Company Announcements

                                                                                              

1 August 2024

Half Year Results for the six months ended 30 June 2024

Resilient results in line with expectations, despite subdued market conditions

 

Vesuvius plc, a global leader in molten metal flow engineering and technology, announces its unaudited results for the six months ended 30 June 2024.

 

Financial summary		H1 2024 (£m)	H1 2023 (£m)	Underlying change (1)	Year-on-year change
Headline (non-statutory)
Revenue		936.5	995.3	(2.0%)	(5.9%)
Trading Profit (2) (adjusted EBITA)		97.2	104.9	(0.9%)	(7.4%)
Return on Sales (2)		10.4%	10.5%	+10bps	(20 bps)
Headline basic EPS (2) (pence)		21.8	24.5	(2.9%)	(11.2%)
Free cash-flow (2)		17.8	42.1	NA	(57.7%)
Net Debt / EBITDA (2)		1.2x	1.0x	NA	+0.2x
Statutory
Operating Profit		84.1	99.7	(9.4%)	(15.6%)
Profit Before Tax		76.7	94.7	(11.3%)	(19.0%)
Statutory basic EPS (pence)		18.1	23.2	(14.2%)	(22.0%)
Cash generated from operations		94.0	106.8	NA	(12.0%)
Dividend (pence per share)		7.1	6.8	NA	4.4%

⁽¹⁾ Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions and disposals.

⁽²⁾ For definitions of non-GAAP measures, refer to Note 15 in the Condensed Group Financial Statements.

NB. The above table and other tables in this results statement contains amounts and percentages derived from source data which was then rounded. The margins and percentage change figures are based on source data, not the rounded figures.

 

Highlights

·     End markets weaker than anticipated, in particular Foundry

·     Good performance of the Steel Division despite weak markets

o    Positive net pricing performance overall

o    Flow Control continues to gain market share

o    Advanced Refractories achieved market share gains in Asia, with 17% of sales now from India

o    Return on Sales increased to 11.2%

·     Lower performance of the Foundry division despite progress in strategic initiatives

o    Positive net pricing overall

o    Market share gains in all major regions

o    Significantly lower volumes reduced Return on Sales to 8.2%

·     Good progress in the implementation of our cost reduction programme; in-year savings estimate increasing to £6m, 2024 exit rate confirmed at £10-15m and projects fully identified to support our £30m target in 2026

·     Working capital intensity has improved in H1 reducing to 23.2% vs. 24.1%

·     Capacity expansion programme on track and will be largely complete by the end of the year

·     Continued progress in R&D efficiency with Group new product sales ratio up to 17.9% with Flow Control now exceeding 20%

·    Continued progress towards our CO₂e intensity reduction targets with the inauguration of our first entirely carbon neutral manufacturing plant for Flow Control and Advanced Refractories products in Brazil

·     Strong Safety performance in H1 with a record low level of accidents confirming the structural improvements achieved in our operations

·     Interim dividend per share of 7.1p, +4.4% reflecting confidence in the business

 

Comment from Patrick André, CEO:

 

"Our end markets remained subdued during the first half with, in particular, significant weakness in Foundry. Despite these unfavourable market conditions, the Steel Division achieved a good performance, demonstrating the strength of its business model with continued market share gains in Flow Control and positive net pricing performance overall. In the Foundry Division however, good performances in market share gains, pricing management and cost reductions could not offset the negative impact of volume reduction due to market conditions.

 

We no longer expect a significant improvement in our end markets in the second half, with most external forecasts predicting end market recovery being postponed to 2025. Accordingly, we now expect our full year headline trading profit for the year to be only slightly ahead of last year on a constant currency basis⁽*⁾.

 

Beyond 2024, we remain confident in the growth potential of our steel and foundry markets and remain very well positioned to benefit from the recovery in these markets once it materialises. Irrespective of the timing of market recovery, we continue to anticipate progress in our results supported by the growing benefits of our cost reduction programme, our continued investment in innovation and our capacity investments in India. For these reasons, we remain confident in the achievement of our 2026 objectives as communicated during our Capital Market Day last November."

 

(*) FY23 trading profit was £200m reported and is £192m retranslated at H1 2024 FX rates.

 

Presentation of Half Year 2024 Results

Vesuvius management will make a presentation to analysts and investors on 1 August 2024 at 09:00 UK time at the London Stock Exchange, 10 Paternoster Square, London EC4M 7LS. For those unable to attend, the event will be livestreamed and can be accessed by clicking here. Participants can also join via an audio conference call. Please click here to register.  Once registered, you will be provided with the information needed to join the conference, including dial-in numbers and passcodes. Be sure to save this information in your calendar. 

 

 

For further information, please contact:
Shareholder/analyst enquiries:
Vesuvius plc	Patrick André, Chief Executive	+44 (0) 207 822 0000
	Mark Collis, Chief Financial Officer Rachel Stevens, Head of Investor Relations	+44 (0) 207 822 0000 +44 (0) 7387 545 271
Media enquiries:
MHP Communications	Rachel Farrington/Ollie Hoare	+44 (0) 203 128 8570

 

 

About Vesuvius plc

Vesuvius is a global leader in molten metal flow engineering and technology principally serving process industries operating in challenging high‑temperature conditions.

 

We develop innovative and customised solutions, often used in extremely demanding industrial environments, which enable our customers to make their manufacturing processes safer, more efficient and more sustainable. These include flow control solutions, advanced refractories and other consumable products and increasingly, related technical services including data capture.

 

We have a worldwide presence. We serve our customers through a network of cost-efficient manufacturing plants located close to their own facilities, and embed our industry experts within their operations, who are all supported by our global technology centres.

 

Our core competitive strengths are our market and technology leadership, strong customer relationships, well established presence in developing markets and our global reach, all of which facilitate the expansion of our addressable markets.

 

Our ultimate goal is to create value for our customers, and to deliver sustainable, profitable growth for our shareholders giving a superior return on their investment whilst providing each of our employees with a safe workplace where they are recognised, developed and properly rewarded.

 

We think beyond today to create solutions that will shape the future for everyone. 

 

Forward looking statements

 

This announcement contains certain forward looking statements which may include reference to one or more of the following: the Group's financial condition, results of operations, cash flows, dividends, financing plans, business strategies, operating efficiencies or synergies, budgets, capital and other expenditures, competitive positions, growth opportunities for existing products, plans and objectives of management and other matters.

 

Statements in this announcement that are not historical facts are hereby identified as "forward looking statements". Such forward looking statements, including, without limitation, those relating to the future business prospects, revenue, working capital, liquidity, capital needs, interest costs and income, in each case relating to Vesuvius, wherever they occur in this announcement, are necessarily based on assumptions reflecting the views of Vesuvius and involve a number of known and unknown risks, uncertainties and other factors that could cause actual results, performance or achievements to differ materially from those expressed or implied by the forward looking statements. Such forward looking statements should, therefore, be considered in light of various important factors that could cause actual results to differ materially from estimates or projections contained in the forward looking statements. These include without limitation: economic and business cycles; the terms and conditions of Vesuvius' financing arrangements; foreign currency rate fluctuations; competition in Vesuvius' principal markets; acquisitions or disposals of businesses or assets; and trends in Vesuvius' principal industries.

 

The foregoing list of important factors is not exhaustive. When considering forward looking statements, careful consideration should be given to the foregoing factors and other uncertainties and events, as well as factors described in documents the Company files with the UK regulator from time to time including its annual reports and accounts.

 

You should not place undue reliance on such forward looking statements which speak only as of the date on which they are made. Except as required by the Rules of the UK Listing Authority and the London Stock Exchange and applicable law, Vesuvius undertakes no obligation to update publicly or revise any forward looking statements, whether as a result of new information, future events or otherwise. In light of these risks, uncertainties and assumptions, the forward looking events discussed in this announcement might not occur.

 

Vesuvius plc, 165 Fleet Street, London EC4A 2AE

Registered in England and Wales No. 8217766

LEI: 213800ORZ521W585SY02

www.vesuvius.com

Vesuvius plc

Half Year Results for the six months ended 30 June 2024

Resilient results in line with expectations, despite subdued market conditions

 

£m	H1 2024 Reported	H1 2023 Reported	Currency	H1 2023 Underlying	H2 2023 Underlying	% Change H1 '24 vs. H1 '23
						Underlying	Reported
Revenue	936.5	995.3	(40.1)	955.2	923.0	(2.0%)	(5.9%)
Trading Profit	97.2	104.9	(6.8)	98.1	94.1	(0.9%)	(7.4%)
Return on Sales	10.4%	10.5%	-	10.3%	10.2%	+10bps	(20bps)

 

End markets remained weak

As anticipated, Steel markets remained weak in H1. Steel production in the world excluding China, Iran, Russia and Ukraine, which accounts for approximately 90% of Vesuvius' Steel Division sales, marginally improved by 1.4% in H1 2024 compared with the prior period.

Steel market production varied by region. India was the stand-out growth region, up 7.4% on the comparative half-year period. South-East Asia also showed consistent growth in the half-year period, up 12.2% vs. prior year. North America and North Asia showed declines of -3.3% and -3.8% vs H1 2023, respectively.  In EMEA, EU27+UK remained broadly flat, while EEMEA excluding Russia, Iran and Ukraine grew +8.4% in H1 vs prior year, although Turkish volume growth was measured against a depressed Q1 2023 due to the earthquake there. (Source: World Steel Association)

 

Foundry end markets remained challenging and worse than anticipated in all regions except India.  The EU+UK, North America, and North Asia markets, which together account for approximately 60% of Foundry sales, showed significant weakness. The automotive end market, which until now had shown better resilience than other Foundry end markets also weakened during the first half.

 

Group trading performance

 

Market share gains in both the Steel and Foundry divisions

In this weak market environment, the business performed well, with the Group generating revenue of £936.5m, a decrease of 2.0% on an underlying basis compared to H1 2023 and 5.9% on a reported basis. The Steel Division performed particularly well, with Flow Control gaining market share overall and in all major regions except the EU+UK where we continue to manage our exposure carefully to certain customers assessed to be a credit risk. In Advanced Refractories, our market share has increased in Asia with a particularly strong performance in India and China. In Foundry, we gained market share in most regions, but this was not sufficient to offset the very negative market impact on volumes.

 

Positive pricing performance in both divisions

We achieved a positive contribution from net pricing in both the Steel and Foundry Divisions, reflecting the value-added by our technologically differentiated products and the clear value proposition that these provide to our customers. This continues the same trend seen in 2022 and 2023, which sits alongside ongoing market share gains.

 

Implementation of our cost savings programme fully on track

The programme to deliver £30m annual cost savings in FY26, announced at our Capital Markets Day in November 2023, continues at pace, and we are on track to deliver an initial £6m in 2024, and to achieve a run-rate of £10m - 15m by the end of this financial year. We remain confident of delivering the target of £30m annualised saving by 2026.

 

Resilient results

As a result of these good performances in market share gains, pricing and cost reductions, our trading profit (adjusted EBITA) in H1 2024 was in line with our expectations despite the unfavourable market conditions. Our trading profit, at £97.2m, shows a reduction of 0.9% on an underlying basis as compared with H1 2023 and a reduction of 7.4% on a reported basis. The Group delivered a Return on Sales of 10.4%, up 10bps on an underlying basis and within this, the Steel division increased its RoS to 11.2% while the Foundry RoS fell to 8.2%.

 

Further improvement in our health and safety performance

The protection of the health and safety of our employees and contractors remains our first priority and we have an overall objective of zero accidents. In the half-year, we achieved a Lost Time Injury Frequency Rate (LTIFR) per million hours worked of 0.64, a further reduction compared to 0.72 in H1 2023, itself a significant reduction versus our historic performance.

 

Efficient R&D drives technological differentiation and value to customers

Our focused and efficient R&D is key to maintaining technological differentiation. This is critical to our value-add proposition to customers and to growing market share and margin. We launched 18 new products in the period and delivered a new product sales ratio (defined as the percentage of sales derived from products launched in the previous 5 years) of 17.9%. This is a further improvement compared to 17.6% delivered in FY 2023 and has been driven in particular by Flow Control, which is now deriving over 20% of its sales from new products.

 

In addition, the interest of our customer base in our robotics offering is accelerating, with 6 projects agreed in the past 6 months vs. 7 in FY 23. These installations add significant value to customers by improving the quality of their steel output, the efficiency of their operations, and the safety of their employees.

 

Capital investment projects continue at pace, to support growth

2024 is the final year of the growth capex programme which was initiated in 2021. In the coming years, this investment will support our long-term growth in the fastest growing regions of the world, especially in India South-East Asia and Middle East Africa.

 

Our strategic expansion in Flow Control is progressing well. In addition to the VISO capacity in Kolkata (India) and in Skawina (Poland) completed in 2023, the slide gate capacity increase in Skawina (Poland) and the mould flux site in Vizag (India) will be fully operational in the second half of the year. The new Advanced Refractories AlSi monolithics and basic monolithics lines in Vizag will also be operational in the second half.

 

Capex, excluding leases, in FY24 is expected to be c. £100 - 120m (>1.6x depreciation) of which approximately half is allocated to growth projects and customer installations, the latter driving the use of our refractories.

 

Cost saving programme on track

We incurred costs of £8.0 million in H1 relating to the cost-saving programme, which are non-recurring and therefore a separately reported item. The majority relate to redundancy costs; we took the decision to close our last plant in the UK, a Foundry site. The expected total cash cost of the cost-saving programme remains at £40m, with the total one-off cash costs relating to the programme in 2024 expected to be between £8m and £10m.

 

Robust cashflow

Working capital intensity continues to improve, with the 12-month average trade working capital to sales ratio to 30 June 2024 at 23.2%, down 20bps from 31 December 2023 and down 90bps from 30 June 2023. The improvement was particularly driven by focused debtor and inventory management in our Advanced Refractories business unit. In H1, there was a cash outflow in respect of trade working capital of £34.2m (H1 2023: £31.3m), reflecting business seasonality.

 

The Group generated adjusted operating cashflow of £47.9m, representing cash conversion of 49%. We continued to have elevated levels of capital expenditure in the period (H1 2024: £50.5m vs. H1 2023: £41.9m), from our ongoing investment expenditure in growth projects. This investment for the growth programme is expected to complete in 2024, at which point capex will reduce.

 

Free cashflow of £17.8m (H1 2023: £42.1m) reflects the additional capital investment in the period, as described above.

 

The share buyback of up to £50m, which began in December 2023, has continued steadily and £33.1m of the programme was completed by 30 June 2024 (of which £30.2m fell in H1 2024). £16.9m remains to be executed before December 2024.

 

As at 30 June 2023, net debt stood at £315.2m (31 December 2023: £237.5m) and net debt / EBITDA at 1.2x (31 December 2023: 0.9x), reflecting the reduced free cashflow, the cash outflow from the share buy-back, and the H1 payment of the full year dividend.

 

Interim Dividend

The Board has declared an interim dividend of 7.1 pence per share, which is a 4.4% increase on the interim dividend for 2023 of 6.8 pence per share.

 

The interim dividend will be paid on 13 September 2024 to shareholders on the register at the close of business on 9 August 2024. The ex-dividend date will be 8 August 2024.  Any shareholder wishing to participate in the Vesuvius Dividend Reinvestment Plan (DRIP) needs to have submitted their election to do so by 23 August 2024. The DRIP is provided by Equiniti Financial Services Limited and enables the Company's shareholders to elect to have their cash dividend payments used to purchase the Company's shares. More information can be found at www.shareview.co.uk/info/drip

Current trading and outlook

Our end markets remained subdued during the first half, with in particular significant weakness in Foundry. Despite these unfavourable market conditions, the Steel Division achieved a good performance, demonstrating the strength of its business model with continued market share gains in Flow Control and positive net pricing performance overall. In the Foundry Division however, good performances in market share gains, pricing management and cost reductions could not offset the negative impact of volume reduction due to market conditions.

 

We no longer expect a significant improvement in our end markets in the second half, with most external forecasts predicting end market recovery being postponed to 2025. Accordingly, we now expect our full year headline trading profit for the year to be only slightly ahead of last year on a constant currency basis.

 

Beyond 2024, we remain confident in the growth potential of our steel and foundry markets and remain very well positioned to benefit from the recovery in these markets once it materialises. Irrespective of the timing of market recovery, we continue to anticipate progress in our results supported by the growing benefits of our cost reduction programme, our continued investment in innovation and our capacity investments in India. For these reasons, we remain confident in the achievement of our 2026 objectives as communicated during our Capital Market Day last November.

 

Operating and Financial Review

Operating review

Vesuvius comprises two Divisions, Steel and Foundry. The Steel Division operates as three business units, Flow Control, Advanced Refractories and Sensors & Probes. Changes described are versus H1 2023 on an underlying basis, excluding the impact of FX, unless otherwise noted. There were no acquisitions or disposals in 2023 or H1 2024 and hence no such adjustments were required.

 

See Note 15.1 to the Group Financial Statements for the definition of headline performance and Note 15.2 to the Group Financial Statements for the definition of underlying performance.

 

Steel Division

 

Steel Division			H1 2024 (£m)	H1 2023 (£m) reported	H1 2023 (£m) underlying	Change % underlying
Flow Control Revenue			393.7	401.8	383.6	2.6%
Advanced Refractories Revenue			270.3	289.6	279.3	(3.2%)
Steel Sensors & Probes Revenue			21.7	20.1	19.6	10.9%
Total Steel Revenue			685.7	711.5	682.5	0.5%
Steel Trading profit			76.5	74.8	69.7	9.7%
Steel RoS			11.2%	10.5%	10.2%	+100bps

 

Steel revenue grew modestly reflecting volume growth of c. 1% partially offset by declines in pricing, reflecting reductions in raw material prices. Revenue growth in the Steel Division was principally driven by Flow Control, which gained market share, with a contribution from Sensors and Probes, which improved profitability. Revenue in Advanced Refractories fell, reflecting the pass-back of reduced raw material costs.

 

Trading profit in Steel grew 9.7% principally reflecting positive net pricing and cost savings. As a result, Return on Sales for the Steel Division increased 100bps to 11.2%

 

Flow Control

 

Flow Control Revenue		H1 2024 (£m)	H1 2023 (£m) reported	H1 2023 (£m) underlying	Change % underlying
Americas		157.6	163.0	154.7	1.9%
Europe, Middle East & Africa (EMEA)		123.7	126.8	122.7	0.8%
Asia-Pacific		112.4	112.1	106.1	5.9%
Total Flow Control Revenue		393.7	401.8	383.6	2.6%

 

Flow Control grew revenue and gained market share in all major regions apart from the EU+UK. In North America, the market contracted by 3.3% in the period, while our sales volumes contracted by a smaller amount, and in South America the market contracted modestly while Vesuvius grew volume. In EMEA, we outperformed the market in the fast-growing EEMEA area (EMEA excluding EU+UK, Russia, Iran and Ukraine) but underperformed the market in EU+UK where we selectively chose to reduce our presence with customers with a high credit risk.

 

In Asia-Pacific we out-performed in the major markets of India and China. In India, the market grew +7.4%, which we materially exceeded. In China, we grew volumes by mid-single-digit despite the market contracting, reflecting our focus on higher-quality steel production. (Market data source: World Steel Association)

 

Advanced Refractories

 

Advanced Refractories Revenue		H1 2024 (£m)	H1 2023 (£m) reported	H1 2023 (£m) underlying	Change % underlying
Americas		98.5	113.7	109.7	(10.2%)
Europe, Middle East & Africa (EMEA)		83.5	94.4	92.5	(9.7%)
Asia-Pacific		88.3	81.5	77.1	14.4%
Total Advanced Refractories Revenue		270.3	289.6	279.3	(3.2%)

 

In Advanced Refractories our market share was positive in Asia, both in India and China, and in EEMEA, which was offset by a slight market share decline in North America and EU+UK.

 

Sensors & Probes

 

Sensors & Probes Revenue		H1 2024 (£m)	H1 2023 (£m) reported	H1 2023 (£m) underlying	Change % underlying
Americas		15.3	13.9	13.5	13.4%
Europe, Middle East & Africa (EMEA)		6.1	5.9	5.8	6.7%
Asia-Pacific		0.2	0.3	0.3	(20.5%)
Total Sensors & Probes Revenue		21.7	20.1	19.6	10.9%

 

Sensors and Probes has had a strong H1 trading period with high revenue growth reflecting a number of new projects in the Americas and the EMEA region.

 

Foundry Division

 

Foundry Division		H1 2024 (£m)	H1 2023 (£m) reported	H1 2023 (£m) underlying	Change % underlying
Americas		63.7	73.0	71.1	(10.3%)
Europe, Middle East & Africa (EMEA)		101.6	120.5	117.7	(13.7%)
Asia-Pacific		85.5	90.3	84.0	1.8%
Total Foundry Revenue		250.8	283.8	272.8	(8.0%)
Foundry Trading Profit		20.7	30.1	28.4	(27.1%)
Foundry Return on Sales		8.2%	10.6%	10.4%	-220bps

 

Foundry end markets were negative in all major regions with the exception of India. Consistent with third party data, we estimate there were double-digit percentage market declines in EMEA and North America, our largest regions. North Asia, another key region for us, also saw significant market declines, with a drop in ferrous castings of 8.4% in the period. The light vehicle end market, which up until now had been more resilient than the other Foundry end markets, also showed signs of weakness in all regions.

 

As a consequence of these negative market conditions and despite market share gains in all regions, Foundry revenue fell 8.0% as compared with H1 2023.  

 

Positive performance in net pricing and cost reduction efforts could not compensate for the large negative volume impact and the Division's trading profit fell 27.1% versus H1 2023 and Return on Sales reduced to 8.2%.

 

Financial Review

H1 2024 performance overview

Income statement

Group revenue of £936.5m is down 5.9% on a reported basis (H1 2023: £995.3m) and trading profit fell 7.4% on a reported basis to £97.2m (H1 2023: £104.9m), as set out in the operating review above.

Operating profit decreased 15.6% on a reported basis to £84.1m (H1 2023: £99.7m), reflecting the changes in trading profit described above, net of amortisation of acquired intangible assets of £5.1m (H1 2023: £5.2m) and cost-reduction programme expenses, treated as a separately reported item, of £8.0m (H1 2023: £nil). In H1 2023, we spent £19.7m on R&D activities (H1 2023: £18.0m), which represents 2.1% of our revenue (H1 2023: 1.8%).

Headline PBT was £89.8m (H1 2023: £99.9m), a reduction of 10.1% on a reported basis, reflecting the reduction in operating profit and an increase in net finance cost. The net finance cost of £8.0m vs. £5.5m in H1 2023 increased principally due to a reduction in finance income, reflecting a drop in finance income from deposits held in Argentina, due both to lower rates this financial period and a lower cash balance in that country.

PBT including amortisation of acquired intangibles was £76.7m (H1 2023: £94.7m), 19.0% lower on a reported basis.

Headline EPS from continuing operations fell 11.0% to 21.8p (H1 2023: 24.5p) on a reported basis, reflecting the lower trading profit described above and the increase in the non-controlling interest from £6.6m in H1 2023 to £7.6m in H1 2024, which principally relates to our growing business in India. This was partially offset by a reduction in our average number of shares in issue from 269.1m to 264.7m, due to the ongoing £50m share buy-back.

Taxation

 

The Group's effective tax rate is the income tax associated with headline performance of H1 2024: £24.5m, (H1 2023: £27.3m), divided by the headline profit before tax and before the Group's share of post-tax profit of joint ventures. The Group's headline effective tax rate was 27.5% in H1 2024 as previously guided (H1 23: 27.5%). We expect the Group's effective tax rate to be 27.5% for the full year 2024.

Cash flow

The Group generated adjusted operating cash flows of £47.9m, representing a 32% decrease versus H1 2023 (£70.7m). This implies a cash conversion rate in H1 2024 of 49% (H1 23: 67%). H1 2024 cash conversion reflected continued planned higher levels of investment in capex of £50.5m (H1 23: £41.9m). Free cash flow was £17.8m in H1 2024 (H1 23: £42.1m).

Working capital

Trade working capital, measured as a percentage of sales on a 12-month moving average basis, has shown progressive improvement, at 23.2% as at 30 June 2024 (30 June 2023: 24.1%; 31 Dec 2023 23.4%). On a 3-month moving average basis, this ratio has fallen from 23.5% at 31 December 2023 to 22.4% at 30 June 2024 reflecting the progress made in the half-year.

In absolute terms, on a constant currency basis, trade working capital increased by £29.4m in H1 2024 to £439.1m compared to the balance as at 31 December 2023.  The increase was due to a rise in inventory (+£23.2m) and debtors (+£21.4m), partially offset by an increase in creditors (+£15.2m).

Capital expenditure

Cash capital expenditure in H1 2024 was £50.5m (H1 2023: £41.9m).  After also taking into account additional fixed assets resulting from capitalised leases and the net repayment of capital expenditure creditors, total capital expenditure additions were £47.9m (H1 2023: £45.2m), of which £39.2m (H1 2023: 33.5m) related to the Steel Division and £8.7m (H1 2023: £11.7m) related to the Foundry Division.

 

Balance sheet

Financial position

At 30 June 2024, Net Debt was £315.2m, (31 December 2023: £237.5m), as free cash flow of £17.8m was offset by dividend payments (£44.2m), the share buyback (£30.2m), purchases for the ESOP (£17.1m), additional right-of-use assets (£7.6m) and other factors including FX (£3.6m).

The net debt to EBITDA ratio increased slightly to 1.2x versus 31 December 2023 (0.9x), principally reflecting the increase in net debt, and to a lesser extent, the fall in EBITDA. EBITDA to interest was 23.2x (31 December 2023: 31.5x). The Group had committed borrowing facilities of £672.6m as at 30th June 2024 (31 December 2023: £685.8m), of which £222.7m was undrawn (31 December 2023: £333.4m). Liquidity stood at £402.7m on 30 June 2024 (31 December 2023: £487.6m), defined as undrawn committed debt facilities plus our cash on balance sheet, less cash used as collateral against loans.

The Group's debt facilities have two financial covenants: the ratios of net debt to EBITDA (maximum 3.25x limit) and EBITDA to interest (minimum 4x limit).  Certain adjustments are made to the net debt calculations for bank covenant purposes, the most significant of which is to exclude the impact of IFRS 16.

Return on Invested Capital

ROIC is calculated as trading profit less amortisation of acquired intangibles plus share of post-tax profit of joint ventures and associates for the previous 12 months after tax, divided by the average (being the average of the opening and closing balance sheet) invested capital (defined as: total assets excluding cash plus non-interest-bearing liabilities), at the average foreign exchange rate for the year. In the period, ROIC was 8.4%, down from 8.9% at 31 December 2023, principally reflecting the reduction in rolling 12-month trading profit.

Pensions

The Group has a limited number of historical defined benefit plans located mainly in the UK, USA, Germany and Belgium. The main plans in the UK and USA are closed to further benefits accrual. In the funded UK plan, an insurance asset from PIC matches the remaining pension liabilities of the UK Plan, with the result that the Company no longer bears any investment, longevity, interest rate or inflation risks in respect of this UK Plan. The Group's net pension liability on 30 June 2024 was £38.5m (2023 full year: £46.3m).  There is no one driver for the reduction in liability as movements in all plans remained relatively flat.

Principal Risks and Uncertainties

The Board exercises oversight of the Group's Principal Risks and reviews the way in which the Group manages those risks.  The Board takes overall responsibility for establishing and maintaining a system of risk management and internal control and for reviewing its effectiveness.

 

The Board has reviewed the Principal Risks and Uncertainties facing the Group and consider that these remain unchanged compared with those published in the Annual Report for the year ended 31 December 2023. 

 

The Principal Risks which could have a material impact on the Group's performance for the remainder of the financial year are as follows:

-      End-market risks

-      Protectionism and globalisation

-      Product quality failure

-      Complex and changing regulatory environment

-      Failure to secure innovation

-      Business interruption

-      People, culture and performance

-      Health and safety

-      Environmental, Social and Governance criteria

 

Further information on these Principal Risks and the way in which the Group manages them is detailed on pages 72-78 of the 2023 Annual Report. 

 

Risk update

 

Whilst there are no changes to the Principal Risks and Uncertainties facing the Group, it is noted that current geo-political risk remains elevated and the threat from cyber security attacks continues to evolve.  Each of these risks has the potential to impact the Principal Risks facing the Group; specifically End-market risks, Protectionism and globalisation, Complex and changing regulatory environment and the risk of Business interruption. 

Half Year Results for the six months ended 30 June 2024

Directors' responsibility statement

 

The Directors confirm that these condensed interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

1)         an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

2)        material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

The names and functions of the Directors of Vesuvius plc are as follows:

 

Carl-Peter Forster	Chairman
Patrick André	Chief Executive
Mark Collis	Chief Financial Officer
Eva Lindqvist	Independent Non-executive Director and Senior Independent Director
Kath Durrant	Independent Non-executive Director and Chair of the Remuneration Committee
Robert MacLeod	Independent Non-executive Director and Chair of the Audit Committee
Carla Bailo Italia Boninelli Dinggui Gao	Independent Non-executive Director Independent Non-executive Director Independent Non-executive Director
Friederike Helfer	Non-executive Director

 

On behalf of the Board

 

 

Mark Collis

Chief Financial Officer

31 July 2024

 

 

Independent review report to Vesuvius plc

Report on the condensed consolidated interim financial statements

Our conclusion

We have reviewed Vesuvius plc's condensed consolidated interim financial statements (the "interim financial statements") in the Half Year Results of Vesuvius plc for the 6 month period ended 30 June 2024 (the "period").

Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

The interim financial statements comprise:

·     the Condensed Group Balance Sheet as at 30 June 2024;

·     the Condensed Group Income Statement and Condensed Group Statement of Comprehensive Income for the period then ended;

·     the Condensed Group Statement of Cash Flows for the period then ended;

·     the Condensed Group Statement of Changes in Equity for the period then ended; and

·     the explanatory notes to the interim financial statements.

The interim financial statements included in the Half Year Results of Vesuvius plc have been prepared in accordance with UK adopted International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Basis for conclusion

We conducted our review in accordance with International Standard on Review Engagements (UK) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Financial Reporting Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Half Year Results and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

Conclusions relating to going concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis for conclusion section of this report, nothing has come to our attention to suggest that the directors have inappropriately adopted the going concern basis of accounting or that the directors have identified material uncertainties relating to going concern that are not appropriately disclosed. This conclusion is based on the review procedures performed in accordance with ISRE (UK) 2410. However, future events or conditions may cause the group to cease to continue as a going concern.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The Half Year Results, including the interim financial statements, is the responsibility of, and has been approved by the directors. The directors are responsible for preparing the Half Year Results in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority. In preparing the Half Year Results, including the interim financial statements, the directors are responsible for assessing the group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.

Our responsibility is to express a conclusion on the interim financial statements in the Half Year Results based on our review. Our conclusion, including our Conclusions relating to going concern, is based on procedures that are less extensive than audit procedures, as described in the Basis for conclusion paragraph of this report. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

 

 

PricewaterhouseCoopers LLP

Chartered Accountants

London

31 July 2024