information is based solely on the Schedule 13G filed jointly on February 13, 2018, by DePrince, Race & Zollo, Inc., a Florida limited liability company. Includes 1,724,650 ordinary shares beneficially owned by DePrince, Race & Zollo, Inc. The principal business address of 250 Park Ave South, Suite 250, Winter Park, FL 32789.
(7)  
Based upon the percentage of the total ordinary share capital in issue. As of December 31, 2017 , this was 26,504,474 ordinary shares ( December 31, 2016 : 26,415,559).
Between January 1, 2017, and December 31, 2017:
•
the percentage of our ordinary shares beneficially owned by Nantahala increased from 5.8% to 9.8%;
•
FMR LLC and DePrince, Race & Zollo, Inc became a major shareholder; and

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•
Canton Group, Stonehill Group and GMT Capital Group ceased to be major shareholders of the Company. The percentage of shares beneficially owned by Canton Group decreased from 8.1% to 3.9% and the percentage of shares beneficially owned by Stonehill Group and GMT Capital Group decreased from 5.8% and 5.3% respectively to nil.
Between January 1, 2016, and December 31, 2016:
•
the percentage of our ordinary shares beneficially owned by (i) Stonehill Group decreased from 9.2% to 5.8%, and (ii) GMT Capital Group decreased from 9.0% to 5.3%; and
•
Nantahala LLC became a major shareholder.
Between January 1, 2015, and December 31, 2015:
•
the percentage of our ordinary shares beneficially owned by (i) Canton Group increased from 7.3% to 9.4%, and (ii) T. Rowe Price Associates, Inc. decreased from 12.6% to 7.3%;
•
Paradice Investment Management LLC became a major shareholder; and
•
FMR LLC ("FMR"), a Delaware limited liability company, Edward C. Johnson 3d and Abigail P. Johnson (together with FMR and Ms. Johnson, the "Fidelity Group") ceased to be major shareholders of the Company. The percentage of shares beneficially owned by the Fidelity Group decreased from 5.2% to 1.6%.
Voting Rights
Major shareholders have the same voting rights per share as all other ordinary shareholders.
U.S. Resident Shareholders of Record
BNY (Nominees) Limited were the holder of record for the Company's ADR program, pursuant to which each ADS represented one ordinary share of £0.50 each. On December 11, 2017, the American Depositary Share (ADS) facility was terminated and all outstanding ADSs were converted into ordinary shares. The Company's ordinary shares are held by the Depository Trust Company (DTC), act as securities depository for the securities, and are registered in the name of Cede & Co.
At January 2, 2018, DTC held 25,929,312 ordinary shares representing 95.6% of the issued share capital held at that date. As of that date, we had a further 68,700 ordinary shares held by two U.S. resident shareholders of record, representing approximately 0.3% of total voting power. Certain of these ordinary shares were held by brokers or other nominees. As a result, the number of holders of record or registered holders in the U.S. is not representative of the number of beneficial holders or of the residence of beneficial holders.
B.
Related Party Transactions
Since January 1, 2015 , other than disclosed below, there has not been, nor is there currently proposed, any material transaction or series of similar material transactions to which we were or are a party in which any of our directors, members of our Executive Leadership Team (previously Executive Management Board), associates, holders of more than 10% of any class of our voting securities, or any affiliates or member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest, other than the compensation and shareholding arrangements we describe where required in "Management."
Joint venture in which the Group is a venturer
During 2017 , the Group maintained its 51% investment in the equity of the joint venture Luxfer Uttam India Private Limited. During 2017 , the Gas Cylinders division made $1.9 million ( 2016 : $1.7 million ) of sales to the joint venture. At December 31, 2017 , the gross amounts receivable from the joint venture amounted to $2.3 million ( 2016 : $0.9 million ) and the net amounts receivable amounted to $0.9 million (2016: $ 0.9 million ). All sales to the joint venture are made on similar terms to arms length transactions.
During 2017 , the Group also maintained its 50% investment in the equity of the joint venture, Nikkei-MEL Company Limited. During 2017 , the Elektron division made $1.2 million of sales to the joint venture (2016: $ 0.8 million ).
During 2017 , the Group provided $0.9 million in debt investment ( 2016 : received $1.0 million in repayment) to the joint venture Luxfer Holdings NA, LLC, of which it holds 49% of the equity. The debt investment is provided through a secured revolving credit facility that the Group has granted to the joint venture of which up to $10.0 million can be drawn down until March 31, 2018 at an interest rate of 8% per annum. During 2017 , the Gas Cylinders division made $5.0 million ( 2016 : $3.9 million ) of sales to the joint venture. At December 31, 2017 , the amounts receivable from the joint venture amounted to $0.9 million ( 2016 : $1.0 million ) of trade debt and $4.7

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million ( 2016 : $3.8 million ) of debt investment. All sales to the joint venture are made on similar terms to arm's length transactions.
Associates in which the Group holds an interest
During 2015, the Group acquired 26.4% of the share capital of Sub161 Pty Limited. Following the investment, in 2017 the Group has made $0.0 million sales ( 2016 : $0.1 million ) to the associate. At December 31, 2017 , the amounts receivable from the associate was $0.0 million ( 2016 : $0.1 million ). The debtor recognized in the prior year has been converted into a secured loan note during 2017 . The secured loan note has interest accruing at 6.0% , of which $nil was outstanding at the year end (net of $0.5 million provision).
Transactions with other related parties
At December 31, 2017 , the directors and key management comprising the members of the Executive Leadership Team, owned 170,297 £0.50 ordinary shares ( 2016 : 1,062,672 £0.50 ordinary shares) and held awards over a further 316,797 £0.50 ordinary shares ( 2016 : 476,839 £0.50 ordinary shares).
Stone Canyon Industries LLC represents a related party due to its association with Adam Cohn as co-CEO, and holds 570,000 ordinary shares in Luxfer Holdings PLC as at December 31, 2017 (2016: 570,000 ADSs).
FTI consulting represents a related party due to its association with Brian Kushner as Senior Managing Director, Corporate Finance. During 2017, we engaged with FTI consulting for IT services for the value of $0.1 million (2016: nil).
Cherokee Properties Inc. represents a related party due to its association with Chris Barnes, who is the president of one of our operating segments and is the president of Cherokee Properties Inc. During 2017, we engaged with Cherokee Properties Inc. for rental costs regarding our manufacturing site in Madison, IL for the value of $1.0 million (2016: $1.0 million.
The son of the retired Chief Executive Officer was employed by the Group during 2017, having joined through our normal recruitment channels.
C. Interests of experts and counsel
Not applicable.
Item 8.
Financial Information
A.
Consolidated Statements and Other Financial Information.
See "Item 18. Financial Statements."
Dividend distribution policy
In July 2012, our Board of Directors declared an interim dividend of £0.25 per £1 ordinary share (equal to $0.39 per £1 ordinary share at an exchange rate of $1.57:£1), totaling $3.8 million, which was paid on August 10, 2012. Our first quarterly dividend was declared and paid in October 2012 to holders of our ordinary shares as of September 30, 2012. A dividend of $0.10 per ordinary share was then paid each quarter during 2013, 2014 and 2015. During 2016, the quarterly interim dividends were increased to $0.125 per ordinary share. In 2017, interim dividends totaling $3.3 million ($0.125 per ordinary share) were paid on February 1, 2017, May 3, 2017, August 2, 2017 and November 1, 2017. The declaration and payment of these dividends and any future dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, cash requirements, financial position, contractual restrictions, restrictions imposed by our indebtedness, any future debt agreements or applicable laws and other factors that our Board of Directors may deem relevant. As with all dividends declared to date, we expect future dividends to be paid out of our earnings. See Item 5. "Operating and Financial Review and Prospects" and Item 3.D. " Risk factors—Risks Relating to Our Operations—Our ability to pay regular dividends on our ordinary shares is subject to the discretion of our Board of Directors and will depend on many factors, including our results of operations, cash requirements, financial position, contractual restrictions, applicable laws and other factors, and may be limited by our structure and statutory restrictions and restrictions imposed by the Revolving Credit Facility, the Loan Notes, as well as any future agreements."
Under our Articles of Association, our shareholders must approve any final dividend, although the Board of Directors may resolve to pay interim dividends without shareholder approval. Any payment of dividends is also subject to the provisions of the Companies Act, according to which dividends may only be paid out of profits available for distribution determined by reference to financial statements prepared in accordance with the Companies Act and IFRS as issued by the IASB, which differ in some respects from U.S. GAAP. In the event that dividends are paid in the future, holders of the ordinary shares will be entitled to receive payments in U.S.

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dollars in respect of dividends on the underlying ordinary shares in accordance with the deposit agreement. Furthermore, because we are a holding company, any dividend payments would depend on cash flows from our subsidiaries. See Item 3.D. "Risk factors—Risks Relating to Our Operations—As a holding company, Luxfer Holdings PLC's main source of cash is distributions from our operating subsidiaries."
B.
Significant Changes.
Except as disclosed elsewhere in this Annual Report, there have been no significant changes since December 31, 2017 .


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Item 9.
The Offer and Listing.
A.
Offer and listing details.
Price History of Stock
Following the listing of our ordinary shares, in the form of ADSs evidenced by ADRs, on October 3, 2012, on the NYSE, and the exchange of our ADSs to ordinary shares on December 11, 2017, the following table sets forth, for the periods indicated, the reported high and low prices quoted in USD.
 
 
 
Price
 
 
 
 
High
 
Low
 
 
 
 
(in USD)
 
 
Annual
 
 

 
 

 
 
2017
 
16.05

 
10.82

 
 
2016
 
13.60

 
9.17

 
 
2015
 
14.98

 
9.20

 
 
2014
 
22.05

 
13.44

 
 
2013
 
21.16

 
12.03

 
 
Quarter
 
 

 
 

 
 
2017
 
 
 
 
 
 
First Quarter
 
12.28

 
10.82

 
 
Second Quarter
 
13.49

 
10.85

 
 
Third Quarter
 
13.42

 
11.30

 
 
Fourth Quarter
 
16.05

 
11.96

 
 
2016
 
 

 
 

 
 
First Quarter
 
11.21

 
9.17

 
 
Second Quarter
 
13.60

 
9.99

 
 
Third Quarter
 
13.39

 
10.28

 
 
Fourth Quarter
 
12.06

 
9.28

 
 
Month
 
 

 
 

 
 
2017
 
 

 
 

 
 
September
 
13.00

 
11.89

 
 
October
 
12.84

 
11.96

 
 
November
 
14.83

 
12.17

 
 
December
 
16.05

 
14.02

 
 
2018
 
 

 
 

 
 
January
 
15.87

 
14.46

 
 
February
 
14.29

 
12.95

 
B.
Plan of distribution.
Not applicable.
C.
Markets.
As of December 31, 2017, 25,929,312 ordinary shares of Luxfer Holdings PLC are listed on the NYSE. Prior to this listing, no public market existed for our ordinary shares. Our ordinary shares are listed on the NYSE under the symbol "LXFR".
D.
Selling Shareholders.
Not applicable.
E.
Dilution.
Not applicable.
F.
Expenses of the issue.
Not applicable.

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Item 10.
Additional Information.
A.
Share capital.
Not applicable.
B.
Memorandum and articles of association.
The information called for by this item has been reported previously in our Registration Statement on form F-1 (File No. 333-178278), filed with the SEC on October 4, 2012, as amended, under the heading "Description of Share Capital" and is incorporated by reference into this Annual Report.
C.
Material contracts.
For the two years immediately preceding the date of this Annual Report, we have not been a party to any material agreements other than in the ordinary course of business.
D.
Exchange controls.
There are no governmental laws, decrees, regulations or other legislation in the U.K. that may affect the import or export of capital, including the availability of cash and cash equivalents for use by us, or which may affect the remittance of dividends, interest, or other payments by us to non-resident holders of our ordinary shares, other than withholding tax requirements. There is no limitation imposed by U.K. law or Luxfer Holdings PLC's Articles of Association on the right of non-residents to hold or vote shares.
E.
Taxation.
U.S. Federal Income Taxation
The following discussion describes certain U.S. federal income tax consequences of the purchase, ownership and disposition of our ordinary shares by a holder that is a citizen or resident of the U.S., a U.S. domestic corporation or a person or entity that otherwise will be subject to U.S. federal income tax on a net income basis in respect of our ordinary shares (a "U.S. Holder"). This discussion does not purport to be a description of all of the possible tax considerations that may be relevant to a decision to purchase, hold or dispose of ordinary shares. In particular, this discussion does not address all U.S. federal income tax considerations that may be relevant to a particular investor, nor does it address the special tax rules applicable to certain categories of investors, such as banks, dealers, traders who elect to mark to market, tax-exempt entities, insurance companies, certain short-term holders of ordinary shares or investors who hold our ordinary shares as part of a hedge, straddle, conversion or integrated transaction or investors who have a "functional currency" other than the U.S. dollar. In addition, the discussion does not address tax consequences to an entity treated as a partnership for U.S. federal income tax purposes that holds the ordinary shares, or a partner in such partnership. This summary deals only with U.S. Holders that will hold our ordinary shares as capital assets and does not address the tax treatment of a U.S. holder that owns or is treated as owning 10% or more of the total combined voting power or value of the company's shares.
This discussion is based on the federal income tax laws of the U.S., as well as U.S. Treasury regulations promulgated thereunder and judicial and administrative interpretations thereof, all as in effect as of the date of this Annual Report, and the income and capital gains tax convention between the U.S. and the U.K. that was signed on July 24, 2001, (and amended by a Protocol signed on July 19, 2002) (the "Treaty"). All of the foregoing authorities are subject to change, which change could apply retroactively and could affect the tax consequences described below. This summary does not address any tax consequences under the laws of any state or locality of the U.S., or the Medicare tax on net investment income.
YOU ARE URGED TO CONSULT YOUR TAX ADVISORS ABOUT THE APPLICATION OF THE U.S. FEDERAL INCOME TAX RULES TO YOUR PARTICULAR CIRCUMSTANCES AS WELL AS THE STATE, LOCAL, FOREIGN AND OTHER TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF THE ORDINARY SHARES.
Taxation of Dividends and Other Distributions on the Ordinary Shares
Subject to the exceptions discussed below, the gross amount of distributions made by us to you with respect to the ordinary shares will generally be includable in your gross income as dividend income. You will be treated as receiving the dividend on the date of receipt. If dividends are converted into U.S. dollars on the date of receipt, you generally should not be required to recognize foreign currency gain or loss in respect of the dividends. You should consult your tax advisor regarding the treatment of the foreign currency gain or loss, if any, on any non-U.S. currency received that is converted into U.S. dollars on a date subsequent to the date of receipt.

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The gross amount of distributions made by us to you with respect to the ordinary shares will be treated as a dividend for U.S. federal income tax purposes only to the extent that the distribution is paid out of our current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent, if any, that the amount of the distribution exceeds our current and accumulated earnings and profits, it will be treated first as a tax-free return of your tax basis in your ordinary shares, and to the extent the amount of the distribution exceeds your tax basis, the excess will be taxed as capital gain. We do not intend to calculate our earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that a distribution will generally be treated as a dividend even if that distribution would otherwise be treated as a non-taxable return of capital or as capital gain under the rules described above. A dividend in respect of the ordinary shares will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations.
With respect to non-corporate U.S. Holders, including individual U.S. Holders, dividends will generally be taxed at the lower rate applicable to qualified dividend income, provided that (1) the ordinary shares are readily tradable on an established securities market in the U.S., or we are eligible for the benefits of a qualifying income tax treaty with the U.S. that has been approved by the U.S. Internal Revenue Service for purposes of the qualified dividend rules, (2) we are not a passive foreign investment company (a "PFIC") for either our taxable year in which the dividend is paid or the preceding taxable year and (3) certain holding period requirements are met. Under U.S. Internal Revenue Service authority, common or ordinary shares are considered for purpose of clause (1) above to be readily tradable on an established securities market in the U.S. if they are listed on the NYSE. Based on our financial statements and current expectations regarding our income, assets and activities, we believe that we were not a PFIC in 2017 and do not anticipate becoming a PFIC in 2018 or in the foreseeable future. If we were to be a PFIC for any taxable year during which a U.S. Holder holds our shares, certain adverse U.S. federal income tax consequences (including, but not limited to, dividends received by non-corporate U.S. Holders being treated as other than qualified dividends) could apply. You should consult your tax advisors regarding the availability of the lower rate for dividends paid with respect to the ordinary shares.
Dividends generally will constitute foreign source income for foreign tax credit limitation purposes. However, if 50% or more of our stock is treated as held by U.S. persons, we will be treated as a "U.S.-owned foreign corporation." In view of the substantial number of shares of our stock that are held by shareholders of record that are U.S. persons, there is a significant possibility that we may be classified as a U.S.-owned foreign corporation. If that were the case, dividends on our stock would be treated for foreign tax credit limitation purposes as income from sources within the U.S. to the extent they are attributable to our U.S. source earnings and profits, and as income from sources outside the U.S. to the extent the dividends are attributable to our non-U.S. source earnings. As described below under "—U.K. Tax Considerations," U.S. Holders that are eligible for benefits under the Treaty and meet certain other requirements generally will not be subject to U.K. tax on dividend payments in respect of the ordinary shares or on capital gains realized on the disposal of the ordinary shares. The treatment of our dividends as U.S. source or foreign source income under the rules described above may nevertheless be relevant for determining your overall foreign tax credit limitation. We do not maintain information definitively establishing the extent to which our earnings and profits are treated as U.S. source for these purposes and such amount therefore is uncertain. You should consult your tax advisor regarding the consequences to you, if any, of the potential treatment of dividends on our stock as U.S. source income under these rules. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will generally be limited to the gross amount of the dividend, multiplied by the reduced rate divided by the highest rate of tax normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to the ordinary shares will generally constitute "passive category income."
Distributions of additional shares with respect to our ordinary shares that are made as part of a pro rata distribution to all of our shareholders generally will not be subject to U.S. federal income tax.
Taxation of Dispositions of Ordinary Shares
Subject to the PFIC rules discussed above, you will recognize taxable gain or loss on any sale, exchange or other taxable disposition of an ordinary share equal to the difference between the amount realized (in U.S. dollars) for the ordinary share and your tax basis (in U.S. dollars) in the ordinary share. The gain or loss will generally be a capital gain or loss. If you are a non-corporate U.S. Holder, including an individual U.S. Holder, who has held the ordinary share for more than one year, you will be eligible for reduced tax rates. The deductibility of capital losses is subject to limitations. Any such gain or loss that you recognize will generally be treated as U.S. source income or loss.


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Foreign Financial Asset Reporting
Certain U.S. Holders that own “specified foreign financial assets” with an aggregate value in excess of U.S.$50,000 are generally required to file an information statement along with their tax returns, currently on Form 8938, with respect to such assets. “Specified foreign financial assets” include any financial accounts held at a non-U.S. financial institution, as well as securities issued by a non-U.S. issuer that are not held in accounts maintained by financial institutions. The understatement of income attributable to “specified foreign financial assets” in excess of U.S.$5,000 extends the statute of limitations with respect to the tax return to six years after the return was filed. U.S. Holders who fail to report the required information could be subject to substantial penalties. Prospective investors are encouraged to consult with their own tax advisors regarding the possible application of these rules, including the application of the rules to their particular circumstances.
Information Reporting and Backup Withholding
Dividend payments with respect to ordinary shares and proceeds from the sale, exchange or redemption of ordinary shares may be subject to information reporting to the U.S. Internal Revenue Service and possible U.S. backup withholding. Backup withholding will not apply, however, to a U.S. Holder who furnishes a correct taxpayer identification number and makes any other required certification or who is otherwise exempt from backup withholding. U.S. Holders that are U.S. persons who are required to establish their exempt status generally must provide such certification on U.S. Internal Revenue Service Form W-9. Holders that are not U.S. persons generally are not subject to information reporting or backup withholding. However, such a holder may be required to provide a certification of its non-U.S. status in connection with payments received within the U.S. or through a U.S.-related financial intermediary. You should consult your tax advisors regarding the application of the U.S. information reporting and backup withholding rules.
Backup withholding is not an additional tax. Amounts withheld as backup withholding may be credited against your U.S. federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by filing the appropriate claim for refund with the U.S. Internal Revenue Service and furnishing any required information.
U.K. Tax Considerations
This section discusses the material U.K. tax consequences of an investment in ordinary shares by Eligible U.S. Holders. It applies only to Eligible U.S. Holders that beneficially hold ordinary shares as capital assets and does not address the tax treatment of investors that are subject to special rules. An "Eligible U.S. Holder" is an investor that, at all material times: (i) qualifies for benefits under the income and capital gains tax convention between the U.S. and the U.K. that was signed on July 24, 2001, (and amended by a Protocol signed on July 19, 2002) (the "Treaty"); (ii) is a resident of the U.S. for the purposes of the Treaty; and (iii) is not resident in the U.K. for U.K. tax purposes at any material time.
This section does not apply to an investor who holds shares in connection with the conduct of a business or the performance of personal services in the U.K. or otherwise in connection with a branch, agency or permanent establishment in the U.K.
This section is based on current U.K. tax law as applied in England and published HM Revenue & Customs ("HMRC") practice as at the date of this Annual Report, both of which are subject to change, possibly with retrospective effect.
POTENTIAL INVESTORS IN THE ORDINARY SHARES SHOULD SATISFY THEMSELVES PRIOR TO INVESTING AS TO THE OVERALL TAX CONSEQUENCES, INCLUDING, SPECIFICALLY, THE CONSEQUENCES UNDER UNITED KINGDOM TAX LAW AND HMRC PRACTICE OF THE ACQUISITION, OWNERSHIP AND DISPOSAL OF THE ORDINARY SHARES, IN THEIR OWN PARTICULAR CIRCUMSTANCES BY CONSULTING THEIR OWN TAX ADVISORS.
Taxation of dividends
Withholding tax
Dividend payments in respect of the ordinary shares may be made without withholding or deduction for or on account of U.K. tax.
Income tax
Payments of dividends on the ordinary shares will constitute U.K. source income for U.K. tax purposes and, as such, remain subject to U.K. income tax by direct assessment even if paid without deduction or withholding for or on account of any U.K. tax. However, dividends with a U.K. source will not generally be chargeable to U.K. tax by direct assessment in the hands of an Eligible U.S. Holder.

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Taxation of disposals
As an Eligible U.S. Holder, you will not generally be liable for U.K. taxation on any capital gain realized on the disposal of the ordinary shares.
Inheritance Tax
If for the purposes of the Taxes on Estates of Deceased Persons and on Gifts Treaty 1978 between the U.S. and the U.K. an individual holder is domiciled in the U.S. and is not a national of the U.K., any ordinary shares or ordinary shares beneficially owned by that holder will not generally be subject to U.K. inheritance tax on that holder's death or on a gift made by that holder during his / her lifetime, provided that any applicable U.S. federal gift or estate tax liability is paid, except where (i) the ordinary shares are part of the business property of a U.K. permanent establishment or pertain to a U.K. fixed base used for the performance of independent personal services; or (ii) the ordinary shares are comprised in a settlement unless, at the time of the settlement, the settlor was domiciled in the U.S. and not a national of the U.K.
Stamp Duty and Stamp Duty Reserve Tax
While the ordinary shares are held within the DTC clearance service, provided that DTC satisfies various conditions specified in U.K. legislation, electronic book-entry transfers of such shares should not be subject to U.K. stamp duty and agreements to transfer such shares should not be subject to U.K. stamp duty reserve tax (“SDRT”). The parties have obtained confirmation of this position by way of formal clearance by HMRC. Likewise, transfers of, or agreements to transfer, the ordinary shares from the DTC clearance service into another clearance service or into a depositary receipt system should not, provided that the other clearance service or depositary receipt system satisfies various conditions specified in U.K. legislation, be subject to U.K. stamp duty or SDRT.
In the event that the ordinary shares have left the DTC clearance service otherwise than into another clearance service or depositary receipt system, any subsequent transfer of, or agreement to transfer, such ordinary shares may, subject to any available exemption or relief, be subject to U.K. stamp duty or SDRT at a rate of 0.5% of the consideration for such transfer or agreement. Any such U.K. stamp duty or SDRT will generally be payable by the transferee and must be paid (and any relevant transfer document stamped by HMRC) before the transfer can be registered in the books of Luxfer Holdings PLC.
In the event that ordinary shares which have left the DTC clearance service otherwise than into another clearance service or depositary receipt system are subsequently transferred back into a clearance service or depositary receipt system, such transfer, or agreement to transfer, may, subject to any available exemption or relief, be subject to U.K. stamp duty or SDRT at a rate of 1.5% of the consideration for such transfer (or, where there is no such consideration, 1.5% of the value of such ordinary shares). In practice this liability for stamp duty or SDRT is in general borne by the person depositing the relevant shares in the clearance service or depositary receipt system.
F.
Dividends and paying agents.
Not applicable.
G.
Statement by experts.
Not applicable.
H.
Documents on display.
You may read and copy any reports or information that we file at the SEC's Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. In addition, the SEC maintains an Internet website that contains reports and other documents about issuers, like us, that file electronically with the SEC. The address of that site is "www.sec.gov".
We also make available on our website, free of charge, our Annual Reports on Form 20-F and the text of our reports on Form 6-K, including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is "www.Luxfer.com". The information contained on our website is not incorporated by reference in this document.
I.
Subsidiary Information.
Not applicable.

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Item 11.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk during the normal course of business from changes in currency exchange rates, interest rates and commodity prices such as aluminum prices. We manage exposures through a combination of normal operating and financing activities and through the use of derivative financial instruments such as foreign currency forward purchase contracts and aluminum forward purchase contracts. We do not use market risk-sensitive instruments for trading or speculative purposes.
A treasury committee, chaired by the Chief Financial Officer, controls and oversees the monitoring of market risks and hedging activities undertaken throughout the company.
Effect of Currency Movement on Results of Operations
We conduct business in the U.K., the U.S., continental Europe, Australasia and Asia and in various other countries around the world and, accordingly, our results of operations are subject to currency translation risk and currency transaction risk.
For the year ended December 31, 2017 , our revenue by origin of manufacture and destination of sales, as a percentage of our consolidated revenue, were as follows:
Revenue by Geographic Origin
2017
 
Geographic Region
 
Percentage of revenue
 
 
North America
57
%
 
 
U.K. 
32
%
 
 
Europe, excluding U.K
10
%
 
 
Rest of World
1
%
 
Revenue by Geographic Destination
2017
 
Geographic Region
 
Percentage of revenue
 
 
North America
54
%
 
 
Europe, excluding U.K.
23
%
 
 
Asia Pacific
11
%
 
 
U.K. 
9
%
 
 
Rest of World
3
%
 
In 2017 , 51% , 9% and 19% of our sales revenue was denominated in U.S. dollars, GBP sterling and euro, respectively.
Currency translation risk
With respect to currency translation risk, our financial position and results of operations are measured and recorded in the relevant local base currency and then translated each month into U.S. dollars for inclusion in our consolidated financial statements. We translate balance sheet amounts at the exchange rates in effect on the date of the balance sheet, while income and cash flow items are translated at the average rate of exchange in effect for the relevant period.
The chart below shows the monthly rates used to translate our U.K. and continental Europe operations over the last year:

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CHART-4D17EB0E511B83912AC.JPG
Translation risk on net assets
We hold significant assets in the U.S., U.K. and continental Europe, and we have in the past used either forward foreign currency exchange contracts or local currency debt to hedge translation risk on our net assets. We do not engage in the use of forward foreign currency exchange contracts for the purpose of hedging translation risk, although we may in the future enter into other similar arrangements when we believe it appropriate. We use local denominated debt externally provided by third parties, in various forms and to various levels, to hedge the exchange rate risks. We had net assets employed (which excludes inter-segment assets and liabilities) in North America, the U.K. and continental Europe of $118.8 million , $10.0 million and $30.7 million , respectively, as of December 31, 2017 . Of the $118.8 million net assets employed in North America, $18.9 million related to goodwill with a functional currency of GBP sterling, the functional currency of the holding company, Luxfer Holdings PLC, following the transition to IFRS in 2012. Net assets employed in other regions only totaled $2.8 million and therefore were not a significant risk. Following the change in presentation currency to U.S. dollars as part of the transition to IFRS, we are now exposed to translation risk for the U.K. and all other non-U.S. net assets employed plus the U.S. goodwill, which in total is $62.4 million . Depreciation of the U.S. dollar compared to GBP sterling positively affects the value of our assets that are exposed to translation risk as reported in U.S. dollars in our consolidated financial statements and, conversely, the appreciation of the U.S dollar has a negative impact on the value of those assets.
As at December 31, 2017 , the U.S. dollar had weakened by approximately 9% against GBP sterling and by approximately 12% against the euro, compared to December 31, 2016 . These movements in conjunction with exchange rate movements of our other overseas investments, which are principally denominated in Czech koruna, Chinese renminbi, Canadian dollars and Australian dollars, increased our consolidated net assets by $11.6 million , which we reported in our statement of other comprehensive income. As of December 31, 2017 , we estimate that a 10% appreciation in the U.S. dollar against the other currencies of our operations would have decreased the value of our consolidated net assets by approximately $3.9 million.

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Translation risk on revenue and operating profits
The impact of changes in exchange rates on our reported revenue and operating profit is dependent on changes in average exchange rates in one year when compared to another. The chart above plots the GBP sterling and euro exchange rates against U.S. dollars. The table below shows the impact of such shifts in average exchange rates had on our financial results.
 
 
 
First quarter
 
Second quarter
 
Third quarter
 
Fourth quarter
 
Full year
 
 
 
 
2017
 
2017
 
2017
 
2017
 
2017
 
 
 
 
(in $ million)
 
 
All currencies—translation impact—(loss) / gain
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
(3.7
)
 
$
(2.7
)
 
$
1.0

 
$
3.8

 
$
(1.6
)
 
 
Operating profit
 
(0.1
)
 
1.1

 
0.8

 
2.1

 
3.9

 
The table above also indicates the impact of movements in the exchange rate of GBP sterling, the euro and other currencies against the U.S. dollar for 2017 . We estimate that a 10% appreciation in the U.S. dollar against the other currencies of our operations in 2017 would have decreased our operating profit by approximately $0.6 million.
Hedging of currency translation risk
The gains and losses arising from our exposure to movements in foreign currency exchange rates are recognized in the statement of other comprehensive income.
We cannot easily hedge the impact of translation risk on our operating profits, but we are able to hedge the translation risk on our overseas net assets. The two common methods are through either bank borrowing denominated in the foreign currency or use of forward foreign currency exchange contracts. We have hedged this risk through bank borrowings denominated in the same currencies as the net assets they help to fund. We can draw down amounts under our Revolving Credit Facility in U.S. dollars, GBP sterling and euro. As of December 31, 2017 , we had $105.5 million of debt denominated in U.S. dollars and £4.7 million of debt denominated in GBP sterling (as of December 31, 2016 , we had $117.0 million of debt denominated in U.S. dollars and £4.7 million of debt denominated in GBP sterling). We have on occasion also used forward foreign currency exchange contracts to hedge this exposure. However, this approach is less desirable than the use of bank debt because it requires the cash settlement of the contracts, which exposes us to an additional cash flow risk. As a result, we have not used such hedges in recent years. We also report any gains and losses on hedging instruments in the statement of other comprehensive income, offsetting the exchange movements on overseas net assets.
Currency transaction risk
In addition to currency translation risk, we incur currency transaction risk whenever one of our operating subsidiaries enters into either a purchase or sales transaction in a currency other than its functional currency. Matching sales revenues and costs in the same currency reduces currency transaction risk.
Our U.S. operations have little currency exposure, as most purchases, costs and revenue are denominated in U.S. dollars. In our U.K. operations, purchases of raw materials and sales are conducted in a large number of countries and in differing currencies, while other operating costs are generally incurred in GBP sterling, resulting in exposure to changes in foreign exchange rates. For example, purchases of raw materials are denominated principally in U.S. dollars, and a large portion of our sales by U.K. operations are in euros.
The analysis of our revenue by destination and origin demonstrates that, although 32% of our product sales revenue in 2017 originates from manufacturing facilities in the U.K., only 9% of our revenue is derived from sales to customers within the U.K. The remaining percentage of revenue is generated from exports outside the U.K. In 2017 , we sold 19% of our products into the countries that have adopted the euro, but we only manufactured 7% of our goods in the Eurozone. As a result, movement in the exchange rate between the euro and GBP sterling is our largest currency transaction risk. We estimate the net exposure to the euro between sales and purchases equates to a gross profit exposure varying between €45 million and €55 million a year, fluctuating due to changes in sales, which will vary due to market demand factors. The geographic sales analysis shows that the U.S. dollar is another potential source of currency transaction risk for our U.K. operations, with sales of products denominated in U.S. dollars extending beyond North America, as many of our sales to Asia are also priced in U.S. dollars. We also purchase a significant amount of raw materials priced in U.S. dollars. The U.K. operations are exposed to a net transaction risk for U.S. dollars estimated at $10 million to $30 million for a net sales risk

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per year. We manage transaction risk on the sales and purchase cash flows separately, using separate sell and buy forward currency contracts, rather than on a net basis.
Hedging of currency transaction risk
To mitigate our exposure to currency transaction risk, we operate a policy of hedging all contracted commitments in foreign currency, and we also hedge a substantial portion of non-contracted forecast currency receipts and payments for up to 18 months forward.
Where no natural hedge exists, all firm contracted commitments and a portion of non-contracted forecast receipts and payments denominated in foreign currencies are hedged by means of forward foreign currency exchange contracts. We base our decision to hedge against non-contracted amounts based on the nature of the transaction being hedged and the volatility of currency movements, among other factors. For example, we cover a lower percentage of our forecast exposure in the case of businesses with relatively few long-term sales contracts.
As of December 31, 2017 , we held various foreign currency exchange contracts designated as hedges in respect of forward sales for U.S. dollars, euros and Australian dollars for the receipt of GBP sterling or euros. For our largest risk exposure, euro to GBP sterling, we had hedges in place for 2018 covering approximately 40% of our forecasted sales. We also held foreign currency exchange contracts designated as hedges in respect of forward purchases for U.S. dollars by the sale of GBP sterling. The contract totals in GBP sterling, range of maturity dates and range of exchange rates are disclosed below:
 
 
 
December 31, 2017
 
 
Sales Hedges
 
U.S. dollars
 
Euros
 
Australian dollars
 
 
Contract totals / £M
 
17.1

 
27.5

 
2.8

 
 
Maturity dates
 
01/18 to 07/19

 
01/18 to 07/19

 
06/18

 
 
Exchange rates
 
$1.2433 to $1.3444

 
€1.0949 to €1.1803

 
1.7667

 
 
 
 
December 31, 2017
 
 
Purchase Hedges
 
U.S. dollars
 
Euros
 
Australian dollars
 
 
Contract totals / £M
 
12.5

 
0.1

 
1.7

 
 
Maturity dates
 
01/18 to 07/19

 
01/18

 
06/18

 
 
Exchange rates
 
$1.2414 to $1.3389

 
€1.1084

 
$1.7161

 
The fair value of the above hedges was $0.7 million as of December 31, 2017 . Under IAS 39, a loss of $0.7 million has been deferred from recognition in our consolidated income statement until 2018 , because it relates to effective hedges against forecast sales and purchases in 2018 . We disclose the amount deferred separately under hedging reserve in our consolidated balance sheet.
Effect of Commodity Price Movements on Results of Operations
Commodity price risk
We are exposed to commodity price risks in relation to the purchases of our raw materials. The raw materials we use include primary magnesium, rare earth metals and chemical compounds, zircon sand, zirconium oxychloride intermediates and other chemical inputs like soda ash for the Elektron Division and aluminum log and sheet and carbon fiber for the Gas Cylinders Division. Many of these raw materials have been subject to price rises and volatility over the last few years, some of which were substantial.
In 2017, raw material costs increased as the average three month LME price for aluminum rose from $1,609 to $1,819 per metric ton, an increase of $210 per metric ton, or 13.1%, from the 2016 equivalent figure. The U.S. Midwest Aluminum Premium remained stable at approximately $200 per metric ton. Magnesium prices rose slightly in 2017 compared to the previous year with an average price of Chinese magnesium on a free on board basis being $2,245 per metric ton, a $48 per metric ton increase, when compared to the average for 2016.
In 2016, raw material costs were stable. The average three month LME price for aluminum was $1,609 per metric ton in 2016, a decrease of $65 per metric ton, or 3.9%, from the 2015 equivalent figure. The U.S. Midwest Aluminum Premium throughout 2016, remained stable at approximately $200 per metric ton. Magnesium prices rose slightly in 2016 compared to the previous year with the average price of Chinese magnesium on a free on board basis being $2,197 per metric ton, a $57 per metric ton increase, when compared to the average for 2015.

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Primary aluminum is a global commodity, with its principal trading market on the LME. In the normal course of business, we are exposed to aluminum price volatility to the extent that the costs of aluminum purchases are more closely related to the LME price than the sales prices of certain of our products. Our Gas Cylinders Division will buy various aluminum alloys, in log, sheet, or tube form, and the contractual price will usually include an LME-linked base price plus a premium for a particular type of alloy and the cost of casting, rolling or extruding. The price of high-grade aluminum, which is actively traded on the LME, has fluctuated significantly in recent years as shown in the LME price graph below. The price remains volatile and difficult to predict. Since aluminum is the Gas Cylinders Division's largest single raw material cost, these fluctuations in the price of aluminum can affect this division's and our financial results. In order to help mitigate this risk, we enter into LME-related transactions in the form of commodity contracts. Historically we have also ordered a certain amount of our aluminum billet purchases on a forward fixed price.
The three month LME price for primary aluminum was as follows from January 1, 2015, through December 31, 2017 :
CHART-CF1A6B3688C068EA4CA.JPG
Source: London Metal Exchange
We estimate that changes in the LME price of aluminum will normally take approximately three months to impact our reported costs of sales and operating profits. In 2015, the price of aluminum fell from $1,832 per metric ton to $1,597 per metric ton, resulting in a $1.9 million reduction in our cost base. In 2016, whilst the price of aluminum stated to rise, ending at $1,693 per metric ton, the fall in the average price year-on-year resulted in a $3.5 million reduction in our cost base. In 2017, the price of aluminum continued to rise, with a year-end high of $2,268 per metric ton.
The average cost of our LME hedges was $1,819 per metric ton in 2017, $1,604 per metric ton in 2016 and $1,942 per metric ton in 2015.
There is no similar financial market to hedge magnesium, zirconium raw materials or carbon fiber, and prices for these raw materials have been volatile in recent years with some increasing substantially. To help mitigate these risks, we have a number of fixed-price supply contracts for these raw materials, which limit our exposure to price volatility over a calendar year. However, we remain exposed over time to rising prices in these markets, and therefore rely on the ability to pass on any major price increases to our customers in order to maintain our levels of profitability for zirconium, and magnesium-based products. We have also in the last few years, when we felt it

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was appropriate, made additional physical purchases of magnesium and some rare earth chemicals to delay the impact of higher prices, but this has had a cash flow impact on occasion thereby leading to greater utilization of our revolving credit bank facilities. Also, the price of magnesium in the U.S. is fairly high due to the protection of the U.S. market from Chinese imports through anti-dumping tariffs.
Ultimately we aim to recover all our raw material cost increases through adjustment to our sales prices. However, for aluminum costs, we can utilize LME financial derivative contracts over a one to two year period to mitigate shorter-term fluctuations and protect us in the short-term as we renegotiate sales prices with customers.
Hedging of Aluminum Metal Price Risk
Based on current sales mix between composite and aluminum cylinders, we expect that our gas cylinders operations will need to purchase approximately 10,000 to 14,000 metric tons of primary aluminum each year, in various sizes of billet and various types of alloy, and that another approximately 1,000 metric tons per year of various forms of fabricated sheet aluminum will be purchased for use in our Superform and composite cylinder production processes. Normally, the division will recover approximately 2,500 to 3,500 metric tons per year of process scrap and would expect to be able to sell this scrap into the market at prices linked to the LME prices. Over time, we have also aimed to recover cost increases via sales price increases, and use LME hedging to protect margins for the next 12 to 18 months.
In 2017, approximately 60% of our price risk on primary aluminum costs was covered with LME hedges. We estimate we have 30% of our forecast price risk of aluminum covered by LME derivative contracts for 2018.
Our hedging policy is designed to enable us to benefit from a more stable cost base. The effect of the LME-related transactions we enter into is to mitigate the unfavorable impact of price increases on aluminum purchases. Under IFRS, similar to the treatment of derivative financial instruments used to hedge foreign currency risk, the change in the fair value of the LME contracts that relate to future transactions is deferred and held in an equity hedging reserve account. Gains and losses derived from such commodity contracts are reflected in the cost of goods sold when the underlying physical transaction takes place. The LME contracts we had at the end of 2017 had a mark-to-market gain of $1.2 million, compared to a mark-to-market loss of $0.6 million in 2016.
Our hedging policy aims to achieve protection against our calculated exposure to metal price volatility for a full calendar year by the end of the immediately preceding year. We use our hedging policy to minimize risk rather than to engage in speculative positions on the underlying commodity. Although this may result in losses on hedged positions, the downside risk of un-hedged exposure to aluminum prices can be far greater. If we did not hedge our aluminum exposure and were unable to pass additional costs onto customers, we estimate, based on a price exposure on 10,000 metric tons that a $100 annual increase in the price of aluminum on the LME would result in a $1.3 million adverse effect on our full year operating profit.
Effect of Interest Rate Movements
Interest Rate Risk
As of December 31, 2017 , we had both fixed rate and variable rate debt outstanding on our consolidated balance sheet. As a result of this exposure, we have in the past hedged interest payable under our floating rate indebtedness based on a combination of forward rate agreements, interest rate caps and swaps. There were no fixed or variable rate interest hedge agreements in place as of December 31, 2017 , and December 31, 2016 .
On May 13, 2011, we entered into the Senior Facilities Agreement and Note Purchase Agreement, providing a variable interest rate Term Loan and Revolving Credit Facility and fixed rated Loan Notes due 2018. This debt was all drawn down on June 15, 2011. The Loan Notes due 2018 had a $65 million principal amount and a fixed rate of interest of 6.19%. During 2016, Luxfer agreed to extend the maturity date of $50 million of the $65 million outstanding aggregate amount of the Loan Notes due 2018. The extension also includes a lower long-term fixed interest rate on the debt. The maturity date on $25 million was extended from June 2018 to June 2023, with a fixed interest rate of 4.88%; and the maturity date on a further $25 million was extended to June 2026 at a fixed interest rate of 4.94%. The Term Loan was fully repaid in October 2012 and under the revised agreement, the value of debt repaid could be re-drawn against the revolving credit facility available in GBP sterling, U.S. dollars or euros. Following an amendment to the Senior Facilities Agreement on March 25, 2014, we are able to draw down up to a maximum aggregate principal amount of $150 million, of which $21.3 million was outstanding at December 31, 2017 . The variable interest charged is linked to ICE LIBOR.
On September 18, 2014, we entered into the Note Purchase and Private Shelf Agreement. The Loan Notes due 2021 issued thereunder have a $25 million principal amount and a fixed rate of interest of 3.67%.

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Item 12.
Description of Securities Other than Equity Securities.
A.
Debt Securities.
Not applicable.
B.
Warrant and Rights.
Not applicable.
C.
Other Securities.
Not applicable.
D.
American Depositary Shares.
On December 11, 2017, Luxfer Holdings PLC terminated its ADR facility and arranged for the exchange of outstanding ADSs for the underlying ordinary shares. The exchange allows Luxfer shareholders to directly own and publicly trade ordinary shares on the New York Stock Exchange under the symbol "LXFR". As a result of this, there are no outstanding ADRs as at December 31, 2017.
Fees and Other Payments Made by the Depositary to Luxfer
The depositary agreed to reimburse us for certain expenses we incurred in relation to the former ADS program.
During the year ended December 31, 2017 , we received $0.5 million in fees from the depositary of our ADSs.
PART II
Item 13.
Defaults, Dividend Arrearages and Delinquencies.
None.
Item 14.
Material Modifications to the Rights of Security Holders and Use of Proceeds.
Not applicable.
Item 15.
Controls and Procedures.
We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) under the supervision and the participation of the Executive Leadership Team, which is responsible for the management of the internal controls, and which includes the Chief Executive Officer and the Chief Financial Officer. There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based upon our evaluation as of December 31, 2017 , the Chief Executive Officer and Chief Financial Officer have concluded that the disclosure controls and procedures (i) were effective at a reasonable level of assurance as of the end of the period covered by this Annual Report on Form 20-F in ensuring that information required to be recorded, processed, summarized and reported in the reports that are filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and (ii) were effective at a reasonable level of assurance as of the end of the period covered by this Annual Report on Form 20-F in ensuring that information to be disclosed in the reports that are filed or submitted under the Exchange Act is accumulated and communicated to the management of the Company, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management's Annual Report on Internal Control over Financial Reporting
Our Executive Leadership Team is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is a process designed, under the supervision of the Chief Executive Officer and the Chief Financial Officer, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external reporting purposes in accordance with IFRS.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly, reflect transactions and dispositions of assets, provide

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reasonable assurance that transactions are recorded in the manner necessary to permit the preparation of consolidated financial statements in accordance with IFRS, and that receipts and expenditures are only carried out in accordance with the authorization of our Executive Leadership Team and directors, and provide reasonable assurance regarding the prevention or timely detection of any unauthorized acquisition, use or disposition of our assets and that could have a material effect on our consolidated financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover, projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that controls may become inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
Our Executive Leadership Team has assessed the effectiveness of internal control over financial reporting based on the framework in Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this assessment, our Executive Leadership Team has concluded that our internal control over financial reporting as of December 31, 2017 , was effective.
Attestation Report of the Registered Public Accountant Firm
Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has audited the consolidated financial statements included in this Annual Report on Form 20-F, and as part of its audit, has issued its report on the effectiveness of our internal control over financial reporting. This report is included on page F-2 of this Form 20-F and is incorporated herein by reference.
Changes in Internal Control over Financial Reporting
During the period covered by this report, we have not made any changes to our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 16.
[Reserved]
Item 16A.
Audit committee financial expert.
During the year ended December 31, 2017 , David Landless served as a Non-Executive Director and as the Audit Committee financial expert and is independent for the purposes of Rule 10A-3 of the Exchange Act and NYSE rule 303A.02.
Item 16B.
Code of Ethics.
The Company has adopted a formal code of ethics applicable to all employees, including to the Chief Executive Officer, Chief Financial Officer and Group Financial Controller.
The Company's code of ethics is available on our website at:
http://www.luxfer.com/governance/code_of_ethics_and_business_conduct.asp
Item 16C.
Principal Accountant Fees and Services.
Our independent registered public accounting firm was our independent auditor for the fiscal years ended December 31, 2017 , December 31, 2016 and December 31, 2015 . The table below sets out the amount billed to us by our independent auditor for services performed in the year ended December 31, 2017 , 2016 and 2015 and breaks down these amounts by category:
 
 
 
2017
 
2016
 
2015
 
 
 
 
(in $ million)
 
 
Fees payable to auditors for the audit of the consolidated financial statements and its subsidiaries
 
1.3

 
1.1

 
1.1

 
 
Fees payable to auditors for non-audit services:
 
 
 
 
 
 
 
 
Accounting advisory services
 
0.1

 
—

 
—

 
 
Total
 
1.4

 
1.1

 
1.1

 
Audit fees
Audit fees in 2017 , 2016 and 2015 were related to the audit of our consolidated financial statements and other audit services provided in connection with statutory and regulatory filings or engagements.

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Accounting advisory services
Accounting advisory services fees incurred in 2017 relate to an ongoing GAAP conversion project in relation to the expected loss of our FPI status.
Pre-approval policies and procedures
The Audit Committee has established pre-approval policies and procedures which are followed prior to the engagement of our independent registered public accounting firm relating to the carrying out of audit and non-audit services. All services provided by our auditors are approved in advance by the audit committee in accordance with such policies and procedures.
Item 16D.
Exemptions from the Listing Standards for Audit Committees.
Not applicable.
Item 16E.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers.
Effective June 4, 2015, the Board authorized a share buy-back program of up to $10.0 million, primarily to satisfy obligations under the Group's employee share programs, subject to applicable securities laws, regulatory considerations and other factors. Shareholder approval for this program was granted at the 2014 Annual General Meeting (for repurchases up to an aggregate amount of 2,700,000 ordinary shares or ADSs). Set forth below is the summary of shares repurchased by us during 2015, 2016 and the approximate dollar value, and number, of shares that may yet be repurchased under this program. No shares were repurchased in 2017.

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Total number of
shares
purchased
 
Average price
paid per share
(in U.S. dollars)
 
Total number of
shares
purchased as
part of publicly
announced plans
or programs
 
Approximate
dollar value of
shares that may
yet be purchased
under the plans
or programs
(in $ million)
 
Maximum
number of
shares that may
yet be purchased
under the plans
or programs
 
 
June 5—June 30, 2015
 
146,804

 
$
13.44

 
146,804

 
8.1

 
2,553,196

 
 
July 1—July 31, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
August 1—August 31, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
September 1—September 30, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
October 1—October 31, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
November 1—November 30, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
December 1—December 31, 2015
 
—

 
—

 
146,804

 
8.1

 
2,553,196

 
 
January 1—January 31, 2016
 
236,537

 
$
9.99

 
383,341

 
5.7

 
2,316,659

 
 
February 1—February 29, 2016
 
333,169

 
$
10.21

 
716,510

 
2.3

 
1,983,490

 
 
March 1—March 31, 2016
 
21,331

 
$
10.66

 
737,841

 
2.0

 
1,962,159

 
 
April 1—April 30, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
May 1—May 31, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
June 1—June 30, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
July 1—July 31, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
August 1—August 31, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
September 1—September 30, 2016
 
—

 
—

 
737,841

 
2.0

 
1,962,159

 
 
October 1—October 31, 2016
 
18,276

 
$
9.50

 
756,117

 
1.9

 
1,943,883

 
 
November 1—November 30, 2016
 
24,872

 
$
9.50

 
780,989

 
1.6

 
1,919,011

 
 
December 1—December 31, 2016
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
January 1—January 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
February 1—February 29, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
March 1—March 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
April 1—April 30, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
May 1—May 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
June 1—June 30, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
July 1—July 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
August 1—August 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
September 1—September 30, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
October 1—October 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
November 1—November 30, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
December 1—December 31, 2017
 
—

 
—

 
780,989

 
1.6

 
1,919,011

 
 
Total
 
780,989

 
$
10.72

 
780,989

 
1.6

 
1,919,011

 
Item 16F.
Change in Registrant's Certifying Accountant.
Not applicable.
Item 16G.
Corporate Governance.
Corporate Governance Practices
Our ordinary shares are listed on the NYSE. As a foreign private issuer, we rely on a provision in the NYSE's Listed Company Manual that permits us to follow home-country practice in lieu of certain NYSE corporate governance requirements. As a U.K. company, our corporate governance practices are governed by our Articles and the Companies Act. The significant differences between our corporate governance practices as a U.K. company and those required by NYSE listing standards for U.S. companies are as follows:
Independence
The NYSE listing standards provide that listed companies must have a majority of independent directors and that both the nominating / corporate governance committee and the compensation committee must consist solely of independent directors. Under NYSE rule 303A.02, a director qualifies as independent only if the board affirmatively determines that such director has no material relationship with the company, either directly or as a

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partner, shareholder or officer of an organization that has a relationship with the company. In addition, in affirmatively determining the independence of any director who will serve on the compensation committee of the listed company's board of directors, the board of directors must consider all factors specifically relevant to determining whether a director has a relationship to the listed company which is material to that director's ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to (i) the source of compensation of such director (including any consulting, advisory or other compensatory fee paid by the listed company to such director) and (ii) whether such director is affiliated with the listed company, a subsidiary of the listed company or an affiliate of a subsidiary of the listed company. Moreover, the NYSE listing standards enumerate a number of relationships that preclude independence.
The NYSE listing standards also provide that listed companies must have an audit committee that (i) satisfies the requirements of Rule 10A-3 under the Exchange Act, which, among other things, requires each member of the audit committee to be independent within the meaning of the Rule, subject to certain exemptions, and (ii) satisfies the requirements for independence set out in NYSE rule 303A.02.
Since we are a foreign private issuer, we have not needed to make an affirmative determination that each member of our Audit Committee is independent for the purposes of NYSE rule 303A.02. However, the Board has determined that each member of the Audit Committee is independent for the purposes of Rule 10A-3 under the Exchange Act and NYSE rile 303A.02.
Committees
We have board committees that are different than those required by NYSE rules for listed U.S. companies.
For instance, in addition to the independence requirement described above, the nominating / corporate governance committee of a listed U.S. company must have (i) a written charter that addresses certain corporate governance matters and (ii) an annual performance evaluation of the committee. Our Nominating and Governance Committee has written terms of reference that are generally responsive to the recommendations thereunder and that are available on our website.
Furthermore, in addition to the independence requirement described above, the compensation committee of a listed U.S. company must have (i) a written charter that addresses certain corporate governance matters and (ii) an annual performance evaluation of the compensation committee and (iii) the rights and responsibilities of the compensation committee set forth in NYSE rule 303A.05(c). Our compensation committee has written terms of reference that are generally responsive to the recommendations thereunder and that are available on our website.
Finally, in addition to the independence requirement described above, the audit committee of a U.S. listed company must (i) satisfy the requirements of Rule 10A-3 under the Exchange Act, (ii) have a minimum of three members, and (iii) have a written charter that addresses certain corporate governance matters. Our audit committee comprises three Non-Executive Directors who are independent for purposes of Rule 10A-3 under the Exchange Act and satisfies the other requirements of Rule 10A-3 under the Exchange Act. Moreover, the Board has determined that each member of the audit committee is independent under NYSE rule 303A.02. Moreover, our audit committee has written terms of reference that are generally responsive to the requirements under NYSE rule 303A.07 and which are available on our website.
Equity Compensation Plans
U.S. listed companies must give shareholders the opportunity to vote on all equity-compensation plans and material revisions thereto, except for employment inducement awards, certain grants, plans and amendments in the context of mergers and acquisitions, and certain specific types of plans. We comply with legal requirements under the Companies Act 2006 and our Articles of Association regarding shareholder approval required in respect of equity compensation plans. Such requirements do not require shareholder approval of equity compensation plans and certain revisions thereof in all circumstance for which the NYSE rules applicable to the U.S. listed companies require such shareholder approval.
Corporate Governance Guidelines
U.S. listed companies are required to adopt and disclose corporate governance guidelines. There is no equivalent recommendation in the U.K. Corporate Governance Code.
Code of Ethics
Listed companies must adopt and disclose a code of business conduct and ethics for directors, officers and employees and promptly disclose any waivers of the code for directors or executive officers. The Companies Act 2006 does not require us to adopt a Code of Ethics. See "Item 16b. Code of Ethics."

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Item 16H.
Mine Safety Disclosure.
Not applicable.
PART III
Item 17.
Financial Statements.
Not applicable.
Item 18.
Financial Statements.
The audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-1 of this Annual Report. The audit report of PricewaterhouseCoopers LLP, independent registered public accounting firm, is included herein preceding the audited consolidated financial statements.

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Item 19.
Exhibits.
1.1
2.1
2.2
2.3
2.4
2.5
2.6
2.7
4.1
4.2
4.3
8.1
List of Subsidiaries (included under Item 4.C "Organizational Structure" in this Annual Report on Form 20-F)
12.1
12.2
13.1
13.2
15.1

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Signature
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on its behalf.
 
 
 
 
 
 
 
Luxfer Holdings PLC
March 19, 2018
 
By:
/s/ Alok Maskara
 
 
 
Alok Maskara
 
 
 
Chief Executive Officer

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 
 
 
 
 
 
Page
 
 
Consolidated Financial Statements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

F- 1
Table of Contents

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Luxfer Holdings PLC
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Luxfer Holdings PLC and its subsidiaries as of December 31, 2017 and 2016 and the related consolidated income statements, consolidated statements of comprehensive income, consolidated statements of changes in equity and consolidated cash flow statements for each of the three years in the period ended December 31, 2017, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2017 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15 of the 2017 Annual Report. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP
Manchester, United Kingdom
March 19, 2018


We have served as the Company’s auditor since 2015.


F- 2
Table of Contents
 

LUXFER HOLDINGS PLC
CONSOLIDATED INCOME STATEMENT
All amounts in millions, except share and per share data
 
 
 
 
2017
 
2016
 
2015
 
 
 
Note
 
$M
 
$M
 
$M
 
 
REVENUE
2
 
441.3

 
414.8

 
460.3

 
 
Cost of sales
 
 
(332.7
)
 
(321.4
)
 
(356.3
)
 
 
Gross profit
 
 
108.6

 
93.4

 
104.0

 
 
Distribution costs
 
 
(9.3
)
 
(7.8
)
 
(7.9
)
 
 
Administrative expenses
 
 
(58.9
)
 
(50.8
)
 
(52.6
)
 
 
Share of results of joint ventures and associates
14
 
0.1

 
0.5

 
(1.2
)
 
 
TRADING PROFIT
2
 
40.5

 
35.3

 
42.3

 
 
Profit on sale of redundant site
5
 
0.4

 
2.1

 
—

 
 
Changes to defined benefit pension plans
5
 
—

 
0.6

 
18.0

 
 
Restructuring and other expense
5
 
(21.6
)
 
(2.2
)
 
(22.4
)
 
 
OPERATING PROFIT
3
 
19.3

 
35.8

 
37.9

 
 
Other income / (expense):
 
 
 

 
 
 
 
 
 
Net gain / (loss) on acquisitions and disposals
5
 
1.3

 
0.2

 
(2.0
)
 
 
Finance income:
 
 
 

 
 
 
 
 
 
Interest received
7
 
0.5

 
1.2

 
0.5

 
 
Finance costs:
 
 
 

 
 
 
 
 
 
Interest costs
8
 
(7.2
)
 
(6.8
)
 
(7.4
)
 
 
IAS 19R retirement benefits finance charge
8
 
(1.8
)
 
(2.1
)
 
(3.0
)
 
 
Unwind of discount on deferred contingent consideration from acquisitions
8
 
(0.2
)
 
(0.4
)
 
(0.4
)
 
 
Total finance costs
 
 
(9.2
)
 
(9.3
)
 
(10.8
)
 
 
PROFIT ON OPERATIONS BEFORE TAXATION
 
 
11.9

 
27.9

 
25.6

 
 
Income tax expense
9
 
(0.4
)
 
(6.0
)
 
(9.5
)
 
 
NET INCOME FOR THE YEAR
 
 
11.5

 
21.9

 
16.1

 
 
Attributable to:
 
 
 

 
 
 
 
 
 
Equity shareholders
 
 
11.5

 
21.9

 
16.1

 
 
Earnings per share:
 
 
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
 
 
Unadjusted
10
 
$
0.43

 
$
0.83

 
$
0.60

 
 
Diluted
 
 
 

 
 
 
 
 
 
Unadjusted
10
 
$
0.43

 
$
0.82

 
$
0.59

 

F- 3
Table of Contents
 

LUXFER HOLDINGS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
All amounts in millions, except share and per share data
 
 
 
 
2017
 
2016
 
2015
 
 
 
Note
 
$M
 
$M
 
$M
 
 
Net income for the year
 
 
11.5

 
21.9

 
16.1

 
 
Other comprehensive income movements
 
 
 
 
 
 
 
 
 
Items that may be reclassified to the consolidated income statement:
 
 
 
 
 
 
 
 
 
Exchange differences on translation of foreign operations
 
 
11.6

 
(13.1
)
 
(8.6
)
 
 
Fair value movements in cash flow hedges
 
 
3.1

 
1.1

 
(5.4
)
 
 
Transfers to consolidated income statement on cash flow hedges
 
 
0.6

 
(0.9
)
 
(0.1
)
 
 
Deferred income taxes on cash flow hedges
 
 
(0.6
)
 
—

 
1.1

 
 
Hedge accounting income / (loss) adjustments
 
 
3.1

 
0.2

 
(4.4
)
 
 
Total hedge accounting and translation of foreign operations movements
 
 
14.7

 
(12.9
)
 
(13.0
)
 
 
Items that will not be reclassified to the consolidated income statement:
 
 
 
 
 
 
 
 
 
Remeasurement of defined benefit retirement plans
29
 
9.5

 
(21.7
)
 
4.4

 
 
Deferred income taxes on retirement benefits remeasurements
23
 
(5.2
)
 
4.3

 
(1.5
)
 
 
Retirement benefits changes
 
 
4.3

 
(17.4
)
 
2.9

 
 
Total other comprehensive income / (loss) movements for the year
 
 
19.0

 
(30.3
)
 
(10.1
)
 
 
Total comprehensive income / (loss) for the year
 
 
30.5

 
(8.4
)
 
6.0

 
 
Attributed to:
 
 
 

 
 

 
 

 
 
Equity shareholders
 
 
30.5

 
(8.4
)
 
6.0

 

F- 4
Table of Contents
 

LUXFER HOLDINGS PLC
CONSOLIDATED BALANCE SHEET
All amounts in millions, except share and per share data
 
 
 
 
December 31, 2017
 
December 31, 2016
 
 
 
Note
 
$M
 
$M
 
 
ASSETS
 
 
 
 
 
 
 
Non-current assets
 
 
 
 
 
 
 
Property, plant and equipment
11
 
125.5

 
127.9

 
 
Intangible assets
12
 
81.7

 
80.6

 
 
Investments
14
 
7.6

 
10.0

 
 
Deferred income tax assets
23
 
16.2

 
16.6

 
 
Trade and other receivables
16
 
0.3

 
0.3

 
 
 
 
 
231.3

 
235.4

 
 
Current assets
 
 
 

 
 
 
 
Current investments
14
 
1.6

 
—

 
 
Inventories
15
 
82.2

 
82.5

 
 
Trade and other receivables
16
 
72.6

 
57.6

 
 
Income tax receivable
 
 
1.6

 
2.4

 
 
Cash and cash equivalents
17
 
13.3

 
13.6

 
 
 
 
 
171.3

 
156.1

 
 
TOTAL ASSETS
 
 
402.6

 
391.5

 
 
EQUITY AND LIABILITIES
 
 
 
 
 
 
 
Capital and reserves
 
 
 
 
 
 
 
Ordinary share capital
18
 
25.3

 
25.3

 
 
Deferred share capital
18
 
150.9

 
150.9

 
 
Share premium account
18
 
56.4

 
56.4

 
 
Treasury shares
18
 
(5.8
)
 
(7.1
)
 
 
Own shares held by ESOP
18
 
(1.0
)
 
(0.5
)
 
 
Retained earnings
20
 
311.4

 
308.1

 
 
Hedging reserve
20
 
(0.2
)
 
(3.3
)
 
 
Translation reserve
20
 
(46.3
)
 
(57.9
)
 
 
Share based compensation reserve
20
 
5.4

 
3.8

 
 
Merger reserve
20
 
(333.8
)
 
(333.8
)
 
 
Capital and reserves attributable to the Group's equity shareholders
 
 
162.3

 
141.9

 
 
Total equity
 
 
162.3

 
141.9

 
 
Non-current liabilities
 
 
 

 
 

 
 
Bank and other loans
21
 
93.8

 
121.0

 
 
Retirement benefits
29
 
55.3

 
66.5

 
 
Deferred income tax liabilities
23
 
3.6

 
4.9

 
 
Deferred contingent consideration
25
 
0.2

 
1.5

 
 
Provisions
22
 
1.1

 
1.1

 
 
Trade and other payables
24
 
1.9

 
0.6

 
 
 
 
 
155.9

 
195.6

 
 
Current liabilities
 
 
 
 
 
 
 
Trade and other payables
24
 
61.3

 
51.1

 
 
Current income tax liabilities
 
 
0.3

 
0.1

 
 
Bank and other loans
21
 
15.0

 
—

 
 
Deferred contingent consideration
25
 
0.5

 
—

 
 
Deferred consideration
25
 
0.3

 
1.3

 
 
Provisions
22
 
2.8

 
1.5

 
 
Overdrafts
17
 
4.2

 
—

 
 
 
 
 
84.4

 
54.0

 
 
Total liabilities
 
 
240.3

 
249.6

 
 
TOTAL EQUITY AND LIABILITIES
 
 
402.6

 
391.5

 

F- 5
Table of Contents
 

LUXFER HOLDINGS PLC
CONSOLIDATED CASH FLOW STATEMENT
All amounts in millions, except share and per share data
 
 
 
 
2017
 
2016
 
2015
 
 
 
Note
 
$M
 
$M
 
$M
 
 
RECONCILIATION OF CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
 
 
 
 
 
 
 
 
 
Net income for the year
 
 
11.5

 
21.9

 
16.1

 
 
Adjustments to reconcile net income for the year to net cash flows from continuing operating activities:
 
 
 
 
 
 
 
 
Income taxes
9
 
0.4

 
6.0

 
9.5

 
 
Depreciation and amortization
3
 
19.0

 
18.4

 
18.6

 
 
Loss on disposal of property, plant and equipment
3
 
0.1

 
0.2

 
—

 
 
Profit on sale of redundant site
5
 
(0.4
)
 
(2.1
)
 
—

 
 
Share based compensation charges net of cash settlement
 
 
1.7

 
1.1

 
1.3

 
 
Net interest costs
 
 
6.7

 
5.6

 
6.9

 
 
Non-cash restructuring charges
 
 
 
 
 
 
 
 
 
   Property, plant and equipment impairment
11
 
5.0


—


1.7

 
 
   Intangible assets impairment
12
 
2.0


—


3.7

 
 
   Investment impairment
14
 
2.2


—


4.6

 
 
   Other non-cash restructuring charges
 
 
1.8


—


7.7

 
 
Curtailment and past service credits on retirement benefits obligations
5
 
—

 
(0.6
)
 
(18.2
)
 
 
IAS 19R retirement benefits finance charge
6
 
1.8

 
2.1

 
3.0

 
 
Acquisitions and disposals costs
5
 
(1.3
)
 
(0.2
)
 
2.0

 
 
Unwind of discount on deferred contingent consideration from acquisitions
8
 
0.2

 
0.4

 
0.4

 
 
Share of results of joint ventures and associates
14
 
(0.1
)
 
(0.5
)
 
1.2

 
 
Changes in operating assets and liabilities:
 
 
 
 
 
 
 
 
 
   Sale of assets classified as held for sale
 
 
—

 
—

 
1.2

 
 
   (Increase) / decrease in receivables
 
 
(9.1
)
 
(1.8
)
 
5.0

 
 
   Decrease in inventories
 
 
5.0

 
4.5

 
3.0

 
 
   Increase / (decrease) in payables
 
 
9.7

 
(10.3
)
 
(0.9
)
 
 
Movement in retirement benefits obligations
 
 
(8.0
)
 
(6.3
)
 
(8.6
)
 
 
Movement in provisions
22
 
1.1

 
(2.6
)
 
0.3

 
 
Acquisition approach costs paid
 
 
—

 
(1.2
)
 
(0.6
)
 
 
Income taxes paid
 
 
(4.1
)
 
(5.4
)
 
(5.1
)
 
 
NET CASH FLOWS FROM CONTINUING OPERATING ACTIVITIES
 
 
45.2

 
29.2

 
52.8

 
 
CASH FLOWS FROM INVESTING ACTIVITIES
 
 
 
 
 
 
 
 
 
Purchases of property, plant and equipment
 
 
(9.6
)
 
(16.5
)
 
(15.3
)
 
 
Purchases of intangible assets
 
 
(1.7
)
 
(2.4
)
 
(2.1
)
 
 
Proceeds from sale of redundant site
 
 
—

 
3.0

 
—

 
 
Receipts from sales of property, plant and equipment
 
 
0.1

 
0.4

 
—

 
 
Cash received as compensation for insured assets
 
 
—

 
0.2

 
—

 
 
Investment in joint ventures and associates
14
 
(1.0
)
 
0.2

 
(4.2
)
 
 
Interest income received from joint ventures and associates
 
 
0.1

 
0.3

 
0.4

 
 
Net cash flows on purchase of businesses
25
 
(5.6
)
 
(0.3
)
 
—

 
 
Acquisition and disposal costs paid
 
 
(0.4
)
 
—

 
—

 
 
NET CASH FLOWS FROM INVESTING ACTIVITIES
 
 
(18.1
)
 
(15.1
)
 
(21.2
)
 
 
NET CASH FLOWS BEFORE FINANCING
 
 
27.1

 
14.1

 
31.6

 
 
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
 
 
 
 
 
 
Interest and similar finance costs paid on banking facilities
 
 
(1.9
)
 
(1.9
)
 
(1.7
)
 
 
Interest paid on Loan Notes
 
 
(4.3
)
 
(4.5
)
 
(4.9
)
 
 
Bank interest received
 
 
0.2

 
0.2

 
0.2

 
 
(Repayment) / draw down on banking facilities
 
 
(13.4
)
 
(8.5
)
 
9.6

 
 
Extension to long term debt—financing costs
 
 
(1.2
)
 
(0.2
)
 
—

 
 
Dividends paid
19
 
(13.3
)
 
(13.3
)
 
(10.8
)
 
 
ESOP cash movements
18
 
—

 
(1.0
)
 
0.1

 
 
Proceeds from issue of shares
 
 
—

 
—

 
0.2

 
 
Treasury shares cash movements
 
 
0.3

 
(6.3
)
 
(1.9
)
 
 
NET CASH FLOWS FROM FINANCING ACTIVITIES
 
 
(33.6
)
 
(35.5
)
 
(9.2
)
 
 
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS
 
 
(6.5
)
 
(21.4
)
 
22.4

 
 
Net foreign exchange differences
 
 
2.0

 
(1.9
)
 
(0.1
)
 
 
Net cash and cash equivalents at January 1
17
 
13.6

 
36.9

 
14.6

 
 
Net cash and cash equivalents at December 31
17
 
9.1

 
13.6

 
36.9

 

F- 6
Table of Contents
 

LUXFER HOLDINGS PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
All amounts in millions, except share and per share data
 
 
Equity attributable to the equity shareholders of the parent
 
 
 
 
 
Ordinary
share
capital
 
Deferred
share
capital
 
Share
premium
account
 
Treasury
shares
 
Retained
earnings
 
Own shares
held
by ESOP
 
Other Reserves (1)

 
Total
equity
 
 
 
Note
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At January 1, 2015
 
 
25.3

 
150.9

 
56.2

 
—

 
308.8

 
(0.4
)
 
(365.4
)
 
175.4

 
 
Net income for the year
 
 
—

 
—

 
—

 
—

 
16.1

 
—

 
—

 
16.1

 
 
Currency translation differences
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(8.6
)
 
(8.6
)
 
 
Increase in fair value of cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(5.4
)
 
(5.4
)
 
 
Transfer to consolidated income statement on cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.1
)
 
(0.1
)
 
 
Remeasurement of defined benefit retirement plans
 
 
—

 
—

 
—

 
—

 
4.4

 
—

 
—

 
4.4

 
 
Deferred income taxes on items taken to other comprehensive income
 
 
—

 
—

 
—

 
—

 
(1.5
)
 
—

 
1.1

 
(0.4
)
 
 
Total comprehensive income for the year
 
 
—

 
—

 
—

 
—

 
19.0

 
—

 
(13.0
)
 
6.0

 
 
Equity dividends
19
 
—

 
—

 
—

 
—

 
(10.8
)
 
—

 
—

 
(10.8
)
 
 
Equity settled share based compensation charges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
0.9

 
0.9

 
 
Arising from issue of share capital
18
 
—

 
—

 
0.2

 
—

 
—

 
—

 
—

 
0.2

 
 
Purchase of own shares
18
 
—

 
—

 
—

 
(1.9
)
 
—

 
—

 
—

 
(1.9
)
 
 
Purchase of shares from ESOP
18
 
—

 
—

 
—

 
—

 
—

 
0.1

 
—

 
0.1

 
 
Utilization of treasury shares
18
 
—

 
—

 
—

 
0.6

 
(0.1
)
 
—

 
(0.5
)
 
—

 
 
Deferred income taxes on items taken to equity
23
 
—

 
—

 
—

 
—

 
(0.3
)
 
—

 
—

 
(0.3
)
 
 
Exchange movement on ESOP
18
 
—

 
—

 
—

 
—

 
—

 
0.1

 
—

 
0.1

 
 
Other changes in equity in the year
 
 
—

 
—

 
0.2

 
(1.3
)
 
(11.2
)
 
0.2

 
0.4

 
(11.7
)
 
 
At December 31, 2015
 
 
25.3

 
150.9

 
56.4

 
(1.3
)
 
316.6

 
(0.2
)
 
(378.0
)
 
169.7

 
 
Net income for the year
 
 
—

 
—

 
—

 
—

 
21.9

 
—

 
—

 
21.9

 
 
Currency translation differences
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(13.1
)
 
(13.1
)
 
 
Increase in fair value of cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
1.1

 
1.1

 
 
Transfer to consolidated income statement on cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
(0.9
)
 
(0.9
)
 
 
Remeasurement of defined benefit retirement plans
 
 
—

 
—

 
—

 
—

 
(21.7
)
 
—

 
—

 
(21.7
)
 
 
Deferred income taxes on items taken to other comprehensive income
23
 
—

 
—

 
—

 
—

 
4.3

 
—

 
—

 
4.3

 
 
Total comprehensive income for the year
 
 
—

 
—

 
—

 
—

 
4.5

 
—

 
(12.9
)
 
(8.4
)
 
 
Equity dividends
19
 
—

 
—

 
—

 
—

 
(13.3
)
 
—

 
—

 
(13.3
)
 
 
Equity settled share based compensation charges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
1.2

 
1.2

 
 
Purchase of own shares
18
 
—

 
—

 
—

 
(6.3
)
 
—

 
—

 
—

 
(6.3
)
 
 
Purchase of shares into ESOP
18
 
—

 
—

 
—

 
—

 
—

 
(1.0
)
 
—

 
(1.0
)
 
 
Utilization of treasury shares
18
 
—

 
—

 
—

 
0.5

 
0.1

 
—

 
(0.6
)
 
—

 
 
Utilization of shares from ESOP
18
 
—

 
—

 
—

 
—

 
0.2

 
0.7

 
(0.9
)
 
—

 
 
Other changes in equity in the year
 
 
—

 
—

 
—

 
(5.8
)
 
(13.0
)
 
(0.3
)
 
(0.3
)
 
(19.4
)
 
 
At December 31, 2016
 
 
25.3

 
150.9

 
56.4

 
(7.1
)
 
308.1

 
(0.5
)
 
(391.2
)
 
141.9

 
 
Net income for the year
 
 
—

 
—

 
—

 
—

 
11.5

 
—

 
—

 
11.5

 
 
Currency translation differences
 
 
—

 
—

 
—

 
—

 
—

 
—

 
11.6

 
11.6

 
 
Increase in fair value of cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
3.1

 
3.1

 
 
Transfer to consolidated income statement on cash flow hedges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
0.6

 
0.6

 
 
Remeasurement of defined benefit retirement plans
 
 
—

 
—

 
—

 
—

 
9.5

 
—

 
—

 
9.5

 
 
Deferred income taxes on items taken to other comprehensive income
23
 
—

 
—

 
—

 
—

 
(5.2
)
 
—

 
(0.6
)
 
(5.8
)
 
 
Total comprehensive income for the year
 
 
—

 
—

 
—

 
—

 
15.8

 
—

 
14.7

 
30.5

 
 
Equity dividends
19
 
—

 
—

 
—

 
—

 
(13.3
)
 
—

 
—

 
(13.3
)
 
 
Equity settled share based compensation charges
 
 
—

 
—

 
—

 
—

 
—

 
—

 
2.6

 
2.6

 
 
Purchase of shares into ESOP
18
 
—

 
—

 
—

 
0.8

 
—

 
(0.8
)
 
—

 
—

 
 
Utilization of treasury shares
18
 
—

 
—

 
—

 
0.5

 
0.1

 
—

 
(0.6
)
 
—

 
 
Utilization of shares from ESOP
18
 
—

 
—

 
—

 
—

 
0.1

 
0.3

 
(0.4
)
 
—

 
 
Deferred income taxes on items taken to equity
23
 
—

 
—

 
—

 
—

 
0.6

 
—

 
—

 
0.6

 
 
Other changes in equity in the year
 
 
—

 
—

 
—

 
1.3

 
(12.5
)
 
(0.5
)
 
1.6

 
(10.1
)
 
 
At December 31, 2017
 
 
25.3

 
150.9

 
56.4

 
(5.8
)
 
311.4

 
(1.0
)
 
(374.9
)
 
162.3

 
(1)
Other reserves include a hedging reserve of a loss of $0.2 million ( 2016 : a loss of $3.3 million and 2015 : a loss of $3.5 million ), a translation reserve of $46.3 million ( 2016 : $57.9 million and 2015 : $44.8 million ), a merger reserve of $333.8 million ( 2016 and 2015 : $333.8 million ) and a share based compensation reserve of $5.4 million ( 2016 : $3.8 million and 2015 : $4.1 million ).

F- 7
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


1.
Accounting policies
Basis of preparation and statement of compliance with IFRS
The consolidated financial statements have been prepared in accordance with the International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board as they apply to the consolidated financial statements of the Group and interpretations issued by IFRS Interpretation Committee, for the year ended December 31, 2017 . The consolidated financial statements have been prepared on a historical cost basis, except where IFRS requires or permits fair value measurement.
The directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Therefore the directors continue to apply the going concern basis for accounting in the preparation of the consolidated financial statements.
For the purpose of the accompanying consolidated financial statements, subsequent events have been evaluated through to March 19, 2018 , which is the date the consolidated financial statements were authorized by the Board. The consolidated financial statements were issued on March 19, 2018 .
Basis of consolidation
The consolidated financial statements comprise the financial statements of Luxfer Holdings PLC and its subsidiaries (the "Group") at December 31 each year. The financial statements of the subsidiaries are prepared for the same reporting year as the parent company, using consistent accounting policies. All inter-company balances and transactions, including unrealized profits arising from intra-Group transactions, have been eliminated in full.
Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.
The accounting policies which follow, set out those polices which apply in preparing the consolidated financial statements for the years ended December 31, 2015 , December 31, 2016 and December 31, 2017 .
Presentation currency
The consolidated financial statements are presented in U.S. dollars and all values are rounded to the nearest $0.1 million except when otherwise indicated. The books of the Group's non-U.S. entities are converted to U.S. dollars at each reporting period date in accordance with the accounting policy below.
The functional currency of the holding company Luxfer Holdings PLC and its U.K. subsidiaries remains GBP sterling, being the most appropriate currency for those particular operations.
Business combinations and goodwill
Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value, and the amount of any non-controlling interest in the acquiree. The choice of measurement of non-controlling interest, either at fair value or at the proportionate share of the acquiree's identifiable net assets, is determined on a transaction by transaction basis. Acquisition costs are expensed as incurred.
Goodwill is initially measured at cost, being the excess of the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognized for the non-controlling interest over the net identifiable amounts of the assets acquired and the liabilities assumed in exchange for the business combination. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to the Group's cash generating units that are expected to benefit from the combination. .
Goodwill arising on acquisitions before the date of transition to IFRS has been retained at the previous U.K. GAAP amounts subject to being tested for impairment at that date and in subsequent years.
A bargain purchase is measured at cost being the excess of the net identifiable amounts of the assets acquired and the liabilities assumed in exchange for the business combination over the aggregate of the acquisition-date fair value of the consideration transferred and the amount recognized for the non-controlling interest. Any amount of a bargain purchase is recognized immediately as income.

Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Contingent consideration arising as a result of a business combination is recognized at fair value at the acquisition date. Subsequent changes in the fair value of contingent consideration classified as an asset or liability are accounted for in accordance with the relevant IFRSs.
Other intangible assets
Other intangible assets excluding development costs, are measured initially at purchase cost, or where acquired in a business combination at fair value, and are amortized on a straight-line basis over their estimated useful lives as shown in the table below.
Research expenditure is expensed as incurred. Internal development expenditure is charged as administrative costs to the consolidated income statement in the year it is incurred unless it meets the recognition criteria of IAS 38 "Intangible Assets". Where the recognition criteria are met, intangible assets are capitalized and amortized over their estimated useful economic lives from product launch, as shown in the table below. Intangible assets relating to products in development are subject to impairment testing at each balance sheet date or earlier upon indication of impairment.
 
Technology and patents
14 – 20 years
 
 
Tradenames and trademarks
20 – 25 years
 
 
Customer relationships
10 – 15 years
 
 
Backlogs and non-compete agreements
5 – 6 years
 
 
Development costs
5 – 10 years
 
 
Software
4 – 7 years
 
The carrying values are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Reviews are made annually of the estimated remaining lives and residual values of the patents and trademarks.
Revenue
Revenue is measured at the fair value of the consideration received or receivable, and represents amounts receivable for goods supplied, less inter-company revenue, estimated rebates, returns, settlement discounts and sales tax.
Sale of goods
Revenue for the sale of goods is recognized when all of the following conditions are satisfied:
•
The significant risks and rewards of ownership of the goods have been transferred to the buyer;
•
The Group retain neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
•
The amount of revenue can be reliably measured;
•
It is probable that future economic benefits will flow to the entity; and
•
The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Royalties
Royalty revenue is recognized on an accrual basis in accordance with the substance of the relevant agreements, provided that it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably.

F- 9
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Tooling revenue
Revenue recognition associated with tooling contracts is recognized in proportion to the progress and costs incurred as a percentage of total expected costs. Payments made in advance of work performed and raw materials purchased for which no work has been performed are excluded from the calculations and are accounted for as deferred income and inventory respectively. Where customer acceptance is on final completion and handover of the tool, revenue is recognized at the point the customer accepts ownership of the tool.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation and any impairment in value. Depreciation is initially calculated on a straight-line basis over the estimated useful life of the particular asset. As a result of the complexity of our manufacturing process, there is a wide range of plant and equipment in operation. The rate of annual charge is summarized as follows:
 
Freehold buildings
3% – 10%
 
 
Leasehold land and buildings
The lesser of life of lease or freehold rate
 
 
Plant and equipment
4% – 30%
 
 
Including:
 
 
 
Heavy production equipment (including casting, rolling, extrusion and press equipment)
4% – 6%
 
 
Chemical production plant and robotics
10% – 15%
 
 
Other production machinery
10% – 20%
 
 
Furniture, fittings, storage and equipment
10% – 30%
 
Freehold land is not depreciated.
Reviews are made annually of the estimated remaining lives and residual values of individual productive assets, taking account of commercial and technological obsolescence as well as normal wear and tear.
For any individual asset the carrying value is reviewed for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. If any such indication exists and where the carrying value exceeds the estimated recoverable amount, the asset is written-down to its recoverable amount. The recoverable amount of property, plant and equipment is the greater of the fair value less costs of disposal and the value in use. In assessing the value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in the consolidated income statement as part of the profit or loss on operations before taxation.
An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the item) is included in the consolidated income statement in the year the item is derecognized.
Maintenance costs in relation to an item of property, plant and equipment are expensed as incurred.
Inventories
Inventories are stated at the lower of cost and net realizable value. Raw materials are valued on a first-in, first-out basis. Strategic purchases of inventories in order to secure supply and reduce the impact of price volatility on the cost of inventories are valued on an average cost basis. Work in progress and finished goods costs comprise direct materials and, where applicable, direct labor costs, an apportionment of production overheads and any other costs that have been incurred in bringing the inventories to their present location and condition. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to be incurred in selling and distribution. Inventories are reviewed on a regular basis, and we will make allowance for excess or obsolete inventories and write-down to net realizable value based primarily on committed sales prices and our estimates of expected and future product demand and related pricing.

F- 10
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Foreign currencies
Transactions in currencies other than an operation's functional currency are initially recorded in the functional currency at the rate of exchange prevailing on the dates of transactions. At each balance sheet date, the foreign currency monetary assets and liabilities are translated into the functional currency at the rates prevailing on the balance sheet date.
All differences are taken to the consolidated income statement with the exception of differences on foreign currency borrowings that provide a hedge against a net investment in a foreign entity. These are taken directly to equity until the disposal of the net investment, at which time they are recognized in the consolidated income statement. Tax charges and credits attributable to exchange differences on those borrowings are also dealt with in equity.
On consolidation, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences that arise, if any, are classified as equity and transferred to the Group's translation reserve. Such translation differences are recognized in the consolidated income statement in the period in which the operation is disposed or partially disposed.
Income taxes
Current income taxes
Current income tax assets and liabilities for the current period are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted, or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.
Current income taxes relating to items recognized directly in equity is recognized in equity and not in the consolidated income statement. Management periodically evaluates positions taken in the tax returns with respect to situations in which applicable tax regulations are subject to interpretation and establishes provisions where appropriate.
Deferred income taxes
Deferred income taxes are the future income taxes expected to be payable or recoverable on differences between the carrying values of assets and liabilities in the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit, and are accounted for using the balance sheet liability method. Deferred income tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax assets are recognized to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
Deferred income tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries, investments in associates, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.
The carrying value of a deferred income tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred income taxes are calculated at the tax rate that is expected to apply in the period when the liability is settled or the asset is realized based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date. Deferred income taxes are charged or credited to the consolidated income statement, except when it relates to items charged or credited directly to equity, in which case the deferred income taxes are also dealt with in equity.

F- 11
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Leases
Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. Operating lease payments are recognized as an expense in the consolidated income statement on a straight-line basis over the lease term.
Retirement benefits costs
In respect of defined benefit plans, obligations are measured at the present value whilst plan assets are recorded at fair value. The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each balance sheet date.
The charge to the consolidated income statement is based on an actuarial calculation of the Group's portion of the annual expected costs of the benefit plans and the net interest cost, which is calculated by applying the discount rate to the net defined benefit obligation, taking into account contributions and benefits paid. Remeasurements are recognized in the statement of comprehensive income.
When a settlement or curtailment occurs the obligation and related plan assets are remeasured using current actuarial assumptions and the resultant gain or loss recognized in the consolidated income statement in the period in which the settlement or curtailment occurs.
Payments to defined contribution plans are charged as an expense as they fall due.
Provisions
Provisions are recognized when the Group has a present obligation as a result of a past event, it is probable that a transfer of resources will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation.
Share based compensation
The cost of equity settled transactions is recognized, based upon the fair value at grant date, together with a corresponding increase in the share based compensation reserve in equity, over the period in which the performance or service conditions are fulfilled. The cumulative expense recognized for equity settled transactions at each reporting date until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number of equity instruments that will ultimately vest. The consolidated income statement expense or credit for a period represents the movement in cumulative expense recognized at the beginning and end of that period.
Separate disclosure of expenses or income
Certain items of expense or income are presented separately based on management's judgment that they need to be disclosed by virtue of their size, nature or incidence in order to provide a proper understanding of our results of operations and financial condition. Such items of expense or income incurred during a period are disclosed under identifiable headings in the consolidated income statement and further explained in Note 5 to the consolidated financial statements. Examples of such items include but are not limited to:
•
Restructuring of the activities of the Group and reversals of any provisions for the costs of restructuring;
•
write-downs of inventories to net realizable value or of property, plant and equipment to recoverable amount, as well as reversals of such write-downs;
•
disposals of items of property, plant and equipment;
•
disposals of investments and subsidiaries;
•
discontinued operations;
•
litigation settlements; and
•
other material reversals of provisions.

F- 12
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

The nature of the items of expense or income is considered to determine whether the item should be presented as part of operating profit or loss or as other expenses or income. The trading profit and adjusted earnings per share calculations, presented by the Group exclude the impact of these items. Management believes that the use of adjusted measures such as this provides additional useful information on underlying trends to shareholders.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity date of three months or less. For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and cash equivalents as defined above, but net of bank overdrafts.
Interest in joint ventures
The Group has applied IFRS 11 to all joint arrangements. Under IFRS 11, investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations of each investor. The Group has assessed the nature of its joint arrangements and determined them to be joint ventures. Joint ventures are accounted for using the equity method of accounting. Under the equity method of accounting, interests in joint ventures are initially recognized at cost and adjusted thereafter to recognize the Group's share of the post-acquisition profits or losses and movements in other comprehensive income.
When the Group's share of losses in a joint venture equals or exceeds its interests in the joint ventures (which includes any long-term interests that, in substance, form part of the Group's net investment in the joint ventures), the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the joint ventures.
The Group determines at each reporting date whether there is any objective evidence that the investment in the joint venture is impaired. If the investment is impaired, the Group calculates the amount of impairment as the difference between the recoverable amount of the joint venture and its carrying value and recognizes the amount as 'restructuring and other expense' in the consolidated income statement.
Gains or losses resulting from upstream and downstream transactions between the Group and its joint venture are recognized in the Group's consolidated financial statements only to the extent of unrelated investor's interests in the joint venture. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of the joint ventures have been changed where necessary to ensure consistency with the policies adopted by the Group.
Interest in associates
Associates are all entities over which the Group has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for using the equity method of accounting. Under the equity method of accounting, the investment is initially recognized at cost, and the carrying value is increased or decreased to recognize the investor's share of the profit or loss and movements in other comprehensive income of the investee after the date of acquisition.
If the ownership interest in an associate is reduced but significant influence is retained, only a proportionate share of the amounts previously recognized in other comprehensive income is reclassified to profit or loss where appropriate.
The Group's share of post-acquisition profit or loss is recognized in the consolidated income statement, and its share of post-acquisition movements in other comprehensive income is recognized in other comprehensive income with a corresponding adjustment to the carrying value of the investment. When the Group's share of losses in an associate equals or exceeds its interest in the associate, including other unsecured receivables, the Group does not recognize further losses, unless it has incurred legal or constructive obligations or made payments on behalf of the associate.
The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognizes the amount as 'restructuring and other expense' in the consolidated income statement.

F- 13
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Gains or losses resulting from upstream and downstream transactions between the Group and its associate are recognized in the Group's consolidated financial statements only to the extent of unrelated investor's interests in the associates. Unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the Group.
Dilution gains and losses arising in investments in associates are recognized in the consolidated income statement.
Financial assets and liabilities
Trade and other receivables
Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts.
Bank and other loans
Bank and other loans are recorded at the fair value of the proceeds received net of directly attributable transaction costs. Issue costs relating to revolving credit facilities are charged to the consolidated income statement over the estimated life of the facility on a periodic basis and are added to the carrying value of the facility. Issue costs relating to fixed term loans are charged to the consolidated income statement using the effective interest method and are added to the carrying value of the fixed term loan.
Trade payables
Trade payables are not interest bearing and are stated at their nominal value.
Derivative financial instruments
The Group uses derivative financial instruments such as foreign currency contracts to hedge its risks associated with foreign currency fluctuations. Such derivative financial instruments are stated at fair value.
Hedges are classified as cash flow hedges when they hedge exposure to variability in cash flows either attributable to a particular risk associated with a recognized asset or liability or a highly probable forecast transaction.
In relation to cash flow hedges to hedge the foreign currency risk of firm commitments which meet the conditions for special hedge accounting, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in equity and the ineffective portion is recognized in the consolidated income statement.
In relation to derivative financial instruments used to hedge a forecast transaction, the portion of the gain or loss on the hedging instrument that is determined to be an effective hedge is recognized directly in equity and the ineffective portion is recognized in the consolidated income statement. Amounts taken to equity are transferred to the consolidated income statement when the hedged transaction affects profit or loss.
Financial liabilities and equity instruments
Financial liabilities and equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.
Financial liabilities and equity instruments are all instruments that are issued by the Group as a means of raising finance, including shares, loan notes, debentures, debt instruments and options and warrants that give the holder the right to subscribe for or obtain financial liabilities and equity instruments.
An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. All equity instruments are included in shareholders' funds. The finance costs incurred in respect of an equity instrument are charged directly to the consolidated income statement. Other instruments are classified as financial liabilities if they contain a contractual obligation to transfer economic benefits.


F- 14
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

Critical accounting judgments and key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the balance sheet date, that have a significant risk of causing a material adjustment to the carrying values of assets and liabilities within the next financial year, are discussed below. The judgments used by management in the application of the Group's accounting policies in respect of these key areas of estimation are considered to be the most significant. The below policies include both elements of judgments and estimates.
Impairment of non-financial assets
The Group assesses whether there are any indicators of impairment for all non-financial assets at each reporting date. Goodwill is tested for impairment annually and at other times when such indicators exist. Other non-financial assets are tested for impairment when there are indicators that the carrying value may not be recoverable. Further details are given in Note 13.
When value in use calculations are undertaken, management must estimate the expected future cash flows from the asset or cash generating unit, including suitable sales growth and terminal growth rates, and choose a suitable discount rate in order to calculate the present value of those cash flows. Details regarding goodwill and assumptions used in carrying out the impairment review are given in Note 13.
Pensions
Determining the present value of future obligations of pensions requires an estimation of future mortality rates, future salary increases, future pension increases, future inflation increases and discount rates. These assumptions are determined in association with qualified actuaries. Due to the long-term nature of these plans, such estimates are subject to significant uncertainty. The pension liabilities at December 31, 2017 are $55.3 million ( 2016 : $66.5 million ). Further details are given in Note 29.
Deferred income taxes
Deferred income tax assets are recognized for unabsorbed tax losses and unutilized capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilized. Judgment is required to determine the amount of deferred income tax assets that can be recognized, based upon the likely timing and level of future taxable profits together with future tax planning strategies. Further details are given in Note 23.
Inventories obsolescence and inventories write down
Inventories are stated at the lower of cost and net realizable value. Inventories are reviewed on a regular basis, and we will make allowance for excess or obsolete inventories and write down to net realizable value based primarily on committed sales prices and our estimates of expected and future product demand and related pricing. Further details are given in Note 15.
Measurement of contingent consideration
Contingent consideration arising from business combinations is valued at fair value at the acquisition date. When the contingent consideration meets the definition of a financial liability, it is subsequently remeasured to fair value at each reporting date. The determination of the fair value is based on an estimate of the future profitability of the acquired businesses. Further details are given in Note 25.
Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except for the following new and amended standards and interpretations during the year that are applicable to the Group. Adoption of these revised standards and interpretations did not have any significant effect on the consolidated financial statements of the Group.
 
International Financial Reporting Standards
Effective date
 
 
IAS 7
Statement of cash flows (Amendments)
January 1, 2017
 
 
IAS 12
Income taxes (Amendments)
January 1, 2017
 

F- 15
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
1. Accounting policies (continued)

New standards and amendments to standards not applied
The IASB has issued the following standards and amendments to standards with a mandatory effective date on or after January 1, 2018:
 
International Financial Reporting Standards
Mandatory effective date
 
 
IFRS 2
Share based payments (Amendments)
No earlier than January 1, 2018
 
 
IFRS 15
Revenue from Contracts with Customers
No earlier than January 1, 2018
 
 
IFRS 9
Financial Instruments
No earlier than January 1, 2018
 
 
IFRS 16
Leases
No earlier than January 1, 2019
 
The Group applies IFRS as issued by the IASB.
The directors do not expect that the adoption of the standards listed above will have a material impact on the consolidated financial statements of the Group in future periods, except as follows:
•
IFRS 15—A five step approach will be taken in respect to recognizing revenue. Having undertaken a detailed review of our material revenue streams within the Group, revenue will continue to be recognized over the same profile as currently under IAS 18 and therefore there will be no change to the timing of revenue recognition. Incremental and contract fulfillment costs will need to be assessed on an ongoing basis, but at present there are no applicable costs. As a result there is not expected to be any material difference in our reported revenue numbers under IFRS 15 compared to what is currently reported under IAS 18;
•
IFRS 9—Financial assets will continue to be classified and measured at amortized cost under IFRS 9. The directors anticipate that the timing of the recognition of impairments will change rather than the size of the balance. Foreign currency exchange contracts should not be impacted although the ability to hedge component parts of the commodity hedges should allow us to decrease the risk of ineffectiveness; and
•
IFRS 16—Currently disclosed operating leases would be brought on to the balance sheet, with an offsetting liability and a depreciation charge and a finance charge would replace the lease expense charge to operating income, with the latter going through finance costs. The current level of operating lease commitments is disclosed in Note 26. These will be included within the balance sheet at a discounted amount, once the standard is adopted. These leases relate to company cars, real property leases and other vehicles. Low value assets (less than $5,000) and short-term (less than twelve months) leases do not need to be brought onto the balance sheet in the same way and can continue to be expensed through the income statement in line with current IAS 17 treatment. An assessment will also need to be carried out for any implicit leases which we have within any of our contracts.


F- 16
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


2.
Revenue and segmental analysis
For management purposes, the Group is organized into two reporting divisions, Gas Cylinders and Elektron. These divisions are aggregated from the six identified operating segments in the Group; Luxfer Gas Cylinders and Luxfer Superform aggregate to Gas Cylinders; and Luxfer MEL Technologies, Luxfer Magtech, Luxfer Graphic Arts and Luxfer Czech Republic aggregate to Elektron. The change in operating segments has come about with the change of CEO during 2017, and the way the group has been re-organized to reflect the common elements within the group. This rationale is in line with IFRS 8 which allows for aggregation of operating segments on the basis they share similar economic characteristics for the nature of the products and services; the nature of the production processes; the type or class of customer for their products and services; the methods used to distribute their products or provide their services; and the nature of the regulatory environment. For the purposes of impairment testing, the cash generating units (CGUs) have been assessed to be at the same level as the operating segments. The tables below set out information on the results of these two reportable divisions.
Management monitors the operating results of its operating segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated by the chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments and has been identified as the CEO, based on trading profit or loss (defined as operating profit or loss before profits on sale of redundant site, changes to defined benefit pension plans and restructuring and other expense), and adjusted EBITDA (defined as profit on operations before taxation for the period, finance income (which comprises interest received and foreign exchange gains) and costs (which comprises interest costs, IAS 19R retirement benefits finance charge and the unwind of the discount on deferred contingent consideration from acquisitions), net gain / loss on acquisitions and disposals of businesses, changes to defined benefit pension plans, restructuring and other expense, other share based compensation charges, depreciation and amortization and loss on disposal of property, plant and equipment). For the purposes of our divisional segmental analysis, IFRS 8 requires the use of "segment profit" performance measures that are used by our chief operating decision maker. Trading profit is the "segment profit" used to satisfy this requirement in the below analysis.
Unallocated assets and liabilities include those which are held on behalf of the Group and cannot be allocated to a division, such as taxation, investments, cash, retirement benefits obligations, bank and other loans and holding company assets and liabilities.


F- 17
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


REPORTING SEGMENTS:
Year ended December 31, 2017
 
 
Gas
Cylinders
 
Elektron
 
Unallocated
 
Total
Continuing
Activities
 
 
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 

 
 

 
 

 
 

 
 
Segment revenue
220.2

 
221.6

 
—

 
441.8

 
 
Inter-segment revenue
—

 
(0.5
)
 
—

 
(0.5
)
 
 
Revenue to external customers
220.2

 
221.1

 
—

 
441.3

 
 
Result
 

 
 

 
 

 
 
 
 
Adjusted EBITDA
17.3

 
44.5

 
—

 
61.8

 
 
Other share based compensation charges
(1.0
)
 
(1.2
)
 
—

 
(2.2
)
 
 
Loss on disposal of property, plant and equipment
—

 
(0.1
)
 
—

 
(0.1
)
 
 
Depreciation and amortization
(7.6
)
 
(11.4
)
 
—

 
(19.0
)
 
 
Trading profit—segment result
8.7

 
31.8

 
—

 
40.5

 
 
Profit on sale of redundant site
—

 
—

 
0.4

 
0.4

 
 
Restructuring and other expense (Note 5)
(6.6
)
 
(12.7
)
 
(2.3
)
 
(21.6
)
 
 
Operating profit
2.1

 
19.1

 
(1.9
)
 
19.3

 
 
Acquisitions and disposals (Note 5)
—

 
1.3

 
—

 
1.3

 
 
Net interest costs
—

 
—

 
(6.7
)
 
(6.7
)
 
 
IAS 19R retirement benefits finance charge
—

 
—

 
(1.8
)
 
(1.8
)
 
 
Unwind of discount on deferred contingent consideration from acquisitions
—

 
(0.2
)
 
—

 
(0.2
)
 
 
Profit / (loss) on operations before taxation
2.1

 
20.2

 
(10.4
)
 
11.9

 
 
Tax expense
 

 
 

 
 
 
(0.4
)
 
 
Net income for the year
 

 
 

 
 

 
11.5

 
 
Other segment information
 

 
 

 
 

 
 
 
 
Segment assets
150.5

 
207.6

 
44.5

 
402.6

 
 
Segment liabilities
(22.6
)
 
(22.3
)
 
(195.4
)
 
(240.3
)
 
 
Net assets / (liabilities) employed (2)
127.9

 
185.3

 
(150.9
)
 
162.3

 
 
Capital expenditure: Property, plant and equipment
3.5

 
5.7

 
—

 
9.2

 
 
Capital expenditure: Intangible assets
1.4

 
0.3

 
—

 
1.7

 



F- 18
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


Year ended December 31, 2016
 
 
Gas
Cylinders
 
Elektron
 
Unallocated
 
Total
Continuing
Activities
 
 
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 

 
 

 
 

 
 

 
 
Segment revenue
225.8

 
189.1

 
—

 
414.9

 
 
Inter-segment revenue
—

 
(0.1
)
 
—

 
(0.1
)
 
 
Revenue to external customers
225.8

 
189.0

 
—

 
414.8

 
 
Result
 

 
 

 
 

 
 
 
 
Adjusted EBITDA
19.7

 
35.6

 
—

 
55.3

 
 
Other share based compensation charges
(0.6
)
 
(0.8
)
 
—

 
(1.4
)
 
 
Loss on disposal of property, plant and equipment
(0.1
)
 
(0.1
)
 
—

 
(0.2
)
 
 
Depreciation and amortization
(7.6
)
 
(10.8
)
 
—

 
(18.4
)
 
 
Trading profit—segment result
11.4

 
23.9

 
—

 
35.3

 
 
Profit on sale of redundant site
—

 
—

 
2.1

 
2.1

 
 
Changes to defined benefit pension plans (Note 5)
—

 
—

 
0.6

 
0.6

 
 
Restructuring and other expense (Note 5)
—

 
(2.2
)
 
—

 
(2.2
)
 
 
Operating profit
11.4

 
21.7

 
2.7

 
35.8

 
 
Acquisitions and disposals (Note 5)
—

 
0.2

 
—

 
0.2

 
 
Net interest costs
—

 
—

 
(5.6
)
 
(5.6
)
 
 
IAS 19R retirement benefits finance charge
—

 
—

 
(2.1
)
 
(2.1
)
 
 
Unwind of discount on deferred contingent consideration from acquisitions
—

 
(0.4
)
 
—

 
(0.4
)
 
 
Profit / (loss) on operations before taxation
11.4

 
21.5

 
(5.0
)
 
27.9

 
 
Tax expense
 

 
 

 
 
 
(6.0
)
 
 
Net income for the year
 

 
 

 
 

 
21.9

 
 
Other segment information
 

 
 

 
 

 
 
 
 
Segment assets
146.8

 
190.6

 
54.1

 
391.5

 
 
Segment liabilities
(21.7
)
 
(14.2
)
 
(213.7
)
 
(249.6
)
 
 
Net assets / (liabilities) employed (2)
125.1

 
176.4

 
(159.6
)
 
141.9

 
 
Capital expenditure: Property, plant and equipment
6.5

 
10.0

 
—

 
16.5

 
 
Capital expenditure: Intangible assets
1.5

 
0.9

 
—

 
2.4

 

F- 19
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


Year ended December 31, 2015
 
 
Gas
Cylinders
 
Elektron
 
Unallocated
 
Total
Continuing
Activities
 
 
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 
 
 
 
 
 
 
 
 
Segment revenue
239.1

 
221.8

 
—

 
460.9

 
 
Inter-segment revenue
—

 
(0.6
)
 
—

 
(0.6
)
 
 
Revenue to external customers
239.1

 
221.2

 
—

 
460.3

 
 
Result
 

 
 

 
 

 
 
 
 
Adjusted EBITDA
16.5

 
45.7

 
—

 
62.2

 
 
Other share based compensation charges
(0.7
)
 
(0.6
)
 
—

 
(1.3
)
 
 
Depreciation and amortization
(7.2
)
 
(11.4
)
 
—

 
(18.6
)
 
 
Trading profit—segment result
8.6

 
33.7

 
—

 
42.3

 
 
Changes to defined benefit pension plans (Note 5)
—

 
—

 
18.0

 
18.0

 
 
Restructuring and other expense (Note 5)
(21.9
)
 
(0.5
)
 
—

 
(22.4
)
 
 
Operating (loss)/profit
(13.3
)
 
33.2

 
18.0

 
37.9

 
 
Acquisitions and disposals (Note 5)
(0.2
)
 
—

 
(1.8
)
 
(2.0
)
 
 
Net interest costs
—

 
—

 
(6.9
)
 
(6.9
)
 
 
IAS 19R retirement benefits finance charge
—

 
—

 
(3.0
)
 
(3.0
)
 
 
Unwind of discount on deferred contingent consideration from acquisitions
—

 
(0.4
)
 
—

 
(0.4
)
 
 
(Loss)/profit on operations before taxation
(13.5
)
 
32.8

 
6.3

 
25.6

 
 
Tax expense
 

 
 

 
 
 
(9.5
)
 
 
Net income for the year
 

 
 

 
 

 
16.1

 
 
Other segment information
 

 
 

 
 

 
 
 
 
Segment assets
158.3

 
208.5

 
68.9

 
435.7

 
 
Segment liabilities
(32.3
)
 
(21.4
)
 
(212.3
)
 
(266.0
)
 
 
Net assets/(liabilities) employed (2)
126.0

 
187.1

 
(143.4
)
 
169.7

 
 
Capital expenditure: Property, plant and equipment
6.0

 
9.3

 
—

 
15.3

 
 
Capital expenditure: Intangible assets
1.2

 
0.9

 
—

 
2.1

 

F- 20
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


GEOGRAPHIC ORIGIN:
Year ended December 31, 2017
 
 
United
Kingdom
 
Rest of
Europe
 
North
America
 
Australasia
 
Asia
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 

 
 

 
 

 
 

 
 

 
 

 
 
Segment revenue
162.6

 
48.6

 
275.9

 
0.1

 
2.7

 
489.9

 
 
Inter-segment revenue
(23.1
)
 
(1.5
)
 
(24.0
)
 
—

 
—

 
(48.6
)
 
 
Revenue to external customers
139.5

 
47.1

 
251.9

 
0.1

 
2.7

 
441.3

 
 
Result
 

 
 

 
 

 
 

 
 

 
 
 
 
Adjusted EBITDA
16.2

 
1.3

 
44.1

 
0.1

 
0.1

 
61.8

 
 
Other share based compensation charges
(1.4
)
 
—

 
(0.8
)
 
—

 
—

 
(2.2
)
 
 
Loss on disposal of property, plant and equipment
—

 
(0.1
)
 
—

 
—

 
—

 
(0.1
)
 
 
Depreciation and amortization
(5.9
)
 
(2.4
)
 
(10.7
)
 
—

 
—

 
(19.0
)
 
 
Trading profit/(loss)—segment result
8.9

 
(1.2
)
 
32.6

 
0.1

 
0.1

 
40.5

 
 
Sale of redundant site
0.4

 
—

 
—

 
—

 
—

 
0.4

 
 
Restructuring and other expense (Note 5)
(14.4
)
 
(2.3
)
 
(4.9
)
 
—

 
—

 
(21.6
)
 
 
Operating (loss) / profit
(5.1
)
 
(3.5
)
 
27.7

 
0.1

 
0.1

 
19.3

 
 
Other geographical segment information
 

 
 

 
 

 
 

 
 

 
 
 
 
Non-current assets (1)
74.3

 
14.2

 
142.5

 
—

 
0.3

 
231.3

 
 
Net assets employed (2)
10.0

 
30.7

 
118.8

 
—

 
2.8

 
162.3

 
 
Capital expenditure: Property, plant and equipment
4.4

 
0.7

 
4.1

 
—

 
—

 
9.2

 
 
Capital expenditure: Intangible assets
1.4

 
—

 
0.3

 
—

 
—

 
1.7

 

F- 21
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


Year ended December 31, 2016
 
 
United
Kingdom
 
Rest of
Europe
 
North
America
 
Australasia
 
Asia
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment revenue
142.6

 
39.1

 
282.5

 
0.1

 
3.4

 
467.7

 
 
Inter-segment revenue
(28.6
)
 
(1.6
)
 
(22.7
)
 
—

 
—

 
(52.9
)
 
 
Revenue to external customers
114.0

 
37.5

 
259.8

 
0.1

 
3.4

 
414.8

 
 
Result
 

 
 

 
 

 
 

 
 

 
 
 
 
Adjusted EBITDA
17.4

 
(0.4
)
 
37.8

 
0.1

 
0.4

 
55.3

 
 
Other share based compensation charges
(1.0
)
 
—

 
(0.4
)
 
—

 
—

 
(1.4
)
 
 
Loss on disposal of property, plant and equipment
—

 
(0.1
)
 
(0.1
)
 
—

 
—

 
(0.2
)
 
 
Depreciation and amortization
(5.7
)
 
(2.3
)
 
(10.3
)
 
—

 
(0.1
)
 
(18.4
)
 
 
Trading profit/(loss)—segment result
10.7

 
(2.8
)
 
27.0

 
0.1

 
0.3

 
35.3

 
 
Sale of redundant site
2.1

 
—

 
—

 
—

 
—

 
2.1

 
 
Changes to defined benefit pension plans
—

 
—

 
0.6

 
—

 
—

 
0.6

 
 
Restructuring and other expense (Note 5)
(0.6
)
 
—

 
(1.6
)
 
—

 
—

 
(2.2
)
 
 
Operating profit/(loss)
12.2

 
(2.8
)
 
26.0

 
0.1

 
0.3

 
35.8

 
 
Other geographical segment information
 

 
 

 
 

 
 

 
 

 
 
 
 
Non-current assets (1)
77.5

 
13.8

 
143.9

 
—

 
0.2

 
235.4

 
 
Net assets employed (2)
6.9

 
19.7

 
112.3

 
0.3

 
2.7

 
141.9

 
 
Capital expenditure: Property, plant and equipment
6.7

 
1.2

 
8.6

 
—

 
—

 
16.5

 
 
Capital expenditure: Intangible assets
2.0

 
—

 
0.4

 
—

 
—

 
2.4

 

F- 22
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data


Year ended December 31, 2015
 
 
United
Kingdom
 
Rest of
Europe
 
North
America
 
Australasia
 
Asia
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
Segment revenue
145.0

 
62.4

 
299.6

 
0.1

 
3.9

 
511.0

 
 
Inter-segment revenue
(27.0
)
 
(2.9
)
 
(20.8
)
 
—

 
—

 
(50.7
)
 
 
Revenue to external customers
118.0

 
59.5

 
278.8

 
0.1

 
3.9

 
460.3

 
 
Result
 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA
13.6

 
1.3

 
46.5

 
0.2

 
0.6

 
62.2

 
 
Other share based compensation charges
(1.0
)
 
—

 
(0.3
)
 
—

 
—

 
(1.3
)
 
 
Depreciation and amortization
(6.1
)
 
(2.3
)
 
(10.1
)
 
—

 
(0.1
)
 
(18.6
)
 
 
Trading profit/(loss)—segment result
6.5

 
(1.0
)
 
36.1

 
0.2

 
0.5

 
42.3

 
 
Changes to defined benefit pension plans
18.0

 
—

 
—

 
—

 
—

 
18.0

 
 
Restructuring and other expense (Note 5)
(8.0
)
 
(7.8
)
 
(6.6
)
 
—

 
—

 
(22.4
)
 
 
Operating profit/(loss)
16.5

 
(8.8
)
 
29.5

 
0.2

 
0.5

 
37.9

 
 
Other geographical segment information
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-current assets (1)
67.8

 
14.5

 
147.6

 
—

 
0.3

 
230.2

 
 
Net assets employed (2)
19.7

 
23.7

 
122.6

 
0.3

 
3.4

 
169.7

 
 
Capital expenditure: Property, plant and equipment
5.5

 
1.4

 
8.4

 
—

 
—

 
15.3

 
 
Capital expenditure: Intangible assets
1.7

 
—

 
0.4

 
—

 
—

 
2.1

 
(1)  
The Group's non-current assets analyzed by geographic origin include property, plant and equipment, intangible assets and investments.
(2)  
Represents net assets employed—excluding inter-segment assets and liabilities.

GEOGRAPHIC DESTINATION:
 
 
United
Kingdom
 
Rest of
Europe
 
Africa
 
North
America
 
South
America
 
Asia
Pacific
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Revenue—Continuing activities
 

 
 

 
 

 
 

 
 

 
 

 
 

 
 
Year ended December 31, 2017
40.7

 
102.9

 
3.0

 
238.7

 
8.6

 
47.4

 
441.3

 
 
Year ended December 31, 2016
36.4

 
94.2

 
2.4

 
226.3

 
9.9

 
45.6

 
414.8

 
 
Year ended December 31, 2015
53.5

 
98.9

 
2.7

 
245.9

 
13.4

 
45.9

 
460.3

 

F- 23
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

3.
Operating profit
Operating profit for continuing activities is stated after charging/ (crediting):
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Research and development expenditure charged to the consolidated income statement
6.9

 
5.5

 
5.8

 
 
Development capital expenditure included within non-current assets (Note 12)
0.9

 
2.1

 
2.5

 
 
Total research and development expenditure
7.8

 
7.6

 
8.3

 
 
Less development expenditure capitalized within non-current assets
(0.9
)
 
(2.1
)
 
(2.5
)
 
 
Net research and development
6.9

 
5.5

 
5.8

 
 
Depreciation of property, plant and equipment (Note 11)
16.7

 
16.7

 
16.6

 
 
Amortization of intangible assets (Note 12)
2.3

 
1.7

 
2.2

 
 
Loss on disposal of property, plant and equipment
0.1

 
0.2

 
—

 
 
Operating lease expense (Note 26)
5.1

 
4.8

 
5.6

 
 
Restructuring and other expense (Note 5)
21.6

—

2.2

—

22.4

 
 
Net foreign exchange gains
—

—

(0.7
)
 
(0.6
)
 
 
Staff costs (Note 6)
121.3

 
111.7

 
119.3

 
 
Cost of inventories recognized as expense
282.9

 
287.3

 
316.2

 
4.
Fees payable to auditors
The total remuneration of the Group's auditor, PricewaterhouseCoopers LLP and other member firms of PricewaterhouseCoopers International Limited, for services provided to the Group during the years ended December 31, 2017 , December 31, 2016 and December 31, 2015 is analyzed below.
 
 
 
2017
 
2016
 
2015
 
 
 
 
$M
 
$M
 
$M
 
 
Fees payable to auditors for the audit of the consolidated financial statements and its subsidiaries
 
1.3

 
1.1

 
1.1

 
 
Fees payable to auditors for non-audit services:
 
 
 
 
 
 
 
 
Accounting advisory services
 
0.1

 
—

 
—

 
 
Total fees payable
 
1.4

 
1.1

 
1.1

 
Accounting advisory services fees incurred in 2017 relate to an ongoing GAAP conversion project in relation to the expected loss of our FPI status.
The audit fee for the company financial statements of Luxfer Holdings PLC was $0.1 million ( 2016 : $0.1 million and 2015 : $0.1 million ).

F- 24
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

5.
Other income/ (expense) items
 
 
 
2017
 
2016
 
2015
 
 
 
 
$M
 
$M
 
$M
 
(a)   Profit on sale of redundant site
 
Credited to operating profit:
 
 
 
 
 
 
 
 
Profit on sale of redundant site
 
0.4

 
2.1

 
—

 
 
 
 
0.4

 
2.1

 
—

 
(b)   Changes to defined benefit pension plans
 
Credited to operating profit:
 
 
 
 
 
 
 
 
Changes to defined benefit pension plans
 
—

 
0.6

 
18.0

 
 
 
 
—

 
0.6

 
18.0

 
(c)   Restructuring and other expense
 
Charged to operating profit:
 
 
 
 
 
 
 
 
Rationalization of operations
 
(12.1
)
 
(0.4
)
 
(21.8
)
 
 
Patent infringement litigation costs
 
(3.5
)
 
(0.6
)
 
(0.5
)
 
 
Direct listing costs
 
(2.3
)
 
—

 
—

 
 
Non-current asset impairments
 
(3.7
)
 
—

 
—

 
 
Receivable impairment provision
 
—

 
(1.2
)
 
—

 
 
I.P.O. related share based compensation charges
 
—

 
—

 
(0.1
)
 
 
 
 
(21.6
)
 
(2.2
)
 
(22.4
)
 
(d)   Net gain / (loss) on acquisitions and disposals
 
(Charged)/credited to non-operating profit:
 
 
 
 
 
 
 
 
Merger and acquisition costs
 
(0.9
)
 
(0.3
)
 
(2.0
)
 
 
Gain on bargain purchase
 
1.2

 
—

 
—

 
 
Remeasurement of deferred contingent consideration
 
1.0

 
0.5

 
—

 
 
 
 
1.3

 
0.2

 
(2.0
)
 
Profit on sale of redundant site
In 2017, a credit of $0.4 million was recognized in relation to a provision that was no longer required. The provision was held pending completion of remediation works at the former Redditch site, which was sold during 2016 to a company that specializes in remediating contaminated land. Given the remediation works were completed at the end of March 2017, it was appropriate to release the provision.
In 2016, a profit of $2.1 million was recognized in relation to the sale of the Redditch site.
Changes to defined benefit pension plans
During 2016, a net credit of $0.6 million was recognized following the sale of $10.0 million of U.S. deferred pensioner liabilities to an insurer, and lump sum payments of $4.9 million offered to certain U.S. deferred pensioners.
In 2015, a credit of $18.0 million has been recognized in relation to changes to the U.K. defined benefit pension plan effective April 5, 2016 in respect of closure of the plan to future accrual and changing the reference index

F- 25
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
5. Other income/ (expense) items (Continued)

from the Retail Prices Index ("RPI") to the Consumer Prices Index ("CPI") when increasing pensions in payment. This credit comprises a past service credit of $14.9 million and a curtailment credit of $3.3 million , offset by associated advisory costs of $0.2 million .
Rationalization of operations
In 2017, $6.6 million of costs were incurred in relation to rationalization costs in the Gas Cylinders Division and $5.5 million in the Elektron Division. $2.2 million of the charge in the Gas Cylinders Division was in relation to an impairment of the investment in our associate, Sub 161 Pty Limited, $2.1 million was incurred following the decision to discontinue our Advanced Oxygen System (AOS) product line and $1.0 million following the announcement to exit our Luxfer HEI business. These were offset in part by a $0.4 million credit relating to sales of inventory that was previously written down as part of the closure of our German operation in 2015. In the Elektron Division, $1.7 million of the charge related to the rationalization of its Magtech operations, which includes $1.3 million in relation to the write down of land and buildings. Separately, we have recorded $0.6 million related to an onerous communications contract. There has also been a Group-wide effort to reduce headcount and streamline management that has resulted in a $1.5 million and $3.0 million charge within the Gas Cylinders and Elektron Divisions respectively. Other rationalization costs of $0.4 million has been incurred, split evenly between the two Divisions.
In 2016, $0.4 million of costs were incurred in relation to rationalization costs in the Elektron division.
In 2015, $21.8 million of costs have been incurred in relation to rationalization costs in the Gas Cylinders Division. The $21.8 million of costs incurred related to the rationalization of its Alternative Fuel ("AF") operations, including closure of two manufacturing facilities (in Germany and Utah) and a review of related assets and investments for obsolescence and impairment. The charge comprises asset write-downs of $17.7 million , redundancy costs of $2.2 million , closure costs of $1.7 million and legal costs of $0.2 million .
Patent infringement litigation costs
In February 2018, the Company reached an out-of-court settlement with regards to the patent infringement litigation action taken against a competitor with us agreeing to pay an amount equivalent to $1.6 million . The settlement has been recognized as an accrual at December 31, 2017. Additionally, our litigation costs incurred during 2017 were $1.9 million , resulting in a total charge of $3.5 million (2016: $0.6 million and 2015: $ 0.5 million ) all relating to the Elektron Division.
Direct listing costs
In 2017, $2.3 million of costs were incurred in relation to professional fees in connection with our project of converting our ADR listing to a direct listing of our ordinary shares. The project was successfully implemented in December 2017.
Non-current asset impairments
In 2017, a charge of $3.7 million has been recognized in relation to non-current asset impairments within the Elektron Division. $2.2 million of this charge relates to our Czech business, $0.9 million in relation to our North America business and $0.6 million in relation to our U.K. business.
Receivable impairment provision
In 2016, $1.2 million was incurred for an impairment charge on receivables in relation to an aerospace customer that has entered Chapter 11 protection . This was an operating cost item but was separated out within the income statement with other unusual operating items and included within the restructuring and other expenses line due to the nature of the customer entering Chapter 11.
I.P.O. related share based compensation charges
In 2015, a charge of $0.1 million was recognized in the consolidated income statement under IFRS 2 in relation to share options granted as part of the initial public offering. The share options are described in further detail in Note 31.


F- 26
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
5. Other income/ (expense) items (Continued)

Merger and acquisition costs
In 2017, acquisition costs of $0.5 million has been recognized in relation to the acquisition of the Specialty Metals business of ESM Group Inc. In addition, as part of the acquisition, an environmental provision of $0.4 million has been established, with funds placed in escrow, to clean up low level chemical contamination on the land acquired, with any remaining funds remitted to the seller.
In 2016, a charge of $0.3 million has been recognized in the consolidated income statement in relation to a potential acquisition which was subsequently aborted.
In 2015, a charge of $1.8 million related to two approaches to acquire the company. Neither of these approaches resulted in an executable offer that could be put to shareholders. $0.2 million of legal costs have also been incurred in relation to the investment in Sub161 Pty Limited; further details are given in Note 14.
Gain on bargain purchase
In 2017, the Group acquired the trade and assets of the Specialty Metals business of ESM Group Inc., for a total consideration of $4.6 million . The fair value of the net assets acquired has been assessed at $5.8 million , with a gain on bargain purchase of $1.2 million recognized. Further details are given in Note 25.
Remeasurement of deferred contingent consideration
In 2017, a credit of $1.0 million (2016: $0.5 million ) has been recognized in the consolidated income statement in relation to the remeasurement of deferred contingent consideration arising from the acquisition of Luxfer Magtech Inc. where an element of deferred contingent consideration is no longer payable due to the acquired business failing to achieve a profit triggers at December 31, 2017 and at December 31, 2016.
6.
Staff Costs
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Wages and salaries
96.1

 
92.2

 
96.3

 
 
Social security costs
11.0

 
10.5

 
11.2

 
 
Retirement benefits costs
4.8

 
4.8

 
5.9

 
 
IAS 19R retirement benefits finance charge
1.8

 
2.1

 
3.0

 
 
Redundancy costs: Continuing activities
4.5

 
0.7

 
1.5

 
 
Share based compensation charges (Note 31)
3.1

 
1.4

 
1.4

 
 
 
121.3

 
111.7

 
119.3

 
The average monthly number of employees during the year was made up as follows:
 
 
2017
 
2016
 
2015
 
 
 
No.
 
No.
 
No.
 
 
Production and distribution
1,397

 
1,381

 
1,432

 
 
Sales and administration
204

 
246

 
218

 
 
Research and development
57

 
60

 
56

 
 
 
1,658

 
1,687

 
1,706

 






F- 27
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
6.
Staff Costs (continued)

The compensation of the members of our Board of Directors (each, a "director") was:
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Remuneration (short-term benefits)
2.0

 
1.5

 
1.7

 
 
Social security costs
0.3

 
0.2

 
0.2

 
 
Post-retirement benefits
0.2

 
0.1

 
0.2

 
 
Compensation for loss of office
0.3

 
—

 
—

 
 
Total short-term and post-retirement benefits
2.8

 
1.8

 
2.1

 
In 2017 , compensation of key management personnel for the period they served on the Executive Leadership Team, (formally, Executive Management Board), (including directors) was $4.7 million ( 2016 : $2.2 million and 2015 : $2.6 million ) for short-term employee benefits, and $0.3 million ( 2016 : $0.2 million and 2015 : $0.4 million ) for post-employment benefits. Social security costs were incurred of $0.5 million ( 2016 : $0.3 million and 2015 : $0.4 million ).
Details of the share awards granted are included in the remuneration report in Outstanding Share Awards During 2017, on pages 77 to 78 of the Remuneration Report.
Further details of directors' remuneration are included in the remuneration report on pages 71 to 81.
During the year, one of the directors was a member of the Group's U.K. registered defined contribution and defined benefit pension arrangements, another director was a participant in the unfunded unregistered unsecured retirement benefits arrangement accrued by the Company and another director was a member of the Group's U.S. registered defined contribution plan.
Directors' interests and related party transactions
No directors had a material interest in, nor were they a party to, any contract or arrangement to which the parent company, Luxfer Holdings PLC (the "Company") or any of its subsidiaries is or was party to either during the year or at the end of the year, with the following exceptions: in the case of the executive directors their individual service contract and the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan; in the case of the non-executive directors their engagement letters or the contract for services under which their services as a director of the Company are provided; in the case of the executive directors and the chairman, the Luxfer Holdings PLC Non-Executive Directors Equity Incentive Plan. Information regarding the share options exercised during the year is included within the Remuneration Report. See Note 32 for related party transactions.
7.
Finance income
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Bank interest received
0.2

 
0.2

 
0.2

 
 
Other interest received
0.3

 
0.3

 
0.3

 
 
Foreign exchange gains on financing activities
—

 
0.7

 
—

 
 
Total finance income
0.5

 
1.2

 
0.5

 

F- 28
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

8.
Finance costs
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Bank and other loan interest payable
6.3

 
6.3

 
6.5

 
 
Amortization of issue costs
0.6

 
0.5

 
0.9

 
 
Foreign exchange loss on financing activities
0.3

 
—

 
—

 
 
IAS 19R retirement benefits finance charge
1.8

 
2.1

 
3.0

 
 
Unwind of discount on deferred contingent consideration from acquisitions
0.2

 
0.4

 
0.4

 
 
Total finance costs
9.2

 
9.3

 
10.8

 
9.
Income taxes
(a)
Analysis of taxation charge for the year
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Current income taxes:
 
 
 
 
 
 
 
U.K. corporation tax
—

 
—

 
0.3

 
 
Adjustments in respect of previous years
(0.3
)
 
0.2

 
(0.4
)
 
 
 
(0.3
)
 
0.2

 
(0.1
)
 
 
Non-U.K. tax
6.3

 
3.5

 
7.2

 
 
Adjustments in respect of previous years
(0.8
)
 
—

 
(0.9
)
 
 
Total current tax charge
5.2

 
3.7

 
6.2

 
 
Deferred income taxes:
 

 
 

 
 

 
 
Origination and reversal of temporary differences
(5.3
)
 
2.1

 
2.7

 
 
Adjustments in respect of previous years
0.5

 
0.2

 
0.6

 
 
Total deferred income taxes (credit) / charge
(4.8
)
 
2.3

 
3.3

 
 
Tax on profit on operations
0.4

 
6.0

 
9.5

 
The income taxes charges relate to continuing activities.














F- 29
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
9. Income taxes (Continued)

(b)
Factors affecting the taxation charge for the year
The tax assessed for the year differs from the standard rate of 19.25% ( 2016 : 20% and 2015 : 20.25% ) for corporation tax in the U.K.
The differences are explained below:
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Profit on operations before taxation
11.9

 
27.9

 
25.6

 
 
Profit on operations at 2017 standard rate of corporation tax in the U.K. of 19.25% (2016: 20% and 2015: 20.25%)
2.3

 
5.6

 
5.2

 
 
Effects of:
 

 
 

 
 

 
 
(Income not taxable) / non-deductible expenses
0.1

 
0.2

 
2.4

 
 
Unprovided deferred income taxes
0.3

 
(2.9
)
 
—

 
 
Foreign tax rate differences
4.3

 
2.7

 
2.6

 
 
Effect of U.S. tax reform
(6.0
)
 
—

 
—

 
 
Adjustment in respect of previous years
(0.6
)
 
0.4

 
(0.7
)
 
 
Tax expense
0.4

 
6.0

 
9.5

 
The 2017 deferred tax credit includes a non-cash accounting adjustment of $6.0 million following the enactment of U.S. tax reform on December 22, 2017. The non-cash adjustment is due to the reduction in the U.S. federal corporate income tax rate from 35% to 21%, which necessitated a re-measurement of the existing U.S. deferred tax position in 2017.

(c)
Factors that may affect future taxation charge
At December 31, 2017 , the Group had carried forward tax losses of $81.9 million (U.K.: $43.6 million , non-U.K.: $38.3 million ). Carried forward tax losses for 2016 were $72.1 million (U.K.: $35.3 million , non-U.K.: $36.8 million ) and for 2015 were $82.9 million (U.K.: $52.9 million , non-U.K.: $30.0 million ). To the extent that these losses are not already recognized as deferred income taxes assets, and available to offset against future taxable profits, it is expected that the future effective tax rate would be below the standard rate in the country where the profits are offset. The Group has unrecognized deferred tax assets relating to certain trading and capital losses and other temporary timing difference of $13.3 million ( 2016 : $12.3 million , 2015 : $14.2 million ), potentially available for offset against future profits.
Changes to the U.K. corporation tax rates were substantively enacted as part of Finance Bill 2017 (on September 6, 2016) to reduce the main rate down to 17% from April 1, 2020. Deferred taxes at the balance sheet date have been measured using the enacted tax rates and reflected in the Group's consolidated financial statements at December 31, 2017 .

F- 30
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
10. Earnings per share

The Group calculates earnings per share in accordance with IAS 33. Basic income per share is calculated based on the weighted average common shares outstanding for the period presented. The weighted average number of shares outstanding is calculated by time-apportioning the shares outstanding during the year.
For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effects of all potential ordinary shares and share options granted to employees.
Following the decision to terminate Luxfer Holdings PLC's ADS facility, each £0.50 ordinary share of Luxfer Holdings PLC are now listed and traded directly on the New York Stock Exchange (NYSE).
Management believe the use of non-GAAP financial measures such as adjusted earnings, as reconciled in the table below, per share more closely reflects the underlying earnings per share performance.
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Basic earnings:
 
 
 
 
 
 
 
Net income
11.5

 
21.9

 
16.1

 
 
Adjusted earnings:
 
 
 
 
 
 
 
Accounting charges relating to acquisitions and disposals of businesses
 
 
 
 
 
 
 
Unwind of discount on deferred contingent consideration from acquisitions
0.2

 
0.4

 
0.4

 
 
Acquisitions and disposals (Note 5)
(1.3
)
 
(0.2
)
 
2.0

 
 
Amortization on acquired intangibles
1.2

 
1.0

 
1.4

 
 
IAS 19R retirement benefits finance charge
1.8

 
2.1

 
3.0

 
 
Profit on sale of redundant site (Note 5)
(0.4
)
 
(2.1
)
 
—

 
 
Changes to defined benefit pension plans (Note 5)
—

 
(0.6
)
 
(18.0
)
 
 
Restructuring and other expense (Note 5)
21.6

 
2.2

 
22.4

 
 
Other share based compensation charges
2.2

 
1.4

 
1.3

 
 
Impact from U.S. tax reform
(6.0
)
 
—

 
—

 
 
Income tax thereon
(3.2
)
 
(1.4
)
 
0.9

 
 
Adjusted net income
27.6

 
24.7

 
29.5

 
 
Weighted average number of £0.50 ordinary shares:
 
 
 
 
 
 
 
For basic earnings per share
26,460,947

 
26,443,662

 
26,918,987

 
 
Exercise of share options
541,223

 
270,997

 
453,736

 
 
For diluted earnings per share
27,002,170

 
26,714,659

 
27,372,723

 
 
Earnings per share using weighted average number of ordinary shares outstanding:
 
 
 
 
 
 
 
Basic
 
 
 
 
 
 
 
Adjusted
$
1.04

 
$
0.93

 
$
1.10

 
 
Unadjusted
$
0.43

 
$
0.83

 
$
0.60

 
 
Diluted
 
 
 
 
 
 
 
Adjusted
$
1.02

 
$
0.92

 
$
1.08

 
 
Unadjusted
$
0.43

 
$
0.82

 
$
0.59

 

F- 31
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

11.
Property, plant and equipment
 
 
Freehold
 
Long
leasehold
 
Short
leasehold
 
Plant and
equipment
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Cost:
 

 
 

 
 

 
 

 
 

 
 
At January 1, 2016
56.1

 
6.4

 
10.3

 
314.6

 
387.4

 
 
Additions
1.9

 
0.6

 
0.5

 
13.5

 
16.5

 
 
Disposals
(3.8
)
 
—

 
—

 
(23.0
)
 
(26.8
)
 
 
Transfers
3.8

 
(0.2
)
 
—

 
(3.6
)
 
—

 
 
Exchange difference
(1.6
)
 
(0.9
)
 
(0.3
)
 
(25.3
)
 
(28.1
)
 
 
At December 31, 2016
56.4

 
5.9

 
10.5

 
276.2

 
349.0

 
 
Additions
0.9

 
0.3

 
0.9

 
7.1

 
9.2

 
 
Acquired via acquisition
2.0

 
—

 
—

 
3.2

 
5.2

 
 
Disposals
(0.1
)
 
(0.1
)
 
—

 
(4.7
)
 
(4.9
)
 
 
Exchange difference
3.2

 
0.1

 
0.8

 
14.2

 
18.3

 
 
At December 31, 2017
62.4

 
6.2

 
12.2

 
296.0

 
376.8

 
 
Accumulated depreciation and impairment:
 

 
 

 
 

 
 

 
 

 
 
At January 1, 2016
20.1

 
3.9

 
4.7

 
222.7

 
251.4

 
 
Provided during the year
2.0

 
0.3

 
0.8

 
13.6

 
16.7

 
 
Disposals
(2.8
)
 
—

 
—

 
(22.8
)
 
(25.6
)
 
 
Transfers
7.9

 
(0.5
)
 
0.2

 
(7.6
)
 
—

 
 
Exchange difference
(0.6
)
 
(0.6
)
 
(0.2
)
 
(20.0
)
 
(21.4
)
 
 
At December 31, 2016
26.6

 
3.1

 
5.5

 
185.9

 
221.1

 
 
Provided during the year
2.2

 
0.3

 
0.9

 
13.3

 
16.7

 
 
Disposals
(0.1
)
 
(0.1
)
 
—

 
(4.5
)
 
(4.7
)
 
 
Impairment
2.5

 
—

 
—

 
2.5

 
5.0

 
 
Exchange difference
1.3

 
0.2

 
0.3

 
11.4

 
13.2

 
 
At December 31, 2017
32.5

 
3.5

 
6.7

 
208.6

 
251.3

 
 
Net book values:
 

 
 

 
 

 
 

 
 
 
 
At December 31, 2017
29.9

 
2.7

 
5.5

 
87.4

 
125.5

 
 
At December 31, 2016
29.8

 
2.8

 
5.0

 
90.3

 
127.9

 
 
At January 1, 2016
36.0

 
2.5

 
5.6

 
91.9

 
136.0

 
As at December 31, 2017 and December 31, 2016 , no assets were held under finance leases.
Impairment of property, plant and equipment
$ 2.2 million of the impairment in 2017 relates to the Luxfer Czech Republic operating segment, as a result of the present value of the free cash flows not covering the enterprise value of the segment. The impairment has been allocated equally across all asset groups based on their respective net book values. The impairment review was carried out as there were indicators of impairment at this level.
$ 1.3 million of the freehold impairment in 2017 relates to the write-down of land and buildings within the Luxfer Magtech operating segment, as a result of the announced exit from one of our sites. The land and buildings have been written down to their net realizable value, as determined by an independent valuation specialist.
$ 1.5 million of the impairment in 2017 relates to the write down of assets across all operating segments as part of an annual exercise to review the use of our non-current assets. These assets are either no longer in use or are part of a site which we have announced we are exiting.
Long and short leasehold
The long and short leasehold costs relate to leasehold property improvements.

F- 32
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

12.
Intangible assets
 
 
Goodwill
 
Customer
related
 
Technology
and trading
related
 
Development
costs
 
Software
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Cost:
 

 
 

 
 

 
 

 
 

 
 

 
 
At January 1, 2016
83.4

 
13.4

 
9.3

 
4.0

 
3.5

 
113.6

 
 
Additions
0.1

 
0.1

 
—

 
2.4

 
0.1

 
2.7

 
 
Disposals
—

 
—

 
—

 
—

 
(0.6
)
 
(0.6
)
 
 
Exchange difference
(8.2
)
 
—

 
(1.3
)
 
(0.4
)
 
(0.3
)
 
(10.2
)
 
 
At December 31, 2016
75.3

 
13.5

 
8.0

 
6.0

 
2.7

 
105.5

 
 
Additions
—

 
—

 
—

 
0.9

 
0.8

 
1.7

 
 
Disposals
—

 
(0.1
)
 
—

 
—

 
(0.4
)
 
(0.5
)
 
 
Exchange difference
4.1

 
—

 
0.6

 
0.5

 
0.3

 
5.5

 
 
At December 31, 2017
79.4

 
13.4

 
8.6

 
7.4

 
3.4

 
112.2

 
 
Accumulated amortization and impairment:
 

 
 

 
 

 
 

 
 

 
 

 
 
At January 1, 2016
21.2

 
1.5

 
1.8

 
0.1

 
2.0

 
26.6

 
 
Provided during the year
—

 
0.7

 
0.4

 
0.3

 
0.3

 
1.7

 
 
Disposals
—

 
—

 
—

 
—

 
(0.3
)
 
(0.3
)
 
 
Exchange difference
(2.8
)
 
(0.1
)
 
(0.3
)
 
0.1

 
—

 
(3.1
)
 
 
At December 31, 2016
18.4

 
2.1

 
1.9

 
0.5

 
2.0

 
24.9

 
 
Provided during the year
—

 
0.9

 
0.4

 
0.7

 
0.3

 
2.3

 
 
Disposals
—

 
(0.1
)
 
—

 
—

 
(0.4
)
 
(0.5
)
 
 
Impairment
—

 
—

 
0.5

 
1.5

 
—

 
2.0

 
 
Exchange difference
1.4

 
—

 
0.2

 
0.1

 
0.1

 
1.8

 
 
At December 31, 2017
19.8

 
2.9

 
3.0

 
2.8

 
2.0

 
30.5

 
 
Net book values:
 

 
 

 
 

 
 

 
 

 
 
 
 
At December 31, 2017
59.6

 
10.5

 
5.6

 
4.6

 
1.4

 
81.7

 
 
At December 31, 2016
56.9

 
11.4

 
6.1

 
5.5

 
0.7

 
80.6

 
 
At January 1, 2016
62.2

 
11.9

 
7.5

 
3.9

 
1.5

 
87.0

 
Customer related intangibles include customer relationships, order backlogs and non-compete agreements. Technology and trading related intangibles include technology, patents, tradenames and trademarks.
Development costs include $4.6 million ( 2016 : $5.5 million ) relating to internally generated intangible assets, all other intangible assets are externally generated.
Impairment of intangible assets
The $0.5 million impairment of technology and trading related intangibles relates to the announcement to exit of our Luxfer HEI business. The $1.5 million impairment of the development costs has resulted following the decision to discontinue our Advanced Oxygen System (AOS) product line. These impairments are both within our Gas Cylinders operating segment.


F- 33
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

13.
Impairment of goodwill
Goodwill acquired in a business combination is allocated, at acquisition, to the cash-generating units (CGUs) that are expected to benefit from the business combination. The six identified CGUs (Luxfer Gas Cylinders, Luxfer Superform, Luxfer MEL Technologies, Luxfer Magtech, Luxfer Graphic Arts and Luxfer Czech Republic) represent the lowest level within the Group at which goodwill is monitored for internal management reporting purposes. The six CGUs are aggregated to form the Group's two defined reportable divisions: Gas Cylinders Division and Elektron Division. The table below summarizes the carrying value of goodwill by division:
 
 
Gas Cylinders
Division
 
Elektron
Division
 
Total
 
 
 
$M
 
$M
 
$M
 
 
At January 1, 2016
22.3

 
39.9

 
62.2

 
 
Additions
—

 
0.1

 
0.1

 
 
Exchange difference
(3.4
)
 
(2.0
)
 
(5.4
)
 
 
At December 31, 2016
18.9

 
38.0

 
56.9

 
 
Exchange difference
1.6

 
1.1

 
2.7

 
 
At December 31, 2017
20.5

 
39.1

 
59.6

 
The Gas Cylinders Division goodwill of $20.5 million ( 2016 : $18.9 million ) includes goodwill attributable to our Luxfer Gas Cylinders operations of $19.5 million ( 2016 : $17.9 million ) and goodwill attributable to our Luxfer Superform operations of $1.0 million ( 2016 : $1.0 million ). During the year, our Elektron Division redefined its operations with MEL Chemicals and Magnesium Elektron reorganized to form the new CGUs of Luxfer MEL Technologies, Luxfer Magtech, Luxfer Graphic Arts and Luxfer Czech Republic. The Elektron Division goodwill of $39.1 million ( 2016 : $38.0 million ) included goodwill attributable to our Luxfer MEL Technologies operations of $5.4 million and goodwill attributable to our Luxfer Magtech operations of $33.7 million ; no goodwill is allocated to Luxfer Graphic Arts or Luxfer Czech Republic. The goodwill figure was allocated based on which operating segments historical acquisitions were allocated to and the value of the acquired goodwill on those historical acquisitions. As at December 31, 2016, the goodwill of $38.0 million included goodwill attributable to our MEL Chemicals of $3.9 million and goodwill attributable to our Magnesium Elektron operations of $34.1 million .
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. The recoverable amount of each of the cash-generating units has been determined based on a value-in-use calculation using a discounted cash flow method. The cash flows were derived from a 3-year business plan prepared at a detailed level by each CGU. The results of these plans were then extrapolated to give a terminal value based on a growth rate of 2.1% ( 2016 : 2.1% ). The 3-year business plans were driven by detailed sales forecasts by product type and best estimate of future demand by end market, using current margins. The cash flows included allowance for capital maintenance costs, along with working capital requirements based on the projected level of sales. A pre-tax discount rate of between 8.5% and 10.9% was used for the individual CGUs ( 2016 : between 10.1% and 10.7% for all CGUs), which was considered a best estimate for the risk-adjusted cost of capital for the CGUs. The long-term projections assumed product prices and costs were at current levels, but the exchange rates used were USD:GBP of $1.35 and USD:EUR of $1.19 .

F- 34
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

14. Investments
 
 
Shares in joint ventures
 
Loans to joint ventures and associates
 
Total
 
 
 
$M
 
$M
 
$M
 
 
At January 1, 2016
2.4

 
4.8

 
7.2

 
 
Debt funding
—

 
(1.0
)
 
(1.0
)
 
 
Transfer from trade receivables
—

 
3.7

 
3.7

 
 
Share of results
0.5

 
—

 
0.5

 
 
Exchange difference
(0.2
)
 
(0.2
)
 
(0.4
)
 
 
At December 31, 2016
2.7

 
7.3

 
10.0

 
 
Debt funding
—

 
0.9

 
0.9

 
 
Share of results
0.1

 
—

 
0.1

 
 
Impairment
—

 
(2.2
)
 
(2.2
)
 
 
Exchange difference
0.1

 
0.3

 
0.4

 
 
At December 31, 2017
2.9

 
6.3

 
9.2

 
 
 
 
 
 
 
 
 
The loans to joint ventures and associates are repayable in 2018, with interest being charged on $4.7 million at 8.0% and $1.6 million incurring interest at 6.0% .
See section 4.C "Organizational Structure" for a full list of Luxfer Holdings PLC subsidiaries.
Investment in joint ventures and associates
At December 31, 2017 , the Group had the following joint ventures and associates which affect the profit of the Group. Unless otherwise stated, the Group's joint ventures and associates have share capital which consists solely of ordinary shares and are indirectly held, and the country of incorporation or registration is also their principal place of operation.
 
Name of company
 
Country of
incorporation
 
Holding
 
Proportion of voting rights and shares held
 
Classification
 
Nature of
business
 
 
Dynetek Cylinders India Private Limited
 
India
 
Ordinary shares
 
49
%
 
Joint venture
 
Engineering
 
 
Dynetek Korea Co. Limited
 
South Korea
 
Ordinary shares
 
49
%
 
Joint venture
 
Engineering
 
 
Luxfer Holdings NA, LLC
 
U.S.
 
Membership interest
 
49
%
 
Joint venture
 
Engineering
 
 
Luxfer Uttam India Private Limited
 
India
 
Ordinary shares
 
51
%
 
Joint venture
 
Engineering
 
 
Nikkei-MEL Co. Limited
 
Japan
 
Ordinary shares
 
50
%
 
Joint venture
 
Distribution
 
 
Sub161 Pty Limited
 
Australia
 
Ordinary shares
 
26.4
%
 
Associate
 
Engineering
 
During 2015, the Group acquired 26.4% of the share capital of Sub161 Pty Limited, an associate, which is a start-up virtual pipeline operator based in Western Australia, for a cash consideration of $3.7 million and the contribution of a number of AF assets with a value of $1.7 million . An impairment of this investment was recognized as part of the review of AF assets following this business stream's restructuring. This write-down would be reversed on any sale or realization of value of these assets in future years.
During 2016, a receivable from Sub161 Pty Limited was converted into a secured loan note which is repayable by March 31, 2018 or before the event of a substantial equity injection, a sale of the business, a material new customer or at the request of Sub161, this was subsequently extended to July 1, 2018.

F- 35
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
14. Investments (Continued)

During 2017, a further impairment of $2.2 million was recognized in relation to the Sub161 Pty Limited investment following continued weakness in this sector. The remaining $1.6 million carrying value is based on the net realizable value of the assets secured against the loan.
The main trading activity in 2017 was in Luxfer Holdings NA, LLC, Luxfer Uttam India Private Limited and Nikkei MEL Co. Limited.
The Group has made available up to $12.5 million of future funding to aid expansion of the U.S. joint venture in the coming years, via $2.5 million of equity into Luxfer Holdings NA, LLC and a $10.0 million secured credit line for working capital and supplier finance, of which $4.7 million ( 2016 : $3.8 million ) was drawn down at December 31, 2017 .
The share of profits of all joint ventures and associates was $0.1 million ( 2016 : $0.5 million ), with no items recognized in other comprehensive income in 2017 or 2016 .
The Group has looked in detail at the ownership agreements of its joint ventures and associates in order to determine the level of control that it has. The Group has determined that it has joint control of its joint ventures mainly based upon the number of members on each company board of directors and their associated voting rights. In relation to the associate undertaking, the Group has significant influence but not joint control based on the proportion of directors on the company board and associated voting rights. The Group therefore accounts for all material joint ventures and associates on an equity basis.
Related party transactions with joint ventures and associates have been disclosed in Note 32 to the Group's consolidated financial statements.

15.
Inventories
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Raw materials and consumables
31.0

 
28.3

 
 
Work in progress
28.1

 
30.5

 
 
Finished goods and goods for resale
23.1

 
23.7

 
 
 
82.2

 
82.5

 
Inventories above are disclosed net of any provisions for obsolete and excess inventories. The provision against obsolete and excess inventories at December 31, 2017 was $8.4 million ( 2016 : $6.5 million ). The cost of inventories recognized as an expense during the year was $282.9 million ( 2016 : $287.3 million ). The cost of inventories written-off during 2017 was $1.6 million ( 2016 : $0.1 million ).

F- 36
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

16.
Trade and other receivables
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Non-current Assets
 

 
 

 
 
Derivative financial instruments
0.3

 
0.3

 
 
 
0.3

 
0.3

 
 
Current Assets
 

 
 

 
 
Trade receivables
54.0

 
40.5

 
 
Amounts owed by joint ventures and associates
1.8

 
2.8

 
 
Other receivables
4.2

 
3.1

 
 
Prepayments and accrued income
10.5

 
9.4

 
 
Derivative financial instruments
2.1

 
1.8

 
 
 
72.6

 
57.6

 
The directors consider that the carrying value of trade and other receivables approximates to their fair value. Trade receivables are non-interest bearing and are generally on 30 - 90  day terms. Trade receivables above are disclosed net of any provisions for doubtful receivables.
During 2016, a loan for $3.6 million to Sub 161 was converted into a secured loan note. This was subsequently reclassified into investments (Note 14).
At December 31, 2017 , trade receivables with a nominal value of $4.1 million ( 2016 : $2.1 million ) were impaired and fully provided for. Movements in the provision for impairment of trade receivables and amounts owed by joint ventures and associates were as follows:
 
 
2017
 
2016
 
 
 
$M
 
$M
 
 
At January 1
2.1

 
4.8

 
 
Charge in the year
2.7

 
1.3

 
 
Utilized in the year
(0.8
)
 
(3.6
)
 
 
Exchange difference
0.1

 
(0.4
)
 
 
At December 31
4.1

 
2.1

 
17.
Cash and cash equivalents
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Cash at bank and in hand
13.3

 
13.6

 
 
Overdrafts
(4.2
)
 
—

 
 
 
9.1

 
13.6

 

In 2017, $0.7 million (2016: nil ) of the $13.3 million cash at bank and in hand balance was held in escrow, as described further in Note 25.

F- 37
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

18. Share capital
(a)
Ordinary share capital
 
 
December 31, 2017
 
December 31, 2016
 
December 31, 2017
 
 
December 31, 2016
 
 
 
 
No.
 
No.
 
$M
 
 
$M
 
 
 
Authorized:
 

 
 

 
 

 
 
 

 
 
 
Ordinary shares of £0.50 each
40,000,000

 
40,000,000

 
35.7

(1)  
 
35.7

(1)  
 
 
Deferred ordinary shares of £0.0001 each
769,423,688,000

 
769,423,688,000

 
150.9

(1)  
 
150.9

(1)  
 
 
 
769,463,688,000

 
769,463,688,000

 
186.6

(1)  
 
186.6

(1)  
 
 
Allotted, called up and fully paid:
 

 
 

 
 

   
 
 

   
 
 
Ordinary shares of £0.50 each
27,136,799

 
27,136,799

 
25.3

(1)  
 
25.3

(1)  
 
 
Deferred ordinary shares of £0.0001 each
769,413,708,000

 
769,413,708,000

 
150.9

(1)  
 
150.9

(1)  
 
 
 
769,440,844,799

 
769,440,844,799

 
176.2

(1)  
 
176.2

(1)  
 
 
​
​

 
​

 
​

​
 
​

​
 

(1)  
The Group's ordinary and deferred share capital are shown in U.S. dollars at the exchange rate prevailing at the month end spot rate at the time of the share capital being issued. This rate at the end of February 2007 was $1.9613 : £1 when the first 20,000,000 shares were issued; the rate at the end of October 2012 was $1.6129 : £1 when 7,000,000 shares were issued; the rate at the end of March 2013 was $1.5173 : £1 when 1,924 shares were issued; the rate at the end of January 2014 was $1.6487 : £1 when 12,076 shares were issued; the rate at the end of May 2014 was $1.6760 : £1 when 24,292 shares were issued; the rate at the end of August 2014 was $1.6580 : £1 when 58,399 shares were issued; the rate at the end of February 2015 was $1.5436 : £1 when 8,563 shares were issued; the rate at the end of March 2015 was $1.4847 : £1 when 3,866 shares were issued; and the rate at the end of June 2015 was $1.5715 : £1 when 27,679 shares were issued.
The rights of the shares are as follows:
Ordinary shares of £0.50 each
The ordinary shares carry no entitlement to an automatic dividend but rank pari passu in respect of any dividend declared and paid. The ordinary shares were allotted and issued to satisfy share awards which vested under the Group's share award and share incentive plans.
At December 31, 2017 , there were 25,929,312 ordinary shares of Luxfer Holdings PLC listed on the New York Stock Exchange (NYSE) following the decision to terminate its ADR facility and to convert outstanding ADSs into ordinary shares.
Deferred ordinary shares of £0.0001 each
The deferred shares have no entitlement to dividends or to vote. On a winding up (but not otherwise) the holders of the deferred shares shall be entitled to the repayment of the paid up nominal amount of the deferred shares, but only after any payment to the holders of ordinary shares of an amount equal to 100 times the amount paid up on such ordinary shares.
(b)
American Depositary Shares
At December 31, 2017 , there were no ADSs ( 2016 : 25,180,726 ADSs) of Luxfer Holdings PLC listed on the New York Stock Exchange (NYSE) following the decision to terminate its ADR facility and to convert outstanding ADSs into ordinary shares. The Depositary for the ADSs held one £0.50 ordinary share for every ADS traded, through American Depositary Receipts.
ADS holders were entitled to instruct their Depositary to vote and to receive a dividend as per the ordinary shareholders, after deducting the fees and expenses of the Depositary.

F- 38
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
18. Share capital (Continued)

(c)
Share premium account
 
 
$M
 
 
At January 1, 2016
56.4

 
 
At December 31, 2016
56.4

 
 
At December 31, 2017
56.4

 
The share premium account is used to record the excess of proceeds over nominal value on the issue of shares. Share issue costs directly related to the issue of shares are deducted from share premium.
(d)
Treasury shares
 
 
$M
 
 
At January 1, 2016
(1.3
)
 
 
Purchase of own shares
(6.3
)
 
 
Utilization of treasury shares
0.5

 
 
At December 31, 2016
(7.1
)
 
 
Transfer of treasury shares into ESOP
0.8

 
 
Utilization of treasury shares
0.5

 
 
At December 31, 2017
(5.8
)
 
In June 2015, the Board announced a share buy-back program of up to $10 million , to cover the needs of employee share plans. Shareholder approval for this program was granted at the 2014 Annual General Meeting (for repurchases up to an aggregate amount of 2,700,000 ordinary shares or ADSs).
During 2016 , 634,185 ordinary shares were repurchased under the share buy-back program at a cost of $6.3 million ; these repurchased shares are presented as treasury shares. At December 31, 2016 , there were 665,424 treasury shares held at a cost of $7.1 million .
During 2017, no ordinary shares were repurchased under the share buy-back program. At December 31, 2017 , there were 527,616 treasury shares held at a cost of $5.8 million .
(e)
Own shares held by ESOP
 
 
$M
 
 
At January 1, 2016
(0.2
)
 
 
Purchases of shares into ESOP
(1.0
)
 
 
Utilization of ESOP shares
0.7

 
 
At December 31, 2016
(0.5
)
 
 
Transfer of treasury shares into ESOP
(0.8
)
 
 
Utilization of ESOP shares
0.3

 
 
At December 31, 2017
(1.0
)
 
At December 31, 2017 , there were 104,709 ordinary shares of £0.50 each ( 2016 : 55,816 ordinary shares of £0.50 each) held by The Luxfer Group Employee Share Ownership Plan (the "ESOP").

F- 39
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

19. Dividends paid and proposed
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Dividends declared and paid during the year:
 

 
 

 
 

 
 
Interim dividend paid February 4, 2015 ($0.10 per ordinary share)
—

 
—

 
2.7

 
 
Interim dividend paid May 6, 2015 ($0.10 per ordinary share)
—

 
—

 
2.7

 
 
Interim dividend paid August 5, 2015 ($0.10 per ordinary share)
—

 
—

 
2.7

 
 
Interim dividend paid November 4, 2015 ($0.10 per ordinary share)
—

 
—

 
2.7

 
 
Interim dividend paid February 3, 2016 ($0.125 per ordinary share)
—

 
3.4

 
—

 
 
Interim dividend paid May 4, 2016 ($0.125 per ordinary share)
—

 
3.3

 
—

 
 
Interim dividend paid August 3, 2016 ($0.125 per ordinary share)
—

 
3.3

 
—

 
 
Interim dividend paid November 2, 2016 ($0.125 per ordinary share)
—

 
3.3

 
—

 
 
Interim dividend paid February 1, 2017 ($0.125 per ordinary share)
3.3

 
—

 
—

 
 
Interim dividend paid May 3, 2017 ($0.125 per ordinary share)
3.3

 
—

 
—

 
 
Interim dividend paid August 2, 2017 ($0.125 per ordinary share)
3.3

 
—

 
—

 
 
Interim dividend paid November 1, 2017 ($0.125 per ordinary share)
3.4

 
—

 
—

 
 
 
13.3

 
13.3

 
10.8

 
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
Dividends declared and paid after December 31 (not recognized as a liability at December 31):
 

 
 

 
 

 
 
Interim dividend paid February 3, 2016: ($0.125 per ordinary share)
—

 
—

 
2.7

 
 
Interim dividend paid February 1, 2017: ($0.125 per ordinary share)
—

 
3.3

 
—

 
 
Interim dividend paid February 7, 2018: ($0.125 per ordinary share)
3.4

 
—

 
—

 
 
 
3.4

 
3.3

 
2.7

 
 
​
​

 
​

 
​

 

F- 40
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
20. Reserves


 
 
Retained
earnings
 
Hedging
reserve
 
Translation
reserve
 
Share based
compensation
reserve
 
Merger
reserve
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At January 1, 2015
308.8

 
0.9

 
(36.2
)
 
3.7

 
(333.8
)
 
 
Net income for the year
16.1

 
—

 
—

 
—

 
—

 
 
Currency translation differences
—

 
—

 
(8.6
)
 
—

 
—

 
 
Decrease in fair value of cash flow hedges
—

 
(5.4
)
 
—

 
—

 
—

 
 
Transfer to consolidated income statement on cash flow hedges
—

 
(0.1
)
 
—

 
—

 
—

 
 
Remeasurement of defined benefit retirement plans
4.4

 
—

 
—

 
—

 
—

 
 
Deferred income taxes on items taken to other comprehensive income
(1.5
)
 
1.1

 
—

 
—

 
—

 
 
Equity dividends
(10.8
)
 
—

 
—

 
—

 
—

 
 
Equity settled share based compensation charges
—

 
—

 
—

 
1.4

 
—

 
 
Cash settled share based compensation charges
—

 
—

 
—

 
(0.5
)
 
—

 
 
Deferred income taxes on items taken to equity
(0.3
)
 
—

 
—

 
—

 
—

 
 
Utilization of treasury shares
(0.1
)
 
—

 
—

 
(0.5
)
 
—

 
 
At December 31, 2015
316.6

 
(3.5
)
 
(44.8
)
 
4.1

 
(333.8
)
 
 
Net income for the year
21.9

 
—

 
—

 
—

 
—

 
 
Currency translation differences
—

 
—

 
(13.1
)
 
—

 
—

 
 
Increase in fair value of cash flow hedges
—

 
1.1

 
—

 
—

 
—

 
 
Transfer to consolidated income statement on cash flow hedges
—

 
(0.9
)
 
—

 
—

 
—

 
 
Remeasurement of defined benefit retirement plans
(21.7
)
 
—

 
—

 
—

 
—

 
 
Deferred income taxes on items taken to other comprehensive income
4.3

 
—

 
—

 
—

 
—

 
 
Equity dividends
(13.3
)
 
—

 
—

 
—

 
—

 
 
Equity settled share based compensation charges
—

 
—

 
—

 
1.2

 
—

 
 
Utilization of treasury shares
0.1

 
—

 
—

 
(0.6
)
 
—

 
 
Utilization of ESOP shares
0.2

 
—

 
—

 
(0.9
)
 
—

 
 
At December 31, 2016
308.1

 
(3.3
)
 
(57.9
)
 
3.8

 
(333.8
)
 
 
Net income for the year
11.5

 
—

 
—

 
—

 
—

 
 
Currency translation differences
—

 
—

 
11.6

 
—

 
—

 
 
Increase in fair value of cash flow hedges
—

 
3.1

 
—

 
—

 
—

 
 
Transfer to consolidated income statement on cash flow hedges
—

 
0.6

 
—

 
—

 
—

 
 
Remeasurement of defined benefit retirement plans
9.5

 
—

 
—

 
—

 
—

 
 
Deferred income taxes on items taken to other comprehensive income
(5.2
)
 
(0.6
)
 
—

 
—

 
—

 
 
Equity dividends
(13.3
)
 
—

 
—

 
—

 
—

 
 
Equity settled share based compensation charges
—

 
—

 
—

 
2.6

 
—

 
 
Utilization of treasury shares
0.1

 
—

 
—

 
(0.6
)
 
—

 
 
Utilization of ESOP shares
0.1

 
—

 
—

 
(0.4
)
 
—

 
 
Deferred income taxes on items taken to equity
0.6

 
—

 
—

 
—

 
—

 
 
At December 31, 2017
311.4

 
(0.2
)
 
(46.3
)
 
5.4

 
(333.8
)
 







F- 41
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
20. Reserves


Nature and purpose of reserves
Hedging reserve
The hedging reserve contains the effective portion of the cash flow hedge relationships entered into by the Group at the reporting date. The movement in the year to December 31, 2017 of $3.1 million ( 2016 : $0.2 million ) includes an increase in the fair value of cash flow hedges of $3.1 million ( 2016 : increase of $1.1 million ) and a gain of $0.6 million of cash flow hedges being transferred to the consolidated income statement ( 2016 : loss of $0.9 million ). This is partially offset by $0.6 million of deferred taxes on items taken to other comprehensive income. For further information regarding the Group's forward foreign currency exchange rate contracts, forward aluminum commodity contracts and forward interest rate agreements refer to Note 28 section (a)—Financial Instruments: Financial Instruments of the Group.
Translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of operations which do not have U.S. dollars as their functional currency.
Share based compensation reserve
The share based compensation reserve is used to recognize the fair value of options and performance shares granted under IFRS 2. For further information refer to Note 31. The charges in 2015, 2016 and 2017 related to options over ordinary shares.
During the year, no shares were purchased on the open market on behalf of one of the share based compensation plans ( 2016 : no shares were purchased). Shares are held in the names of the employees who are members of the plan until the end of the holding period.
Merger reserve
The merger reserve relates to the recapitalization of Luxfer Group Limited during the year ended December 31, 1999. Pursuant to the recapitalization of Luxfer Group Limited, Luxfer Holdings PLC acquired the entire share capital of Luxfer Group Limited. The company known as Luxfer Group Limited during the year ended December 31, 1999 was subsequently renamed LGL 1996 Limited and remains dormant. The recapitalization was accounted for using merger accounting principles.
The accounting treatment reflected the fact that ownership and control of Luxfer Group Limited, after the recapitalization, remained with the same institutional and management shareholders as before the recapitalization. Under merger accounting principles the consolidated financial statements of Luxfer Holdings PLC appear as a continuation of those for Luxfer Group Limited and therefore as if it had been the parent of the Group from its incorporation.

F- 42
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
21.
Bank and other loans


 
 
December 31, 2017
 
December 31, 2016
 
 

$M
 
$M
 
 
Loan Notes due 2018—gross
15.0

 
15.0

 
 
Unamortized finance costs
—

 
(0.1
)
 
 
Loan Notes due 2018—net
15.0

 
14.9

 
 
Loan Notes due 2021—gross
25.0

 
25.0

 
 
Unamortized finance costs
(0.1
)
 
(0.1
)
 
 
Loan Notes due 2021—net
24.9

 
24.9

 
 
Loan Notes due 2023—gross
25.0

 
25.0

 
 
Unamortized finance costs
(0.3
)
 
(0.3
)
 
 
Loan Notes due 2023—net
24.7

 
24.7

 
 
Loan Notes due 2026—gross
25.0

 
25.0

 
 
Unamortized finance costs
(0.3
)
 
(0.3
)
 
 
Loan Notes due 2026—net
24.7

 
24.7

 
 
Revolving credit facility—gross
21.3

 
32.8

 
 
Unamortized finance costs
(1.8
)
 
(1.0
)
 
 
Revolving credit facility—net
19.5

 
31.8

 
 
 
108.8

 
121.0

 
 
 
 
 
 
 
 
Included in current liabilities
15.0

 
—

 
 
Included in non-current liabilities
93.8

 
121.0

 
 
 
108.8

 
121.0

 
On July 31, 2017, an extension to the Senior Facilities Agreement was agreed which provides $150 million in committed debt facilities, in the form of a multi-currency revolving credit facility, with an additional $50 million of uncommitted facilities through an accordion facility. The Senior Facilities Agreement was due to mature in April 2019, but has now been extended until the end of July 2022. Finance costs of $1.2 million were capitalized following this extension and were deemed to be a modification of the existing facility. The Senior Facility Agreement bears interest equal to a margin based upon the Group's leverage plus either EURIBOR or LIBOR, depending on the currency drawn down.
On June 29, 2016, Luxfer agreed to extend the maturity date of $50 million of its existing $65 million Loan Notes due 2018. The extension includes a lower long-term fixed interest rate on the debt. The maturity date on $25 million was extended from June 2018 to June 2023 with a reduction in the fixed interest rate from 6.19% to 4.88% ; and the maturity date on $25 million was extended to June 2026 at a fixed interest rate of 4.94% . This was facilitated through the utilization of the Shelf Facility.
The $25.0 million 7 year private placement will be repayable in full in 2021 and bears interest at a fixed rate of 3.67% .
The maturity profile of the Group's undiscounted contractual payments is disclosed in Note 27.

Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

22.
Provisions
 
 
Rationalization
and
redundancy
 
Employee
benefits
 
Environmental
provisions
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
 
At January 1, 2016
2.6

 
1.5

 
1.2

 
5.3

 
 
Charged to consolidated income statement
1.4

 
—

 
—

 
1.4

 
 
Credited to consolidated income statement
(0.2
)
 
(0.4
)
 
—

 
(0.6
)
 
 
Cash payments
(3.0
)
 
—

 
(0.3
)
 
(3.3
)
 
 
Translation
—

 
—

 
(0.2
)
 
(0.2
)
 
 
At December 31, 2016
0.8

 
1.1

 
0.7

 
2.6

 
 
Charged to consolidated income statement
4.3

 
0.5

 
0.4

 
5.2

 
 
Credited to consolidated income statement
—

 
—

 
(0.4
)
 
(0.4
)
 
 
Cash payments
(3.0
)
 
(0.5
)
 
—

 
(3.5
)
 
 
At December 31, 2017
2.1

 
1.1

 
0.7

 
3.9

 
 
 
 
 
 
 
 
 
 
 
 
At December 31, 2017
 

 
 

 
 

 
 
 
 
Included in current liabilities
2.1

 
—

 
0.7

 
2.8

 
 
Included in non-current liabilities
—

 
1.1

 
—

 
1.1

 
 
 
2.1

 
1.1

 
0.7

 
3.9

 
 
At December 31, 2016
 

 
 

 
 

 
 
 
 
Included in current liabilities
0.8

 
—

 
0.7

 
1.5

 
 
Included in non-current liabilities
—

 
1.1

 
—

 
1.1

 
 
 
0.8

 
1.1

 
0.7

 
2.6

 
Rationalization and redundancy
At December 31, 2017 , the Group had $2.1 million of provisions relating to redundancy and the rationalization of its operations ( 2016 : $0.8 million ). $1.3 million (2016: $0.3 million ) and $0.8 million (2016: $0.5 million ) of this provision in 2017 related to the Elektron and Gas Cylinders divisions respectively. Of the $1.3 million within the Elektron division, $0.6 million related to an onerous contract and $0.5 million to the rationalization of its Magtech operations.
Employee benefits
At December 31, 2017 , the Group had $1.1 million of employee benefit liabilities (in addition to retirement benefits), as calculated on an actuarial basis, relating to a provision for workers' compensation in the U.S. ( 2016 : $1.1 million ).
Environmental provisions
At December 31, 2017 , the Group had environmental provisions totaling $0.7 million relating to environmental clean-up costs ( 2016 : $0.7 million ). $0.4 million relates to a provision for disbursement of environmental liabilities as part of the acquisition of the trade and assets of the Specialty Metals business of ESM Group Inc., $0.2 million relates to work required at the U.K. Elektron division site and $0.1 million relates to work required at a Elektron business in the U.S. acquired during 2014.

F- 44
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

23.
Deferred income taxes
 
 
Accelerated
tax
depreciation
 
Other
temporary
differences
 
Tax
losses
 
Retirement
benefit
obligations
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At January 1, 2016
(11.0
)
 
5.1

 
4.7

 
13.3

 
12.1

 
 
Credited/(charged) to consolidated income statement
0.1

 
(2.1
)
 
0.9

 
(1.2
)
 
(2.3
)
 
 
Credited to other comprehensive income
—

 
—

 
—

 
4.3

 
4.3

 
 
Exchange difference
—

 
(0.2
)
 
(0.5
)
 
(1.7
)
 
(2.4
)
 
 
At December 31, 2016
(10.9
)
 
2.8

 
5.1

 
14.7

 
11.7

 
 
Credited/(charged) to consolidated income statement
5.2

 
(1.0
)
 
—

 
0.6

 
4.8

 
 
Charged to other comprehensive income
—

 
(0.6
)
 
—

 
(5.2
)
 
(5.8
)
 
 
Credited to equity
—

 
0.6

 
—

 
—

 
0.6

 
 
Exchange difference
—

 
0.2

 
0.3

 
0.8

 
1.3

 
 
At December 31, 2017
(5.7
)
 
2.0

 
5.4

 
10.9

 
12.6

 
The amount of deferred income taxes accounted for in the Group balance sheet, after the offset of balances within countries for financial reporting purposes, comprised the following deferred income tax assets and liabilities:
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Deferred income tax liabilities
(3.6
)
 
(4.9
)
 
 
Deferred income tax assets
16.2

 
16.6

 
 
Net deferred income tax assets
12.6

 
11.7

 
At the balance sheet date, the Group has unrecognized deferred income tax assets relating to certain trading and capital losses and other temporary differences of $13.3 million ( 2016 : $12.3 million ) potentially available for offset against future profits. No deferred income tax assets have been recognized in respect of this amount because of the unpredictability of future qualifying profit streams in the relevant entities. Of the total unrecognized deferred income tax assets of $13.3 million ( 2016 : $12.3 million ), $10.3 million ( 2016 : $8.8 million ) relates to losses that can be carried forward indefinitely under current legislation and the remaining $3.0 million ( 2016 : $3.5 million ) are due to expire between 2028 and 2034.
At the balance sheet date, there were unremitted earnings of overseas subsidiaries and joint ventures and associates of $42.4 million ( 2016 : $54.9 million ), for which there are no deferred income tax liabilities recognized or unrecognized ( 2016 : $ nil ).
The 2017 deferred tax credit includes a non-cash accounting adjustment of $6.0 million following the enactment of U.S. tax reform on December 22, 2017. The non-cash adjustment is due to the reduction in the U.S. federal corporate income tax rate from 35% to 21%, which necessitated a re-measurement of the existing U.S. deferred tax position in 2017.


F- 45
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

24. Trade and other payables
 
 
December 31, 2017

December 31, 2016
 
 
 
$M

$M
 
 
Non-current Liabilities
 
 
 
 
 
Accruals
1.5

 
—

 
 
Derivative financial instruments
0.4

 
0.6

 
 
 
1.9

 
0.6

 
 
Current Liabilities
 

 
 

 
 
Trade payables
28.4

 
24.0

 
 
Other taxation and social security
1.3

 
1.3

 
 
Accruals
29.7

 
20.4

 
 
Interest payable
0.4

 
0.2

 
 
Derivative financial instruments
1.5

 
5.2

 
 
 
61.3

 
51.1

 
The directors consider that the carrying value of trade payables approximates to their fair value.
25. Acquisitions
On December 5, 2017, the Group acquired the trade and assets of the Specialty Metals business of ESM Group Inc., incorporating a manufacturing facility in Saxonburg PA. The plant manufactures a range of magnesium-based chips, granules, ground powders and atomized powders. The acquired business will be integrated with Luxfer’s existing business that currently offers similar products under the Luxfer Magtech brand. On closing, an initial consideration of $4.3 million was paid as well as an amount placed in general escrow of $0.3 million as deferred consideration. There was a further $0.4 million placed in escrow for disbursement of environmental liabilities which has not been included as part of the purchase consideration.
The fair value of net assets acquired has been assessed as $5.8 million , resulting in a gain on bargain purchase of $1.2 million . The principal assets acquired are land and buildings, $2.0 million , plant and equipment, $3.2 million and inventory, $0.7 million , with assumed liabilities of $0.1 million . No separately identifiable intangibles have been identified. There gain on bargain purchase resulted because the Specialty Metals business was not considered to be part of ESM Group's core business activities as it has adopted a strategy to focus on its steel industry customers. In implementing this strategy, ESM Group was eager to divest this non-core business, which was reflected in the transaction price. The Group believes that it can extract additional value from the site due to synergies with our existing Luxfer Magtech business.
In addition to the purchase consideration, $0.5 million of acquisition-related costs were incurred and a $0.4 million provision was set up for the disbursement of the environmental liabilities.
On April 29, 2016, the Group acquired a business, Canland UK (Hotpack) Limited ("Canland") specializing in the assembly, packing, distribution and export of self-heating meals and import and distribution of flameless ration heaters. On closing, an initial consideration of $0.5 million was paid, and with the acquired business having $0.2 million of cash, the net cost was $0.3m . Based on the assessment of the assets which were acquired and liabilities assumed, customer related intangibles were recognized for $0.1 million , goodwill for $0.1 million was also recognized and $0.1 million of other net assets. Goodwill included the fair value of the expertise of the acquired workforce following the business combination and also the synergies that were expected to arise. Following the Group-wide rationalization which took place during 2017, the operation was closed and sold for consideration of $0.1 million .
Deferred consideration
The deferred consideration for the acquisition of the Specialty Metals business was shown in the balance sheet at December 31, 2017 at $0.3 million .

F- 46
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
25. Acquisitions (Continued)

The deferred consideration for Luxfer Utah was fixed and all of it was paid on March 31, 2017. The deferred consideration was shown in the balance sheet at December 31, 2016 at $1.3 million .
Deferred contingent consideration
The deferred contingent consideration for Luxfer Magtech is linked to the future profitability of the company and where appropriate will be payable annually from 2015 to 2020. The deferred contingent consideration is shown in the balance sheet at December 31, 2017 at $0.7 million ( 2016 : $1.5 million , following a remeasurement of deferred contingent consideration at the year-end based upon the estimated future cash flows and the weighted probability of those cash flows being achieved, resulting in a credit to the consolidated income statement of $1.0 million ( 2016 : credit of $0.5 million ), net of an unwind of discount on deferred contingent consideration of $0.2 million ( 2016 : $0.2 million ). $0.5 million of the $0.7 million consideration is deemed to be current as it is based on the performance of Luxfer Magtech for the year ending December 31, 2017. The potential undiscounted future payment has been estimated at $0.7 million . The maximum undiscounted amount payable under the sale agreement is $10.0 million .
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Net cash flows on purchase of business:
 
 
 
 
 
Included in net cash flows from investing activities:
 
 
 
 
 
Consideration paid
4.3

 
0.5

 
 
Deferred consideration paid
1.4

 
—

 
 
Cash receipt on disposal of business
(0.1
)
 
—

 
 
Cash acquired
—

 
(0.2
)
 
 
 
5.6

 
0.3

 
26. Commitments and contingencies
 
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
 
 
$M
 
$M
 
$M
 
 
Operating lease commitments—Group as a lessee
 
 
 
 
 
 
 
Minimum lease payments under operating leases recognized in the consolidated income statement
5.1

 
4.8

 
5.6

 
At the balance sheet date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
 
 
December 31, 2017
 
December 31, 2016
 
December 31, 2015
 
 
 
$M
 
$M
 
$M
 
 
Within one year
5.4

 
4.6

 
4.9

 
 
In two to five years
14.5

 
11.8

 
13.5

 
 
In over five years
14.5

 
10.7

 
12.4

 
 
 
34.4

 
27.1

 
30.8

 
Operating lease payments represent rentals payable by the Group for certain of its properties and items of machinery. Leasehold land and buildings have a life between 2 and 65 years . Plant and equipment held under operating leases have an average life between 2 and 5 years . Renewal terms are included in the lease contracts.



F- 47
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
26. Commitments and contingencies (Continued)


Capital commitments
At December 31, 2017 , the Group had capital expenditure commitments of $0.6 million ( 2016 : $3.6 million and 2015 : $3.1 million ) for the acquisition of new plant and equipment.
Contingencies
During February 2014, a cylinder was sold to a long term customer and ruptured at one of their gas facilities. As a result of this rupture, three people were noted to have minor injuries such as loss of hearing. There was no major damage to assets of the customer. A claim has been launched by the three people who were injured in the incident and a prosecutor has been appointed. We have reviewed our quality control checks from around the time which the cylinder was produced and no instances of failures have been noted. It has also been noted by the investigator that the customer has poor quality and safety checks. As a result we do not believe that we are liable for the incident.
27. Financial risk management objectives and policies
The Group's financial instruments comprise bank and other loans, senior loan notes, derivatives and trade payables. Other than derivatives, the main purpose of these financial instruments is to raise finance for the Group's operations. The Group also has various financial assets such as trade receivables and cash and cash equivalents, which arise directly from its operations.
A Treasury Committee, chaired by the Chief Financial Officer, oversees the implementation of the Group's hedging policies, including the risk management of currency and aluminum risks and the use of derivative financial instruments.
It is not the Group's policy or business activity to trade in derivatives. They are only used to hedge underlying risks occurring as part of the Group's normal operating activities.
The main risks arising from the Group's financial instruments are cash flow interest rate risk, liquidity risk, foreign currency translation and transaction risk, aluminum price risk and credit risk on trade receivables.
The Group regularly enters into forward currency contracts to manage currency risks and when considered suitable will use other financial derivatives to manage commodity and interest rate risks.
Interest rate risk
The Group has exposure to variable interest rates when it draws down on the revolving credit facilities. As a result of this exposure, the Group may decide to hedge interest payable based on a combination of forward rate agreements, interest rate caps and swaps. It has also used fixed rate debt within its financing structure to mitigate volatility in interest rate movements as disclosed in Note 21. If the interest rates were to change by 1%, based on the balance on the revolving credit facilities at December 31, 2017 , this would impact the interest cost by approximately $0.2 million .
Total debt and debt funding to joint ventures and associates, at December 31, 2017 , all related to fixed interest rate debt and so there was no interest rate risk at that date.
Liquidity risk
To understand and monitor cash flows, the Group uses a combination of a short-term rolling six week cash forecast, based on expected daily liquidity requirements and longer term monthly rolling forecasts, covering forecast periods of between 6 and 18 months forward. The Group also prepares, at least annually, a longer-term strategic cash forecast. Together this system of control is used to ensure the Group can fund its ongoing operations, including working capital, capital expenditure and interest payments and to ensure that bank covenant targets will be met. Short and medium term changes in liquidity needs are funded from the Group's $150 million revolving bank facility, as disclosed in Note 21, which provides the ability to draw down and repay funds on a daily basis. In monitoring liquidity requirements and planning its working capital and capital expenditure programs, the Group aims to maintain a sufficiently prudent level of headroom against its banking facilities and forecast covenant position as protection against any unexpected or sudden market shocks.

F- 48
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
27. Financial risk management objectives and policies (Continued)

The Group also uses forecasts to manage the compliance with any associated covenant tests in relation to the Group's financing arrangements. The Group is subject to maintaining net debt to EBITDA levels of below three times, EBITDA to net interest above four times, and a number of other debt service tests which include EBITDA, taxation, capital expenditure and pension payments.
The Group has been in compliance with the covenants under the Loan Notes due 2018, 2021, 2023 and 2026 and the banking facilities throughout all of the quarterly measurement dates from and including September 30, 2011 to December 31, 2017.
The maturity of the Group's liabilities is also monitored to ensure sufficient funds remain available to meet liabilities as they fall due. The table below summarizes the maturity profile of the Group's financial liabilities at December 31, based on contractual payments.
 
 
December 31, 2017
 
December 31, 2016
 
 
 
Within 12 months
 
1-5 years
 
> 5 years
 
Total
 
Within 12 months
 
1-5 years
 
> 5 years
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Loan Notes due 2018
15.0

 
—

 
—

 
15.0

 
—

 
15.0

 
—

 
15.0

 
 
Loan Notes due 2021
—

 
25.0

 
—

 
25.0

 
—

 
25.0

 
—

 
25.0

 
 
Loan Notes due 2023
—

 
—

 
25.0

 
25.0

 
—

 
—

 
25.0

 
25.0

 
 
Loan Notes due 2026
—

 
—

 
25.0

 
25.0

 
—

 
—

 
25.0

 
25.0

 
 
Revolving credit facility
—

 
21.3

 
—

 
21.3

 
—

 
32.8

 
—

 
32.8

 
 
Deferred contingent consideration
0.5

 
0.2

 
—

 
0.7

 
—

 
1.5

 
—

 
1.5

 
 
Deferred consideration
0.3

 
—

 
—

 
0.3

 
1.3

 
—

 
—

 
1.3

 
 
Trade payables
28.4

 
—

 
—

 
28.4

 
24.0

 
—

 
—

 
24.0

 
 
Accruals
29.7

 
1.5

 
—

 
31.2

 
20.4

 
—

 
—

 
20.4

 
 
Interest payable
0.4

 
—

 
—

 
0.4

 
0.2

 
—

 
—

 
0.2

 
 
Derivative financial instruments
1.5

 
0.4

 
—

 
1.9

 
5.2

 
0.6

 
—

 
5.8

 
 
Overdrafts
4.2

 
—

 
—

 
4.2

 
—

 
—

 
—

 
—

 
 
 
80.0

 
48.4

 
50.0

 
178.4

 
51.1

 
74.9

 
50.0

 
176.0

 
The table below summarizes the maturity profile of the Group's financial liabilities at December 31 based on contractual undiscounted payments. Interest rates on the Group's variable rate debt have been based on a forward curve.
 
 
December 31, 2017
 
December 31, 2016
 
 
 
$M
 
$M
 
 
Undiscounted contractual maturity of financial liabilities:
 
 
 
 
 
Amounts payable:
 
 
 
 
 
Within 12 months
84.5

 
56.4

 
 
1-5 years
63.6

 
90.5

 
 
> 5 years
54.9

 
57.4

 
 
 
203.0

 
204.3

 
 
Less: future finance charges
(24.6
)
 
(28.3
)
 
 
 
178.4

 
176.0

 




F- 49
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
27. Financial risk management objectives and policies (Continued)

Capital risk management
The capital structure of the Group consists of shareholders' equity, debt and cash and cash equivalents. For the foreseeable future, the Board will maintain a capital structure that supports the Group's strategic objectives through:
•
Managing funding and liquidity;
•
Optimizing shareholder return; and
•
Maintaining a strong, investment-grade credit rating
The Group monitors its adjusted EBITDA, as reconciled in the table below, for continuing activities to net debt ratio. The table below sets out the calculations for 2017 , 2016 and 2015 :
 
 
2017
 
2016
 
2015
 
 
 
$M
 
$M
 
$M
 
 
For continuing operations:
 
 
 
 
 
 
 
Operating profit
19.3

 
35.8

 
37.9

 
 
Deduct:
 
 
 
 
 
 
 
Profit on sale of redundant site (Note 5)
(0.4
)
 
(2.1
)
 
—

 
 
Changes to defined benefit pension plans (Note 5)
—

 
(0.6
)
 
(18.0
)
 
 
Add back:
 
 
 
 
 
 
 
Restructuring and other expense (Note 5)
21.6

 
2.2

 
22.4

 
 
Loss on disposal of property, plant and equipment
0.1

 
0.2

 
—

 
 
Other share based compensation charges
2.2

 
1.4

 
1.3

 
 
Depreciation and amortization
19.0

 
18.4

 
18.6

 
 
Adjusted EBITDA
61.8

 
55.3

 
62.2

 
 
 
 
 
 
 
 
 
 
Bank and other loans
108.8

 
121.0

 
131.6

 
 
Total debt
108.8

 
121.0

 
131.6

 
 
Less: Cash and cash equivalents
(13.3
)
 
(13.6
)
 
(36.9
)
 
 
Add: Overdrafts
4.2

 
—

 
—

 
 
Add: Restricted cash
0.7

 
—

 
—

 
 
Net debt
100.4

 
107.4

 
94.7

 
 
Net debt: Adjusted EBITDA ratio
1.6
x
 
1.9
x
 
1.5
x
 


















F- 50
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
27. Financial risk management objectives and policies (Continued)

Reconciliation of net debt
 
 
Cash at bank and in hand
 
Overdrafts
 
Bank and other loans due within one year
 
Bank and other loans due after one year
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Net debt at January 1, 2016
(36.9
)
 
—

 
—

 
131.6

 
94.7

 
 
Cash flows
21.4

 
—

 
—

 
(9.0
)
 
12.4

 
 
Foreign exchange adjustments
1.9

 
—

 
—

 
(2.1
)
 
(0.2
)
 
 
Other non-cash movements
—

 
—

 
—

 
0.5

 
0.5

 
 
Net debt at January 1, 2017
(13.6
)
 
—

 
—

 
121.0

 
107.4

 
 
Cash flows
6.5

 
—

 
—

 
(14.5
)
 
(8.0
)
 
 
Reclassification
(4.2
)
 
4.2

 
14.9

 
(14.9
)
 
—

 
 
Foreign exchange adjustments
(2.0
)
 
—

 
—

 
1.7

 
(0.3
)
 
 
Restricted cash
0.7

 
—

 
—

 
—

 
0.7

 
 
Other non-cash movements
—

 
—

 
0.1

 
0.5

 
0.6

 
 
Net debt at December 31, 2017
(12.6
)
 
4.2

 
15.0

 
93.8

 
100.4

 
Credit risk
The Group only provides trade credit to creditworthy third parties. Credit checks are performed on new and existing customers along with monitoring payment histories of customers. Outstanding receivables from customers are closely monitored to ensure they are paid when due, with both outstanding overdue days and total days of sales outstanding reported as a business unit key performance measure. Where possible sales are also protected through the use of credit insurance. At December 31, 2017 , the Group has a provision for bad and doubtful debtors of $4.1 million ( 2016 : $2.1 million ) and a charge of $2.7 million ( 2016 : $1.3 million ) has been made to the consolidated income statement in relation to bad debts recognized in 2017 .
The analysis of trade receivables that were past due but not impaired is as follows:
 
 
 
 
Neither past due nor impaired
 
Past due but not impaired
 
 
 
Total
 
< 31 days
 
31-60 days
 
61-90 days
 
91-121 days
 
> 121 days
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At December 31, 2017
54.0

 
37.3

 
11.0

 
3.2

 
1.7

 
0.8

 
—

 
 
At December 31, 2016
40.5

 
33.4

 
5.5

 
1.0

 
0.5

 
0.1

 
—

 
The Group also monitors the spread of its customer base with the objective of trying to minimize exposure at a Group and divisional level to any one customer. The top 10 customers in 2017 represented 25% ( 2016 : 27% and 2015 : 27% ) of total revenue. There were no customers in 2017 , 2016 or 2015 that represented over 10% of total revenue.
Foreign currency translation risk
With substantial operations in Europe, the Group is exposed to translation risk on both its consolidated income statement, based on average exchange rates, and its balance sheet with regards to period end exchange rates.
The Group's results and net assets are reported by geographic region in Note 2. This analysis shows in 2017 the Group had revenue of $139.5 million derived from U.K. operations, an operating loss of $5.1 million and when deducting profit on sale of a redundant site and adding back restructuring and other expense, share based compensation, and depreciation and amortization, an adjusted EBITDA of $16.2 million . During 2017 , the average exchange rate for GBP sterling was £0.7682 compared to the 2016 average of £0.7438 . This resulted in a negative impact of $4.4 million on revenue, $0.2 million on operating profit and $0.5 million on adjusted EBITDA. Based on the 2017 level of sales and profits a weakening in GBP sterling leading to a £0.05 increase in the GBP sterling to U.S. dollar exchange rate would result in a decrease of $8.5 million in revenue, $0.3 million in operating loss and $1.0 million in adjusted EBITDA.

F- 51
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
27. Financial risk management objectives and policies (Continued)

The capital employed at December 31, 2017 in the U.K. was $81.8 million translated at an exchange rate of £0.7401 . A £0.05 change in exchange rates would change capital employed by approximately $5.2 million .
During 2017 , the average exchange rate for the Euro was €0.8788 , compared to the 2016 average of €0.9061 . This resulted in a positive impact of $0.9 million on revenue, nil on operating profit and $0.1 million on adjusted EBITDA. Based on the 2017 level of sales and profits a weakening in the Euro leading to a €0.05 increase in the Euro to U.S. dollar exchange rate would result in a decrease of $1.5 million in revenue, no change to operating profit and $ 0.1 million in adjusted EBITDA.
Foreign currency transaction risk
In addition to currency translation risk, the Group incurs currency transaction risk whenever one of the Group's operating subsidiaries enters into either a purchase or sales transaction in a currency other than its functional currency. Currency transaction risk is reduced by matching sales revenues and costs in the same currency. The Group's U.S. operations have little currency exposure as most purchases, costs and revenues are conducted in U.S. dollars. The Group's U.K. operations are exposed to exchange transaction risks, mainly because these operations sell goods priced in Euros and U.S. dollars, and purchase raw materials priced in U.S. dollars. The Group also incurs currency transaction risk if it lends currency other than its functional currency to one of its joint venture partners.
The U.K. operations within the Group have approximately $14.0 million net sales risk after offsetting raw material purchases made in U.S. dollars and a substantial Euro sales risk, with approximately $54.0 million of exports priced in Euros. These risks are being partly hedged through the use of forward foreign currency exchange rate contracts, but we estimate that in 2017 our Elektron division has incurred a transaction gain of $5.6 million , and the transaction impact at our Gas Cylinders division was a gain of $2.4 million .
Based on a $14.0 million net exposure to the U.S. dollar, a $0.10 increase in exchange rates would have a $1.1 million annual decrease in Group operating profit and based on a €54.0 million Euro sales risk a €0.10 increase in exchange rates would have a $5.5 million annual decrease in Group operating profit.
Commodity price risks
The Group is exposed to a number of commodity price risks, including primary aluminum, magnesium, rare earth chemicals, zircon sand and other zirconium basic compounds. All have been subject to substantial increases in recent years. Historically the two largest exposures to the Group have been the prices of aluminum and magnesium and the Group will spend annually approximately $80 million to $100 million on these two raw materials.
Unlike the other major commodities purchased, aluminum is traded on the London Metal Exchange ("LME") and therefore the Group is able to use LME derivative contracts to hedge a portion of its price exposure. In 2017 the Group purchased approximately 12,500 metric tons of primary aluminum. The processed waste can be sold as scrap aluminum at prices linked to the LME price. The price risk on aluminum is mitigated by the use of LME derivative contracts. At December 31, 2017 , the Group had hedged 32% of its main primary aluminum requirements for 2018 . Before hedging the risk, a $100 increase in the LME price of aluminum would increase our Gas Cylinders division's costs by approximately $1.3 million .
In the long-term, the Group has sought to recover the cost of increased commodity costs through price increases and surcharges. Any hedging of aluminum risk is performed to protect the Group against short-term fluctuations in aluminum costs.
In 2017 the Group purchased approximately 6,000 metric tons of primary magnesium. Magnesium is not traded on the LME so we are not able to maintain a hedge position of its price exposure.
The Group purchases various rare earth chemicals which it uses in the production of various materials produced by its Elektron division and when these chemicals became subject to significant price volatility it used surcharges on its products to maintain its product margins.

F- 52
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

28. Financial instruments
The following disclosures relating to financial instruments have been prepared on a basis which excludes short-term debtors and creditors which have resulted from the Group's operating activities.
(a)
Financial instruments of the Group
The financial instruments of the Group other than short-term debtors and creditors and non-current derivative financial instruments were as follows:
 
 
Book value
 
Fair value
 
Book value
 
Fair value
 
 
 
December 31, 2017
 
December 31, 2017
 
December 31, 2016
 
December 31, 2016
 
 
Financial instruments:
$M
 
$M
 
$M
 
$M
 
 
Financial assets:
 
 
 
 
 
 
 
 
 
Cash at bank and in hand
13.3

 
13.3

 
13.6

 
13.6

 
 
Financial liabilities (1) :
 
 
 
 
 
 
 
 
 
Loan Notes due 2018
15.0

 
15.3

 
15.0

 
15.9

 
 
Loan Notes due 2021
25.0

 
25.2

 
25.0

 
25.0

 
 
Loan Notes due 2023
25.0

 
26.6

 
25.0

 
26.3

 
 
Loan Notes due 2026
25.0

 
27.1

 
25.0

 
26.5

 
 
Revolving credit facility
21.3

 
21.3

 
32.8

 
32.8

 
 
Overdrafts
4.2

 
4.2

 
—

 
—

 
 
Deferred contingent consideration
0.7

 
0.7

 
1.5

 
1.5

 
 
Deferred consideration
0.3

 
0.3

 
1.3

 
1.3

 
(1)  
The financial instruments included in financial liabilities are shown gross of unamortized finance costs.
(2)  
The fair value of these financial instruments is calculated by discounting the future cash flows, including interest payments due.
All financial assets mature within one year except some derivative financial instruments. The maturity of the financial liabilities is disclosed in Note 27.
At December 31, 2017 , the amount drawn in bank and other loans was $111.3 million ( 2016 : $122.8 million ), of which $105.5 million was denominated in U.S. dollars with the remainder being denominated in GBP sterling ( 2016 : $117.0 million was denominated in U.S. dollars with the remainder being denominated in GBP sterling).
 
 
Book value
 
Fair value
 
Book value
 
Fair value
 
 
Derivative financial instruments are as follows:
December 31, 2017
 
December 31, 2017
 
December 31, 2016
 
December 31, 2016
 
 
 
$M
 
$M
 
$M
 
$M
 
 
Held to hedge purchases and sales by trading businesses:
 
 
 
 
 
 
 
 
 
Forward foreign currency exchange rate contracts
(0.7
)
 
(0.7
)
 
(3.1
)
 
(3.1
)
 
 
LME derivative contracts
1.2

 
1.2

 
(0.6
)
 
(0.6
)
 
The fair value calculations were performed on the following basis:
Cash at bank and in hand / overdrafts
The carrying value approximates to the fair value as a result of the short-term maturity of the instruments. Cash at bank and in hand are subject to a right to offset.

F- 53
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
28. Financial instruments (Continued)

Bank loans
At December 31, 2017 , bank and other loans of $111.3 million ( 2016 : $122.8 million ) were outstanding. At December 31, 2017 , bank and other loans are shown net of issue costs of $2.5 million ( 2016 : $1.8 million ) and these issue costs are to be amortized to the expected maturity of the facilities. At December 31, 2017 , $21.3 million ( 2016 : $32.8 million ) of the total $111.3 million ( 2016 : $122.8 million ) bank and other loans was variable interest rate debt and subject to floating interest rate risk, with the remainder being fixed rate debt.
Forward foreign currency exchange rate contracts
The fair value of these contracts was calculated by determining what the Group would be expected to receive or pay on termination of each individual contract by comparison to present market prices.
LME derivative contracts
The fair value of these contracts has been calculated by valuing the contracts against the equivalent forward rates quoted on the LME.
Deferred contingent consideration
Disclosure of the basis of calculation of the fair value of deferred contingent consideration is included within Note 25 of the consolidated financial statements.
Deferred consideration
Disclosure of the basis of calculation of the fair value of deferred consideration is included within Note 25 of the consolidated financial statements.
Fair value hierarchy
At December 31, 2017 , the Group used the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
 
 
December 31, 2017
 
Level 1
 
Level 2
 
Level 3
 
 
 
$M
 
$M
 
$M
 
$M
 
 
Net derivative financial (assets) / liabilities at fair value through profit or loss:
 
 
 
 
 
 
 
 
 
Forward foreign currency exchange rate contracts
0.7

 
—

 
0.7

 
—

 
 
LME derivative contracts
(1.2
)
 
—

 
(1.2
)
 
—

 
 
Interest bearing loans and borrowings:
 
 
 
 
 
 
 
 
 
Loan Notes due 2018
15.3

 
—

 
15.3

 
—

 
 
Loan Notes due 2021
25.2

 
—

 
25.2

 
—

 
 
Loan Notes due 2023
26.6

 
—

 
26.6

 
—

 
 
Loan Notes due 2026
27.1

 
—

 
27.1

 
—

 
 
Revolving credit facility
21.3

 
—

 
21.3

 
—

 
 
Other financial liabilities:
 
 
 
 
 
 
 
 
 
Deferred contingent consideration
0.7

 
—

 
—

 
0.7

 
 
Deferred consideration
0.3

 
—

 
—

 
0.3

 


F- 54
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
28. Financial instruments (Continued)

During the year ended December 31, 2017 , there were no transfers between Level 1 and Level 2 fair value measurements.
The following table presents the changes in Level 3 instruments for the year ended December 31, 2017 and 2016 .
 
 
2017
 
2016
 
 
 
$M
 
$M
 
 
Balance at January 1
2.8

 
2.9

 
 
Payments made during year
(1.3
)
 
—

 
 
New deferred consideration
0.3

 
—

 
 
Gains recognized in profit or loss
(0.8
)
 
(0.1
)
 
 
Balance at December 31
1.0

 
2.8

 
 
Total gains for the period included in profit and loss for assets held at the end at December 31
(0.8
)
 
(0.1
)
 
 
Change in unrealized (gains) or losses for the period included in profit and loss for assets held at the end at December 31
(0.8
)
 
(0.1
)
 
The deferred contingent consideration relates to estimations of amounts payable in the future regarding acquisitions made in prior years. This is based upon an estimate of the future profitability of the businesses versus targets agreed upon as part of the acquisitions.
(b)
Interest rate risks
Interest rate risk profile on financial assets
This table shows the Group's financial assets at December 31, which are cash and cash equivalents. These assets are all subject to floating interest rate risk.
 
 
December 31, 2017
 
December 31, 2016
 
 
Cash by currency:
$M
 
$M
 
 
U.S. dollar
5.4

 
1.3

 
 
GBP sterling
3.6

 
9.1

 
 
Euro
1.0

 
1.4

 
 
Australian dollar
0.6

 
0.5

 
 
Chinese renminbi
1.0

 
0.8

 
 
Czech koruna
1.2

 
0.3

 
 
Canadian dollar
0.5

 
0.2

 
 
 
13.3

 
13.6

 
 
 
December 31, 2017
 
December 31, 2016
 
 
Overdraft by currency:
$M
 
$M
 
 
U.S. dollar
(3.0
)
 
—

 
 
GBP sterling
(1.2
)
 
—

 
 
 
(4.2
)
 
—

 
The Group earns interest on cash balances through either deposit accounts or placing funds on money markets at short-term fixed rates. In all cases, with the exception of the restricted cash of $0.7 million , interest earned is at approximately ICELIBOR rates during the year.


F- 55
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
28. Financial instruments (Continued)

Interest rate risk profile on financial liabilities
The following table sets out the carrying value, by original maturity, of the Group's financial instruments that were exposed to both fixed and variable interest rate risk. The carrying values include interest payments to be made and interest rates on the Group's variable rate debt have been based on a forward curve.
 
 
December 31, 2017
 
December 31, 2016
 
 
 
Within 12 months
 
1-5 years
 
> 5 years
 
Total
 
Within 12 months
 
1-5 years
 
> 5 years
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Floating interest rate risk:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revolving credit facility (including interest payments)
0.7

 
24.2

 
—

 
24.9

 
0.9

 
34.1

 
—

 
35.0

 
 
Fixed interest rate risk:
 
 
 
 
 
 

 
 
 
 
 
 
 

 
 
Loan Notes due 2018 (including interest payments)
15.5

 
—

 
—

 
15.5

 
0.9

 
15.5

 
—

 
16.4

 
 
Loan Notes due 2021 (including interest payments)
0.9

 
27.5

 
—

 
28.4

 
1.0

 
28.7

 
—

 
29.7

 
 
Loan Notes due 2023 (including interest payments)
1.2

 
4.9

 
25.6

 
31.7

 
1.2

 
4.9

 
26.8

 
32.9

 
 
Loan Notes due 2026 (including interest payments)
1.2

 
5.0

 
29.3

 
35.5

 
1.2

 
5.0

 
30.6

 
36.8

 
 
 
19.5

 
61.6

 
54.9

 
136.0

 
5.2

 
88.2

 
57.4

 
150.8

 

(c)
Hedging activities
Forward foreign currency exchange contracts
The Group utilizes forward foreign currency exchange contracts to hedge significant future transactions and cash flows to manage its exchange rate exposures. The contracts purchased are primarily denominated in GBP sterling, U.S. dollars, Euros and Australian dollars. The Group is also exposed to a number of other currencies like Japanese yen and Canadian dollars with hedges against these on a more ad hoc basis, when exposures are more significant.
At December 31, 2017 , the fair value of forward foreign currency exchange contracts deferred in equity was a loss of $0.7 million ( 2016 : loss of $3.1 million and 2015 : loss of $0.4 million ). During 2017 , a gain of $0.6 million ( 2016 : loss of $0.9 million and 2015 : loss of $0.1 million ) has been transferred to the consolidated income statement in respect of contracts that have matured in the year.
At December 31, 2017 and 2016 , the Group held various forward foreign currency exchange contracts designated as hedges in respect of forward sales for U.S. dollars, Euros and Australian dollars for the receipt of GBP sterling or Euros. The Group also held forward foreign currency exchange contracts designated as hedges in respect of forward purchases for U.S. dollars by the sale of GBP sterling. The contract totals in GBP sterling and Euros, range of maturity dates and range of exchange rates are disclosed overleaf:
 
December 31, 2017
 
 
 
 
Australian dollars
 
 
Sales hedges
U.S. dollars
 
Euros
 
 
 
Contract totals/£m
17.1


27.5


2.8

 
 
Maturity dates
01/18 to 07/19


01/18 to 07/19


06/18

 
 
Exchange rates
$1.2433 to $1.3444


€1.0949 to €1.1803


$
1.7667

 

F- 56
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
28. Financial instruments (Continued)

 
Purchase hedges
U.S. dollars
 
Euros
 
Australian dollars
 
 
Contract totals/£m
12.5

 
0.1

 
1.7

 
 
Maturity dates
01/18 to 07/19

 
01/18

 
06/18

 
 
Exchange rates
$1.2414 to $1.3389

 
€1.1084

 
$1.7161

 
 
December 31, 2016
 
 
 
 
Australian dollars
 
 
Sales hedges
U.S. dollars
 
Euros
 
 
 
Contract totals/£m
27.6

 
39.4

 
2.9

 
 
Maturity dates
01/17 to 11/18

 
01/17 to 11/18

 
09/17

 
 
Exchange rates
$1.2310 to $1.5638

 
€1.0951 to €1.4200

 
$1.7237
 
 
Purchase hedges
 
 
U.S. dollars
 
Euros
 
 
Contract totals/£m
 
 
25.7

 
2.5

 
 
Maturity dates
 
 
01/17 to 10/18

 
01/17 to 06/17

 
 
Exchange rates
 
 
$1.2311 to $1.5618

 
€1.1121 to €1.1804

 
Aluminum commodity contracts
The Group did not hold any forward aluminum commodity contracts at December 31, 2017 or December 31, 2016 .
Forward interest rate agreements
The Group did not hold any forward interest rate agreements at December 31, 2017 or December 31, 2016 .
LME derivative contracts
At December 31, 2017 , the Group has hedged 3,000 metric tons of aluminum for supply in 2018 , using its ancillary banking facilities. The fair value of LME derivative contracts deferred in equity was a gain of $1.2 million ( 2016 : loss of $0.6 million and 2015 : loss of $3.7 million ).
(d)
Foreign currency translation risk disclosures
Exchange gains and losses arising on the translation of the Group's non-U.S. assets and liabilities are classified as equity and transferred to the Group's translation reserve. In 2017 , a gain of $11.6 million ( 2016 : loss of $13.1 million and 2015 : loss of $8.6 million ) was recognized in translation reserves.
(e)
Un-drawn committed facilities
At December 31, 2017 , the Group had committed banking facilities of $150.0 million . The facilities were for providing loans and overdrafts, with a separate facility for letters of credit which at December 31, 2017 was £7.0 million ( $9.5 million ). Of the committed facilities, $21.3 million of loans were drawn and $ nil for letters of credit were utilized. The Group also has a separate bonding facility for bank guarantees denominated in GBP sterling of £3.0 million ( $4.1 million ), of which £1.0 million ( $1.4 million ) was utilized at December 31, 2017 .
At December 31, 2016 , the Group had committed banking facilities of $150.0 million . The facilities were for providing loans and overdrafts, with a separate facility for letters of credit which at December 31, 2016 was £7.0 million ( $8.6 million ). Of the committed facilities, $32.8 million of loans were drawn and $ nil for letters of credit were utilized. The Group also has a separate bonding facility for bank guarantees denominated in GBP sterling of £3.0 million ( $3.7 million ), of which £1.0 million ( $1.3 million ) was utilized at December 31, 2016 .

F- 57
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data

29. Retirement benefits
The Group has defined benefit pension plans in the U.K., the U.S. and France. The levels of funding are determined by periodic actuarial valuations. The assets of the plans are generally held in separate trustee-administered funds. The Group also operates defined contribution plans in the U.K., the U.S., Australia and Canada.
Remeasurements are recognized in full in the period in which they occur. The liability recognized in the balance sheet represents the present value of the defined benefit obligation, as reduced by the fair value of plan assets. The cost of providing benefits is determined using the Projected Unit Credit Method.
The principal defined benefit pension plans in the Group is the U.K. Luxfer Group Pension Plan ("the Plan"), which closed to new members in 1998, new employees then being eligible for a defined contribution plan. With effect from April 2004, the Plan changed from a final salary to a career average revalued earnings benefit scale. In August 2005, a plan specific earnings cap of £60,000 per annum subject to inflation increases was introduced, the figure had risen to £76,000 in 2015. In October 2007, the rate of the future accrual for pension was reduced and a longevity adjustment was introduced to mitigate against the risk of further unexpected increases in life expectancies. In 2015, following a consultation with the Trustees and members, it was agreed the Plan would close to future accrual of benefits effective from April 5, 2016 and for the purpose of increasing pensions in payment, to use the Consumer Prices Index ("CPI") as the reference index in place of the Retail Prices Index ("RPI") where applicable. The remaining active members, numbering approximately 160 , were transferred into a defined contribution plan. The weighted average duration of the expected benefit payments from the Plan is around 18 years. The pension cost of the Plan is assessed in accordance with the advice of an independent firm of professionally qualified actuaries, Lane Clark & Peacock LLP. The Plan is registered with HMRC for tax purposes, operates separately from the Group and is managed by an independent set of Trustees. The Plan operates under U.K. trust law and the trust is a separate legal entity from the Group. The Plan is governed by an independent board of Trustees, composed of two member nominated Trustees and four company appointed Trustees.
The Trustees are required by law to act in the best interests of plan members and are responsible for setting certain policies (e.g. investment funding) together with the Company. A schedule of payments provides for deficit funding, which is based upon minimum annual contributions of £3.8 million per year, together with additional variable contributions based on 15% of net earnings of Luxfer Holdings PLC between £12.0 million and £24.0 million , and 10% of net earnings of Luxfer Holdings PLC in excess of £24.0 million .
The Group's other arrangements are less significant than the Luxfer Group Pension Plan, the largest being the BA Holdings, Inc. Pension Plan in the U.S. In December 2005, this plan was closed to further benefit accrual with members being offered contributions to that company's 401(k) plan. At January 1, 2016, the U.S. pension plans (BA Holdings, Inc. Pension Plan and Luxfer Hourly Pension Plan) merged into one plan.
The total charge to the Group's consolidated income statement for 2017 for retirement benefits was a cost of $6.6 million ( 2016 : cost of $6.4 million , 2015 : credit of $9.3 million ).

F- 58
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
29. Retirement benefits (Continued)

The movement in the pension liabilities is shown below:
 
 
2017
 
2016
 
 
 
$M
 
$M
 
 
Balance at January 1
66.5

 
58.9

 
 
(Credited) / charged to the consolidated income statement:
 
 
 
 
 
Past service credit
—

 
—

 
 
Curtailment credit
—

 
(0.6
)
 
 
Current service cost
0.1

 
0.4

 
 
Net interest on net liability
1.8

 
2.0

 
 
Administrative costs
0.7

 
0.9

 
 
Total charge for defined contribution plans
4.0

 
3.7

 
 
Cash contributions
(12.9
)
 
(10.9
)
 
 
(Credited) / charged to the consolidated statement of comprehensive income
(9.5
)
 
21.7

 
 
Exchange difference
4.6

 
(9.6
)
 
 
Balance at December 31
55.3

 
66.5

 
The financial assumptions used in the calculations were:
 
 
Projected Unit Credit Valuation
 
 
 
U.K.
 
Non-U.K.
 
 
 
2017
 
2016
 
2015
 
2017
 
2016
 
2015
 
 
 
%
 
%
 
%
 
%
 
%
 
%
 
 
Discount rate
2.40
 
2.60
 
3.70
 
3.60
 
4.20
 
4.50
 
 
Retail Price Inflation
3.10
 
3.20
 
3.00
 
—
 
—
 
—
 
 
Inflation related assumptions:
 
 
 
 
 
 
 
 
 
 
 
 
 
Salary inflation
n/a
 
n/a
 
4.00
 
—
 
—
 
—
 
 
Consumer Price Inflation
2.10
 
2.20
 
2.00
 
—
 
—
 
—
 
 
Pension increases—pre 6 April 1997
1.90
 
2.00
 
1.80
 
—
 
—
 
—
 
 
—1997 - 2005
2.10
 
2.20
 
2.10
 
—
 
—
 
—
 
 
—post 5 April 2005
1.70
 
1.80
 
1.70
 
—
 
—
 
—
 
 
 
2017
 
2016
 
 
Other principal actuarial assumptions:
Years
 
Years
 
 
Life expectancy of male / female in the U.K. aged 65 at accounting date
21.6 / 24.6
 
21.5 / 24.5
 
 
Life expectancy of male / female in the U.K. aged 65 at 20 years after accounting date
23.3 / 26.5
 
23.2 / 26.4
 
Investment strategies
For the principal defined benefit plan in the Group and the U.K., the Luxfer Group Pension Plan, the assets are invested in a diversified range of asset classes and include matching assets (comprising fixed interest and index linked bonds and swaps) and growth assets (comprising all other assets). The Trustees have formulated a de-risking strategy to help control the short term risks of volatility associated with holding growth assets. The Trustees also monitor the cost of a buy-in to secure pensioner liabilities with an insurance company to ensure they and the Company are able to act if such an opportunity arises. Other options to progressively reduce the scale of the liabilities are discussed between the Trustees and the Company.
Risk exposures
The Group is at risk of adverse experience relating to the defined benefit plans.

F- 59
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
29. Retirement benefits (Continued)

The plans hold a high proportion of assets in equity and other growth investments, with the intention of growing the value of assets relative to liabilities. The Group is at risk if the value of liabilities grows at a faster rate than the plans assets, or if there is a significant fall in the value of these assets not matched by a fall in the value of liabilities. If these events occurred, this would be expected to lead to an increase in the Group's future cash contributions.
Special events
In 2016 annuities were purchased settling $10.0 million of liabilities of the U.S. plan with an associated settlement charge of $0.1 million . Lump sums were also paid of $4.2 million with an associated settlement credit of $0.7 million . The gross amounts settled were $14.8 million and $14.2 million during this exercise.
In 2015, following a consultation with the Trustees and members, it was agreed that the Luxfer Group Pension Plan in the U.K. would close to future accrual of benefits effective from April 5, 2016 and for the purpose of increasing pensions in payment, to use CPI as the reference index in place of RPI where applicable. As a result, in 2015 the Group has recognized a curtailment credit of $3.3 million in respect of the closure of the Plan to future accrual and a past service credit of $14.9 million in respect of the change in expected future pension increases in payment.
The amounts recognized in the consolidated income statement in respect of the pension plans were as follows:
 
 
2017
 
2017
 
2017
 
2016
 
2016
 
2016
 
2015
 
2015
 
2015
 
 
 
U.K.
 
Non-U.K.
 
Total
 
U.K.
 
Non-U.K.
 
Total
 
U.K.
 
Non-U.K.
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
In respect of defined benefit plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Current service cost
—

 
0.1

 
0.1

 
0.3

 
0.1

 
0.4

 
1.4

 
0.1

 
1.5

 
 
Net interest on net liability
1.4

 
0.4

 
1.8

 
1.5

 
0.5

 
2.0

 
2.5

 
0.5

 
3.0

 
 
Administrative expenses
0.2

 
0.5

 
0.7

 
0.4

 
0.5

 
0.9

 
1.0

 
0.3

 
1.3

 
 
Past service credit
—

 
—

 
—

 
—

 
—

 
—

 
(14.9
)
 
—

 
(14.9
)
 
 
Curtailment credit
—

 
—

 
—

 
—

 
(0.6
)
 
(0.6
)
 
(3.3
)
 
—

 
(3.3
)
 
 
Total charge / (credit) for defined benefit plans
1.6

 
1.0

 
2.6

 
2.2

 
0.5

 
2.7

 
(13.3
)
 
0.9

 
(12.4
)
 
 
In respect of defined contribution plans:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total charge for defined contribution plans
1.9

 
2.1

 
4.0

 
1.6

 
2.1

 
3.7

 
1.3

 
1.8

 
3.1

 
 
Total charge / (credit) for pension plans
3.5

 
3.1

 
6.6

 
3.8

 
2.6

 
6.4

 
(12.0
)
 
2.7

 
(9.3
)
 
Of the total charge for the year ( 2016 : charge for the year and 2015 : credit for the year), charges of $4.1 million and $0.7 million ( 2016 : $4.1 million and $0.9 million and 2015 : $4.6 million and $1.3 million ); have been included in cost of sales and administrative costs, respectively; a charge of nil ( 2016 : credit of $0.6 million and 2015 : credit of $18.0 million ) has been recognized as changes to defined benefit pension plans in the consolidated income statement and a charge of $1.8 million ( 2016 : $2.0 million and 2015 : $3.0 million ) has been included in finance costs.
For the year, the amount of gain recognized in the Consolidated Statement of Comprehensive Income is $9.5 million ( 2016 : loss of $21.7 million and 2015 : gain of $4.4 million ).
The actual return of the plans assets was a gain of $33.2 million ( 2016 : gain of $56.4 million and 2015 : loss of $0.6 million ).

F- 60
Table of Contents
LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
29. Retirement benefits (Continued)

The value of the plans assets were:
 
 
2017
 
2017
 
2017
 
2016
 
2016
 
2016
 
 
 
U.K.
 
Non-U.K.
 
Total
 
U.K.
 
Non-U.K.
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
Assets in active markets:
 
 
 
 
 
 
 
 
 
 
 
 
 
Equities and growth funds
203.4

 
22.9

 
226.3

 
171.6

 
20.6

 
192.2

 
 
Government bonds
49.9

 
—

 
49.9

 
44.3

 
—

 
44.3

 
 
Corporate bonds
72.7

 
18.3

 
91.0

 
64.5

 
16.0

 
80.5

 
 
Cash
0.3

 
—

 
0.3

 
(0.1
)
 
—

 
(0.1
)
 
 
Total market value of assets
326.3

 
41.2

 
367.5

 
280.3

 
36.6

 
316.9

 
 
Present value of plan liabilities
(369.7
)
 
(53.1
)
 
(422.8
)
 
(334.8
)
 
(48.6
)
 
(383.4
)
 
 
Deficit in the plans
(43.4
)
 
(11.9
)
 
(55.3
)
 
(54.5
)
 
(12.0
)
 
(66.5
)
 
 
Related deferred income tax assets
7.8

 
3.1

 
10.9

 
10.2

 
4.4

 
14.6

 
 
Net pension liabilities
(35.6
)
 
(8.8
)
 
(44.4
)
 
(44.3
)
 
(7.6
)
 
(51.9
)
 
The plans do not invest directly in property occupied by the Group or in financial securities issued by the Group.
Analysis of movement in the present value of the defined benefit obligations:
 
 
2017
 
2017
 
2017
 
2016
 
2016
 
2016
 
 
 
U.K.
 
Non-U.K.
 
Total
 
U.K.
 
Non-U.K.
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At January 1
334.8

 
48.6

 
383.4

 
334.4

 
61.0

 
395.4

 
 
Service cost
—

 
0.1

 
0.1

 
0.3

 
0.1

 
0.4

 
 
Interest on obligation
8.9

 
1.9

 
10.8

 
10.9

 
2.6

 
13.5

 
 
Contributions from plan members
—

 
—

 
—

 
0.1

 
—

 
0.1

 
 
Actuarial gains on financial assumptions
6.9

 
3.8

 
10.7

 
67.5

 
2.6

 
70.1

 
 
Actuarial gains on plan experience
3.5

 
0.5

 
4.0

 
(3.3
)
 
(0.2
)
 
(3.5
)
 
 
Exchange difference
31.7

 
0.3

 
32.0

 
(59.3
)
 
(0.1
)
 
(59.4
)
 
 
Benefits paid
(16.1
)
 
(2.1
)
 
(18.2
)
 
(15.8
)
 
(2.6
)
 
(18.4
)
 
 
Curtailment credit
—

 
—

 
—

 
—

 
(14.8
)
 
(14.8
)
 
 
At December 31
369.7

 
53.1

 
422.8

 
334.8

 
48.6

 
383.4

 
The defined benefit obligation comprises $2.1 million ( 2016 : $2.6 million ) arising from unfunded plans and $420.7 million ( 2016 : $380.8 million ) from plans that are funded.
The sensitivities regarding the principal assumptions used to measure the present value of the defined benefit obligations are set out below:
 
Assumption
 
Change in assumption
 
Impact on total defined
benefit obligations
 
 
Discount rate
 
Increase/decrease by 1.0%
 
Decrease/increase by 18%
 
 
CPI inflation (and related increases)
 
Increase/decrease by 1.0%
 
Increase/decrease by 10%
 
 
Post retirement mortality
 
Increase by 1 year
 
Increase by 4%
 
The sensitivities have been calculated to show the movement in the total defined benefit obligation in isolation, assuming no other changes in market conditions at the accounting date. In practice, for example, a change in discount rate is likely to be associated with a movement in the value of the invested assets held by the plans.


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LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
29. Retirement benefits (Continued)

Analysis of movement in the present value of the fair value of plan assets:
 
 
2017
 
2017
 
2017
 
2016
 
2016
 
2016
 
 
 
U.K.
 
Non-U.K.
 
Total
 
U.K.
 
Non-U.K.
 
Total
 
 
 
$M
 
$M
 
$M
 
$M
 
$M
 
$M
 
 
At January 1
280.3

 
36.6

 
316.9

 
287.1

 
49.4

 
336.5

 
 
Interest on plan assets
7.5

 
1.5

 
9.0

 
9.4

 
2.1

 
11.5

 
 
Actuarial gains
20.4

 
3.8

 
24.2

 
43.7

 
1.2

 
44.9

 
 
Exchange difference
27.4

 
—

 
27.4

 
(49.8
)
 
—

 
(49.8
)
 
 
Contributions from employer
7.0

 
1.9

 
8.9

 
6.0

 
1.2

 
7.2

 
 
Contributions from plan members
—

 
—

 
—

 
0.1

 
—

 
0.1

 
 
Administrative expenses
(0.2
)
 
(0.5
)
 
(0.7
)
 
(0.4
)
 
(0.5
)
 
(0.9
)
 
 
Benefits paid
(16.1
)
 
(2.1
)
 
(18.2
)
 
(15.8
)
 
(2.6
)
 
(18.4
)
 
 
Settlement credit
—

 
—

 
—

 
—

 
(14.2
)
 
(14.2
)
 
 
At December 31
326.3

 
41.2

 
367.5

 
280.3

 
36.6

 
316.9

 
The estimated amount of employer contributions expected to be paid to the defined benefit pension plans for the year ending December 31, 2018 is $8.7 million ( 2017 : $8.9 million actual employer contributions).
30. The Luxfer Group Employee Share Ownership Plan
The trust
In 1997, the Group established an employee benefit trust ("the ESOP") with independent Trustees, to purchase and hold shares in the Group in trust to be used to satisfy options granted to eligible senior employees under the Group's share plans established from time to time.
The ESOP was established with the benefit of a gift equivalent to the set up and running costs. Purchase monies and costs required by the ESOP Trustees to purchase shares for and under the provisions of the trust are provided by way of an interest free loan from a Group subsidiary. The loan is repayable, in normal circumstances, out of monies received from senior employees when they exercise options granted to them over shares. Surplus shares are held by the ESOP Trustees to satisfy future option awards. The ESOP Trustees have waived their right to receive dividends on shares held in trust. The Remuneration Committee is charged with determining which senior employees are to be granted options and in what number subject to the relevant plan rules.
The current plan
The current share option plan, implemented by the Group in February 2007 is The Luxfer Holdings Executive Share Option Plan ("the Plan"), which consists of two parts. Part A of the Plan is approved by HM Revenue & Customs and Part B is unapproved. Options can be exercised at any time up to the tenth anniversary of their grant subject to the rules of the relevant part of the Plan. As a result of the I.P.O. all leaver restrictions over the shares were released. There are no other performance criteria attached to the options.
Movements in the year
The movement in the number of shares held by the Trustees of the ESOP and the number of share options held over those shares are shown below:

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LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
30. The Luxfer Group Employee Share Ownership Plan (Continued)

 
 
Number of shares held by ESOP Trustees
 
 
 
£0.0001 deferred shares
 
£0.50 ordinary shares
 
 
At January 1, 2017
15,977,968,688

 
55,816

 
 
Shares utilized during the year
—

 
(34,594
)
 
 
Shares transferred into ESOP during the year
—

 
83,487

 
 
At December 31, 2017
15,977,968,688

 
104,709

 
At December 31, 2017 , the loan outstanding from the ESOP was $2.6 million ( 2016 : $2.6 million ).
The market value of each £0.50 ordinary share held by the ESOP at December 31, 2017 was $15.80 ( 2016 : $10.89 ).
31. Share based compensation
Luxfer Holdings PLC Long-Term Umbrella Incentive Plan and Luxfer Holdings PLC Non-Executive Directors Equity Incentive Plan
As an important retention tool and to align the long-term financial interests of our management with those of our shareholders, the Group adopted the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (the "LTiP") for the Group's senior employees, and the Luxfer Holdings PLC Non-Executive Directors Equity Incentive Plan (the "Director EIP") for the Non-Executive Directors.
The equity or equity-related awards under the LTiP and the Director EIP are based on the ordinary shares of the Group. The Remuneration Committee administers the LTiP and have the power to determine to whom the awards will be granted, the amount, type and other terms. Awards under the Director EIP are non-discretionary and purely time-based.
Share option and restricted stock awards
As a tool to retain key people and align their interests with those of shareholders, a one-off award of market-value options was made to a small number of executives and the non-executive directors immediately prior to the I.P.O. in 2012. 40% of the options granted vested immediately and 20% of the options vested upon each of the first, second and third anniversaries of the I.P.O.
In January 2013, 306,200 Restricted Stock Units and Options over ordinary shares, were granted under the LTiP and 9,252 ADS Restricted Stock was granted under the Director EIP. In March 2013, 1,924 ADS Restricted Stock was granted under the Director EIP. These awards were a mixture of time-based, market-based and performance-based awards.
In March 2014, 201,870 Restricted Stock Units and Options over ordinary shares were granted under the LTiP, which were all performance-based awards. Following the Annual General Meeting on May 29, 2014, 12,517 Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards.
In June 2015, 46,800 Restricted Stock Units and Options over ordinary shares were granted under the LTiP, which were all time-based awards. Following the Annual General Meeting on May 28, 2015, 15,943 Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards.
In March 2016, 95,140 Restricted Stock Units and Options over ordinary shares were granted under the LTiP, which were all time-based awards. Following the Annual General Meeting on May 24, 2016, 12,520 Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards.
In March 2017, 139,800 Restricted Stock Units and Options over ordinary shares were granted under the LTiP, which were all time-based awards. Following the Annual General Meeting on May 23, 2017, 21,814 Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards.

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LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
31. Share based compensation (Continued)

 
 
2017
 
2016
 
2015
 
 
 
$M
$M
 
$M
 
 
I.P.O. related share based compensation charges
—

 
—

 
0.1

 
 
Other share based compensation charges
2.2

 
1.4

 
1.3

 
 
Restructuring share based compensation charges
0.9

 
—

 
—

 
 
 
3.1

 
1.4

 
1.4

 
There were no cancellations or modifications to the awards in 2017 , 2016 or 2015 .
The following table illustrates the number of, and movements in, share options during the year, with each option relating to 1 ordinary share:
 
 
2017
 
2017
 
2016
 
2016
 
 
 
Number
 
Weighted average exercise price
 
Number
 
Weighted average exercise price
 
 
At January 1
963,789

 
$8.51
 
1,144,534

 
$7.26
 
 
Granted during the year
386,614

 
$0.65
 
107,660

 
$0.67
 
 
Exercised during the year
(172,501
)
 
$(5.03)
 
(132,599
)
 
$(0.67)
 
 
Accrued dividend awards
12,258

 
$0.65
 
12,572

 
$0.67
 
 
Lapsed during the year
(7,845
)
 
$(0.65)
 
(168,378
)
 
$(0.67)
 
 
At December 31
1,182,315

 
$6.42
 
963,789

 
$8.51
 
Within the share options which were outstanding at the year-end of 1,182,315 (2016: 963,789 ), 740,253 (2016: 819,856 ), were able to be exercised. The weighted average remaining contractual life for the share options outstanding at December 31, 2017 was 2.4 years ( 2016 : 2.9 years). The weighted average fair value of options granted during the year was $9.82 ( 2016 : $9.39 ).
The following table illustrates the assumptions used in deriving the fair value of share options during the year:
 
 
2017
 
2016
 
 
Dividend yield (%)
4.00
 
4.00
 
 
Expected volatility range (%)
26.81 - 35.81
 
29.73 – 38.73
 
 
Risk-free interest rate (%)
1.00 - 2.01
 
0.36 – 1.05
 
 
Expected life of share options range (years)
0.50 - 7.36
 
1 - 3.5
 
 
Weighted average exercise price ($)
$0.65
 
$0.67
 
 
Model used
Black-Scholes
 
Black-Scholes
 
The expected life of the share options is based on historical data and current expectations and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility over a period similar to the life of the options is indicative of future trends, which may not necessarily be the actual outcome.
Employee share incentive plans
The Group operates an all-employee share incentive plan in its U.K. and U.S. operations and will look to implement plans in other geographic regions.
32. Related party transactions
Joint venture in which the Group is a venturer
During 2017 , the Group maintained its 51% investment in the equity of the joint venture, Luxfer Uttam India Private Limited. During 2017 , the Gas Cylinders division made $1.9 million ( 2016 : $1.7 million ) of sales to the joint venture. At December 31, 2017 , the gross amounts receivable from the joint venture amounted to $2.3

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LUXFER HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
All amounts in millions, except share and per share data
32. Related party transactions (Continued)



million ( 2016 : $0.9 million ) and the net amounts receivable amounted to $0.9 million (2016: $ 0.9 million ). All sales to the joint venture are made on similar terms to arms length transactions.
During 2017 , the Group also maintained its 50% investment in the equity of the joint venture, Nikkei-MEL Company Limited. During 2017 , the Elektron division made $1.2 million of sales to the joint venture (2016: $ 0.8 million ).
During 2017 , the Group provided $0.9 million in debt investment ( 2016 : received $1.0 million in repayment) to the joint venture Luxfer Holdings NA, LLC, of which it holds 49% of the equity. The debt investment is provided through a secured revolving credit facility that the Group has granted to the joint venture of which up to $10.0 million can be drawn down until March 31, 2018 at an interest rate of 8% per annum. During 2017 , the Gas Cylinders division made $5.0 million ( 2016 : $3.9 million ) of sales to the joint venture. At December 31, 2017 , the amounts receivable from the joint venture amounted to $0.9 million ( 2016 : $1.0 million ) of trade debt and $4.7 million ( 2016 : $3.8 million ) of debt investment. All sales to the joint venture are made on similar terms to arm's length transactions.
Associates in which the Group holds an interest
During 2015, the Group acquired 26.4% of the share capital of Sub161 Pty Limited. In 2017 the Group has made $ nil sales ( 2016 : $0.1 million ) to the associate. At December 31, 2017 , the amounts receivable from the associate denominated in Australian dollars was $ nil ( 2016 : $0.1 million ). The debtor recognized in the 2015 was converted into a secured loan note during 2016 . The secured loan note has interest accruing at 6.0% , of which $ nil was outstanding at the year end (net of $0.5 million provision).
Transactions with other related parties
At December 31, 2017 , the directors and key management comprising the members of the Executive Leadership Team, owned 170,297 £0.50 ordinary shares ( 2016 : 1,062,672 £0.50 ordinary shares) and held awards over a further 316,797 £0.50 ordinary shares ( 2016 : 476,839 £0.50 ordinary shares).
During the year ended December 31, 2017 , share options held by members of the Executive Leadership Team were exercised; information relating to these exercises is disclosed in the Remuneration Report.
Stone Canyon Industries LLC represents a related party due to its association with Adam Cohn as co-CEO, and holds 570,000 ordinary shares in Luxfer Holdings PLC as at December 31, 2017 (2016: 570,000 ADSs).
FTI consulting represents a related party due to its association with Brian Kushner as Senior Managing Director, Corporate Finance. During 2017, we engaged with FTI consulting for IT services for the value of $0.1 million (2016: nil).
Cherokee Properties Inc. represents a related party due to its association with Chris Barnes, who is the president of one of our operating segments and is the president of Cherokee Properties Inc. During 2017, we engaged with Cherokee Properties Inc. for rental costs regarding our manufacturing site in Madison, IL for the value of $1.0 million (2016: $1.0 million.
The son of the retired Chief Executive Officer was employed by the Group during 2017, having joined through the normal recruitment channels.
Other than the transactions with the joint ventures and associates disclosed above and key management personnel disclosed above, no other related party transactions have been identified.
33. Post Balance Sheet Events
Since the balance sheet date, the Company has reached an out-of-court settlement with regards to the patent infringement litigation which we had been pursuing. The settlement has been recognized as an accrual at December 31, 2017.
Furthermore, post year end we have announced plans to close our plants in Brigham City, UT and Findlay, OH. The operations from our Brigham City operation will be moved to our Canadian gas cylinders facility and the operations from Findlay will be moved to our Madison, IL facility.

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Dated 31 July 2017
LUXFER HOLDINGS PLC
LLOYDS BANK PLC, THE ROYAL BANK OF SCOTLAND PLC, CLYDESDALE
BANK PLC (TRADING AS YORKSHIRE BANK), HSBC BANK PLC AND
CITIBANK, N.A. (LONDON BRANCH)
as Arrangers
THE PARTIES LISTED IN PART 1 OF SCHEDULE 2
as Borrowers
THE PARTIES LISTED IN PART 2 OF SCHEDULE 1
as Guarantors
THE FINANCIAL INSTITUTIONS LISTED IN PART 3 OF SCHEDULE 1
as Original Lenders
THE ROYAL BANK OF SCOTLAND PLC
as Agent
FOURTH AMENDMENT AND
RESTATEMENT AGREEMENT RELATING
TO A SENIOR FACILITIES AGREEMENT
ORIGINALLY DATED 13 MAY 2011 AS
AMENDED ON 14 JUNE 2011, AS
AMENDED AND RESTATED ON
30 NOVEMBER 2012, AS AMENDED ON
7 NOVEMBER 2013 AND AS FURTHER
AMENDED AND RESTATED ON
25 MARCH 2014 AND 23 DECEMBER 2016


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Contents
Clause    Page
1    Definitions and interpretation     1
2    Restatement    3
3    Representations    5
4    Continuity and further assurance    5
5    No waiver    5
6    Fees, costs and expenses    5
7    Miscellaneous    6
Schedule 1
The Parties    7
Part 1 – The Original Borrowers    7
Part 2 – The Original Guarantors    8
Part 3 - The Original Lenders    9
Schedule 2
Conditions precedent    10
Schedule 3
Restated Agreement    12



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This Agreement is dated 31 July 2017
Between
(1)
Luxfer Holdings PLC (registered in England and Wales with number 3690830) ( Company );
(2)
The parties listed in Part 1 (The Original Borrowers) of Schedule 1 ( Original Borrowers ) ;
(3)
The parties listed in Part 2 (The Original Guarantors) of Schedule 1 ( Original Guarantors ) ;
(4)
Lloyds Bank plc, The Royal Bank of Scotland plc, Clydesdale Bank plc (trading as Yorkshire Bank) , HSBC Bank plc and Citibank, N.A. (London Branch) as mandated lead arrangers (whether acting individually or together ( Arrangers );
(5)
The Financial Institutions listed in Part 3 (The Original Lenders) of Schedule 1 as lenders ( Original Lenders );
(6)
Lloyds Bank plc, Clydesdale Bank PLC (trading as Yorkshire Bank), HSBC Bank plc, National Westminster Bank plc and Citibank, N.A. (London Branch) as ancillary facilities providers ( Original Ancillary Lenders );
(7)
The Royal Bank of Scotland plc as agent of the other Finance Parties ( Agent ); and
(8)
Lloyds Bank plc as document co-ordinator (Document co-ordinator).
Whereas
(A)
Prior to the date of this Agreement, Bank of America ceased to be an Arranger pursuant to the Appointment, Resignation and Transfer Deed.
(B)
Prior to the date of this Agreement, HSBC and Citibank were appointed as Arrangers.
(C)
Prior to the date of this Agreement, Lloyds resigned as Agent and RBS was appointed in its place pursuant to the Appointment, Resignation and Transfer Deed.
(D)
Santander and Bank of America have made the Required Transfers immediately prior to the Parties entering into this Agreement. Following completion of the Required Transfers, the Commitments of each Lender immediately prior to the date of this Agreement are set out in part 3 (The Original Lenders) of schedule 1.
(E)
Following completion of the Required Transfers and the other action referred to in (A) above Santander and Bank of America are no longer a Finance Party in any capacity for the purposes of the Original Facilities Agreement.

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It is agreed
1    Definitions and interpretation
1.1     Definitions
In this Agreement:
Agency Fee Letter means the letter dated the date of this Agreement between the Company and the Agent setting out the amount of the fee referred to in clause 6.2 (Fees, costs and expenses)
Appointment, Resignation and Transfer Deed means the appointment, resignation and transfer deed dated on or about the date of this Agreement and made between, amongst others, the Company, Santander and Bank of America as retiring lenders, Bank of America as resigning arranger, Lloyds as resigning agent, RBS as the new agent and HSBC and Citibank as new lenders and new arrangers
Bank of America means Bank of America N.A.
Citibank means Citibank, N.A. (London Branch)
Clydesdale means Clydesdale Bank PLC (trading as Yorkshire Bank)
Fourth Restatement Date means the date upon which the Agent gives the notification referred to in clause 2.2(a) (Conditions precedent)
Group Structure Chart means the group structure to be delivered by the Company to the Agent pursuant to clause 2.2(a) (Conditions precedent)
HSBC means HSBC Bank plc
Lloyds means Lloyds Bank plc
New Borrower means Luxfer Gas Cylinders Limited (registered in England with number 3376625)
New Finance Documents means:
(a) this Agreement and
(b) the Participation Fee Letter
New Guarantor means Luxfer Canada Limited (a company amalgamated under the laws of the Province of Alberta, Canada with registered number 2017012705)
Obligor has the meaning given in the Restated Agreement and includes for the avoidance of doubt the New Borrower and the New Guarantor
Original Facilities Agreement means the senior facilities agreement originally dated 13 May 2011 (as amended on 14 June 2011, as amended and restated on 30 November 2012, as

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amended on 7 November 2013 and as further amended and restated on 25 March 2014 and 23 December 2016) between, amongst others, the Company, the financial institutions listed in Part 3 of Schedule 1 as lenders and Lloyds Bank plc as agent
Participation Fee Letter means the letter dated the date of this Agreement between the Company and the Lenders setting out the amount of the fee referred to in clause 6.1 (Fees, costs and expenses)
Party means a party to this Agreement
RBS means The Royal Bank of Scotland plc
Required Transfers means:
(a)    the transfer by Santander of:
(i) $10,000,000 of its Commitment to National Westminster Bank plc; and
(ii) $10,000,000 of its Commitment to HSBC; and
(b)    the transfer by Bank of America of:
(i) $30,000,000 of its Commitment to Citibank; and
(ii) $6,500,000 of its Commitment to HSBC; and
(c)    the transfer by Clydesdale of $6,500,000 of its Commitment to HSBC; and
(d)    the transfer by Lloyds of $7,000,000 of its Commitment to HSBC;
Restated Agreement means the Original Facilities Agreement, as amended by this Agreement, the terms of which are set out in Schedule 3 (Restated Agreement)
Santander means Santander UK plc
1.2     Interpretation
(a)
Unless otherwise defined in this Agreement, a term defined in the Original Facilities Agreement has the same meaning when used in this Agreement or any notices, acknowledgements or other documents issued under or in connection with this Agreement.
(b)
Clause 1.2 (Interpretation) of the Original Facilities Agreement is incorporated in this Agreement as if set out here in full but so that each reference in that clause to "this Agreement" shall be read as a reference to this Agreement.
1.3     Third party rights
(a)
Unless expressly provided to the contrary in any Finance Document, a person who is not a Party has no right under the Contracts (Rights of Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this Agreement or any other Finance Document issued or entered into under or in connection with it.

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(b)
Unless expressly provided to the contrary in any Finance Document the consent of any person who is not a Party is not required to rescind or vary this Agreement or any other Finance Document entered into under or in connection with it.
2    Restatement
2.1     Restatement of the Original Facilities Agreement
With effect from and including the Fourth Restatement Date, the Original Facilities Agreement shall be amended and restated so that it shall be read and construed for all purposes as set out in Schedule 3 (Restated Agreement).
2.2     Conditions precedent
(a)
The Agent shall (acting on the instructions of all the Lenders if a waiver is required) notify the Company promptly in writing when it has received or waived the requirement to receive all the documents and other evidence listed in Schedule 2 (Conditions precedent) of this Agreement in form and substance satisfactory to the Agent.
(b)     The Agent shall not be obliged to issue the notice referred to in clause 2.2(a) if:
(i)
a Default is continuing or would result from the restatement of the Original Facilities Agreement pursuant to clause 2.1; or
(ii)
the representations in clause 3 (Representations) to be made by each Obligor are not true.
2.3     Failure to satisfy conditions precedent
If the Fourth Restatement Date has not occurred on or before 7 August 2017 (or any later date which the Agent (acting on the instructions of the Majority Lenders) and the Company may agree), then clause 2 (other than this clause 2.3) and clause 4.1 (Continuing obligations) will cease to have effect and none of the amendments referred to in clause 2.1 shall take effect. The Company shall, however, remain liable to the Finance Parties for all fees, costs and expenses pursuant to clause 6 (Fees, costs and expenses).
2.4     Guarantee confirmation
Each Guarantor confirms that the guarantee contained in clause 22 (Guarantee and Indemnity) of the Original Facilities Agreement continues in full force and effect, is, subject to the Legal Reservations, a valid and binding obligation or such Guarantor and is, subject to the Legal Reservations, enforceable in accordance with its terms, that on the date of this Agreement no defenses, offsets, claims, counterclaims exist in respect of the guarantee given by it which affect this guarantee in any material respect and shall cover (without limitation) the obligations and liabilities of the Obligors under the Restated Agreement and will extend to any obligations and liabilities of the Obligors in respect of any Uncommitted Accordion Facility Loan that is made in accordance with clause 2.3 (Uncommitted Accordion Facility Commitments) of the Restated Agreement.
2.5     Accession of Obligors

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(a)    By its execution of this Agreement:
(i)
the New Borrower, shall, with effect on and from the Fourth Restatement Date, be bound by the terms and provisions of the Restated Agreement and other Finance Documents as a Borrower pursuant to clause 30.2 (Additional Borrowers) of the Original Facilities Agreement as if it had been an original party in the capacity of Borrower and will be entitled to all rights and benefits and subject to all obligations and liabilities under the Restated Agreement as a Borrower; and
(ii)
the New Guarantor, shall, with effect on and from the Fourth Restatement Date, be bound by the terms and provisions of the Restated Agreement and other Finance Documents as a Guarantor pursuant to clause 30.4 (Additional Guarantors) or the Original Facilities Agreement as if it had been an original party in the capacity of Guarantor and will be entitled to all rights and benefits and subject to all obligations and liabilities under the Restated Agreement as a Guarantor.
(b)
The address and facsimile number of the New Borrower and the New Guarantor for notices and demands under the Restated Agreement are:
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
(c)
The Company confirms that no Default is continuing or would result from the New Borrower becoming a Borrower and the New Guarantor becoming a Guarantor.
(d)
With effect from the Fourth Restatement Date, all the Lenders approve the New Borrower becoming a Borrower and the New Guarantor becoming a Guarantor.
(e)
This clause 2.5 shall be deemed to be, and shall take effect as, an Accession Deed as defined in and for the purposes of the Restated Agreement.
3    Representations
(a)
Each Obligor makes the Repeating Representations by reference to the facts and circumstances then existing on the date of this Agreement;
(b)
Each Obligor makes all of the representations set out in clause 23 (Representations) of the Restated Agreement by reference to the facts and circumstances then existing on the Fourth Restatement Date.
(c)
Each Obligor confirms that the Group Structure Chart delivered to the Agent pursuant to clause 2.2(a) (Conditions precedent) is true, complete and accurate in all material respects as at the Fourth Restatement Date.
4    Continuity and further assurance

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4.1     Continuing obligations
The provisions of the Original Facilities Agreement and the other Finance Documents shall, save as amended by this Agreement, continue in full force and effect.
4.2     Further assurance
Each Obligor shall promptly do all such acts or execute all such documents as the Agent may reasonably specify (and in such form as the Agent may reasonably require) in favour of it or any other Finance Party to give effect to the amendments effected or to be effected pursuant to this Agreement.
5    No waiver
Save as and to the extent expressly waived in this Agreement, the Original Facilities Agreement and the other Finance Documents shall remain in full force and effect. No waivers are given and the Finance Parties expressly reserve all rights and remedies in respect of any breach of, or Default under, the Finance Documents, save as expressly set out in this Agreement.
6    Fees, costs and expenses
6.1
The Company must pay to each Lender for its own account a participation fee in an amount and at the time referred to in the Participation Fee Letter.
6.2
The Company must pay to the Agent for its own account an agency fee in an amount and at a time referred to in the Agency Fee Letter.
6.3
The Company shall, within 3 Business Days of demand, reimburse the Agent or the Document Co-ordinator, for the amount of all costs and expenses (including agreed legal fees) reasonably incurred by the Agent or the Document Co-ordinator in connection with the negotiation, preparation, printing, execution and perfection of this Agreement and any other documents referred to in this Agreement.
6.4
The Obligors shall pay and, within 3 Business Days of demand, indemnify each Finance Party against any cost, loss or liability that Finance Party incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of this Agreement.
7    Miscellaneous
7.1     Incorporation of terms
Clauses 36 (Notices), 38 (Partial invalidity), 44 (Governing Law) and 45 (Enforcement) of the Original Facilities Agreement shall be deemed to be incorporated into this Agreement (with such conforming changes as the context requires) as if set out in full in this Agreement.
7.2     Counterparts
This Agreement or any Finance Document entered into under or in connection with this Agreement may be executed in any number of counterparts, and by each party on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of a counterpart of this Agreement or such Finance Document

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entered into under or in connection with this Agreement by e-mail attachment or telecopy shall be an effective mode of delivery.
7.3     Finance Document
Each of this Agreement and the Restated Agreement is a Finance Document.
This Agreement has been entered into on the date given at the beginning of this Agreement.

Schedule 1
The Parties
Part 1 – The Original Borrowers
Company Name
Company Number
Relevant Jurisdiction
Luxfer Holdings PLC
3690830
England & Wales
BA Holdings, Inc.
 
Delaware
Luxfer Group Limited
3944037
England & Wales
Luxfer Group 2000 Limited
4027006
England & Wales
MEL Chemicals Inc.
 
New Jersey
Magnesium Elektron North America Inc.
 
Delaware
Luxfer Gas Cylinders Limited
3376625
England & Wales


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Part 2 – The Original Guarantors
Company Name
Company Number
Relevant Jurisdiction
Luxfer Holdings PLC
3690830
England & Wales
BA Holdings, Inc.
 
Delaware
Luxfer Group Limited
3944037
England & Wales
Luxfer Group 2000 Limited
4027006
England & Wales
MEL Chemicals Inc.
 
New Jersey
Magnesium Elektron North America, Inc.
 
Delaware
Luxfer Gas Cylinders Limited
3376625
England & Wales
Luxfer Group Services Limited
3981395
England & Wales
Magnesium Elektron Limited
3141950
England & Wales
Luxfer Overseas Holdings Limited
3081726
England & Wales
Luxfer Gas Cylinders China Holdings Limited
5165622
England & Wales
Luxfer Inc.
 
Delaware
Hart Metals, Inc.
 
Delaware
Reade Manufacturing Company
 
Delaware
Luxfer Magtech Inc.
 
Delaware
Luxfer Canada Limited
2017012705
Alberta, Canada


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Part 3 - The Original Lenders
Commitments following Required Transfers
 
Total Commitment following
Required Transfers
Bilateral Limit following
Required Transfers
Lloyds Bank plc
$30,000,000
£17,000,000
Clydesdale Bank PLC (trading as Yorkshire Bank)
$30,000,000
£3,000,000
National Westminster Bank plc
$30,000,000
$5,000,000
HSBC Bank plc
$30,000,000
$25,000,000
Citibank, N.A. (London Branch)
$30,000,000
$10,000,000
Total
$150,000,000
 


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Schedule 2
Conditions precedent
1    Obligors
(a)
A copy of the constitutional documents of each Obligor or a certificate of an authorised signatory of each relevant Obligor certifying that the constitutional documents previously delivered to the Agent for the purposes of the Original Facilities Agreement have not been amended and remain in full force and effect.
(b)
A copy of a resolution of the board or, if applicable, a committee of the board of directors of each Obligor:
(i)
approving the terms of, and the transactions contemplated by, the New Finance Documents and resolving that it execute, deliver and perform the New Finance Documents;
(ii)
authorising a specified person or persons to execute the New Finance Documents on its behalf;
(iii)
authorising a specified person or persons, on its behalf, to sign and/or despatch all documents and notices to be signed and/or despatched by it under or in connection with the New Finance Documents.
(c)
If applicable, a copy of a resolution of the board of directors of the relevant company, establishing the committee referred to in paragraph 1(b) above.
(d)
A specimen of the signature of each person authorised by the resolution referred to in paragraph 1(b) above in relation to the New Finance Documents and related documents.
(e)
Where required by the applicable constitutional documents or applicable laws, a copy of a resolution signed by all the holders of the issued shares in each Guarantor (other than the Company), approving the terms of, and the transactions contemplated by, the New Finance Documents.
(f)
Where required by the applicable constitutional documents or applicable laws, a copy of a resolution of the board of directors of each corporate shareholder of each Guarantor approving the terms of the resolution referred to in paragraph 1(e) above.
(g)
A certificate from a director of the Company confirming that borrowing or guaranteeing, as appropriate, the Total Commitments and any Uncommitted Accordion Facility would not cause any borrowing, guarantee or similar limit binding on any Obligor to be exceeded.
(h)
A certificate from a director or officer of each Obligor certifying that each copy document relating to it specified in this Schedule 2 is correct, complete and in full force and effect and has not been amended, varied, novated, supplemented, superseded or terminated as at a date no earlier than the Fourth Restatement Date.

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2    Amendment and restatement Agreement
(a)    This Agreement executed by each Obligor who is a Party.
(b)
The Participation Fee Letter executed by the Company.
(c)
The Agency Fee Letter executed by the Company.
3    Legal opinions
The following legal opinions, each addressed to the Finance Parties:
(a)
A legal opinion of Addleshaw Goddard LLP, legal advisers to the Agent as to English law substantially in the form provided to the Agent and/or distributed to the Finance Parties prior to execution and delivery of this Agreement.
(b)
A legal opinion of the Company's solicitors, Fried, Frank, Harris, Shriver & Jacobson LLP, as to the laws of the state of Delaware in substantially in the form provided to the Agent and/or distributed to the Finance Parties prior to execution and delivery of this Agreement.
(c)
A legal opinion of the Company's solicitors, Montalbano, Condon & Frank, P.C., as to the laws of the state of New Jersey in substantially in the form provided to the Agent and/or distributed to the Finance Parties prior to execution and delivery of this Agreement.
(d)
A legal opinion of the Company's solicitors, Torys LLP, as to the laws of the Province of Alberta and the federal laws of Canada applicable therein in substantially in the form provided to the Agent and/or distributed to the Finance Parties prior to execution and delivery of this Agreement.
4    Other documents and evidence
(a)
The Appointment, Resignation and Transfer Deed. executed by each party to that deed.
(b)
The Group Structure Chart which shows the Group as at the Fourth Restatement Date.
(c)
A certified copy of the latest financial statements of the Company and each Obligor.
(d)
A copy of the Compliance Certificate for the Relevant Period ending 31 March 2017.
(e)
Personal Property Security Act searches and related lien searches (and other customary searches) against any Canadian Obligor.
(f)
Evidence that the fees, costs and expenses then due from the Company pursuant to clause 6 (Fees, costs and expenses) have been paid or will be paid by the Fourth Restatement Date.

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(g)
The Agent and each Lender being satisfied with the results of its "know your customer" and money laundering checks on the Obligors, their officers and shareholders.
(h)
A copy of any other Authorisation or other document, opinion or assurance which the Agent notifies the Company is necessary in connection with the entry into and performance of the transactions contemplated by this Agreement or for the validity and enforceability of this Agreement.


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Schedule 3
Restated Agreement


Dated 13 May 2011 as amended on 14 June 2011, as amended and restated on
30 November 2012, as amended on 7 November 2013 and as further amended
and restated on 25 March 2014, 23 December 2016 and 31 July 2017
LUXFER HOLDINGS PLC
LLOYDS BANK PLC, CLYDESDALE BANK PLC (TRADING AS YORKSHIRE
BANK), HSBC BANK PLC, THE ROYAL BANK OF SCOTLAND PLC and
CITIBANK, N.A. (LONDON BRANCH)
as Arrangers
THE PARTIES LISTED IN PART 1 OF SCHEDULE 1
as Borrowers
THE PARTIES LISTED IN PART 2 OF SCHEDULE 1
as Guarantors
THE FINANCIAL INSTITUTIONS LISTED IN PART 3 OF SCHEDULE 1
as Lenders
THE ROYAL BANK OF SCOTLAND PLC
as Agent

SENIOR FACILITIES AGREEMENT


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Contents
Clause    Page
1    Definitions and interpretation     1
2    The Facilities     37
3    Purpose    44
4    Conditions of utilisation    45
5    Utilisation    46
6    Optional currencies    48
7    Ancillary Facilities     48
8    Bilateral Facilities     54
9    Repayment    57
10    Illegality, voluntary prepayment and cancellation      60
11    Mandatory prepayment    62
12    Restrictions     66
13    Interest     67
14    Interest Periods    68
15    Changes to the calculation of interest     70
16    Fees    72
17    Tax gross up and indemnities     73
18    Increased costs    83
19    Other indemnities     84
20    Mitigation by the Lenders    85
21    Costs and expenses    86
22    Guarantee and indemnity    86
23    Representations     91
24    Information undertakings    99
25    Financial covenants     104
26    General undertakings     109
27    Events of Default     120
28    Changes to the Lenders     124

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29    Restriction on Debt Purchase Transactions     130
30    Changes to the Obligors      130
31    Role of the Agent, the Arrangers and others     132
32    Conduct of business by the Finance Parties     142
33    Sharing among the Finance Parties     143
34    Payment mechanics     144
35    Set-off     148
36    Notices     148
37    Calculations and certificates     150
38    Partial invalidity     150
39    Remedies and waivers     150
40    Amendments and waivers     150
41    Confidentiality     154
42    Publicity     158
43    Counterparts     158
44    Governing law     158
45    Enforcement    158
Schedule 1      160
Part 1 - Original Borrowers    160
Part 2 - Original Guarantors     160
Part 3 - The Original Lenders     161
Schedule 2 Conditions precedent     162
Part 1 - Conditions precedent to signing this Agreement    162
Part 2 - Conditions precedent to initial Utilisation     163
Part 3 - Conditions precedent required to be delivered by an Additional Obligor     164
Schedule 3 Requests and Notices     166
Part 1 - Utilisation Request     166
Part 2 - Selection Notice     168
Part 3 - Withdrawal Request     169
Schedule 4 Form of Transfer Certificate     170

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Schedule 5 Form of Assignment Agreement    173
Schedule 6 Form of Accession Deed    176
Schedule 7 Form of Resignation Letter     178
Schedule 8 Form of Compliance Certificate      179
Schedule 9 Timetables     181
Schedule 10 Form of Increase Confirmation      182
Schedule 11 Uncommitted Accordion Facility Commitment Notice     185























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This Agreement dated 13 May 2011 as amended on 14 June 2011, as amended and restated on 30 November 2012, as amended on 7 November 2013 and as further amended and restated on 25 March 2014, 23 December 2016 and 31 July 2017
Between
(1)
Luxfer Holdings PLC (registered in England and Wales with number 3690830) ( Company );
(2)
The parties listed in Part 1 - (Original Borrowers) of Schedule 1 ( Original Borrowers );
(3)
The parties listed in Part 2 - (Original Guarantors) of Schedule 1 ( Original Guarantors );
(4)
Lloyds Bank plc , Clydesdale Bank plc (trading as Yorkshire Bank), HSBC Bank plc, Citibank, N.A. (London Branch) and The Royal Bank of Scotland plc as mandated lead arrangers (whether acting individually or together the Arrangers );
(5)
The Financial Institutions listed in Part 3 - (The Original Lenders) of Schedule 1 as lenders ( Original Lenders );
(6)
Lloyds Bank plc , Clydesdale Bank plc (trading as Yorkshire Bank), HSBC Bank plc, Citibank, N.A. (London Branch) and National Westminster Bank plc as ancillary facilities providers ( Original Ancillary Lenders );
(7)
Lloyds Bank plc as document co-ordinator ( Document Co-ordinator ); and
(8)
The Royal Bank of Scotland plc as agent of the other Finance Parties ( Agent ). It is agreed
1    Definitions and interpretation
1.1     Definitions
In this Agreement:
Acceptable Bank means:
(a)
a Lender (provided that such Lender is not a Defaulting Lender)
(b)
a bank or financial institution which has a rating for its short-term unsecured and non credit-enhanced debt obligations of A-3 or higher by Standard & Poor's Rating Services, F(3) or higher by Fitch Ratings Ltd or P-3 or higher by Moody's Investors Service Limited or a comparable rating from an internationally recognised credit rating agency; or
(c)
any other bank or financial institution approved by the Agent, or if the Agent is an Impaired Agent the Majority Lenders.
Accession Deed means a document substantially in the form set out in Schedule 6 (Form of Accession Deed).
Accounting Principles means the international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements or if required by the applicable law the generally acceptable accounting principles of the US.
Accounting Reference Date has the meaning given to it in section 391 of the CA 2006.
Additional Borrower means a company which becomes an Additional Borrower in accordance with clause 30.2 (Additional Borrowers).

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Additional Guarantor means a company which becomes an Additional Guarantor in accordance with clause 30.4 (Additional Guarantors).
Additional Obligor means an Additional Borrower or an Additional Guarantor.
Affiliate means, in relation to any person, a Subsidiary of that person or a Holding Company of that person or any other Subsidiary of that Holding Company. Notwithstanding the foregoing, in relation to The Royal Bank of Scotland plc and/or National Westminster Bank plc, the term "Affiliate" shall not include (i) the UK government or any member or instrumentality thereof, including Her Majesty's Treasury and UK Financial Investments Limited (or any directors, officers, employees or entities thereof) or (ii) any persons or entities controlled by or under common control with the UK government or any member or instrumentality thereof (including Her Majesty's Treasury and UK Financial Investments Limited) and which are not part of The Royal Bank of Scotland Group plc and its subsidiaries or subsidiary undertakings.
Agent's Spot Rate of Exchange means the Agent's spot rate of exchange for the purchase of the relevant currency with the Base Currency in the London foreign exchange market at or about 11.00 a.m. on a particular day.
Amendment and Restatement Agreement means the amendment and restatement agreement relating to this Agreement made between the Parties and dated on or around the Restatement Date.
Ancillary Commencement Date means, in relation to an Ancillary Facility, the date on which that Ancillary Facility is first made available, which date shall be a Business Day within the Availability Period for the Revolving Facility or a Business Day within the Availability Period for the Uncommitted Accordion Revolving Facility (as applicable).
Ancillary Commitment means, in relation to an Ancillary Lender and an Ancillary Facility, the maximum Base Currency Amount which that Ancillary Lender has agreed to make available from time to time under an Ancillary Facility and which has been authorised as such under clause 7 (Ancillary Facilities), to the extent that amount is not cancelled or reduced under this Agreement or the Ancillary Documents relating to that Ancillary Facility.
Ancillary Document means each document relating to or evidencing the terms of an Ancillary Facility.
Ancillary Facility means any ancillary facility made available by an Ancillary Lender in accordance with clause 7 (Ancillary Facilities).
Ancillary Lender means any Lender which makes available an Ancillary Facility in accordance with clause 7 (Ancillary Facilities), initially being the Original Ancillary Lenders.
Ancillary Outstandings means, at any time, in relation to an Ancillary Lender and an Ancillary Facility then in force the aggregate of the equivalents (as calculated by that Ancillary Lender) in the Base Currency of the following amounts outstanding under that Ancillary Facility:
(a)
the principal amount under each overdraft facility (net of any Available Credit Balance);
(b)
the face amount of each letter of credit under that Ancillary Facility (less any amount prepaid or repaid in respect of such instrument and taking account of any decrease in the liability under such instrument as a consequence of a decrease in the underlying liability in respect of which such instrument was issued); and
(c)
the amount fairly representing the aggregate exposure (excluding interest and similar charges) of that Ancillary Lender under each other type of accommodation provided under that Ancillary Facility,

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in each case as determined by such Ancillary Lender, acting reasonably in accordance with its normal banking practice and in accordance with the relevant Ancillary Document.
Annual Financial Statements means the financial statements for a Financial Year delivered pursuant to clause 24.1(a) (Financial statements).
Anti-Terrorism Law means any US state or federal law relating to terrorism or money laundering, including the Executive Order, the USA Patriot Act and the Money Laundering Control Act of 1986, Public Law 99-570.
Articles means the articles of association of the Company.
Assignment Agreement means an agreement substantially in the form set out in Schedule 5 (Form of Assignment Agreement) or any other form agreed between the relevant assignor and assignee.
Auditors means one of PricewaterhouseCoopers LLP, Ernst & Young LLP, KPMG Audit PLC, Deloitte & Touche LLP, Grant Thornton LLP, Soren McAdam Christenson LLP, BDO International or any other firm of independent public accountants of international standing appointed by the Company to act as its statutory auditors.
Authorisation means an authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration.
Available Credit Balance means, in relation to an Ancillary Facility, credit balances on any account of any Borrower of that Ancillary Facility with the Ancillary Lender making available that Ancillary Facility to the extent that those credit balances are freely available to be set off by that Ancillary Lender against liabilities owed to it by that Borrower under that Ancillary Facility
Availability Period means the period from and including the Fourth Restatement Date to and including the date falling 1 Month before the Termination Date.
Available Commitment means, in relation to a Facility, a Lender's Commitment under that Facility, minus:
(a)
the Base Currency Amount of its participation in any outstanding Loans under that Facility and, in the case of the Revolving Facility or an Uncommitted Accordion Revolving Facility only, the Base Currency Amount of the aggregate of its applicable Ancillary Commitments; and
(b)
in relation to any duly requested proposed Loan, the Base Currency Amount of its participation in any other Loans that are due to be made under that Facility on or before the proposed Utilisation Date and in the case of the Revolving Facility or an Uncommitted Accordion Revolving Facility only, the Base Currency Amount of its Ancillary Commitment in relation to any new Ancillary Facility under the relevant Facility that is due to be made available on or before the proposed Utilisation Date.
For the purposes of calculating a Lender's Available Commitment in relation to any proposed Loan under the Revolving Facility or an Uncommitted Accordion Revolving Facility only the following amounts shall not be deducted from a Lender's Commitment under that Facility:
(i)
that Lender's participation in any Revolving Facility Loans or any Uncommitted Accordion Facility Loans that are due to be repaid or prepaid on or before the proposed Utilisation Date; and
(ii)
that Lender's Ancillary Commitments under the relevant Facility to the extent that they are due to be reduced or cancelled on or before the proposed Utilisation Date.

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Available Facility means, in relation to a Facility, the aggregate for the time being of each Lender's Available Commitment in respect of that Facility.
Base Currency means US Dollars.
Base Currency Amount means:
(a)
in relation to a Loan, the amount specified in the Utilisation Request delivered by a Borrower (or the Company on its behalf) for that Loan (or, if the amount requested is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent's Spot Rate of Exchange on the date which is 3 Business Days before the Utilisation Date or, if later, on the date the Agent receives the Utilisation Request in accordance with the terms of this Agreement);
(b)
in relation to an Ancillary Commitment, the amount specified as such in the notice delivered to the Agent by the Company pursuant to clause 7.2 (Availability); or
(c)
if the amount specified is not denominated in the Base Currency, that amount converted into the Base Currency at the Agent's Spot Rate of Exchange on the date which is 3 Business Days before the Ancillary Commencement Date for that Ancillary Facility or, if later, the date the Agent receives the notice of the Ancillary Commitment in accordance with the terms of this Agreement,
as adjusted to reflect any repayment, prepayment or consolidation of a Loan, or (as the case may be) cancellation or reduction of an Ancillary Facility.
Base Reference Bank Rate means the arithmetic mean of the rates (rounded upwards to four decimal places) as supplied to the Agent at its request by the Base Reference Banks:
(a)
in relation to LIBOR, as the rate at which the relevant Base Reference Bank could borrow funds in the London interbank market; or
(b)
in relation to EURIBOR, as the rate at which the relevant Base Reference Bank could borrow funds in the European interbank market,
in the relevant currency and for the relevant period, were it to do so by asking for and then accepting interbank offers for deposits in reasonable market size in that currency and for that period.
Base Reference Banks means, in relation to LIBOR and EURIBOR, the principal office of such banks as may be appointed by the Agent in consultation with the Company and provided such other bank or banks has agreed to act as a Base Reference Bank.
Basel III means:
(a)
the agreements on capital requirements, a leverage ratio and liquidity standards contained in "Basel III: A global regulatory framework for more resilient banks and banking systems", "Basel III: International framework for liquidity risk measurement, standards and monitoring" and "Guidance for national authorities operating the countercyclical capital buffer" published by the Basel Committee on Banking Supervision in December 2010, each as amended, supplemented or restated
(b)
the rules for global systemically important banks contained in "Global systemically important banks: assessment methodology and the additional loss absorbency requirement – Rules text" published by the Basel Committee on Banking Supervision in November 2011, as amended, supplemented or restated and

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(c)
any further guidance or standards published by the Basel Committee on Banking Supervision relating to Basel III.
Bilateral Document means each document relating to or evidencing the terms of a Bilateral Facility.
Bilateral Facility means a bilateral facility made available to an Obligor by a Bilateral Lender in accordance with clause 8 (Bilateral Facilities).
Bilateral Lender means each Lender.
Bilateral Limit means in respect of each Bilateral Lender the amount set opposite its name under the heading Bilateral Limit in Part 3 - (The Original Lenders) of Schedule 1 (or its equivalent in any currency) each Bilateral Lender's exposure and limit being calculated in accordance with the relevant Bilateral Lender's usual policy.
Borrower means an Original Borrower or an Additional Borrower unless it has ceased to be a Borrower in accordance with clause 30 (Changes to the Obligors).
Break Costs means the amount (if any) by which:
(a)
the interest (other than the Margin) which a Lender should have received for the period from the date of receipt of all or any part of its participation in a Loan or Unpaid Sum to the last day of the current Interest Period in respect of that Loan or Unpaid Sum, had the amount of the Loan or Unpaid Sum received been paid on the last day of that Interest Period,
exceeds:
(b)
the amount which that Lender would be able to obtain by placing an amount equal to the amount of the Loan or Unpaid Sum received by it on deposit with a leading bank in the Relevant Interbank Market for a period starting on the Business Day following receipt or recovery and ending on the last day of the current Interest Period.
Budget means the budget delivered by the Company to the Agent in respect of that period pursuant to, and in accordance with, clause 24.4 (Budget)
Business Day means a day (other than a Saturday or Sunday) on which banks are open for general business in London, and:
(a)
    in relation to any date for payment or purchase of a currency other than     euro, the principal financial centre of the country of that currency; or
(b)
in relation to any date for payment or purchase of euro, any TARGET Day. CA2006 means the Companies Act 2006.
Canadian Borrower means a Borrower incorporated in Canada or any province or territory thereof.
Canadian Guarantor means a Guarantor incorporated in Canada or any province of territory thereof.
Canadian Obligor means a Canadian Borrower or a Canadian Guarantor.
Cash Equivalent Investments means at any time:
(a)
certificates of deposit maturing within 6 Months after the relevant date of calculation and issued by an Acceptable Bank;

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(b)
any investment in marketable debt obligations issued or guaranteed by the government of the United States of America, the United Kingdom or any member state of the European Economic Area (subject to any such member state of the European Economic Area having a credit rating equivalent to or better than the United States of America or the United Kingdom), or by an instrumentality or agency of any of them having an equivalent credit rating, maturing within 3 Months after the relevant date of calculation and not convertible or exchangeable to any other security;
(c)
commercial paper not convertible or exchangeable to any other security:
(i)
for which a recognised trading market exists;
(ii)
issued by an issuer incorporated in the United States of America, the United Kingdom or any member State of the European Economic Area;
(iii)
which matures within 3 Months after the relevant date of calculation; and
(iv)
which has a credit rating of either A-1 or higher by Standard & Poor's Rating Services, F-1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody's Investors Service Limited, or, if no rating is available in respect of the commercial paper, the issuer of which has, in respect of its long-term unsecured and non-credit enhanced debt obligations, an equivalent rating;
(d)    any investment in money market funds which:
(i)
have a credit rating of either A-1 or higher by Standard & Poor's Rating Services, F-1 or higher by Fitch Ratings Ltd or P-1 or higher by Moody's Investors Service Limited;
(ii)
invest substantially all their assets in securities of the types described in paragraphs (a) to (c); and
(iii)    can be turned into cash on not more than 30 days' notice; or
(e)    any other debt security approved by the Majority Lenders,
in each case, denominated in sterling or an Optional Currency and to which an Obligor is alone or together with other Obligors beneficially entitled at that time and which is not issued or guaranteed by any member of the Group or subject to any Security
Change of Control means any person or group of persons acting in concert gains direct or indirect control of the Company. For the purposes of this definition:
(a)     control of the Company means:
(i)
the power (whether by way of ownership of shares, proxy, contract, agency or otherwise) to:
(A)
cast, or control the casting of, more than 50% of the maximum number of votes that might be cast at a general meeting of the Company; or
(B)
appoint or remove all, or the majority, of the directors or other equivalent officers of the Company; or
(C)
give directions with respect to the operating and financial policies of the Company with which the directors or other equivalent officers of the Company are obliged to comply; or

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(ii)
the holding beneficially of more than 50% of the issued share capital of the Company (excluding any part of that issued share capital that carries no right to participate beyond a specified amount in a distribution of either profits or capital); and
(b)
acting in concert means, a group of persons who, pursuant to an agreement or understanding (whether formal or informal), actively co-operate, through the acquisition, directly or indirectly, of shares in the Company by any of them, either directly or indirectly, to obtain or consolidate control of the Company.
Closing Date means the date the Agent gives the notice to the Company pursuant to clause 4.1(c).
Commitment means the Revolving Facility Commitment or an Uncommitted Accordion Facility Commitment.
Competitor means a person or entity or an Affiliate of (or a person or entity that otherwise controls directly or indirectly) a person or entity, whose primary business is the same or substantially similar to or in competition with that carried out by the Group (taken as a whole).
Compliance Certificate means a certificate substantially in the form set out in Schedule 8 (Form of Compliance Certificate).
Confidential Information means all information relating to the Company, any Obligor, the Group, the Finance Documents or a Facility in respect of which a Finance Party becomes aware in its capacity as, or for the purpose of becoming, a Finance Party or which is received by a Finance Party in relation to, or for the purpose of becoming a Finance Party under, the Finance Documents or a Facility from either:
(a)
any member of the Group, or any of its advisers; or
(b)
another Finance Party, if the information was obtained by that Finance Party directly or indirectly from any member of the Group or any of its advisers,
in whatever form, and includes information given orally and any document, electronic file or any other way of representing or recording information which contains or is derived or copied from such information but excludes information that:
(i)
is or becomes public information other than as a direct or indirect result of any breach by that Finance Party of clause 40.6 (Confidentiality); or
(ii)
is identified in writing at the time of delivery as non-confidential by any member of the Group or any of its advisers; or
(iii)
is known by that Finance Party before the date the information is disclosed to it in accordance with paragraphs (a) or (b) above or is lawfully obtained by that Finance Party after that date, from a source which is, as far as that Finance Party is aware, unconnected with the Group and which, in either case, as far as that Finance Party is aware, has not been obtained in breach of, and is not otherwise subject to, any obligation of confidentiality.
Confidentiality Undertaking means a confidentiality undertaking substantially in the recommended form of the LMA for the time being or in any other form agreed between the Company and the Agent.
Contribution Notice means a contribution notice issued by the Pensions Regulator under section 38 or section 47 of the Pensions Act 2004.

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CRD IV means, together, the Capital Requirements Regulation (Regulation (EU) no. 575/2013 of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending regulation (EU) No. 648/2012 and the Capital Requirements Directive (Directive 2013/36/EU of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directive 2006/48/EC and 2006/49/EC) of the European Parliament and the Council, as either of the same may be amended, supplemented or restated from time to time.
CTA means the Corporation Tax Act 2009.
Czech Subsidiary means Magnesium Elektron Recycling CZ S.R.O.
Debt Purchase Transaction means, in relation to a person, a transaction where such person:
(a)
purchases by way of assignment or transfer;
(b)
enters into any sub-participation in respect of; or
(c)
enters into any other agreement or arrangement having an economic effect substantially similar to a sub-participation in respect of,
any Commitment or amount outstanding under this Agreement.
Deed of Termination means the deed of termination to an intercreditor deed entered into on or about the Second Restatement Date and made between, amongst others, the Company, the
Debtors, Lloyds Bank plc as Agent and the Noteholders (each term as defined therein).
Default means an Event of Default or any event or circumstance specified in clause 27 (Events of Default) which would (with the expiry of a grace period, the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Defaulting Lender means any Lender:
(a)
which has failed to make its participation in a Loan available or has notified the Agent that it will not make its participation in a Loan available, in each case, by the Utilisation Date of that Loan in accordance with clause 5.4 (Lenders' participation); or
(b)
which has otherwise rescinded or repudiated a Finance Document or any term of a Finance Document; or
(c)
with respect to which an Insolvency Event has occurred,
unless, in the case of paragraph (a) above:
(i)    its failure to pay is caused by:
(A) administrative or technical error; or
(B) a Disruption Event,
and payment is made within 5 Business Days of its due date; or
(ii)
the Lender is disputing in good faith whether it is contractually obliged to make the payment in question.
Defined Benefit Scheme means each of the following:

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(a)
Luxfer Group Pension Plan
(b)
Luxfer Group Supplementary Pension Plan
(c)
BA Holdings inc. Defined Benefit Pension Plan
(d)
Pension Plan for Hourly Employees of Luxfer Inc
(e)
BA Holdings Inc. Executive Supplemental Retirement Plan
(f)
IPC Supplementary Pension scheme and
(g)
IDR Termination Indemnities
Designated Gross Amount means the amount notified by the Company to the Agent upon the establishment of a Multi-account Overdraft as being the maximum amount of Gross Outstandings that will, at any time, be outstanding under that Multi-account Overdraft
Designated Net Amount means the amount notified by the Company to the Agent upon the establishment of a Multi-account Overdraft as being the maximum amount of Net Outstandings that will, at any time, be outstanding under that Multi-account Overdraft
Designated Person means a person:
(a)
listed on the annex to the Executive Order;
(b)
owned or controlled by, or acting for or on behalf of, any person listed on the annex to the Executive Order;
(c)
listed on the "Specially Designated Nationals and Blocked Persons" list maintained by OFAC of the United States Department of the Treasury, as updated or amended from time to time;
(d)
whose property has been blocked, or is subject to seizure, forfeiture or confiscation, under any applicable Anti-Terrorism Law; or
(e)
that commits, threatens or conspires to commit or support "terrorism" as defined in the Executive Order.
Disruption Event means either or both of:
(a)
a material disruption to those payment or communications systems or to those financial markets which are, in each case, required to operate in order for payments to be made in connection with the Facilities (or otherwise in order for the transactions contemplated by the Finance Documents to be carried out) which disruption is not caused by, and is beyond the control of, any of the Parties; or
(b)
the occurrence of any other event which results in a disruption (of a technical or systems-related nature) to the treasury or payments operations of a Party preventing that, or any other Party:
(i)
from performing its payment obligations under the Finance Documents; or
(ii)
from communicating with other Parties in accordance with the terms of the Finance Documents,
and which (in either such case) is not caused by, and is beyond the control of, the Party whose operations are disrupted.

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Dormant Subsidiary means a member of the Group which does not trade (for itself or as agent for any person) and does not own, legally or beneficially, assets (including indebtedness owed to it) which in aggregate have a value of $33,000 or more or its equivalent in other currencies.
Employee Plan means, at any time, an "employee pension benefit plan" as defined in section 3(2) of ERISA and subject to Title IV of ERISA (other than a Multiemployer Plan) then or at any time during the previous six years maintained for, or contributed to (or to which there is or was an obligation to contribute) on behalf of, employees of any Obligor or ERISA Affiliate.
Environment means humans, animals, plants and all other living organisms including the ecological systems of which they form part and the following media:
(a)
air (including, without limitation, air within natural or man made structures, whether above or below ground);
(b)
water (including, without limitation, territorial, coastal and inland waters, water under or within land and water in drains and sewers); and
(c)
land (including, without limitation, land under water).
Environmental Claim means any claim, proceeding, formal notice or investigation by any person in respect of any Environmental Law.
Environmental Law means any applicable law or regulation which relates to:
(a)
the pollution or protection of the Environment;
(b)
the conditions of the workplace; or
(c)
the generation, handling, storage, use, release or spillage of any substance which alone, or in combination with any other, is capable of causing harm to the Environment, including without limitation, any waste.
Environmental Permits means any permit and other Authorisation and the filing of any notification, report or assessment required under any Environmental Law for the operation of the business of any member of the Group conducted on or from any Real Property owned or used by any member of the Group.
ERISA means the US Employee Retirement Income Security Act of 1974, as amended from time to time, and the regulations promulgated and rulings issued thereunder.
ERISA Affiliate means each person (as defined in section 3(9) of ERISA) that is a member of a controlled group of, or under common control with, any Obligor, within the meaning of section 414 of the Internal Revenue Code.
ERISA Event means any of the following events:
(a)
any reportable event, as defined in section 4043(c) of ERISA, with respect to an Employee Plan as to which the PBGC has not by regulation waived the requirement of section 4043(a) of ERISA that it be notified within thirty days of the occurrence of that event. However, a failure to meet the minimum funding standard of section 412 of the Internal Revenue Code or section 302 of ERISA shall be a reportable event for the purposes of this paragraph (a) regardless of the issuance of any waiver under said sections;
(b)
the requirements of subsection (1) of section 4043(b) of ERISA (without regard to subsection (2) of that section) are met with respect to a contributing sponsor, as defined in section 4001(a)(13) of ERISA, of an Employee Plan and an event described in

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paragraph (9), (10), (11), (12) or (13) of section 4043(c) of ERISA is reasonably expected to occur with respect to that Employee Plan within the following 30 days;
(c)
the filing under section 4041(c) of ERISA of a notice of intent to terminate any Employee Plan;
(d)
the termination of any Employee Plan under section 4041(c) of ERISA;
(e)
the institution of proceedings under section 4042 of ERISA by the PBGC for the termination of, or the appointment of a trustee to administer, any Employee Plan;
(f)
the failure to make a required contribution to any Employee Plan that would result in the imposition of an encumbrance pursuant to section 412 of the Internal Revenue Code or section 302 of ERISA; or
(g)
engagement with an Employee Plan in a non-exempt prohibited transaction within the meaning of section 4975 of the Internal Revenue Code or section 406 of ERISA other than as a result of entering into this Agreement.
ESOP means the Luxfer Group Employee Share Ownership Plan established by a deed of trust dated 3 November 1997.
EURIBOR means, in relation to any Loan in euro:
(a)
the applicable Screen Rate;
(b)
(if no Screen Rate is available for the Interest Period of that Loan) the Interpolated Screen Rate for that Loan; or
(c)
if
(i) no Screen Rate is available for the Interest Period of that Loan; and
(ii) it is not possible to calculate an Interpolated Screen Rate for that Loan, the Base Reference Bank Rate,
as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for euro and for a period equal in length to the Interest Period of that Loan and if, in any case, the rate is less than zero, EURIBOR shall be deemed to be zero.
Event of Default means any event or circumstance specified as such in clause 27 (Events of Default).
Excluded Deposit Account means each of the following deposit accounts:
(a)
any deposit account specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of the Company or any of its Subsidiary's salaried employees;
(b)
any deposit account credited at any time with an amount not exceeding $100,000 (or its equivalent in any currency) individually and, when aggregated with the amounts in all other such accounts, $500,000 (or its equivalent in any currency);
(c)
any deposit account, the balance of which consists solely of funds set aside in connection with tax, trust or similar accounts that are or are or will be promptly applied in the ordinary course of business toward valid applicable obligations of such Obligor; and

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(d)
any "lock-box" deposit account the balance of which is swept on a daily basis into other deposit accounts of the Company or any of its Subsidiaries that are deposit accounts as set forth under the preceding limbs (a) - (c) (inclusive).
Executive Order means Executive Order No. 13224 of September 23, 2001- Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten To Commit, or Support Terrorism.
Facilities means the Revolving Facility and the Uncommitted Accordion Facility, and each a " Facility ".
Facility Office means:
(a)
in respect of a Lender, the office or offices notified by that Lender to the Agent in writing on or before the date it becomes a Lender (or, following that date, by not less than 7 days' written notice) as the office or offices through which it will perform its obligations under this Agreement; or
(b)
in respect of any other Finance Party, the office in the jurisdiction in which it is resident for tax purposes.
FATCA has the meaning given to that term in clause 17.1 (Tax gross up and indemnities). FATCA Application Date means:
(a)
in relation to a "withholdable payment" described in section 1473(1)(A)(i) of the Code (which relates to payments of interest and certain other payments from sources within the US), 1 January 2014;
(b)
in relation to a "withholdable payment" described in section 1473(1)(A)(ii) of the Code (which relates to "gross proceeds" from the disposition of property of a type that can produce interest from sources within the US), 1 January 2019; or
(c)
in relation to a "passthru payment" described in section 1471(d)(7) of the Code not falling within paragraphs (a) or (b) above, 1 January 2019,
or, in each case, such other date from which such payment may become subject to a deduction or withholding required by FATCA as a result of any change in FATCA after the date of this Agreement.
FATCA Deduction means a deduction or withholding from a payment under a Finance Document required by FATCA.
FATCA Exempt Party means a Party that is entitled to receive payments free from any FATCA Deduction.
Fee Letter means:
(a)    any letter or letters dated on or about the Fourth Restatement Date between:
(i)
the Original Lenders and the Company; or
(ii)
the Agent and the Company,
setting out any of the fees referred to in clause 2.2(e) (Increase) or clause 16 (Fees);
(b)    an Uncommitted Accordion Facility Fee Letter;

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(c)
the Participation Fee Letter (as defined in the Fourth Amendment and Restatement Agreement).
Finance Document means this Agreement, any Accession Deed, any Ancillary Document, any Bilateral Document, any Compliance Certificate, any Fee Letter, any Resignation Letter, any Utilisation Request, any Uncommitted Accordion Facility Document, the Amendment and Restatement Agreement, the Second Amendment and Restatement Agreement, the Third Amendment and Restatement Agreement, the Fourth Amendment and Restatement Agreement, the Deed of Termination and any other document designated as a Finance Document by the Agent and the Company, provided that where the term Finance Document is used in, and construed for the purposes of, this Agreement, a Bilateral Document shall be a Finance Document only for the purposes of clause 22 (Guarantee and indemnity).
Finance Lease means any lease or hire purchase contract which would, in accordance with the Accounting Principles, be treated as a finance or capital lease.
Finance Party means the Agent, the Arrangers, the Document Co-ordinator, a Lender, any Ancillary Lender or any Bilateral Lender.
provided that where the term Finance Party is used in, and construed for the purposes of, this Agreement a Bilateral Lender shall be a Finance Party only for the purposes of clause 22 (Guarantee and indemnity).
Financial Covenant means any maintenance covenant (whether set forth as a covenant, undertaking, event of default, restriction or other such provision) that requires the Company or a member of the Group to achieve or maintain a stated level of financial condition or financial performance and includes, without limitation, any requirement that any member of the Group:
(a)
maintain a specified level of net worth, shareholders' equity, total assets, cash flow or net income;
(b)
maintain any specified ratio of any component of its capital structure to any other component thereof (including, without limitation, the relationship of indebtedness, senior indebtedness or subordinated indebtedness to total capitalisation or to net worth); or
(c)
maintain any measure of its ability to service its indebtedness (including, without limitation, any specified ratio of revenues, cash flow or net income to indebtedness, interest expense, rental expense, capital expenditures and/or scheduled payments of indebtedness).
Financial Indebtedness means, without double counting, any indebtedness for or in respect of:
(a)
monies borrowed and debit balances at banks or other financial institutions;
(b)
acceptance under any acceptance credit or bill discounting facility (or dematerialised equivalent);
(c)
any note purchase facility or the issue of bonds, notes, debentures, loan stock or any similar instrument;
(d)
any Finance Leases;
(e)
receivables sold or discounted (other than any receivables to the extent they are sold on a non-recourse basis);
(f)
any Treasury Transaction (and, when calculating the value of that Treasury Transaction, only the marked to market value (or, if any actual amount is due as a result of the

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termination or close-out of that Treasury Transaction, that amount) shall be taken into account);
(g)
any counter-indemnity obligation in respect of a guarantee, bond, standby or documentary letter of credit or any other instrument issued by a bank or financial institution in respect of (i) an underlying liability of an entity which is not a member of the Group which liability would fall within one of the other paragraphs of this definition;
(h)
any amount of any liability under an advance or deferred purchase agreement if (i) one of the primary reasons behind entering into the agreement is to raise finance or to finance the acquisition or construction of the asset or service in question or (ii) the agreement is in respect of the supply of assets or services and payment is due more than 180 days after the date of supply;
(i)
any amount raised under any other transaction (including any forward sale or purchase sale and sale back or sale and leaseback agreement) having the commercial or economic effect of a borrowing or otherwise classified as borrowings under the Accounting Principles;
(j)
any amount raised by the issue of redeemable shares which are redeemable (other than at the option of the issuer) before the Termination Date or are otherwise classified as borrowings under the Accounting Principles; and
(k)
the amount of any liability in respect of any guarantee for any of the items referred to in paragraphs (a) to (j).
Financial Quarter has the meaning given to that term in clause 25 (Financial covenants).
Financial Support Direction means a financial support direction issued by the Pensions Regulator under section 43 of the Pensions Act 2004.
Financial Year has the meaning given to that term in clause 25 (Financial covenants).
Fourth Amendment and Restatement Agreement means the amendment and restatement agreement between the Parties dated on or about the Fourth Restatement Date.
Fourth Restatement Date means 31 July 2017.
Fraudulent Transfer Law means any applicable US Bankruptcy Law (including, without limitation, section 548 of Title 11 of the US Bankruptcy Law) or any US state fraudulent transfer or conveyance statute or any relevant case law.
French Subsidiary means Luxfer Gas Cylinders S.A.S.
Funding Rate means any individual rate notified by a Lender to the Agent pursuant to clause 15.5(a)(ii) ( Cost of funds ).
Funds Flow Statement means a funds flow statement in agreed form.
Group means the Company and each of its Subsidiaries for the time being.
Group Structure Chart means the group structure chart to be delivered by the Company to the Agent pursuant to clause 4.1 (Initial conditions precedent).
Gross Outstandings means, in relation to a Multi-account Overdraft, the Ancillary Outstandings of that Multi-account Overdraft but calculated on the basis that the words "(net of any Available Credit Balance)" in paragraph (a) of the definition of Ancillary Outstandings were deleted

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Guarantor means an Original Guarantor or an Additional Guarantor, unless it has ceased to be a Guarantor in accordance with clause 30 (Changes to the Obligors).
Holding Company means, in relation to a company or corporation, any other company or corporation in respect of which it is a Subsidiary.
Impaired Agent means the Agent at any time when:
(a)
it has failed to make (or has notified a Party that it will not make) a payment required to be made by it under the Finance Documents by the due date for payment;
(b)
the Agent otherwise rescinds or repudiates as Finance Document;
(c)
(if the Agent is also a Lender) it is a Defaulting Lender under paragraph (a) or (b) of the definition of Defaulting Lender and, in the case of the events or circumstances referred to in paragraph (a), none of the exceptions apply to that paragraph; or
(d)
an Insolvency Event has occurred and is continuing with respect to the Agent, unless, in the case of paragraph (a) above:
(i)    its failure to pay is caused by:
(A) administrative or technical error, or
(B) a Disruption Event; and
(ii)    payment is made within 5 Business Days of its due date; or
(iii)
the Agent is disputing in good faith whether it is contractually obliged to make the payment in question.
Increase Confirmation means a confirmation substantially in the form set out in Schedule 10 (Form of Increase Confirmation).
Increase Lender has the meaning given to that term in clause 2.2 (Increase). Insolvency Event means, in relation to a Finance Party:
(a)
any receiver, administrative receiver, administrator, liquidator, compulsory manager or other similar officer is appointed in respect of that Finance Party or all or substantially all of its assets; or
(b)
that Finance Party is subject to any event which has an analogous effect to any of the events specified in paragraph (a) under the applicable laws of any jurisdiction; or
(c)    that Finance Party suspends making payments on all or substantially all of its debts or publicly announces an intention to do so.
Intellectual Property means:
(a)
any patents, trade marks, service marks, designs, business names, copyrights, database rights, design rights, domain names, moral rights, inventions, confidential information, know-how and other intellectual property rights and interests (which may now or in the future subsist), whether registered or unregistered; and
(b)
the benefit of all applications and rights to use such assets of each member of the Group (which may now or in the future subsist).

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Interest Period means, in relation to a Loan, each period determined in accordance with clause 14 (Interest Periods) and, in relation to an Unpaid Sum, each period determined in accordance with clause 13.3 (Default interest).
Internal Revenue Code means the US Internal Revenue Code of 1986, as amended from time to time, and any and all regulations and rulings issued thereunder.
Interpolated Screen Rate means, in relation to LIBOR or EURIBOR for any Loan, the rate (rounded to the same number of decimal places as the two relevant Screen Rates) which results from interpolating on a linear basis between:
(a)    the applicable Screen Rate for the longest period (for which that Screen Rate is available) which is less than the Interest Period of that Loan; and
(b)    the applicable Screen Rate for the shortest period (for which that Screen Rate is available) which exceeds the Interest Period of that Loan,
each as of the Specified Time on the Quotation Day for the currency of that Loan.
ITA means the Income Tax Act 2007 (England).
Joint Venture means any joint venture entity, whether a company, unincorporated firm, undertaking, association, joint venture or partnership or any other entity.
Legal Reservations means:
(a)
the principle that equitable remedies may be granted or refused at the discretion of a court and the limitation of enforcement by laws relating to insolvency, reorganisation and other laws generally affecting the rights of creditors;
(b)
the time barring of claims under the Limitation Acts, the possibility that an undertaking to assume liability for or indemnify a person against non-payment of UK stamp duty may be void and defences of set-off or counterclaim;
(c)
the possibility that the courts may recharacterise any security purporting to be a fixed charge as a floating charge (or vice versa); and
(d)
similar principles, rights and defences under the laws of any Relevant Jurisdiction. Lender means:
(a)    any Original Lender; and
(b)    any bank, financial institution, trust, fund or other entity which has     become a Party as a Lender in accordance with clause 2.2     (Increase) or clause 28 (Changes to the Lenders),
which in each case has not ceased to be a Lender in accordance with the terms of this Agreement.
LIBOR means, in relation to any Loan:
(a)
the applicable Screen Rate;
(b)
(if no Screen Rate is available for the Interest Period of that Loan) the Interpolated Screen Rate for that Loan; or
(c)
if:
(i)
no Screen Rate is available for the currency of that Loan; or

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(ii)
no Screen Rate is available for the Interest Period of that Loan and it is not possible to calculate an Interpolated Screen Rate for that Loan the Base Reference Bank Rate,
as of, in the case of paragraphs (a) and (c) above, the Specified Time on the Quotation Day for the currency of that Loan and a period equal in length to the Interest Period of that Loan and if, in any case, the rate is less than zero, LIBOR shall be deemed to be zero.
Limitation Acts means the Limitation Act 1980 and the Foreign Limitation Periods Act 1984.
LMA means the Loan Market Association.
Loan means a Revolving Facility Loan or an Uncommitted Accordion Facility Loan.
Majority Lenders means a Lender or Lenders whose Commitments aggregate more than 66 2 / 3 per cent of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated more than 66 2 / 3 per cent of the Total Commitments immediately prior to that reduction).
Mandatory Prepayment Default means an Event of Default under any of clause 27.1 (Nonpayment), clause 27.6 (Insolvency), clause 27.7 (Insolvency proceedings) or clause 27.8 (Creditors' process) or, to the extent not capable of remedy, any event or circumstance specified in clause 27.1 (Non-payment), clause 27.6 (Insolvency), clause 27.7 (Insolvency proceedings) or clause 27.8 (Creditors' process) which would (with the giving of notice, the making of any determination under the Finance Documents or any combination of any of the foregoing) be an Event of Default.
Margin means:
(a)
in relation to each Revolving Facility Loan, the percentage rate per annum determined pursuant to clause 15.1 (Margin adjustment);
(b)
in relation to any Uncommitted Accordion Facility Loan, the rate per annum specified in the relevant Uncommitted Accordion Facility Commitment Notice, subject to any margin adjustment mechanism also specified therein;
(c)
in relation to any Unpaid Sum relating or referable to a Facility, the rate per annum specified for that Facility; and
(d)
in relation to any other Unpaid Sum, the highest rate specified above.
Margin Stock shall have the meaning ascribed to such term under Regulation U, Regulation T or Regulation X of the Board of Governors of the Federal Reserve System.
Material Adverse Effect means in the reasonable opinion of the Majority Lenders a material adverse effect on:
(a)
the business, operations, property, condition (financial or otherwise) or prospects of the Group taken as a whole
(b)
the ability of an Obligor to perform its payment obligations under the Finance Documents (taking into account the financial resources available to that Obligor from other members of the Group) or
(c)
the rights or remedies of any Finance Party under any of the Finance Documents. Material Company means, at any time:
(a)
an Obligor;

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(b)
a wholly-owned member of the Group that holds shares in an Obligor; or
(c)
a Subsidiary of the Company which has earnings before interest, tax and amortisation calculated on the same basis as EBITA representing 5% or more of EBITA, or has gross assets, (excluding intra-group items) representing 5%, or more of the gross assets of the Group, calculated on a consolidated basis.
Compliance with the conditions set out in paragraph (c) shall be determined by reference to the most recent Compliance Certificate supplied by the Company and/or the latest audited financial statements of that Subsidiary (consolidated in the case of a Subsidiary which itself has Subsidiaries) and the latest audited consolidated financial statements of the Group. However, if a Subsidiary has been acquired since the date as at which the latest audited consolidated financial statements of the Group were prepared, the financial statements shall be deemed to be adjusted in order to take into account the acquisition of that Subsidiary (that adjustment being certified by the Group's Auditors as representing an accurate reflection of the revised EBITA and gross assets of the Group).
A report by the Auditors of the Company that a Subsidiary is or is not a Material Company shall, in the absence of manifest error, be conclusive and binding on all Parties.
Month means a period starting on one day in a calendar month and ending on the numerically corresponding day in the next calendar month, except that:
(a)
(subject to paragraph (c)) if the numerically corresponding day is not a Business Day, that period shall end on the next Business Day in that calendar month in which that period is to end if there is one, or if there is not, on the immediately preceding Business Day;
(b)
if there is no numerically corresponding day in the calendar month in which that period is to end, that period shall end on the last Business Day in that calendar month; and
(c)    if an Interest Period begins on the last Business Day of a calendar month, that Interest Period shall end on the last Business Day in the calendar month in which that Interest Period is to end.
The above rules will only apply to the last Month of any period.
Monthly Financial Statements means the financial statements delivered pursuant to clause 24.1(b) (Financial statements).
Multi-account Overdraft means an Ancillary Facility which is an overdraft facility comprising more than 1 account
Multiemployer Plan means, at any time, a multiemployer plan (as defined in section 4001(a)(3) of ERISA) then or at any time during the previous five years maintained for, or contributed to (or to which there is or was an obligation to contribute) on behalf of, employees of any Obligor or an ERISA Affiliate.
Net Outstandings means, in relation to a Multi-account Overdraft, the Ancillary Outstandings of that Multi-account Overdraft
New Lender has the meaning given to it in clause 28.1 (Assignments and transfers by the Lenders).
Net Cash Proceeds has the meaning given in clause 11.2 (Disposal and Insurance)
Notes means the notes issued pursuant to the Note Documents.
Note Documents means:

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(a)
the note purchase agreement for up to US $65,000,000 entered into by BA Holdings Inc on or around the date of this Agreement;
(b)
the guarantee entered into by each Obligor on or around the Closing Date in the form set out in the note purchase agreement referred to in limb (a) above;
(c)
each note issued pursuant to the note purchase agreement referred to in limb (a) above;
(d)
the hedging letter issued pursuant to the note purchase agreement referred to in limb (a) above;
(e)
a letter dated 21 March 2011 between the Company and Pricoa Capital Group; and
(f)
any other Note Document as defined in the note purchase agreement referred to in limb (a) above.
Obligor means a Borrower or a Guarantor.
OFAC means the Office of Foreign Asset Control of the US Department of the Treasury.
Optional Currency means a currency (other than the Base Currency) which complies with the conditions set out in clause 4.3 (Conditions relating to Optional Currencies).
Original Financial Statements means:
(a)
in relation to the Company its consolidated audited financial statements for its financial year ended 31 December 2016;
(b)
in relation to the Company the consolidated unaudited monthly management accounts for the period from 1 January 2017 to 31 May 2017;
(c)
in relation to each Obligor (other than a Canadian Obligor or a US Obligor), its audited financial statements for the financial year ended 31 December 2016; and
(d)
in relation to any other Obligor, its audited financial statements delivered to the Agent as required by clause 30 (Changes to the Obligors).
Original Obligor means an Original Borrower or an Original Guarantor.
Participating Member State means any member state of the European Communities that has the euro as its lawful currency in accordance with legislation of the European Union relating to Economic and Monetary Union.
Party means a party for the time being to this Agreement.
PBGC means the Pension Benefit Guaranty Corporation of the US established pursuant to section 4002 of ERISA or any entity succeeding to all or any of its functions under ERISA.
Pensions Regulator means the body corporate called the Pensions Regulator established under Part I of the Pensions Act 2004.
Permitted Acquisition means:
(a)
an acquisition pursuant to a Permitted Share Issue;
(b)
the incorporation of a company which on incorporation becomes a member of the Group, but only if that company is incorporated with limited liability in the European Union, the United Kingdom, the United States, or such other jurisdiction in which an existing member

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of the Group operates, and not in any jurisdiction that is on a restricted list for a Finance Party;
(c)
an acquisition by a member of the Group of an asset sold, leased, transferred or otherwise disposed of by another member of the Group in circumstances constituting a Permitted Disposal;
(d)
an acquisition (not being an acquisition by the Company), of (A) all or the amount required to hold a controlling interest of the issued share capital of a limited liability company or (B) (if the acquisition is made by a limited liability company) a business or undertaking carried on as a going concern, but only if:
(i)
no Default is continuing on the closing date for the acquisition or would occur as a result of the acquisition;
(ii)
the acquired company, business or undertaking:
(A)    is engaged in a business substantially the same as that carried on by the Group; and
(B)    is incorporated or established, and carries on its principal business in,
the European Union, the United Kingdom, the United States, or such other jurisdiction in which an existing member of the Group operates, and not in any jurisdiction that is on a restricted list for a Finance Party;
(iii)
Leverage (calculated on a proforma basis taking into account the acquisition), subject to a Permitted Temporary Leverage Increase, does not exceed 2.5:1;
(iv)    either:
(A)
the EBITDA of the acquired company, business or undertaking (in respect of the period of 12 Months ending on the last day of the Month prior to the date the Company legally commits to the acquisition) is positive; or
(B)
the EBITDA of the acquired company, business or undertaking (in respect of the period of 12 Months ending on the last day of the Month prior to the date the Company legally commits to the acquisition) is negative and the prior written consent of the Majority Lenders (not to be unreasonably withheld or delayed) to the acquisition has been obtained;
(v)
the Company has delivered to the Lender not later than 5 Business Days prior to the date it (or the relevant member of the Group) legally commits to make such acquisition (such date being the Acquisition Commitment Date ), a certificate signed by two directors of the Company:
(A)
giving notice to the Agent of the proposed acquisition;
(B)
to which is attached forecasts (which have been prepared on the basis of recent historical information and reasonable assumptions, and which assume that the acquisition has occurred), demonstrating that the Company will remain in compliance with its obligations under clause 25 (Financial covenants) for a period of not less than 12 Months from the closing date for the acquisition; and
(C)
certifying that Leverage (calculated on a proforma basis taking into account the acquisition) does not, subject to a Permitted Temporary Leverage Increase, exceed 2.5:1; and

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(vi)    the consideration (including associated costs and expenses) for the acquisition and any Financial Indebtedness or other assumed actual or contingent liability, in each case remaining in the acquired company (or any such business) at the date of acquisition (the Total Purchase Price ) does not exceed in aggregate 25 per cent. of the consolidated net assets of the Group as at the Acquisition Commitment Date;
(e)
an acquisition by the Company of its own shares (to be held in treasury) or by any other member of the Group of shares in the Company, in each case in connection with any employee share ownership or share incentive plan; or
(f)
an acquisition permitted by the Agent (acting on the instructions of the Majority Lenders (such consent not to be unreasonably withheld or delayed)) in writing.
Permitted Cash Balance means $16,500,000 (or its equivalent in any currency).
Permitted Disposal means any sale, lease, licence, transfer or other disposal which, except in the case of paragraphs (b) and (m), is on arm's length terms:
(a)
of trading stock or cash made by any member of the Group in the ordinary course of trading of the disposing entity;
(b)
of any asset by a member of the Group to another member of the Group;
(c)
of assets in exchange for other assets comparable or superior as to type, value or quality;
(d)
of assets to a Permitted Joint Venture;
(e)
of obsolete or redundant Real Property, vehicles, plant and equipment for cash;
(f)
of Cash Equivalent Investments for cash or in immediate exchange for other Cash Equivalent Investments;
(g)
constituted by a licence of intellectual property rights permitted by clause 26.22 (Intellectual Property);
(h)
arising as a result of any Permitted Security;
(i)
of cash by way of a Permitted Loan;
(j)
of cash in order to complete a Permitted Acquisition;
(k)
of assets for cash where the higher of the market value or the net consideration receivable in respect of such asset (when aggregated with the higher of the market value or the net consideration receivable for any other sale, lease, licence, transfer or other disposal of an asset not allowed under the preceding paragraphs) does not exceed $25,000,000 (or its equivalent) in aggregate;
(l)
that is a Permitted Transaction;
(m)
of shares in the Company by the Company or any other member of the Group in connection with any employee share ownership or share incentive plan; or
(n)
of cash in order to fund the acquisition of shares in the Company in connection with any employee share ownership or share incentive plan.
Permitted Distribution means:

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(a)
the payment of a dividend to any member of the Group by any of that member of the Group's Subsidiaries;
(b)
the payment of a dividend by the Company provided no Event of Default has occurred and is continuing or would result from such payment, in each case, at the time such dividend is declared;
(c)
the redemption of up to £50,000 B preference shares at par value (plus any accrued dividend) issued by the Company to Brian Purves and Ian Mckinnon; or
(d)    the payment of any other dividend agreed between the Company and the Agent (acting on the instructions of the Majority 7Lenders).
Permitted Financial Indebtedness means Financial Indebtedness:
(a)
arising under any of the Finance Documents, the Note Documents, in each case as in force on the date of this Agreement and amended from time to time in compliance with this Agreement;
(b)
arising under a Permitted Loan, a Permitted Guarantee or as permitted by clause 26.26 (Treasury transactions);
(c)
arising under a foreign exchange transaction for spot or forward delivery entered into in connection with protection against fluctuation in currency rates where that foreign exchange exposure arises in the ordinary course of trade or in respect of Loans made in Optional Currencies, but not a foreign exchange transaction for investment or speculative purposes;
(d)
under finance or capital leases of vehicles, plant, equipment or computers, provided that the aggregate capital value of all such items so leased under outstanding leases by members of the Group does not exceed $16,500,000 (or its equivalent in other currencies) at any time;
(e)
of a company that becomes a member of the Group as a result of a Permitted Acquisition provided that the Financial Indebtedness is repaid in full within 45 days of that company becoming a member of the Group;
(f)
arising under any Bilateral Facility;
(g)
owed by a member of the Group to another member of the Group;
(h)
performance bonds issued in the ordinary course of trading in respect of non-financial obligations;
(i)
permitted by the Agent (acting on the instructions of the Majority Lenders) in writing; and
(j)
such other Financial Indebtedness not permitted by the preceding paragraphs, provided that the outstanding principal amount of all Financial Indebtedness of the Group (including the Financial Indebtedness permitted pursuant to paragraphs (a) to (i) above (other than the Financial Indebtedness permitted under limbs (c), (f) or (g) of Permitted Loan)) does not exceed $300,000,000 (or its equivalent) in aggregate for the Group at any time.
Permitted Guarantee means:
(a)
the endorsement of negotiable instruments in the ordinary course of trade;
(b)
any guarantee to a property landlord of which a member of the Group is a tenant;

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(c)
any performance or similar bond guaranteeing performance by a member of the Group under any contract entered into in the ordinary course of trade;
(d)
any guarantee or indemnity arising under any Transaction Document;
(e)
any indemnity given by a member of the Group for its liabilities in the ordinary course of trade;
(f)
a guarantee in respect of Financial Indebtedness permitted under limb (h) of the definition of Permitted Financial Indebtedness;
(g)
a guarantee of Financial Indebtedness as part of a Permitted Joint Venture;
(h)
a guarantee in respect of obligations of another member of the Group;
(i)
any guarantee given in respect of the netting or set-off arrangements permitted pursuant to paragraph (c) of the definition of Permitted Security;
(j)
any guarantee or indemnity given by a member of the Group in respect of any obligations of an employee or officer of a member of the Group, which obligations shall not exceed $165,000 (or its equivalent) in aggregate for all such obligations supported by such guarantee or indemnity pursuant to this clause (j) outstanding at any time; or
(k)
any guarantee arising under the Shelf Facility.
Permitted Joint Venture means any investment by any member of the Group:
(a)    where the joint venture interest is held through an entity incorporated or formed with limited liability; and
(i)    the joint venture entity is incorporated or established, and carries on its principal business in a jurisdiction in which an existing member of the Group operates and not in any jurisdiction that is on a restricted list for a Finance Party;
(ii)    as at the date of the joint venture investment by the relevant member of the Group:
(A)
Leverage (as shown in the latest Compliance Certificate) does not, subject to a Permitted Temporary Leverage Increase, exceed 2.5:1; and
(B)
the Company has delivered to the Lender not later than 5 Business Days prior to the relevant member of the Group legally committing to make such joint venture investment, a certificate signed by two directors of the Company:
1)
giving notice to the Agent of the proposed joint venture investment; and
2)
to which is attached forecasts (which have been prepared on the basis of recent historical information and reasonable assumptions, and which assume that the joint venture investment has occurred), demonstrating that the Company will remain in compliance with its obligations under clause 25 (Financial covenants) for a period of not less than 12 Months from the date of the joint venture investment;
(iii)    the joint venture investment is made on arm's length terms;

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(iv)
that entity carries on or owns the same, a similar, complementary or related business to that carried on by the Group; and
(v)
the aggregate (without double counting) of:
(A)
all outstanding amounts lent, advances, contributed to or for equity in, or otherwise invested in, such entity by members of the Group;
(B)
the market value (at the date of transfer or contribution) of all assets transferred or contributed to such entity by members of the Group to the extent exceeding the value of the consideration for such transfers or contributions; and
(C)
all outstanding Financial Indebtedness incurred (whether by way of guarantee or otherwise) in relation to such entity by members of the Group,
shall not after the date of this Agreement, when taken together with any contingent liability of the Permitted Joint Venture, exceed $25,000,000 (or its equivalent); or
(b)    permitted by the Agent acting on the instruction of the Majority Lenders (such consent not to be unreasonably withheld or delayed) in writing.
Permitted Loan means:
(a)
any trade credit extended by any member of the Group to its customers on normal commercial terms and in the ordinary course of its trading activities;
(b)
Financial Indebtedness which is referred to in the definition of, or otherwise constitutes, Permitted Financial Indebtedness;
(c)
any loan made to a Permitted Joint Venture;
(d)
any loan or advance made to employees of any member of the Group which loans and advances shall not exceed $3,300,000 in aggregate for all loans to employees (or its equivalent) outstanding at any time;
(e)
any loan, advance or other financial facility in an aggregate amount not to exceed $2,000,000 in any calendar year made available to the trustee of the ESOP, the trustee or administrator (or any similar third party) of any other employee share ownership or share incentive plan or similar scheme or to an employee whether for the purpose of acquiring ordinary, preference or deferred shares or American depositary receipts or shares in the Company or any member of the Group, provided that such loan, advance or other financial facility may not exceed $10,000,000 at any one time outstanding;
(f)
a loan made by a member of the Group to another member of the Group; or
(g)
any loan (other than a loan that would fall within one of the limbs set out above) so long as the aggregate amount of Financial Indebtedness under any such loan does not exceed $825,000 (or its equivalent) at any time.
Permitted Note Increase means any increase in the principal amount of the Notes or the fees or commission relating to the Notes provided that:
(a)
any such new Financial Indebtedness created by such increase would constitute Permitted Financial Indebtedness; or

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(b)
the increase in fees or commission is in consideration for the amendment or waiver of, or the giving of a consent under, any term of a Note Document.
Permitted Security means:
(a)    any lien arising by operation of law and in the ordinary course of trading and not as a result of any default or omission by any member of the Group;
(b)    any netting or set-off arrangement entered into by any member of the Group in the ordinary course of its banking arrangements for the purpose of netting debit and credit balances of members of the Group but only so long as such arrangement does not give rise to other Security over the assets of Obligors in support of liabilities of members of the Group which are not Obligors;
(c)    any payment or close out netting or set-off arrangement pursuant to any Treasury Transaction or foreign exchange transaction entered into by a member of the Group which constitutes Permitted Financial Indebtedness, excluding any Security or Quasi-Security under a credit support arrangement;
(d)    any Security or Quasi-Security arising under any retention of title, hire purchase or conditional sale arrangement or arrangements having similar effect in respect of goods supplied to a member of the Group in the ordinary course of trading and on the supplier's standard or usual terms and not arising as a result of any default or omission by any member of the Group;
(e)    any Quasi-Security arising as a result of a disposal which is a Permitted Disposal; or
(f)    any Security or Quasi-Security arising as a consequence of any finance or capital lease permitted pursuant to paragraph (d) of the definition of "Permitted Financial Indebtedness";
(g)    any Security or Quasi-Security over or affecting any asset acquired by a member of the Group after the Fourth Restatement Date if:
(i)
the Security or Quasi-Security was created prior to the date on which the asset was acquired and was not created in contemplation of the acquisition of that asset by a member of the Group;
(ii)
the principal amount secured has not been increased in contemplation of or since the acquisition of that asset by a member of the Group; and
(iii)
within 90 days of the date of acquisition of such asset, the Security or Quasi-Security is removed or discharged in full or part to the extent required to ensure that such Security or Quasi Security is Permitted Financial Indebtedness and Permitted Security (other than in respect of this paragraph g); or
(h)    any Security or Quasi-Security over or affecting any asset of any company which becomes a member of the Group after the Fourth Restatement Date, where the Security or Quasi-Security is created prior to the date on which that company becomes a member of the Group if:
(i)
the Security or Quasi-Security was created prior to the date on which that company becomes a member of the Group and was not created in contemplation of the acquisition of that company;
(ii)
the principal amount secured has not increased in contemplation of or since the acquisition of that company; and

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(iii)
within 90 days of that company becoming a member of the Group, the Security or Quasi-Security is removed or discharged in full or part to the extent required to ensure that such Security or Quasi Security is Permitted Financial Indebtedness and Permitted Security (other than in respect of this paragraph h).
Permitted Share Issue means an issue of:
(a)
ordinary shares by the Company, paid for in full in cash upon issue and which by their terms are not redeemable and where such issue does not lead to a Change of Control of the Company;
(b)
any shares issued in connection with the ESOP or any other employee share ownership or share incentive plan or similar scheme, where such issue does not lead to a Change of Control; and
(c)
shares by a member of the Group (other than the Company) which is a Subsidiary to any Holding Company or, in the case of any Subsidiary which is Joint Venture, to the shareholder(s) of such Joint Venture provided that any investment in a Joint Venture by a member of the Group by way of subscription for shares is permitted under the definition of Permitted Joint Venture.
Permitted Temporary Leverage Increase means a temporary increase in the Leverage ratio set out in clause 25.2(b) (Financial Condition) for the agreed period approved by the Lenders pursuant to clause 25.4
Permitted Transaction means:
(a)
any disposal required, Financial Indebtedness incurred, guarantee, indemnity or Security or Quasi-Security given, or other transaction arising, under the Finance Documents;
(b)
the solvent liquidation or reorganisation of any member of the Group (other than the Company) so long as any payments or assets distributed as a result of such liquidation or reorganisation are distributed to other members of the Group; or
(c)
transactions (other than (i) any sale, lease, license, transfer or other disposal and (ii) the granting or creation of Security or the incurring or permitting to subsist of Financial Indebtedness) conducted in the ordinary course of trading on arm's length terms.
Qualifying Lender has the meaning given to that term in clause 17 (Tax gross up and indemnities).
Quarter Date means the last day of a Financial Quarter.
Quarterly Financial Statements means the financial statements for each Financial Quarter delivered pursuant to clause 24.1 (Financial statements).
Quasi-Security has the meaning given to that term in clause 26.12 (Negative pledge). Quotation Day means, in relation to any period for which an interest rate is to be determined:
(a)
if the currency is sterling, the first day of that period;
(b)
if the currency is euro, 2 TARGET Days before the first day of that period; or
(c)
for any other currency, 2 Business Days before the first day of that period,
unless market practice differs in the Relevant Interbank Market for a currency, in which case the Quotation Day for that currency will be determined by the Agent in accordance with market practice in the Relevant Interbank Market (and if quotations would normally be given by leading banks in

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the Relevant Interbank Market on more than 1 day, the Quotation Day will be the last of those days).
Real Property means:
(a)
any freehold, leasehold, commonhold or immovable property; and
(b)
any buildings, fixtures, fittings, fixed plant or machinery from time to time situated on or forming part of that freehold, leasehold, commonhold or immovable property.
Receiving Agent means The Bank of New York.
Regulation T , Regulation U or Regulation X means Regulation T, U or, as the case may be, X of the Board of Governors of the Federal Reserve System of the US (or any successor) as from time to time in effect and all official rulings and interpretations thereunder or thereof.
Related Fund in relation to a fund ( first fund ), means a fund which is managed or advised by the same investment manager or investment adviser as the first fund or, if it is managed by a different investment manager or investment adviser, a fund whose investment manager or adviser is an Affiliate of the investment manager or investment adviser of the first fund.
Relevant Interbank Market means:
(a)
in relation to euro, the European interbank market; and
(b)
in relation to any other currency, the London interbank market. Relevant Jurisdiction means, in relation to an Obligor:
(a)
its jurisdiction of incorporation; and
(b)
any jurisdiction where it conducts its business.
Relevant Period has the meaning given to that term in clause 25 (Financial covenants).
Relevant Permitted Acquisition means an acquisition permitted pursuant to paragraph (d) of the definition of Permitted Acquisition
Repayment Date means any repayment date which is set out in an Uncommitted Accordion Facility Commitment Notice in respect of an amortising Uncommitted Accordion Term Facility.
Repayment Instalment means any repayment instalment which is set out in an Uncommitted Accordion Facility Commitment Notice in respect of an amortising Uncommitted Accordion Term Facility.
Repeating Representations means each of the representations set out in clause 23.2 (Status) to clause 23.7 (Governing law and enforcement) (inclusive), clause 23.11 (No default), clause 23.12(b) (No misleading information), clause 23.13(f), (g) and (h) (Original Financial Statements), clause 23.19 (Good title to assets), clause 23.24 (Centre of main interests and establishments), clause 23.28 (Sanctions) and clause 23.29 (Anti-corruption law)
Representative means any delegate, agent, manager, administrator, nominee, attorney, trustee or custodian.
Resignation Letter means a letter substantially in the form set out in Schedule 7 (Form of Resignation Letter).
Restatement Date means 30 November 2012.

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Revolving Facility means the revolving credit facility made available under this Agreement as described in clause 2.1(a) (The Facilities).
Revolving Facility Commitment means:
(a)
in relation to an Original Lender, the amount in the Base Currency set opposite its name in Part 3 - (Original Lenders) of Schedule 1 and the amount of any other commitment transferred to it under this Agreement or assumed by it in accordance with clause 2.2 (Increase); and
(b)
in relation to any other Lender, the amount in the Base Currency of any Revolving Facility Commitment transferred to it under this Agreement or assumed by it in accordance with clause 2.2 (Increase),
to the extent not cancelled, reduced or transferred by it under this Agreement.
Revolving Facility Loan means a loan made or to be made under the Revolving Facility or the principal amount outstanding for the time being of that loan.
Rollover Loan means one or more Loans:
(a)    in the case of a Revolving Facility Loan:
(i)
made or to be made on the same day that a maturing Revolving Facility Loan is due to be repaid;
(ii)
the aggregate amount of which is equal to or less than the amount of the maturing Revolving Facility Loan;
(iii)
in the same currency as the maturing Revolving Facility Loan (unless it arose as a result of the operation of clause 6.2 (Unavailability of a currency)); and
(iv)
made or to be made to the same Borrower for the purpose of refinancing that maturing Revolving Facility Loan; and
(b)    in the case of an Uncommitted Accordion Revolving Facility Loan:
(i)
made or to be made on the same day that a maturing Uncommitted Accordion Revolving Facility Loan is due to be repaid;
(ii)
the aggregate amount of which is equal to or less than the amount of the maturing Uncommitted Accordion Revolving Facility Loan;
(iii)
in the same currency as the maturing Uncommitted Accordion Revolving Facility Loan (unless it arose as a result of the operation of clause 6.2 (Unavailability of a currency); and
(iv)
made or to be made to the same Borrower for the purpose of refinancing that maturing Uncommitted Accordion Revolving Facility Loan.
Screen Rate means:
(a)
in relation to LIBOR the London interbank offered rate administered by ICE Benchmark Administration Limited (or any other person that takes over the administration of that rate) for the relevant currency and period displayed on pages LIBOR01 or LIBOR02 of the Reuters screen (or any replacement Reuters page which displays that rate); and

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(b)
in relation to EURIBOR, the euro interbank offered rate administered by the Banking Federation of the European Union (or any other person that takes over the administration of that rate) for the relevant period displayed on page EURIBOR01 of the Reuters screen (or any replacement Reuters page which displays that rate),
or, in each case, on the appropriate page of such other information service which publishes that rate from time to time in place of Reuters. If such page or service ceases to be available, the Agent may specify another page or service displaying the relevant rate after consultation with the Company.
Second Amendment and Restatement Agreement means the amendment and restatement agreement made between the Parties and dated on or around the Second Restatement Date.
Second Restatement Date means 25 March 2014.
Security means a mortgage, charge, pledge, lien, assignment or other security interest securing any obligation of any person or any other agreement or arrangement having a similar effect.
Selection Notice means a notice substantially in the form set out in Part 2 - (Selection Notice) of Schedule 3.
Share Option Documents means each deed of agreement granting options pursuant to parts A and B of the ESOP.
Shelf Facility means any private shelf facility/bilateral facility to be entered into between any member of the Group as issuer, Prudential Investment Management, Inc. ( Pricoa ) and each Affiliate, managed account, investment fund or other vehicle for which Pricoa or any of its Affiliates acts as investment advisor or portfolio manager and that becomes party to that private shelf facility/bilateral facility from time to time as a purchaser.
Specified Time means a time determined in accordance with Schedule 9 (Timetables).
Subsidiary means a subsidiary undertaking within the meaning of section 1162 of the CA2006.
TARGET2 means the Trans-European Automated Real-time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007.
TARGET Day means any day on which TARGET2 is open for the settlement of payments in euro .
Tax means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure to pay or any delay in paying any of the same).
Termination Date means the fifth anniversary of the Fourth Restatement Date.
Third Amendment and Restatement Agreement means the amendment and restatement agreement made between the Agent and the Company and dated on or around the Third Restatement Date.
Third Restatement Date means 23 December 2016.
Third Parties Act means the Contracts (Rights of Third Parties) Act 1999.
Third Party Disposal means the disposal of an Obligor to a person which is not a member of the Group where that disposal is permitted under clause 26.13 (Disposals) or made with the approval of the Majority Lenders (and the Company has confirmed this is the case).

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Total Commitments means the aggregate of the Total Revolving Facility Commitments and the Total Uncommitted Accordion Facility Commitments.
Total Revolving Facility Commitments means the aggregate of the Revolving Facility Commitments being $150,000,000 as at the Fourth Restatement Date.
Total Uncommitted Accordion Facility Commitments means the aggregate of the Uncommitted Accordion Facility Commitments.
Total Uncommitted Accordion Revolving Facility Commitments means the aggregate of the Uncommitted Accordion Revolving Facility Commitments.
Trade Instruments means any performance bonds, advance payment bonds or documentary letters of credit issued in respect of the obligations of any member of the Group arising in the ordinary course of trading of that member of the Group.
Transaction Costs means all fees, costs and expenses incurred by the Obligors in connection with the Transaction Documents as set out in the Funds Flow Statement.
Transaction Documents means the Finance Documents, the Note Documents, the Articles and any other document designated as a Transaction Document by the Agent and the Company.
Transfer Certificate means a certificate substantially in the form set out in Schedule 4 (Form of Transfer Certificate) or any other form agreed between the Agent and the Company.
Transfer Date means, in relation to an assignment or a transfer, the later of:
(a)
the proposed Transfer Date specified in the relevant Assignment Agreement or Transfer Certificate; and
(b)
the date on which the Agent executes the relevant Assignment Agreement or Transfer Certificate.
Treasury Transaction means any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price.
Uncommitted Accordion Facility means any term loan or revolving credit facility made available under this Agreement pursuant to clause 2.3 (Uncommitted Accordion Facility Commitments).
Uncommitted Accordion Facility Commitment means an Uncommitted Accordion Term Facility Commitment or an Uncommitted Accordion Revolving Facility Commitment.
Uncommitted Accordion Facility Commitment Cancellation Notice means a notice delivered by the Company to the Agent and which cancels all or part of an undrawn Uncommitted Accordion Facility Commitment.
Uncommitted Accordion Facility Commitment Fee Letter means each fee letter in respect of the Uncommitted Accordion Facility Commitment entered into between the Company and the Lenders or other bank or financial institutions which commit Uncommitted Accordion Facility Commitments.
Uncommitted Accordion Facility Commitment Notice means a notice substantially in the form set out in Schedule 11 (Uncommitted Accordion Facility Commitment Notice) delivered by the Company to the Agent in accordance with clause 2.3 (Uncommitted Accordion Facility Commitments).
Uncommitted Accordion Facility Documents means any Uncommitted Accordion Facility Commitment Fee Letter, any Uncommitted Accordion Facility Commitment Cancellation Notice,

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any Uncommitted Accordion Facility Commitment Notice and any other document designated as an “Uncommitted Accordion Facility Document” by the Agent and the Company.
Uncommitted Accordion Facility Loan means a loan made or to be made under an Uncommitted Accordion Facility or the principal amount outstanding for the time being of that loan.
Uncommitted Accordion Facility Maximum Amount means in aggregate $50,000,000 (or its equivalent in other currencies).
Uncommitted Accordion Revolving Facility Commitment means:
(a)
in relation to an entity identified as a Lender in an Uncommitted Accordion Facility Commitment Notice, the amount in the Base Currency set out opposite its name under the heading "Uncommitted Accordion Revolving Facility Commitment" in such Uncommitted Accordion Facility Commitment Notice and the amount of any other Uncommitted Accordion Revolving Facility Commitment transferred to it under this Agreement; and
(b)    in relation to any other Lender, the amount in the Base Currency of any Uncommitted Accordion Revolving Facility Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Uncommitted Accordion Revolving Facility means an Uncommitted Accordion Facility that is a revolving credit facility.
Uncommitted Accordion Revolving Facility Loan means a revolving loan made or to be made under an Uncommitted Accordion Revolving Facility or the principal amount outstanding for the time being of that loan.
Uncommitted Accordion Term Facility means an Uncommitted Accordion Facility that is a term loan facility.
Uncommitted Accordion Term Facility Commitment means:
(a)
in relation to an entity identified as a Lender in an Uncommitted Accordion Facility Commitment Notice, the amount in the Base Currency set out opposite its name under the heading "Uncommitted Accordion Term Facility Commitment" in such Uncommitted Accordion Facility Commitment Notice and the amount of any other Uncommitted Accordion Term Facility Commitment transferred to it under this Agreement; and
(b)
in relation to any other Lender, the amount in the Base Currency of any Uncommitted Accordion Term Facility Commitment transferred to it under this Agreement,
to the extent not cancelled, reduced or transferred by it under this Agreement.
Uncommitted Accordion Term Facility Loan means a term loan made or to be made under an Uncommitted Accordion Term Facility or the principal amount outstanding for the time being of that loan.
Unpaid Sum means any sum due and payable but unpaid by an Obligor under the Finance Documents.
USA Patriot Act means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56 of the United States.
US or United States means the United States of America.

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US Bankruptcy Law means the United States Bankruptcy Code of 1978 or any other United States federal or state bankruptcy, insolvency or similar law.
US Guarantor means a Guarantor incorporated or formed under the laws of, or of any state (including the District of Columbia) of, the US.
US Obligor means an Obligor incorporated or formed under the laws of, or of any state (including the District of Columbia) of, the US.
Utilisation means a Loan.
Utilisation Date means the date of a Utilisation being the date on which the relevant Loan is to be made.
Utilisation Request means a notice substantially in the relevant form set out in Part 1 - (Utilisation Request) of Schedule 3 (Requests and Notices).
VAT means value added tax as provided for in the Value Added Tax Act 1994 and any other tax of a similar nature including without limitation any harmonized sales tax and goods and services tax imposed under the Excise Tax Act (Canada) and any Quebec sales tax.
Withdrawal Request means a notice in substantially the form set out in Part 3 - (Withdrawal Request) of Schedule 3 (Requests and Notices).
1.2     Interpretation
(a)    Unless a contrary indication appears, a reference in this Agreement to:
(i)
the Agent, the Arrangers, any Finance Party, any Lender, any Obligor, any Party, any Ancillary Lender, any Bilateral Lender or any other person shall be construed so as to include its successors in title, permitted assigns and permitted transferees and, in the case of the Agent any person for the time being appointed as Agent (as the case may be) in accordance with the Finance Documents;
(ii)
a document in agreed form is a document which is previously agreed in writing by or on behalf of the Agent and the Company or, if not so agreed, is in the form specified by the Agent;
(iii)
assets includes present and future properties, revenues and rights of every description (including any right to receive such revenues);
(iv)
a Finance Document or a Transaction Document or any other agreement or instrument is a reference to that Finance Document or Transaction Document or other agreement or instrument as amended, novated, supplemented or restated (however fundamentally) or (in the case of an Ancillary Document or a Bilateral Document) replaced;
(v)
guarantee means (other than in clause 22 (Guarantee and indemnity)) any guarantee, letter of credit, bond, indemnity or similar assurance against loss, or any obligation, direct or indirect, actual or contingent, to purchase or assume any indebtedness of any person or to make an investment in or loan to any person or to purchase assets of any person where, in each case, such obligation is assumed in order to maintain or assist the ability of such person to meet its indebtedness;
(vi)
indebtedness includes any obligation (whether incurred as principal or as surety) for the payment or repayment of money, whether present or future, actual or contingent;

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(vii)
a person includes any individual person, firm, company, corporation, government, state or agency of a state or any association, trust, joint venture, consortium or partnership (whether or not having separate legal personality) or any other entity or body of any description;
(viii)
a regulation includes any regulation, rule, official directive, request or guideline (whether or not having the force of law but if not having the force of law, then being a type with which persons to which it applies customarily comply) of any governmental, intergovernmental or supranational body, agency, department or of any regulatory, self-regulatory or other authority or organisation;
(ix)
a provision of law is a reference to a provision, of any treaty, legislation, regulation, decree, order or by-law and any secondary legislation enacted under a power given by that provision, as amended, applied or re-enacted or replaced (whether with or without modification) whether before or after the date of this Agreement;
(x)
a time of day is a reference to London time;
(xi)
a group of Lenders includes all the Lenders of the particular group;
(xii)
a reference to the date of this Agreement means 13 May 2011;
(xiii)
sterling and £ shall be construed as a reference to the lawful currency of the United Kingdom;
(xiv)
euro and € shall be construed as a reference to the single currency of Participating Member States; and
(xv)
US Dollar and $ shall be construed as a reference to the lawful currency of the United States.
(b)    Clause and schedule headings are for ease of reference only.
(c)    Unless a contrary indication appears, a term used in any other Finance Document or in any notice given under or in connection with any Finance Document has the same meaning in that Finance Document or notice as in this Agreement.
(d)    Any word importing the singular shall include the plural and vice versa.
(e)    A Borrower providing cash cover for an Ancillary Facility means a Borrower paying an amount in the currency of the Ancillary Facility into an interest-bearing account in the name of such Borrower and the following conditions being met:
(i)
the account is with the Ancillary Lender; and
(ii)
until no amount is or may be outstanding under Ancillary Facility, withdrawals from the account may only be made to pay a Finance Party amounts due and payable to it under this Agreement in respect of the Ancillary Facility.
(f)    A Default (other than an Event of Default) is continuing if it has not been remedied or waived and an Event of Default is continuing if it has not been waived, in both cases, to the satisfaction of the Agent acting on the instructions of the Majority Lenders.
(g)    A Borrower repaying or prepaying the Ancillary Outstandings means:
(i)
that Borrower providing cash cover for the Ancillary Outstandings;

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(ii)
the maximum amount payable under the Ancillary Facility being reduced or cancelled in accordance with its terms; or
(iii)
the Ancillary Lender being satisfied that it has no further liability under the Ancillary Facility,
and the amount by which the Ancillary Outstandings are, repaid or prepaid under clauses 1.2(g)(i) and 1.2(g)(ii) is the amount of the relevant cash cover or reduction.
(h)
An amount borrowed includes any amount utilised under an Ancillary Facility.
(i)
Any certificate provided by a director of an Obligor pursuant to the terms of a Finance Document shall be given without incurring any personal liability.
(j)
A reference to "the date of this Agreement" is a reference to 13 May 2011.
(k)
A reference to an amount in a currency other than the Base Currency shall be converted to the Base Currency at the Agent's Spot Rate of Exchange unless another conversion rate is expressly stated.
1.3     Third party rights
(a)
Unless expressly provided to the contrary in this Agreement a person (other than a Bilateral Lender) who is not a Party has no right under the Third Parties Act to enforce or enjoy the benefit of any term of this Agreement.
(b)
Unless expressly provided to the contrary in any Finance Document, the consent of any person who is not a Party is not required to rescind or vary this Agreement or any other Finance Document entered into under or in connection with it.
2    The Facilities
2.1     The Facilities
(a)
Subject to the terms of this Agreement, the Lenders make available a multicurrency revolving credit facility the Base Currency Amount of which is equal to the Total Revolving Facility Commitments.
(b)
The Uncommitted Accordion Facility will be available to all Borrowers.
(c)
The Revolving Facility will be available to all the Borrowers.
(d)
Subject to the terms of this Agreement and the Ancillary Documents, an Ancillary Lender may make available an Ancillary Facility to any of the Borrowers under the Revolving Facility in place of all or part of its Revolving Facility Commitment.
(e)
Subject to the terms of this Agreement and the Ancillary Documents, an Ancillary Lender may make available an Ancillary Facility to any of the Borrowers under an Uncommitted Accordion Revolving Facility in place of all or part of its Uncommitted Accordion Revolving Facility Commitment.
(f)
Subject to the terms of this Agreement and the Bilateral Documents, a Bilateral Lender may make available a Bilateral Facility to any of the Borrowers.
2.2     Increase
(a)
The Company may by giving prior notice to the Agent after the effective date of a cancellation of:

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(i)
the Available Commitments of a Defaulting Lender in accordance with clause 10.7 (Right of cancellation in relation to a Defaulting Lender); or
(ii)
the Commitments of a Lender in accordance with clause 10.1 (Illegality),
request that the Total Commitments under the relevant Facilities be increased (and the Total Commitments shall be so increased) in an aggregate amount in the Base Currency of up to the amount of the Available Commitments or Commitments so cancelled as follows:
(iii)
the increased Commitments will be assumed by one or more Lenders or other banks, financial institutions, trusts, funds or other entities (each an Increase Lender ) selected by the Company (each of which shall not be a member of the Group and which is further acceptable to the Agent (acting reasonably)) and each of which confirms its willingness to assume and does assume all the obligations of a Lender corresponding to that part of the increased Commitments which it is to assume, as if it had been an Original Lender;
(iv)
each of the Obligors and any Increase Lender shall assume obligations towards one another and/or acquire rights against one another as the Obligors and the Increase Lender would have assumed and/or acquired had the Increase Lender been an Original Lender;
(v)
each Increase Lender shall become a Party as a Lender and any Increase Lender and each of the other Finance Parties shall assume obligations towards one another and acquire rights against one another as that Increase Lender and those Finance Parties would have assumed and/or acquired had the Increase Lender been an Original Lender;
(vi)
the Commitments of the other Lenders shall continue in full force and effect; and
(vii)
any increase in the Total Commitments shall take effect on the date specified by the Company in the notice referred to above or any later date on which the conditions set out in clause 2.2(b) below are satisfied.
(b)    An increase in the Total Commitments will only be effective on:
(i)
the execution by the Agent of an Increase Confirmation from the relevant Increase Lender; and
(ii)
in relation to an Increase Lender which is not a Lender immediately prior to the relevant increase the performance by the Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assumption of the increased Commitments by that Increase Lender, the completion of which the Agent shall promptly notify to the Company and the Increase Lender.
(c)    Each Increase Lender, by executing the Increase Confirmation, confirms (for the
avoidance of doubt) that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the increase becomes effective.
(d)
The Company shall, on the date upon which the increase takes effect, promptly on demand pay the Agent the amount of all costs and expenses (including legal fees

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subject to any cap agreed in advance between the Company and the Agent) reasonably incurred.
(e)
The Company may pay to the Increase Lender a fee in the amount and at the times agreed between the Company and the Increase Lender in a Fee Letter.
(f)
Clause 28.4 (Limitation of responsibility of Existing Lenders) shall apply mutatis mutandis in this clause 2.2 in relation to an Increase Lender as if references in that clause to:
(i)
an Existing Lender were references to all the Lenders immediately prior to the relevant increase;
(ii)
the New Lender were references to that Increase Lender; and
(iii)
a re-transfer and re-assignment were references to respectively a transfer and assignment.
2.3     Uncommitted Accordion Facility Commitments
(a)
The Company may confirm that one or more Lenders or any other entity referred to in paragraph (b) below has agreed to commit Uncommitted Accordion Facility Commitments by delivering to the Agent an Uncommitted Accordion Facility Commitment Notice duly signed by those parties that have agreed to participate in the relevant Uncommitted Accordion Facility.
(b)
The Company shall offer the Original Lenders the first right to provide any Uncommitted Accordion Facility, provided that:
(i)    subject to paragraph (ii) below:
(A)
if no Original Lender agrees to arrange and underwrite such Facility on terms satisfactory to the Company within any time limit specified by the Company in such offer to all of the Original Lenders (being not less than 15 Business Days) and subject to compliance with the terms of this clause 2.3, any other bank, financial institution, trust, fund or other entity which is regularly engaged in or established for the purpose of making, purchasing or investing in loans, securities or other financial assets provided it is not a member, nominee or Affiliate of the Group ( Third Party Lender ) may provide such Facility; or
(B)
subject to paragraph (C) below, if one or more Original Lenders agree to arrange and underwrite such Facility (the amount of such Facility which an Original Lender agrees to arrange and underwrite being such Original Lender's Original Offer Amount ) on terms satisfactory to the Company within any time limit specified by the Company in such offer to all of the Original Lenders (being not less than 15 Business Days) and subject to compliance with the terms of this clause 2.3, that Facility shall be allocated in equal amounts 1 to each such Original Lender;
1     As at the Fourth Restatement Date, the initial equal share of each Original Lender will constitute 20 per cent. of the amount of the Uncommitted Accordion Facility being offered by the Company assuming that all of the Original Lenders agree to provide the Facility in the amount equal to or greater than 20 per cent. of the Uncommitted Accordion Facility.
(C)
if an Original Lender does not agree to arrange and underwrite such Facility on terms satisfactory to the Company within any time limit specified by the Company in such offer to all of the Original Lenders (being not less than 15 Business Days) or, in the case of paragraph (B) above, provide the full amount of their equal share in such Facility (in

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each case the relevant remaining amount being the Original Lender Shortfall ) and subject to compliance with the terms of this clause 2.3, the Original Lenders who have agreed to provide the full amount of their share in such Facility shall provide, subject to paragraphs (E) and (F) below, in equal amounts, the full amount of such Original Lender Shortfall, provided that where such Original Offer Amounts are in aggregate less than the amount of such Facility requested by the Company under this clause 2.3, any Third Party Lender may provide all or part of the remaining amount of the Original Lender Shortfall;
(D)
the Company shall only offer such Facility to a Third Party Lender on the same or no more favourable terms as it has offered to the Original Lenders pursuant to clause 2.3(b). For avoidance of doubt this paragraph (D) will apply at any time the Company offers a Facility to a Third Party Lender under this clause 2.3;
(E)
for avoidance of doubt, under this clause 2.3 no Lender will have to provide more than their Original Offer Amount; and
(F)
if the provisions of paragraph (C) would result in a shortfall to the Original Lender Shortfall, any Lenders whose Original Offer Amount is not yet reached can provide the remainder of the Original Lender Shortfall, in equal amounts if there is more than one such Lender (with such process to be repeated until all such Original Offer Amounts have been reached); or
(ii)
to the extent that an Original Lender has assigned or transferred any of its Revolving Facility Commitments under this Agreement to a New Lender (as defined in clause 28.1 (Assignments and transfers by the Lenders)), any such New Lender shall be treated as an Original Lender for the purposes of paragraph (i) above, provided that if such Revolving Facility Commitments have been assigned or transferred to one or more New Lenders, all such New Lenders (and including the relevant Original Lender if it still holds any Revolving Facility Commitments) shall be taken together and treated as one Original Lender for the purposes of paragraph (i) and the one equal share of any Uncommitted Accordion Facility which is offered to each Original Lender in accordance with paragraph (i) shall be offered to such New Lenders (and, if relevant, the Original Lender) as if they were one Original Lender and, as between themselves only, pro rata to their share of the relevant Revolving Facility Commitments.
(c)    Each Uncommitted Accordion Facility Commitment Notice is irrevocable and will not be regarded as having been duly completed unless it specifies:
(i)
the date on which the Uncommitted Accordion Facility Commitments are to become effective and the applicable Availability Period;
(ii)
the amount of the Uncommitted Accordion Facility Commitments, which shall be not less than $10,000,000 (or its equivalent in other currencies);
(iii)
the final repayment date for the Loans to be made under the Uncommitted Accordion Facility;
(iv)
the purpose for which any amounts drawn under the Uncommitted Accordion Facility may be used;
(v)
the name(s) of the Borrower(s) under the Uncommitted Accordion Facility;

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(vi)
the amount of the Uncommitted Accordion Facility Commitment allocated to each entity named in the Uncommitted Accordion Facility Commitment Notice as a Lender;
(vii)
the Margin (and any applicable Margin adjustment mechanism) applicable to each Loan to be made available under the Uncommitted Accordion Facility;
(viii)
any provisions agreed between the Company and the entities providing the Uncommitted Accordion Facility Commitments relating to fees (including any arrangement fee) and conditionality; and
(ix)
(A)    if to be utilised for the purpose of a Permitted Acquisition, attached to the notice are:
1)
forecasts (which have been prepared on the basis of recent historical information and reasonable assumptions, and which assume that the acquisition has occurred), demonstrating that the Company will remain in compliance with its obligations under clause 25 (Financial covenants) for a period of not less than 12 Months from the closing date of the acquisition; and
2)
board papers in respect of the acquisition; or
(B)    if to be utilised for other purposes, forecasts (which have been prepared on the basis of recent historical information and reasonable assumptions), demonstrating that the Company will remain in compliance with its obligations under clause 25 (Financial covenants) for a period of not less than 12 Months from the date of the Uncommitted Accordion Facility Commitment Notice.
(d)    The Uncommitted Accordion Facility Commitment Notice shall only be valid if:
(i)
it states the amount of the commitment fee, if any;
(ii)
it states the amount of the arrangement fee if any;
(iii)
subject to clause 12.4, the aggregate of all Uncommitted Accordion Facility Commitments (including those specified in the relevant Uncommitted Accordion Facility Commitment Notice), whether utilised or unutilised is less than or equal to the Uncommitted Accordion Facility Maximum Amount;
(iv)
it states the currency of the Uncommitted Accordion Facility Commitments (which must be the Base Currency or an Optional Currency);
(v)
there is no Event of Default which is continuing or which would be caused by a Utilisation of the Uncommitted Accordion Facility; and
(vi)
if an Uncommitted Accordion Revolving Facility Commitment is to be provided by a Third Party Lender, details of any limits on the aggregate Ancillary Commitments for that Third Party Lender.
(e)
Each Uncommitted Accordion Facility Commitment Notice shall be signed by the Company and the Borrower and countersigned by each entity to which Uncommitted Accordion Facility Commitments are allocated. Any entity to which Uncommitted Accordion Facility Commitments are allocated shall comply with the provisions of clause 28 (Changes to the Lenders) to the extent applicable. By countersigning the Uncommitted

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Accordion Facility Commitment Notice each such entity agrees to commit the Uncommitted Accordion Facility Commitments set out against its name and in the case of an entity which is not already a Lender, to become a Lender and party to this Agreement.
(f)
Upon receipt of a duly completed Uncommitted Accordion Facility Commitment Notice, the Agent shall acknowledge receipt of such notice and, if appropriate (and subject to paragraph (j) below), the accession of the relevant Lenders to this Agreement and the Agent shall inform all the Lenders of such receipt. The Agent is authorised to disclose details in the Uncommitted Accordion Facility Commitment Notice and in relation to any Uncommitted Accordion Facility to the Lenders on request. The Agent shall only be obliged to sign an Uncommitted Accordion Facility Commitment Notice upon its satisfactory completion of all "know your customer" or other checks relating to any person that it is required to carry out in relation to the accession of any entity as a Lender.
(g)
The Agent shall notify the Company and the Lenders of the proposed changed amounts of the Uncommitted Accordion Facility Commitments promptly after receipt of each Uncommitted Accordion Facility Commitment Notice and each Uncommitted Accordion Facility Commitment Cancellation Notice.
(h)
The terms and conditions relating to each Uncommitted Accordion Facility will be set out in a separate Uncommitted Accordion Facility Commitment Notice entered into by the Company and the relevant Lenders or other entities providing the relevant Uncommitted Accordion Facility Commitments.
(i)
If the other provisions of this Clause 2.3 are met, each Party:
(i)
agrees that Uncommitted Accordion Facility Commitments may be made available to the Borrowers; and
(ii)
authorises and instructs the Agent to sign an Uncommitted Accordion Facility Commitment Notice to record the Uncommitted Accordion Facility Commitments as set out in the relevant Uncommitted Accordion Facility Commitment Notice and accordingly the establishment of (or the increase in Uncommitted Accordion Facility Commitments in respect of) the Uncommitted Accordion Facility.
(j)
Upon the relevant Uncommitted Accordion Facility Commitment Notice being signed by the Agent, the Company and the relevant Lenders, the relevant Uncommitted Accordion Facility and corresponding Uncommitted Accordion Facility Commitments will be established for the purpose of this Agreement and the other Finance Documents (and, in the case of any Uncommitted Accordion Facility Lender (as defined in clause 28.10 (Uncommitted Accordion Facility)), the accession of that Uncommitted Accordion Facility Lender hereunder shall become effective).
(k)    Each Obligor confirms:
(i)
the authority of the Company to agree and implement the establishment of Uncommitted Accordion Facility Commitments and the Uncommitted Accordion Facility in accordance with the procedures and up to the amounts permitted by this Agreement (as amended or modified from time to time); and
(ii)
that all its guarantee and indemnity obligations recorded in clause 22 (Guarantee and indemnity) and/or in any Accession Deed or other Finance Document will continue in full force and effect, is, subject to the Legal Reservations, a valid and binding obligation of such Obligor and is, subject to the Legal Reservations, enforceable in accordance with its terms, that as at the date of the Uncommitted Accordion Facility Commitment Notice, no defenses, offsets, claims or counterclaims exist in respect of the guarantee given by it which affect the

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guarantee in any material respect and it will extend to include the Uncommitted Accordion Facility Loans and other obligations arising under the Uncommitted Accordion Facility subject to any limits as specifically recorded in clause 22 (Guarantee and indemnity), the relevant Accession Deed or elsewhere in the Finance Documents;
(iii)
that utilising the Uncommitted Accordion Facility Commitment in full would not breach any borrowing limit binding on any Obligor;
(iv)
that utilising the Uncommitted Accordion Facility Commitment would not cause any guarantee limit applicable to any Obligor to be breached; and
(v)
each Party agrees that it shall within 10 Business Days of a request to do so it will sign any amendment agreement required in respect of this Agreement in order to document any purely administrative amendment required solely to record the amount of or any terms of any Uncommitted Accordion Facility Commitments made available in accordance with this clause 2.3.
(l)
For the avoidance of doubt, the Obligors shall not grant Security in favour of any Finance Party to secure the liabilities under any Uncommitted Accordion Facility unless equivalent Security is granted in favour of the Finance Parties to secure the liabilities under the Revolving Facility.
2.4     Finance Parties' rights and obligations
(a)
The obligations of each Finance Party under the Finance Documents are several. Failure by a Finance Party to perform its obligations under the Finance Documents does not affect the obligations of any other Party under the Finance Documents. No Finance Party is responsible for the obligations of any other Finance Party under the Finance Documents.
(b)
The rights of each Finance Party under or in connection with the Finance Documents are separate and independent rights and any debt arising under the Finance Documents to a Finance Party from an Obligor is a separate and independent debt in respect of which a Finance Party shall be entitled to enforce its rights in accordance with clause 2.4(c). The rights of each Finance Party include any debt owing to that Finance Party under the Finance Documents and, for the avoidance of doubt, any part of a Loan or any other amount owed by an Obligor which relates to a Finance Party's participation in a Facility or its role under a Finance Document (including any such amount payable to the Agent on its behalf) is a debt owing to that Finance Party by that Obligor.
(c)
A Finance Party may, except as specifically provided in the Finance Documents, separately enforce its rights under or in connection with the Finance Documents.
2.5     Obligors' agent
(a)
Each Obligor (other than the Company) by its execution of this Agreement or an Accession Deed irrevocably appoints the Company to act on its behalf as its agent in relation to the Finance Documents and irrevocably authorises:
(i)
the Company on its behalf to supply all information concerning itself contemplated by this Agreement to the Finance Parties and to give all notices and instructions (including Utilisation Requests), to execute on its behalf any Accession Deed to make such agreements and to effect the relevant amendments, supplements and variations capable of being given, made or effected by any Obligor notwithstanding that they may affect the Obligor, without further reference to or the consent of that Obligor; and

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(ii)
each Finance Party to give any notice, demand or other communication to that Obligor pursuant to the Finance Documents to the Company,
and in each case the Obligor shall be bound as though the Obligor itself had given the notices and instructions (including, without limitation, any Utilisation Requests) or executed or made the agreements or effected the amendments, supplements or variations, or received the relevant notice, demand or other communication.
(b)
Every act, omission, agreement, undertaking, settlement, waiver, amendment, supplement, variation, notice or other communication given or made by the Obligors' agent or given to the Obligors' agent under any Finance Document on behalf of another Obligor or in connection with any Finance Document (whether or not known to any other Obligor and whether occurring before or after such other Obligor became an Obligor under any Finance Document) shall be binding for all purposes on that Obligor as if that Obligor had expressly made, given or concurred with it. In the event of any conflict between any notices or other communications of the Obligors' agent and any other Obligor, those of the Obligors' agent shall prevail.
3    Purpose
3.1     Purpose
Each Borrower shall apply all amounts borrowed by it under the Facilities and any utilisation of any Ancillary Facility towards the general corporate and working capital purposes of the Obligors (including, for the avoidance of doubt, funding any Permitted Acquisition and any costs and expenses incurred in connection with such Permitted Acquisition) or (other than in the case of any utilisation of any Ancillary Facility) towards repayment or prepayment of any Loan.
3.2     Monitoring
No Finance Party is bound to monitor or verify the application of any amount borrowed pursuant to this Agreement.
4    Conditions of utilisation
4.1     Initial conditions precedent
(a)
The Company shall provide the Agent all the documents and other evidence in Part 1 - (Conditions precedent to signing this Agreement) of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent on or before the date of this Agreement.
(b)
The Lenders will only be obliged to comply with clause 5.4 (Lenders' participation) in relation to any Loan if on or before the Utilisation Date for that Utilisation, the Agent has received all of the documents and other evidence listed in Part 2 - (Conditions precedent to initial Utilisation) of Schedule 2 (Conditions precedent) in form and substance satisfactory to the Agent.
(c)
The Agent shall, in each case, notify the Company and the Lenders promptly upon being so satisfied.
4.2     Further conditions precedent
Subject to clause 4.1 the Lenders will only be obliged to comply with clause 5.4 (Lenders' participation) if on the date of the Utilisation Request and on the proposed Utilisation Date:
(a)
in the case of a Rollover Loan, no Event of Default is continuing or would result from the proposed Loan and, in the case of any other Loan, no Default is continuing or would result from the proposed Loan; and

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(b)
in relation to any Loan on the Closing Date, all the representations and warranties in clause 23 (Representations) or, in relation to any other Loan, the Repeating Representations, to be made by each Obligor are true.
4.3     Conditions relating to Optional Currencies
(a)    A currency will constitute an Optional Currency in relation to a Loan if:
(i)
it is readily available in the amount and for the period required and freely convertible into the Base Currency in the Relevant Interbank Market on the Quotation Day and the Utilisation Date for that Loan; and
(ii)
it is Euro or Sterling or has been approved by the Agent (acting on the instructions of all the Lenders) on or prior to receipt by the Agent of the relevant Utilisation Request for that Loan.
(b)
If the Agent has received a written request from the Company for a currency to be approved under clause 4.3(a)(ii), the Agent will confirm to the Company by the Specified Time:
(i)
whether or not the Lenders have granted their approval; and
(ii)
if approval has been granted, the minimum amount for any subsequent Loan in that currency.
4.4      Maximum number of Loans
(a)
A Borrower (or the Company on its behalf) may not deliver a Utilisation Request if as a result of the proposed Loan:
(i)
more than 10 Revolving Facility Loans would be outstanding; or
(ii)
more than 5 Uncommitted Accordion Facility Loans would be outstanding.
(b)
Any Loan made by a single Lender under clause 6.2 (Unavailability of a currency) shall not be taken into account in this clause 4.4.
5    Utilisation
5.1     Delivery of a Utilisation Request
A Borrower (or the Company on its behalf) may request a Loan by delivery to the Agent of a duly completed Utilisation Request not later than the Specified Time.
5.2     Completion of a Utilisation Request
(a)
Each Utilisation Request is irrevocable and will not be regarded as having been duly completed unless:
(i)
it identifies the Borrower and the Facility to be utilised;
(ii)
the proposed Utilisation Date is a Business Day within the Availability Period;
(iii)
the currency and amount of the Loan comply with clause 5.3; and
(iv)
the proposed Interest Period complies with clause 14 (Interest Periods).
(b)
Multiple Loans may be requested in a Utilisation Request where the proposed Utilisation Date is the Closing Date. Only 1 Loan may be requested in each subsequent Utilisation Request.

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5.3     Currency and amount
(a)
The currency specified in a Utilisation Request or an Uncommitted Accordion Facility Notice must be the Base Currency or an Optional Currency.
(b)
The amount of the proposed Loan must be:
(i)
in respect of an Uncommitted Accordion Term Facility, equal to or less than the Available Facility;
(ii)
in respect of the Revolving Facility or an Uncommitted Accordion Revolving Facility:
(A)
if the currency selected is Sterling, a minimum of £1,500,000 (and a multiple of £500,000) or, if less, the Available Facility; or
(B)
if the currency selected is Euro, a minimum of Euro 2,000,000 (and a multiple of Euro 500,000) or, if less, the Available Facility; or
(C)
if the currency selected is the Base Currency, a minimum of $2,000,000 (and a multiple of $500,000) or, if less, the Available Facility; or
(D)
if the currency selected is an Optional Currency other than Euro or Sterling, the minimum amount specified by the Agent pursuant to clause 4.3(b)(ii) (Conditions relating to Optional Currencies) or, if less, the Available Facility.
5.4     Lenders' participation
(a)
If the conditions set out in this Agreement have been met and subject to clause 9.2 (Repayment of Revolving Facility Loans) and clause 9.3 (Repayment of Uncommitted Accordion Revolving Facility Loans), each Lender shall make its participation in each Loan available by the Utilisation Date through its Facility Office.
(b)
The amount of each Lender's participation in each Loan will be equal to the proportion borne by its Available Commitment to the Available Facility immediately prior to making that Loan.
(c)
The Agent shall determine the Base Currency Amount of each Loan which is to be made in an Optional Currency and notify each Lender of the amount, currency and the Base Currency Amount of each Loan and the amount of its participation in that Loan and, if different, the amount of that participation to be made available in cash, by the Specified Time.
5.5     Limitations on Loans
(a)
The maximum aggregate amount of the Ancillary Commitments of all the Lenders shall not at any time exceed $36,465,000 (or its equivalent in any currency).
(b)
The maximum aggregate amount of the Ancillary Commitments of all the Lenders in respect of overdraft facilities and bilateral loan facilities shall not at any time exceed $21,450,000 (or its equivalent in any currency).
(c)
The maximum aggregate amount of the Ancillary Commitments of all the Lenders in respect of guarantee, bonding, documentary or stand-by letters of credit facilities shall not at any time exceed $15,015,000 (or its equivalent in any currency).
(d)
The maximum aggregate amount of the Ancillary Commitments of all the Lenders in respect of derivatives facilities and foreign exchange facilities shall not at any time exceed $15,015,000 (or its equivalent in any currency).
5.6     Cancellation of Commitment

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(a)
The Uncommitted Accordion Facility Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.
(b)
The Revolving Facility Commitments which, at that time, are unutilised shall be immediately cancelled at the end of the Availability Period.
6    Optional currencies
6.1     Selection of currency
A Borrower (or the Company on its behalf) shall select the currency of a Loan in a Utilisation Request or an Uncommitted Accordion Facility Notice.
6.2     Unavailability of a currency
If before the Specified Time on any Quotation Day a Lender notifies the Agent that:
(a)
the Optional Currency requested is not readily available to it in the amount and for the period required; or
(b)
compliance with its obligation to participate in a Loan in the proposed Optional Currency would contravene a law or regulation applicable to it,
the Agent will give notice to the Company to that effect by the Specified Time on that day. In this event, any Lender that gives notice pursuant to this clause 6.2 will be required to participate in the Loan in the Base Currency (in an amount equal to that Lender's proportion of the Base Currency Amount, or in respect of a Rollover Loan in an amount equal to that Lender's proportion of the Base Currency Amount of the Rollover Loan that is due to be made) and its participation will be treated as a separate Loan denominated in the Base Currency during that Interest Period.
6.3     Agent's calculations
Each Lender's participation in a Loan will be determined in accordance with clause 5.4 (Limitations on Loans).
7    Ancillary Facilities
7.1     Type of Facility
An Ancillary Facility may be by way of:
(a)
an overdraft facility;
(b)
a guarantee, bonding, documentary or stand-by letter of credit facility;
(c)
a short term loan facility;
(d)
a derivatives facility;
(e)
a foreign exchange facility; or
(f)
any other facility or accommodation required in connection with the business of the Group and which is agreed by the Company with an Ancillary Lender.
7.2     Availability
(a)
If the Company and a Lender agree and except as otherwise provided in this Agreement, that Lender may provide an Ancillary Facility on a bilateral basis in place of all or part of that Lender's unutilised Revolving Facility Commitment or unutilised Uncommitted Accordion

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Revolving Facility Commitment (which shall (except for the purposes of determining the Majority Lenders and of clause 40.3 (Deemed consent)) be reduced by the amount of the Ancillary Commitment under that Ancillary Facility).
(b)
An Ancillary Facility shall not be made available unless, not later than 14 days prior to the Ancillary Commencement Date for an Ancillary Facility, the Agent has received from the Company:
(i)    a notice in writing of the establishment of an Ancillary Facility and specifying:
(A)
the proposed Borrower(s) or Affiliates of a Borrower (under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as applicable)) which may use the Ancillary Facility;
(B)
the proposed Ancillary Commencement Date and expiry date of the Ancillary Facility;
(C)
the proposed type of Ancillary Facility to be provided;
(D)
the proposed Ancillary Lender;
(E)
the proposed Ancillary Commitment, the maximum amount of the Ancillary Facility and, in the case of a Multi-account Overdraft, its Designated Gross Amount and its Designated Net Amount;
(F)
the proposed currency of the Ancillary Facility (if not denominated in the Base Currency); and
(G)
whether the proposed Ancillary Commitment is to be provided under a Revolving Facility or an Uncommitted Accordion Revolving Facility; and
(ii)
any other information which the Agent may reasonably request in connection with the Ancillary Facility.
(c)
The Agent shall promptly notify the Ancillary Lender and the other Lenders of the establishment of an Ancillary Facility and whether it is established under a Revolving Facility or an Uncommitted Accordion Revolving Facility.
(d)
(i)
No amendment or waiver of a term of any Ancillary Facility shall require the consent of any Finance Party other than the relevant Ancillary Lender unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement (including, for the avoidance of doubt, under this clause). In such a case, the provisions of clause 40 (Amendments and waivers) will apply.
(ii)
The Company shall notify the Agent and provide details of any material amendment or waiver of a term of any Ancillary Facility which does not require the consent of any other Finance Party, no later than 14 days prior to the date of such amendment or waiver.
(e)    Subject to compliance with clause 7.2(b):
(i)
the Lender concerned will become an Ancillary Lender; and
(ii)
the Ancillary Facility will be available,
with effect from the date agreed by the Company and the Ancillary Lender.

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(f)
As at the Fourth Restatement Date, the only Ancillary Facilities provided are under the Revolving Facility.
7.3     Terms of Ancillary Facilities
(a)
Except as provided below, the terms of any Ancillary Facility will be those agreed by the Ancillary Lender and the Company.
(b)    However, those terms:
(i)
must be based upon normal commercial rates and terms at that time (except as varied by this Agreement);
(ii)
may allow only Borrowers (or Affiliates of Borrowers nominated pursuant to clause 7.9) (under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as applicable)) to use the Ancillary Facility;
(iii)
may not allow the Ancillary Outstandings to exceed the Ancillary Commitment;
(iv)
may not allow the Ancillary Commitment of a Lender to exceed the Available Commitment with respect to the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility of that Lender; and
(v)
must require that the Ancillary Commitment is reduced to nil, and that all Ancillary Outstandings are repaid not later than the Termination Date (or such earlier date as the Revolving Facility Commitment or the relevant Uncommitted Accordion Revolving Facility Commitment of the relevant Ancillary Lender (or its Affiliate) is reduced to zero).
(c)
If there is any inconsistency between any term of an Ancillary Facility and any term of this Agreement, this Agreement shall prevail except for (i) clause 37.3 (Day count convention) which shall not prevail for the purposes of calculating fees, interest or commission relating to an Ancillary Facility and (ii) an Ancillary Facility comprising more than one account where the terms of the Ancillary Documents shall prevail to the extent required to permit the netting of balances on those accounts and (iii) where the relevant term of this Agreement would be contrary to, or inconsistent with, the law governing the relevant Ancillary Document, in which case that term of this Agreement shall not prevail.
7.4     Repayment of Ancillary Facility
(a)
An Ancillary Facility shall cease to be available on the Termination Date in relation to the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be) or such earlier date on which its expiry date occurs or on which it is cancelled in accordance with the terms of this Agreement.
(b)
If an Ancillary Facility expires in accordance with its terms the Ancillary Commitment of the Ancillary Lender shall be reduced to zero (and its Revolving Facility Commitment or its relevant Uncommitted Accordion Revolving Facility Commitment (as the case may be) shall be increased accordingly).
(c)
No Ancillary Lender may demand repayment or prepayment of any amounts under its Ancillary Facility unless:
(i)
required to reduce the Gross Outstandings of a Multi-account Overdraft to or towards an amount equal to its Net Outstandings;
(ii)
the Total Revolving Facility Commitments or the relevant Total Uncommitted Accordion Revolving Facility Commitments (as the case may be) have been

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cancelled in full, or all outstanding Loans under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be) have become due and payable in accordance with the terms of this Agreement, or the Agent has declared all outstanding Loans under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be) immediately due and payable in accordance with the terms of this Agreement, or the expiry date of the Ancillary Facility occurs;
(iii)
it becomes unlawful in any applicable jurisdiction for the Ancillary Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in its Ancillary Facility (or it becomes unlawful for any Affiliate of an Ancillary Lender to do so); or
(iv)
the Ancillary Outstandings (if any) under that Ancillary Facility can be refinanced by a Revolving Facility Loan or an Uncommitted Accordion Revolving Facility Loan (as the case may be) and the Ancillary Lender gives sufficient notice to enable a Loan of the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be) to be made to refinance those Ancillary Outstandings in accordance with the terms of this Agreement.
Other than demanding repayment or prepayment, as the case may be, no Ancillary Lender may exercise any other right, remedy and/or power in connection with any amount or liability owed to it by any Borrower under any Ancillary Facility.
(d)
For the purposes of determining whether or not the Ancillary Outstandings under an Ancillary Facility mentioned in clause 7.4(c)(iv) can be refinanced by a Revolving Loan or an Uncommitted Accordion Revolving Facility Loan (as the case may be):
(i)
the Revolving Facility Commitment or the relevant Uncommitted Accordion Revolving Facility Commitment (as the case may be) of that Lender will be increased by the amount of its Ancillary Commitment; and
(ii)
the Loan may (so long as clause 7.4(c)(i) does not apply) be made irrespective of whether a Default is outstanding or any other applicable condition precedent is not satisfied (but only to the extent that the proceeds are applied in refinancing those Ancillary Outstandings) and irrespective of whether clause 4.4 (Maximum number of Loans) or clause 5.2(b) (Completion of a Utilisation Request) applies.
(e)
On the making of a Revolving Facility Loan or the relevant Uncommitted Accordion Revolving Facility Loan (as the case may be) to refinance Ancillary Outstandings:
(i)
each Lender will participate in that Loan in an amount (as determined by the Agent) which will result as nearly as possible in the aggregate amount of its participation in the Revolving Facility Loans or the relevant Uncommitted Accordion Revolving Facility Loans (as the case may be) then outstanding bearing the same proportion to the aggregate amount of the Revolving Facility Loans or the relevant Uncommitted Accordion Revolving Facility Loans (as the case may be) then outstanding as its Commitment bears to the Total Revolving Facility Commitments or the Total Uncommitted Accordion Revolving Facility Commitments (as the case may be); and
(ii)
the relevant Ancillary Facility shall be cancelled.
(f)
In relation to an Ancillary Facility which comprises an overdraft facility where a Designated Net Amount has been established, the Ancillary Lender providing that Ancillary Facility shall only be obliged to take into account for the purposes of calculating compliance with the Designated Net Amount those credit balances which it is permitted to take into account

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by the then current law and regulations in relation to its reporting of exposures to the Financial Services Authority as netted for capital adequacy purposes.
7.5     Ancillary Outstandings
Under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be), each Borrower and each Ancillary Lender agrees with and for the benefit of each Lender that:
(a)
the Ancillary Outstandings under any Ancillary Facility provided by that Ancillary Lender shall not exceed the Ancillary Commitment applicable to that Ancillary Facility; and
(b)
in relation to a Multi-account Overdraft:
(i)
the Ancillary Outstandings shall not exceed the Designated Net Amount applicable to that Multi-account Overdraft; and
(ii)
the Gross Outstandings shall not exceed the Designated Gross Amount applicable to that Multi-account Overdraft.
7.6
Adjustment for Ancillary Facilities upon acceleration
In this clause 7.6:
For avoidance of doubt, all references to an Ancillary Facility are references to the Ancillary Facility provided under the relevant Facility only and Ancillary Facilities are not to be aggregated or adjusted across the Revolving Facility and any Uncommitted Accordion Revolving Facility.
Outstandings means, in relation to a Lender, the aggregate of the equivalent in the Base Currency of (i) its participation in each Utilisation of the Revolving Facility or an Uncommitted Accordion Revolving Facility (as the case may be) then outstanding (together with the aggregate amount of all accrued interest, fees and commission owed to it as a Lender under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility) and (ii) if the Lender is also an Ancillary Lender, the Ancillary Outstandings in respect of Ancillary Facilities provided by that Ancillary Lender (or by its Affiliate) (together with the aggregate amount of all accrued interest, fees and commission owed to it as an Ancillary Lender(or its Affiliate) in respect of the Ancillary Facility) under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be).
Total Outstandings means the aggregate of all Outstandings.
(a)
If a notice is served under clause 27.19 (Acceleration) (other than a notice declaring Utilisations to be due on demand), each Lender and each Ancillary Lender shall promptly adjust by corresponding transfers (to the extent necessary) their claims in respect of amounts outstanding to them under the Revolving Facility and each Uncommitted Accordion Revolving Facility and each Ancillary Facility to ensure that after such transfers the Outstandings of each Lender under the Revolving Facility or the relevant Uncommitted Accordion Revolving Facility (as the case may be) bear the same proportion to the Total Outstandings as such Lender's Revolving Facility Commitment or the relevant Uncommitted Accordion Revolving Facility Commitment (as the case may be) bears to the Total Revolving Facility Commitments or the relevant Total Uncommitted Accordion Revolving Facility Commitments (as the case may be), each as at the date the notice is served under clause 27.19 (Acceleration).
(b)
If an amount outstanding under an Ancillary Facility is a contingent liability and that contingent liability becomes an actual liability or is reduced to zero after the original adjustment is made under paragraph (a) above, then each Lender and Ancillary Lender will make a further adjustment by corresponding transfers (to the extent necessary), to

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put themselves in the position they would have been in had the original adjustment been determined by reference to the actual liability or, as the case may be, zero liability and not the contingent liability.
(c)
Prior to the application of the provisions of paragraph (a) of this clause 7.6, an Ancillary Lender that has provided an overdraft comprising more than one account under an Ancillary Facility shall set-off any liabilities owing to it under such overdraft facility against credit balances on any account comprised in such overdraft facility.
(d)
All calculations to be made pursuant to this clause 7.6 shall be made by the Agent based upon information provided to it by the Lenders and Ancillary Lenders.
7.7     Information
Each Borrower and each Ancillary Lender shall, promptly upon request by the Agent, supply the Agent with any information relating to the operation of an Ancillary Facility (including the Ancillary Outstandings) as the Agent may reasonably request from time to time. Each Borrower consents to all such information being released to the Agent and the other Finance Parties.
7.8     Affiliates of Lenders as Ancillary Lenders
(a)
Subject to the terms of this Agreement, an Affiliate of a Lender may become an Ancillary Lender. In such case, the Lender and its Affiliate shall be treated as a single Lender whose Revolving Facility Commitment is the amount set out opposite the relevant Lender's name in Part 3 - (Original Lenders) of Schedule 1 and/or the amount of any Revolving Facility Commitment transferred to or assumed by that Lender under this Agreement, to the extent (in each case) not cancelled, reduced or transferred by it under this Agreement.
(b)
The Company shall specify any relevant Affiliate of a Lender in any notice delivered by the Company to the Agent pursuant to clause 7.2(b)(i).
(c)
If a Lender assigns all of its rights and benefits or transfers all of its rights and obligations to a New Lender, its Affiliate shall cease to have any obligations under this Agreement or any Ancillary Document.
(d)
Where this Agreement or any other Finance Document imposes an obligation on an Ancillary Lender and the relevant Ancillary Lender is an Affiliate of a Lender which is not a party to that document, the relevant Lender shall ensure that the obligation is performed by its Affiliate.
7.9     Affiliates of Borrowers
(a)
Subject to the terms of this Agreement, an Affiliate of a Borrower may with the approval of the relevant Lender become a borrower with respect to an Ancillary Facility.
(b)
The Company shall specify any relevant Affiliate of a Borrower in any notice delivered by the Company to the Agent pursuant to clause 7.2(b)(i).
(c)
Where this Agreement or any other Finance Document imposes an obligation on a Borrower under an Ancillary Facility and the relevant Borrower is an Affiliate of a Borrower which is not a party to that document, the relevant Borrower shall ensure that the obligation is performed by its Affiliate.
(d)
Any reference in this Agreement or any other Finance Document to a Borrower being under no obligations (whether actual or contingent) as a Borrower under such Finance Document shall be construed to include a reference to any Affiliate of a Borrower being under no obligations under any Finance Document or Ancillary Document.

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7.10
Revolving Facility and Uncommitted Accordion Revolving Facility Commitment amounts
Notwithstanding any other term of this Agreement, each Lender shall ensure that at all times its Revolving Facility Commitment and its Uncommitted Accordion Revolving Facility Commitment is not less than its applicable Ancillary Commitment or the Ancillary Commitment of its Affiliate.
8    Bilateral Facilities
8.1     Type of Facility
A Bilateral Facility may be by way of:
(a)
a foreign exchange facility; or
(b)
any other facility or accommodation required in connection with the business of the Group (other than any facility or accommodation for the purpose of or having the effect of a term loan or a revolving credit facility) and which is agreed by the Company with a Bilateral Lender.
8.2     Availability
(a)
If a Borrower and a Bilateral Lender agree and except as otherwise provided in this Agreement, that Bilateral Lender may provide a Bilateral Facility to that Borrower.
(b)
The aggregate amount of all Bilateral Facilities shall at no time exceed the relevant Bilateral Limit.
(c)
The Company shall promptly notify the Agent of the establishment of a Bilateral Facility.
(d)
No amendment or waiver of a term of a Bilateral Facility shall require the consent of any Finance Party other than the relevant Bilateral Lender unless such amendment or waiver itself relates to or gives rise to a matter which would require an amendment of or under this Agreement (including, for the avoidance of doubt, under this clause). In such a case, the provisions of this Agreement with regard to amendments and waivers will apply.
(e)
The Company shall notify the Agent and provide details of any material amendment or waiver of a term of any Bilateral Facility which does not require the consent of any Finance Party, no later than 14 days prior to the date of such amendment or waiver.
8.3     Information
Each Borrower shall, promptly upon request by the Agent, supply the Agent with any information relating to the terms or operation of a Bilateral Facility as the Agent may reasonably request from time to time. Each Borrower consents to all such information being released to the Agent and the other Finance Parties.
8.4     Permitted Enforcement: Bilateral Lenders
(a)    For the purposes of this clause 8.4:
Bilateral Liabilities means the liabilities owed by a member of the Group to the Bilateral Lenders under the Bilateral Documents.
Enforcement Action means :
(i)    in relation to the Bilateral Liabilities:

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(A)
the acceleration of any Bilateral Liabilities or the making of any declaration that any Bilateral Liabilities are prematurely due and payable (other than as a result of it becoming unlawful for a Bilateral Lender to perform its obligations under, or of any voluntary or mandatory prepayment (or offer to prepay) arising under, the Bilateral Documents at any time when no Event of Default has occurred and is continuing);
(B)
the making of any declaration that any Bilateral Liabilities are payable on demand;
(C)
the making of a demand in relation to a Bilateral Liability that is payable on demand;
(D)
the making of any demand against any member of the Group in relation to any guarantee of that member of the Group;
(E)
the exercise of any right to require any member of the Group to acquire any Bilateral Liability (including exercising any put or call option against any member of the Group for the redemption or purchase of any Bilateral Liability but excluding any mandatory offer to prepay arising under the Bilateral Documents in respect of any Disposal Proceeds or Insurance Proceeds); or
(F)
the suing for, commencing or joining of any legal or arbitration proceedings against any member of the Group to recover any Bilateral Liabilities;
(ii)
the entering into of any composition, compromise, assignment or arrangement with any member of the Group which owes any Bilateral Liabilities, or has given a guarantee or indemnity or other assurance against loss in respect of the Bilateral Liabilities; or
(iii)
the petitioning, applying or voting for, or the taking of any steps (including the appointment of any liquidator, receiver, administrator or similar officer) in relation to, the winding up, dissolution, administration or reorganisation of any member of the Group which owes any Bilateral Liabilities, or has given any guarantee, indemnity or other assurance against loss in respect of any of the Bilateral Liabilities, or any of such member of the Group's assets or any suspension of payments or moratorium of any indebtedness of any such member of the Group, or any analogous procedure or step in any jurisdiction,
except that the following shall not constitute Enforcement Action:
(A)
the taking of any action falling within paragraphs (i)(E) or (iii) above which is necessary (but only to the extent necessary) to preserve the validity, existence or priority of claims in respect of Bilateral Liabilities, including the registration of such claims before any court or governmental authority and the bringing, supporting or joining of proceedings to prevent any loss of the right to bring, support or join proceedings by reason of applicable limitation periods; or
(B)
a Party bringing legal proceedings against any person solely for the purpose of:
(1)
obtaining injunctive relief (or any analogous remedy outside England and Wales) to restrain any actual or putative breach of any Finance Document to which it is party;

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(2)
obtaining specific performance (other than specific performance of an obligation to make a payment) with no claim for damages; or
(3)
requesting judicial interpretation of any provision of any Finance Document to which it is party with no claim for damages.
Insolvency Event means, in relation to any member of the Group:
(i)
any resolution is passed or order made for the winding up, dissolution, administration or reorganisation of that member of the Group, a moratorium is declared in relation to any indebtedness of that member of the Group or an administrator is appointed to that member of the Group;
(ii)
any composition, compromise, assignment or arrangement is made with any of its creditors;
(iii)
the appointment of any liquidator, receiver, administrator, administrative receiver, compulsory manager or other similar officer in respect of that member of the Group or any of its assets; or
(iv)
any analogous procedure or step is taken in any jurisdiction.
(b)
Restriction on Enforcement: Bilateral Lenders
Subject to paragraph (c) below, so long as any of the Facilities (other than the Ancillary Facilities) are or may be outstanding, none of the Bilateral Lenders shall be entitled to take any Enforcement Action in respect of any of Bilateral Liabilities.
(c)
Permitted Enforcement: Bilateral Lenders
Each Bilateral Lender may take Enforcement Action if:
(i)
at the same time as, or prior to, that action, Enforcement Action has been taken in respect of the Facilities (other than the Ancillary Facilities), in which case the Bilateral Lenders may take the same Enforcement Action as has been taken in respect of those Facilities; or
(ii)
at the same time as or prior to, that action, the consent of the Majority Lenders to that Enforcement Action is obtained; or
(iii)
an Insolvency Event has occurred in relation to any member of the Group, in which case after the occurrence of that Insolvency Event, each Bilateral Lender shall be entitled (if it has not already done so) to exercise any right it may otherwise have in respect of that member of the Group to:
(A)
accelerate any of that member of the Group's Bilateral Liabilities or declare them prematurely due and payable on demand;
(B)
make a demand under any guarantee, indemnity or other assurance against loss given by that member of the Group in respect of any Bilateral Liabilities;
(C)
exercise any right of set off or take or receive any payment in respect of any Bilateral Liabilities of that member of the Group; or
(D)
claim and prove in the liquidation of that member of the Group for the Bilateral Liabilities owing to it.

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9    Repayment
9.1     Repayment of Uncommitted Accordion Term Facility Loans
The Borrowers of any Uncommitted Accordion Facility Loan shall repay it in the amount and at the time specified in the relevant Uncommitted Accordion Facility Notice.
9.2     Repayment of Revolving Facility Loans
(a)
Each Borrower which has drawn a Revolving Facility Loan shall repay that Loan on the last day of its Interest Period.
(b)
Without prejudice to each Borrower's obligation under clause 9.2(a) above, if one or more Revolving Facility Loans are to be made available to a Borrower:
(i)
on the same day that a maturing Revolving Facility Loan is due to be repaid by that Borrower;
(ii)
in the same currency as the maturing Revolving Facility Loan (unless it arose as a result of the operation of clause 6.2 (Unavailability of a currency)); and
(iii)
in whole or in part for the purpose of refinancing the maturing Revolving Facility Loan,
the aggregate amount of the new Loans shall be treated as if applied in or towards repayment of the maturing Revolving Facility Loan so that:
(A)
if the amount of the maturing Revolving Facility Loan exceeds the aggregate amount of the new Revolving Facility Loans:
1)
the relevant Borrower will only be required to pay an amount in cash in the relevant currency equal to that excess; and
2)
each Lender's participation (if any) in the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation (if any) in the maturing Revolving Facility Loan and that Lender will not be required to make its participation in the new Revolving Facility Loans available in cash; and
(B)
if the amount of the maturing Revolving Facility Loan is equal to or less than the aggregate amount of the new Revolving Facility Loans:
1)
the relevant Borrower will not be required to make any payment in cash; and
2)
each Lender will be required to make its participation in the new Revolving Facility Loans available in cash only to the extent that its participation (if any) in the new Revolving Facility Loans exceeds that Lender's participation (if any) in the maturing Revolving Facility Loan and the remainder of that Lender's participation in the new Revolving Facility Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation in the maturing Revolving Facility Loan.
9.3     Repayment of Uncommitted Accordion Revolving Facility Loans

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(a)
Each Borrower which has drawn an Uncommitted Accordion Revolving Facility Loan shall repay that Loan on the last day of its Interest Period.
(b)
Without prejudice to each Borrower's obligation under clause 9.3(a) above, if one or more Uncommitted Accordion Revolving Facility Loans are to be made available to a Borrower:
(i)
on the same day that a maturing Uncommitted Accordion Revolving Facility Loan is due to be repaid by that Borrower;
(ii)
in the same currency as the maturing Uncommitted Accordion Revolving Facility Loan (unless it arose as a result of the operation of clause 6.2 (Unavailability of a currency)); and
(iii)
in whole or in part for the purpose of refinancing the maturing Uncommitted Accordion Revolving Facility Loan,
the aggregate amount of the new Loans shall be treated as if applied in or towards repayment of the maturing Uncommitted Accordion Revolving Facility Loan so that:
(A)
if the amount of the maturing Uncommitted Accordion Revolving Facility Loan exceeds the aggregate amount of the new Uncommitted Accordion Revolving Facility Loans:
1)
the relevant Borrower will only be required to pay an amount in cash in the relevant currency equal to that excess; and
2)
each Lender's participation (if any) in the new Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation (if any) in the maturing Uncommitted Accordion Revolving Facility Loan and that Lender will not be required to make its participation in the new Uncommitted Accordion Revolving Facility Loans available in cash; and
(B)
if the amount of the maturing Uncommitted Accordion Revolving Facility Loan is equal to or less than the aggregate amount of the new Uncommitted Accordion Revolving Facility Loans:
1)
the relevant Borrower will not be required to make any payment in cash; and
2)
each Lender will be required to make its participation in the new Uncommitted Accordion Revolving Facility Loans available in cash only to the extent that its participation (if any) in the new Uncommitted Accordion Revolving Facility Loans exceeds that Lender's participation (if any) in the maturing Uncommitted Accordion Revolving Facility Loans and the remainder of that Lender's participation in the new Uncommitted Accordion Revolving Facility Loans shall be treated as having been made available and applied by the Borrower in or towards repayment of that Lender's participation in the maturing Uncommitted Accordion Revolving Facility Loan.
9.4     Effect of cancellation and prepayment on scheduled repayments and reductions

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If any Loans under an amortising Uncommitted Accordion Term Facility are prepaid in accordance with clause 10.1 (Illegality), clause 10.6 (Right of cancellation and repayment in relation to a single Lender) or clause 11.2 (Disposal and Insurance), then the amount of the Repayment Instalment for each Repayment Date falling after that prepayment will reduce pro rata by the amount of the Uncommitted Accordion Term Facility Loan prepaid unless otherwise agreed in the relevant Uncommitted Accordion Facility Commitment Notice.
10    Illegality, voluntary prepayment and cancellation
10.1     Illegality
If it becomes unlawful in any applicable jurisdiction for a Lender to perform any of its obligations as contemplated by this Agreement or to fund, issue or maintain its participation in any Loan (or it becomes unlawful for any Affiliate of a Lender to do so):
(a)
that Lender, shall promptly notify the Agent upon becoming aware of that event;
(b)
upon the Agent notifying the Company, the Available Commitment of that Lender will be immediately cancelled; and
(c)
to the extent that the Lender's participation has not been transferred pursuant to clause 40.6 (Replacement of Lender):
(i)
each Borrower shall repay that Lender's participation in the Loans made to that Borrower on the last day of the then current Interest Period for each Loan occurring after the Agent has notified the Company or, if earlier, the date specified by the Lender in the notice delivered to the Agent (being no earlier than the last day of any applicable grace period permitted by law) and that Lender's corresponding Commitment shall be cancelled in the amount of the participations repaid; and
(ii)
to the extent that Lender (or any Affiliate of that Lender) has entered into any Treasury Transaction in relation to its corresponding Commitment, that Lender (or any Affiliate of that Lender) shall be entitled to terminate such Treasury Transaction.
10.2     Mandatory cancellation
All Available Commitments under a Facility shall automatically be cancelled at the end of the Availability Period in respect of that Facility.
10.3     Voluntary cancellation
(a)
Subject to clause 10.3(b), the Company may, if it gives the Agent not less than 3 Business Days' (or such shorter period as the Majority Lenders may agree) prior written notice, cancel the whole or any part (being a minimum amount of $2,000,000, £1,500,000 or €2,000,000 (or its equivalent in any currency) and a multiple of $500,000 (or its equivalent in any currency)) of an Available Facility. Any cancellation under this clause 10.3 shall reduce the Commitments of the Lenders rateably under the relevant Facility.
(b)
The Company shall not cancel any part of the Available Commitment with respect to the Revolving Facility unless it cancels a pro rata amount of the Available Commitment for any Uncommitted Accordion Revolving Facility and the Company shall not cancel any part of the Available Commitment with respect to any Uncommitted Accordion Revolving Facility unless it cancels a pro rata amount of the Available Commitment for each other Uncommitted Accordion Revolving Facility and the Revolving Facility.
10.4     Voluntary prepayment of Uncommitted Accordion Term Facility Loans

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A Borrower may, if it gives the Agent not less than 3 Business Days (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part of an Uncommitted Accordion Term Facility Loan (but, if in part, being an amount that reduces the Base Currency Amount of the Uncommitted Accordion Facility Loan by a minimum amount of $500,000 (or its equivalent in any currency) and a multiple of $100,000 (or its equivalent in any currency)). In respect of any amortising Uncommitted Accordion Term Facility, prepayments which are made under this clause 10.4 shall be applied to reduce pro rata the relevant Repayment Instalments, unless otherwise agreed in the relevant Uncommitted Accordion Facility Commitment Notice.
10.5
Voluntary prepayment of Revolving Facility Loans and Uncommitted Accordion Revolving Facility Loans
A Borrower to which a Revolving Facility Loan or Uncommitted Accordion Revolving Facility Loan has been made may, if it or the Company gives the Agent not less than 3 Business Days' (or such shorter period as the Majority Lenders may agree) prior written notice, prepay the whole or any part of a Revolving Facility Loan or Uncommitted Accordion Revolving Facility Loan (but if in part, being a minimum amount of $2,000,000 (or its equivalent in any currency) and a multiple of $250,000 (or its equivalent in any currency)).
10.6     Right of cancellation and repayment in relation to a single Lender
(a)    If:
(i)
any sum payable to any Lender by an Obligor is required to be increased under clause 17.2(c) (Tax gross-up); or
(ii)
any Lender claims indemnification from an Obligor under clause 17.3 (Tax indemnity) or clause 18.1 (Increased costs),
the Company may, whilst the circumstance giving rise to the requirement for that increase or indemnification continues give the Agent notice of cancellation of the Commitment of that Lender and its intention to procure the repayment of that Lender's participation in the Loans.
(b)
On receipt of a notice referred to in clause 10.6(a) in relation to a Lender, the Commitment of that Lender shall immediately be reduced to zero.
(c)
On the last day of each Interest Period which ends after the Company has given notice under clause 10.6(a) in relation to a Lender (or, if earlier, the date specified by the Company in that notice), each Borrower to which a Loan is outstanding shall repay that Lender's participation in that Loan together with all interest and other amounts accrued under the Finance Documents.
10.7     Right of cancellation in relation to a Defaulting Lender
(a)
If any Lender becomes a Defaulting Lender, the Company may, at any time whilst the Lender continues to be a Defaulting Lender, give the Agent 10 Business Days' notice of cancellation of each Available Commitment of that Lender.
(b)
On the notice referred to in clause 10.7(a) above becoming effective, each Available Commitment of the Defaulting Lender shall immediately be reduced to zero.
(c)
The Agent shall as soon as practicable after receipt of a notice referred to in clause 10.7(a) above, notify all the Lenders.
10.8      Cash cover

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To the extent that, under the terms of this Agreement, an Obligor is obliged to provide cash cover in respect of the Ancillary Facilities, it shall only be entitled to withdraw that cash cover if:
(a)
the Company delivers to the Agent a duly completed Withdrawal Request not later than 11am 14 days before the proposed date of withdrawal;
(b)
no Default is continuing; and
(c)
the amount so withdrawn is applied in immediate prepayment of the Ancillary Facilities.
11    Mandatory prepayment
11.1     Exit :
Upon the occurrence of:
(a)
a Change of Control; or
(b)
the sale of all or substantially all of the assets of the Group whether in a single transaction or a series of related transactions,
the Facilities will be cancelled and all outstanding Loans and Ancillary Outstandings, together with accrued interest, and all other amounts accrued under the Finance Documents, shall become immediately due and payable.
11.2     Disposal and Insurance
(a)    For the purposes of this clause 11.2:
Disposal means a sale, lease or licence (other than an occupational rack rent lease or licence), transfer, loan or other disposal by a person of any asset, undertaking or business (whether by a voluntary or involuntary single transaction or series of transactions).
Disposal Proceeds means Net Cash Proceeds for any Disposal made by any member of the Group except for Excluded Disposal Proceeds.
Excluded Disposal Proceeds means the proceeds of a Disposal from a Permitted Disposal.
Excluded Insurance Proceeds means any proceeds of an insurance claim:
(i)    which the Company notifies the Agent are, or are to be, applied:
(A)
to meet a third party claim;
(B)
to cover operating losses in respect of which the relevant insurance claim was made;
(C)
to the replacement, reinstatement and/or repair of the assets or otherwise in amelioration of the loss in respect of which the relevant insurance claim was made; or
(D)
by an Obligor to purchase assets useful to the business of the Obligors,
in each case as soon as reasonably practicable after receipt; or
(ii)    received prior to the Fourth Restatement Date and those which when aggregated together with the proceeds of all other insurance claims (excluding those referred to in (i)(A), (B) and (C) of this definition) received after the Fourth Restatement Date do

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not exceed $16,500,000 (or its equivalent) during the remaining term of this Agreement.
Insurance Proceeds means proceeds of any insurance claim under any insurance maintained by any member of the Group except for Excluded Insurance Proceeds and after deducting any reasonable expenses in relation to that claim which are incurred by any member of the Group to persons who are not members of the Group.
Net Cash Proceeds means the cash proceeds received by a member of the Group (and if the recipient is not a wholly-owned subsidiary of a member of the Group, the cash proceeds received by a member of the Group proportionate to the interest held by the Group in the recipient) of any Disposal after deducting:
(i)
fees costs and expenses properly incurred by any member of the Group with respect to that Disposal to persons who are not members of the Group (including without limitation bonus payments to management of the disposed business);
(ii)
any Tax incurred and required to be paid by the seller in connection with that Disposal (as reasonably determined by the seller) or the transfer of the proceeds thereof intra-Group;
(iii)
amounts reasonably retained to cover anticipated liabilities in connection with any Disposal provided such amounts are approved by the Majority Lenders (acting reasonably); and
(iv)
out-of-pocket costs of closure, relocation, reorganisation and restructuring and out-of-pocket costs incurred preparing the asset for any Disposal, in each case, approved by the Majority Lenders (acting reasonably).
(b)    The Company shall ensure (unless the Agent agrees in writing otherwise) that the Borrowers cancel Commitments and prepay Loans in the following amounts at the times and in the order of application contemplated by clause 11.3(a):
(i)
in respect of Disposal Proceeds, subject to clauses 11.2(c)(ii) to 11.2(f) (inclusive), in an amount so that the aggregate amount of such proceeds is applied on a pro rata and pari passu basis between the principal amount outstanding under the Loans, the principal amount outstanding under the Notes outstanding under the Note Documents and the principal amount outstanding under the notes outstanding under the Shelf Facility; and
(ii)
in respect of Insurance Proceeds, in an amount so that the aggregate amount of such proceeds is applied on a pro rata and pari passu basis between the principal amount outstanding under the Loans, the principal amount outstanding under the Notes outstanding under the Note Documents and the principal amount outstanding under the notes outstanding under the Shelf Facility.
(c)    The Company shall ensure that Disposal Proceeds (or an equivalent amount) are         either:
(i)
applied in accordance with clause 11.2(b) (Disposal and Insurance); or
(ii)
subject to clause 11.2(f), if Leverage (as at the Relevant Period immediately prior to the date of such Disposal) does not exceed 2.5:1.0 and the Majority Lenders have given their written prior consent, retained by the Company provided that:
(A)
within the 18 month period from the date of receipt of the Disposal Proceeds ( Retention Period ), such Disposal Proceeds are applied to

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purchase (or otherwise reinvest into) assets (other than shares) comparable or superior as to type, value or quality in replacement or substitution of assets to which the Disposal Proceeds relate, towards Permitted Acquisitions, Permitted Joint Ventures or the capital expenditure of the Group to the extent permitted under this Agreement; or
(B)
prior to the end of applicable Retention Period:
1)
such Disposal Proceeds are contractually committed to be applied; or
2)
subject to Majority Lender consent (acting reasonably), such Disposal Proceeds are designated by the board of directors of the Company to be applied,
and such Disposal Proceeds are so applied within 12 months of the end of the applicable Retention Period to purchase (or otherwise reinvest into) assets (other than shares) comparable or superior as to type, value or quality in replacement or substitution of assets to which the Disposal Proceeds relate, towards Permitted Acquisitions, Permitted Joint Ventures or the capital expenditure of the Group to the extent permitted under this Agreement.
(d)    Any Disposal Proceeds:
(i)
not so applied within the relevant Retention Period pursuant to clause 11.2(c)(ii)(A); or
(ii)
not so applied within 12 months of the end of the relevant Retention Period pursuant to clause 11.2(c)(ii)(B),
shall be applied by the Company in accordance with clause 11.2(b) (Disposal and Insurance).
(e)    The Company shall:
(i)
promptly notify the Agent of any change or termination of any contractual commitments or designations by the board of directors of the Company in respect of such Disposal Proceeds after the end of the applicable Retention Period; and
(ii)
any such Disposal Proceeds retained by the Company after the Retention Period which exceed the relevant contractual commitments or designations by the board of directors of the Company shall be applied in accordance with clause 11.2(b) (Disposal and Insurance).
(f)
If a Mandatory Prepayment Default is continuing, the Company shall ensure a sum equal to any Disposal Proceeds not applied to purchase (or otherwise reinvest into) assets (other than shares) comparable or superior as to type, value or quality in replacement or substitution of assets to which the Disposal Proceeds relate, towards Permitted Acquisitions, Permitted Joint Ventures or the capital expenditure of the Group to the extent permitted pursuant to this Agreement pursuant to clause 11.2(c)(ii)(A) or clause 11.2(c)(ii)(B) are, within 2 Business Days of the Agent's request, applied in mandatory prepayment in accordance with clause 11.2(b) (Disposal and Insurance).
11.3     Application

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(a)
A prepayment and/or cancellation made under clause 11.2 shall be applied in the following order:
(i)
first in prepayment of any Uncommitted Accordion Term Facility Loans as contemplated in clause 11.3(b);
(ii)
second in pro rata cancellation of the Available Commitments under the Uncommitted Accordion Term Facilities (and the Available Commitment of the Lenders under the Uncommitted Accordion Term Facilities will be cancelled rateably);
(iii)
third, in pro rata prepayment of Revolving Facility Loans and any Uncommitted Accordion Revolving Facility Loans and pro rata cancellation of such Revolving Facility Commitments and the Uncommitted Accordion Revolving Facility Commitments; and
(iv)
fourth, in pro rata prepayment and cancellation of the Ancillary Outstandings provided under the Revolving Facility and any Uncommitted Accordion Revolving Facility and pro rata cancellation of Ancillary Commitments provided under the Revolving Facility and any Uncommitted Accordion Revolving Facility.
(b)
A prepayment made under clause 11.2 shall prepay the Uncommitted Accordion Term Facility Loans as follows:
(i)
in prepayment of such Uncommitted Accordion Term Facility Loans pro rata: and
(ii)
if applicable, in reducing the relevant Repayment Instalment for each Repayment Date falling after the date of prepayment in the manner contemplated by clause 9.4 (Effect of cancellation and prepayment on scheduled repayments and reductions).
(c)
A prepayment relating to the amounts of Disposal Proceeds or Insurance Proceeds made under clause 11.2 shall be made promptly upon receipt of those proceeds.
12    Restrictions
12.1     Notices of Cancellation or Prepayment
Any notice of cancellation, prepayment, authorisation or other election given by any Party under clause 10 (Illegality, voluntary prepayment and cancellation) or clause 11 (Mandatory prepayment) shall (subject to the terms of those clauses) be irrevocable and, unless a contrary indication appears in this Agreement, shall specify the date or dates upon which the relevant cancellation or prepayment is to be made and the amount of that cancellation or prepayment.
12.2     Interest and other amounts
Any prepayment under this Agreement shall be made together with accrued interest on the amount prepaid and, subject to any Break Costs, without premium or penalty.
12.3      Reborrowing of the Revolving Facility and Uncommitted Accordion Revolving Facility
Unless a contrary indication appears in this Agreement, any part of the Revolving Facility and Uncommitted Accordion Revolving Facility which is prepaid or repaid may be reborrowed in accordance with the terms of this Agreement.
12.4      No reborrowing of Uncommitted Accordion Term Loan Facility

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Any part of an Uncommitted Accordion Term Loan Facility which is prepaid or repaid may be available to be reborrowed in accordance with clause 2.3 (Uncommitted Accordion Facility Commitments), but for avoidance of doubt does not remain available to be redrawn under the relevant Uncommitted Accordion Term Loan Facility.
12.5      Prepayment in accordance with Agreement
Subject to clause 2.2 (Increase), no Borrower shall repay or prepay all or any part of the Loans or cancel all or any part of the Commitments except at the times and in the manner expressly provided for in this Agreement. Any prepayment of all or any part of the Loans shall be applied pro rata to each Lender's participation in that Loan.
12.6      No reinstatement of Commitments
Subject to clause 2.2 (Increase), no amount of the Total Commitments cancelled under this Agreement may be subsequently reinstated.
12.7      Agent's receipt of Notices
If the Agent receives a notice or election under clause 10 (Illegality, voluntary prepayment and cancellation) or clause 11 (Mandatory prepayment) it shall promptly forward a copy of that notice or election to either the Company or the affected Lender, as appropriate.
12.8      Effect of Repayment and Prepayment on Commitments
If all or part of a Utilisation under a Facility is repaid or prepaid and is not available for redrawing (other than by operation of clause 4.2 (Further conditions precedent), an amount of the Commitments (equal to the Base Currency Amount of the amount of the Utilisation which is repaid or prepaid) in respect of that Facility will be deemed to be cancelled on the date of repayment or prepayment. Any cancellation under this clause 12.8 shall reduce the Commitments of the Lenders rateably under that Facility and any prepayment of a Utilisation under this clause 12.8 shall be applied pro rata to each Lender's participation in that Utilisation.
13    Interest
13.1     Calculation of interest
The rate of interest on each Loan for each Interest Period is the percentage rate per annum which is the aggregate of the applicable:
(a)
Margin; and
(b)
LIBOR or, in relation to any Loan in euro, EURIBOR.
13.2     Payment of interest
The Borrower to which a Loan has been made shall pay accrued interest on that Loan on the last day of each Interest Period (and, if the Interest Period is longer than 6 Months, on the dates falling at 6 Monthly intervals after the first day of the Interest Period).
13.3     Default interest
(a)
If an Obligor fails to pay any amount payable by it under a Finance Document on its due date, interest shall accrue on the overdue amount from the due date up to the date of actual payment (both before and after judgment) at a rate which, subject to clause 13.3(b), is 2% higher than the rate which would have been payable if the overdue amount had, during the period of non-payment, constituted a Loan in the currency of the overdue amount for successive Interest Periods, each of a duration selected by the Agent (acting

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reasonably). Any interest accruing under this clause 13.3 shall be immediately payable by the Obligor on demand by the Agent.
(b)
If any overdue amount consists of all or part of a Loan which became due on a day which was not the last day of an Interest Period relating to that Loan:
(i)
the first Interest Period for that overdue amount shall have a duration equal to the unexpired portion of the current Interest Period relating to that Loan; and
(ii)
the rate of interest applying to the overdue amount during that first Interest Period shall be 2% higher than the rate which would have applied if the overdue amount had not become due.
(c)
Default interest (if unpaid) arising on an overdue amount will be compounded with the overdue amount at the end of each Interest Period applicable to that overdue amount but will remain immediately due and payable.
13.4     Notification of rates of interest
The Agent shall promptly notify the Lenders and the relevant Borrower (or the Company on its behalf) of the determination of a rate of interest under this Agreement.
14    Interest Periods
14.1     Selection of Interest Periods and terms
(a)
A Borrower (or the Company on its behalf) may select an Interest Period for a Loan in the Utilisation Request for that Loan or (if the Loan is an Uncommitted Accordion Term Facility Loan and has already been borrowed) in a Selection Notice.
(b)
Each Selection Notice for an Uncommitted Accordion Term Facility Loan is irrevocable and must be delivered to the Agent by a Borrower not later than the Specified Time.
(c)
If a Borrower fails to deliver a Selection Notice to the Agent in accordance with clause 14.1(b), the relevant Interest Period will be 3 Months.
(d)
Subject to this clause 14, the Borrower (or the Company on its behalf) may select an Interest Period of 1, 2, 3 or 6 Months or any other period agreed between the Agent (acting on the instructions of all the Lenders in relation to the relevant Loan) and the Company. In addition a Borrower (or the Company on its behalf) may select an Interest Period of (in relation to an Uncommitted Accordion Term Facility which is an amortising facility) a period of less than three Months, if necessary to ensure that there are Uncommitted Accordion Term Facility Loans (with an aggregate Base Currency Amount equal to the Repayment Instalment) which have an Interest Period ending on a Repayment Date relating to the relevant Facility for the Borrowers to make the Repayment Instalment due on that date.
(e)
No Interest Period for a Loan shall extend beyond the Termination Date applicable to its Facility.
(f)
Each Interest Period for an Uncommitted Accordion Facility Loan shall start on the Utilisation Date or (if already made) on the last day of its preceding Interest Period.
(g)
A Revolving Facility Loan or Uncommitted Accordion Revolving Facility Loan has 1 Interest Period only.
14.2     Changes to Interest Periods

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(a)
Prior to determining the interest rate for an Uncommitted Accordion Term Facility Loan which is an amortising Loan, the Agent may shorten an Interest Period for any such Uncommitted Accordion Term Facility Loan to ensure there are sufficient such Uncommitted Accordion Term Facility Loans (with an aggregate Base Currency Amount equal to or greater than the relevant Repayment Instalment) which have an Interest Period ending on a Repayment Date for the Borrowers to make the relevant Repayment Instalment due on that date.
(b)
If the Agent makes any of the changes to an Interest Period referred to in this clause 14.2 it shall promptly notify the Company and the Lenders.
14.3     Non-Business Days
If an Interest Period would otherwise end on a day which is not a Business Day, that Interest Period will instead end on the next Business Day in that calendar month (if there is one) or the preceding Business Day (if there is not).
14.4     Canadian Interest Provisions
(a)
This clause 14.4 (relates only to the Canadian Obligors and the amounts payable thereby (or by any of them) pursuant to the terms hereof and of the other Finance Documents.
(b)
For the purposes of the Interest Act (Canada) and any other applicable laws which may hereafter regulate the calculation or computation of interest on borrowed funds and disclosure thereunder, whenever any interest or any fee to be paid hereunder or in connection herewith is to be calculated on the basis of a 360-day or 365-day year, the yearly rate of interest to which the rate used in such calculation is equivalent is the rate so used multiplied by the actual number of days in the calendar year in which the same is to be ascertained and divided by 360 or 365, as applicable. The rates of interest under this Agreement are nominal rates, and not effective rates or yields. The principle of deemed reinvestment of interest does not apply to any interest calculation under this Agreement.
(c)
Any provision of this Agreement or any other Finance Document that would oblige a Canadian Obligor to pay any fine, penalty or rate of interest on any arrears of principal or interest secured by a mortgage on real property or hypothec on immovables that has the effect of increasing the charge on arrears beyond the rate of interest payable on principal money not in arrears shall not apply to such Canadian Obligor, which shall be required to pay interest on money in arrears at the same rate of interest payable on principal money not in arrears.
(d)
If any provision of this Agreement or any other Finance Document would oblige a Canadian Obligor to make any payment of interest or other amount payable in an amount or calculated at a rate which would be prohibited by any applicable law or would result in a receipt by a Lender of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable law or so result in a receipt by that Lender of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows:
(i)
first, by reducing the amount or rate of interest required to be paid to the affected Lender; and
(ii)
thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid to the affected Lender which would constitute interest for purposes of section 347 of the Criminal Code (Canada).

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It is further agreed that any excess actually received by a Lender shall be credited against the Canadian Obligor's obligations.
15    Changes to the calculation of interest
15.1     Margin adjustment
(a)    If:
(i)
no Default is continuing; and
(ii)
Leverage in respect of the most recently completed Relevant Period (as evidenced by the last Compliance Certificate) is within the range set out below,
then the Margin for each Revolving Facility Loan will be the percentage per annum set out below in the column opposite that range:
Leverage
Margin % p.a.
Greater than 3.0:1.0
2.90
Less than or equal to 3.0:1.0, but greater than 2.5:1.0
2.50
Less than or equal to 2.5:1.0, but greater than 2.0:1.0
2.25
Less than or equal to 2.0:1.0 but greater than 1.5:1.0
2.00
Less than or equal to 1.5:1.0 but greater than 1.0:1.0
1.75
Less than or equal to 1.0:1.0
1.50

(b)
(i)
Any increase or decrease in the Margin shall take effect on the date which is the first day of the Interest Period for each Revolving Facility Loan.
(ii)
If, following receipt by the Agent of the Annual Financial Statements of the Group and related Compliance Certificate, those statements and Compliance Certificate do not confirm the basis for a reduced Margin, then the provisions of clause 13.2 (Payment of interest) shall apply and the Margin for each Revolving Facility Loan shall be the percentage per annum determined in accordance with clause 15.1(a) and the revised ratio of Leverage calculated using the figures in the Compliance Certificate and the Company shall (or shall ensure the relevant Borrower shall) promptly pay to the Agent any amounts necessary to put the Lenders in the position they would have been in had the reduced Margin not have been applied during such period.
(iii)
While a Default is continuing unremedied and unwaived, the Margin for each Revolving Facility Loan shall be the highest percentage per annum set out in clause 15.1(a) for a Revolving Facility Loan.
15.2     Unavailability of Screen Rate
(a)
Interpolated Screen Rate: If no Screen Rate is available for LIBOR or, if applicable, EURIBOR for the Interest Period of a Loan, the applicable LIBOR or EURIBOR shall be the Interpolated Screen Rate for a period equal in length to the Interest Period of that Loan.
(b)
Base Reference Bank Rate: If no Screen Rate is available for LIBOR or, if applicable, EURIBOR for:

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(i)
the currency of a Loan; or
(ii)
the Interest Period of a Loan and it is not possible to calculate the Interpolated Screen Rate,
the applicable LIBOR or EURIBOR shall be the Base Reference Bank Rate as of the Specified Time for the currency of that Loan and for a period equal in length to the Interest Period of that Loan.
(c)
Cost of funds: If clause 15.2(b) applies but no Base Reference Bank Rate is available for the relevant currency or Interest Period there shall be no LIBOR or EURIBOR for that Loan and clause 15.5 shall apply to that Loan for that Interest Period.
15.3      Calculation of Base Reference Bank Rate
(a)
Subject to clause 15.3(b), if LIBOR or EURIBOR is to be determined on the basis of a Base Reference Bank Rate but a Base Reference Bank does not supply a quotation by the Specified Time, the Base Reference Bank Rate shall be calculated on the basis of the quotations of the remaining Base Reference Banks.
(b)
If at or about noon on the Quotation Day, none or only one of the Base Reference Banks supplies a quotation, there shall be no Base Reference Bank Rate for the relevant Interest Period.
15.4     Market disruption
If before close of business in London on the Quotation Day for the relevant Interest Period, the Agent receives notifications from a Lender or Lenders (whose participations in a Loan exceed 35% of that Loan) that the cost to it of funding its participation in that Loan from whatever source it may reasonably select would be in excess of LIBOR or, if applicable, EURIBOR then clause 15.5 shall apply to that Loan for the relevant Interest Period.
15.5      Cost of funds
(a)
If this clause 15.5 applies, the rate of interest on each Lender's share of the relevant Loan for the relevant Interest Period shall be the percentage rate per annum which is the sum of:
(i)
the Margin; and
(ii)
the rate notified to the Agent by that Lender as soon as practicable and in any event by close of business on the date falling 2 Business Days after the Quotation Day (or, if earlier, on the date falling 2 Business Days before the date on which interest is due to be paid in respect of that Interest Period), to be that which expresses as a percentage rate per annum the cost to the relevant Lender of funding its participation in that Loan from whatever source it may reasonably select.
(b)
If this clause 15.5 applies and the Agent or the Company so requires, the Agent and the Company shall enter into negotiations (for a period of not more than 30 days) with a view to agreeing a substitute basis for determining the rate of interest.
(c)
Any alternative basis agreed pursuant to clause 15.5(b) shall, with the prior consent of all the Lenders and the Company, be binding on all Parties.
(d)    If this clause 15.5 applies pursuant to clause 15.4 and:

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(i)
a Lender's Funding Rate is less than LIBOR or, in relation to any Loan in euro, EURIBOR; or
(ii)
a Lender does not supply a quotation by the time specified in clause 15.5(a)(ii),
the cost to that Lender of funding its participation in that Loan for that Interest Period shall be deemed, for the purposes of clause 15.5(a), to be LIBOR or, in relation to a Loan in euro, EURIBOR.
(e)
If this clause 15.5 applies pursuant to clause 15.2 but any Lender does not supply a quotation by the time specified in clause 15.5(a)(ii) the rate of interest shall be calculated on the basis of the quotations of the remaining Lenders.
15.6     Notification to Company
If clause 15.5 applies the Agent shall, as soon as is practicable, notify the Company.
15.7      Break Costs
(a)
Each Borrower shall, within three Business Days of demand by a Finance Party, pay to that Finance Party its Break Costs attributable to all or any part of a Loan or Unpaid Sum being paid by that Borrower on a day other than the last day of an Interest Period for that Loan or Unpaid Sum.
(b)
Each Lender shall, as soon as reasonably practicable after a demand by the Agent, provide a certificate confirming the amount of its Break Costs for any Interest Period in which they accrue.
16    Fees
16.1      Commitment fee
(a)
The Company shall pay to the Agent (for the account of each Lender) a fee in the Base Currency computed at the rate of 35% of the applicable Margin on that Lender's Available Commitment under the Revolving Facility for the Availability Period.
(b)
The accrued commitment fee is payable on the last day of each successive period of 3 Months which ends during the Availability Period, on the Fourth Restatement Date, on the last day of the Availability Period and on the cancelled amount of the relevant Lender's Available Commitment at the time the cancellation is effective.
16.2     Participation fee
The Company shall pay to the Original Lenders a participation fee in the amount and at the times agreed in a Fee Letter.
16.3      Agency fee
The Company shall pay to the Agent (for its own account) an agency fee in the amount and at the times agreed in a Fee Letter.
16.4     Interest, commission and fees on Ancillary Facilities
The rate and time of payment of interest, commission, fees and any other remuneration in respect of each Ancillary Facility shall be determined by agreement between the relevant Ancillary Lender and the Borrower of that Ancillary Facility based upon normal market rates and terms.

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16.5     Interest, commission and fees on Bilateral Facilities
The rate and time of payment of interest, commission, fees and any other remuneration in respect of each Bilateral Facility shall be determined by agreement between the relevant Bilateral Lender and the Borrower of that Bilateral Facility based upon normal market rates and terms.
17    Tax gross up and indemnities
17.1     Definitions
In this Agreement:
FATCA means Sections 1471 through 1474 of the Internal Revenue Code, and any regulations thereunder and official interpretations thereof.
Non-US Finance Party means a Finance Party that is not a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code.
Protected Party means a Finance Party which is or will be subject to any liability or required to make any payment for or on account of Tax in relation to a sum received or receivable or accruing (or any sum deemed for the purposes of Tax to be received or receivable or accruing) under a Finance Document.
Qualifying Lender means:
(i)
a Lender (other than a Lender within (ii) below) which is beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document and is:
(A)    a Lender:
(1)
which is a bank (as defined for the purpose of section 879 of ITA) making an advance under a Finance Document; or
(2)
in respect of an advance made under a Finance Document by a person that was a bank (as defined for the purpose of section 879 of ITA) at the time that that advance was made,
and which is within the charge to United Kingdom corporation tax as respects any payments of interest made in respect of that advance;
(B)    a Lender which is:
(1)    a company resident in the United Kingdom for United Kingdom tax purposes;
(2)    a partnership each member of which is:
(a)
a company so resident in the United Kingdom; or
(b)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA;
(3)    a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and

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which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company; or
(C)    a Treaty Lender; or
(ii)    a building society (as defined for the purposes of section 880 of the ITA) making an advance under a Finance Document.
Tax Confirmation means a confirmation by a Lender that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:
(a)    a company resident in the United Kingdom for United Kingdom tax purposes;
(b)    a partnership each member of which is:
(i)
a company so resident in the United Kingdom; or
(ii)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(c)    a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.
Tax Credit means a credit against, relief or remission for, or repayment of, any Tax.
Tax Deduction means a deduction or withholding for or on account of Tax from a payment under a Finance Document.
Tax Payment means either the increase in a payment made by an Obligor to a Finance Party under clause 17.2 or a payment under clause 17.3.
Treaty Lender means a Lender which:
(a)
is treated as a resident of a Treaty State for the purposes of the Treaty;
(b)
does not carry on a business in the United Kingdom through a permanent establishment with which that Lender's participation in the Loan is effectively connected; and
(c)
fulfils any other conditions that must be fulfilled under the relevant Treaty by residents of that Treaty State for such residents to obtain exemption from taxation of interest imposed by the United Kingdom, assuming for these purposes that all relevant procedural steps and formalities have been duly completed.
Treaty State means a jurisdiction having a double taxation agreement (Treaty) with the United Kingdom which makes provision for full exemption from tax imposed by the United Kingdom on interest.
UK Non-Bank Lender means a Lender which gives a Tax Confirmation in the Assignment Agreement or Transfer Certificate which it executes on becoming a Party.

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Unless a contrary indication appears, in this clause 17 a reference to determines or determined means a determination made in the absolute discretion of the person making the determination, acting in good faith.
17.2      Tax gross-up
(a)
Each Obligor shall make all payments to be made by it without any Tax Deduction, unless a Tax Deduction is required by law.
(b)
The Company shall promptly upon becoming aware that an Obligor must make a Tax Deduction (or that there is any change in the rate or the basis of a Tax Deduction) notify the Agent accordingly. Similarly, a Lender shall notify the Agent on becoming so aware in respect of a payment payable to that Lender. If the Agent receives such notification from a Lender it shall notify the Company and that Obligor.
(c)
If a Tax Deduction is required by law to be made by an Obligor, the amount of the payment due from that Obligor shall be increased to an amount which (after making any Tax Deduction) leaves an amount equal to the payment which would have been due if no Tax Deduction had been required.
(d)
A payment shall not be increased under clause 17.2(c) by reason of a Tax Deduction on account of Tax imposed by the United Kingdom from a payment of interest on a Loan, or an amount treated as interest on a loan for Tax purposes, if on the date on which the payment falls due:
(i)
the payment could have been made to the relevant Lender without a Tax Deduction if the Lender had been a Qualifying Lender, but on that date that Lender is not or has ceased to be a Qualifying Lender other than as a result of any change after the date it became a Lender under this Agreement in (or in the interpretation, administration, or application of) any law or Treaty, or any published practice or published concession of any relevant taxing authority;
(ii)
the relevant Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the definition of Qualifying Lender and:
(A)
an officer of HM Revenue & Customs has given (and not revoked) a direction (Direction) under section 931 of ITA which relates to that payment and that Lender has received from the Obligor making the payment or from the Company a certified copy of that Direction; and
(B)
the payment could have been made to the Lender without any Tax Deduction if that Direction had not been made;
(iii)
the relevant Lender is a Qualifying Lender solely by virtue of paragraph (i)(B) of the definition of Qualifying Lender and:
(A)
the relevant Lender has not given a Tax Confirmation to the Company; and
(B)
the payment could have been made to the Lender without any Tax Deduction if the Lender had given a Tax Confirmation to the Company, on the basis that the Tax Confirmation would have enabled the Company to have formed a reasonable belief that the payment was an "excepted payment" for the purpose of section 930 of the ITA;
(iv)
the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender complied with its obligations under clause 17.2(g); or

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(v)
the relevant Lender is a Treaty Lender and the Obligor making the payment is able to demonstrate that the payment could have been made to the Lender without the Tax Deduction had that Lender not granted a sub-participation to a person who, if that person had been a Lender, would not be a Qualifying Lender with regard to that payment but on that date that subparticipant is, if that person had been a Lender, not a Qualifying Lender (or, has ceased to be a Qualifying Lender) other than as a result of any change after the date it became a sub-participant in (or in the official interpretation, administration or application of) any law or treaty, or any published practice or published concession of any relevant taxing authority. For the avoidance of doubt there shall be no obligation on a Finance Party to disclose any sub-participation to any Obligor.
(e)
If an Obligor is required to make a Tax Deduction, that Obligor shall make that Tax Deduction and any payment required in connection with that Tax Deduction within the time allowed and in the minimum amount required by law.
(f)
Within 28 days of making either a Tax Deduction or any payment required in connection with that Tax Deduction, the Obligor making that Tax Deduction shall deliver to the Agent for the Finance Party entitled to the payment a statement under section 975 of the ITA or other evidence reasonably satisfactory to that Finance Party that the Tax Deduction has been made or (as applicable) any appropriate payment paid to the relevant taxing authority.
(g)
(i)
Subject to clause 17.2(g)(ii) below, a Treaty Lender and each Obligor which makes a payment to which that Treaty Lender is entitled shall co-operate in completing any procedural formalities necessary for that Obligor to obtain authorisation to make that payment without a Tax Deduction
(ii)    Nothing in clause 17.2(g)(i) above shall require a Treaty Lender to:
(A)
register under the HMRC DT Treaty Passport scheme;
(B)
apply the HMRC DT Treaty Passport scheme to any Loan if it has so registered; or
(C)
file Treaty forms if it has included an indication to the effect that it wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with clause 17.2(i) below or clause 17.7(a), and the Obligor making that payment has not complied with its obligations under clause 17.2(j) or clause 17.7(b).
(h)    A UK Non-Bank Lender shall promptly notify the Company and the Agent if there is any change in the position from that set out in the Tax Confirmation.
(i)    A Treaty Lender which becomes a Party on the day on which this Agreement is entered into that holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, shall include an indication to that effect (for the benefit of the Agent and without liability to any Obligor) by including its scheme reference number and its jurisdiction of tax residence opposite its name in Part 3 - (The Original Lenders) of Schedule 1.
(j)    Where a Lender includes the indication described in clause 17.2(i) above in Part 3 - (The Original Lenders) of Schedule 1:
(i)
each Original Borrower shall, to the extent that that Lender is a Lender under the Facility made available to that Original Borrower pursuant to clause 2.1 (The

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Facilities), file a duly completed form DTTP2 in respect of such Lender with HM Revenue & Customs within 30 days of the date of this Agreement and shall promptly provide the Lender with a copy of that filing; and
(ii)
each Additional Borrower shall, to the extent that that Lender is a Lender under the Facility made available to that Additional Borrower pursuant to clause 2.1 (The Facilities), file a duly completed form DTTP2 in respect of such Lender with HM Revenue & Customs within 30 days of becoming an Additional Borrower and shall promptly provide the Lender with a copy of that filing.
(k)    If a Lender has not included an indication to the effect that it wishes the HMRC DT
Treaty Passport scheme to apply to this Agreement in accordance with clause 17.2(i) above or clause 17.7(a), no Obligor shall file any form relating to the HMRC DT Treaty Passport scheme in respect of that Lender's Commitments or its participation in any Loan.
(l)    A payment shall not be increased under clause 17.2(c) by reason of a Tax Deduction
on account of Tax imposed by the United States from a payment of a Loan (i) pursuant to FATCA or (ii) attributable to the failure by a Finance Party to deliver the applicable US tax forms in accordance with clause 17.9.
17.3      Tax indemnity
(a)
Each Obligor shall, within 3 Business Days of demand by the Agent, pay to a Protected Party an amount equal to the loss, liability or cost which that Protected Party determines will be or has been (directly or indirectly) suffered for or on account of Tax by that Protected Party in respect of a Finance Document.
(b)    Clause 17.3(a) shall not apply:
(i)    with respect to any Tax assessed on a Finance Party:
(A)
under the law of the jurisdiction in which that Finance Party is incorporated or, if different, the jurisdiction (or jurisdictions) in which that Finance Party is treated as resident for tax purposes; or
(B)
under the law of the jurisdiction in which that Finance Party's Facility Office is located in respect of amounts received or receivable in that jurisdiction,
if that Tax is imposed on or calculated by reference to the net income received or receivable (but not any sum deemed to be received or receivable) by that Finance Party; or
(ii)    to the extent a loss, liability or cost:
(A)
is compensated for by an increased payment under clause 17.2; or
(B)
would have been compensated for by an increased payment under clause 17.2 but was not so compensated solely because one of the exclusions in clause 17.2(d) or clause 17.2(l) applied.
(c)
A Protected Party making, or intending to make a claim under clause 17.3(a) shall promptly notify the Agent of the event which will give, or has given, rise to the claim, and will give details of the amount claimed following which the Agent shall notify the Company.

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(d)
A Protected Party shall, on receiving a payment from an Obligor under this clause 17.3, notify the Agent.
17.4      Tax Credit
If an Obligor makes a Tax Payment and the relevant Finance Party determines that:
(a)
a Tax Credit is attributable either to an increased payment of which that Tax Payment forms part or to that Tax Payment; and
(b)
that Finance Party has obtained, utilised and retained that Tax Credit,
the Finance Party shall (provided that no Default is continuing) pay an amount to the Obligor as soon as reasonably practicable from the date on which it has acting reasonably determined that it has obtained, utilised and retained such Tax Credit which that Finance Party determines will leave it (after that payment) in the same after-Tax position as it would have been in had the Tax Payment not been required to be made by the Obligor.
17.5      Refund of Tax Deduction
If a Borrower incorporated in the United Kingdom makes a Tax Deduction in respect of tax imposed by the United Kingdom on interest from a payment of interest to a Treaty Lender, and clause 17.2 (Tax gross-up) applies to increase the amount of the payment due to that Treaty Lender from that Borrower, such Borrower shall promptly provide the Treaty Lender with an executed original certificate, in the form required by HM Revenue & Customs, evidencing the Tax Deduction. The Treaty Lender shall, within a reasonable period following receipt of such certificate, apply to HM Revenue & Customs for a refund of the amount of the Tax and following receipt of this refund shall inform the Borrower of such receipt within a reasonable period of such receipt. This clause 17.5 shall not require a Treaty Lender to apply for a refund of the amount of the Tax Deduction if the procedural formalities required in relation to making such an application are materially more onerous or require the disclosure of materially more information than the procedural formalities required by HM Revenue & Customs as at the date of this Agreement in relation to such an application.
17.6      Lender Status Confirmation
Each Lender which becomes a Party to this Agreement after the date of this Agreement shall indicate, in the Transfer Certificate, Assignment Agreement, an Increase Confirmation or Uncommitted Accordion Facility Commitment Notice which it executes on becoming a Party, and for the benefit of the Agent and without liability to any Obligor, which of the following categories it falls in:
(a)
not a Qualifying Lender;
(b)
a Qualifying Lender (other than a Treaty Lender); or
(c)
a Treaty Lender.
If a New Lender fails to indicate its status in accordance with this clause 17.6 then such New Lender shall be treated for the purposes of this Agreement (including each Obligor) as if it is not a Qualifying Lender until such time as it notifies the Agent which category applies (and the Agent, upon receipt of such notification, shall inform the Company). For the avoidance of doubt, a Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice shall not be invalidated by any failure of a Lender to comply with this clause 17.6.
17.7      HMRC DT Treaty Passport scheme confirmation

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(a)
A New Lender or an Increase Lender that is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme, and which wishes that scheme to apply to this Agreement, shall include an indication to that effect (for the benefit of the Agent and without liability to any Obligor) in the Transfer Certificate, Assignment Agreement or Increase Confirmation or Uncommitted Accordion Facility Commitment Notice which it executes by including its scheme reference number and its jurisdiction of tax residence in that Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice.
(b)
Where a New Lender or an Increase Lender includes the indication described in clause 17.7(a) above in the relevant Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice:
(i)
each Borrower which is a Party as a Borrower as at the relevant Transfer Date or the date on which the increase in Total Commitments described in the relevant Increase Confirmation or Uncommitted Accordion Facility Commitment Notice takes effect shall, to the extent that that New Lender or Increase Lender becomes a Lender under the Facility which is made available to that Borrower pursuant to clause 2.1 (The Facilities), file a duly completed form DTTP2 in respect of such Lender with HM Revenue & Customs within 30 days of that Transfer Date or that date on which the increase in Total Commitments takes effect and shall promptly provide the Lender with a copy of that filing; and
(ii)
each Additional Borrower which becomes an Additional Borrower after the relevant Transfer Date or the date on which the increase in Total Commitments described in the relevant Increase Confirmation or Uncommitted Accordion Facility Commitment Notice takes effect shall, to the extent that that New Lender or Increase Lender is a Lender under the Facility which is made available to that Additional Borrower pursuant to clause 2.1 (The Facilities), file a duly completed form DTTP2 in respect of such Lender with HM Revenue & Customs within 30 days of becoming an Additional Borrower and shall promptly provide the Lender with a copy of that filing.
17.8     Co-operation
In the event that it is necessary for any procedural formalities to be completed to allow an Obligor to make a payment of interest on a Loan to a Treaty Lender without a Tax Deduction, the Obligor and the Treaty Lender shall co-operate to procure the filing of any relevant tax forms including (to the extent applicable and available under the prevailing law, and only where the HMRC DT Treaty Passport scheme does not apply to a Loan), an application form for an Obligor to obtain authorisation to pay interest to a Treaty Lender without a Tax Deduction in respect of tax imposed by the United Kingdom on interest, and where reasonably practicable such filing shall be made before the end of the relevant Interest Period. Nothing in this clause shall require a Treaty Lender to:
(a)
register under the HMRC DT Treaty Passport scheme; or
(b)
apply the HMRC DT Treaty Passport scheme to any Loan if it has so registered; or
(c)
file Treaty forms if it has included an indication to the effect that it wishes the HMRC DT Treaty Passport scheme to apply to this Agreement in accordance with clause 17.2(i) or clause 17.7(a), and the Obligor making that payment has not complied with its obligations under clause 17.2(j) or clause 17.7(b).
17.9      US tax forms

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(a)
Each Finance Party that is a "United States person" within the meaning of Section 7701(a)(30) of the Internal Revenue Code shall deliver to each applicable Obligor and the Agent executed originals of US Internal Revenue Service Form W-9 or such other documentation or information prescribed by applicable law or reasonably requested by the applicable Obligor or the Agent as will enable such Obligor or the Agent, as the case may be, certifying to such Finance Party's exemption from US backup withholding and/or information reporting requirements.
(b)
Each Non-US Finance Party shall deliver to each applicable Obligor and the Agent (in such number of copies as shall be requested by the recipient) as soon as reasonably practicable following the date on which such Non-US Finance Party becomes a Finance Party under this Agreement, but no later than three Business Days prior to the date the first payment is due under the Finance Documents to that Non-US Finance Party (and from time to time thereafter upon the request of such Obligor or the Agent), whichever of the following is applicable:
(i)
properly completed and duly executed originals of US Internal Revenue Service Form W-8BEN (claiming a complete exemption from United States withholding tax on payments made to such Non-US Finance Party pursuant to the Finance Documents under the benefits of an applicable income tax treaty);
(ii)
properly completed and duly executed originals of US Internal Revenue Service Form W-ECI (claiming a complete exemption from United States withholding tax because payments made to such Non-US Finance Party pursuant to the Finance Documents are effectively connected with a US trade or business);
(iii)
properly completed and duly executed originals of US Internal Revenue Service Form W-8IMY and all required supporting documentation (claiming a complete exemption from United States withholding tax because payments made to such Non-US Finance Party pursuant to the Finance Documents); or
(iv)
in the case of a Non-US Finance Party claiming the benefits of the exemption for portfolio interest under Sections 871(h) or 881(c) of the Internal Revenue Code, (x) a certificate to the effect that such Non-US Finance Party is not (A) a "bank" within the meaning of Section 881(c)(3)(A) of the Internal Revenue Code, (B) a "10 percent shareholder" of the Borrower within the meaning of Section 881(c)(3)(B) of the Internal Revenue Code, or (C) a "controlled foreign corporation" described in Section 881(c)(3)(C) of the Internal Revenue Code and (y) properly completed and duly executed originals of US Internal Revenue Service Form W-8BEN.
(c)    If a payment made by any Obligor hereunder or under any other Finance Document would be subject to United States withholding tax imposed pursuant to FATCA (including those contained in Sections 1471(b) or 1472(b) of the Internal Revenue Code, as applicable), such Finance Party shall use commercially reasonable efforts to deliver to such Obligor and the Agent, as reasonably requested by such Obligor, (A) two properly completed and duly executed original certifications prescribed by applicable law and/or reasonably satisfactory to such Obligor and the Agent that establish that such payment is exempt from United States withholding tax imposed pursuant to FATCA and (B) any other documentation reasonably requested by such Obligor sufficient for such Obligor and the Agent to comply with their obligations under FATCA and to determine that such Finance Party has complied with such applicable reporting and other requirements of FATCA.
17.10      Stamp taxes

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The Obligors shall pay and, within 3 Business Days of demand, indemnify each Secured Party and Arrangers against any cost, loss or liability that Secured Party or Arrangers incurs in relation to all stamp duty, registration and other similar Taxes payable in respect of any Finance Document provided that this clause 17.10 shall not apply in respect of any stamp duty, registration and other similar Taxes which are payable in respect of an assignment transfer or other alienation of any kind by a Lender of any of its rights and/or obligations under a Finance Document.
17.11      Value added tax
(a)
All amounts set out or expressed in a Finance Document to be payable by any Party to a Finance Party which (in whole or in part) constitute the consideration for a supply or supplies for VAT purposes shall be deemed to be exclusive of any VAT which is chargeable on such supply or supplies, and accordingly, subject to clause 17.11(b), if VAT is or becomes chargeable on any supply made by any Finance Party to any Party under a Finance Document, that Party shall pay to the Finance Party (in addition to and at the same time as paying any other consideration for such supply) an amount equal to the amount of such VAT (and such Finance Party shall promptly provide an appropriate VAT invoice to such Party).
(b)
If VAT is or becomes chargeable on any supply made by any Finance Party (Supplier) to any other Finance Party (Recipient) under a Finance Document, and any Party other than the Recipient (Subject Party) is required by the terms of any Finance Document to pay an amount equal to the consideration for such supply to the Supplier (rather than being required to reimburse the Recipient in respect of that consideration), such Party shall also pay to the Supplier (in addition to and at the same time as paying such amount) an amount equal to the amount of such VAT. The Recipient will promptly pay to the Subject Party an amount equal to any credit or repayment obtained by the Recipient from the relevant tax authority which the Recipient reasonably determines is in respect of such VAT.
(c)
Where a Finance Document requires any Party to reimburse or indemnify a Finance Party for any cost or expense, that Party shall reimburse or indemnify (as the case may be) such Finance Party for the full amount of such cost or expense, including such part thereof as represents VAT, save to the extent that such Finance Party reasonably determines that it is entitled to credit or repayment in respect of such VAT from the relevant tax authority.
(d)
Any reference in this clause 17.11 to any Party shall, at any time when such Party is treated as a member of a group for VAT purposes, include (where appropriate and unless the context otherwise requires) a reference to the representative member of such group at such time (the term "representative member" to have the same meaning as in the Value Added Tax Act 1994).
17.12      FATCA Information
(a)    Subject to clause 17.12(c), each Party shall, within 10 Business Days of a reasonable
request by another Party:
(i)    confirm to that other Party whether it is:
(A) a FATCA Exempt Party; or
(B) not a FATCA Exempt Party; and
(ii)
supply to that other Party such forms, documentation and other information relating to its status under FATCA (including its applicable pass thru percentage

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or other information required under the Treasury Regulations or other official guidance including intergovernmental agreements) as that other Party reasonably requests for the purposes of that other Party's compliance with FATCA.
(b)
If a Party confirms to another Party pursuant to clause 17.12(a)(i) above that it is a FATCA Exempt Party and it subsequently becomes aware that it is not, or has ceased to be a FATCA Exempt Party, that Party shall notify that other Party reasonably promptly.
(c)
Clause 17.12(a) above shall not oblige any Finance Party to do anything which would or might in its reasonable opinion constitute a breach of:
(i)
any law or regulation;
(ii)
any policy of that Finance Party;
(iii)
any fiduciary duty; or
(iv)
any duty of confidentiality.
(d)
If a Party fails to confirm its status or to supply forms, documentation or other information requested in accordance with clause 17.12(a) (including, for the avoidance of doubt, where clause 17.12(c) applies), then:
(i)
if that Party failed to confirm whether it is (and/or remains) a FATCA Exempt Party then such Party shall be treated for the purposes of the Finance Documents as if it is not a FATCA Exempt Party; and
(ii)
if that Party failed to confirm its applicable passthru percentage then such Party shall be treated for the purposes of the Finance Documents (and payments made thereunder) as if its applicable passthru percentage is 100%,
until (in each case) such time as the Party in question provides the requested confirmation, forms, documentation or other information.
18    Increased costs
18.1     Increased costs
(a)
Subject to clause 18.3 the Obligors shall, within 3 Business Days of a demand by the Agent, pay for the account of a Finance Party the amount of any Increased Costs incurred by that Finance Party or any of its Affiliates as a result of:
(i)
the introduction of or any change in (or in the interpretation, administration or application of) any law or regulation; or
(ii)
compliance with any law or regulation made after the date of this Agreement; or
(iii)
to the extent the costs were not reasonably foreseeable as at the Fourth Restatement Date, the implementation or application of, or compliance with, Basel III or CRD IV or any other law or regulation which implements Basel III or CRD IV (whether such implementation, application or compliance is by a government, regulator, Finance Party or any of its Affiliates).
(b)    In this Agreement Increased Costs means:

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(i)
a reduction in the rate of return from a Facility or on a Finance Party's (or its Affiliate's) overall capital;
(ii)
an additional or increased cost; or
(iii)
a reduction of any amount due and payable under any Finance Document,
which is incurred or suffered by a Finance Party or any of its Affiliates to the extent that it is attributable to that Finance Party having entered into its Commitment or an Ancillary Commitment or funding or performing its obligations under any Finance Document.
18.2     Increased cost claims
(a)
A Finance Party intending to make a claim pursuant to clause 18.1 shall notify the Agent of the event giving rise to the claim, following which the Agent shall promptly notify the Company.
(b)
Each Finance Party shall, as soon as practicable after a demand by the Agent, provide a certificate confirming the amount of its Increased Costs.
18.3     Exceptions
(a)    Clause 18.1 does not apply to the extent any Increased Cost is:
(i)
attributable to a Tax Deduction required by law to be made by an Obligor;
(ii)
attributable to a FATCA Deduction required to be made by a Party;
(iii)
compensated for by clause 17.3 (Tax indemnity) (or would have been compensated for under clause 17.3 (Tax indemnity) but was not so compensated solely because any of the exclusions in clause 17.3(b) (Tax indemnity) applied); or
(iv)
attributable to the wilful breach by the relevant Finance Party or its Affiliates of any law or regulation.
(b)
In this clause 18.3 reference to a Tax Deduction has the same meaning given to the term in clause 17.1 (Definitions).
19    Other indemnities
19.1     Currency indemnity
(a)
If any sum due from an Obligor under the Finance Documents ( Sum ), or any order, judgment or award given or made in relation to a Sum, has to be converted from the currency ( First Currency ) in which that Sum is payable into another currency ( Second Currency ) for the purpose of:
(i)
making or filing a claim or proof against that Obligor; or
(ii)
obtaining or enforcing an order, judgment or award in relation to any litigation or arbitration proceedings,
that Obligor shall as an independent obligation, within 3 Business Days of demand by the Agent, indemnify each Finance Party to whom that Sum is due against any cost, loss or liability arising out of or as a result of the conversion including any discrepancy between (A) the rate of exchange used to convert that Sum from the First Currency into the Second

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Currency and (B) the rate or rates of exchange available to that person at the time of its receipt of that Sum.
(b)
Each Obligor waives any right it may have in any jurisdiction to pay any amount under the Finance Documents in a currency or currency unit other than that in which it is expressed to be payable (or in which it is otherwise determined to be payable pursuant to clause 34.10 (Change of currency).
19.2     Other indemnities
(a)
The Company shall (or shall ensure that an Obligor will), within 3 Business Days of demand, indemnify each Finance Party against any cost, loss or liability incurred by it as a result of:
(i)
the occurrence of any Event of Default;
(ii)
a failure by an Obligor to pay any amount due under a Finance Document on its due date, including without limitation, any cost, loss or liability arising as a result of clause 33 (Sharing among the Finance Parties);
(iii)
funding, or making arrangements to fund, its participation in a Loan requested by a Borrower in a Utilisation Request but not made by reason of the operation of any one or more of the provisions of this Agreement (other than by reason of gross negligence or wilful default by that Finance Party alone); or
(iv)
a Loan (or part of a Loan) not being prepaid in accordance with a notice of prepayment given by a Borrower (or the Company on its behalf).
19.3      Indemnity to the Agent
Each Obligor will, within 3 Business Days of demand, indemnify the Agent against any cost, loss or liability incurred by the Agent (acting reasonably) as a result of:
(a)
investigating any event which it reasonably believes is a Default; or
(b)
acting or relying on any notice, request or instruction which it reasonably believes to be genuine, correct and appropriately authorised.
20    Mitigation by the Lenders
20.1     Mitigation
(a)
Each Finance Party shall, in consultation with the Company, take all reasonable steps to mitigate any circumstances which arise and which would result in any amount becoming payable under or pursuant to, or cancelled pursuant to, any of clause 10.1 (Illegality), clause 17 (Tax gross up and indemnities), clause 18 (Increased costs), including (but not limited to) transferring its rights and obligations under the Finance Documents to another Affiliate or Facility Office.
(b)
Clause 20.1(a) does not in any way limit the obligations of any Obligor under the Finance Documents.
20.2     Limitation of liability
(a)
The Company shall (or shall ensure that an Obligor will), within 3 Business Days of demand indemnify each Finance Party for all costs and expenses reasonably incurred by that Finance Party as a result of steps taken by it under clause 20.1.

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(b)
A Finance Party is not obliged to take any steps under clause 20.1 if, in the opinion of that Finance Party (acting reasonably), to do so might be prejudicial to it.
21    Costs and expenses
21.1     Transaction expenses
The Company shall promptly on demand pay the Agent and the Arrangers the amount of all costs and expenses (including legal fees subject to any cap previously agreed between the Company and the Agent) reasonably incurred by any of them in connection with the negotiation, preparation, printing, execution, syndication and perfection of:
(a)
this Agreement and any other documents referred to in this Agreement; and
(b)
any other Finance Documents executed after the date of this Agreement.
21.2      Amendment costs
If:
(a)
an Obligor requests an amendment, waiver or consent; or
(b)
an amendment is required pursuant to clause 34.10 (Change of currency),
the Company shall, within 3 Business Days of demand, reimburse the Agent for the amount of all costs and expenses (including legal fees) reasonably incurred by the Agent in responding to, evaluating, negotiating or complying with that request or requirement.
21.3      Enforcement and preservation costs
The Company shall, within 3 Business Days of demand, pay to each Finance Party the amount of all costs and expenses (including legal fees) incurred by it in connection with the enforcement of, or the preservation of, any rights under any Finance Document.
22    Guarantee and indemnity
22.1     Guarantee and indemnity
Each Guarantor irrevocably and unconditionally:
(a)
jointly and severally guarantees to each Finance Party punctual performance by each other Obligor of all that Obligor's obligations under the Finance Documents;
(b)
jointly and severally undertakes with each Finance Party that whenever another Obligor does not pay any amount when due under or in connection with any Finance Document, that Guarantor shall immediately on demand pay that amount as if it was the principal obligor; and
(c)
jointly and severally (or in the case of a Canadian Obligor, severally and not jointly and severally) agrees with each Finance Party that if any obligation guaranteed by it is or becomes unenforceable, invalid or illegal, it will, as an independent and primary obligation, indemnify that Finance Party immediately on demand against any cost, loss or liability it incurs as a result of an Obligor not paying any amount which would, but for such unenforceability, invalidity or illegality, have been payable by it under any Finance Document on the date when it would have been due. The amount payable by a Guarantor under this indemnity will not exceed the amount it would have had to pay under this clause 22 if the amount claimed had been recoverable on the basis of a guarantee.

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22.2      Continuing Guarantee
This guarantee is a continuing guarantee and will extend to the ultimate balance of sums payable by any Obligor under the Finance Documents, regardless of any intermediate payment or discharge in whole or in part.
22.3      Reinstatement
If any discharge, release or arrangement (whether in respect of the obligations of any Obligor or any Security for those obligations or otherwise) is made by a Finance Party in whole or in part on the basis of any payment, security or other disposition which is avoided or must be restored in insolvency, liquidation, administration or otherwise, without limitation, then the liability of each Guarantor under this clause 22 will continue or be reinstated as if the discharge, release or arrangement had not occurred.
22.4      Waiver of defences
The obligations of each Guarantor under this clause 22 will not be affected by an act, omission, matter or thing which, but for this clause 22, would reduce, release or prejudice any of its obligations under this clause 22 (without limitation and whether or not known to it or any Finance Party) including:
(a)
any time, waiver or consent granted to, or composition with, any Obligor or other person;
(b)
the release of any other Obligor or any other person under the terms of any composition or arrangement with any creditor of any member of the Group;
(c)
the taking, variation, compromise, exchange, renewal or release of, or refusal or neglect to perfect, take up or enforce, any rights against, or Security over assets of, any Obligor or other person or any non-presentation or non-observance of any formality or other requirement in respect of any instrument or any failure to realise the full value of any Security;
(d)
any incapacity or lack of power, authority or legal personality of or dissolution or change in the members or status of an Obligor or any other person;
(e)
any amendment, novation, supplement, extension, restatement (however fundamental and whether or not more onerous) or replacement of any Finance Document or any other document or Security including without limitation any change in the purpose of, any extension of or any increase in any facility or the addition of any new facility under any Finance Document or other document or Security;
(f)
any unenforceability, illegality or invalidity of any obligation of any person under any Finance Document or any other document or Security; or
(g)
any insolvency or similar proceedings.
22.5     Guarantor Intent
Without prejudice to the generality of clause 22.4, each Guarantor expressly confirms that it intends that this guarantee shall extend from time to time to any (however fundamental) variation, increase, extension or addition of or to any of the Finance Documents and/or any facility or amount made available under any of the Finance Documents for the purposes of or in connection with any of the following:
(a)
business acquisitions of any nature;
(b) increasing working capital;

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(c) enabling investor distributions to be made;
(d) carrying out restructurings;
(e) refinancing existing facilities;
(f) refinancing any other indebtedness;
(g) making facilities available to new borrowers;
(h)
any other variation or extension of the purposes for which any such facility or amount might be made available from time to time; and
(i) any fees, costs and/or expenses associated with any of the foregoing.
22.6      Immediate recourse
Each Guarantor waives any right it may have of first requiring any Finance Party (or any trustee or agent on its behalf) to proceed against or enforce any other rights or Security or claim payment from any person before claiming from that Guarantor under this clause 22. This waiver applies irrespective of any law or any provision of a Finance Document to the contrary.
22.7      Appropriations
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full, each Finance Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other moneys, Security or rights held or received by that Finance Party (or any trustee or agent on its behalf) in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise) and no Guarantor shall be entitled to the benefit of the same; and
(b)
hold in an interest-bearing suspense account any moneys received from any Guarantor or on account of any Guarantor's liability under this clause 22.
22.8     Deferral of Guarantors' rights
Until all amounts which may be or become payable by the Obligors under or in connection with the Finance Documents have been irrevocably paid in full and unless the Agent otherwise directs, no Guarantor will exercise any rights which it may have by reason of performance by it of its obligations under the Finance Documents or by reason of any amount being payable, or liability arising, under this clause 22 :
(a)
to be indemnified by an Obligor;
(b)
to claim any contribution from any other guarantor of any Obligor's obligations under the Finance Documents;
(c)
to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under the Finance Documents or of any other guarantee or Security taken pursuant to, or in connection with, the Finance Documents by any Finance Party;
(d)
to bring legal or other proceedings for an order requiring any Obligor to make any payment, or perform any obligation, in respect of which any Guarantor has given a guarantee, undertaking or indemnity under clause 22.1 (Guarantee and indemnity);
(e)
to exercise any right of set-off against any Obligor; and/or

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(f)
to claim or prove as a creditor of any Obligor in competition with any Finance Party.
If a Guarantor receives any benefit, payment or distribution in relation to such rights it shall hold that benefit, payment or distribution to the extent necessary to enable all amounts which may be or become payable to the Finance Parties by the Obligors under or in connection with the Finance Documents to be repaid in full on trust for the Finance Parties and shall promptly pay or transfer the same to the Agent or as the Agent may direct for application in accordance with clause 34 (Payment mechanics).
22.9     Release of Guarantors' right of contribution
If any Guarantor ( Retiring Guarantor ) ceases to be a Guarantor in accordance with the terms of the Finance Documents for the purpose of any sale or other disposal of that Retiring Guarantor then on the date such Retiring Guarantor ceases to be a Guarantor:
(a)
that Retiring Guarantor is released by each other Guarantor from any liability (whether past, present or future and whether actual or contingent) to make a contribution to any other Guarantor arising by reason of the performance by any other Guarantor of its obligations under the Finance Documents; and
(b)
each other Guarantor waives any rights it may have by reason of the performance of its obligations under the Finance Documents to take the benefit (in whole or in part and whether by way of subrogation or otherwise) of any rights of the Finance Parties under any Finance Document or of any other Security taken pursuant to, or in connection with, any Finance Document where such rights or Security are granted by or in relation to the assets of the Retiring Guarantor.
22.10      US Guarantors
(a)    Each US Guarantor acknowledges that:
(i)
it will receive valuable direct or indirect benefits as a result of the transactions financed by the Finance Documents;
(ii)
those benefits will constitute reasonably equivalent value and fair consideration for the purpose of any Fraudulent Transfer Law;
(iii)
each Lender has acted in good faith in connection with the guarantee given by that US Guarantor and the transactions contemplated by the Finance Documents; and
(iv)
it has not incurred and does not intend to incur debts beyond its ability to pay as they mature.
(b)
Each Lender agrees that each US Guarantor's liability under this clause is limited to the extent (if any) necessary so that no obligation of, or payment by, any US Guarantor under this clause is subject to avoidance or turnover under any Fraudulent Transfer Law.
(c)    Each US Guarantor represents and warrants to each Lender that:
(i)
the aggregate amount of its debts (including its obligations under the Finance Documents (other than obligations that are, at the relevant time, wholly contingent or prospective)) is less than the aggregate value (being the lesser of fair valuation and present fair saleable value) of its assets;
(ii)
its capital is not unreasonably small to carry on its business as it is being conducted;

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(iii)
it has not incurred and does not intend to incur debts beyond its ability to pay as they become due; and
(iv)
it has not made a transfer or incurred any obligation under any Finance Document with the intent to hinder, delay or defraud any of its present or future creditors.
22.11      Additional security
This guarantee is in addition to and is not in any way prejudiced by any other guarantee or Security now or subsequently held by any Finance Party.
22.12      Guarantee Limitations
This guarantee does not apply to any liability to the extent that it would result in this guarantee constituting unlawful financial assistance within the meaning of sections 678 or 679 of the CA2006 or any equivalent and applicable provisions under the laws of the jurisdiction of incorporation of the relevant Guarantor and, with respect to any Additional Guarantor, is subject to any limitations set out in the Accession Deed applicable to such Additional Guarantor.
23    Representations
23.1     General
Each Obligor makes the representations and warranties set out in this clause 23 to each Finance Party.
23.2      Status
(a)
It and each of its Subsidiaries is a limited liability corporation, corporation or partnership duly incorporated, continued, amalgamated or formed (as the case may be) and validly existing under the law of its jurisdiction of incorporation, continuance, amalgamation or formation (as applicable).
(b)
It and each of its Subsidiaries has the power to own its assets and carry on its business as it is being conducted.
23.3     Binding obligations
Subject to the Legal Reservations the obligations expressed to be assumed by it in each Transaction Document to which it is a party are legal, valid, binding and enforceable obligations.
23.4     Non-conflict with other obligations
The entry into and performance by it of, and the transactions contemplated by, the Transaction Documents do not and will not conflict with:
(a)
any law or regulation applicable to it;
(b)
the constitutional documents of any member of the Group; or
(c)
any agreement or instrument binding upon it or any member of the Group or any of its or any member of the Group's assets or constitute a default or termination event (however described) under any such agreement or instrument unless such conflict, default or termination event would not have or is not reasonably likely to have a Material Adverse Effect.
23.5      Power and authority

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(a)
It has the power to enter into, perform and deliver, and has taken all necessary action to authorise its entry into, performance and delivery of, the Transaction Documents to which it is or will be a party and the transactions contemplated by those Transaction Documents.
(b)
No limit on its powers will be exceeded as a result of the borrowing, grant of Security or giving of guarantees or indemnities contemplated by the Transaction Documents to which it is a party.
23.6     Validity and admissibility in evidence
(a)    All Authorisations required:
(i)
to enable it lawfully to enter into, exercise its rights and comply with its obligations in the Transaction Documents to which it is a party; and
(ii)
to make the Transaction Documents to which it is a party admissible in evidence in its Relevant Jurisdictions,
have been obtained or effected and are in full force and effect except any Authorisation referred to in clause 23.9 (No filing or stamp taxes).
(b)
All Authorisations necessary for the conduct of the business, trade and ordinary activities of the members of the Group have been obtained or effected and are in full force and effect if failure to obtain or effect those Authorisations has or is reasonably likely to have a Material Adverse Effect.
23.7      Governing law and enforcement
(a)
The choice of governing law of the Finance Documents will be recognised and enforced in its Relevant Jurisdictions.
(b)
Any judgment obtained in relation to a Finance Document in the jurisdiction of the governing law of that Finance Document will be recognised and enforced in its Relevant Jurisdictions.
23.8      Insolvency
(a)    No:
(i)
corporate action, legal proceeding or other procedure or step described in clause 27.7(a) (Insolvency proceedings); or
(ii)
creditors' process described in clause 27.8 (Creditors' process),
has been taken or, so far as it is aware, threatened in relation to an Obligor or a Material Subsidiary.
(b)
No corporate action, legal proceeding or other procedure or step described in clause 27.7(b) (Insolvency proceedings) has been taken or, so far as it is aware, threatened in relation to an Obligor or a Material Subsidiary incorporated in the US.
(c)
None of the circumstances described in clause 27.6 (Insolvency) applies to an Obligor or a Material Subsidiary.
23.9      No filing or stamp taxes
Under the laws of its Relevant Jurisdiction it is not necessary that the Finance Documents be filed, recorded or enrolled with any court or other authority in that jurisdiction or that any stamp,

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registration, notarial or similar Taxes or fees be paid on or in relation to the Finance Documents or the transactions contemplated by the Finance Documents except for those registrations specifically set out in any legal opinion delivered to the Agent pursuant to clause 4.1 (Initial conditions precedent) of this Agreement or clause 2.2(a) of the Fourth Amendment and Restatement Agreement.
23.10      Deduction of Tax
An Obligor that is not a Canadian Obligor is not required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender which is:
(a)    a Qualifying Lender:
(i)
falling within paragraph (i)(A) of the definition of Qualifying Lender;
(ii)
except where a Direction has been given under section 931 of the ITA in relation to the payment concerned, falling within paragraph (i)(B) of the definition of Qualifying Lender; or
(iii)
falling within paragraph (ii) of the definition of Qualifying Lender or;
(b)
a Treaty Lender and the payment is one specified in a direction given by the Commissioners of Revenue & Customs under Regulation 2 of the Double Taxation Relief (Taxes on Income) (General) Regulations 1970 (SI 1970/488).
No Canadian Obligor is required to make any deduction for or on account of Tax from any payment it may make under any Finance Document to a Lender with which the Canadian Borrower deals at arms’ length for purposes of the Income Tax Act (Canada).
23.11     No default
(a)
No Event of Default and, on the date of this Agreement and the Closing Date, no Default is continuing or is reasonably likely to result from the making of any Loan or the entry into, the performance of, or any transaction contemplated by, any Transaction Document.
(b)
No other event or circumstance is outstanding which constitutes (or, with the expiry of a grace period, the giving of notice, the making of any determination or any combination of any of the foregoing, would constitute) a default or termination event (however described) under any other agreement or instrument which is binding on it or any of its Subsidiaries or to which its (or any of its Subsidiaries') assets are subject which has or is reasonably likely to have a Material Adverse Effect.
23.12     No misleading information
(a)
All material information provided to a Finance Party by or on behalf of the Group on or before the Fourth Restatement Date and not superseded before that date is accurate and not misleading in any material respect and the most recent projections provided to any Finance Party on or before the Fourth Restatement Date and not superseded before that date have been prepared in good faith on the basis of assumptions which were reasonable at the time at which they were prepared and supplied.
(b)
All other written information provided by the Company to a Finance Party was true, complete and accurate in all material respects as at the date it was provided and is not misleading in any material respect.
23.13      Original Financial Statements

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(a)
Its Original Financial Statements were prepared in accordance with the Accounting Principles consistently applied.
(b)
Its unaudited Original Financial Statements fairly represent its financial condition and results of operations for the relevant period in accordance with basis of preparation and Accounting Principles unless expressly disclosed to the Agent in writing to the contrary prior to the date of this Agreement.
(c)    Its audited Original Financial Statements give a true and fair view of its financial
condition and results of operations during the relevant Financial Year.
(d)
There has been no material adverse change in its assets, business or financial condition (or the assets, business or consolidated financial condition of the Group, in the case of the Company) since 31 December 2016.
(e)
The Original Financial Statements of the Company do not consolidate the results, assets or liabilities of any person or business which does not form part of the Group (other than in respect of any joint venture) as at the Fourth Restatement Date.
(f)
Its most recent financial statements delivered pursuant to clause 24.1 (Financial statements) on or after the Fourth Restatement Date:
(i)
have been prepared in accordance with the Accounting Principles as applied to the Original Financial Statements (or if there has been a change to the Accounting Principles the requirements of clause24.3(c) have been complied with); and
(i)
give a true and fair view of (if audited) or fairly present (if unaudited) its consolidated financial condition as at the end of, and consolidated results of operations for, the period to which they relate.
(g)
The budgets and forecasts supplied under this Agreement on or after the Fourth Restatement Date were arrived at after careful consideration and have been prepared in good faith on the basis of recent historical information and on the basis of assumptions which were reasonable as at the date they were prepared and supplied (it being acknowledged by the Finance Parties that financial projections or forecasts are subject to uncertainties and contingencies and no representation or warranty is given that such financial projections or forecasts warranties will be realised).
(h)
Since the date of the most recent financial statements delivered pursuant to clause 24.1 (Financial statements) on or after the Fourth Restatement Date there has been no material adverse change in the business, assets or financial condition of the Group.
23.14     No proceedings pending or threatened
(a)
No litigation, arbitration or administrative proceedings or investigations of, or before, any court, arbitral body or agency which, if adversely determined, are reasonably likely to result in liabilities to it or any of its Subsidiaries (whether actual or contingent) which has or is reasonably likely to have a Material Adverse Effect have (so far as it is aware) been started or threatened against it or any of its Subsidiaries.
(b)
No labour disputes are current or, so far as it is aware, threatened against any member of the Group which have or are reasonably likely to result in liabilities to it or any of its Subsidiaries which has or is reasonably likely to have a Material Adverse Effect.
23.15      No breach of laws

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It has not (and none of its Subsidiaries has) breached any law or regulation which breach has or is reasonably likely to have a Material Adverse Effect.
23.16     Environmental laws
(a)
It and each of its Subsidiaries is in compliance with clause 26.3 (Environmental compliance) and, so far as it is aware, no circumstances have occurred which would prevent such compliance in a manner or to an extent which has or is reasonably likely to result in a Material Adverse Effect.
(b)
No Environmental Claim has been commenced or, so far as it is aware, is threatened against any member of the Group where that claim has or is reasonably likely, if determined against that member of the Group, to result in a Material Adverse Effect.
(c)
The cost to the Group of compliance with Environmental Laws (including Environmental Permits) is, so far as it is aware, adequately provided for in the most recent audited financial statements of the Company.
23.17 Taxation
(a)
It is not (and none of its Subsidiaries is) materially overdue in the filing of any Tax returns and it is not (and none of its Subsidiaries is) overdue in the payment of any amount in respect of Tax.
(b)
No claims or investigations are being, or are reasonably likely to be, made or conducted against it (or any of its Subsidiaries) with respect to Taxes such that a liability of, or claim against, any member of the Group which would have or is reasonably likely to have a Material Adverse Effect.
(c) It is resident for Tax purposes only in the jurisdiction of its incorporation.
23.18      Security and Financial Indebtedness
(a)
No Security or Quasi-Security exists over all or any of the present or future assets of any member of the Group other than as permitted by this Agreement.
(b)
No member of the Group has any Financial Indebtedness outstanding other than as permitted by this Agreement.
23.19      Good title to assets
It and each of its Subsidiaries has a good, valid and marketable title to, or valid leases or licences of, and all appropriate Authorisations to use, the assets necessary to carry on its business as presently conducted.
23.20      Shares
There are no agreements in force which provide for the issue, allotment or transfer of, or grant any person the right to call for the issue, allotment or transfer of, any share or loan capital of any member of the Group (including any option or right of pre-emption or conversion) other than pursuant to the Share Option Documents.
23.21      Intellectual Property
It and each of its Subsidiaries:
(a)    is the sole legal and beneficial owner of or has licensed to it on normal commercial

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terms all the Intellectual Property which is material in the context of its business and which is required by it in order to carry on its business as it is being conducted and as contemplated to be conducted and where the Intellectual Property is licensed to it, that licence has not been breached in any material respect or terminated by any party;
(b)
does not, in carrying on its businesses, infringe any Intellectual Property of any third party in any respect which has or is reasonably likely to have a Material Adverse Effect; and
(c)
has taken all formal or procedural actions (including payment of fees) required to maintain any Intellectual Property owned by it which is required by it in order to carry on its business as it is being conducted and as contemplated to be conducted.
23.22     Obligors
(a)
Each Subsidiary of the Company incorporated in the United Kingdom (other than a Dormant Subsidiary, Biggleswick Limited, Lumina Trustees Limited and Luxfer Magtech International Limited) and each Material Company (other than the French Subsidiary and the Czech Subsidiary) incorporated in any other jurisdiction is an Obligor on or prior to the Fourth Restatement Date.
(b)
The aggregate:
(i)
earnings before interest, tax and amortisation (calculated on the same basis as EBITA) of the Guarantors on the Closing Date (calculated on an unconsolidated basis and excluding all unrealised intra-Group profits of any member of the Group) exceeds 80% of EBITA of the Group; and
(ii)
gross assets of the Guarantors on the Closing Date (calculated on an unconsolidated basis and excluding all intra-Group items and investments in Subsidiaries of any member of the Group) exceeds 80% of the consolidated gross assets of the Group.
23.23     Accounting reference date
The Accounting Reference Date of each member of the Group is 31 December.
23.24      Centre of main interests and establishments
For the purposes of The Council of the European Union Regulation No. 1346/2000 on Insolvency Proceedings ( Regulation ), its centre of main interest (as that term is used in Article 3(1) of the Regulation) is situated in its jurisdiction of incorporation and it has no establishment (as that term is used in Article 2(h) of the Regulation) in any other jurisdiction.
23.25 Dormant Companies
There are no Dormant Subsidiaries other than:
(a) BAL 1996 Limited;
(b) LGL 1996 Limited; and
(c) Mel Chemicals China Limited.
23.26     No adverse consequences
(a)    It is not necessary under the laws of its Relevant Jurisdictions:

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(i)
in order to enable any Finance Party to enforce its rights under any Finance Document; or
(ii)
by reason of the execution of any Finance Document or the performance by it of its obligations under any Finance Document,
that any Finance Party should be licensed, qualified or otherwise entitled to carry on business in any of its Relevant Jurisdictions.
(b)
No Finance Party is or will be deemed to be resident, domiciled or carrying on business in its Relevant Jurisdictions by reason only of the execution, performance and/or enforcement of any Finance Document.
23.27 US Regulations
(a)    Employee Benefit Plans
(i)
No Obligor or ERISA Affiliate has incurred during any time within the last six years or could be reasonably expected to incur any liability to, or on account of, a Multiemployer Plan as a result of a violation of section 515 of ERISA or pursuant to section 4201, 4204 or 4212(c) of ERISA.
(ii)
Each Employee Plan complies in form and operation in all material respects with ERISA, the Internal Revenue Code and all other applicable laws and regulations.
(iii)
The present value of the aggregate benefit liabilities under each of the Employee Plans (other than any Multiemployer Plan), determined as of the end of such plan's most recently ended plan year on the basis of the actuarial methods and assumptions specified for funding purposes in such plan's most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such plan allocable to such benefit liabilities by more than US$12,000,000 (or its equivalent) in the aggregate for all Employee Plans. The term "benefit liabilities" has the meaning specified in section 4001 of ERISA and the terms "current value" and "present value" have the meaning specified in section 3 of ERISA.
(iv)
There is (to the best of each Obligor's and ERISA Affiliates' knowledge and belief) no litigation, arbitration, administrative proceeding or claim pending or threatened against or with respect to any Employee Plan (other than routine claims for benefits) which has or, if adversely determined, could reasonably be expected have a Material Adverse Effect.
(v)
Within the last 6 years, each Obligor and each ERISA Affiliate has made all material contributions to each Employee Plan and Multiemployer Plan required by law within the applicable time limits prescribed by law, the terms of that plan and any contract or agreement requiring contributions to that plan.
(vi)
No Obligor or ERISA Affiliate has ceased operations at a facility so as to be subject to the provisions of section 4062(e) of ERISA, withdrawn as a substantial employer so as to be subject to the provisions of section 4063 of ERISA, or ceased making contributions to any Employee Plan subject to section 4064(a) of ERISA to which it made contributions.
(vii)
No Obligor or ERISA Affiliate has incurred any material liability to the PBGC, which remains outstanding or could reasonably be expected to incur any material liability to the PBGC.

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(viii)
No ERISA Event has occurred or, as at the date of this Agreement, is reasonably likely to occur that could reasonably be expected to have a Material Adverse Effect.
(b)    Margin Regulations
(i)
The proceeds of any Utilisation will not be used, directly or indirectly, in whole or in part, for purchasing or carrying Margin Stock or for any purpose which might (whether immediately, incidentally or ultimately) cause all or any part of the Facilities to be a purpose credit within the meaning of Regulation T, U or X.
(ii)
Following the application of the proceeds of any Utilisation, not more than 25 per cent of the value of the assets of the Obligors, as a group (on a consolidated basis), will be invested in Margin Stock.
(iii)
Neither any Obligor nor any agent acting on its behalf has taken or will take any action which might cause any document delivered under or in connection with the Facility to violate any regulation of the Board of Governors of the Federal Reserve System (including Regulation T, U or X) or violate the United States Securities Exchange Act of 1934 or any applicable US federal or state securities law.
(c)    Other US Regulation
(i)    No Obligor or any Affiliate of an Obligor is:
(A)
a public utility within the meaning of, or subject to regulation under, the United States Federal Power Act of 1920
(B)
an investment company or a company controlled by an investment company within the meaning of the United States Investment Company Act of 1940 or
(C)
subject to regulation under any United States federal or state law or regulation that limits its ability to incur or guarantee indebtedness.
(d)    Anti-Terrorism Law
No Obligor or any of its Subsidiaries or any of its Affiliates or Holding Companies, or to its knowledge any of their respective brokers or other agents acting or benefiting in any capacity in connection with the Facilities:
(i)
is in violation of any Anti-Terrorism Law or
(ii)
is a Designated Person.
23.28      Sanctions
The Company represents that neither the Company nor any member of the Group (collectively for the purpose of this clause only, the Company) or, to the knowledge of the Company, any director, officer, employee, agent, affiliate or representative of the Company is an individual or entity ( Person ) currently the subject of any sanctions administered or enforced by OFAC, the United Nations Security Council ( UNSC ), the European Union, Her Majesty's Treasury ( HMT ), or other relevant sanctions authority (collectively, Sanctions ), nor is the Company located, organised or resident in a country or territory that is the subject of Sanctions. The Company represents and covenants that it will not, directly or indirectly, use the proceeds of the transaction, or lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other Person, to fund any activities of or business with any Person, or in Burma/Myanmar, Cuba, Iran, Libya, North Korea, Sudan, Syria, Crimea region with Ukraine or in any other country or territory, that, at the time of such funding would result in a violation by any Person

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(including any Person participating in the transaction, whether as underwriter, advisor, investor or otherwise) of Sanctions.
23.29     Anti-corruption law
Each member of the Group has conducted its businesses in compliance with applicable anticorruption laws and has instituted and maintained policies and procedures designed to promote and achieve compliance with such laws.
23.30      Times when representations made
(a)
All the representations and warranties in this clause 23 are made by each Obligor on the date of this Agreement and the Fourth Restatement Date.
(b)
The Repeating Representations are deemed to be made by each Obligor on the date of each Utilisation Request, on each Utilisation Date and on the first day of each Interest Period (except that those contained in clause 23.13(a) to 23.13(e) will cease to be so made once subsequent financial statements have been delivered under this Agreement).
(c)
All the representations and warranties in this clause 23 except clause 23.12 and clause 23.25 are deemed to be made by each Additional Obligor on the day on which it becomes (or it is proposed that it becomes) an Additional Obligor.
(d)
Each representation or warranty deemed to be made after the date of this Agreement shall be deemed to be made by reference to the facts and circumstances existing at the date the representation or warranty is deemed to be made.
24    Information undertakings
The undertakings in this clause 24 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
24.1     Financial statements
The Company shall supply to the Agent in sufficient copies for all the Lenders:
(a)
as soon as they are available, but in any event within 180 days after the end of each of its Financial Years:
(i)
its audited consolidated financial statements for that Financial Year; and
(ii)
the financial statements (consolidated if appropriate) of each Obligor (audited where required under the Relevant Jurisdiction) for that Financial Year;
(b)
as soon as they are available, but in any event within 45 days after the end of each calendar month its management financial statements on a consolidated basis for that calendar month and for the Financial Year to date.
24.2     Provision and contents of Compliance Certificate
(a)
The Company shall supply a Compliance Certificate to the Agent with each set of its Annual Financial Statements and each set of its Quarterly Financial Statements.
(b)
The Compliance Certificate shall, amongst other things, set out (in reasonable detail) computations as to compliance with clause 25 (Financial covenants).
(c)
Each Compliance Certificate delivered with each set of its Annual Financial Statements and each set of its Quarterly Financial Statements (other than the Compliance Certificate

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delivered with the last set of Quarterly Financial Statements of each Financial Year) shall be signed by two directors of the Company.
24.3      Requirements as to financial statements
(a)    The Company shall procure that:
(i)
each set of Annual Financial Statements shall be audited by the auditors and shall include the audited profit and loss accounts, balance sheets and cashflow statements of each Obligor (prepared in the case of the Company on a consolidated basis); and
(ii)
each set of Monthly Financial Statements shall be in the form of the monthly management accounts supplied by the Company to the Agent pursuant to clause 4.1 (Initial conditions precedent).
(b)    Each set of financial statements delivered pursuant to clause 24.1:
(i)
in the case of the Annual Financial Statements, shall be accompanied by any letter addressed to the management of the relevant company (to the extent the Company receives such a letter) by the auditors accompanying those Annual Financial Statements;
(ii)
in the case of the Monthly Financial Statements of the Company, shall be accompanied by a commentary by the finance director of the Company comparing actual performance for the period to which the financial statements relate to:
(A)
the projected performance for that period set out in the Budget; and
(B)
the actual performance for the corresponding period in the preceding Financial Year; and
(iii)    shall be prepared in accordance with Accounting Principles.
(c)
Where there is a change in the Accounting Principles, accounting practices or financial reference periods to those applied:
(i)
in the case of the Company, in the preparation of the audited consolidated financial statements for the Financial Year ended 31 December 2016; and
(ii)
in the case of any Obligor, in the preparation of the financial statements, audited where required by local law, for the Financial Year ended 31 December 2016 for that Obligor which has an effect on:
(A)
the determination of EBIT, EBITA or EBITDA, which results in EBIT, EBITA or EBITDA being increased or decreased by not less than $500,000 as a result of such change;
(B)
the determination of Total Net Debt, which results in Total Net Debt being increased or decreased by not less than $1,000,000 as a result of such change;
(C)
the determination of Net Finance Charges, which results in Net Finance Charges being increased or decreased by not less than $200,000 as a result of such change; or

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(D)
the determination of the gross assets for any Guarantor, which results in the amount of gross assets being increased or decreased by not less than $1,000,000 as a result of such change,
in relation to any set of financial statements, the Company shall notify the Agent that there has been a change in the Accounting Principles, the accounting practices or the financial reference period and (1) in relation to the Monthly Financial Statements, the Company and (2) in relation to the Annual Financial Statements, the Auditors (or, if appropriate, the auditors of the relevant Obligor), shall deliver, to the Agent sufficient information, in form and substance as may be reasonably required by the Agent, to enable the Lenders to determine the Margin for the purposes of clause 15.1 (Margin adjustment), to determine whether clause 25 (Financial covenants) has been complied with and/or to determine whether clause 26.30 (Guarantors) and/or clause 30.4(a) (Additional Guarantors) has been complied with (in each case, assuming that no such change of Accounting Principles, the accounting practices or the financial reference period had occurred) and to make an accurate comparison between the financial position indicated in those financial statements and the audited consolidated financial statements for the Financial Year ended 31 December 2016 (in the case of the Company) or that Obligor's financial statements for the Financial Year ended 31 December 2016 (in the case of an Obligor).
(d)
If at any time a Default is continuing the Agent wishes to discuss the financial position of any member of the Group with the auditors, the Agent may notify the Company, stating the questions or issues which the Agent wishes to discuss with the auditors. In this event, the Company must ensure that the auditors are authorised (at the expense of the Company):
(i)
to discuss the financial position of each member of the Group with the Agent on request from the Agent; and
(ii)
to disclose to the Agent for the Finance Parties any information which the Agent may reasonably request.
24.4     Budget
(a)
The Company shall supply to the Agent in sufficient copies for all the Lenders, as soon as the same become available but in any event before the start of each of its Financial Years, an annual Budget for that Financial Year.
(b)    The Company shall ensure that each Budget:
(i)    is in a form acceptable to the Agent and includes:
(A)
a projected consolidated profit and loss, balance sheet and cashflow statement for each principal division of the Group; and
(B)
projected financial covenant calculations for that Financial Year;
(ii)
is prepared in accordance with the Accounting Principles and the accounting practices and financial reference periods applied to financial statements under clause 24.1; and
(iii)    has been approved by the board of directors of the Company.
(c)
If the Company materially updates or changes the Budget, it shall promptly and within not more than 15 Business Days of the update or change being made deliver to the Agent,

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in sufficient copies for each of the Lenders, such updated or changed Budget together with a written explanation of the main changes in that Budget.
24.5      Year-end
The Company shall procure that each Financial Year-end of each member of the Group falls on 31 December save where otherwise required by law in any Relevant Jurisdiction.
24.6     Information: miscellaneous
The Company shall supply to the Agent (in sufficient copies for all the Lenders, if the Agent so requests):
(a)
at the same time as they are dispatched, copies of all documents dispatched by the Company to its shareholders generally (or any class of them) or dispatched by the Company or any Obligor to its creditors generally (or any class of them);
(b)
promptly upon becoming aware of them, the details of any litigation, arbitration or administrative proceedings which are current, threatened or pending against any member of the Group, and which, if adversely determined, would have a Material Adverse Effect;
(c)
promptly upon becoming aware of them, the details of any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body which is made against any member of the Group and which is reasonably likely to have a Material Adverse Effect;
(d)
promptly on the reasonable request of the Agent, such further information regarding the financial condition, assets and operations of the Group and/or any member of the Group (including any requested amplification or explanation of any item in the financial statements, Budget or other material provided by any Obligor under this Agreement); and
(e)
any changes to the main board or the executive board of the Company and an up to date copy of its register of members (or equivalent in its jurisdiction of incorporation)) as any Finance Party through the Agent may reasonably request (provided that the Agent shall not request a copy of its register of members more frequently than twice in any Financial Year unless the Agent requires the register of members for know your customer requirements and/or if the Agent suspects that there has been a Change of Control).
24.7     Notification of default
(a)
Each Obligor shall notify the Agent of any Default (and the steps, if any, being taken to remedy it) promptly upon becoming aware of its occurrence (unless such a notification has already been provided by another Obligor).
(b)
If the Agent reasonably suspects that a Default is continuing promptly upon a request by the Agent, the Company shall supply to the Agent a certificate signed by two of its directors certifying that no Default is continuing (or if a Default is continuing, specifying the Default and the steps, if any, being taken to remedy it).
24.8     "Know your customer" checks
(a)    If:
(i)
the implementation or introduction of or any change in (or in the interpretation, administration or application of) any law or regulation made after the date of this Agreement;

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(ii)
any change in the status of an Obligor or the composition of the shareholders of an Obligor after the date of this Agreement; or
(iii)
a proposed assignment or transfer by a Lender of any of its rights and/or obligations under this Agreement to a party that is not a Lender prior to such assignment or transfer,
obliges the Agent or any Lender (or, in the case of clause 24.8(a)(iii), any prospective new Lender) to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, each Obligor shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent, such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations pursuant to the transactions contemplated in the Finance Documents.
(b)
Each Lender shall promptly upon the request of the Agent supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself) in order for the Agent to carry out and be satisfied with the results of all necessary "know your customer" or other checks on Lenders or prospective new Lenders pursuant to the transactions contemplated in the Finance Documents.
(c)
The Company shall, by not less than ten Business Days prior written notice to the Agent, notify the Agent (who shall promptly notify the Lenders) of its intention to request that one of its Subsidiaries becomes an Additional Obligor pursuant to clause 30 (Changes to the Obligors).
(d)
Following the giving of any notice pursuant to clause 24.8(c), if the accession of such Additional Obligor obliges the Agent or any Lender to comply with "know your customer" or similar identification procedures in circumstances where the necessary information is not already available to it, the Company shall promptly upon the request of the Agent or any Lender supply, or procure the supply of, such documentation and other evidence as is reasonably requested by the Agent (for itself or on behalf of any Lender) or any Lender (for itself or on behalf of any prospective new Lender) in order for the Agent or such Lender or any prospective new Lender to carry out and be satisfied it has complied with all necessary "know your customer" or other checks in relation to any relevant person pursuant to such Subsidiary becoming an Additional Obligor.
24.9     ERISA
Each Obligor will:
(a)
promptly upon a request by the Lender, deliver to the Lender copies of the Annual Report (IRS form 5500 Series) together with all schedules and documentation reasonably requested by the Agent with respect to each Employee Plan; and
(b)
within 21 Business Days after it or any ERISA Affiliate becomes aware that any ERISA Event has occurred or, in the case of any ERISA Event which requires advance notice under section 4043(b) of ERISA, will occur, deliver to the Lender a statement signed by a director, member or officer of the Obligor or ERISA Affiliate describing that ERISA Event and the action, if any, taken or proposed to be taken with respect to that ERISA Event.
25    Financial covenants
25.1
Financial definitions

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In this Agreement:
Adjusted Acquisition EBITDA means in respect of any Relevant Period, EBITDA for that Relevant Period after:
(a)
including the operating profit before interest, tax, depreciation, amortisation and impairment charges (calculated on the same basis as EBITDA) of a member of the Group for the Relevant Period (or attributable to a business or assets acquired during the Relevant Period) prior to its becoming a member of the Group or (as the case may be) prior to the acquisition of the business or assets; and
(b)
excluding operating profit before interest, tax, depreciation, amortisation and impairment charges (calculated on the same basis as EBITDA) attributable to any member of the Group (or to any business or assets) disposed of during the Relevant Period.
Average Exchange Rate means the 12 month average of the month end exchange rates as referenced to Reuters.
Current Assets means the aggregate (on a consolidated basis) of all inventory, work in progress, trade and other receivables of each member of the Group including prepayments in relation to operating items and sundry debtors (but excluding cash and Cash Equivalent Investments) maturing within 12 Months from the date of computation but excluding amounts in respect of:
(a)
receivables in relation to corporation and deferred Tax;
(b)
Exceptional Items and other non-operating items;
(c)
insurance claims; and
(d)
any interest owing to any member of the Group.
Current Liabilities means the aggregate (on a consolidated basis) of all liabilities (including trade creditors, accruals and provisions) of each member of the Group falling due within 12 Months from the date of computation but excluding amounts in respect of:
(a)
liabilities for Financial Indebtedness and Finance Charges;
(b)
liabilities for corporation and deferred Tax;
(c)
Exceptional Items and other non-operating items;
(d)
insurance claims; and
(e)
liabilities in relation to dividends declared but not paid by the Company or by a member of the Group in favour of a person which is not a member of the Group.
EBIT means in respect of any Relevant Period the consolidated operating profit of the Company before taxation (excluding the results from discontinued operations):
(a)
before deducting any interest, commission, fees, discounts, prepayment fees, premiums or charges, gains or losses on Financial Indebtedness and other finance payments whether paid, payable or capitalised by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period;
(b)
not including any accrued interest owing or paid to any member of the Group;
(c)
before taking into account any Exceptional Items;
(d)
before deducting any Transaction Costs;

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(e)
before taking into account any gain or loss arising from an upward or downward revaluation of any other asset except for the impairment of working capital items;
(f)
after deducting the amount of any profit (or adding back the amount of any loss) of any member of the Group which is attributable to minority interests;
(g)
before taking into account any unrealised gains or losses on any derivative instrument (other than any derivative instrument which is accounted for on a hedge accounting basis); and
(h)
excluding any profit or loss arising from the disposal of fixed assets,
in each case to the extent added, deducted or taken into account, as the case may be, for the purposes of determining operating profits of the Group before taxation.
EBITA means in respect of any Relevant Period, EBIT for that Relevant Period after adding back any amount attributable to the impairment or amortisation of assets or impairment of members of the Group and non-cash based charges and amortisation costs associated with equity stock-based compensation schemes for that Relevant Period.
EBITDA means in respect of any Relevant Period, EBITA for that Relevant Period after adding back any amount attributable to the depreciation of assets of members of the Group for that Relevant Period.
Exceptional Items means any exceptional, one-off or non-recurring items which represent gains or losses including (without limitation) those arising on:
(a)
the restructuring of the activities of an entity, including the associated redundancy programme costs and reversals of any provisions for the cost of restructuring;
(b)
disposals, revaluations or impairment of non-current assets;
(c)
disposals of assets associated with discontinued operations and acquisition costs in relation to the acquisition of new operations;
(d)
Environmental remediation costs and provisions – not in the ordinary course of business;
(e)
one-off gains and losses recognised on the early termination, curtailment or change in employee retirement defined benefits; and
(f)
disposal of a business operation whereby this is not classified as a discontinued operation for accounting purposes.
Finance Charges means for any Relevant Period the aggregate amount of the accrued interest, commission, fees, discounts, prepayment fees, premiums or charges and other finance payments in respect of Financial Indebtedness whether paid payable or capitalised by any member of the Group (calculated on a consolidated basis) in respect of that Relevant Period:
(a)
excluding any upfront fees or costs;
(b)
including the interest (but not the capital) element of payments in respect of Finance Leases;
(c)
including any commission, fees, discounts and other finance payments payable by (and deducting any such amounts payable to) any member of the Group under any interest rate hedging arrangement;
(d)
taking no account of any unrealised gains or losses on any financial instruments other than any derivative investments which are accounted for on a hedge accounting basis;
(e)
excluding any Transaction Costs; and

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(f)
excluding any interest cost or expected return on plan assets in relation to any post employment benefit schemes,
so that no amount shall be added (or deducted) more than once.
Financial Quarter means a 3 calendar months period ending on 31 March, 30 June, 30 September or 31 December in any Financial Year.
Financial Year means a financial year of the Company.
Interest Cover means the ratio of EBITDA to Net Finance Charges in respect of any Relevant Period.
Leverage means in respect of any Relevant Period the ratio of Total Net Debt on the last day of that Relevant Period to Adjusted Acquisition EBITDA in respect of that Relevant Period.
Net Finance Charges means, for any Relevant Period, the Finance Charges for that Relevant Period after deducting any interest payable in that Relevant Period to any member of the Group on any cash or Cash Equivalent investment.
Non-Group Entity means any investment or entity (which is not itself a member of the Group (including associates) in which any member of the Group has an ownership interest.
Relevant Period means in respect of Leverage and Interest Cover each 12 Month period ending on the last day of the Financial Year and each 12 Month period ending on the last day of each Financial Quarter.
Total Debt means at any time the aggregate amount of all obligations of members of the Group for or in respect of Financial Indebtedness at that time but:
(a)
excluding any such obligations to any other member of the Group;
(b)
including in the case of Finance Leases only their capitalised value;
(c)
excluding unrealised gains and losses on Treasury Transactions (including currency exchange gains and losses); and
(d)
excluding any obligations in respect of performance bonds issued in the ordinary course of trading in respect of non-financial obligations to the extent such performance bonds are not called or enforced,
and so that no amount shall be included or excluded more than once.
Total Net Debt means Total Debt less the aggregate amount of cash and Cash Equivalent Investments held by an Obligor at that time and so that no amount shall be included or excluded more than once.
Working Capital means on any date Current Assets less Current Liabilities.
25.2     Financial Condition
The Company shall ensure that:
(a)
Interest Cover: Interest Cover in respect of any Relevant Period shall not be less than 4.0:1.
(b)
Leverage: Subject to clause 25.4 (Permitted Temporary Leverage Increase), Leverage in respect of any Relevant Period shall not exceed 3.0:1.

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(c)
Capital expenditure: The aggregate capital expenditure of the Group (other than capital expenditure funded by the retention of Excluded Insurance Proceeds referred to in paragraphs (i)(C) and (i)(D) of the definition of “Excluded Insurance Proceeds” in accordance with clause 11.2 (Disposal and Insurance)) in respect of any Financial Year shall not exceed $25,000,000.
If in any Financial Year (the " Original Financial Year ") the amount of the capital expenditure is less than the maximum amount permitted for that Original Financial Year (the difference being referred to below as the " Unused Amount "), then the maximum expenditure amount for the immediately following Financial Year (the " Carry Forward Year ") shall be increased by an amount (the " Permitted Carry Forward Amount ") equal to the Unused Amount.
In any Carry Forward Year, the original $25,000,000 specified above for that Financial Year shall be treated as having been incurred prior to any Permitted Carry Forward Amount carried forward into that Carry Forward Year and no amount carried forward into that Carry Forward Year may be carried forward into a subsequent Financial Year.
25.3     Financial testing
(a)
The financial covenants set out in clause 25.2 shall be calculated in accordance with the Accounting Principles and tested by reference to:
(i)
the Annual Financial Statements; and
(ii)
the Quarterly Financial Statements for the Relevant Period.
(b)
If in respect of any period there is a discrepancy between the information set out in the Quarterly Financial Statements for such period and that set out in the Annual Financial Statements for such period, the information in the Annual Financial Statements shall prevail.
(c)
In respect of any Relevant Period, the exchange rate used to calculate Total Net Debt shall be the Average Exchange Rate for that Relevant Period.
25.4      Permitted Temporary Leverage Increase
(a)
Subject to clauses 25.4(b) and 25.4(c), the Company shall be entitled to serve notice on the Agent requesting a temporary increase in the Leverage ratio set out in clause 25.2(b) (Financial Condition) ( Leverage Increase Request ) provided:
(i)
such increase is being requested in connection with a Relevant Permitted Acquisition; and
(ii)
no Event of Default is continuing as at the date of such notice.
(b)    A Leverage Increase Request must:
(i)
be in writing and be delivered to the Agent not less than 17 Business Days before the proposed completion date of the Relevant Permitted Acquisition; and
(ii)
contain details of the Relevant Permitted Acquisition and the proposed temporary increase in, and proposed period of, the Leverage covenant ratio.
(c)
The Company shall, promptly and in any event within 5 Business Days of the Agent's request, provide to the Agent all information relating to the Relevant Permitted Acquisition as may be reasonably requested by the Lenders in order that they may consider a Leverage Increase Request, including, without limitation, financial information regarding

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the relevant target, provided the Company is able to disclose such information without damaging business relationships or breaching any applicable legal obligations based on any statute, rule or regulation not to disclose such information.
(d)
The Lenders shall respond to any Leverage Increase Request by the date falling 15 Business Days after the date the Agent receives the Leverage Increase Request ( Response Date ).
(e)
All the Lenders must approve the Leverage Increase Request and the Lenders shall have an absolute discretion as to whether to approve any such Leverage Increase Request.
(f)
If a Lender fails to respond or approve the Leverage Increase Request by the Response Date, the failure to respond or approve the Leverage Increase Request shall be deemed to be a rejection of such Leverage Increase Request by that Lender.
(g)
The Agent shall notify the Company of any rejection of any Leverage Increase Request by any Lender or, if applicable, notify the Company of the conditions subject to which a Lender shall approve the Leverage Increase Request.
(h)
If the terms of the Leverage Increase Request are consented to by all the Lenders, the Company and the Agent shall be authorised to make such amendments to the terms of the Agreement as may be required to effect the temporary increase in the Leverage ratio set out in clause 25.2(b) (Financial Condition) for the agreed period.
(i)
No more than one Leverage Increase Request may be delivered by the Company or granted by the Lenders in any 12 Month period.
26    General undertakings
The undertakings in this clause 26 remain in force from the date of this Agreement for so long as any amount is outstanding under the Finance Documents or any Commitment is in force.
26.1     Authorisations
Each Obligor shall promptly:
(a)
obtain, comply with and do all that is necessary to maintain in full force and effect; and
(b)
upon request by the Agent, supply certified copies to the Agent of, any Authorisation required under any law or regulation of a Relevant Jurisdiction to:
(i)
enable it to perform its obligations under the Finance Documents;
(ii)
ensure the legality, validity, enforceability or admissibility in evidence of any Finance Document; and
(iii)
carry on its business where failure to do so has or is reasonably likely to have a Material Adverse Effect.
26.2      Compliance with laws
Each Obligor shall (and the Company shall ensure that each member of the Group will) comply in all respects with all laws to which it may be subject, if failure so to comply has or is reasonably likely to have a Material Adverse Effect.
26.3      Environmental compliance

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Each Obligor shall (and the Company shall ensure that each member of the Group will):
(a)
comply with all Environmental Law;
(b)
obtain, maintain and ensure compliance with all requisite Environmental Permits; and
(c)
implement procedures to monitor compliance with and to prevent liability under any Environmental Law,
where failure to do so has or is reasonably likely to have a Material Adverse Effect.
26.4      Environmental claims
Each Obligor shall (and the Company shall ensure that each member of the Group will) promptly upon becoming aware of the same, inform the Agent in writing of:
(a)
any Environmental Claim against any member of the Group which is current, pending or threatened; and
(b)
any facts or circumstances which are reasonably likely to result in any Environmental Claim being commenced or threatened against any member of the Group,
where the claim, if determined against that member of the Group, has or is reasonably likely to have a Material Adverse Effect.
26.5      Taxation
(a)
Each Obligor shall pay and discharge all Taxes imposed upon it or its assets within the time period allowed without incurring penalties unless and only to the extent that:
(i)
such payment is being contested in good faith;
(ii)
adequate reserves are being maintained for those Taxes and the costs required to contest them in accordance with the Accounting Principles; and
(iii)
such payment can be lawfully withheld and failure to pay those Taxes does not have or is not reasonably likely to have a Material Adverse Effect.
(b)
No Obligor may change its residence for Tax purposes, where such change would have an adverse effect on the interests of the Lenders in the opinion of the Agent (acting reasonably).
26.6      Merger
No Obligor shall enter into any amalgamation, demerger, merger, consolidation or corporate reconstruction without the prior written consent of the Agent (acting on the instructions of the Majority Lenders (such consent not to be unreasonably withheld or delayed)).
26.7      Change of business
The Company shall procure that no substantial change is made to the general nature of the business of the Company, the Obligors or the Group taken as a whole from that carried on by the Group at the date of this Agreement.
26.8     Acquisitions
(a)
No Obligor shall (and the Company shall ensure that no other member of the Group will):

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(i)
acquire a company or any shares or securities or a business or undertaking (or, in each case, any interest in any of them); or
(ii)
incorporate a company.
(b)
Clause 26.8(a) does not apply to an acquisition of a company, of shares, securities or a business or undertaking (or, in each case, any interest in any of them) or the incorporation of a company which is a Permitted Acquisition or a Permitted Transaction.
26.9      Joint ventures
No Obligor shall (and the Company shall ensure that no member of the Group will):
(a)
enter into, invest in or acquire (or agree to acquire) any shares, stocks, securities or other interest in any Joint Venture; or
(b)
transfer any assets or lend to or guarantee or give an indemnity for or give Security for the obligations of a Joint Venture or maintain the solvency of or provide working capital to any Joint Venture (or agree to do any of the foregoing).
Clause 26.9(a) and (b) above does not apply to any Joint Venture which is a Permitted Joint Venture.
26.10      Preservation of Assets
Each Obligor shall maintain in good working order and condition (ordinary wear and tear excepted) all of its assets necessary in the conduct of its business, provided that this clause 26.10 shall not prevent the Company or any member of the Group from discontinuing the operation and the maintenance of any of its assets if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.
26.11      Pari passu ranking
Each Obligor shall (and the Company shall ensure that each member of the Group will) ensure that at all times any unsecured and unsubordinated claims of a Finance Party against it under the Finance Documents rank at least pari passu with the claims of all its other unsecured and unsubordinated creditors except those creditors whose claims are mandatorily preferred by laws of general application to companies.
26.12      Negative pledge
In this Agreement, Quasi-Security means an arrangement or transaction described in clause 26.12(b).
(a)
No Obligor shall (and the Company shall ensure that no other member of the Group will) create or permit to subsist any Security over any of its assets.
(b)
No Obligor shall (and the Company shall ensure that no other member of the Group will):
(i)
sell, transfer or otherwise dispose of any of its assets on terms whereby they are or may be leased to or re-acquired by an Obligor or any other member of the Group;
(ii)
sell, transfer or otherwise dispose of any of its receivables on recourse terms;

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(iii)
enter into any arrangement under which money or the benefit of a bank or other account may be applied, set-off or made subject to a combination of accounts; or
(iv)
enter into any other preferential arrangement having a similar effect,
in circumstances where the arrangement or transaction is entered into primarily as a method of raising Financial Indebtedness or of financing the acquisition of an asset.
(c)
Clauses 26.12(a) and 26.12(b) do not apply to any Security or (as the case may be) Quasi-Security, which is (i) Permitted Security or (ii) created or subsists as a result of a Permitted Transaction.
26.13     Disposals
(a)
No Obligor shall (and the Company shall ensure that no member of the Group will) enter into a single transaction or a series of transactions (whether related or not) and whether voluntary or involuntary to sell, lease, transfer or otherwise dispose of any asset.
(b)
Clause 26.13(a) above does not apply to any sale, lease, transfer or other disposal which is:
(i)
a Permitted Disposal; or
(ii)
a sale, lease, transfer or other disposal that does not constitute a Permitted Disposal where the Disposal Proceeds of such transaction are applied in accordance with clause 11.2(c) ( Disposal and Insurance ); or
(iii) a Permitted Transaction.
26.14      Arm's length basis
(a)
No Obligor shall (and the Company shall ensure no member of the Group will) enter into any transaction with any person except on arm's length terms and for full market value.
(b)
Clause 26.14(a) does not apply to:
(i)
intra-Group loans permitted under clause 26.15;
(ii)
fees, costs and expenses payable under the Transaction Documents in the amounts set out in the Transaction Documents delivered to the Agent under clause 4.1 (Initial conditions precedent) or agreed by the Agent;
(iii)
any Permitted Transaction;
(iv)
the sale and/or licensing by Revere Graphics Worldwide of certain Intellectual Property for a nominal amount to a third party as approved by the Federal Trade Commission in the US; or
(v) transactions between members of the Group.
26.15      Loans or credit
(a)
No Obligor shall (and the Company shall ensure that no member of the Group will) be a creditor in respect of any Financial Indebtedness.
(b) Clause 26.15(a) does not apply to a Permitted Loan or a Permitted Transaction.
26.16      No Guarantees or indemnities

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(a)
No Obligor shall (and the Company shall ensure that no member of the Group will) incur or allow to remain outstanding any guarantee in respect of any obligation of any person.
(b) Clause 26.16(a) does not apply to a Permitted Guarantee or a Permitted     Transaction.
26.17      Dividends and share redemption
(a)    The Company shall not (and the Company shall ensure that no member of the Group         will):
(i)
declare, make or pay any dividend, charge, fee or other distribution (or interest on any unpaid dividend, charge, fee or other distribution) (whether in cash or in kind) on or in respect of its share capital (or any class of its share capital);
(ii)
repay or distribute any dividend or share premium reserve;
(iii)
pay or allow any member of the Group to pay any management, advisory or other fee to or to the order of any of the shareholders of the Company; or
(iv)
redeem, repurchase, defease, retire or repay any of its share capital or resolve to do so.
(b)    Clause 26.17(a) does not apply to a Permitted Distribution or a Permitted Transaction (other than as referred to in paragraph (c) of the definition of “ Permitted Transaction ”).
26.18      Financial Indebtedness
(a)
No Obligor shall (and the Company shall ensure that no member of the Group will) incur or allow to remain outstanding any Financial Indebtedness.
(b)
Clause 26.18(a) does not apply to Permitted Financial Indebtedness or a Permitted Transaction.
26.19      Share capital
(a)
No Obligor shall (and the Company shall ensure no member of the Group will) issue any shares.
(b) Clause 26.19(a) does not apply to a Permitted Share Issue or a Permitted     Transaction.
26.20      Insurance
The Obligors shall maintain insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.
26.21      Pensions
(a)
The Company shall ensure that all pension schemes operated by or maintained for the benefit of members of the Group and/or any of its employees are funded in accordance with the statutory funding objective under sections 221 and 222 of the Pensions Act 2004 and that no action or omission is taken by any member of the Group in relation to such a pension scheme which has or is reasonably likely to have a Material Adverse Effect (including, without limitation, the termination or commencement of winding-up

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proceedings of any such pension scheme or any member of the Group ceasing to employ any member of such a pension scheme).
(b)
Except for the Defined Benefit Schemes, the Company shall ensure that no member of the Group is or has been at any time an employer (for the purposes of sections 38 to 51 of the Pensions Act 2004) of an occupational pension scheme which is not a money purchase scheme (both terms as defined in the Pension Schemes Act 1993) or connected with or an associate of (as those terms are used in sections 38 or 43 of the Pensions Act 2004) such an employer.
(c)
If requested, the Company shall deliver to the Agent at such times as those reports are prepared in order to comply with the then current statutory or auditing requirements (as applicable either to the trustees of any relevant schemes or to the Company), the actuarial reports in relation to all pension schemes mentioned in clause 26.21(a).
(d)
The Company shall promptly notify the Agent of any material change in the rate of contributions to any pension schemes mentioned in clause 26.21(a) above paid or recommended to be paid (whether by the scheme actuary or otherwise) or required (by law or otherwise).
(e)
Each Obligor shall as soon as it becomes aware of it immediately notify the Agent of any investigation or proposed investigation by the Pensions Regulator which may lead to the issue of a Financial Support Direction or a Contribution Notice to any member of the Group.
(f)
Each Obligor shall immediately notify the Agent if it receives a Financial Support Direction or a Contribution Notice from the Pensions Regulator.
(g)
No Canadian Obligor maintains or is required to make contributions to any pension plan registered under the Income Tax Act (Canada), the Pension Benefits Act (Ontario) or any other applicable pension standards legislation which contains a “defined benefit provision”, as such term is defined in subsection 147.1(1) of the Income Tax Act (Canada). All obligations of each Canadian Obligor (including fiduciary, funding, investment and administration obligations) required to be performed in connection with the Pension Plans and the funding agreements thereunder have been performed on a timely basis except as would not have or is reasonably likely to have a Material Adverse Effect (including, without limitation, the termination or commencement of winding-up proceedings of any such pension plan). There are no outstanding disputes concerning the assets of any pension plan maintained by a Canadian Obligor and there have been no improper withdrawals of any assets of any pension plan maintained by a Canadian Obligor except as would not have or be reasonably likely to have a Material Adverse Effect. All assessments owed to the Pension Benefits Guarantee Fund established under the Pension Benefits Act (Ontario), or other assessments or payments required under similar legislation in any other Canadian jurisdiction have been paid when due in respect of each pension plan maintained by a Canadian Obligor except as would not have or would be reasonably likely to have a Material Adverse Effect.
26.22
Intellectual Property
Each Obligor shall:
(a)
preserve and maintain the subsistence and validity of the Intellectual Property necessary for the business of the relevant Obligor;
(b)
use reasonable endeavours to prevent any infringement in any material respect of the Intellectual Property;

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(c)
make registrations and pay all registration fees and Taxes necessary to maintain the Intellectual Property that the relevant Obligor is required to maintain under clause 26.22(a) above in full force and effect and record its interest in that Intellectual Property;
(d)
not use or permit the Intellectual Property to be used in a way or take any step or omit to take any step in respect of that Intellectual Property which may materially and adversely affect the existence or value of the Intellectual Property or imperil the right of any Obligor to use such property; and
(e)
not discontinue the use of the Intellectual Property,
where failure to do so, in the case of clause 26.22(a) and clause 26.22(b) or, in the case of clause 26.22(d) and clause 26.22(e), such use, permission to use, omission or discontinuation is reasonably likely to have a Material Adverse Effect.
26.23      Transaction Documents
(a)
No Obligor shall amend, vary, novate, supplement, supersede, waive or terminate any term of a Transaction Document (subject to paragraph (b), other than a Note Document) or any other document delivered to the Agent pursuant to clause 4.1 (Initial conditions precedent) or clause 30 (Changes to the Obligors) or enter into any agreement with any shareholders of the Company or any of their Affiliates which is not a member of the Group except in writing:
(i)
in accordance with the provisions of clause 40 (Amendments and waivers);
(ii)
prior to or on the Closing Date, with the prior written consent of the Original Lenders; or
(iii)
after the Closing Date, in a way which could not be reasonably expected materially and adversely to affect the interests of the Lenders.
(b)
No Obligor shall amend or waive the terms of the Note Documents if the amendment or waiver is:
(i)
an amendment or waiver constituting an increase in the aggregate principal amount of the Notes (other than a Permitted Note Increase);
(ii)
an amendment or waiver making the due date of payment of any amount under the Note Documents earlier than as set out in the Note Documents;
(iii)
an amendment or waiver constituting an increase in, or addition of, any fees or commission other than such an increase or addition which is:
(A) contemplated by the Note Documents; or
(B) a Permitted Note Increase; or
(iv)
an amendment or waiver the effect of which is to make any member of the Group liable to make additional or increased payments not:
(A) provided for under the Note Documents; or
(B) a Permitted Note Increase
unless the prior consent of the Majority Lenders is obtained

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(c)
The Company shall promptly supply to the Agent a copy of any document relating to any of the matters referred to in clause 26.23(a)(i) to 26.23(a)(iii) and clause 26.23(b) above.
(d)
Each Obligor shall (and the Company shall ensure that each member of the Group will) comply with the material terms of all Transaction Documents to which it is party.
26.24      Financial assistance
Any Obligor which is incorporated in any jurisdiction other than England and Wales shall comply with any law or regulation on financial assistance or its equivalent in that jurisdiction.
26.25      Group bank accounts
Each Obligor shall, where in the reasonable opinion of the Company it is commercially reasonable to do so, ensure that within 3 months of the Closing Date all its bank accounts in the United Kingdom or the US (other than Excluded Deposit Accounts) shall be opened and maintained with banks or financial institutions that are Acceptable Banks from time to time.
26.26      Treasury transactions
No Obligor shall (and the Company will ensure that no member of the Group will) enter into any Treasury Transaction, other than:
(a)
any hedging of the interest rate liabilities of the Borrowers in respect of the Facilities;
(b)
spot and forward delivery foreign exchange contracts entered into in the ordinary course of business and not for speculative purposes; and
(c)
any Treasury Transaction entered into for the hedging of actual or projected real exposures arising in the ordinary course of trading activities of a member of the Group and not for speculative purposes.
26.27      Repatriation of Cash
The Company shall procure that on the last day of each Interest Period all cash within the Group (other than the Permitted Cash Balance) shall be in bank accounts of the Obligors.
26.28      Auditors
The Company shall ensure that the auditors of each member of the Group are Auditors.
26.29      Further assurance
The Obligors shall, promptly upon the request of the Agent, file or record, as applicable, all termination statements and lien releases and take such other actions as may be necessary to discharge all mortgages, deeds of trust and security interests granted by members of the Group in respect of any other security over assets of any Obligor other than Permitted Security.
26.30      Guarantors
(a)    The Company shall ensure that at all times after the date of this Agreement the             aggregate:
(i)
earnings before interest, tax and amortisation (calculated on the same basis as EBITA) of the Guarantors (calculated on an unconsolidated basis and excluding all unrealised intra-Group profits of any member of the Group) exceeds 80% of EBITA of the Group; and

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(ii)
gross assets of the Guarantors (calculated on an unconsolidated basis and excluding all intra-Group items and investments in Subsidiaries of any member of the Group) exceeds 80% of the consolidated gross assets of the Group.
(b)    The Company need only perform its obligations under clause 26.30(a) if it is not
unlawful for the relevant person to become a Guarantor and that person becoming a Guarantor would not result in personal liability for that person's directors or other management. Each Obligor must use, and must procure that the relevant person uses, all reasonable endeavours lawfully available to avoid any such unlawfulness or personal liability. This includes agreeing to a limit on the amount guaranteed. The Agent may (but shall not be obliged to) agree to such a limit if, in its opinion, to do so would avoid the relevant unlawfulness or personal liability.
26.31      Anti-Terrorism Laws
Each Obligor agrees to the extent applicable to each Obligor:
(a)
to comply with all Anti-Terrorism Laws;
(b)
immediately to notify the Agent if it obtains knowledge that it or any of its Affiliates has become or been listed as a Designated Person or has been charged with or has engaged in any violation of any Anti-Terrorism Law;
(c)
to exclude any funds derived from any Designated Person or from any person or entity involved in the violation of any Anti-Terrorism Law from being used to pay debt service or any other amounts owing under the Finance Documents;
(d)
except for transfers of stock of any publicly traded Obligor or Affiliate effected on a stock exchange, not to transfer or permit the transfer of any legal or beneficial ownership interest of any kind in such Obligor or any Affiliate of such Obligor to a Designated Person or any person or entity that such Obligor has to its best knowledge (based upon reasonable inquiry by such Obligor) been involved in the violation of any Anti-Terrorism Law;
(e)
not to acquire, directly or indirectly, ownership interest of any kind in any Designated Person or any person or entity that such Obligor has, to its best knowledge (based upon reasonable inquiry by such Obligor) been involved in the violation of any Anti-Terrorism Law, not to form any partnership or joint venture with any such person and not to act, directly or indirectly, as the agent or representative of any such person; and
(f)
to indemnify the Lenders for any costs incurred by any of them as a result of any violation of an Anti-Terrorism Law by any Obligor or any Affiliate of any Obligor.
26.32      ERISA
Each Obligor shall:
(a)
ensure that neither it nor any ERISA Affiliate engages in a complete or partial withdrawal, within the meaning of sections 4203 and 4205 of ERISA, from any Multiemployer Plan without the prior consent of the Agent;
(b)
ensure that any material liability imposed on it or any ERISA Affiliate pursuant to Title IV of ERISA is paid and discharged when due;
(c)
ensure that neither it nor any ERISA Affiliate adopts an amendment to an Employee Plan requiring the provision of Security under ERISA or the Internal Revenue Code without the prior consent of the Lender; and

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(d)
ensure that no Employee Plan is terminated under section 4041 of ERISA
26.33      Margin Regulation
(a)
Each Obligor shall (and the Company shall ensure that each Obligor shall) use the proceeds of the Loans without violating Regulation T, U or X or any other applicable US federal or state laws or regulations.
(b)
If requested by the Agent, each Obligor shall furnish to the Agent a statement in conformity with the requirements of FR Form U-1 referred to in Regulation U.
26.34      US Regulation
Each Obligor shall ensure that it will not, by act or omission, become subject to any of the categories, laws or regulations described in clause 23.27(c) (Other US Regulation).
26.35
Comparative Covenants
If at any time:
(a)
the Note Documents or the Shelf Facility (or any instrument which refinances or replaces the Note Documents or the Shelf Facility) include any Financial Covenant (howsoever described) not set out in the Finance Documents (any such provision, a New Covenant ); or
(b)
any Financial Covenant contained in the Note Documents or the Shelf Facility (or any instrument which refinances or replaces the Note Documents or the Shelf Facility) would be more beneficial to the Finance Parties than any analogous provision contained in the Finance Documents (any such provision, an Improved Covenant and, together with any New Covenants, the Additional Covenants ), then the Company shall provide an Additional Covenant notice to the Agent. Upon receipt of such notice, unless waived in writing by the Majority Lenders within 16 days of receipt of such Additional Covenant notice by the Agent, such Additional Covenant shall be deemed automatically incorporated by reference into this Agreement as if set out fully therein, without any further action required on the part of any person, effective as of the date when such Additional Covenant became effective under the Note Documents. Thereafter upon the request of the Agent, the Company shall enter into any additional agreement or amendment to this Agreement reasonably requested by the Agent evidencing that such Additional Covenant is incorporated into this Agreement.
26.36      Anti-corruption law
(a)
No Obligor shall (and the Company shall ensure that no other member of the Group will) directly or to the best of its knowledge indirectly use the proceeds of the Facilities for any purpose which would breach the Bribery Act 2010, the United States Foreign Corrupt Practices Act of 1977 or other similar legislation in other applicable jurisdictions.
(b)
Each Obligor shall (and the Company shall ensure that each other member of the Group will):
(i)
conduct its businesses in compliance with applicable anti-corruption laws; and
(ii)
maintain policies and procedures designed to promote and achieve compliance with such laws.
27    Events of Default

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Each of the events or circumstances set out in this clause 27 (other than clause 27.19) is an Event of Default.
27.1      Non-payment
An Obligor does not pay on the due date any amount payable pursuant to a Finance Document at the place and in the currency in which it is expressed to be payable unless:
(a)    its failure to pay is caused by:
(i) an administrative or technical error; or
(ii) a Disruption Event; and
(b)    payment is made within 3 Business Days of its due date.
27.2      Financial covenants and other obligations
Any requirement of clause 25 (Financial covenants) is not satisfied.
27.3      Other obligations
(a)
An Obligor does not comply with any provision of the Finance Documents (other than those referred to in clause 27.1 and clause 27.2).
(b)
No Event of Default under clause 27.3(a) will occur if the failure to comply is capable of remedy and is remedied within 15 Business Days of the earlier of:
(i)
the Agent giving notice to the Company or relevant Obligor; and
(ii)
the Company or the relevant Obligor becoming aware of the failure to comply.
27.4      Misrepresentation
(a)
Any representation or statement made or deemed to be made by an Obligor in the Finance Documents or any other document delivered by or on behalf of any Obligor under or in connection with any Finance Document is or proves to have been incorrect or misleading when made or deemed to be made.
(b)
No Event of Default under clause 27.4(a) will occur if:
(i)
the event or circumstance causing the representation or statement to be incorrect or misleading is capable of remedy; and
(ii)
such Obligor shall have remedied such event or circumstance within 15 Business Days after the earlier of:
(A)
the relevant Obligor becoming aware of such incorrect or misleading representation or statement; and
(B)
receipt by the relevant Obligor of written notice from the Agent to such Obligor requiring the event or circumstance to be remedied.
27.5      Cross default
(a)
Any Financial Indebtedness of any member of the Group is not paid when due nor within any originally applicable grace period.
(b)
Any Financial Indebtedness of any member of the Group is declared to be or otherwise becomes due and payable prior to its specified maturity as a result of an event of default (however described).

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(c)
Any commitment for any Financial Indebtedness of any member of the Group is cancelled or suspended by a creditor of any member of the Group as a result of an event of default (however described).
(d)
Any creditor of any member of the Group becomes entitled to declare any Financial Indebtedness of any member of the Group due and payable prior to its specified maturity as a result of an event of default (however described).
(e)
No Event of Default will occur under this clause 27.5 if the aggregate amount of Financial Indebtedness or commitment for Financial Indebtedness falling within clause 27.5(a) to 27.5(d) (inclusive) is less than $4,125,000 (or its equivalent in any other currency or currencies).
27.6     Insolvency
(a)
An Obligor or a Material Company is unable or admits inability to pay its debts as they fall due, suspends or threatens to suspend making payments on any of its debts or, by reason of actual or anticipated financial difficulties, commences negotiations with one or more of its creditors (excluding any Finance Party in its capacity as such) with a view to rescheduling any of its indebtedness or a Canadian Obligor commits an act of bankruptcy pursuant to the Canadian Bankruptcy and Insolvency Act that is material and adverse to the interests of the Lenders.
(b)
A moratorium is declared in respect of any indebtedness of any Obligor or a Material Company. If a moratorium occurs, the ending of the moratorium will not remedy any Event of Default caused by that moratorium.
27.7      Insolvency proceedings
(a)    Any corporate action, legal proceedings or other procedure or step is taken in relation
to:
(i)
the suspension of payments, a moratorium of any indebtedness, winding-up, dissolution, administration or reorganisation (by way of voluntary arrangement, scheme of arrangement or otherwise) of any Obligor or a Material Company;
(ii)
a composition, compromise, assignment or arrangement with any creditor of any Obligor or a Material Company other than as permitted under paragraph (b) of the definition of Permitted Transaction;
(iii)
the appointment of a liquidator, receiver, administrative receiver, administrator, compulsory manager (or, in respect of an insolvency process initiated by or against any Canadian Obligor, a trustee in bankruptcy, custodian or monitor) or other similar officer in respect of any Obligor or a Material Company or any of its assets; or
(iv)
enforcement of any Security over any assets of any Obligor or a Material Company,
or any analogous procedure or step is taken in any jurisdiction.
(b)    Any of the following occurs in respect of a US Obligor:
(i)
it makes a general assignment for the benefit of creditors;
(ii)
it commences a voluntary case or proceeding under any US Bankruptcy Law;

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(iii)
an involuntary proceeding under any US Bankruptcy Law is commenced against it and is not challenged by appropriate means within thirty (30) days and is not dismissed or stayed within ninety (90) days after commencement of such case; or
(iv)
a custodian, conservator, receiver, liquidator, assignee, trustee, sequestrator or other similar official is appointed under any US Bankruptcy Law for, or takes charge of, all or a substantial part of the property of a US Obligor
(c)
Clause 27.7 shall not apply to any winding-up petition which is frivolous or vexatious and is discharged, stayed or dismissed within 14 days of commencement.
27.8      Creditors' process
Any expropriation, attachment, sequestration, distress or execution or any analogous process in any jurisdiction affects any asset or assets of any Obligor or a Material Company having an aggregate value of $2,475,000 (or its equivalent in any currency) and is not discharged within 21 days of the commencement of such process.
27.9     Unlawfulness and invalidity
(a)
It is or becomes unlawful for an Obligor to perform any of its obligations under the Finance Documents.
(b)
Any obligation or obligations of any Obligor under any Finance Documents are not (subject to the Legal Reservations) or cease to be legal, valid, binding or enforceable and the cessation individually or cumulatively materially and adversely affects the interests of the Lenders under the Finance Documents.
(c)
Any Finance Document ceases to be in full force and effect or is alleged by a party to it (other than a Finance Party) to be ineffective.
27.10      Cessation of business
Any member of the Group suspends or ceases to carry on (or threatens to suspend or cease to carry on) all or a material part of its business where such suspension or cessation is reasonably likely to have a Material Adverse Effect.
27.11      Change of ownership
After the Closing Date, an Obligor (other than the Company) ceases to be a wholly-owned Subsidiary of the Company, other than as a result of a Permitted Disposal.
27.12      Audit qualification
The Auditors of the Group qualify the Annual Financial Statements of the Company in an adverse manner which the Agent (acting reasonably) considers material.
27.13      Expropriation
The authority or ability of any Obligor to conduct its business is materially limited or wholly or substantially curtailed by any seizure, expropriation, nationalisation, intervention, restriction or other action by or on behalf of any governmental, regulatory or other authority or other person in relation to any Obligor or any of its assets which has or is reasonably likely to have a Material Adverse Effect.
27.14      Repudiation and rescission of agreements

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An Obligor (or any other relevant party) rescinds or purports to rescind or repudiates or purports to repudiate a Finance Document or evidences an intention to rescind or repudiate a Finance Document.
27.15      Litigation
Any litigation, arbitration, administrative, governmental, regulatory or other investigations, proceedings or disputes are commenced or threatened or any judgment or order of a court, arbitral tribunal or other tribunal or any order or sanction of any governmental or other regulatory body is made, in relation to the Transaction Documents or the transactions contemplated in the Transaction Documents or against any member of the Group or its assets which results in a liability to such member of the Group (whether actual or contingent) that would be reasonably likely to have a Material Adverse Effect.
27.16      Pensions
The Pensions Regulator issues a Financial Support Direction or a Contribution Notice to any member of the Group unless the aggregate liability of the Obligors in each Financial Year under all Financial Support Directions and Contributions Notices is less than the greater of:
(a)
$8,250,000 (or its equivalent in any currency); and
(b)
10% of the Group's EBITDA (by reference to the latest audited Annual Financial Statements delivered to the Agent pursuant to clause 24.1(a) (Financial statements)).
27.17      Material adverse change
Any event or circumstance occurs which has or is reasonably likely to have a Material Adverse Effect.
27.18      ERISA
Any ERISA Event or event set forth in (a), (b) or (c) below occurs that has or could reasonably be expected to have a Material Adverse Effect:
(a)
any Obligor or ERISA Affiliate incurs a liability to or on account of a Multiemployer Plan as a result of a violation of section 515 of ERISA or under section 4201, 4204 or 4212(c) of ERISA;
(b)
with respect to each Employee Plan subject to Title IV of ERISA, such plan's funded ratio (defined for this purpose as the actuarial value of the assets of such plan divided by the present value of all benefits accrued or earned with respect to such plan) is less than (i) 76 per cent as of 1 January 2011, and (ii) 80 per cent on the first day of any calendar year thereafter. The calculation of such ratio shall be computed using the actuarial value, assumptions and methods used by the actuary to the Employee Plan in its most recent valuation of such plan; or
(c)
any Obligor or ERISA Affiliate incurs or is likely to incur a liability to or on account of an Employee Plan under section 409, 502(i) or 502(I) of ERISA or section 4971 or 4975 of the Internal Revenue Code other than as a result of entering into this Agreement.
27.19      Acceleration
On and at any time after the occurrence of an Event of Default which is continuing the Agent may, and shall if so directed by the Majority Lenders, by notice to the Company:
(a)
cancel the Total Commitments and/or Ancillary Commitments at which time they shall immediately be cancelled;

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(b)
declare that all or part of the Loans, together with accrued interest, and all other amounts accrued or outstanding under the Finance Documents be immediately due and payable, at which time they shall become immediately due and payable;
(c)
declare that all or part of the Loans be payable on demand, at which time they shall immediately become payable on demand by the Agent on the instructions of the Majority Lenders; and/or
(d)
declare all or any part of the amounts (or cash cover in relation to those amounts) outstanding under the Ancillary Facilities to be immediately due and payable, at which time they shall become immediately due and payable.
27.20      Automatic Acceleration in Relation to a US Obligor
If an Event of Default occurs under clause 27.7(b) in relation to a US Obligor:
(a)
the Total Commitment shall immediately be cancelled automatically, without any direction, notice, declaration or other act;
(b)
all of the Utilisations, together with accrued interest, and all other amounts accrued and outstanding under the Finance Documents shall be immediately due and payable, automatically and without any direction, notice, declaration or other act; and
(c)
each amount expressed hereunder to be payable by any US Obligor on demand shall, after that Event of Default has occurred, be immediately due and payable without the need for any demand or other claim on any US Obligor.
28    Changes to the Lenders
28.1      Assignments and transfers by the Lenders
Subject to this clause 28 and to clause 29 (Restriction on Debt Purchase Transactions), a Lender ( Existing Lender ) may:
(a) assign any of its rights; or
(b) transfer by novation any of its rights and obligations,
under any Finance Document to another bank or financial institution or to a trust, fund or other entity which is regularly engaged in, or established for the purpose of making, purchasing or investing in loans, securities or other financial assets ( New Lender ).
28.2      Conditions of assignment or transfer
(a)    An Existing Lender must consult with the Company for not less than 5 Business Days
before it may make an assignment or transfer in accordance with clause 28.1 unless the assignment or transfer is:
(i)
to another Lender or an Affiliate of a Lender;
(ii)
if the Existing Lender is a fund, to a fund which is a Related Fund of the Existing Lender; or
(iii)
made at a time when an Event of Default is continuing.
(b)    An assignment will only be effective on:

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(i)
receipt by the Agent (whether in the Assignment Agreement or otherwise) of written confirmation from the New Lender (in form and substance satisfactory to the Agent) that the New Lender will assume the same obligations to the other Finance Parties as it would have been under if it was an Original Lender at that time; and
(ii)
the performance by the Agent of all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to such assignment to a New Lender, the completion of which the Agent shall promptly notify to the Existing Lender and the New Lender.
(c)    If:
(i)
a Lender assigns or transfers any of its rights or obligations under the Finance Documents or changes its Facility Office; and
(ii)
as a result of circumstances existing at the date the assignment, transfer or change occurs, an Obligor would be obliged to make a payment to the New Lender or Lender acting through its new Facility Office under clause 18 (Increased costs),
then the New Lender or Lender acting through its new Facility Office is only entitled to receive payment under those clauses to the same extent as the Existing Lender or Lender acting through its previous Facility Office would have been if the assignment, transfer or change had not occurred.
(d)    Each New Lender, by executing the relevant Transfer Certificate or Assignment
Agreement, confirms, for the avoidance of doubt, that the Agent has authority to execute on its behalf any amendment or waiver that has been approved by or on behalf of the requisite Lender or Lenders in accordance with this Agreement on or prior to the date on which the transfer or assignment becomes effective in accordance with this Agreement and that it is bound by that decision to the same extent as the Existing Lenders would have been had it remained a Lender.
28.3      Assignment or transfer fee
Unless the Agent otherwise agrees the New Lender shall, on the date upon which an assignment or transfer takes effect, pay to the Agent (for its own account) a fee of £2,500.
28.4      Limitation of responsibility of Existing Lenders
(a)
Unless expressly agreed to the contrary, an Existing Lender makes no representation or warranty and assumes no responsibility to a New Lender for:
(i)
the legality, validity, effectiveness, adequacy or enforceability of the Transaction Documents or any other documents;
(ii)
the financial condition of any Obligor;
(iii)
the performance and observance by any Obligor or any other member of the Group of its obligations under the Transaction Documents or any other documents; or
(iv)
the accuracy of any statements (whether written or oral) made in or in connection with any Transaction Document or any other document,
and any representations or warranties implied by law are excluded.
(b)    Each New Lender confirms to the Existing Lender and the other Finance Parties that it:

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(i)
has made (and shall continue to make) its own independent investigation and assessment of the financial condition and affairs of each Obligor and its related entities in connection with its participation in this Agreement and has not relied exclusively on any information provided to it by the Existing Lender or any other Finance Party in connection with any Transaction Document; and
(ii)
will continue to make its own independent appraisal of the creditworthiness of each Obligor and its related entities and of the risks arising under or in connection with the Finance Documents on the terms set out in clause 31.16 (Credit appraisal by the Lenders and Ancillary Lenders) whilst any amount is or may be outstanding under the Finance Documents or any Commitment is in force.
(c)    Nothing in any Finance Document obliges an Existing Lender to:
(i)
accept a re-transfer or re-assignment from a New Lender of any of the rights and obligations assigned or transferred under this clause 28; or
(ii)
guarantee, indemnify or otherwise hold harmless a New Lender in respect of any cost, loss or liability directly or indirectly incurred by the New Lender by reason of the non-performance by any Obligor of its obligations under the Transaction Documents or otherwise.
28.5     Procedure for transfer
(a)
Subject to the conditions set out in clause 28.2 a transfer is effected in accordance with clause 28.5(c) when the Agent executes an otherwise duly completed Transfer Certificate delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to clause 28.5(b), as soon as reasonably practicable after receipt by it of a duly completed Transfer Certificate appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Transfer Certificate. Each Obligor and each Finance Party (other than the Existing Lender and the Agent) irrevocably authorises the Agent to execute on its behalf each duly completed Transfer Certificate delivered to the Agent and acknowledges that it will be bound by such transfer.
(b)
The Agent shall only be obliged to execute a Transfer Certificate delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or similar checks under all applicable laws and regulations in relation to the transfer to such New Lender.
(c)
Subject to clause 28.9, on the Transfer Date:
(i)
to the extent that in the Transfer Certificate the Existing Lender seeks to transfer by novation its rights and obligations under the Finance Documents each of the Obligors and the Existing Lender shall be released from further obligations towards one another under the Finance Documents and their respective rights against one another under the Finance Documents shall be cancelled (Discharged Rights and Obligations);
(ii)
each of the Obligors and the New Lender shall assume obligations towards one another and/or acquire rights against one another which differ from the Discharged Rights and Obligations only insofar as that Obligor or other member of the Group and the New Lender have assumed and/or acquired the same in place of that Obligor and the Existing Lender;
(iii)
the Agent, the Arrangers, the New Lender, the other Lenders and any relevant Ancillary Lender shall acquire the same rights and assume the same obligations between themselves as they would have acquired and assumed had the New

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Lender been an Original Lender with the rights, and/or obligations acquired or assumed by it as a result of the transfer and to that extent the Agent, the Arrangers and any relevant Ancillary Lender and the Existing Lender shall each be released from further obligations to each other under the Finance Documents; and
(iv) the New Lender shall become a Party as a Lender.
28.6     Procedure for assignment
(a)     Subject to the conditions set out in clause 28.2 an assignment may be effected in accordance with clause 28.6(c) below when the Agent executes an otherwise duly completed Assignment Agreement delivered to it by the Existing Lender and the New Lender. The Agent shall, subject to clause 28.6(b) below, as soon as reasonably practicable after receipt by it of a duly completed Assignment Agreement appearing on its face to comply with the terms of this Agreement and delivered in accordance with the terms of this Agreement, execute that Assignment Agreement.
(b)
The Agent shall only be obliged to execute an Assignment Agreement delivered to it by the Existing Lender and the New Lender once it is satisfied it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to the assignment to such New Lender.
(c)    Subject to clause 28.9, on the Transfer Date:
(i)
the Existing Lender will assign absolutely to the New Lender its rights under the Finance Documents expressed to be the subject of the assignment in the Assignment Agreement;
(ii)
the Existing Lender will be released from the obligations ( Relevant Obligations ) expressed to be the subject of the release in the Assignment Agreement; and
(iii)
the New Lender shall become a Party as a "Lender" and will be bound by obligations equivalent to the Relevant Obligations.
(d)
Lenders may utilise procedures other than those set out in this clause 28.6 to assign their rights under the Finance Documents (but not, without the consent of the relevant Obligor or unless in accordance with clause 28.5, to obtain a release by that Obligor from the obligations owed to that Obligor by the Lenders nor the assumption of equivalent obligations by a New Lender) provided that they comply with the conditions set out in clause 28.2.
28.7
Copy of Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice to Company
The Agent shall, as soon as reasonably practicable after it has executed a Transfer Certificate, an Assignment Agreement, an Increase Confirmation or an Uncommitted Accordion Facility Commitment Notice, send to the Company a copy of that Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice.
28.8      Security over Lenders' rights
In addition to the other rights provided to Lenders under this clause 28, each Lender may without consulting with or obtaining consent from any Obligor, at any time charge, assign or otherwise create a Security in or over (whether by way of collateral or otherwise) all or any of its rights under any Finance Document to secure obligations of that Lender including, without limitation:
(a)
any Security to secure obligations to a federal reserve or central bank or to a government authority, department or agency (including HM Treasury); and

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(b)
in the case of any Lender which is a fund any Security granted to any holders (or trustee or representatives of holders) of obligations owed, or securities issued, by that Lender as security for those obligations or securities,
except that no such Security shall:
(i)
release a Lender from any of its obligations under the Finance Documents or substitute the beneficiary of the relevant Security for the Lender as a party to any of the Finance Documents; or
(ii)
require any payments to be made by an Obligor or grant to any person any more extensive rights than those required to be made or granted to the relevant Lender under the Finance Documents.
28.9     Pro rata interest settlement
If the Agent has notified the Lenders that it is able to distribute interest payments on a "pro rata basis" to Existing Lenders and New Lenders then (in respect of any transfer pursuant to clause 28.6 or any assignment pursuant to clause 28.6 the Transfer Date of which, in each case, is after the date of such notification and is not on the last day of an Interest Period):
(a)
any interest or fees in respect of the relevant participation which are expressed to accrue by reference to the lapse of time shall continue to accrue in favour of the Existing Lender up to but excluding the Transfer Date ( Accrued Amounts ) and shall become due and payable to the Existing Lender (without further interest accruing on them) on the last day of the current Interest Period (or, if the Interest Period is longer than six Months, on the next of the dates which falls at six Monthly intervals after the first day of that Interest Period); and
(b)
the rights assigned or transferred by the Existing Lender will not include the right to the Accrued Amounts so that, for the avoidance of doubt:
(i)
when the Accrued Amounts become payable, those Accrued Amounts will be payable for the account of the Existing Lender; and
(ii)
the amount payable to the New Lender on that date will be the amount which would, but for the application of this clause 28.9, have been payable to it on that date, but after deduction of the Accrued Amounts.
28.10      Uncommitted Accordion Facility
Any bank or financial institution (an " Uncommitted Accordion Facility Lender ") which accepts an Uncommitted Accordion Facility Commitment by countersigning an Uncommitted Accordion Facility Commitment Notice and delivering it to the Agent shall, upon the countersignature of such Uncommitted Accordion Facility Commitment Notice by the Agent become Party to this Agreement as a Lender:
(a)
each of the Obligors will owe obligations to the Uncommitted Accordion Facility Lender as recorded in the Finance Documents;
(b)
without limiting paragraph 28.11(a) above, and subject to any limits recorded in the Finance Documents, the guarantees and security recorded in the Finance Documents in favour of the Finance Parties will extend to the Uncommitted Accordion Facility Lender and the Uncommitted Accordion Facility Loans;
(c)
the Agent, the Uncommitted Accordion Facility Lender and the other Lenders shall acquire the rights and assume the obligations between themselves as if the Uncommitted

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Accordion Facility Lender had been an Original Lender under this Agreement in such capacity; and
(d)
to the extent the Uncommitted Accordion Facility Lender is not an Existing Lender it shall be treated as a New Lender for the purposes of paragraph 28.4 (Limitation of responsibility of Existing Lenders).
29    Restriction on Debt Purchase Transactions
29.1     Prohibition on Debt Purchase Transactions by the Group
The Company shall not, and shall procure that each other member of the Group shall not, enter into any Debt Purchase Transaction or beneficially own all or any part of the share capital of a company that is a Lender or a party to a Debt Purchase Transaction of the type referred to in paragraphs (b) or (c) of the definition of Debt Purchase Transaction.
30    Changes to the Obligors
30.1     Assignment and transfers by Obligors
No Obligor or any other member of the Group may assign any of its rights or transfer (or enter into any transaction or purported transaction the effect of which is to give rise to a trust in respect of) any of its rights or obligations under the Finance Documents.
30.2      Additional Borrowers
(a)
Subject to compliance with the provisions of clause 24.8(c) ("Know your customer" checks) and 24.8(d) ("Know your customer" checks), the Company may request, at any time after the first Utilisation Date, in connection with any of its wholly owned Subsidiaries, which is not a Dormant Subsidiary, becomes a Borrower under the Facilities. That Subsidiary shall become a Borrower upon satisfaction of each of the following conditions:
(A)
it is incorporated in the same jurisdiction as an existing Borrower and the Majority Lenders approve the addition of that Subsidiary or otherwise if all the Lenders approve the addition of that Subsidiary;
(B)
the Company and that Subsidiary deliver to the Agent a duly completed and executed Accession Deed;
(C)
the Subsidiary is (or becomes) a Guarantor prior to becoming a Borrower;
(D)
the Company confirms that no Default is continuing or would occur as a result of that Subsidiary becoming an Additional Borrower and the Company confirms this; and
(E)
the Agent has received all of the documents and other evidence listed in Part 3 - (Conditions precedent required to be delivered by an Additional Obligor) of Schedule 2 (Conditions precedent) in relation to that Additional Borrower, each in form and substance satisfactory to the Agent.
(b)
The Agent shall notify the Company and the Lenders promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part 3 - (Conditions precedent required to be delivered by an Additional Obligor) of Schedule 2 (Conditions precedent).
(c)
Upon becoming an Additional Borrower that Subsidiary shall make any filings (and provide copies of such filings) as required by clause 17.2(j) (Tax gross-up) and

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clause 17.7(b) (HMRC DT Treaty Passport scheme confirmation) in accordance with those clauses.
30.3      Resignation of a Borrower
(a)
With the prior consent of all the Lenders (such consent to be provided if the Borrower is the subject of a disposal that is permitted under clause 26.13 (Disposals)), the Company may request that such Borrower ceases to be a Borrower by delivering to the Agent a Resignation Letter.
(b)
The Agent shall accept a Resignation Letter and notify the Company and the other Finance Parties of its acceptance if:
(i)
the Company has confirmed that no Default is continuing or would result from the acceptance of the Resignation Letter;
(ii)
the Borrower is under no actual or contingent obligations as a Borrower under any Finance Documents;
(iii)
where the Borrower is also a Guarantor (unless its resignation has been accepted in accordance with clause 30.5), its obligations in its capacity as Guarantor continue to be legal, valid, binding and enforceable and in full force and effect (subject to the Legal Reservations) and the amount guaranteed by it as a Guarantor is not decreased (and the Company has confirmed this is the case); and
(iv)
the Company has confirmed that it shall ensure that any relevant Disposal Proceeds will be applied in accordance with clause 11.2 (Disposal and Insurance).
(c)
Upon notification by the Agent to the Company of its acceptance of the resignation of a Borrower, that Party shall cease to be a Borrower and shall have no further rights or obligations under the Finance Documents as a Borrower.
(d)
The Agent may, at the cost and expense of the Company, require a legal opinion from counsel to the Agent confirming the matters set out in clause 30.3(b)(ii) and the Agent shall be under no obligation to accept a Resignation Letter until it has obtained such opinion in form and substance satisfactory to it.
30.4      Additional Guarantors
(a)
Subject to compliance with the provisions of clause 24.8 ("Know your customer" checks), the Company shall ensure that any other member of the Group which is a Material Company (other than the French Subsidiary and the Czech Subsidiary) shall within ten Business Days after becoming a Material Company, shall become an Additional Guarantor.
(b)
A member of the Group shall become an Additional Guarantor if the Agent has received all of the documents and other evidence listed in Part 3 - (Conditions precedent required to be delivered by an Additional Obligor) of Schedule 2 (Conditions precedent) in relation to that Additional Guarantor, each in form and substance satisfactory to the Agent.
(c)
The Agent shall notify the Company and the other Finance Parties promptly upon being satisfied that it has received (in form and substance satisfactory to it) all the documents and other evidence listed in Part 3 - (Conditions precedent required to be delivered by an Additional Obligor) of Schedule 2 (Conditions precedent).
30.5      Resignation of a Guarantor
(a)
The Company may request that a Guarantor (other than the Company) ceases to be a Guarantor by delivering to the Agent a Resignation Letter if:

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(i)
that Guarantor is being disposed of by way of a Third Party Disposal and the Company has confirmed this is the case; or
(ii)
all the Lenders have consented to the resignation of that Guarantor.
(b)    The Agent shall accept a Resignation Letter and notify the Company and the Lenders
of its acceptance upon satisfaction of each of the following conditions:
(i)
the Company has confirmed that no Default is continuing or would result from the acceptance of the Resignation Letter;
(ii)
no payment is due from the Guarantor under clause 22.1 (Guarantee and indemnity);
(iii)
where the Guarantor is also a Borrower, it is under no actual or contingent obligations as a Borrower and has resigned and ceased to be a Borrower under clause 30.3; and
(iv)
the Company has confirmed that it shall ensure that the relevant Disposal Proceeds will be applied, in accordance with clause 11.2 (Disposal and Insurance).
(c)
The resignation of that Guarantor shall not be effective until the date of the relevant Third Party Disposal at which time that company shall cease to be a Guarantor and shall have no further rights or obligations under the Finance Documents as a Guarantor.
30.6      Repetition of Representations
Delivery of an Accession Deed constitutes confirmation by the relevant Subsidiary that the representations and warranties referred to in clause 23.30(c) (Times when representations made) are true and correct in relation to it as at the date of delivery as if made by reference to the facts and circumstances then existing.
31    Role of the Agent, the Arrangers and others
31.1     Appointment of the Agent
(a)
Each of the Arranger and the Lenders appoints the Agent to act as its agent under and in connection with the Finance Documents.
(b)
Each of the Arranger and the Lenders authorises the Agent to perform the duties, obligations and responsibilities and to exercise the rights, powers, authorities and discretions specifically given to the Agent under or in connection with the Finance Documents together with any other incidental rights, powers, authorities and discretions.
31.2     Instructions
(a)    The Agent shall:
(i)
unless a contrary indication appears in a Finance Document, exercise or refrain from exercising any right, power, authority or discretion vested in it as Agent in accordance with any instructions given to it by:
(A)
all Lenders if the relevant Finance Document stipulates the matter is an all Lender decision; and
(B)
in all other cases, the Majority Lenders; and

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(ii)
not be liable for any act (or omission) if it acts (or refrains from acting) in accordance with clause 31.2(a)(i).
(b)
The Agent shall be entitled to request instructions, or clarification of any instruction, from the Majority Lenders (or, if the relevant Finance Document stipulates the matter is a decision for any other Lender or group of Lenders, from that Lender or group of Lenders) as to whether, and in what manner, it should exercise or refrain from exercising any right, power, authority or discretion. The Agent may refrain from acting unless and until it receives any such instructions or clarification that it has requested.
(c)
Save in the case of decisions stipulated to be a matter for any other Lender or group of Lenders under the relevant Finance Document and unless a contrary indication appears in a Finance Document, any instructions given to the Agent by the Majority Lenders shall override any conflicting instructions given by any other Parties and will be binding on all Finance Parties.
(d)
The Agent may refrain from acting in accordance with any instructions of any Lender or group of Lenders until it has received any indemnification and/or security that it may in its discretion require (which may be greater in extent than that contained in the Finance Documents and which may include payment in advance) for any cost, loss or liability which it may incur in complying with those instructions.
(e)
In the absence of instructions, the Agent may act (or refrain from acting) as it considers to be in the best interest of the Lenders.
(f)
The Agent is not authorised to act on behalf of a Lender (without first obtaining that Lender's consent) in any legal or arbitration proceedings relating to any Finance Document.
31.3      Duties of the Agent
(a)
The Agent's duties under the Finance Documents are solely mechanical and administrative in nature.
(b)
Subject to clause 31.3(c) below, the Agent shall promptly forward to a Party the original or a copy of any document which is delivered to the Agent for that Party by any other Party.
(c)
Without prejudice to clause 28.7 (Copy of Transfer Certificate, Assignment Agreement, Increase Confirmation or Uncommitted Accordion Facility Commitment Notice to Company), clause 31.3(b) shall not apply to any Transfer Certificate, any Assignment Agreement, any Increase Confirmation or Uncommitted Accordion Facility Commitment Notice.
(d)
Except where a Finance Document specifically provides otherwise, the Agent is not obliged to review or check the adequacy, accuracy or completeness of any document it forwards to another Party.
(e)
If the Agent receives notice from a Party referring to this Agreement, describing a Default and stating that the circumstance described is a Default, it shall promptly notify the other Finance Parties.
(f)
If the Agent is aware of the non-payment of any principal, interest, commitment fee or other fee payable to a Finance Party (other than the Agent or the Arrangers) under this Agreement, it shall promptly notify the other Finance Parties.

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(g)
The Agent shall maintain a register for recordation of the names, addresses (including the department or officer) if any, to whom communications are to be made or documents are to be delivered), fax numbers, electronic mail address and/or any other information required to enable the sending and receipt of information by electronic mail or other electronic means and the Commitments of each Lender, and agrees to provide to the Company within 5 Business Days of a request by the Company (but no more frequently than once per calendar month) or as soon as reasonably practicable upon the Agent becoming an Impaired Agent a copy of such register as at the date of that request. The entries in the register shall be conclusive absent manifest error, and the Obligors and the Lenders may treat each Person whose name is recorded in the register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement.
(h)
The Agent shall have only those duties, obligations and responsibilities expressly specified in the Finance Documents to which it is expressed to be a party (and no others shall be implied).
31.4      Role of the Arrangers
Except as specifically provided in the Finance Documents, the Arrangers have no obligations of any kind to any other Party under or in connection with any Finance Document.
31.5     No fiduciary duties
(a)
Nothing in any Finance Document constitutes the Agent or the Arrangers as a trustee or fiduciary of any other person.
(b)
None of the Agent, the Arrangers or any Ancillary Lender shall be bound to account to any Lender for any sum or the profit element of any sum received by it for its own account.
31.6      Business with the Group
The Agent, the Arrangers and each Ancillary Lender may accept deposits from, lend money to and generally engage in any kind of banking or other business with any member of the Group.
31.7     Rights and discretions
(a)    The Agent may:
(i)
rely on any representation, communication, notice or document believed by it to be genuine, correct and appropriately authorised;
(ii)    assume that:
(A)
any instructions received by it from the Majority Lenders, any Lenders or any group of Lenders are duly given in accordance with the terms of the Finance Documents; and
(B)
unless it has received notice of revocation, that those instructions have not been revoked; and
(iii)    rely on a certificate from any person:
(A)
as to any matter of fact or circumstance which might reasonably be expected to be within the knowledge of that person; or
(B)
to the effect that such person approves of any particular dealing, transaction, step, action or thing,

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as sufficient evidence that that is the case and, in the case of clause 31.7(a)(iii)(A), may assume the truth and accuracy of that certificate.
(b)
The Agent may assume (unless it has received notice to the contrary in its capacity as agent for the Lenders) that:
(i)
no Default has occurred (unless it has actual knowledge of a Default arising under clause 27.1 (Non-payment);
(ii)
any right, power, authority or discretion vested in any Party or any group of Lenders has not been exercised; and
(iii)
any notice or request made by the Company (other than a Utilisation Request or Selection Notice) is made on behalf of and with the consent and knowledge of all the Obligors.
(c)
The Agent may engage and pay for the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts.
(d)
Without prejudice to the generality of clause 31.7(c) or clause 31.7(e), the Agent may at any time engage and pay for the services of any lawyers to act as independent counsel to the Agent (and so separate from any lawyers instructed by the Lenders) if the Agent in its reasonable opinion deems this to be necessary.
(e)
The Agent may rely on the advice or services of any lawyers, accountants, tax advisers, surveyors or other professional advisers or experts (whether obtained by the Agent or by any other Party) and shall not be liable for any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of its so relying.
(f)
The Agent may act in relation to the Finance Documents through its officers, employees and agents and the Agent shall not:
(i)
be liable for any error of judgment made by any such person; or
(ii)
be bound to supervise, or be in any way responsible for any loss incurred by reason of misconduct, omission or default on the part, of any such person,
unless such error or such loss was directly caused by the Agent's gross negligence or wilful misconduct.
(g)
Unless a Finance Document expressly provides otherwise, the Agent may disclose to any other Party any information it reasonably believes it has received as agent under this Agreement.
(h)    Without prejudice to the generality of clause 31.7(g), the Agent:
(i)    may disclose; and
(ii)
on the written request of the Company or the Majority Lenders shall, as soon as reasonably practicable, disclose,
the identity of a Defaulting Lender to the Company and to the other Finance Parties.
(i)
Notwithstanding any other provision of any Finance Document to the contrary, none of the Agent nor the Arrangers is obliged to do or omit to do anything if it would, or might in its reasonable opinion, constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of confidentiality.

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(j)
Notwithstanding any provision of any Finance Document to the contrary, the Agent is not obliged to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties, obligations or responsibilities or the exercise of any right, power, authority or discretion if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not reasonably assured to it.
31.8      Responsibility for documentation
None of the Agent, any Arranger or any Ancillary Lender is responsible or liable for:
(a)
the adequacy, accuracy and/or completeness of any information (whether oral or written) supplied by the Agent, any Arranger, an Ancillary Lender, an Obligor or any other person given in or in connection with any Finance Document or the transactions contemplated in the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; or
(c)
any determination as to whether any information provided or to be provided to any Finance Party is non-public information the use of which may be regulated or prohibited by applicable law or regulation relating to insider dealing or otherwise.
31.9      No duty to monitor
The Agent shall not be bound to enquire:
(a)
whether or not any Default has occurred;
(b)
as to the performance, default or any breach by any Party of its obligations under any Finance Document; or
(c) whether any other event specified in any Finance Document has occurred.
31.10      Exclusion of liability
(a)
Without limiting clause 31.10(b) (and without prejudice to any other provision of any Finance Document excluding or limiting the liability of the Agent or any Ancillary Lender), none of the Agent nor any Ancillary Lender will be liable (including, without limitation, for negligence or any other category of liability whatsoever) for:
(i)
any damages, costs or losses to any person, any diminution in value, or any liability whatsoever arising as a result of taking or not taking any action under or in connection with any Finance Document unless directly caused by its gross negligence or wilful misconduct;
(ii)
exercising, or not exercising, any right, power, authority or discretion given to it by, or in connection with, any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with, any Finance Document; or
(iii)
without prejudice to the generality of clause 31.10(a)(i) and clause 31.10(a)(ii), any damages, costs or losses to any person, any diminution in value or any liability whatsoever arising as a result of:
(A)
any act, event or circumstance not reasonably within its control; or
(B)
the general risks of investment in, or the holding of assets in, any jurisdiction,

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including (in each case and without limitation) such damages, costs, losses, diminution in value or liability arising as a result of: nationalisation, expropriation or other governmental actions; any regulation, currency restriction, devaluation or fluctuation; market conditions affecting the execution or settlement of transactions or the value of assets (including any Disruption Event); breakdown, failure or malfunction of any third party transport, telecommunications, computer services or systems; natural disasters or acts of God; war, terrorism, insurrection or revolution; or strikes or industrial action.
(b)
No Party (other than the Agent or an Ancillary Lender (as applicable)) may take any proceedings against any officer, employee or agent of the Agent or any Ancillary Lender, in respect of any claim it might have against the Agent or an Ancillary Lender or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document or any Transaction Document and any officer, employee or agent of the Agent or any Ancillary Lender may rely on this clause subject to clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
(c)    The Agent will not be liable for any delay (or any related consequences) in crediting an account with an amount required under the Finance Documents to be paid by the Agent if the Agent has taken all necessary steps as soon as reasonably practicable to comply with the regulations or operating procedures of any recognised clearing or settlement system used by the Agent for that purpose.
(d)    Nothing in this Agreement shall oblige the Agent or the Arrangers to carry out:
(i)
any "know your customer" or other checks in relation to any person; or
(ii)
any check on the extent to which any transaction contemplated by this Agreement might be unlawful for any Lender or for any Affiliate of any Lender,
on behalf of any Lender and each Lender confirms to the Agent and the Arrangers that it is solely responsible for any such checks it is required to carry out and that it may not rely on any statement in relation to such checks made by the Agent or the Arrangers.
(e)    Without prejudice to any provision of any Finance Document excluding or limiting the
Agent's liability, any liability of the Agent arising under or in connection with any Finance Document shall be limited to the amount of actual loss which has been finally judicially determined to have been suffered (as determined by reference to the date of default of the Agent or, if later, the date on which the loss arises as a result of such default) but without reference to any special conditions or circumstances known to the Agent at any time which increase the amount of that loss. In no event shall the Agent be liable for any loss of profits, goodwill, reputation, business opportunity or anticipated saving, or for special, punitive, indirect or consequential damages, whether or not the Agent has been advised of the possibility of such loss or damages.
31.11      Lenders' indemnity to the Agent
(a)
Each Lender shall (in proportion to its share of the Total Commitments or, if the Total Commitments are then zero, to its share of the Total Commitments immediately prior to their reduction to zero) indemnify the Agent, within 3 Business Days of demand, against any cost, loss or liability (including, without limitation, for negligence or any other category of liability whatsoever) incurred by the Agent (otherwise than by reason of the Agent's gross negligence or wilful misconduct) (or, in the case of any cost, loss or liability pursuant to clause 34.11 (Disruption to payment systems etc.) notwithstanding the Agent's negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) in acting as Agent under the Finance Documents (unless the Agent has been reimbursed by an Obligor pursuant to a Finance Document).

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(b)
Subject to clause 31.11(c), the Company shall immediately on demand reimburse any Lender for any payment that Lender makes to the Agent pursuant to clause 31.11(a).
(c)
Clause 31.11(b) shall not apply to the extent that the indemnity payment in respect of which the Lender claims reimbursement relates to a liability of the Agent to an Obligor.
31.12      Resignation of the Agent
(a)    The Agent may resign and appoint one of its Affiliates acting through an office in the United Kingdom as successor by giving notice to the Lenders and the Company.
(b)
Alternatively the Agent may resign by giving 30 days' notice to the Lenders and the Company, in which case the Majority Lenders (after consultation with the Company) may appoint a successor Agent.
(c)
If the Majority Lenders have not appointed a successor Agent in accordance with clause 31.12(b) within 30 days after notice of resignation was given, the retiring Agent (after consultation with the Company) may appoint a successor Agent (acting through an office in the United Kingdom).
(d)
If the Agent wishes to resign because (acting reasonably) it has concluded that it is no longer appropriate for it to remain as agent and the Agent is entitled to appoint a successor Agent under clause 31.12(c), the Agent may (if it concludes (acting reasonably) that it is necessary to do so in order to persuade the proposed successor Agent to become a party to this Agreement as Agent) agree with the proposed successor Agent amendments to this clause 31.12 and any other term of this Agreement dealing with the rights or obligations of the Agent consistent with then current market practice for the appointment and protection of corporate trustees together with any reasonable amendments to the agency fee payable under this Agreement which are consistent with the successor Agent's normal fee rates and those amendments will bind the Parties.
(e)
The retiring Agent shall, at its own cost, make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(f)
The Agent's resignation notice shall only take effect upon the appointment of a successor.
(g)
Upon the appointment of a successor, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under clause 31.12(e)) but shall remain entitled to the benefit of clause 19.3 (indemnity to the Agent) and this clause 31 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date). Any successor and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
(h)
After consultation with the Company, the Majority Lenders may, by notice to the Agent, require it to resign in accordance with clause 31.12(b). In this event, the Agent shall resign in accordance with clause 31.12(b).
(i)
The Agent shall resign in accordance with clause 31.12(b) (and, to the extent applicable, shall use reasonable endeavours to appoint a successor Agent pursuant to clause 31.12(c)) if on or after the date which is 3 months before the earliest FATCA Application Date relating to any payment to the Agent under the Finance Documents, either:
(i)
the Agent fails to respond to a request under clause 17.12 (FATCA Information) and a Lender reasonably believes that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;

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(ii)
the information supplied by the Agent pursuant to clause 17.12 (FATCA Information) indicates that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date; or
(iii)
the Agent notifies the Company and the Lenders that the Agent will not be (or will have ceased to be) a FATCA Exempt Party on or after that FATCA Application Date;
and (in each case) a Lender reasonably believes that a Party will be required to make a FATCA Deduction that would not be required if the Agent were a FATCA Exempt Party, and that Lender, by notice to the Agent, requires it to resign.
31.13      Replacement of the Agent
(a)
After consultation with the Company, the Majority Lenders may, by giving 30 days' notice to the Agent (or, at any time the Agent is an Impaired Agent, by giving any shorter notice determined by the Majority Lenders) replace the Agent by appointing a successor Agent (acting through an office in the United Kingdom).
(b)
The retiring Agent shall (at its own cost if it is an Impaired Agent and otherwise at the expense of the Lenders) make available to the successor Agent such documents and records and provide such assistance as the successor Agent may reasonably request for the purposes of performing its functions as Agent under the Finance Documents.
(c)
The appointment of the successor Agent shall take effect on the date specified in the notice from the Majority Lenders to the retiring Agent. As from this date, the retiring Agent shall be discharged from any further obligation in respect of the Finance Documents (other than its obligations under clause 31.13(b)) but shall remain entitled to the benefit of clause 19.3 (Indemnity to Agent) and this clause 31 (and any agency fees for the account of the retiring Agent shall cease to accrue from (and shall be payable on) that date).
(d)
Any successor Agent and each of the other Parties shall have the same rights and obligations amongst themselves as they would have had if such successor had been an original Party.
31.14      Confidentiality
(a)
In acting as agent for the Finance Parties, the Agent shall be regarded as acting through its agency division which shall be treated as a separate entity from any other of its divisions or departments.
(b)
If information is received by another division or department of the Agent, it may be treated as confidential to that division or department and the Agent shall not be deemed to have notice of it.
31.15      Relationship with the Lenders
(a)    Subject to clause 28.9 ( Pro rata interest settlement ), the Agent may treat the person shown in its records as Lender at the opening of business (in the place of the Agent's principal office as notified to the Finance Parties from time to time) as the Lender acting through its Facility Office:
(i)
entitled to or liable for any payment due under any Finance Document on that day; and

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(ii)
entitled to receive and act upon any notice, request, document or communication or make any decision or determination under any Finance Document made or delivered on that day,
unless it has received not less than 5 Business Days' prior notice from that Lender to the contrary in accordance with the terms of this Agreement.
(b)    Any Lender may by notice to the Agent appoint a person to receive on its behalf all
notices, communications, information and documents to be made or despatched to that Lender under the Finance Documents. Such notice shall contain the address, fax number and (where communication by electronic mail or other electronic means is permitted under clause 36.6 (Electronic communication)) electronic mail address and/or any other information required to enable the transmission of information by that means (and, in each case, the department or officer, if any, for whose attention communication is to be made) and be treated as a notification of a substitute address, fax number, electronic mail address (or such other information), department and officer by that Lender for the purposes of clause 36.2 (Addresses) and clause 36.6(a)(ii) (Electronic communication) and the Agent shall be entitled to treat such person as the person entitled to receive all such notices, communications, information and documents as though that person were that Lender.
31.16      Credit appraisal by the Lenders and Ancillary Lenders
Without affecting the responsibility of any Obligor for information supplied by it or on its behalf in connection with any Finance Document, each Lender and Ancillary Lender confirms to the Agent, the Arrangers and each Ancillary Lender that it has been, and will continue to be, solely responsible for making its own independent appraisal and investigation of all risks arising under or in connection with any Finance Document including but not limited to:
(a)
the financial condition, status and nature of each member of the Group;
(b)
the legality, validity, effectiveness, adequacy or enforceability of any Finance Document and any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance;
(c)
whether that Lender or Ancillary Lender has recourse, and the nature and extent of that recourse, against any Party or any of its respective assets under or in connection with any Finance Document, the transactions contemplated by the Finance Documents or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document; and
(d)
the adequacy, accuracy and/or completeness of any information provided by the Agent, any Party or by any other person under or in connection with any Finance Document, the transactions contemplated by any Finance Document or any other agreement, arrangement or document entered into, made or executed in anticipation of, under or in connection with any Finance Document.
31.17      Agent's management time
Any amount payable to the Agent under clause 19.3 (Indemnity to the Agent), clause 21 (Costs and expenses) and clause 31.11 shall include the cost of utilising the Agent's management time or other resources and will be calculated on the basis of such reasonable daily or hourly rates as the Agent may notify to the Company and the Lenders, and is in addition to any fee paid or payable to the Agent under clause 16 (Fees).
31.18      Deduction from amounts payable by the Agent

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If any Party owes an amount to the Agent (in its capacity as such) under the Finance Documents the Agent may, after giving notice to that Party, deduct an amount not exceeding that amount from any payment to that Party which the Agent would otherwise be obliged to make under the Finance Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the purposes of the Finance Documents that Party shall be regarded as having received any amount so deducted.
31.19      Reliance and engagement letters
Each Finance Party confirms that each of the Arrangers and the Agent has authority to accept on its behalf (and ratifies the acceptance on its behalf of any letters or reports already accepted by the Arrangers or the Agent) the terms of any reliance letter or engagement letters relating to any reports or letters provided by accountants in connection with the Finance Documents or the transactions contemplated in the Finance Documents and to bind it in respect of those reports or letters and to sign such letters on its behalf and further confirms that it accepts the terms and qualifications set out in such letters.
31.20      Role of Base Reference Banks
(a)
No Base Reference Bank is under any obligation to provide a quotation or any other information to the Agent.
(b)
No Party (other than the relevant Base Reference Bank) may take any proceedings against any officer, employee or agent of any Base Reference Bank in respect of any claim it might have against that Base Reference Bank or in respect of any act or omission of any kind by that officer, employee or agent in relation to any Finance Document and any officer, employee or agent of each Base Reference Bank may rely on this clause 31.20 subject to clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
31.21      Third Party Base Reference Banks
A Base Reference Bank which is not a Party may rely on clause 31.20, subject to clause 1.3 (Third party rights) and the provisions of the Third Parties Act.
32
Conduct of business by the Finance Parties
No provision of this Agreement will:
(a)
interfere with the right of any Finance Party to arrange its affairs (tax or otherwise) in whatever manner it thinks fit;
(b)
oblige any Finance Party to investigate or claim any credit, relief, remission or repayment available to it or the extent, order and manner of any claim; or
(c)
oblige any Finance Party to disclose any information relating to its affairs (tax or otherwise) or any computations in respect of Tax.
33    Sharing among the Finance Parties
33.1     Payments to Finance Parties
If a Finance Party ( Recovering Finance Party ) receives or recovers any amount from an Obligor other than in accordance with clauses 16.2 (participation fee), 16.3 (Agency fee) and 34 (Payment mechanics) (a Recovered Amount ) and applies that amount (or exercises any other right (including any right of set-off or combination) which it may have, in each case) to or towards the discharge of a payment due under the Finance Documents then:

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(a)
the Recovering Finance Party shall, within 3 Business Days, notify details of the receipt recovery, or discharge, to the Agent;
(b)
the Agent shall determine whether the receipt recovery or discharge is in excess of the amount the Recovering Finance Party would have been paid had the receipt recovery or discharge been received or made by the Agent and distributed in accordance with clause 34 (Payment mechanics), without taking account of any Tax which would be imposed on the Agent in relation to the receipt, recovery or distribution; and
(c)
the Recovering Finance Party shall, within 3 Business Days of demand by the Agent, pay to the Agent an amount ( Sharing Payment ) equal to such receipt or recovery less any amount which the Agent determines may be retained by the Recovering Finance Party as its share of any payment to be made, in accordance with clause 34.6 (Partial payments).
33.2      Redistribution of payments
The Agent shall treat the Sharing Payment as if it had been paid by the relevant Obligor and distribute it between the Finance Parties (other than the Recovering Finance Party) (the Sharing Finance Parties ) in accordance with clause 34.6 (Partial payments) towards the obligations of that Obligor to the Sharing Finance Parties.
33.3      Recovering Finance Party's rights
On a distribution by the Agent under clause 33.2 of a payment received by a Recovering Finance Party from an Obligor, as between the relevant Obligor and the Recovering Finance Party, an amount of the Recovered Amount equal to the Sharing Payment will be treated as not having been paid by that Obligor.
33.4     Reversal of redistribution
If any part of the Sharing Payment received or recovered (or which is deemed to have been received or recovered) by a Recovering Finance Party becomes repayable and is repaid by that Recovering Finance Party, then:
(a)
each Sharing Finance Party shall, upon request of the Agent, pay to the Agent for that account of that Recovering Finance Party an amount equal to the appropriate part of its share of the Sharing Payment (together with an amount as is necessary to reimburse that Recovering Finance Party for its proportion of any interest on the Sharing Payment which that Recovering Finance Party is required to pay) (the Redistributed Amount ); and
(b)
as between the relevant Obligor and each relevant Sharing Finance Party, an amount equal to the relevant Redistributed Amount will be treated as not having been paid by that Obligor.
33.5      Exceptions
(a)
This clause 33 shall not apply to the extent that the Recovering Finance Party would not, after making any payment pursuant to this clause, have a valid and enforceable claim against the relevant Obligor.
(b)
A Recovering Finance Party is not obliged to share with any other Finance Party any amount which the Recovering Finance Party has received or recovered as a result of taking legal or arbitration proceedings, if:
(i)
it notified the other Finance Party of the legal or arbitration proceedings; and

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(ii)
the other Finance Party had an opportunity to participate in those legal or arbitration proceedings but did not do so as soon as reasonably practicable having received notice and did not take separate legal or arbitration proceedings.
33.6      Ancillary Lenders
(a)
This clause 33 shall not apply to any receipt or recovery by a Lender in its capacity as an Ancillary Lender at any time prior to service of notice under clause 27.19 (Acceleration).
(b)
Following service of notice under clause 27.19 (Acceleration), this clause 33 shall apply to all receipts or recoveries by Ancillary Lenders except to the extent that the receipt or recovery represents a reduction from the Gross Outstandings of a Multi-account Overdraft to or towards an amount equal to its Net Outstandings.
34    Payment mechanics
34.1     Payments to the Agent
(a)
On each date on which an Obligor or a Lender is required to make a payment under a Finance Document (excluding a payment under the terms of an Ancillary Document) that Obligor or Lender shall make the same available to the Agent (unless a contrary indication appears in a Finance Document) for value on the due date at the time and in such funds specified by the Agent as being customary at the time for settlement of transactions in the relevant currency in the place of payment.
(b)
Payment shall be made to such account in the principal financial centre of the country of that currency (or, in relation to euro, in a principal financial centre in a Participating Member State or London) with such bank as the Agent specifies.
34.2     Distributions by the Agent
Each payment received by the Agent under the Finance Documents for another Party shall, subject to clause 34.3 and clause 34.4 be made available by the Agent as soon as practicable after receipt to the Party entitled to receive payment in accordance with this Agreement (in the case of a Lender, for the account of its Facility Office), to such account as that Party may notify to the Agent by not less than 5 Business Days’ notice with a bank in the principal financial centre of the country of that currency (or, in relation to euro, in the principal financial centre of a Participating Member State or London).
34.3     Distributions to an Obligor
The Agent may (with the consent of the Obligor or in accordance with clause 35 (Set-off)) apply any amount received by it for that Obligor in or towards payment (on the date and in the currency and funds of receipt) of any amount due from that Obligor under the Finance Documents or in or towards purchase of any amount of any currency to be so applied.
34.4      Clawback
(a)
Where a sum is to be paid to the Agent under the Finance Documents for another Party, the Agent is not obliged to pay that sum to that other Party (or to enter into or perform any related exchange contract) until it has been able to establish to its satisfaction that it has actually received that sum.
(b)
If the Agent pays an amount to another Party and it proves to be the case that the Agent had not actually received that amount, then the Party to whom that amount (or the proceeds of any related exchange contract) was paid by the Agent shall on demand refund the same to the Agent together with interest on that amount from the date of

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payment to the date of receipt by the Agent, calculated by the Agent to reflect its cost of funds.
34.5      Impaired Agent
If, at any time, the Agent becomes an Impaired Agent, an Obligor or a Lender which is required to make a payment under the Finance Documents to the Agent in accordance with clause 34.1 (Payments to the Agent) may instead pay that amount direct to the required recipient or if the relevant Obligor and the Majority Lenders agree at that time pay that amount to an interest-bearing account (which account shall bear interest at a market rate taking into account the currency and term of the deposit) held with an Acceptable Bank which is a regular acceptor of deposits within the meaning of paragraph (a) of the definition of Acceptable Bank and in relation to which no Insolvency Event has occurred and is continuing, in the name of the Obligor or the Lender making the Payment and designated as a trust account for the benefit of the Party or Parties beneficially entitled to that payment under the Finance Documents. In each case such payments must be made on the due date for payment under the Finance Documents. The trust account must be held in London or in a principal financial centre of another jurisdiction whose law recognises the concept of a trust arrangement and in which the Majority Lenders consider that the rights of the Partiers in respect of that account (and the rights to receive monies due to them standing to its credit) will not be prejudiced (including in the event of an insolvency or other similar proceedings affecting the Acceptable Bank or the relevant recipient party). In each case such payments must be made on the due date for payment under the Finance Documents.
34.6      Partial payments
(a)
If the Agent receives a payment for application against amounts due in respect of any Finance Documents that is insufficient to discharge all the amounts then due and payable by an Obligor under those Finance Documents to the Agent, the Arrangers and the Lenders, the Agent shall apply that payment towards the obligations of that Obligor under those Finance Documents to such parties in the following order:
(i)
first, in or towards payment pro rata of any unpaid fees, costs and expenses of the Agent and the Arrangers under those Finance Documents;
(ii)
secondly, in or towards payment pro rata of any accrued interest, fee or commission due but unpaid under those Finance Documents to such parties;
(iii)
thirdly, in or towards payment pro rata of any principal due but unpaid under those Finance Documents to such parties; and
(iv)
fourthly, in or towards payment pro rata of any other sum due but unpaid under the Finance Documents to such parties.
(b)
The Agent shall, if so directed by the Majority Lenders, vary the order set out in clause 34.6(a)(ii) to 34.6(a)(iv).
(c) Clauses 34.6(a) and 34.6(b) will override any appropriation made by an Obligor.
34.7      No set-off by Obligors
All payments to be made by an Obligor under the Finance Documents shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.
34.8      Business Days
(a)
Subject to clause 34.8(b), any payment which is due to be made on a day that is not a Business Day shall be made on the next Business Day in the same calendar month (if there is one) or the preceding Business Day (if there is not).

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(b)
If a payment under the Finance Documents is due to be paid on a relevant Termination Date but that day is not a Business Day, that payment shall be made on the preceding Business Day.
(c)
During any extension of the due date for payment of any principal or Unpaid Sum under this Agreement interest is payable on the principal or Unpaid Sum at the rate payable on the date on which, but for this clause 34.8, such principal or Unpaid Sum would otherwise have been due.
34.9      Currency of account
(a)
Subject to clauses 34.9(b) to 34.9(e), the Base Currency is the currency of account and payment for any sum due from an Obligor under any Finance Document.
(b)
A repayment of a Loan or Unpaid Sum or a part of a Loan or Unpaid Sum shall be made in the currency in which that Loan or Unpaid Sum is denominated on its due date.
(c)
Each payment of interest shall be made in the currency in which the sum in respect of which the interest is payable was denominated when that interest accrued.
(d)
Each payment in respect of costs, expenses or Taxes shall be made in the currency in which the costs, expenses or Taxes are incurred.
(e)
Any amount expressed to be payable in a currency other than the Base Currency shall be paid in that other currency.
34.10      Change of currency
(a)
Unless otherwise prohibited by law, if more than one currency or currency unit are at the same time recognised by the central bank of any country as the lawful currency of that country, then:
(i)
any reference in the Finance Documents to, and any obligations arising under the Finance Documents in, the currency of that country shall be translated into, or paid in, the currency or currency unit of that country designated by the Agent (after consultation with the Company); and
(ii)
any translation from one currency or currency unit to another shall be at the official rate of exchange recognised by the central bank for the conversion of that currency or currency unit into the other, rounded up or down by the Agent (acting reasonably).
(b)
If a change in any currency of a country occurs, this Agreement will, to the extent the Agent (acting reasonably and after consultation with the Company) specifies to be necessary, be amended to comply with any generally accepted conventions and market practice in the Relevant Interbank Market and otherwise to reflect the change in currency.
34.11      Disruption to Payment Systems etc.
If either the Agent determines (in its discretion) that a Disruption Event has occurred or the Agent is notified by the Company that a Disruption Event has occurred:
(a)
the Agent may, and shall if requested to do so by the Company, consult with the Company with a view to agreeing with the Company such changes to the operation or administration of the Facilities as the Agent may deem necessary in the circumstances;

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(b)
the Agent shall not be obliged to consult with the Company in relation to any changes mentioned in clause 34.11(a) if, in its opinion, it is not practicable to do so in the circumstances and, in any event, shall have no obligation to agree to such changes;
(c)
the Agent may consult with the other Finance Parties in relation to any changes mentioned in clause 34.11(a) but shall not be obliged to do so if, in its opinion, it is not practicable to do so in the circumstances;
(d)
any such changes agreed upon by the Agent and the Company shall (whether or not it is finally determined that a Disruption Event has occurred) be binding upon the Parties as an amendment to (or, as the case may be, waiver of) the terms of the Finance Documents notwithstanding the provisions of clause 40 (Amendments and waivers);
(e)
the Agent shall not be liable for any damages, costs or losses whatsoever (including, without limitation for negligence, gross negligence or any other category of liability whatsoever but not including any claim based on the fraud of the Agent) arising as a result of its taking, or failing to take, any actions pursuant to or in connection with this clause 34.11; and
(f)
the Agent shall notify the other Finance Parties of all changes agreed pursuant to clause 34.11(d) above.
35    Set-off
(a)
A Finance Party may set off any matured obligation due from an Obligor under the Finance Documents (to the extent beneficially owned by that Finance Party) against any matured obligation owed by that Finance Party to that Obligor, regardless of the place of payment, booking branch or currency of either obligation. If the obligations are in different currencies, the Finance Party may convert either obligation at a market rate of exchange in its usual course of business for the purpose of the set-off.
(b)
Any credit balances taken into account by an Ancillary Lender when operating a net limit in respect of any overdraft under an Ancillary Facility shall on enforcement of the Finance Documents be applied first in reduction of the overdraft provided under that Ancillary Facility in accordance with its terms.
36    Notices
36.1     Communications in writing
Any communication to be made under or in connection with the Finance Documents shall be made in writing and, unless otherwise stated, may be made by fax or letter.
36.2      Addresses
The address and fax number (and the department or officer, if any, for whose attention the communication is to be made) of each Party for any communication or document to be made or delivered under or in connection with the Finance Documents is:
(a)
in the case of the Company, that identified with its name below;
(b)
in the case of the Agent, the Arrangers, each Original Lender and the Original Ancillary Lender, that identified with its name below; and
(c)
in the case of each other Lender, each other Ancillary Lender or any other Obligor, that notified in writing to the Agent on or prior to the date on which it becomes a Party,

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or any substitute address, fax number or department or officer as the Party may notify to the Agent (or the Agent may notify to the other Parties, if a change is made by the Agent) by not less than 5 Business Days’ notice.
36.3     Delivery
(a)
Any communication or document made or delivered by one person to another under or in connection with the Finance Documents will only be effective:
(i)
if by way of fax, when received in legible form; or
(ii)
if by way of letter, when it has been left at the relevant address or 3 Business Days after being deposited in the post postage prepaid in an envelope addressed to it at that address,
and, if a particular department or officer is specified as part of its address details provided under clause 36.2, if addressed to that department or officer.
(b)
Any communication or document to be made or delivered to the Agent will be effective only when actually received by the Agent and then only if it is expressly marked for the attention of the department or officer identified with the Agent's signature below (or any substitute department or officer as the Agent shall specify for this purpose).
(c)
All notices from or to an Obligor shall be sent through the Agent.
(d)
Any communication or document made or delivered to the Company in accordance with this clause 36.3 will be deemed to have been made or delivered to each of the Obligors.
36.4      Notification of address and fax number
Promptly upon receipt of notification of an address and fax number or change of address or fax number pursuant to clause 36.2 or changing its own address or fax number, the Agent shall notify the other Parties.
36.5      Communication when Agent is an Impaired Agent
Upon the Agent becoming aware that it is an Impaired Agent, the Agent will as soon as reasonably practicable notify, in writing, each Party to a Finance Document that it is an Impaired Agent (the Impaired Agent Notice ). The Impaired Agent Notice will specify the date on which the Agent became an Impaired Agent and will include the details required to be delivered by the Agent under clause 31.3 (Duties of the Agent). From the date of the Impaired Agent Notice, the Parties may, instead of communicating with each other through the Agent, communicate with each other directly and (while the Agent is an Impaired Agent) all the provisions of the Finance Documents which require communications to be made or notices to be given to or by the Agent shall be varied so that communications may be made and notices given to or by the relevant Parties directly. This provision shall not operate after a replacement Agent has been appointed. For the avoidance of doubt, the failure of the Agent to deliver the Impaired Agent Notice will not prevent the Parties from communicating directly with each other if the Agent is an Impaired Agent.
36.6      Electronic communication
(a)
Any communication to be made between the Agent and a Lender under or in connection with the Finance Documents may be made by electronic mail or other electronic means, if the Agent and the relevant Lender:
(i)
agree that, unless and until notified to the contrary, this is to be an accepted form of communication;

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(ii)
notify each other in writing of their electronic mail address and/or any other information required to enable the sending and receipt of information by that means; and
(iii)
notify each other of any change to their address or any other such information supplied by them.
(b)
Any electronic communication made between the Agent and a Lender will be effective only when actually received in intelligible form and in the case of any electronic communication made by a Lender to the Agent only if it is addressed in such a manner as the Agent shall specify for this purpose.
36.7     English language
(a)
Any notice given under or in connection with any Finance Document must be in English.
(b)
All other documents provided under or in connection with any Finance Document must be:
(i)
in English; or
(ii)
if not in English, and if so required by the Agent, accompanied by a certified English translation and, in this case, the English translation will prevail unless the document is a constitutional, statutory or other official document.
37    Calculations and certificates
37.1      Accounts
In any litigation or arbitration proceedings arising out of or in connection with a Finance Document, the entries made in the accounts maintained by a Finance Party are prima facie evidence of the matters to which they relate.
37.2     Certificates and determinations
Any certification or determination by a Finance Party of a rate or amount under any Finance Document is, in the absence of manifest error, conclusive evidence of the matters to which it relates.
37.3      Day count convention
Any interest, commission or fee accruing under a Finance Document will accrue from day to day and is calculated on the basis of the actual number of days elapsed and a year of 360 days or, in any case where the practice in the Relevant Interbank Market differs, in accordance with that market practice.
38    Partial invalidity
If, at any time, any provision of the Finance Documents is or becomes illegal, invalid or unenforceable in any respect under any law of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions nor the legality, validity or enforceability of such provision under the law of any other jurisdiction will in any way be affected or impaired.
39    Remedies and waivers
No failure to exercise, nor any delay in exercising, on the part of any Finance Party, any right or remedy under the Finance Documents shall operate as a waiver, nor shall any single or partial

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exercise of any right or remedy prevent any further or other exercise or the exercise of any other right or remedy. The rights and remedies provided in this Agreement and the other Finance Documents are cumulative and not exclusive of any rights or remedies provided by law.
40    Amendments and waivers
40.1     Required consents
(a)
Subject to clause 40.2 any term of the Finance Documents may be amended or waived only with the prior written consent of the Majority Lenders and the Company and any such amendment or waiver will be binding on all Parties.
(b)
The Agent may effect, on behalf of any Finance Party, any amendment or waiver permitted by this clause 40.
(c)
Each Obligor agrees to any such amendment or waiver permitted by this clause 40 which is agreed to by the Company. This includes any amendment or waiver which would, but for this clause 40.1(c), require the consent of all of the Guarantors.
40.2      Exceptions
(a)    An amendment or waiver that has the effect of changing or which relates to:
(i)
the definition of Majority Lenders in clause 1 (Definitions and interpretation);
(ii)
an extension to the date of payment of any amount under the Finance Documents;
(iii)
a reduction in the Margin (other than by means of the operation of the Margin ratchet) or a reduction in the amount of any payment of principal, interest, fees or other amount payable to a Lender under the Finance Documents (other than in relation to clause 11 (Mandatory prepayment));
(iv)
a change in currency of payment of any amount under the Finance Documents;
(v)
an increase in any Commitment or the Total Commitments, an extension of any Availability Period or any requirement that a cancellation of Commitments reduces the Commitments of the Lenders rateably under the relevant Facility;
(vi)
a change to the Borrowers or Guarantors other than in accordance with clause 30 (Changes to the Obligors);
(vii)
any provision which expressly requires the consent of all the Lenders;
(viii)
clause 1.3 (Third party rights), clause 2.3 (Uncommitted Accordion Facility Commitments), clause 2.4 (Finance Parties' rights and obligations), clause 11 (Mandatory prepayment), clause 15.1 (Margin adjustment), clause 23.28 (Sanctions), clause 28 (Changes to the Lenders), clause 33 (Sharing among the Finance Parties), this clause 40, clause 44 (Governing law) or clause 45 (Enforcement);
(ix)
(other than as expressly permitted by the provisions of any Finance Document) the nature or scope of the guarantee and indemnity granted under clause 22 (Guarantee and indemnity); or
(x)
the release of any guarantee and indemnity granted under clause 22 (Guarantee and indemnity) unless permitted under this Agreement or any other Finance Document or relating to a sale or disposal of an asset which is expressly permitted under this Agreement,

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shall not be made without the prior consent of all the Lenders.
(b)
An amendment or waiver which relates to the rights or obligations of the Agent, the Arrangers or any Ancillary Lender (each in their capacity as such) may not be effected without the prior written consent of the Agent, the Arrangers or, as the case may be, that Ancillary Lender.
40.3      Deemed consent
If at any time the Lenders agree to amend or waive any term of this Agreement in accordance with this clause 40 then the Ancillary Lenders will be deemed to make a corresponding amendment or waiver in equivalent terms to the Ancillary Documents and to take any steps that the Agent may reasonably require on behalf of the Lenders to give effect to this clause 40.3.
40.4      Disenfranchisement of Defaulting Lenders
(a)
For so long as a Defaulting Lender has any Available Commitment, in ascertaining the Majority Lenders or whether any given percentage (including, for the avoidance of doubt, unanimity) of the Total Commitments has been obtained to approve any request for a consent, waiver, amendment or other vote under the Finance Documents, that Defaulting Lender's Commitments will be reduced by the amount of its Available Commitments.
(b)
For the purposes of this clause 40.4 the Agent may assume that the following Lenders are Defaulting Lenders:
(i)
any Lender which has notified the Agent that it has become a Defaulting Lender;
(ii)
any Lender in relation to which it is aware that any of the events of circumstances referred to in paragraphs (a), (b) or (c) of the definition of Defaulting Lender has occurred and, in the case of the events or circumstances referred to in paragraph (a), none of the exceptions to that paragraph apply,
unless it has received notice to the contrary from the Lender concerned (together with any supporting evidence reasonably requested by the Agent) or the Agent is otherwise aware that the Lender has ceased to be a Defaulting Lender.
40.5      Replacement of a Defaulting Lender
(a)
The Company may, at any time a Lender has become and continues to be a Defaulting Lender, by giving 10 Business Days' prior written notice to the Agent and such Lender:
(i)
replace such Lender by requiring such Lender to (and such Lender shall) transfer pursuant to clause 28 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement;
(ii)
require such Lender to (and such Lender shall) transfer pursuant to clause 28 (Changes to the Lenders) all (and not part only) of the undrawn Commitment of the Lender; or
(iii)
require such Lender to (and such Lender shall) transfer pursuant to clause 28 (Changes to the Lenders) all (and not part only) of its rights and obligations in respect of the Facilities,
to a Lender or other bank, financial institution, trust, fund or other entity ( Replacement Lender ) selected by the Company, and which (unless the Agent is an Impaired Agent) is acceptable to the Agent (acting reasonably), which confirms its willingness to assume and does assume all the obligations or all the relevant obligations of the transferring Lender (including the assumption of the transferring Lender's participations or unfunded

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participations (as the case may be) on the same basis as the transferring Lender) for a purchase price in cash payable at the time of transfer equal to the outstanding principal amount of such Lender's participation in the outstanding Utilisations and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.
(b)    Any transfer of rights and obligations of a Defaulting Lender pursuant to this clause shall be subject to the following conditions:
(i)
the Company shall have no right to replace the Agent;
(ii)
neither the Agent nor the Defaulting Lender shall have any obligation to the Company to find a Replacement Lender;
(iii)
the transfer must take place no later than 20 Business Days after the notice referred to in clause 40.5(a) above; and
(iv)
in no event shall the Defaulting Lender be required to pay or surrender to the Replacement Lender any of the fees received by the Defaulting Lender pursuant to the Finance Documents.
40.6      Replacement of Lender
(a)    If:
(i)
any Lender becomes a Non-Consenting Lender (as defined in clause 40.6(d));
(ii)
an Obligor becomes obliged to repay any amount in accordance with clause 10.1 (Illegality) or to pay additional amounts pursuant to clause 15.4 ( Market disruption ) or clause 18.1 (Increased costs), clause 17.2 (Tax gross-up) or clause 17.3 (Tax indemnity) to any Lender; or
(iii)
any Lender becomes a Competitor,
then the Company may, on 10 Business Days' prior written notice to the Agent and such Lender, replace such Lender by requiring such Lender to (and, to the extent permitted by law, such Lender shall) transfer pursuant to clause 28 (Changes to the Lenders) all (and not part only) of its rights and obligations under this Agreement to a Lender or other bank, financial institution, trust, fund or other entity ( Replacement Lender ) which is acceptable to the Company and which confirms its willingness to assume and does assume all the obligations of the transferring Lender in accordance with clause 28 (Changes to the Lenders) for a purchase price in cash payable at the time of transfer in an amount equal to the outstanding principal amount of such Lender's participation in the outstanding Utilisations and all accrued interest, Break Costs and other amounts payable in relation thereto under the Finance Documents.
(b)    The replacement of a Lender pursuant to this clause 40.6 shall be subject to the             following conditions:
(i)
the Company shall have no right to replace the Agent;
(ii)
neither the Agent nor the Lender shall have any obligation to the Company to find a Replacement Lender;
(iii)
the transfer to such Replacement Lender shall be deemed to occur 3 Business Days' following delivery of the relevant Transfer Certificate to the Agent, payment of the purchase price by the Lender to the Replacement Lender as required pursuant to clause 40.6(a) and subject to satisfaction with clause 40.6(b)(v);

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(iv)
in no event shall the Lender replaced under this clause 40.6 be required to pay or surrender to such Replacement Lender any of the fees received by such Lender pursuant to the Finance Documents; and
(v)
the Lender shall only be obliged to transfer its rights and obligations pursuant to clause 40.6(a) once it is satisfied that it has complied with all necessary "know your customer" or other similar checks under all applicable laws and regulations in relation to that transfer.
(c)
A Lender shall perform the checks described in clause 40.6(b)(v) as soon as reasonably practicable following delivery of a notice referred to in clause 40.6(a) and shall notify the Agent and the Company when it is satisfied that it has complied with those checks.
(d)
In the event that:
(i)
the Company or the Agent (at the request of the Company) has requested the Lenders to give a consent in relation to, or to agree to a waiver or amendment of, any provisions of the Finance Documents;
(ii)
the consent, waiver or amendment in question requires the approval of all the Lenders; and
(iii)
Lenders whose Commitments aggregate at least 80% of the Total Commitments (or, if the Total Commitments have been reduced to zero, aggregated at least 80% of the Total Commitments prior to that reduction) have consented or agreed to such waiver or amendment,
then any Lender who does not and continues not to consent or agree to such waiver or amendments shall be deemed a Non-Consenting Lender .
41    Confidentiality
41.1     Confidential Information
Each Finance Party agrees to keep all Confidential Information confidential and not to disclose it to anyone, save to the extent permitted by clause 41.2 (Disclosure of Confidential Information) and to ensure that all Confidential Information is protected with security measures and a degree of care that would apply to its own confidential information.
41.2
Disclosure of Confidential Information
Any Finance Party may disclose:
(a)
to any of its Affiliates and Related Funds and any of its or their officers, directors, employees, professional advisers, auditors, partners and Representatives such Confidential Information as that Finance Party shall consider appropriate if any person to whom the Confidential Information is to be given pursuant to this clause 41.2(a) is informed in writing of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no such requirement to so inform if the recipient is subject to professional obligations to maintain the confidentiality of the information or is otherwise bound by requirements of confidentiality in relation to the Confidential Information:
(b)
to any person:
(i)
to (or through) whom it assigns or transfers (or may potentially assign or transfer) all or any of its rights and/or obligations under one or more Finance Documents

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and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;
(ii)
with (or through) whom it enters into (or may potentially enter into), whether directly or indirectly, any sub-participation in relation to, or any other transaction under which payments are to be made or may be made by reference to, one or more Finance Documents and/or one or more Obligors and to any of that person's Affiliates, Related Funds, Representatives and professional advisers;
(iii)
appointed by any Finance Party or by a person to whom clause 41.2(b)(i) or (ii) applies to receive communications, notices, information or documents delivered pursuant to the Finance Documents on its behalf (including, without limitation, any person appointed under clause 31.15 (Relationship with the Lenders));
(iv)
who invests in or otherwise finances (or may potentially invest in or otherwise finance), directly or indirectly, any transaction referred to in clause 41.2(b)(i) or 41.2(b)(ii);
(v)
to whom information is required or requested to be disclosed by any court of competent jurisdiction or any governmental, banking, taxation or other regulatory authority or similar body, the rules of any relevant stock exchange or pursuant to any applicable law or regulation;
(vi)
to whom or for whose benefit that Finance Party charges, assigns or otherwise creates Security (or may do so) pursuant to clause 28.8 (Security over Lenders' rights));
(vii)
to whom information is required to be disclosed in connection with, and for the purposes of, any litigation, arbitration, administrative or other investigations, proceedings or disputes;
(viii)
who is a Party; or
(ix)
with the consent of the Company;
in each case, such Confidential Information as that Finance Party shall consider appropriate if:
(A)
in relation to clauses 41.2(b)(i), 41.2(b)(ii) and 41.2(b)(iii), the person to whom the Confidential Information is to be given has entered into a Confidentiality Undertaking except that there shall be no requirement for a Confidentiality Undertaking if the recipient is a professional adviser and is subject to professional obligations to maintain the confidentiality of the Confidential Information;
(B)
in relation to clause 41.2(b)(iv), the person to whom the Confidential Information is to be given has entered into a Confidential Undertaking or is otherwise bound by requirements of confidentiality in relation to the Confidential Information they receive and is informed that some or all of such Confidential Information may be price-sensitive information;
(C)
in relation to clauses 41.2(b)(v) and 41.2(b)(vii), the person to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information except that there shall be no requirement to so inform if, in the opinion of that Finance Party, it is not practicable so to do in the circumstances;

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(c)
to any person appointed by that Finance Party or by a person to whom clauses 41.2(b)(i) or 41.2(b)(ii) applies to provide administration or settlement services in respect of one or more of the Finance Documents including without limitation, in relation to the trading of participations in respect of the Finance Documents, such Confidential Information as may be required to be disclosed to enable such service provider to provide any of the services referred to in this clause 41.2(c) if the party to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information;
(d)
to any rating agency (including its professional advisers) such Confidential Information as may be required to be disclosed to enable such rating agency to carry out its normal rating activities in relation to the Finance Documents and/or the Obligors if the rating agency to whom the Confidential Information is to be given is informed of its confidential nature and that some or all of such Confidential Information may be price-sensitive information.
41.3      Disclosure to a numbering service provider
(a)
Any Finance Party may disclose to any national or international numbering service provider appointed by that Finance Party to provide identification numbering services in respect of this Agreement, the Facilities and/or one or more Obligors the following information:
(i) names of Obligors;
(ii) country of domicile of Obligors;
(iii) place of incorporation of Obligors;
(iv) date of this Agreement;
(v) clause 44 (Governing law);
(vi) the names of the Agent and the Arranger;
(vii)
date of each amendment and restatement of this Agreement;
(viii)
amounts of, and names of, the Facilities (and any tranches);
(ix)
amount of Total Commitments;
(x)
currencies of the Facilities;
(xi)
type of Facilities;
(xii)
ranking of the Facilities;
(xiii)
Termination Date for Facilities;
(xiv)
changes to any of the information previously supplied pursuant to clauses 41.3(a)(i) to 41.3(a)(xiii) above; and
(xv)
such other information agreed between such Finance Party and the Company.
to enable such number service provider to provide its usual syndicated loan numbering identification services.
(b)
The Parties acknowledge and agree that each identification number assigned to this Agreement, the Facilities and/or one or more Obligors by a number service provider and the information associated with each such number may be disclosed to users of its

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services in accordance with the standard terms and conditions of that number service provider.
(c)
Each Obligor represents that none of the information set out in clauses paragraphs 41.3(a)(i) to 41.3(a)(xv) above is, nor will at any time be, unpublished price-sensitive information.
(d)
The Agent shall notify the Company and the other Finance Parties of:
(i)
the name of any numbering service provider appointed by the Agent in respect of this Agreement, the Facilities and/or one or more Obligors; and
(ii)
the number or, as the case may be, numbers assigned to this Agreement, the Facilities and/or one or more Obligors by such numbering service provider.
41.4     Entire agreement
This clause 41.4 constitutes the entire agreement between the Parties in relation to the obligations of the Finance Parties under the Finance Documents regarding Confidential Information and supersedes any previous agreement, whether express or implied, regarding Confidential Information.
41.5     Inside information
Each of the Finance Parties acknowledges that some or all of the Confidential Information is or may be price-sensitive information and that the use of such information may be regulated or prohibited by applicable legislation including securities law relating to insider dealing and market abuse and each of the Finance Parties undertakes not to use any Confidential Information for any unlawful purpose.
41.6     Notification of disclosure
Each of the Finance Parties agrees (to the extent permitted by law and regulation) to inform the Company:
(a)
of the circumstances of any disclosure of Confidential Information made pursuant to clause 41.2(b)(v) except where such disclosure is made to any of the persons referred to in that paragraph during the ordinary course of its supervisory or regulatory function; and
(b)
upon becoming aware that Confidential Information has been disclosed in breach of this clause 41.
41.7     Continuing obligations
The obligations in this clause 41.7 are continuing and, in particular, shall survive and remain binding on each Finance Party for a period of 12 months from the earlier of:
(a)
the date on which all amounts payable by the Obligors under or in connection with the Finance Documents have been paid in full and all Commitments have been cancelled or otherwise cease to be available; and
(b)
the date on which such Finance Party otherwise ceases to be a Finance Party.
42    Publicity
The Company and each Obligor confirm it will not delay or unreasonably withhold its consent to any Finance Party publicising (by such means as that Finance Party may determine) its role in the funding of the Facilities.

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43    Counterparts
Each Finance Document may be executed in any number of counterparts, and by each party on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of a counterpart of a Finance Document by e-mail attachment or telecopy shall be an effective mode of delivery.
44    Governing law
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
45    Enforcement
45.1     Jurisdiction of English courts
(a)
The courts of England have exclusive jurisdiction to settle any dispute arising out of or in connection with this Agreement (including a dispute relating to the existence, validity or termination of this Agreement or any non-contractual obligation arising out of or in connection with this Agreement) (a Dispute ).
(b)
The Parties agree that the courts of England are the most appropriate and convenient courts to settle Disputes and accordingly no Party will argue to the contrary.
(c)
This clause 45 is for the benefit of the Finance Parties. As a result, no Finance Party shall be prevented from taking proceedings relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Finance Parties may take concurrent proceedings in any number of jurisdictions.
45.2      Service of process
(a)
Without prejudice to any other mode of service allowed under any relevant law, each Obligor (other than an Obligor incorporated in England and Wales):
(i)
irrevocably appoints Luxfer Holdings PLC as its agent for service of process in relation to any proceedings before the English courts in connection with any Finance Document (and Luxfer Holdings PLC by its execution of this Agreement, accepts that appointment); and
(ii)
agrees that failure by an agent for service of process to notify the relevant Obligor of the process will not invalidate the proceedings concerned.
(b)
If any person appointed as an agent for service of process is unable for any reason to act as agent for service of process, Luxfer Holdings PLC (on behalf of all the Obligors) must immediately (and in any event within 5 days of such event taking place) appoint another agent on terms acceptable to the Agent. Failing this, the Agent may appoint another agent for this purpose.
(c)
Luxfer Holdings PLC expressly agrees and consents to the provisions of this clause 45 and clause 44 (Governing law).
This Agreement has been entered into on the date stated at the beginning of this Agreement.

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Schedule 1
Part 1 - Original Borrowers
Company Name
Company Number
Relevant Jurisdiction
Luxfer Holdings PLC
3690830
England & Wales
BA Holdings, Inc.
 
Delaware
Luxfer Group Limited
3944037
England & Wales
Luxfer Group 2000 Limited
4027006
England & Wales
MEL Chemicals Inc.
 
New Jersey
Magnesium Elektron North America Inc.
 
Delaware
Luxfer Gas Cylinders Limited
3376625
England & Wales

Part 2 - Original Guarantors
Company Name
Company Number
Relevant Jurisdiction
Luxfer Holdings PLC
3690830
England & Wales
BA Holdings, Inc.
 
Delaware
Luxfer Group Limited
3944037
England & Wales
Luxfer Group 2000 Limited
4027006
England & Wales
MEL Chemicals Inc.
 
New Jersey
Magnesium Elektron North America, Inc.
 
Delaware
Luxfer Gas Cylinders Limited
3376625
England & Wales
Luxfer Group Services Limited
3981395
England & Wales
Magnesium Elektron Limited
3141950
England & Wales
Luxfer Overseas Holdings Limited
3081726
England & Wales
Luxfer Gas Cylinders China Holdings Limited
5165622
England & Wales
Luxfer Inc.
 
Delaware
Hart Metals, Inc.
 
Delaware
Reade Manufacturing Company
 
Delaware
Luxfer Magtech Inc.
 
Delaware
Luxfer Canada Limited
2017012705
Alberta, Canada

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Part 3 - The Original Lenders
Commitments as at the Fourth Restatement Date
 
Total Commitment as at the
Fourth Restatement Date
Bilateral Limit as at the
Fourth Restatement Date
Lloyds Bank plc
$30,000,000
£17,000,000
Clydesdale Bank PLC (trading as Yorkshire Bank)
$30,000,000
£3,000,000
National Westminster Bank plc
$30,000,000
$5,000,000
HSBC Bank plc
$30,000,000
$25,000,000
Citibank, N.A. (London Branch)
$30,000,000
$10,000,000
Total
$150,000,000
 
Schedule 2
Conditions precedent
Part 1 - Conditions precedent to signing this Agreement
Not restated – the conditions precedent in this Part 1 (Conditions precedent to signing this Agreement) of Schedule 2 were either satisfied or waived on or about the date of this Agreement.
Part 2 - Conditions precedent to initial Utilisation
Not restated – the conditions precedent in this Part 2 - Conditions precedent to initial Utilisation were satisfied prior to the initial Utilisation under this Agreement
Part 3 - Conditions precedent required to be delivered by an Additional Obligor
1    An Accession Deed executed by the Additional Obligor and the Company.
2    A copy of the constitutional documents of the Additional Obligor.
3
A copy of a resolution of the board or, if applicable, a committee of the board of directors of the Additional Obligor:
(a)
approving the terms of, and the transactions contemplated by, the Accession Deed and the Finance Documents and resolving that it execute, deliver and perform the Accession Deed and any other Finance Document to which it is party;
(b)
authorising a specified person or persons to execute the Accession Deed and other Finance Documents on its behalf;
(c)
authorising a specified person or persons, on its behalf, to sign and/or despatch all other documents and notices (including, in relation to an Additional Borrower, any Utilisation Request) to be signed and/or despatched by it under or in connection with the Finance Documents to which it is a party; and
(d)
authorising the Company to act as its agent in connection with the Finance Documents.
4
If applicable, a copy of a resolution of the board of directors of the Additional Obligor, establishing the committee referred to in paragraph 3.
5
A specimen of the signature of each person authorised by the resolution referred to in paragraph 3.
6
A copy of a resolution signed by all the holders of the issued shares of the Additional Guarantor, approving the terms of, and the transactions contemplated by, the Finance Documents to which the Additional Guarantor is a party.

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7
A copy of a resolution of the board of directors of each corporate shareholder of each Additional Guarantor approving the terms of the resolution referred to in paragraph 6.
8
A certificate from a director of the Additional Obligor confirming that borrowing or guaranteeing or securing, as appropriate, the Total Commitments would not cause any borrowing, guarantee, Security or similar limit binding on it to be exceeded.
9
A certificate from a director of the Additional Obligor certifying that each copy document listed in this Part 3 - (Conditions precedent required to be delivered by an Additional Obligor) of Schedule 2 (Conditions precedent) is correct, complete and in full force and effect and has not been amended or superseded as at a date no earlier than the date of the Accession Deed.
10
A copy of any other authorisation, consent, approval, resolution, licence, exemption, filing, notarisation or registration or other document, opinion or assurance which the Agent considers to be necessary or desirable in connection with the entry into and performance of the transactions contemplated by the Accession Deed or for the validity and enforceability of any Finance Document.
11    The latest Annual Financial Statement of the Additional Obligor.
12    The following legal opinions each addressed to the Agent and the Lenders:
(a)
A legal opinion of Addleshaw Goddard, the legal advisers to the Agent and the Arrangers as to English law in the form provided to the Agent and the Arrangers and/or distributed to the Lenders prior to signing the Accession Deed.
(b)
If the Additional Obligor is incorporated in or has its centre of main interest or establishment (as referred to in clause 23.24 (Centre of main interests and establishments)) in a jurisdiction other than England and Wales or is executing a Finance Document which is governed by a law other than English law, a legal opinion of the legal advisers to the Agent and the Arrangers in the jurisdiction of its incorporation, centre of main interest or establishment (as applicable) or, as the case may be, the jurisdiction of the governing law of that Finance Document ( Applicable Jurisdiction ) as to the law of the Applicable Jurisdiction and in the form provided to the Agent and the Arrangers and/or distributed to the Lenders prior to signing the Accession Deed.
13
If the proposed Additional Obligor is incorporated in a jurisdiction other than England and Wales, evidence that the process agent specified in clause 45.2 (Service of process) if not an Obligor, has accepted its appointment in relation to the proposed Additional Obligor.
14
Any notices duly executed or documents required to be given or executed under the terms of those security documents.
15
An accession memorandum to the Company Intra-Group Loan Agreement or similar loan agreement with the Company.
Schedule 3
Requests and Notices
Part 1 - Utilisation Request
From: [Borrower] [Company] i
To:    [Agent]
Dated:
Dear Sirs

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Luxfer Holdings PLC – Senior facilities agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement. This is a Utilisation Request. Terms defined in the Facilities Agreement have the same meaning in this Utilisation Request unless given a different meaning in this Utilisation Request.
2    We wish to borrow a Loan on the following terms:
(a)
Borrower: •
(b)
Proposed Utilisation Date:     • (or, if that is not a Business Day, the next Business
Day)
(c)
Facility to be utilised: [Uncommitted    Accordion    Term    Facility/Uncommitted
Accordion Revolving Facility/Revolving Facility]
(d)
Currency of Loan: •
(e)
Amount:     • or, if less, the Available Facility
(f)
Interest Period:     •
3
We confirm that each condition specified in clause 4.2 (Further conditions precedent) is satisfied on the date of this Utilisation Request.
4
[We irrevocably instruct you to deduct from the amount of the Loan the legal fees, VAT and disbursements of Addleshaw Goddard in the amount of £ • and to pay such amount to Addleshaw Goddard on the Utilisation Date.]
5    The proceeds of this Loan should be credited to [account].
6    This Utilisation Request is irrevocable.
i     Amend as appropriate. Utilisation Requests can be given by a Borrower or by the Company.
Yours faithfully
authorised signatory for
[the Company on behalf of [insert name of relevant Borrower]] [insert name of Borrower] ii
ii     Amend as appropriate. Utilisation Requests can be given by the Borrower or by the Company.

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Part 2 - Selection Notice
Applicable to an Uncommitted Accordion Term Facility Loan
From: [Company]
To:    [Agent]
Dated:
Dear Sirs
Luxfer Holdings PLC – Senior facilities agreement dated ● (Facilities Agreement)
1
We refer to the Facilities Agreement. This is a Selection Notice. Terms defined in the Facilities Agreement have the same meaning in this Selection Notice unless given a different meaning in this Selection Notice.
2
[We refer to the following Uncommitted Accordion Term Facility Loan[s] with an Interest Period ending on ●]:
3
We request that the next Interest Period for the Uncommitted Accordion Term Facility Loan[s] is ●.
4    This Selection Notice is irrevocable.
Yours faithfully

authorised signatory for
[the Company on behalf of [insert name of relevant Borrower]] [insert name of Borrower] iii

iii Amend as appropriate: Selection Notice can be given by the Borrower or by the Company.
Part 3 - Withdrawal Request
From: [Borrower] [Company] iv
To:    [Agent]
Dated:
Dear Sirs
Luxfer Holdings PLC – Senior facilities agreement dated • ( Facilities Agreement )
1
We refer to the Facilities Agreement. This is a Withdrawal Request. Terms defined in the Facilities Agreement have the same meaning in this Withdrawal Request unless given a different meaning in this Withdrawal Request.
2    We wish to withdraw cash cover as follows:
(a)
Proposed withdrawal date:     • (or, if that is not a Business Day, the next Business Day)
(b)
Amount:     •

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3    We confirm that each condition specified in clause 10.8 (Cash cover) is satisfied.
4
We confirm that each condition in clause 10.7 (Right of cancellation in relation to a Defaulting Lender) is satisfied.
5
[The proceeds of the withdrawal should be credited to the following accounts: •
6    We confirm that the amount withdrawn will be applied in [prepaying the Ancillary Facility].
7    This Withdrawal Notice is irrevocable.
Yours faithfully

authorised signatory for
[[the Company] on behalf of [insert name of relevant Borrower]] [insert name of Borrower]
iv     Amend as appropriate. The Withdrawal Notice can be given by the Borrower or the Company.

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Schedule 4
Form of Transfer Certificate
To:     • as Agent
From: [ The Existing Lender ] ( Existing Lender ) and [ The New Lender ] ( New Lender )
Dated:
Luxfer Holdings PLC – Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement). This agreement ( Agreement ) shall take effect as a Transfer Certificate for the purpose of the Facilities Agreement . Terms defined in the Facilities Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
2    We refer to clause 28.5 (Procedure for transfer) of the Facilities Agreement:
(a)
The Existing Lender and the New Lender agree to the Existing Lender transferring to the New Lender by novation all or part of the Existing Lender's Commitment, rights and obligations referred to in the schedule in accordance with clause 28.5 (Procedure for transfer).
(b)
The proposed Transfer Date is • .
(c)
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 36.2 (Addresses) are set out in the schedule.
3
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in clause 28.4(c) (Limitation of responsibility of Existing Lenders).
4
The New Lender confirms, for the benefit of the Agent and without liability to any Obligor, that it is:
(a)
[a Qualifying Lender falling within paragraph (i)(A) [or paragraph (ii)] of the definition of Qualifying Lender);]
(b)
[a Treaty Lender;]
(c)
[not a Qualifying Lender].
5
[The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:
(a)
a company resident in the United Kingdom for United Kingdom tax purposes;
(b)
a partnership each member of which is:

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(i)
a company so resident in the United Kingdom; or
(ii)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(b)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]
6
[The New Lender confirms (for the benefit of the Agent and without liability to any Obligor) that it is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme (reference number • ) and is tax resident in • v, so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax and notifies the Company that:
(a)
each Borrower which is a Party as a Borrower as at the Transfer Date must, to the extent that the New Lender becomes a Lender under a Facility which is made available to that Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date; and
(b)
each Additional Borrower which becomes an Additional Borrower after the Transfer Date must, to the extent that the New Lender is a Lender under a Facility which is made available to that Additional Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of becoming an Additional Borrower vi .]
7
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
8
This Agreement and any non-contractual obligations arising out of or in connection with governed by English law.
9    This Agreement has been entered into on the date stated at the beginning of this Agreement.
v     Insert jurisdiction of tax residence
vi
This confirmation must be included if the New Lender holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to apply to the Facilities Agreement.

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The schedule
Commitment/rights and obligations to be transferred
[ insert relevant details ]
[ Facility Office address, fax number and attention details for notices and account details for payments ,]
[Existing Lender]    [New Lender]
By:    By:
This Agreement is accepted as a Transfer Certificate for the purposes of the Facilities Agreement and the Transfer Date is confirmed as ¨ .
[Agent]
By:

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Schedule 5
Form of Assignment Agreement
To:     • as Agent and • , • as [Company], for and on behalf of each Obligor
From: [the Existing Lender ] ( Existing Lender ) and [the New Lender ] ( New Lender )
Dated:
Luxfer Holdings PLC - Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement. This is an Assignment Agreement. This agreement ( Agreement ) shall take effect as an Assignment Agreement for the purpose of the Facilities Agreement. Terms defined in the Facilities Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
2    We refer to clause 28.5 (Procedure for transfer) of the Facilities Agreement:
(a)
The Existing Lender assigns absolutely to the New Lender all the rights of the Existing Lender under the Facilities Agreement, the other Finance Documents which correspond to that portion of the Existing Lender's Commitments under the Facilities Agreement as specified in the schedule.
(b)
The Existing Lender is released from all the obligations of the Existing Lender which correspond to that portion of the Existing Lender's Commitments under the Facilities Agreement specified in the schedule.
(c)
The New Lender becomes a Party as a Lender and is bound by obligations equivalent to those from which the Existing Lender is released under paragraph 2(b) above.
3    The proposed Transfer Date is • .
4
On the Transfer Date the New Lender becomes Party to the relevant Finance Documents as a Lender.
5
The Facility Office and address, fax number and attention details for notices of the New Lender for the purposes of clause 36.2 (Addresses) are set out in the schedule.
6
The New Lender expressly acknowledges the limitations on the Existing Lender's obligations set out in clause 28.4(c) (Limitation of responsibility of Existing Lenders).
7
The New Lender confirms, for the benefit of the Agent and without liability to any Obligor, that it is:
(a)
[a Qualifying Lender falling within paragraph (i)(A) [or paragraph (ii)] of the definition of Qualifying Lender;]

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(a)
[a Treaty Lender;]
(b)
[not a Qualifying Lender].
8
[The New Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:
(a)    a company resident in the United Kingdom for United Kingdom tax purposes; or
(b)    a partnership each member of which is:
(i)
a company so resident in the United Kingdom; or
(ii)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(c)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]
9
[The New Lender confirms (for the benefit of the Agent and without liability to any Obligor) that it is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme (reference number • ) and is tax resident in • i, so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax and notifies the Company that:
(a)
each Borrower which is a Party as a Borrower as at the Transfer Date must, to the extent that the New Lender becomes a Lender under a Facility which is made available to that Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date; and
(a)
each Additional Borrower which becomes an Additional Borrower after the Transfer Date must, to the extent that the New Lender is a Lender under a Facility which is made available to that Additional Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of becoming an Additional Borrower ii .]
10
This Agreement acts as notice to the Agent (on behalf of each Finance Party) and, upon delivery in accordance with clause 28.7 (Copy of Transfer Certificate, Assignment Agreement, Increase

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Confirmation or Uncommitted Accordion Facility Commitment Notice to Company), to the [Company] (on behalf of each Obligor) of the assignment referred to in this Agreement.
11
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
12
This Agreement and any non-contractual obligations arising out of or in connection with it are governed by English law.
13    This Agreement has been entered into on the date stated at the beginning of this Agreement.
i     Insert jurisdiction of tax residence
ii
This confirmation must be included if the New Lender holds a passport under the HRMC DT Treaty Passport scheme and wishes that scheme to apply to the Facilities.

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The schedule
Commitment/rights and obligations to be transferred by assignment, release and accession
[ insert relevant details ]
[ Facility office address, fax number and attention details for notices and account details for payments ]
[Existing Lender]    [New Lender]
By:    By:
This Agreement is accepted as an Assignment Agreement for the purposes of the Facilities Agreement and the Transfer Date is confirmed as ¨ .
Signature of this Agreement by the Agent constitutes confirmation by the Agent of receipt of notice of the assignment referred to in this Agreement, which notice the Agent receives on behalf of each Finance Party.
[Agent]
By:

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Schedule 6
Form of Accession Deed
To:     • as Agent
From: [ Subsidiary ] and [[ Company ]]
Dated:
Dear Sirs
Luxfer Holdings PLC – Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement. This deed ( Accession Deed ) shall take effect as an Accession Deed for the purposes of the Facilities Agreement. Terms defined in the Facilities Agreement have the same meaning in paragraphs 1 to 3 of this Accession Deed unless given a different meaning in this Accession Deed.
2
[Subsidiary] agrees to become an Additional [Borrower]/[Guarantor] and to be bound by the terms of the Facilities Agreement and the other Finance Documents as an Additional [Borrower]/[Guarantor] pursuant to clause 30.2 (Additional Borrowers)/[clause 30.4 (Additional Guarantors) of the Facilities Agreement. [Subsidiary] is a company duly incorporated under the laws of [name of relevant jurisdiction] and is a limited liability company and registered number • .
3
[Subsidiary's] administrative details for the purposes of the Facilities Agreement are as follows:
Address:
Fax No.:
Attention:
4
This Accession Deed [and any non-contractual obligations arising out of or in connection with it] [is/are] governed by English law.

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This Accession Deed has been signed on behalf of the [Company] and executed as a deed by [ Subsidiary ] and is delivered on the date stated above.
[ Subsidiary ]
[EXECUTED AS A DEED
By: [ Subsidiary ]
Director
Director/Secretary
OR
[EXECUTED AS A DEED
By: [ Subsidiary ]
Signature of Director
Name of Director
in the presence of
Signature of witness
Name of witness
Address of witness
Occupation of witness]
The Company
[ Company ]
By:

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Schedule 7
Form of Resignation Letter
To:     • as Agent
From: [ resigning Obligor ] and [ Company ]
Dated:
Dear Sirs
Luxfer Holdings PLC - Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement. This is a Resignation Letter. Terms defined in the Facilities Agreement have the same meaning in this Resignation Letter unless given a different meaning in this Resignation Letter.
2
Pursuant to [clause 30.3 (Resignation of a Borrower)] [clause 30.5 (Resignation of a Guarantor)], we request that [resigning Obligor] be released from its obligations as a [Borrower] [Guarantor] under the Facilities Agreement and the Finance Documents.
3    We confirm that:
(a)
no Default is continuing or would result from the acceptance of this request;
(b)
[this request is given in relation to a Third Party Disposal of [ resigning Obligor ];
(c)
[the Disposal Proceeds have been or will be applied in accordance with clause 11.2 (Disposal and Insurance); and
(d)
[];
4
This Resignation Letter (and any non-contractual obligations arising out of or in connection with it [is/are]) is governed by English law.
[Company]    [ resigning Obligor ]
By:    By:

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Schedule 8
Form of Compliance Certificate
To:     • as Agent
From: Luxfer Holdings PLC
Dated:
Dear Sirs
Luxfer Holdings PLC - Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement. This is a Compliance Certificate. Terms defined in the Facilities Agreement have the same meaning when used in this Compliance Certificate unless given a different meaning in this Compliance Certificate.
2
With reference to the [Annual Financial Statements] [Quarterly Financial Statements] for the [Financial Year ended • ] [Financial Quarter ended • ], we confirm that:
Covenant
Relevant Period
Target
Actual
Compliant/Non
compliant
 
 
 
 
 
Interest Cover
·      to •
At least • : •
·      : •
]
Leverage
·      to •
Not
exceeding
·      : •
·      : •
]
Capital
Expenditure
For the Financialexceeding Year ending •
Not
£25,000,000
£ •
]

3
[We confirm that a Permitted Temporary Leverage Increase has been agreed by the Lenders and Leverage shall not exceed • : • for the Relevant Period ending • to the Relevant Period ending • .]
4
We confirm that Leverage is • :1 and that, therefore, the Margin for the Revolving Facility should be • % [and the Margin for the Uncommitted Accordion Revolving Facility] [the Margin for the Uncommitted Accordion Term Facility Margin] should be ●%]
5    [We confirm that no Default is continuing.]i
6
[We confirm that the following companies constitute Material Companies for the purposes of the Facilities Agreement:
·      .]
i If this statement cannot be made, the certificate should identify any Default that is continuing and the steps, if any, being taken to remedy it.

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[We confirm that the aggregate of the earnings before interest, tax and amortisation (calculated on the same basis as [EBITA)] [aggregate gross assets] of the Guarantors (calculated on an unconsolidated basis and excluding all intra-group items and investments in Subsidiaries of any member of the Group) exceeds 80% of the [EBITA] [consolidated gross assets].]
Signed     
Finance Director    Director
of    of
[Company]    [Company]
[insert applicable certification language]
for and on behalf of
name of Auditors of the Company ii
ii
Only applicable if the Compliance Certificate accompanies the Audited Financial Statements and is to be signed by the Auditors. To be agreed with the Company's Auditors prior to signing of the Agreement.

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Schedule 9
Timetables
 
 
Loans in euro
and US$
Loans in sterling
Loans in other currencies
Agent notifies the Company if a currency is approved as an Optional Currency in accordance with clause 4.3 (Conditions relating to Optional Currencies))
-
-
U-4
Delivery of a duly completed Utilisation
U-3
U-1
U-3
Request (clause 5.1 (Delivery of a Utilisation
 
 
 
Request) or a Selection Notice (clause 14.1
1.00pm
9.30am
9.30am
(Selection of Interest Periods and terms))
 
 
 
Agent determines (in relation to a Loan) the
U-3
U-1
U-3
Base Currency Amount of the Loan, if required under clause 5.4 (Lenders' participation) and notifies the Lenders of the
5.00pm
Noon
Noon
Loan in accordance with clause 5.4 (Lenders' participation)
 
 
 
Agent receives a notification from a Lender under clause 6.2 (Unavailability of a currency)
Quotation Day 9.30am
-
Quotation Day 9.30am
Agent gives notice in accordance with clause
Quotation Day
U
Quotation Day
6.2 (Unavailability of a currency)
 
 
 
 
5.30pm
9.30am
5.30pm
LIBOR or EURIBOR is fixed
Quotation Day as
Quotation Day as of
Quotation Day
 
of 11:00 a.m. in
respect of LIBOR
11:00 a.m.
as of 11:00 a.m.
and as of 11.00
a.m.    (Brussels
time) in respect of
EURIBOR
"U"    =    date of utilisation or, if applicable, in the case of an Uncommitted Accordion Term Facility
Loan that has already been borrowed, the first day of the relevant Interest Period for that Uncommitted Accordion Term Facility Loan
"U - X" =    X Business Days prior to date of utilisation

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Schedule 10
Form of Increase Confirmation
To:     • as Agent, and • as [Company], for and on behalf of each Obligor
From: [ the Increase Lender ] ( Increase Lender )
Dated:
Luxfer Holdings PLC - Senior Facilities Agreement dated • (Facilities Agreement)
1
We refer to the Facilities Agreement . This agreement ( Agreement ) shall take effect as an Increase Confirmation for the purpose of the Facilities Agreement. Terms defined in the Facilities Agreement have the same meaning in this Agreement unless given a different meaning in this Agreement.
2    We refer to clause 2.2 (Increase) of the Facilities Agreement.
3
The Increase Lender agrees to assume and will assume all of the obligations corresponding to the Commitment specified in the schedule (Relevant Commitment) as if it was an Original Lender under the Facilities Agreement.
4
The proposed date on which the increase in relation to the Increase Lender and the Relevant Commitment is to take effect (Increase Date) is • .
5    On the Increase Date, the Increase Lender becomes party to the relevant Finance Documents.
6
The Facility Office and address, fax number and attention details for notices to the Increase Lender for the purposes of clause 36.2 (Addresses) are set out in the schedule.
7
The Increase Lender expressly acknowledges the limitations on the Lenders' obligations referred to in clause 2.2(f) (Increase).
8
The Increase Lender confirms, for the benefit of the Agent and without liability to any Obligor, that it is:
(a) [a Qualifying Lender (other than a Treaty Lender);]
(b) [a Treaty Lender;]
(c) [not a Qualifying Lender]
9
[The Increase Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:
(a)    a company resident in the United Kingdom for United Kingdom tax purposes; or
(a)    a partnership each member of which is:

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(i)
a company so resident in the United Kingdom; or
(ii)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(b)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]
10
[The Increase Lender confirms (for the benefit of the Agent and without liability to any Obligor) that it is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme (reference number • ) and is tax resident in • i, so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax and notifies the Company that:
(a)
each Borrower which is a Party as a Borrower as at the Transfer Date must, to the extent that the New Lender becomes a Lender under a Facility which is made available to that Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date; and
(a)
each Additional Borrower which becomes an Additional Borrower after the Transfer Date must, to the extent that the New Lender is a Lender under a Facility which is made available to that Additional Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of becoming an Additional Borrower ii .]
11
This Agreement may be executed in any number of counterparts and this has the same effect as if the signatures on the counterparts were on a single copy of this Agreement.
12
This Agreement [and any non-contractual obligations arising out of or in connection with it] [is/are] governed by English law.
13    This Agreement has been entered into on the date stated at the beginning of this Agreement.
i     Insert jurisdiction of tax residence
ii
This confirmation must be included if the Increase Lender holds a passport under the HRMC DT Treaty Passport scheme and wishes that scheme to apply to the Facilities Agreement.

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The schedule
Relevant Commitment/rights and obligations to be assumed by the Increase Lender
[ insert relevant details ]
[ Facility office address, fax number and attention details for notices and account details for payments ]
[Increase Lender]
By:
This Agreement is accepted as an Increase Confirmation for the purposes of the Facilities Agreement by the Agent and the Increase Date is confirmed as ¨ .
Agent
By:

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Schedule 11
Uncommitted Accordion Facility Commitment Notice
Uncommitted Accordion Facility Commitment Notice Number: [n]
To:    [ • ] as Agent
From:    [Company]
Dated: [    ]
Dear Sirs,
Luxfer Holdings PLC – Senior Facilities Agreement
dated [ • ] (as amended from time to time, the "Facilities Agreement")
1
We refer to the Facilities Agreement and in particular Clause 2.3 (Uncommitted Accordion Facility Commitments) thereof. Terms defined in the Facilities Agreement have the same meaning when used in this Uncommitted Accordion Facility Commitment Notice.
2
We have agreed with the following institutions (the "Lenders" ) in respect of the Uncommitted Accordion Facility Commitments detailed in this Uncommitted Accordion Facility Commitment Notice) that they commit Uncommitted Accordion Facility Commitments as follows:
Name of Institution
Existing Lenders (yes/no)
Uncommitted Accordion
[Revolving/Term] Facility
Commitment







TOTAL:



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3
The date on which the Uncommitted Accordion [Revolving/Term] Facility Commitments referred to above are to become effective is [DATE].
4    The Availability Period is: [Availability Period]
5
The currencies in which the Uncommitted Accordion [Revolving/Term] Facility Commitments may be utilised are:
6    The Borrower and amounts are: [insert name of Borrower]    [●]
7
The applicable Margin shall be as follows (at the date of this Notice): [●] % p.a. [insert ratchet provisions if applicable]
8    The final repayment date is:
9    The purpose of the Uncommitted Accordion [Revolving/Term] Facility Commitment is:
10    The amount of the applicable commitment fee is:
11    The amount of the applicable arrangement fee is:
12
[The Borrower of the Uncommitted Accordion Term Facility shall repay the aggregate Uncommitted Accordion Term Facility Loan(s) on the dates and in the amounts set out in the table below:]
Repayment Date  
=
Repayment Instalment  
=

13
[insert any other relevant matters referred to in clause 2.3 (Uncommitted Accordion Facility Commitments)]
14
The aggregate of the Uncommitted Accordion [Revolving/Term] Facility Commitments (including pursuant to this notice) is: [ • ]
15
[If a Third Party Lender, the maximum aggregate amount of the Ancillary Commitments under the Uncommitted Accordion Revolving Facility for [insert Third Party Lender details] is: [ • ]]
16
This Uncommitted Accordion Facility Commitment Notice and any non-contractual obligations arising out of or in connection with it are governed by English law.

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[Authorised Signatory]
For and on behalf of [Company]
[Authorised Signatory]
For and on behalf of [Borrower]
Lender Confirmations
We agree to become a party to the Facilities Agreement as a Lender with an Uncommitted Accordion [Revolving/Term] Facility Commitment as recorded above [ and provide the following confirmations:
The Facility Office and address, fax number and attention details for notices of the Lender for the purposes of clause 36.2 (Addresses) are set out in the schedule.
That Lender expressly acknowledge the limitations on the Existing Lender's obligations set out in clause 28.4(c) (Limitation of responsibility of Existing Lenders).
That Lender confirms, for the benefit of the Agent and without liability to any Obligor, that it is:
(a)
[a Qualifying Lender falling within paragraph (i)(A) [or paragraph (ii)] of the definition of Qualifying Lender);]
(b)
[a Treaty Lender;]
(c)
[not a Qualifying Lender].
That Lender confirms that the person beneficially entitled to interest payable to that Lender in respect of an advance under a Finance Document is either:
(a)    a company resident in the United Kingdom for United Kingdom tax purposes;
(b)    a partnership each member of which is:
(i)
a company so resident in the United Kingdom; or
(ii)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account in computing its chargeable profits (within the meaning of section 19 of the CTA) the whole of any share of interest payable in respect of that advance that falls to it by reason of Part 17 of the CTA; or
(c)
a company not so resident in the United Kingdom which carries on a trade in the United Kingdom through a permanent establishment and which brings into account interest payable in respect of that advance in computing the chargeable profits (within the meaning of section 19 of the CTA) of that company.]

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That Lender confirms (for the benefit of the Agent and without liability to any Obligor) that it is a Treaty Lender that holds a passport under the HMRC DT Treaty Passport scheme (reference number • ) and is tax resident in • ii , so that interest payable to it by borrowers is generally subject to full exemption from UK withholding tax and notifies the Company that:
(a)
each Borrower which is a Party as a Borrower as at the Transfer Date must, to the extent that the New Lender becomes a Lender under a Facility which is made available to that Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of the Transfer Date; and
(b)
each Additional Borrower which becomes an Additional Borrower after the Transfer Date must, to the extent that the New Lender is a Lender under a Facility which is made available to that
ii Insert jurisdiction of tax residence
Additional Borrower pursuant to clause 2.1 (The Facilities) of the Facilities Agreement, make an application to HM Revenue & Customs under form DTTP2 within 30 days of becoming an Additional Borrower iii .]
Countersigned by:
[Authorised Signatory]
[Name of Lender]
We acknowledge the accession of each of the parties (other than the Company) to this letter to the Facilities Agreement as a Lender.
[Authorised Signatory]
the Agent
Borrower
iii
This confirmation must be included if the New Lender holds a passport under the HMRC DT Treaty Passport scheme and wishes that scheme to apply to the Facilities Agreement.

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NOTICES
THE ORIGINAL BORROWERS
LUXFER HOLDINGS PLC
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
BA HOLDINGS, INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
LUXFER GROUP LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
LUXFER GROUP 2000 LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
MEL CHEMICALS INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
MAGNESIUM ELEKTRON NORTH AMERICA, INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
LUXFER GAS CYLINDERS LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC

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THE ORIGINAL GUARANTORS
LUXFER HOLDINGS PLC
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
BA HOLDINGS, INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
LUXFER GROUP LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
LUXFER GROUP 2000 LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
MEL CHEMICALS INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
MAGNESIUM ELEKTRON NORTH AMERICA, INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
LUXFER GAS CYLINDERS LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
LUXFER GROUP SERVICES LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE

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Fax:    0870 1911 492
Attention:    Company Secretary
MAGNESIUM ELEKTRON LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
LUXFER OVERSEAS HOLDINGS LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary

LUXFER GAS CYLINDERS CHINA HOLDINGS LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary
LUXFER INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
HART METALS, INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
READE MANUFACTURING COMPANY
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC
LUXFER MAGTECH INC.
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492

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Attention:    Company Secretary of Luxfer Holdings PLC

LUXFER CANADA LIMITED
Address:    Anchorage Gateway, 5 Anchorage Quay, Salford, M50 3XE
Fax:    0870 1911 492
Attention:    Company Secretary of Luxfer Holdings PLC


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THE ARRANGERS
LLOYDS BANK PLC
Address:    8th Floor, 40 Spring Gardens, Manchester M2 1EN
Fax:    0161 227 4358
Attention:    Seth Vaughan
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK)
Address:    Yorkshire Bank, 58 Spring Gardens, Manchester M2 1YB
Fax:    0161 832 5187
Attention:    Jon Hall/David Thomson
THE ROYAL BANK OF SCOTLAND PLC
Address:    1 Spinningfields Square, Manchester, M3 3AP
Fax:    0161 862 4002
Attention:    Chris Yau
HSBC BANK PLC
Address:    Steve Estill
Attention:    4 Hardman Square, Spinningfields, Manchester, M3 3EB, UK
CITIBANK, N.A. (LONDON BRANCH)
Address:
c/o Head of Citi Commercial Bank, United Kingdom Citigroup Centre, 25 Canada Square, Canary Wharf, London, E14 5LB, United Kingdom
Attention:
Citi Commercial Bank, United Kingdom
Relationship Manager – Vineet Vetts
THE ORIGINAL LENDERS
LLOYDS BANK PLC
Address:    8th Floor, 40 Spring Gardens, Manchester M2 1EN
Fax:    0161 227 4358
Attention:    Seth Vaughan
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK)
Address:    Yorkshire Bank, 58 Spring Gardens, Manchester M2 1YB

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Fax:    0161 832 5187
Attention:    Jon Hall/David Thomson
NATIONAL WESTMINSTER BANK PLC
Address:    1 Spinningfields Square, Manchester, M3 3AP
Fax:    0161 862 4002
Attention:    Chris Yau
HSBC BANK PLC
Address:    Steve Estill
Attention:    4 Hardman Square, Spinningfields, Manchester, M3 3EB
CITIBANK, N.A. (LONDON BRANCH)
Address:
c/o Head of Citi Commercial Bank, United Kingdom Citigroup Centre, 25 Canada Square, Canary Wharf, London, E14 5LB, United Kingdom
Attention:
Citi Commercial Bank, United Kingdom
Relationship Manager – Vineet Vetts
THE ORIGINAL ANCILLARY LENDERS
LLOYDS BANK PLC
Address:    8th Floor, 40 Spring Gardens, Manchester M2 1EN
Fax:    0161 227 4358
Attention:    Seth Vaughan
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK)
Address:    Yorkshire Bank, 58 Spring Gardens, Manchester M2 1YB
Fax:    0161 832 5187
Attention:    Jon Hall/David Thomson
NATIONAL WESTMINSTER BANK PLC
Address:    1 Spinningfields Square, Manchester, M3 3AP
Fax:    0161 862 4002
Attention:    Chris Yau
HSBC BANK PLC
Address:    Steve Estill

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Attention:    4 Hardman Square, Spinningfields, Manchester, M3 3EB, UK
CITIBANK, N.A. (LONDON BRANCH)
Address:
c/o Head of Citi Commercial Bank, United Kingdom Citigroup Centre, 25 Canada Square, Canary Wharf, London, E14 5LB, United Kingdom
Attention:
Citi Commercial Bank, United Kingdom
Relationship Manager – Vineet Vetts
THE AGENT
THE ROYAL BANK OF SCOTLAND PLC
Address:    250 Bishopsgate, London EC2M 4AA
Fax:    0207 678 8727
Attention:    Kim Uyen Nguyen

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SIGNATURES
THE COMPANY
LUXFER HOLDINGS PLC
By: Alok Maskara
THE ORIGINAL BORROWERS
LUXFER HOLDINGS PLC
By: Alok Maskara
BA HOLDINGS, INC.
By: Alok Maskara
LUXFER GROUP LIMITED
By: Alok Maskara
LUXFER GROUP 2000 LIMITED
By: Alok Maskara
MEL CHEMICALS INC.
By: Alok Maskara
MAGNESIUM ELEKTRON NORTH AMERICA, INC. By: Alok Maskara
LUXFER GAS CYLINDERS LIMITED
By: Andrew M. Beaden
THE ORIGINAL GUARANTORS
LUXFER HOLDINGS PLC
By: Alok Maskara
BA HOLDINGS, INC.
By: Alok Maskara
LUXFER GROUP LIMITED
By: Alok Maskara
LUXFER GROUP 2000 LIMITED
By: Alok Maskara
MEL CHEMICALS INC.
By: Alok Maskara
MAGNESIUM ELEKTRON NORTH AMERICA, INC. By: Alok Maskara
LUXFER GAS CYLINDERS LIMITED
By: Andrew M. Beaden
LUXFER GROUP SERVICES LIMITED By: Alok Maskara

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MAGNESIUM ELEKTRON LIMITED
By: Alok Maskara
LUXFER OVERSEAS HOLDINGS LIMITED
By: Alok Maskara
LUXFER GAS CYLINDERS CHINA HOLDINGS LIMITED By: Alok Maskara
LUXFER INC.
By: J. Michael Edwards
HART METALS, INC.
By: Alok Maskara
READE MANUFACTURING COMPANY
By: Alok Maskara
LUXFER MAGTECH INC.
By: Alok Maskara
LUXFER CANADA LIMITED
By: J. Michael Edwards
THE ARRANGERS
LLOYDS BANK PLC
By: Robert Abraham
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK) By: David Thomson
THE ROYAL BANK OF SCOTLAND PLC
By: Kim-Uyen.Nguyen
HSBC BANK PLC
By: Claudia Harrison
CITIBANK, N.A. (LONDON BRANCH)
By: Oliver Rey-Beckstrom
THE LENDERS
LLOYDS BANK PLC
By: Robert Abraham
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK) By: David Thomson
NATIONAL WESTMINSTER BANK PLC
By: Kim-Uyen.Nguyen
HSBC BANK PLC
By: Claudia Harrison
CITIBANK, N.A. (LONDON BRANCH)
By: Oliver Rey-Beckstrom
THE ANCILLARY LENDER

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LLOYDS BANK PLC
By: Robert Abraham
CLYDESDALE BANK PLC (TRADING AS YORKSHIRE BANK) By: David Thomson
NATIONAL WESTMINSTER BANK PLC
By: Kim-Uyen.Nguyen
HSBC BANK PLC
By: Claudia Harrison
CITIBANK, N.A. (LONDON BRANCH)
By: Oliver Rey-Beckstrom
THE AGENT
THE ROYAL BANK OF SCOTLAND PLC
By: Kim-Uyen.Nguyen
THE DOCUMENT CO-ORDINATOR
LLOYDS BANK PLC
By: Robert Abraham

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LUXFER HOLDINGS PLC
LONG-TERM UMBRELLA INCENTIVE PLAN

1.
Purpose of the Plan
The purpose of the Plan is to attract and retain high-quality senior employees in an environment where compensation levels are based on global market practice, to align rewards of employees with returns to shareholders and to reward the achievement of business targets and key strategic objectives. The Plan is designed to serve these goals by providing such employees with a proprietary interest in pursuing the long-term growth, profitability and financial success of the Company. Award grants are intended to be determined annually, but may be made on other occasions, such as recruitments.
2.
Definitions
As used in the Plan or in any instrument governing the terms of any Award, unless stated otherwise, the following definitions apply to the terms indicated below:
(a) “ Award ” means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, or Other Stock Based Award, or Cash Incentive Award granted to a Participant pursuant to the Plan.
(b) “ Award Agreement ” means any written agreement, contract or other instrument or document evidencing an Award.
(c) “ Beneficiary ” means a person designated in writing by the Participant to receive any amounts due to the Participant hereunder in the event of the Participant’s death or, absent any such designation, the Participant’s estate. Such designation, if any, must be on file with the Company prior to the Participant’s death.
(d) “ Board ” means the Board of Directors of Luxfer.
(e) “ Cash Incentive Award ” means an award granted pursuant to Section 9 of the Plan.
(f) “ Cause ” means (i) if the Participant is a party to an employment agreement with the Company and such agreement provides for a definition of Cause or the grounds for summary dismissal, the definition of Cause contained therein or such grounds for summary dismissal, as applicable, or (ii) if no such agreement exists or if such agreement does not define Cause and does not provide for the grounds for summary dismissal, such conduct of a Participant that constitutes grounds for summary dismissal, as determined by the Company in its sole discretion. For the avoidance of doubt, grounds for summary dismissal will include, without limitation, (i) gross misconduct, gross incompetence or any other material breach of obligations to the Company, (ii) commission of any criminal offence other than a road traffic offence or any other offence which does not result in a custodial sentence and in the reasonable opinion of the Company does not affect the Participant’s employment, (iii) becoming bankrupt or making any formal arrangement or composition with the Participant’s creditors generally, (iv) disqualification from being a director of any company by reason of an order made by any competent court other than by reason of mental or physical disability; (v) engaging in any conduct which brings the Participant or the Company into disrepute.
(g) “ Change in Control ” means, unless otherwise defined in the Award Agreement, the occurrence of any of the following after the Effective Date: (i) any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s outstanding securities (other than any Person who was a “beneficial owner” of securities of the Company representing 40% or more of the combined voting power of the Company’s outstanding securities prior to the Effective Date); or (ii) dissolution or liquidation of the Company; or (iii) material reconstruction or significant demerger; or (iv) individuals who constitute the Board on the Effective Date (the “ Incumbent Board ”) cease for any reason to constitute at least a majority of the members of the Board, provided that any person becoming a director subsequent to the Effective Date whose appointment to fill a vacancy or to fill a new Board position was approved by a vote of at least three-quarters of the directors comprising the Incumbent Board, or whose nomination for election by the Company’s shareholders was approved by the same nominating committee serving under an Incumbent Board, shall be, for purposes of this clause (iv), considered as though he were a member of the Incumbent Board; or (v) the occurrence of any of the following of which the Incumbent Board does not approve: (A) merger or consolidation in which the Company is not the surviving corporation or (B) sale of all or substantially all of the assets of the Company; or (vi) consummation of a plan of reorganization, merger or consolidation of the Company with one or more corporations as a result of which the outstanding shares of the class of securities then subject to the plan of reorganization are exchanged or converted into cash or property or securities not issued by the Company, which was approved by shareholders pursuant to a proxy statement soliciting proxies from shareholders of the Company, by someone other than the then current management of the Company.
(h) “ Code ” means the United States Internal Revenue Code of 1986, as amended from time to time, and all regulations, interpretations and administrative guidance issued thereunder.
(i) “ Committee ” means the Remuneration Committee of the Board or such other committee as the Board shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Committee under the terms of the Plan.




(j) “ Company ” means Luxfer and all of its Subsidiaries, collectively.
(k) “ Director EIP ” means the Luxfer Non-Executive Directors Equity Incentive Plan, as it may be amended from time to time.
(l) “ Disability ” means any physical or mental impairment which qualifies a Participant for (i) disability benefits under any long-term disability plan maintained by the Company, (ii) workers’ compensation total disability benefits, (iii) Social Security disability benefits, or (iv) as otherwise determined by the Board. For purposes of the Plan, a Participant’s employment shall be deemed to have terminated as a result of Disability on the date as of which he or she is first entitled to receive disability benefits under such policy, law or regulation or such other date as the Committee shall determine in its sole discretion; provided that with respect to any Award that is subject to Section 409A of the Code, if such Award provides for any payment or distribution upon a Participant’s (i) Disability, then “Disability” shall have the meaning given to such term in Section 1.409A-3(i)(4) of the Treasury Regulations or (ii) termination of employment as a result of Disability, then such Participant’s employment shall be deemed to have terminated as a result of Disability on the date on which such Participant experiences a separation from service within the meaning of Section 409A of the Code and regulations promulgated thereunder.
(m) “ Effective Date ” means October 2, 2012.
(n) “ Exchange Act ” means the United States Securities Exchange Act of 1934, as amended from time to time.
(o) “ Executive Officers ” shall mean the Chief Executive Officer, the Chief Financial Officer, Corporate Secretary and other members of the Executive Management Board of Luxfer.
(p) “ Exercise Price ” means the price per Share at which a holder of an Option or a Stock Appreciation Right may purchase Shares or exercise a Stock Appreciation Right, as applicable.
(q) “ Fair Market Value ” means, with respect to a Share, as of the applicable date of determination (i) (x) for purposes of Sections 3(c) and 6(a) hereof, the closing price per Share on the trading day immediately preceding such date as reported on the New York Stock Exchange and (y) for all other purposes, the closing price per Share on that date as reported on the New York Stock Exchange (or if not reported, the closing price per Share on the trading day immediately preceding such date as reported on the New York Stock Exchange) or (ii) if not so reported, as determined by the Committee in its sole discretion using a reasonable valuation method taking into account, to the extent applicable, the requirements of Section 409A of the Code.
(r) “ Luxfer ” means Luxfer Holdings PLC, incorporated in England and Wales, and any successor thereto.
(s) “ Nonqualified Stock Option ” means an Option that is not intended to meet the requirements of Section 422 of the Code or that otherwise does not meet such requirements.
(t) “ Option ” means a right granted to a Participant pursuant to Section 6 to purchase a specified amount of Shares at an Exercise Price.
(u) “ Ordinary Shares ” means Luxfer’s ordinary shares, nominal value £0.50 per share, or any other security into which the ordinary shares shall be changed pursuant to the adjustment provisions of Section 12 of the Plan.
(v) “ Other Stock Based Award ” means an equity-based or equity-related award, other than an Option, Stock Appreciation Right, Restricted Stock, or Restricted Stock Unit, granted to a Participant pursuant to Section 10, including a nil or nominal cost right to acquire Shares.
(w) “ Participant ” means an employee of the Company who is eligible to participate in the Plan and to whom one or more Awards have been granted pursuant to the Plan.
(x) “ Performance-Based ” means, with respect to an Award, an Award that vests, in whole or in part, on the basis of one or more Performance Targets that are imposed on such Award pursuant to Section 11.
(y) “ Performance Measures ” means such measures as are described in Section 11 on which Performance Targets are based in respect of Performance-Based Awards.
(z) “ Performance Percentage ” means the factor determined pursuant to a Performance Schedule that is to be applied to a Target Award and that reflects actual performance compared to the Performance Target.
(aa) “ Performance Period ” means the period of time during which the Performance Targets must be met in order to determine the degree of payout and/or vesting with respect to a Performance-Based Award. Performance Periods for different Awards may be overlapping.
(ab) “ Performance Schedule ” means a schedule or other objective method for determining the applicable Performance Percentage to be applied to each Target Award.
(ac) “ Performance Target ” means performance goals and objectives with respect to Performance Measures for a Performance Period.
(ad) “ Person ” means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange Act, including any “group” within the meaning of Section 13(d)(3) under the Exchange Act.
(ae) “ Personal Data ” means the name, home address, email address and telephone number, date of birth, social security number or equivalent of a Participant, details of all rights to acquire Shares or other securities or cash granted to the Participant and of Shares or other securities issued or transferred or cash paid to the Participant pursuant to the Plan and any other personal information which could identify the Participant and is necessary for the administration of the Plan.
(af) “ Plan ” means this Luxfer Holdings PLC Long-Term Umbrella Incentive Plan, as it may be amended from time to time.
(ag) “ Restricted Stock ” means Shares awarded to a Participant pursuant to Section 7 subject to a substantial risk of forfeiture.
(ah) “ Restricted Stock Unit ” means a right to receive a number of Shares subject to the Award or the value thereof as of the specified date granted to a Participant pursuant to Section 8.  
(ai) “ Securities Act ” means the United States Securities Act of 1933, as amended.
(aj) “ Share ” means an Ordinary Share.




(ak) “ Stock Appreciation Right ” means a right granted to a Participant under Section 6.
(al) “ Subsidiary ” shall mean any entity of which a majority of the outstanding voting shares or voting power is beneficially owned directly or indirectly by Luxfer.
(am) “ Target Award ” means a target Award determined by the Committee to be payable upon satisfaction of any applicable Performance Targets.
(an) “ Time-Based “ means, with respect to an Award, an Award that vests solely on the basis of continued employment.
(ao) “ Transfer ” means, with respect to any Award, a transfer, sale, exchange, assignment, pledge, hypothecation or other encumbrance or disposition of such Award, whether for or without consideration. “ Transferee ”, “ Transferred ” and “ Transferability ” shall have correlative meanings.
(ap) “ U.S. ” shall mean the United States of America.
3.
Term; Stock Subject to the Plan; Limitations on Individual Awards
(a) Term of the Plan
Unless the Plan shall have been earlier terminated by the Company, Awards may be granted under the Plan at any time in the period commencing on the Effective Date and ending immediately prior to the tenth anniversary of the Effective Date. Awards granted pursuant to the Plan within that period shall not expire solely by reason of the termination of the Plan.
(b) Stock Subject to the Plan
The maximum number of Shares that initially may be available for Awards under the Plan and awards under the Director EIP, in the aggregate, shall be a number equal to 2,010,820, which represents 7.4% of the outstanding share capital of Luxfer as of the Effective Date. The maximum referred to in the preceding sentences of this paragraph shall be subject to adjustment as provided in Section 12. The Board may, subject to any applicable law, from time to time increase the maximum number of Shares that may be available for Awards under the Plan. The Company may satisfy its obligation to deliver Shares under the Plan in any manner permitted by law, including without limitation, by issuing new Shares that are authorized for issuance, using treasury shares or causing an employee benefit trust or any other trust to deliver Shares.
For purposes of the preceding paragraph, Shares covered by Awards shall only be counted as used to the extent they are actually transferred or delivered to a Participant (or such Participant’s permitted transferees as described in the Plan) pursuant to the Plan. For purposes of clarification, in accordance with the preceding sentence, if an Award is settled for cash or if Shares are withheld to pay the Exercise Price of an Option or to satisfy any tax withholding requirement in connection with an Award, only the shares transferred or delivered (if any), net of the shares withheld or paid, will be deemed transferred or delivered for purposes of determining the number of Shares that are available for transfer and delivery under the Plan or the Director EIP. In addition, if Shares are transferred or delivered subject to conditions which may result in the forfeiture, cancellation or return of such Shares to the Company, any portion of the Shares forfeited, cancelled or returned shall thereafter be treated as not transferred or delivered pursuant to the Plan. In addition, if Shares owned by a Participant (or such Participant’s permitted transferees as described in the Plan) are tendered (either actually or through attestation) to the Company in payment of any obligation in connection with an Award, the number of Shares tendered shall be added to the number of Shares that are available for delivery under the Plan or the Director EIP. Shares covered by Awards granted pursuant to the Plan in connection with the assumption, replacement, conversion or adjustment of outstanding equity-based awards in the context of a corporate acquisition or merger (within the meaning of Section 303A.08 of the New York Stock Exchange Listed Company Manual) shall not count as used under the Plan for purposes of this Section 3(b).
(c) Individual Award Limits; Valuation
Unless otherwise determined by the Committee, the maximum value of the Awards granted under the Plan in any calendar year shall not exceed in the aggregate: (i) 150% of base salary for the Chief Executive Officer, (ii) 120% of base salary for the Chief Financial Officer and other members of the Executive Management Board of Luxfer (other than the Chief Executive Officer), and (iii) 100% of base salary for other Participants. For purposes of these individual limits, the Awards shall be valued as follows: (i) Time-Based Restricted Stock and Time-Based Restricted Stock Units shall be valued at the Fair Market Value of Shares subject to the Award on the date of grant; (ii) Options and Stock Appreciation Rights shall be valued at one-third of the Fair Market Value of Shares subject to the Award on the date of grant; (iii) Performance-Based Restricted Stock and Performance-Based Restricted Stock Units shall be valued at 50% of the Fair Market Value on the date of grant of the Target Award; (iv) Cash Incentive Awards shall be valued at the maximum cash value payable under the Award, and (v) Other Stock Based Awards shall be valued, as determined by the Committee in good faith at the time of grant, by reference to the Fair Market Value of Shares subject to the Award at the time of grant.
4.
Administration of the Plan
The Plan shall be administered by the Committee. The Committee shall, consistent with the terms of the Plan, from time to time designate those employees of the Company who shall be granted Awards under the Plan and the amount, type and other terms and conditions of such Awards. The Committee, in its discretion and consistent with applicable law and regulations, may delegate its authority and duties under the Plan to any other individual or committee as it deems to be advisable, under any conditions and subject to any limitations that the Committee may establish, except that the Committee may not delegate its authority with respect to establishing the terms and conditions of Awards made to the Executive Officers of the Company.
The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and the terms of any Award (and any Award Agreement) granted thereunder and




to adopt and amend from time to time such rules and regulations for the administration of the Plan as the Committee may deem necessary or appropriate. The employment of a Participant with the Company shall be deemed to have terminated for all purposes of the Plan if such Participant is employed by a Subsidiary of Luxfer and such Subsidiary ceases to be a Subsidiary of Luxfer, unless the Committee determines otherwise.
On or after the date of grant of an Award under the Plan, the Committee may (i) accelerate the date on which any such Award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such Award, including, without limitation, extending the period following a termination of a Participant’s employment during which any such Award may remain outstanding, (iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such Award or (iv) provide for the payment of dividends or dividend equivalents with respect to any such Award; provided that the Committee shall not have any such authority to the extent that the grant or exercise of such authority would cause any tax to become due under Section 409A of the Code or any other applicable law.
Without limiting the generality of the foregoing, in order to assure the viability of Awards granted to Participants employed in various jurisdictions, the Committee may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy, or custom applicable in the jurisdiction in which the Participant resides or is employed. Moreover, the Committee may approve such supplements to, or amendments, restatements, or alternative version of, the Plan as it may consider necessary or appropriate for such purposes without thereby affecting the terms of the Plan for any other purpose.
Decisions of the Committee shall be final, binding and conclusive on all parties.
To the extent permitted by applicable law, (i) no member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and (ii) the Company shall indemnify and hold harmless each member of the Committee and each other director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan.
5.
Eligibility; Award Agreements; Non-Transferability
(a) The Committee shall select from time to time the employees of the Company who are eligible to receive Awards pursuant to the Plan, including those key employees who are largely responsible for the management, growth and protection of the business of the Company.
(b) Employees of Subsidiaries may participate in the Plan upon approval of Awards to such employees by the Committee. A Subsidiary’s participation in the Plan may be conditioned upon the Subsidiary’s agreement to reimburse Luxfer for costs and expenses of such participation, as determined by Luxfer. The Committee may terminate the Subsidiary’s participation in the Plan at any time and for any reason. If a Subsidiary’s participation in the Plan shall terminate, such termination shall not relieve it of any obligations theretofore incurred by it under the Plan, except with the approval of the Committee, and the Committee shall determine, in its sole discretion, the extent to which employees of the Subsidiary may continue to participate in the Plan with respect to previously granted Awards. Unless the Committee determines otherwise, a Subsidiary’s participation in the Plan shall terminate upon the occurrence of any event that results in such entity no longer constituting a Subsidiary as defined herein ; provided , however , that such termination shall not relieve such Subsidiary of any of its obligations to Luxfer theretofore incurred by it under the Plan, except with the approval of the Committee. Notwithstanding the foregoing, unless otherwise specified by the Committee, upon any such Subsidiary ceasing to be a Subsidiary as defined herein, the Participants employed by such Subsidiary shall be deemed to have terminated employment for purposes of the Plan . With respect to Awards subject to Section 409A of the Code, for purposes of determining whether a distribution is due to a Participant, such Participant’s employment shall be deemed terminated as described in the preceding sentence only if the Committee determines that a separation from service (within the meaning of Section 409A of the Code and regulations promulgated thereunder) has occurred.
(c) Each Award granted under the Plan shall be evidenced by an Award Agreement in form and substance approved by the Committee. Except as otherwise determined by the Committee, an Award may not be Transferred.
6.
Options and Stock Appreciation Rights
The Committee may from time to time grant Time-Based Options that are Nonqualified Stock Options and Time-Based Stock Appreciation Rights, subject to the following terms and conditions:
(a) Evidence of Grant
The Award Agreement evidencing the grants of Options and Stock Appreciation Rights shall include the amount of Shares subject to an Award, the Exercise Price, vesting conditions (as set forth below) and such additional provisions as may be specified by the Committee. The Exercise Price per Share covered by any Option or Stock Appreciation Right shall be not less than 100% of the Fair Market Value of a Share on the date on which such Option or Stock Appreciation Right is granted.
(b) Vesting
Each Option or Stock Appreciation Right shall become vested and exercisable with respect to one-third of the Shares subject to the Award on each of the first three anniversaries from the date of grant provided the Participant is continuously employed through each such respective anniversary.




(c) Exercise Period
No Option or Stock Appreciation Right shall be exercisable after the expiration of ten years from the date such Option or Stock Appreciation Right is granted.
(d) Exercise of Options and Stock Appreciation Rights
Each Option or Stock Appreciation Right may, to the extent vested and exercisable, be exercised in whole or in part. The partial exercise of an Option or Stock Appreciation Right shall not cause the expiration, termination or cancellation of the remaining portion thereof. An Option or Stock Appreciation Right shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation, in the case of an Option, through net physical settlement or other method of cashless exercise. The Exercise Price of an Option must be paid in full when the Option is exercised. For the avoidance of doubt, the preceding sentence will not prevent the Exercise Price being paid from the proceeds pursuant to the prompt sale of Shares acquired upon exercise or the Participant entering into other permissible arrangements, agreed by the Committee, for procuring payment of the aggregate Exercise Price.
(e) Payment in Cash or Shares .
Upon exercise, a Stock Appreciation Right may be settled for cash or Shares or a combination of cash and Shares, in the discretion of the Committee, and as described in the Award Agreement. If a Stock Appreciation Right is settled for cash, the Company shall make a payment to the Participant equal to the excess, if any, of the Fair Market Value of a Share on the date of exercise over the Exercise Price, for each Share for which a Stock Appreciation Right was exercised. If the Stock Appreciation Right is settled for Shares, the Company shall deliver to the Participant a number of Shares in the amount equal to the cash payment amount that would have been payable if the Stock Appreciation Right was settled in cash divided by the Fair Market Value of a Share on the date of exercise, rounded down to the nearest whole number of Shares.
(f) Termination of Employment .
Subject to the discretion of the Committee, upon the termination of the Participant’s employment for any reason other than for Cause, (i) the portion of an Option or a Stock Appreciation Right that has not become vested or exercisable as of the date of such termination shall immediately lapse and (ii) except as otherwise provided in the Plan or in the applicable Award Agreement, the portion of the Option or a Stock Appreciation Right that is vested or exercisable as of the date of termination of employment will lapse on the first anniversary of the date of termination of employment to the extent not theretofore exercised. In the event of the termination of the Participant’s employment for Cause, all Shares subject to an Option or a Stock Appreciation Right, whether then vested or exercisable or not, shall immediately lapse on such termination.
7.
Restricted Stock
The Committee may from time to time grant Time-Based and Performance-Based Restricted Stock, subject to the following terms and conditions:
(a) Grant of Restricted Stock
At the time of grant, the Committee shall determine, in its discretion, the terms and conditions that will apply to Restricted Stock granted pursuant to this Section 7. Time-Based Restricted Stock shall vest with respect to one-third of the Shares subject to the Award on each of the first three anniversaries from the date of grant provided the employee is continuously employed through each such respective anniversary.
(b) Issuance of Restricted Stock; Rights of Participants
As soon as practicable after Restricted Stock has been granted, Restricted Stock shall be transferred to the Participant. Shares of Restricted Stock may be evidenced in such manner as the Committee shall determine. Except as otherwise determined by the Committee, the Participant will have all rights of a shareholder with respect to the Shares of Restricted Stock, including the right to vote and to receive dividends or other distributions, except that the Shares may be subject to a vesting schedule and forfeiture and may not be Transferred until the restrictions are satisfied or lapse. The Committee may enforce any restrictions that the Committee may impose on Restricted Stock in such manner as the Committee shall determine, including legends, custody accounts or any other restrictions on transfer.
(c) Dividends




The Committee may provide that any dividends declared on the Restricted Stock before they are vested shall either (i) be reinvested in the form of additional Shares, which shall be subject to the same vesting provisions that apply to the Shares of Restricted Stock to which they relate, or (ii) be credited by the Company to an account for the Participant and accumulated with or withJout interest until the date upon which the Shares of Restricted Stock to which they relate become vested, and any dividends accrued with respect to forfeited Restricted Stock will be reconveyed to the Company without further consideration or any act or action by the Participant. In cased dividends are reinvested, the number of additional Shares shall be determined by first (i) multiplying the number of Shares of Restricted Stock subject to an Award on the dividend payment date by the per-Share dollar amount of the dividend so paid, and then (ii) dividing the resulting amount by the Fair Market Value of Shares on the dividend payment date, with the number of Shares rounded down to the nearest whole number and the cash balance remaining being carried forward and added to the dividend amounts (if any) paid on the next occasion. If Shares of Restricted Stock subject to an Award are forfeited, the additional Shares that relate to such Restricted Stock shall also be forfeited.”

(d) Termination of Employment .
Subject to the discretion of the Committee, upon the termination of the Participant’s employment for any reason other than for Cause, (i) all Shares underlying Time-Based Restricted Stock that have not yet become vested as of the date of the Participant’s termination shall be immediately forfeited by the Participant and the Participant shall have no further rights with respect thereto and (ii) the Performance-Based Restricted Stock shall vest with respect to the number of Shares underlying such Award equal to (a) the number of Shares underlying such Award that would have been vested in the Participant for the full Performance Period, as determined by the Committee in its sole discretion, taking into account actual performance results as of the date of termination multiplied by (b) a fraction, the numerator of which is the number of days during such Performance Period that have elapsed prior to (and including) the date of termination and the denominator of which is the total number of days in such Performance Period, rounded down to the nearest whole number of Shares. Any portion of a Performance-Based Restricted Stock that does not vest pursuant to the clause (ii) of the preceding sentence shall be immediately forfeited by the Participant as of the termination and the Participant shall have no further rights with respect thereto. In the event of the termination of the Participant’s employment for Cause, all unvested Restricted Stock shall be immediately forfeited by the Participant as of the termination and the Participant shall have no further rights with respect thereto.
8.
Restricted Stock Units
The Committee may from time to time grant Time-Based and Performance-Based Restricted Stock Units, subject to the following terms and conditions:
(a) Grant of Restricted Stock Units
At the time of grant, the Committee shall determine, in its discretion, the terms and conditions that will apply to Restricted Stock Units granted pursuant to this Section 8. Unless otherwise determined by the Committee, Time-Based Restricted Stock Units shall vest with respect to one-third of the Shares subject to the Award on each of the first three anniversaries from the date of grant provided the Participant is continuously employed through each such respective anniversary.
(b) Dividend Equivalents
The Committee shall provide for the payment of dividend equivalents with respect to Restricted Stock Units. The Company shall credit the Participant with additional Restricted Stock Units as of each date on which the Company pays a cash dividend on Shares, the number of which shall be determined by first (i) multiplying the number of Restricted Stock Units subject to an Award on the dividend payment date by the per-Share dollar amount of the dividend so paid, and then (ii) dividing the resulting amount by the Fair Market Value of Shares on the dividend payment date. Additional Restricted Stock Units shall be subject to the same restrictions, including but not limited to vesting, Transferability and payment restrictions, that apply to the Restricted Stock Units to which they relate. If the Restricted Stock Units subject to an Award are forfeited, the additional Restricted Stock Units that relate to such Restricted Stock Units shall also be forfeited.
(c) Form and Timing of Settlement
Payment of earned Restricted Stock Units shall be made as soon as practicable after the date(s) determined by the Committee and set forth in the Award Agreement, provided that with respect to any Restricted Stock Units subject to Section 409A of the Code such payment will occur in a manner that would not cause any tax to become due under Section 409A of the Code. Restricted Stock Units may be settled for cash, Shares, or a combination of both, as determined by the Committee and set forth in the Award Agreement. The Committee may permit Participants to request the deferral of payment of vested Restricted Stock Units (including the value of related dividend equivalents, if any) to a date later than the payment date specified in the Award Agreement, provided that with respect to any Restricted Stock Units subject to Section 409A of the Code such deferral will be made in a manner that would not cause any tax to become due under Section 409A of the Code.
(d) Termination of Employment .
Subject to the discretion of the Committee, upon the termination of the Participant’s employment for any reason other than for Cause, (i) all Shares underlying Time-Based Restricted Stock Units that have not yet become vested as of the date of the Participant’s termination shall be immediately forfeited by the Participant, and (ii) the Performance-Based Restricted Stock




Units shall vest and be settled in cash or Shares with respect to the number of Shares underlying such Award equal to (a) the number of Shares underlying such Award that would have been delivered to the Participant for the full Performance Period, as determined by the Committee in its sole discretion, taking into account actual performance results as of the date of termination multiplied by (b) a fraction, the numerator of which is the number of days during such Performance Period that have elapsed prior to (and including) the date of termination and the denominator of which is the total number of days in such Performance Period, rounded down to the nearest whole number of Shares. Any portion of a Performance-Based Restricted Stock Units Award that does not vest pursuant to the clause (ii) of the preceding sentence shall be immediately forfeited by the Participant as of the termination and the Participant shall have no further rights with respect thereto. In the event of the termination of the Participant’s employment for Cause, all Restricted Stock Units shall be immediately forfeited by the Participant as of the termination and the Participant shall have no further rights with respect thereto.
9.
Cash Incentive Awards
The Committee may from time to time grant Cash Incentive Awards. At the time of grant, the Committee shall determine, in its discretion, the terms and conditions that will apply to Cash Incentive Awards granted pursuant to this Section 9. Cash Incentive Awards may be settled in cash or in other property, including Shares, as determined by the Committee at the time of grant. Unless otherwise determined by the Committee, all Cash Incentive Awards shall be granted upon satisfaction of applicable performance conditions and shall be deferred for at least two years, subject to continued service of the Participant. If during such deferral period the Company restates its financial results based on which the Cash Incentive Award was computed, the Participant shall forfeit the excess of the amount of the Cash Incentive Award over what he would have received based on the restated financial results. Upon the termination of the Participant’s employment for any reason other than for Cause, the Cash Incentive Award held by the Participant shall become vested in full and payable within 30 days after the termination of the Participant’s employment, except (i) if the Participant is subject to United States taxation and the Cash Incentive Award is subject to Section 409A of the Code, the payment of the Cash Incentive Award shall not be accelerated and (ii) if the Committee, in its sole discretion, reasonably believes that there is more than minimal risk of a restatement of the Company’s financial results during the original deferral period, the Cash Incentive Award shall be treated as if the Participant remained employed through the original payment date set forth in the Award. In the event of the termination of the Participant’s employment for Cause, all outstanding Cash Incentive Awards shall be forfeited by the Participant and the Participant shall have no further rights with respect thereto.
10.
Other Stock Based Awards
The Committee may grant Other Stock Based Awards not otherwise described herein in such amounts and subject to such terms and conditions as the Committee shall determine. Without limiting the generality of the preceding sentence, each such Other Stock Based Award may (i) involve the transfer of Shares to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of Shares, and (ii) be Time-Based or Performance-Based; provided that each Other Stock Based Award shall be denominated in, or shall have a value determined by reference to, a number of Shares that is specified at the time of the grant of such award. The UK schedule hereto or applicable Award Agreement shall specify the consequences, if any, on the Award of the Participant’s termination of employment; provided that in the event of the termination of the Participant’s employment for Cause, all outstanding Other Stock Based Awards shall be immediately forfeited by the Participant and the Participant shall have no further rights with respect thereto.
11.
Performance-Based Awards
The Performance-Based Awards shall be subject to the following terms and conditions:
(a) Performance Targets, Target Awards and Performance Schedules
Within 90 days after the beginning of a Performance Period, and in any case before 25% of the Performance Period has elapsed, the Committee shall establish (a) Performance Targets for such Performance Period, (b) Target Awards for each Participant, and (c) Performance Schedules for such Performance Period. The Performance Targets may be with respect to corporate performance, operating group or sub group performance, individual company performance, other group or individual performance, or division performance, and shall be based on one or more of the Performance Measures described below.
(b) Performance Measures
The Performance Targets upon which the payment or vesting of any Performance-Based Award depends shall relate to one or more of the following Performance Measures: (i) net income or operating net income (before or after taxes, interest, depreciation, amortization, and/or nonrecurring/unusual items), (ii) return on assets, return on capital, return on equity, return on economic capital, return on other measures of capital, return on sales or other financial criteria, (iii) revenue or net sales, (iv) gross profit or operating gross profit, (v) cash flow, (vi) productivity or efficiency ratios, (vii) share price or total shareholder return, (viii) earnings per share, (ix) budget and expense management, (x) customer and product measures, including market share, high value client growth, and customer growth, (xi) working capital turnover and targets, (xii) margins, and (xiii) economic value added or other value added measurements, in any such case (x) considered absolutely or relative to historic performance or relative to one or more other businesses and (y) determined for the Company or any business unit or division thereof.
The measurement of any Performance Measure(s) may exclude the impact of charges for restructurings, discontinued operations, extraordinary items, and other unusual or non-recurring items, and the cumulative effects of accounting changes,




each as defined by generally accepted accounting principles and as identified in the Company’s audited financial statements, including the notes thereto.
Each Performance Measure may be expressed on an absolute and/or relative basis and may be used to measure the performance of any Participant or group of Participants, or Luxfer, the Company or a Subsidiary as a whole or any business unit of Luxfer or any Subsidiary or any combination thereof, as the Committee may deem appropriate, or any of the above Performance Measures as compared to the performance of a group of comparator companies, or a published or special index that the Committee, in its sole discretion, deems appropriate.
(c) Certification
Except as otherwise provided in the Plan, no distribution shall be made under this Plan until after the Committee has certified the attainment of the Performance Targets and the amount to be paid to each Participant.
(d) Service Requirements
Nothing in this Section 11 is intended to limit the Committee’s discretion to adopt any service conditions or restrictions with respect to Performance-Based Awards.
12.
Adjustment upon Certain Changes
(a) Adjustment of Shares
If the number of outstanding Shares is changed by a stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change in the capital structure of Luxfer, without the fair market value consideration, then (i) the number of Shares available for Awards under the Plan and awards under the Director EIP set forth in Section 3, (ii) the Exercise Prices of and number of Shares subject to outstanding Options and Stock Appreciation Rights and (iii) the nominal value per Share, if applicable, and the number of Shares subject to other outstanding Awards, may be proportionately adjusted, subject to any required action by the Board or the shareholders of the Company and in compliance with applicable securities laws and, to the extent applicable, Section 409A of the Code. In addition, except insofar as the Board (on behalf of Luxfer) agrees to capitalize Luxfer’s reserves and apply the same in paying up any difference between the Exercise Price (or any amount payable per Share in relation to an Award) and the nominal value of the Shares, the Exercise Price (or other amount payable per Share in relation to an Award) of any Award over Shares that are to be newly issued by Luxfer in satisfaction of the Award shall not be reduced below a Share’s nominal value.
(b) Certain Mergers
Subject to any required action by the shareholders of Luxfer, in the event that the Company shall be the surviving corporation in any merger, consolidation or similar transaction as a result of which the holders of Shares receive consideration consisting exclusively of securities of such surviving corporation, the Committee may, to the extent deemed appropriate by the Committee, adjust each Award outstanding on the date of such merger or consolidation so that it pertains and applies to the securities which a holder of the number of Shares subject to such Award would have received in such merger or consolidation.
(c) Certain Other Transactions
In the event of (i) a dissolution or liquidation of Luxfer, (ii) a sale of all or substantially all of the Luxfer’s assets (on a consolidated basis), (iii) a merger, consolidation or similar transaction involving Luxfer in which Luxfer is not the surviving corporation or (iv) a merger, consolidation or similar transaction involving Luxfer in which Luxfer is the surviving corporation but the holders of Shares receive securities of another corporation and/or other property, including cash, the Committee shall, in its sole discretion, have the power to:
(i) cancel, effective immediately prior to the occurrence of such event, each Award (whether or not then exercisable), and, in full consideration of such cancellation, pay to the Participant to whom such Award was granted an amount in cash, for each Share subject to such Award equal to the value, as determined by the Committee in its reasonable discretion, of such Award, provided that with respect to any outstanding Option or Stock Appreciation Right, such value shall be equal to the excess of (A) the value, as determined by the Committee in its reasonable discretion, of the property (including cash) received by the holder of a Share as a result of such event over (B) the Exercise Price of such Option or Stock Appreciation Right; or
(ii) provide for the exchange of each Award (whether or not then exercisable or vested) for an award with respect to, as appropriate, some or all of the property which a holder of the number of Shares subject to such Award would have received in such transaction and, incident thereto, make an equitable adjustment as determined by the Committee in its reasonable discretion in the Exercise Price of the Award, or the number of shares or amount of property subject to the Award or, if appropriate, provide for a cash payment to the Participant to whom such Award was granted in partial consideration for the exchange of the Award.




(d) Notice
The Company shall give each Participant notice of an adjustment, substitution, cancellation or other action hereunder and, upon notice, such adjustment, substitution, cancellation or other action shall be conclusive and binding for all purposes. Notwithstanding the foregoing, the Committee may, in its discretion, decline to take action under this Section 12 with respect to any Award if the Committee determines that such action would violate (or cause the Award to violate) applicable law or result in adverse tax consequences to the Participant or to the Company.
(e)     Changes to Awards Subject to Performance Conditions
In the event of any transaction or event described in this Section 12, the Committee may, in its sole discretion, make such adjustments in any Performance Schedule, Performance Targets or Target Award, and in such other terms of any Award, as the Committee may consider appropriate in respect of such transaction or event.
(b) No Repricing
Notwithstanding any provision of the Plan to the contrary, in no event shall (i) any repricing (within the meaning of U.S. generally accepted accounting principles or any applicable stock exchange rule) of Awards granted under the Plan be permitted at any time under any circumstances or (ii) any new Awards be granted in substitution for outstanding Awards previously granted to Participants if such action would be considered a repricing (within the meaning of U.S. generally accepted accounting principles or any applicable stock exchange rule).
(c) No Other Rights
Except as expressly provided in the Plan, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of Luxfer or any other corporation. Except as expressly provided in the Plan, no issuance by Luxfer of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of Shares or amount of other property subject to, or the terms related to, any Award.
(d) Savings Clause
No provision of this Section 12 shall be given effect to the extent that such provision would cause any tax to become due under Section 409A of the Code.
13.
Rights under the Plan
No person shall have any rights as a shareholder with respect to any Shares covered by or relating to any Award granted pursuant to the Plan until the date of the transfer or delivery of Shares. Except as otherwise expressly provided in Section 12, no adjustment of any Award shall be made for dividends or other rights for which the record date occurs prior to the date such Shares are transferred or delivered. Nothing in this Section 13 is intended, or should be construed, to limit authority of the Committee to cause the Company to make payments based on the dividends that would be payable with respect to any Share if it were transferred or delivered or outstanding, or from granting rights related to such dividends.
The Company may, but shall not have any obligation to, establish any separate fund or trust or other segregation of assets to provide for the satisfaction of Awards under the Plan.
14.
No Special Employment Rights; No Right to Award
Nothing contained in the Plan or any Award Agreement shall confer upon any Participant any right with respect to the continuation of his employment by or service to the Company or interfere in any way with the right of the Company at any time to terminate such employment or service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.
No person shall have any claim or right to receive an Award hereunder. The Committee’s granting of an Award to a Participant at any time shall neither require the Committee to grant an Award to such Participant or any other Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other Participant or other person.
15.
Securities Matters
The Company shall be under no obligation to effect the registration pursuant to the Securities Act or any federal, state or non-U.S. securities laws of any Shares to be transferred or delivered hereunder or to effect similar compliance under any state laws. Notwithstanding anything in the Plan to the contrary, the Company shall not be obligated to cause to be transferred or delivered any Shares pursuant to the Plan unless and until the Company is advised by its counsel that the transfer and delivery of Shares is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which Shares are traded. The Committee may require, as a condition to the transfer and delivery of Shares pursuant to the terms hereof, that the recipient of such Shares make such covenants, agreements and representations, and that certificates, if any, evidencing such Shares, bear such legends, as the Committee deems necessary or desirable.




The exercise of any Option or Stock Appreciation Right that is settled in Shares granted hereunder shall only be effective at such time as counsel to the Company shall have determined that the transfer or delivery of Shares pursuant to such exercise is in compliance with all applicable laws and regulations and the requirements of any securities exchange on which Shares are traded. The Company may, in its sole discretion, defer the effectiveness of an exercise of an Award hereunder or the delivery or transfer of Shares pursuant to any Award pending or to ensure compliance under federal, state, non-U.S. securities laws and the requirements of any securities exchange on which Shares are traded. The Company shall inform the Participant in writing of its decision to defer the effectiveness of the exercise of an Award or the delivery or transfer of Shares pursuant to any Award. During the period that the effectiveness of the exercise of an Award has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.
The issue or transfer of any Shares under the Plan shall be subject to Luxfer’s Articles of the Association and to any necessary consents of any governmental or other authorities (in any jurisdiction) under any enactments or regulations from time to time in force. The Participant shall comply with any requirements to be fulfilled in order to obtain or obviate the necessity of any such consent.
16.
Withholding Taxes
(a) Payment of Taxes
Participants shall be solely responsible for any applicable taxes imposed on the Participant by applicable law (including without limitation income, social security and excise taxes but excluding any taxes imposed in connection with the issuance of Shares) and penalties, and any interest that accrues thereon, which they incur in connection with the receipt, vesting, settlement or exercise of any Award. Notwithstanding any provision of the Plan to the contrary, in no event shall the Company or the Committee be liable to a Participant on account of an Award’s failure to (i) qualify for favorable U.S. or non-U.S. tax treatment or (ii) avoid adverse tax treatment under U.S. or non-U.S. law, including, without limitation, under Section 409A of the Code.
(b) Cash Remittance
Whenever Shares are to be transferred or delivered upon the exercise, grant or vesting of an Award, and whenever any cash amount shall become payable in respect of any Award, the Company shall have the right to require the Participant to remit to the Company in cash an amount sufficient to satisfy federal, state, local and/or non-U.S. withholding tax requirements, if any, attributable to such exercise, grant, vesting or payment prior to the delivery of Shares or recordation by the Company of the Participant or his or her nominee as the owner of such Shares or the effectiveness of the lapse of such restrictions or making of such payment. In addition, upon the exercise or settlement of any Award in cash, or any payment (including in Shares) with respect to any Award, the Company shall have the right to withhold from any payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state, local and/or non-U.S. withholding tax requirements, if any, attributable to such exercise, settlement or payment.
(c) Share Remittance
At the election of the Participant, subject to the approval of the Committee, when Shares are to be transferred or delivered upon the exercise, grant or vesting of an Award, the Participant may tender to the Company a number of Shares that have been owned by the Participant for at least six months (or such other period as the Committee may determine) having a Fair Market Value at the tender date determined by the Committee to be sufficient to satisfy the minimum federal, state, local and/or non-U.S. withholding tax requirements, if any, attributable to such exercise, grant or vesting, but not greater than the minimum withholding obligations. Such election shall satisfy the Participant’s obligations under Section 16(a) hereof, if any.
(d) Share Withholding
At the election of the Participant, subject to the approval of the Committee, when Shares are to be transferred or delivered upon the exercise, grant or vesting of an Award, the Company shall withhold a number of such Shares determined by the Committee to be sufficient to satisfy the minimum federal, state, local and/or non-U.S. withholding tax requirements, if any, attributable to such exercise, grant or vesting, but not greater than the minimum withholding obligations. Such election shall satisfy the Participant’s obligations under Section 16(a) hereof, if any.
17.
Amendment or Termination of the Plan
(a) The Board may at any time suspend or discontinue the Plan or revise or amend it in any respect whatsoever; provided , however , that to the extent that any applicable law, regulation or rule of a stock exchange requires shareholder approval in order for any such revision or amendment to be effective, such revision or amendment shall not be effective without such approval. The preceding sentence shall not restrict the Committee’s ability to exercise its discretionary authority hereunder pursuant to Section 4 hereof, which discretion may be exercised without amendment to the Plan. No provision of this Section 17 shall be given effect to the extent that such provision would cause any tax to become due under Section 409A of the Code. Except as expressly provided in the Plan, no action hereunder may, without the consent of a Participant, reduce the Participant’s rights under any previously granted and outstanding Award. Nothing in the Plan shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.
(b) The Committee may amend or modify the terms and conditions of an Award to the extent that the Committee determines, in its sole discretion, that the terms and conditions of the Award violate or may violate Section 409A of the Code; provided , however , that (i) no such amendment or modification shall be made without the




Participant’s written consent if such amendment or modification would violate the terms and conditions of any other agreement between the Participant and the Company and (ii) unless the Committee determines otherwise, any such amendment or modification of an Award made pursuant to this Section 17(b) shall maintain, to the maximum extent practicable, the original intent of the applicable Award provision without contravening the provisions of Section 409A of the Code. The amendment or modification of any Award pursuant to this Section 17(b) shall be at the Committee’s sole discretion and the Committee shall not be obligated to amend or modify any Award or the Plan, nor shall the Company be liable for any adverse tax or other consequences to a Participant resulting from such amendments or modifications or the Committee’s failure to make any such amendments or modifications for purposes of complying with Section 409A of the Code or for any other purpose. To the extent the Committee amends or modifies an Award pursuant to this Section 17(b), the Participant shall receive notification of any such changes to his or her Award and, unless the Committee determines otherwise, the changes described in such notification shall be deemed to amend the terms and conditions of the Award and the applicable Award Agreement.
18.
Transfers upon Death
Upon the death of a Participant, to the extent provided in the applicable Award Agreement, (i) any outstanding Options and Stock Appreciation Rights granted to such Participant may be exercised only by the Beneficiary and (ii) any Award granted to such Participant may only be transferred to the Beneficiary. The Beneficiary, as a condition of such exercise or transfer, as the case may be, shall be bound in all respects by the provisions of the Plan and the applicable Award Agreement as if the Beneficiary were an original party thereto and by the acknowledgements made by the Participant in connection with the grant of the Award and all references in the Plan and the applicable Award Agreement to the Participant shall be deemed to refer to such Beneficiary. Any attempt to Transfer an Award in violation of the Plan shall render such Award null and void.
19.
Change in Control
(a) Treatment of the Awards
Unless otherwise set forth in the Award Agreement, upon a Change in Control,
(i) each outstanding Time-Based Award shall become fully vested and (a) with respect to Options and Stock Appreciation Rights, exercisable or (b) with respect to all other Awards hereunder, settled in cash or Shares, as applicable, and all restrictions thereon shall lapse, and except as otherwise provided in the Plan or in the applicable Award Agreement or as otherwise communicated to the Participants by the Committee in connection with the Change in Control, an Option or a Stock Appreciation Right shall lapse on the first anniversary of the Change in Control to the extent not theretofore exercised.
(ii) each outstanding Performance-Based Award shall become vested and exercisable and/or settled in cash or Shares, as applicable, and the restrictions thereon shall lapse, in each case, with respect to the number of Shares underlying such Award or the amount of cash that is equal to (x) the number of Shares underlying such Award or cash amount under an Award that would have been vested in or delivered to the Participant, as applicable, for the full Performance Period, as determined by the Committee in its sole discretion, taking into account actual performance results as of the date of a Change in Control multiplied by (y) a fraction, the numerator of which is the number of days during such Performance Period that have elapsed prior to (and including) the date of the Change in Control and the denominator of which is the total number of days in such Performance Period, rounded down to the nearest whole number of Shares. Any portion of a Performance-Based Award that does not vest pursuant to this clause (ii) shall be forfeited or lapse, as applicable, as of the date of the Change in Control and the Participant shall have no further rights with respect thereto.
(b) 409A Savings Clause
Notwithstanding the foregoing and for the purposes of timing of payment, distribution or settlement only, a Change in Control shall not be deemed to occur under this Section 19 of the Plan with respect to any Award that constitutes “non-qualified deferred compensation” within the meaning of Section 409A of the Code and is granted to a Participant subject to United States taxation, unless the events that have occurred would also constitute a “Change in the Ownership or Effective Control of a Corporation or in the Ownership of a Substantial Portion of the Assets of a Corporation” under Treasury Department Final Regulation 1.409A-3(i)(5), or any successor thereto.
(c) 280G Cutback
In the event that it shall be determined by the Committee that any benefit provided or payment made by the Company to or for the benefit of the Participant, whether paid or payable or distributed or distributable pursuant to the terms of the Plan or any other agreement, plan, program, arrangement or otherwise (“ Parachute Payments ”), would subject the Participant to an obligation to pay an excise tax imposed by Section 4999 of the Code or any interest or penalties related to such excise tax (such excise tax, together with any such interest and penalties, are hereinafter collectively referred to as the “ Excise Tax ”), the amount of Parachute Payments payable to such Participant shall be reduced in the manner determined by the Committee, to the extent and only to the extent that such reduction would result in a greater after-tax benefit for such Participant than if the Parachute Payments were not reduced; provided , however , that in no event shall such reduction be effected through a delay in the timing of any Payment that is subject to Section 409A of the Code (or that would become subject to 409A of the Code as a result of such delay).




20.
Fractional Shares
The Company shall not be required to issue any fractional Shares pursuant to the Plan. The Committee may provide for the elimination of fractions or for the settlement thereof in cash.
21.
Nominal Value
If determined by the Committee, the vesting/exercise of an Award over Shares and the issue of Shares pursuant to the Award will be subject to the payment of the aggregate nominal value of the underlying Shares by the Participant. Any cash payment to be made to a Participant pursuant to Section 12(c)(i) of the Plan in consideration of the cancellation of an Award or an award that is provided in exchange for an Award pursuant to Section 12(c)(ii) of the Plan, shall where appropriate and if determined by the Committee, take account of the nominal value of the Shares subject to the Award.
22.
Data Protection
It shall be a condition of an Award that the Participant agrees and consents to:
(a) The collection, use, processing and transfer of Participant’s Personal Data by the Company, any trustee or third party administrator of the Plan, the Company’s registrars, or any broker through whom Shares are to be sold on behalf of a Participant.
(b) The Company, any trustee or third party administrator of the Plan, the Company’s registrars, or any broker through whom Shares are to be sold on behalf of a Participant transferring the Participant's Personal Data amongst themselves for the purposes of implementing, administering and managing the Plan and the grant of Awards and the acquisition of Shares pursuant to Awards, the disposal of such Shares or the making of any cash payment under the Plan.
(c) The use of Personal Data by any such person for any such purposes; and
(d) The transfer to and retention of Personal Data by third parties including any trustee or third party administrator of the Plan for or in connection with such purposes.
23.
Service of Documents
(a) Except as otherwise provided in the Plan, any written notice or document to be given by, or on behalf of, the Company or any administrator of the Plan to a Participant in accordance or in connection with the Plan may be given by hand or sent by pre-paid first class mail (airmail if overseas), facsimile transmission or email to the Participant's home or work address, facsimile number or email address last known to the Company to be the Participant’s address, facsimile number or email address. Subject to the paragraph (d) of this Section 23 any notice or document given in accordance with this Section 23 shall be deemed to have been given: (i) upon delivery, if delivered by hand; (ii) after 24 hours, if sent by mail; after 4 hours, if sent by facsimile transmission; and (iv) at the time of transmission, if sent by email except that a notice or document shall not be duly given by email unless that person is known by his employer company to have personal access during his normal business hours to information sent to him by email.
(b) Any notice or document so sent to a Participant shall be deemed to have been duly given notwithstanding that such person is then deceased (and whether or not the Company has notice of his death) except where his personal representatives have supplied an alternative address to which documents are to be sent to the Company.
(c) Any written notice or document to be submitted or given to the Company or any administrator of the Plan in accordance or in connection with the Plan may be given by hand or sent by pre-paid first class post (airmail if overseas), facsimile transmission or email but shall not in any event be duly given unless it is actually received by the Secretary of the Company or such other individual as may from time to time be nominated by the Company and whose name and address, facsimile number or email address is notified to the Participant.
(d) For the purposes of the Plan, an email shall be treated as not having been duly sent or received if the recipient of such email notifies the sender that it has not been opened because it contains, or is accompanied by a warning or caution that it could contain or be subject to, a virus or other computer program which could alter, damage or interfere with any computer software or email.
24.
Third Party Rights
Except as otherwise expressly stated to the contrary, neither the Plan nor the making of any Award shall have the effect of giving any third party any rights under the Plan pursuant to the UK Contracts (Rights of Third Parties) Act 1999 or otherwise and that Act shall not apply to the Plan or to the terms of any Award under it.




25.
Governing Law
(a) This Plan and any Award shall be governed by, and construed in accordance with, English law.
(b) Any person or persons referred to in the Plan shall:
(i)    submit to the exclusive jurisdiction of the English courts as regards any claim, legal action, dispute, difference or proceedings concerning an Award or any matter arising from, or in relation to, the Plan;
(ii)    waive personal service of any proceedings;
(iii)    agree that service on him or it of proceedings may be effected by registered mail to his or its address for service of notices under the Plan; and
(iv)    waive any objection to proceedings taking place in the English courts on the grounds of venue or that proceedings have been brought in an inconvenient forum.




AMENDMENT NO. 1 TO LUXFER HOLDINGS PLC LONG-TERM UMBRELLA INCENTIVE PLAN

The Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (the “Plan”) is hereby amended effective as of January 23, 2013 as follows:

1.    By deleting Section 3(c) of the Plan in its entirety and replacing it by the following:

“(c)     Unless otherwise determined by the Committee, the maximum value of the Awards granted under the Plan in any calendar year shall not exceed in the aggregate: (i) 150% of base salary for the Chief Executive Officer, (ii) 120% of base salary for the Chief Financial Officer and other members of the Executive Management Board of Luxfer (other than the Chief Executive Officer), and (iii) 100% of base salary for other Participants. For purposes of these individual limits, the Awards shall be valued as follows: (i) Time-Based Restricted Stock and Time-Based Restricted Stock Units shall be valued at the Fair Market Value of Shares subject to the Award on the date of grant; (ii) Options and Stock Appreciation Rights shall be valued at one-third of the Fair Market Value of Shares subject to the Award on the date of grant; (iii) Performance-Based Restricted Stock and Performance-Based Restricted Stock Units shall be valued at 50% of the Fair Market Value on the date of grant of the Target Award; (iv) Cash Incentive Awards shall be valued at the maximum cash value payable under the Award, and (v) Other Stock Based Awards shall be valued, as determined by the Committee in good faith at the time of grant, by reference to the Fair Market Value of Shares subject to the Award at the time of grant.”
2.    By deleting Section 7(c) of the Plan in its entirety and replacing it by the following:

“(c)    The Committee may provide that any dividends declared on the Restricted Stock before they are vested shall either (i) be reinvested in the form of additional Shares, which shall be subject to the same vesting provisions that apply to the Shares of Restricted Stock to which they relate, or (ii) be credited by the Company to an account for the Participant and accumulated with or without interest until the date upon which the Shares of Restricted Stock to which they relate become vested, and any dividends accrued with respect to forfeited Restricted Stock will be reconveyed to the Company without further consideration or any act or action by the Participant. In cased dividends are reinvested, the number of additional Shares shall be determined by first (i) multiplying the number of Shares of Restricted Stock subject to an Award on the dividend payment date by the per-Share dollar amount of the dividend so paid, and then (ii) dividing the resulting amount by the Fair Market Value of Shares on the dividend payment date, with the number of Shares rounded down to the nearest whole number and the cash balance remaining being carried forward and added to the dividend amounts (if any) paid on the next occasion. If Shares of Restricted Stock subject to an Award are forfeited, the additional Shares that relate to such Restricted Stock shall also be forfeited.”
3.    By deleting Section 5(c) of the Plan in its entirety and replacing it by the following:

“(c)     Each Award granted under the Plan shall be evidenced by an Award Agreement, in form and substance approved by the Committee. Except as otherwise determined by the Committee, an Award may not be Transferred.”
4    This amendment shall not affect any other provisions of the Plan and the Plan shall remain in full force and effect.




AMENDMENT NO. 2 TO LUXFER HOLDINGS PLC LONG-TERM UMBRELLA INCENTIVE PLAN

The Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (the “Plan”) is hereby amended effective as of March 28, 2013 as follows:

1.    By deleting Section 2(r) of the Plan in its entirety and replacing it by the following:

“(r)     “Fair Market Value” means, with respect to a Share, as of the applicable date of determination (i) (x) for purposes of Sections 3(c) and 6(a) hereof, the closing price per Share on the trading day immediately preceding such date as reported on the New York Stock Exchange and (y) for all other purposes, the closing price per Share on that date as reported on the New York Stock Exchange (or if not reported, the closing price per Share on the trading day immediately preceding such date as reported on the New York Stock Exchange) or (ii) if not so reported, as determined by the Committee in its sole discretion using a reasonable valuation method taking into account, to the extent applicable, the requirements of Section 409A of the Code.”
2.     This amendment shall not affect any other provisions of the Plan and the Plan shall remain in full force and effect.















AMENDMENT NO. 3 TO LUXFER HOLDINGS PLC LONG-TERM UMBRELLA INCENTIVE PLAN

The Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (the “Plan”) is hereby amended effective as of January 23, 2018 as follows:

1.    By deleting the reference to American Depositary Shares.
2. In 2(u) By changing the nominal shares of Luxfer’s ordinary shares to a nominal value £0.50 per share, or any other security into which the ordinary shares shall be changed pursuant to the adjustment provisions of Section 12 of the Plan.
3.    In 3(b) By increasing the maximum number of Shares that initially may be available for Awards under the Plan and awards under the Director EIP, in the aggregate, shall be a number equal to 2,010,820, which represents 7.4% of the outstanding share capital of Luxfer as of the Effective Date.
4.    In 2(g) by increasing the percentage from 30% to 40% in (i) if any Person is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 40% or more of the combined voting power of the Company’s outstanding securities (other than any Person who was a “beneficial owner” of securities of the Company representing 40% or more of the combined voting power of the Company’s outstanding securities prior to the Effective Date);






Section 302 Certificate
Form of Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
I, Alok Maskara, certify that:
1.
I have reviewed this annual report on Form 20-F of Luxfer Holdings PLC;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the company and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):
a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and




b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.


Date: March 19, 2018
__/s/__________________________
 
Alok Maskara
Chief Executive Officer







Section 302 Certificate
Form of Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934
I, Heather Harding, certify that:
1.
I have reviewed this annual report on Form 20-F of Luxfer Holdings PLC;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4.
The company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the company and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
disclosed in this report any change in the company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and
5.
The company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing the equivalent functions):




a)
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who have a significant role in the company’s internal control over financial reporting.


Date: March 19, 2018
__/s/__________________________
 
Heather Harding
Chief Finance Officer







Section 906 Certificate
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Luxfer Holdings PLC, a public limited company incorporated under English law (the “company”), hereby certifies, to such officer’s knowledge, that:
The Annual Report on Form 20-F for the year ended December 31, 2017 (the “Form 20-F”) of the company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the company.

Date: March 19, 2018
__/s/__________________________
Alok Maskara
Chief Executive Officer



 
 


     





Section 906 Certificate
Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code)
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code), each of the undersigned officers of Luxfer Holdings PLC, a public limited company incorporated under English law (the “company”), does hereby certify, to such officer’s knowledge, that:
The Annual Report on Form 20-F for the year ended December 31, 2017 (the “Form 20-F”) of the company fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 20-F fairly presents, in all material respects, the financial condition and results of operations of the company.

 
 
Date: March 19, 2018
__/s/__________________
Heather Harding
Chief Finance Officer






Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 333-184351) pertaining to the Executive Share Option Plan, Long-Term Umbrella Incentive Plan, Non-Executive Directors Equity Incentive Plan, Executive Officer IPO Stock Option Grants and Non-Executive Director IPO Stock Option Grants of Luxfer Holdings PLC (the “Company”) and in the Registration Statement on Form S-8 (No. 333-196166) pertaining to the Employee Stock Purchase Plan and Share Incentive Plan of the Company of our report dated March 19, 2018, relating to the financial statements for the years ended December 31, 2017, 2016 and December 31, 2015 included in this Form 20-F.


/ s/ PricewaterhouseCoopers LLP
Manchester, United Kingdom
March 19, 2018