Vesuvius plc Prospectus

2.2.4 Funding of PMP inventory
In line with industry practice, PMP generally does not own the precious metals it processes
but, instead, uses precious metal supplied by customers or from consigning banks. In the
latter case, PMP enters into various precious metal consignment arrangements with precious
metals consigning entities (the “Consignors”). The metal which PMP fabricates for its
customers may be purchased by PMP from a Consignor and sold concurrently to the
customer, or may be consigned and sold directly from a Consignor to PMP’s customers,
with PMP charging customers only for the fabrication process. As the Consignors retain
title and associated risks and rewards of ownership under these arrangements, the value of
the physical metal so held is not recognised in PMP’s balance sheet. Consequently, the
obligations in respect of the consigned metal are not recognised as a liability in PMP’s
balance sheet. The utilisation of consigned precious metals is established practice in the
precious metals industry. PMP’s obligations under the consignment agreements, which are
uncommitted, are fully guaranteed by Cookson.
As at 30 June 2012, a total of $499 million of precious metal consignment facilities were
provided to PMP by consignors: Scotiabank, HSBC, Standard Chartered, RBS and
Commerzbank, and drawings under these facilities totalled $265 million.
2.2.5 Strategy
The key objectives for PMP’s strategy are:
Continue to hold market-leading positions in all its current geographic markets
PMP intends to continue to hold market leadership positions and profitably increase its
market share by providing exemplary customer service and a strong value-for-money
proposition. It also intends to continue to develop the product range to meet customer
requirements with a focus on maintaining and growing margins in a highly competitive
market. Continual focus on, and improvement in, cost control, cash management and metal
utilisation are also fundamental aspects of the business.
Grow new geographical markets in coin blanks
PMP currently supplies precious metal coin blanks to the sovereign mints in the UK,
France, Spain, Portugal and Australia. This is a significant global market in which PMP can
grow its share. In-house capacity has recently been enhanced and, based on its growing
reputation as a reliable high quality producer, PMP is now seeking to win business in new
countries. The reputation of PMP was recently enhanced by being a key player in the
production of the London 2012 Olympic medals.
Maximise opportunities in reclaim
Over recent years there has been very strong growth in the precious metals reclaim or
recycling market, stimulated by the increasing value of precious metals. PMP believes that
it has a strong market reputation for integrity and professionalism and a proven ability to
provide a fast and effective service. PMP intends to continue to perform strongly in this
highly attractive market. Strong customer relationships support this proposition in all
markets where PMP is geographically present. There is also the opportunity to grow outside
these markets. This proposition is ably supported by internal refining capabilities located in
Madrid.
Further, PMP has developed a fully traceable and ISO supported range of recycled products
branded ECOGOLD and ECOSILVER, responding to corporate social responsibility and
sustainable development concerns.
Growth in new markets based on technical innovation
New technology is now available for the jewellery and watch precious metals industry in
the form of 3D additive manufacturing, an innovative and market changing technology
which allows design-driven manufacturing. PMP has partnered with the market leader in
this technology, to produce proven solutions for the jewellery and watch precious metals
industry. Complex parts can be made using CAD/CAM technology that were either not
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