LUXFER HOLDINGS PLC - Annual Report: 2023 (Form 10-K)

Net (loss) / income from continuing operations() Net gain on disposition of discontinued operations Income / (loss) from discontinued operations, net of tax ()()Net (loss) / income$()$ $

(Loss) / earnings per share(1)

Basic from continuing operations() Basic from discontinued operations () Basic$()$ $ Diluted from continuing operations() Diluted from discontinued operations () Diluted$()$ $ Weighted average ordinary shares outstandingBasic Diluted

(1)

See accompanying notes to consolidated financial statements

LUXFER HOLDINGS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Years Ended December 31,
In millions	2023		2022	2021
Net (loss) / income	$	()	$	$

Other comprehensive income / (loss)
Net change in foreign currency translation adjustment			()	()
Pension and post-retirement gains, net of $, $ and $ of tax, respectively
Additional paid-in capital
Treasury shares	()		()
Company shares held by ESOP	()		()
Retained earnings
Accumulated other comprehensive loss	()		()
Total shareholders' equity	$		$
Total liabilities and shareholders' equity	$		$

See accompanying notes to consolidated financial statements

LUXFER HOLDINGS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Years Ended December 31,
In millions	2023		2022	2021
Operating activities
Net (loss) / income	$	()	$	$
Net (income) / loss from discontinued operations	()
Net (loss) / income from continuing operations	()
Adjustments to reconcile net loss from continuing operations to net cash provided by operating activities
Depreciation
Amortization of purchased intangible assets
Amortization of debt issuance costs
Share-based compensation charge
Deferred income taxes	()			()
Loss on disposal of business
Asset impairment charges and non-cash restructuring charges
Defined benefit pension expense / (credit)				()
Defined benefit pension contributions	()		()	()
Changes in assets and liabilities, net of effects of business acquisitions
Accounts and notes receivable			()	()
Inventories			()	()
Current assets held-for-sale			()	()
Other current assets	()
Accounts payable	()
Accrued liabilities	()
Current liabilities held-for-sale				()
Other current liabilities	()		()
Other non-current assets and liabilities	()		()
Net cash provided by operating activities - continuing
Net cash provided by operating activities - discontinued
Net cash provided by operating activities
Investing activities
Capital expenditures	()		()	()
Proceeds from sale of property, plant and equipment
Proceeds from sale of businesses
Settlements from sale of businesses			()
Acquisitions, net of cash acquired				()
Net cash used for investing activities - continuing	()		()	()
Net cash used for investing activities - discontinued	()		()	()
Net cash used for investing activities	()		()	()
Financing activities
Repayment of loan notes	()
Drawdown of bank overdraft
Net drawdown of of long-term borrowings
Debt issuance costs	()			()
Dividends paid	()		()	()
Share-based compensation cash paid	()		()	()
Repurchase of deferred shares			()
Repurchase of ordinary shares	()		()	()
Net cash used for financing activities	()		()	()
Effect of exchange rate changes on cash and cash equivalents			()
Net (decrease) / increase	()
Cash, cash equivalents and restricted cash; beginning of year
Cash, cash equivalents and restricted cash; end of year	$		$	$

Supplemental cash flow information:
Interest payments	$		$	$
Income tax payments

See accompanying notes to consolidated financial statements

LUXFER HOLDINGS PLC

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

In millions,

Ordinary
shares

Deferred
shares

Additional paid-in capital

Treasury shares Number

Treasury shares Amount

Company shares held by ESOP Number

Company shares held by ESOP Amount

Retained
earnings

Accumulated other comprehensive loss

Total
shareholders'
equity

At January 1, 2021

()

Net income for the year

—

Other comprehensive income, net of tax

—

Dividends declared and paid

—

()

—

()

Share-based compensation

—

Utilization of treasury shares to satisfy share-based compensation

—

()

—

Utilization of shares from ESOP to satisfy share-based compensation

—

()

—

()

Repurchase of ordinary shares

—

()

—

()

Cancellation of ordinary shares

()

—

()

—

At December 31, 2021

()

Net income for the year

—

Other comprehensive loss, net of tax

—

()

Dividends declared and paid

—

()

—

()

Share-based compensation

—

Utilization of treasury shares to satisfy share-based compensation

—

()

—

()

Utilization of shares from ESOP to satisfy share-based compensation

—

()

—

()

Repurchase of ordinary shares

—

()

—

()

Cancellation of ordinary shares

—

()

—

()

At December 31, 2022

()

Net loss for the year

—

()

—

()

Other comprehensive income, net of tax

—

Dividends declared and paid

—

()

—

()

Share-based compensation charges

—

Utilization of treasury shares to satisfy share-based compensation

—

()

—

()

Utilization of shares from ESOP to satisfy share-based compensation

—

()

—

()

Repurchase of ordinary shares

—

()

—

()

At December 31, 2023

()

See accompanying notes to consolidated financial statements

LUXFER HOLDINGS PLC

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

reportable segments being Gas Cylinders, Elektron and Graphic Arts.

- yearsTechnology and trading related

- 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.

%Joint ventureEquity method

million, $ million and $ million, respectively. - yearsLeasehold land and buildingsThe lesser of life of lease or freehold rateMachinery and equipment

- years

Including: Heavy production equipment (including casting, rolling, extrusion and press equipment)

- years

Chemical production plant and robotics

- years

Other production machinery

- years

Furniture, fittings, storage and equipment

- years

Computer equipment years

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.

million impairment charge has been recognized in 2023, disclosed as impairment charges in the consolidated statement of income, relating to right of use assets,$ million and property, plant and equipment, $ million, in our Graphic Arts segment.

There was also $ million of asset impairments recognized within restructuring charges predominantly relating to rationalization of our North American Gas Cylinders businesses.

Within discontinued operations in 2022, there was a $ million impairment charge relating to the right of use asset previously held as a sublet to Neos International Limited, the right of use asset being building leases retained on sale of Superform U.K.

million impairment charge relating to plant and equipment held in our Superform U.S. business, reflecting updated expectations of fair market value.

to days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined its contracts do not include a significant financing component.

The Company’s revenue is primarily derived from the following sources and are recognized when or as the Company satisfies a performance obligation by transferring a good or service to a customer:

Product revenues

We recognize revenue when it is realized or realizable and has been earned. Revenue is recognized when the following are met: (i) persuasive evidence of an arrangement exists; (ii) shipment or delivery has occurred (depending on the terms of the sale), which is when the transfer of product or control occurs; (iii) our price to the buyer is fixed or determinable; and (iv) the ability to collect is reasonably assured.

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 Company and the amount of revenue can be measured reliably.

Practical Expedients

The Company applies the practical expedient and does not disclose information about remaining performance obligations for contracts that have original expected durations of one year or less.

million at December 31, 2023, and $ million at December 31, 2022. The amounts held in escrow were held in relation to a payment received for a historic doubtful debt in our Elektron division and workers' compensation insurance.

compared to the 2022 average of £. This change resulted in a positive impact of $ million on revenue and $ million on operating income. Based on the 2023 level of revenue and income, a weakening in GBP sterling leading to a £ increase in the USD/GBP sterling exchange rate would result in a decrease of $ million in revenue and a decrease of $ million in operating net income.

$ $ $ Transportation Defense, First Response & Healthcare Total$ $ $ $ 2022Gas CylindersElektronGraphic ArtsTotalGeneral industrial$ $ $ $ Transportation Defense, First Response & Healthcare Total$ $ $ $ 2021Gas CylindersElektronGraphic ArtsTotalGeneral industrial$ $ $ $ Transportation Defense, First Response & Healthcare Total$ $ $ $

The Company’s performance obligations are satisfied at a point in time. With the classification of our Superform business as discontinued operations, none of the Company's revenue from continuing operations is satisfied over time. As a result, the Company's contract receivables, contract assets and contract liabilities at December 31, 2023, 2022 and 2021 are included within current assets and liabilities held-for-sale.

million cash consideration. The fair value of assets and liabilities acquired were equal to the cash consideration paid.

There were acquisition-related costs of $ million and $ million in 2022 and 2021 respectively. These represented transitional costs and professional fees incurred in relation to the above SCI acquisition.

million, consisting of a $ million gain on our U.S. aluminum business, sold in March 2021, partially offset by a $ million loss on our Superform U.K. business sold in September 2021.

)$()$()Elektron Segment()()()$()$()$()Asset impairmentsGas Cylinders Segment$()$ $ Elektron Segment() $()$ $ Total restructuring charges()()() $ Costs incurred Cash payments and other()()Balance at December 31,$ $

million in 2021 which related to the settlement of a class action lawsuit in the Gas Cylinders segment as a result of an alleged historic violation of the California Labor Code, concerning a Human Resources administration matter.

)$ $

Net income / (loss) from discontinued operations (including net gain on disposition of $m in 2021)

()()Net (loss) / income$()$ $

Weighted average number of £ ordinary shares:

For basic loss / earnings per share Dilutive effect of potential common stock For diluted loss / earnings per share

(Loss) / earnings per share using weighted average number of ordinary shares outstanding:(1)(2)

Basic from continuing operations$()$ $ Basic from discontinued operations$ $()$ Basic (loss) / earnings per ordinary share$()$ $ Diluted from continuing operations$()$ $ Diluted from discontinued operations$ $()$ Diluted (loss) / earnings per ordinary share $()$ $

(1) The calculation of earnings per share is performed separately for continuing and discontinued operations. As a result, the sum of the two in any particular year may not equal the earnings-per-share amount in total.

(2) The loss per share for continuing operations in 2023 has not been diluted, since the incremental shares

included in the weighted-average number of shares outstanding would have been anti-dilutive.

million, net of working capital adjustments. The Company recognized a gain on disposition, net of tax, of $ million.

In September 2021, our Superform U.K. business was sold for $ million, net of working capital adjustments. The Company recognized a loss on disposition, net of tax, of $ million.

In 2022, the Company recognized impairment and disposal-related costs of $ million and $ million respectively, in relation to the previous dispositions which occurred in 2021.

In 2023, the Company recognized a disposal-related credit of $ million, in relation to a previously impaired asset from the previous dispositions which occurred in 2021.

The assets and liabilities of the above businesses have been presented within Current assets held-for-sale and Current liabilities held-for-sale in the Consolidated Balance Sheets at December 31, 2023, and December 31, 2022. In 2021, Company recognized a $ million impairment charge relating to plant and equipment held in our Superform U.S. business reflecting updated expectations of fair market value.

$ $ Cost of goods sold()()()Gross profit / (loss) ()Selling, general and administrative expenses()()()Restructuring charges()()()Acquisition and disposal credit / (costs) () Impairment charges ()()

Identifiable intangible assets consisted of the following:

December 31, 2023

December 31, 2022

In millions

Gross

Accumulated amortization

Net

Gross

Accumulated amortization

Net

Customer relationships

()

Technology and trading related

()

Total identifiable intangibles

()

Identifiable intangible asset amortization expense in 2023, 2022 and 2021 was $ million, $ million and $ million, respectively.

Intangible asset amortization expense over the next five years is expected to be approximately $ million per year.

The weighted-average amortization period for the customer relationships is years and for the technology and trading related assets is years.

9. $ Related parties Prepayments and accrued incomeDerivative financial instrumentsOther receivablesTotal accounts and other receivables$ $ InventoriesRaw materials and supplies$ $ Work-in-process Finished goods Total inventories$ $ Other current assetsIncome tax receivable Total other current assets$ $ Property, plant and equipment, netLand, buildings and leasehold improvements$ $ Machinery and equipment Construction in progress Total property plant and equipment Accumulated depreciation and impairment()()Total property, plant and equipment, net$ $ Current maturities of long-term debt and short-term borrowingsBank and other loans$ $ Bank overdraft Total current maturities of long-term debt and short-term borrowings$ $ Other current liabilitiesShort term provision$ $ Restructuring provision Derivative financial instruments Operating lease liability Advance payments Total other current liabilities$ $ Other non-current liabilitiesContingent liabilities$ $ Operating lease liability Other non-current liabilities Total other non-current liabilities$ $

million and $ million of property, plant and equipment, and right-of-use asset impairments respectively, were recognized in continuing operations relating to our Graphic Arts segment. There were property, plant and equipment, or right-of-use asset impairments recognized in 2022 or 2021.

10.

)$()Pension plans actuarial loss, net of tax()()Accumulated other comprehensive loss$()$()

11.

The bank overdraft is an uncommitted facility with no expiration date, this is reviewed annually and can be cancelled by either the bank or the Company on demand.

:1. The leverage ratio measures our Total Net Debt (as defined in the agreements) to the Relevant Period Adjusted Acquisition EBITDA (as defined in the agreements). We are required to maintain a leverage ratio of no more than :1.

Any breach of a covenant could result in a default under the agreements, 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 subsidiaries' ability to make investments, incur liens and make certain restricted payments is also controlled by limits within the agreements.

12.

million (2022: $ million) derivative financial instruments recorded within accounts and other receivables. The value of derivative financial instruments recorded in other current liabilities in 2023 was $ (2022: $ million).

Forward foreign currency exchange contracts

The Company incurs currency transaction risk whenever one of the Company'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 and expenses in the same currency. The Company's U.S. operations have little currency exposure as most purchases, costs and sales are conducted in U.S. dollars. The Company's U.K. operations are exposed to exchange transaction risks, mainly because these operations sell goods priced in U.S. dollars and purchase raw materials priced in U.S. dollars.

At December 31, 2023 and 2022, the Company held various forward foreign currency exchange contracts in respect of forward sales for U.S. dollars, euros, Canadian dollars and Japanese yen for the receipt of GBP sterling. The Company also held forward foreign currency exchange contracts in respect of forward purchases for U.S. dollars, euros, Canadian dollars, Australian dollars and Chinese yuan by the sale of GBP sterling. The contract totals in GBP sterling, range of maturity dates and range of exchange rates are disclosed overleaf, with the value denominated in GBP sterling, given that it is the currency the all of the contracts are held in.

Maturity dates01/24 to 02/2401/24 to 03/2401/24 to 02/2401/24 to 02/24Exchange rates

$ to $

€ to €

¥ to ¥

Purchase hedges

U.S. dollars

Euros

Canadian dollars

Australian dollars

Chinese yuan

Contract totals/£m

Maturity dates

02/24 to 03/24

01/24

01/24 to 02/24

01/24

Exchange rates

$ to $

€ to €

$ to $

¥ to ¥

December 31, 2022

Sales hedges

U.S. dollars

Euros

Canadian Dollars

Contract totals/£m

Maturity dates

01/23 to 03/23

01/24

Exchange rates

$ to $

€ to €

Purchase hedges

U.S. dollars

Euros

Canadian dollars

Australian dollars

Chinese yuan

Contract totals/£m

Maturity dates

01/23 to 04/23

01/23

01/23 to 03/23

Exchange rates

$ to $

€ to €

$ to $

¥ to ¥

The above contracts are held in GBP sterling. Therefore, the analysis in the table has been given in GBP sterling to avoid any movements as a result of translation.

Fair value of financial instruments

The following methods were used to estimate the fair values of each class of financial instrument:

Cash at bank and in hand

The carrying value approximates 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 in the U.S. and U.K.

Bank loans

At December 31, 2023, bank and other loans of $ million (2022: $ million) were outstanding. At December 31, 2023, bank and other loans are shown net of issue costs of $ million (2022: $ million), and these issue costs are to be amortized to the expected maturity of the facilities. This carrying value approximates to its fair value at December 31, 2023 and 2022 respectively. At December 31, 2023, $ million(2022: $ million) of the total $ million (2022: $ 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 Company would be expected to receive or pay on termination of each individual contract by comparison to present market prices.

$ $ $ Interest bearing loans and borrowings:Loan Notes due 2026 Revolving credit facility Bank overdraft

December 31, 2022

In millions

Total

Level 1

Level 2

Level 3

Derivative financial assets:

Foreign currency contract assets

Derivative financial liabilities:

Foreign currency contract liabilities

Interest bearing loans and borrowings:

Loan Notes due 2023

Loan Notes due 2026

Revolving credit facility

13.

$ $

International(1)

() (Loss) / income before income taxes$()$ $

$()$

International(1)

Total current taxes$ $()$ DeferredU.K.$ $ $()

International(1)

() ()Total deferred taxes$()$ $()Total provision for income taxes$()$ $

)$ $ Provision for income taxes at the U.K. statutory tax rate (2023: 23.5%, 2022:19%, 2021: 19%)() Effect of:Non-deductible expenses Movement in valuation allowances() ()

Differences in income tax rates in countries where the Company operates(1)

Effect of changes in tax rates (2)

()()Tax impact of defined benefit pension settlement() Other()()()Total provision for income taxes$()$ $

(1) Refers mainly to the effects of the differences between the statutory income tax rate in the U.K. against the applicable income tax rates of each country where the Company operates.

(2) An increase in the U.K. corporation tax rate from 19% to 25%, effective from April 1, 2023, was announced in March 2021. Rate changes also occur in each period as a result of changes in the average state tax rate in the U.S.

$ $ Gross increases based on tax positions related to the current year Reductions due to expiry of statute of limitations ()()Ending balance$ $ $ Non-current$ $ $

The Company's unrecognized tax benefits relate to the pricing of its various inter-company transactions. Because the transfer pricing calculation is often multifaceted, taking into account economics, finance, industry practice, and functional analysis, a company's transfer pricing position often sits at a particular point along a wide continuum of possible pricing outcomes. The inherent subjectivity in pricing inter-company balances gives rise to measurement uncertainty. Management has considered the valuation uncertainty in determining the measurement of the uncertain tax position. There are no current tax audit examinations.

At December 31, 2023, 2022 and 2021, there were $ million, $ million, and $ million of unrecognized tax benefits, respectively, that, if recognized, would affect the annual effective tax rate.

The Company recognizes interest accrued and penalties relating to unrecognized tax benefits in the income tax line. During the years ended December 31, 2023, 2022 and 2021, the Company recognized no amounts related to interest and penalties.

million (at December 31, 2022: $ million, at December 31, 2021: $ million). If these earnings were remitted, it is estimated that the additional income tax arising would be approximately $ million (at December 31, 2022: $ million, at December 31, 2021: $ million). $ Deferred tax liabilities()()Net deferred tax (liabilities) / assets$()$()

The tax effects of the major items recorded in deferred tax assets and liabilities were as follows:


	December 31,
In millions	2023		2022
Deferred tax assets
Accrued liabilities
Tax loss and credit carry forwards
Employee compensation benefits
Operating leases
Property, plant and equipment
Excess interest capacity carry forward
Other
Total deferred tax assets
Valuation allowances	()		()
Deferred tax assets, net of valuation allowances	$		$
Deferred tax liabilities
Property, plant and equipment	$		$
Pension benefits
Goodwill and other intangibles
Operating leases
Other
Total deferred tax liabilities	$		$
Net deferred tax assets	$	()	$	()

Deferred tax liabilities and assets represent the tax effect of temporary differences between the value of assets and liabilities for financial statement purposes and such values as measured by the relevant jurisdiction's tax laws and regulations. Deferred tax assets and liabilities from the same tax jurisdiction have been netted, resulting in assets and liabilities being recorded under the deferred taxation captions on the consolidated balance sheet.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences and carryforwards become deductible or creditable. Management considers the scheduled reversal of existing taxable temporary differences, projected future taxable income, and tax-planning strategies in making this assessment.

$ Foreign exchange movements ()(Deductions) / additions() Closing balance$ $

In March 2021 an increase in the U.K. corporation tax rate from 19% to 25% was announced, effective from April 1, 2023. Deferred tax liabilities and assets which are expected to unwind after April 1, 2023 have been valued at %.

million (U.K.: $ million, non-U.K.: $ million). Carried forward tax losses and tax credits for 2022 were $ million (U.K.: $ million, non-U.K.: $ million) and for 2021 were $ million (U.K.: $ million, non-U.K.: $ million). To the extent that these losses are not already recognized as deferred income taxes assets and are 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. A valuation allowance of $ million (2022: $ million, 2021: $ million) exists for deferred tax benefits related to the tax loss and tax credit carry forwards and other benefits that may not be realized. The apportionment of the valuation allowance between the U.K. and non-U.K. jurisdictions is U.K.: $ million, non-U.K.: $ million (2022: U.K.: $ million, non-U.K.: $ million; 2021: U.K.: $ million, non-U.K.: $ million). The non-U.K. valuation allowances relates to tax losses in France and Germany.

Of the carried forward tax losses and tax credits as at December 31, 2023, $ million expire between 2024 and 2034, and $ million are available for indefinite carry-forward.

14.

The principal defined benefit pension plan in the Company is the U.K. Luxfer Group Pension Plan ("the Plan"), which closed to new members in 1998, with new employees then being eligible for a defined contribution plan. In April 2016, the Plan was closed to further benefit accrual, with members being offered contributions to a defined contribution plan. The Company completed a buyout of the U.S. BA Holdings, Inc. Pension Plan in the first quarter of 2023. The Company's other arrangements are less significant than the Plan.

$ $ $ $ $ Interest cost Settlement gain ()() ()()Actuarial gains()()()()()()Exchange difference () ()Benefits paid()()()()()()Benefit obligation at December 31$ $ $ $ $ $ Change in plan assetsFair value of plan assets at January 1$ $ $ $ $ $ Actual return on assets ()()()Exchange difference () ()Contributions from employer Benefits paid()()()()()()Settlement loss ()() ()()Fair value of plan assets at December 31$ $ $ $ $ $ Funded statusNet benefit surplus / (obligation)$ $()$ $ $()$

The net benefit surplus of $ million (2022: $ million) in the U.K. plan is recorded in non-current assets at December 31, 2023 and December 31, 2022, the net benefit obligation of $ million (2022: $ million) in the U.S. / other is recorded in non-current liabilities at December 31, 2022.

In December 2021, the Company made a special one-off deficit reduction payment to the U.K. Plan of $ million. The payment means the Company is not expected to make any additional deficit recovery contributions to the Plan until at least December 2024. Contributions of $m were paid to the U.K. plan in relation to the Pension Protection Fund levy.

Expected return on assets() ()()()()()()()Settlement loss Amortization of net actuarial loss Amortization of prior service credit() ()() ()() ()Total (credit) / expense for defined benefit plans$()$ $ $()$ $ $()$()$()In respect of defined contribution plans:Total charge for defined contribution plans$ $ $ $ $ $ $ $ $ Total charge / (credit) for benefit plans$ $ $ $()$ $ $ $ $

In accordance with ASC 715, defined benefit pension credit is split in the income statement, with $ million (2022: $ million; 2021: $ million) of expenses recognized within sales, general and administrative expenses and a charge of $ million (2022: $ million credit; 2021: $ million credit) recognized below operating income in the income statement.

$ $ Amortization of actuarial loss Actuarial loss recognized due to settlement event

(2023: actual employer contributions).

15.

each $ (1)$ (1) $ (1)$ (1)Allotted, called up and fully paid:

Ordinary shares of £ each

$ (1)$ (1)Utilization of ESOP shares At December 31, 2022() ordinary shares )

At December 31, 2023, the loan outstanding from the ESOP was $ million (2022: $ million).

The market value of each £ ordinary share held by the ESOP at December 31, 2023, was $ (2022: $).

(b) 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 Company adopted the Luxfer Holdings PLC Long-Term Umbrella Incentive Plan (the "LTIP") for the Company'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 Company. The Remuneration Committee administers the LTIP and has the power to determine to whom the awards will be granted, the amount, type and other terms. Awards granted under the LTIP generally vest one-quarter each year over a period, subject to continuous employment and certain other conditions, with the exercise period expiring after grant date. Awards granted under the Director EIP are non-discretionary, are purely time-based and vest over , with settlement occurring immediately on vesting.

of Restricted Stock Units and Options over ordinary shares were granted under the LTIP, which were all time-based awards vesting over a period of and expiring later. Also in March 2023, a maximum awards were granted based on the achievement of shareholder return targets. In June 2023, a combined Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards that would fully vest later.

In March 2022, a combined of Restricted Stock Units and Options over ordinary shares were granted under the LTIP, which were all time-based awards vesting over a period between three and and expiring later. Also throughout 2022, a maximum awards were granted based on the achievement of shareholder return targets. In May 2022, additional awards were granted under the LTIP, which were all time-based awards vesting over and an additional awards were granted under the LTIP, which vested immediately. In June 2022, a combined Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards that would fully vest later.

In March 2021, a combined of Restricted Stock Units and Options over ordinary shares were granted under the LTIP, which were all time-based awards vesting over and expiring later. Also throughout 2021, a maximum awards were granted based on the achievement of shareholder return targets. In June 2021, a combined Restricted Stock Units and Options over ordinary shares were granted under the Director EIP, which were all time-based awards that would fully vest later.

$ $

There were no cancellations or modifications to the awards in 2023, 2022 or 2021.

The actual tax benefit realized for the tax deductions from option exercises totaled $ million, $ million and $ million in 2023, 2022 and 2021, respectively.

$ $ Granted during the year $ Exercised during the year()$ Accrued dividend awards $ Lapsed during the year()$ At December 31, 2023 $ $ Options exercisable at December 31, 2023 $ $ Options expected to vest as of December 31, 2023 $ $

The weighted average fair value of options granted in 2023, 2022 and 2021 was estimated to be $, $ and $ per share, respectively. The total intrinsic value of options that were exercised during 2023, 2022 and 2021 was $ million, $ million and $ million, respectively. At December 31, 2023, the total unrecognized compensation cost related to share options was $ million (2022: $ million). This cost is expected to be recognized over a weighted average period of years (2022: years ).

Expected volatility range (%)

Risk-free interest rate (%)

Expected life of share options range (years)

Forfeiture rate (%) Weighted average exercise price ($)$$$Models usedBlack-Scholes & Monte-CarloBlack-Scholes & Monte-CarloBlack-Scholes & Monte-Carlo

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 Company operates an all-employee share incentive plan in its U.K. and U.S. operations and may look to implement plans in other geographic regions.

17.

identified business units, which aggregate into reportable segments within continuing operations, and within discontinued operations. Luxfer Gas Cylinders forms the Gas Cylinders segment, and Luxfer MEL Technologies and Luxfer Magtech aggregate into the Elektron segment. As of December 31, 2023, it was determined that the Luxfer Graphic Arts reporting segment no longer met the criteria, specifically, similar economic characteristics, to be aggregated within the Elektron segment for 2023. As a result, Luxfer Graphic Arts has been disaggregated from the Elektron segment and is being reported separately as the Graphic Arts segment. The Elektron segment's results for 2022 and 2021 have been adjusted to exclude Graphic Arts' results. Our Superform business unit used to aggregate into the Gas Cylinders segment but is now recognized within discontinued operations. A summary of the operations of the segments within continuing operations is provided below:

Gas Cylinders segment

Our Gas Cylinders segment manufactures and markets specialized highly-engineered cylinders, using composites and aluminum alloys, including pressurized cylinders for use in various applications including self-contained breathing apparatus ('SCBA') for firefighters, containment of oxygen and other medical gases for healthcare, alternative fuel vehicles, and general industrial applications.

Elektron segment Our Elektron segment focuses on specialty materials based primarily on magnesium and zirconium, with key product lines including advanced lightweight magnesium alloys with a variety of uses across a variety of industries; magnesium powders for use in countermeasure flares, as well as heater meals; and high-performance zirconium-based materials and oxides used as catalysts and in the manufacture of advances ceramics, fiber-optic fuel cells, and many other performance products.

Graphic Arts segment

Our Graphic Arts segment provides a full range of pre-sensitized magnesium, copper and zinc plates, along with associated chemicals, for the production of foil-stamping and embossing dies. In addition, non-sensitized polished brass and magnesium plates are also manufactured for computer numerical control ('CNC') engraving. The segment also advises on turnkey engraving operations, complete with etching machines, computer-to-plate ('CtP') machines, exposure units and film setters.

Other

Other, as used below, primarily represents unallocated corporate expense and includes non-service related defined benefit pension cost / credit.

Management monitors the operating results of its reportable segments separately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated by the chief operating decision maker, the CEO, who is responsible for allocating resources and assessing performance of the operating segments, using adjusted EBITA(1) and adjusted EBITDA, which is defined as segment income, and is based on operating income adjusted for share-based compensation charges; restructuring charges; impairment charges; other charges; acquisitions and disposals costs; and depreciation and amortization.

Unallocated assets and liabilities include those which are held on behalf of the Company and cannot be allocated to a segment, such as taxation, investments, cash, retirement benefits obligations, bank and other loans and holding company assets and liabilities.

$ $ $ $ $ Elektron segment Graphic Arts segment()Consolidated$ $ $ $ $ $

During 2023 there were $ million sales made between our Elektron segment and Graphic Arts segment (2022: $ million and 2021: )

(1) Adjusted EBITA is adjusted EBITDA less depreciation and loss on disposal of property, plant and equipment.

$ $ $ $ $ Elektron segment Graphic Arts segment Consolidated$ $ $ $ $ $


	Total assets		Capital expenditure
In millions	2023	2022	2023	2022	2021
Gas Cylinders segment	$	$	$	$	$
Elektron segment
Graphic Arts segment
Other
Discontinued operations
	$	$	$	$	$

The following table presents a reconciliation of Adjusted EBITDA to net income from continuing operations:


In millions	2023		2022	2021
Adjusted EBITDA	$		$	$
Share-based compensation charges	()		()	()

Depreciation and amortization	()		()	()

Restructuring charges	()		()	()
Impairment charges	()
Acquisition and disposal costs			()	()
Other charges				()

Defined benefits pension (charge) / credit	()
Interest expense, net	()		()	()
Credit / (provision) for taxes			()	()
Net income from continuing operations	$	()	$	$

The following tables present certain geographic information by geographic region for the years ended December 31:


	Net Sales(1)
	2023			2022			2021
	$M	Percent		$M	Percent		$M	Percent
United States	$		%	$		%	$		%
U.K.			%			%			%
Japan			%			%			%
Germany			%			%			%
Canada			%			%			%
Top five countries	$		%	$		%	$		%
Rest of Europe			%			%			%
Asia Pacific			%			%			%
Other (2)			%			%			%
	$			$			$

(1) Net sales are based on the geographic destination of sale.

$ United Kingdom CanadaRest of Europe Asia Pacific $ $

(1) Net sales are based on the geographic destination of sale.

(2) Other includes South America, Latin America and Brazil.

18.

, with one building having years remaining.

None of our leases were classified as finance leases in any of the years disclosed.

$ $

Supplemental cash flow information related to leases was as follows:


	Years ended December 31,
In millions	2023	2022	2021
Operating cash flows from operating leases	$	$	$

During the year ended December 31, 2023, there were additional operating leases entered into totaling $ million (2022: $ million, 2021: $ million). There was also a $ million impairment recognized in 2023 in relation to the Graphic Arts segment. These are non-cash items but will impact cash in future years.

Supplemental balance sheet information related to leases was as follows:


	December 31,		December 31,
In millions	2023		2022
Operating leases
Operating lease right-of-use asset	$		$

Other current liabilities
Other non-current liabilities
	$		$

Weighted Average Remaining Lease Term (Years)
Weighted Average Discount Rate		%		%

2025 2026 2027 2028 Thereafter Total lease payments$ Less imputed interest()Total$

19.

million (2022: $ million and 2021: $ million) for the acquisition of new plant and equipment.

Committed banking facilities

The Company had committed banking facilities of $ million at December 31, 2023 and $ million at December 31, 2022. Of these committed facilities, $ million was drawn at December 31, 2023 and $ million at December 31, 2022. The Company also had an additional $ million of uncommitted facilities through an accordion provision at December 31, 2023 and $ million at December 31, 2022.

$ $ $ Letters of Credit Overdraft $ $ $ $

Additionally, the Company has various uncommitted transitional banking and foreign exchange lines available for day-to-day operational purposes.

Contingencies

In November 2018, an alleged explosion occurred at a third-party waste disposal and treatment site in Grand View, Idaho, reportedly causing property damage, personal injury, and one fatality. The Company had contracted with a service company for removal and disposal of certain waste resulting from the magnesium powder manufacturing operations at the Reade facility in Manchester, New Jersey. The Company believes this service company, in turn, contracted with the third-party disposal company, at whose facility the explosion occurred, for treatment and disposal of the waste. In November 2020, we were named as a defendant in lawsuits in relation to the incident – by the third-party disposal company, by the estate of the decedent, and by an injured employee of the third-party disposal company. The lawsuits were administratively consolidated and, to date, lawsuits remain ongoing. The Company believes that we are not liable for the incident, have asserted such, and, in conjunction with our insurers, continue to fully defend the Company against these lawsuits. Therefore, we do not currently expect any eventual outcome in these matters to have a material impact on the Company's financial position or results of operations.

20.

% investment in the equity of the joint venture, Nikkei-MEL Company Limited. During 2023, the Elektron Segment made $ million of sales to the joint venture (2022: $ million). At December 31, 2023, the gross and net amounts receivable from the joint venture amounted to $ million (2022: $ million).

Transactions with other related parties

At December 31, 2023, the directors and key management comprising the members of the Executive Leadership Team owned £ ordinary shares (2022: £ ordinary shares) and held awards over a further £ ordinary shares (2022: £ ordinary shares).

During the years ended December 31, 2023, and December 31, 2022, share options held by members of the Executive Leadership Team were exercised.

Other than the transactions with the joint ventures, associates and key management personnel disclosed above, no other related-party transactions have been identified.

21.

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of the design and operation of our disclosure controls and procedures for the period covered by this report, pursuant to Rule 13a-15(b) of the Securities Exchange Act of 1934 (the "Exchange Act"). Based upon their evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective as of the year ended December 31, 2023, due to the material weakness in our internal control over financial reporting described below.

Management's Annual Report on Internal Control Over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Management’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 accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements due to error or fraud.

Management has performed an evaluation of the effectiveness of its internal control over financial reporting as of December 31, 2023, based on the framework and criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on its evaluation, due to the material weakness described below, management concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2023.

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim consolidated financial statements may not be prevented or detected on a timely basis.

In conjunction with the preparation of the Company’s financial statements for the year ended December 31, 2023 management identified a lack of controls related to the Company’s accounting for inventory in transit. As a result, management concluded it did not properly design or maintain effective risk assessment control activities to allow for timely reassessment of the material risk of misstatement in financial reporting. Management has thus identified a material weakness in internal control over financial reporting. This material weakness could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected. However, this material weakness did not result in a misstatement to the annual or interim consolidated financial statements previously filed or included in this Annual Report on Form 10-K.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report, which appears in Item 8 of this Annual Report on Form 10-K.

Plan for Remediation of Material Weakness in Internal Control Over Financial Reporting

Following the identification of the material weakness described above, management developed and is executing a remediation plan to address the material weakness. Management plans to develop and design enhanced risk assessment procedures to identify and analyse changes in the business that could have a significant impact on financial reporting and determine actions necessary to mitigate new or evolving risks.

Management’s remediation activities also include the implementation of a new period-end control over the recording of inventory in-transit. The material weakness will not be considered remediated until management has implemented their plan and operated the controls for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarter ended December 31, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

During the fourth quarter of 2023, none of our directors or Section 16 officers or a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” (as each term is defined in Item 408(a) of Regulation S-K).

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Not applicable.

PART III

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item is incorporated by reference to the following sections of our definitive Proxy Statement related to the 2024 Annual General Meeting to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this annual report, (the "2024 Proxy Statement"): "Resolutions 1 - 5 - Election and Re-Election of Director Nominees," "Corporate Governance Matters" and "Section 16(a) Beneficial Ownership Reporting Compliance."

The Company has adopted a code of ethics which is applicable to all employees and is available on the corporate website, www.luxfer.com. A copy of the code can also be obtained, without charge, upon request. If there is an amendment to the code, then the nature of the amendment will also be made available of the corporate website.

Item 11. Executive Compensation

The information required by this Item is incorporated by reference to the following sections of the Proxy Statement for the 2024 Annual General Meeting: “Executive Compensation Discussion and Analysis” and “Director Compensation.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference to the following sections of the Proxy Statement for the 2024 Annual General Meeting: "Equity Compensation Plan Information" and "Security Ownership."

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference to the following sections of the Proxy Statement for the 2024 Annual General Meeting: "Policies and Procedures Regarding Conflicts of Interest and Related Party Transactions" and "Corporate Governance Matters."

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to the following section of the Proxy Statement for the 2024 Annual General Meeting: "Resolution 9 - Ratification of the appointment of PricewaterhouseCoopers LLP as the independent auditors of Luxfer Holdings PLC for 2024, and to authorize, by binding vote, the Audit Committee to set the auditors’ remuneration".

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a)(1) Financial Statements

The Financial Statements listed in the Index to Financial Statements in Item 8 are filed as part of this Annual Report on Form 10-K.

(a)(2) Financial Statement Schedules

Financial statement schedules are omitted because they are either not required or because the required information is included in the Consolidated Financial Statements and related notes.

(a)(3) Exhibits

3.1 Articles of Association of the Registrant, initially filed with the SEC on December 2, 2011 and as amended on May 22, 2018 and as amended on May 15, 2019

4.1 Form of specimen certificate evidencing ordinary shares (incorporated by reference to Exhibit 4.1 to our Registration Statement on Form F-1 (file no. 333-178278), as amended, initially filed with the SEC on December 2, 2011)

10.1 Amended and Restated Note Purchase Agreement dated as of June 29, 2016 by and among BA Holdings, Inc. and the parties named therein (incorporated by reference to Exhibit 2.3 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.2 Senior Facilities Agreement dated as of May 13, 2011, as amended and restated on July 31, 2017 by and among Luxfer Holdings PLC and the parties named therein (incorporated by reference to Exhibit 2.4 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.3 First Amendment to Amended and Restated Note Purchase Agreement dated as of March 13, 2017 by and among Luxfer Holdings PLC and the parties named therein (incorporated by reference to Exhibit 2.5 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.4 Amended and Restated Note Purchase and Private Shelf Agreement dated as of June 29, 2016 by and among Luxfer Holdings PLC and the parties named therein (incorporated by reference to Exhibit 2.6 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.5 First Amendment to Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of March 13, 2017 by and among Luxfer Holdings PLC and the parties named therein (incorporated by reference to Exhibit 2.7 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.6 Second Amendment to Amended and Restated Note Purchase Agreement and Private Shelf Agreement dated as of October 26, 2021 by and among Luxfer Holdings PLC and the parties named therein, initially filed with the SEC on February 24, 2022

10.7 Senior Facilities Agreement dated as of October 26, 2021 by and among Luxfer Holdings PLC and the parties named therein, initially filed with the SEC on February 24, 2022

10.8* Executive Share Option Plan (incorporated by reference to Exhibit 10.3 to our Registration Statement on Form F-1 (file no. 333-178278), as amended, initially filed with the SEC on December 2, 2011)

10.9* Long-Term Umbrella Incentive Plan (incorporated by reference to Exhibit 4.2 to our Annual Report on Form 20-F (file no. 001-35370), initially filed with the SEC on March 19, 2018)

10.10* Amended and Restated Non-Executive Director Equity Incentive Plan (incorporated by reference to Exhibit 4.7 to our Annual Report on Form 20-F (file no. 001-35370), filed with the SEC on March 29, 2013)

10.11* The Luxfer Share Incentive Plan, initially filed with the SEC on March 11, 2019, amended May 15, 2019

10.12* The Luxfer Employee Stock Purchase Plan, filed with the SEC on March 11, 2019

10.13* Form of Executive Officer IPO Stock Option Grant Agreement (incorporated by reference to Exhibit 10.6 to our Registration Statement on Form F-1 (file no. 333-178278), as amended, initially filed with the SEC on December 2, 2011)

10.14* Form of Non-Executive Director IPO Stock Option Grant Agreement (incorporated by reference to Exhibit 10.7 to our Registration Statement on Form F-1 (file no. 333-178278), as amended, initially filed with the SEC on December 2, 2011)

10.15* Employment Agreements, filed with the SEC on March 11, 2019

10.16* Employment Agreements, filed with the SEC on March 11, 2019,

10.17* Employment Agreements, filed with the SEC on May 6, 2022

10.18* Employment Agreements, filed with the SEC on May 6, 2022

10.19* Employment Agreements, filed with the SEC on May 6, 2022

10.20* Employment Agreements, filed with the SEC on March 11, 2019

10.21* Employment Agreements, filed with the SEC on March 1, 2023

10.22* Employment Agreements, filed with the SEC on October 25, 2023

10.23 Insider Trading and Dealing Policy

10.24 Executi ve C ompensation Clawback Policy

21.1 List of Subsidiaries of the Company

23.1 Consent of PricewaterhouseCoopers LLP

31.1 Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934-Andrew Butcher

31.2 Certification Required by Rule 13a-14(a) or 15d-14(a) under the Securities Exchange Act of 1934-Stephen Webster

32.1 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)-Andrew Butcher

32.2 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)-Stephen Webster

101 The financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, formatted in XBRL: (i) Consolidated Statements of Income, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Changes in Equity, and (vi) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags.

* Management contract or compensatory plan or arrangement

Item 16. Form 10-K Summary

None.

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Luxfer Holdings plc

(Registrant)

/s/Andrew Butcher

Andrew Butcher

Chief Executive Officer

(Duly Authorized Officer)

February 27, 2024

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

Signature

Title

Date

/s/Andrew Butcher

Chief Executive Officer (Principal Executive Officer) and Director

February 27, 2024

Andrew Butcher

/s/Stephen M.D. Webster

Chief Financial Officer (Principal Financial and Accounting Officer)

February 27, 2024

Stephen M.D. Webster

/s/Patrick K. Mullen

Chairman of the Board and Director

February 27, 2024

Patrick K. Mullen

/s/Richard J. Hipple

Director

February 27, 2024

Richard J. Hipple

/s/Sylvia A. Stein

Director

February 27, 2024

Sylvia A. Stein

/s/Clive J. Snowdon

Director

February 27, 2024

Clive J. Snowdon

/s/Lisa G. Trimberger

Director

February 27, 2024

Lisa G. Trimberger

LUXFER HOLDINGS PLC - Annual Report: 2023 (Form 10-K)

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