Vesuvius plc Prospectus

Vesuvius’ products are largely single-use by nature, as they are either consumed or
transformed during contact with the molten metal during casting. In a typical foundry
process, Vesuvius’ products may be used in the melting shop, core shop, moulding line and
pouring stages. Using the chemical binders and refractory “paints” of Vesuvius, the
customer foundries prepare the sand moulds and cores, the quality of which determines the
precision and surface finish of the final casting. As liquid metal is transferred from the
melting furnace to the casting line, it may be in contact with the molten metal transfer
products of Vesuvius, such as insulating ladle linings, and be modified and conditioned by
metal treatment equipment and additives. Vesuvius ceramic filters are used within the
mould to remove impurities and reduce turbulence during pouring, thereby reducing scrap
and improving the mechanical properties of the finished casting. Its feeding systems are also
important in the reduction of material waste and improvement of casting quality: its
exothermic feeding aids may be employed in the mould to provide secondary heat sources
that can control cooling, minimising the adverse effects of shrinkage during solidification,
helping to optimise the yield and the quality of the finished casting.
Foundry consumables typically make up less than five per cent. of the total cost of
manufacturing the final casting. Foundries are typically small and are often jobbing shops
(i.e. producing different castings for different end-markets based on spot demand). They are
often relatively unsophisticated in their understanding of the casting process and how they
can improve product quality and plant efficiency.
Vesuvius estimates that revenue for the Foundry Technologies product line is broadly split
by end-market as follows: general engineering 28 per cent., light vehicles 25 per cent.,
construction, agriculture and mining 18 per cent., medium and heavy vehicles 15 per cent.,
railroad 4 per cent., pipes and fittings 2 per cent. and other 8 per cent.
Vesuvius believes that the Foundry Technologies business was significantly enhanced by
the acquisition of Foseco plc on 4 April 2008. Foseco plc produced ceramic consumables
for foundry and steel casting applications. For the year ended 31 December 2008 (at
reported exchange rates and as if Foseco plc had been acquired on 1 January 2008, rather
than 4 April 2008), the Foundry Technologies business had revenue and EBITDA of
£454.3 million and £79.3 million respectively.
Fused Silica
Vesuvius believes it is one of the world’s leading manufacturers of fused silica refractory
products. Its Zyarock ® fused silica product range is used in a wide variety of highlydemanding
industrial applications, such as glass melting and transformation and steel and
aluminium casting. Since the late 1990s, Vesuvius has been applying Zyarock ® technology
to make crucibles used in the manufacture of silicon wafers for photovoltaic solar panels.
These Solar Crucibles are at the heart of the manufacturing process for multi-crystalline
and more recently quasi-mono solar-grade silicon ingots.
Vesuvius also supplies a wide range of fused silica refractories for the manufacture of flat
glass and the shaping of safety glass for the automotive and architectural industries.
1.1.2 Precious Metals Processing business
Vesuvius’ Precious Metals Processing (“PMP”) business is a leading supplier of fabricated
precious metals (primarily gold, silver, platinum and palladium) to the jewellery industry in
Europe and also has significant precious metal recycling operations. On 1 May 2012, the
US operations of this division were sold to Richline Group Inc. (a subsidiary of Berkshire
Hathaway Inc.), leaving only the European operations in the UK, France, Spain, the
Netherlands and Portugal.
PMP products include alloy materials, semi-finished jewellery components and finished
jewellery, as well as coin blanks for sovereign mints. PMP has approximately
500 employees and 14 facilities in the UK, France, Spain, the Netherlands and Portugal.
Customers of the PMP business include jewellery manufacturers, jewellery retailers and
sovereign mints (including the Royal Mint).
In 2011, PMP had revenue of £326 million, net sales value (being revenue less precious
metal content) of £132 million and trading profit of £6.2 million. In the first half of 2012,
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