Vesuvius plc Prospectus

US defined benefit pension plans: additional payments totalling £4.5 million were made into
the US pension plans in 2011.
Net cash flows from investing activities
The net cash outflow from investing activities in 2011 was £84.4 million, compared with
£56.2 million in 2010. The main components of the total outflow were:
Capital expenditure: payments to acquire property, plant and equipment in 2011 were
£69.0 million, £22.8 million higher than 2010 and representing 144 per cent. of depreciation
(2010: 102 per cent.). The capital expenditure in 2011 principally reflecting the expansion
of production capacity in China, India, Brazil, Eastern Europe and the Middle East;
customer installations and the expansion of R&D facilities.
Acquisition of subsidiaries and joint ventures: net cash outflow in 2011 was £10.6 million
(2010: £3.2 million), primarily comprising the acquisition of SERT for €11 million (£9
million) on 23 November 2011 and further investment in the Steel business’ joint venture in
China with Angang Steel, one of China’s largest steel producers.
Free cash flow
Free cash inflow for 2011 was £43.5 million, £0.9 million lower than 2010, due to the
£22.8 million increase in capital expenditure more than offsetting the increase in net cash
flow from operating activities.
In 2011, free cash inflow in the second half of the year was £56.5 million compared to a
free cash outflow of £13.0 million in the first half.
Net cash flow before financing
Net cash inflow before financing for 2011 was £15.6 million, £11.4 million lower than
2010, due principally to the increase in capital expenditure described above.
Net cash flow from financing activities
Net cash outflow from financing activities was £1.3 million (2010: £11.6 million),
principally comprising the following:
Net increase in borrowings: there was an increase of £41.4 million in the year (2010:
£28.9 million net repayment).
Settlement of forward foreign exchange contracts: a cash outflow of £27.6 million arose
relating to the settlement during the year of forward foreign exchange contracts, in
particular those relating to the Singapore dollar and US dollar (2010: £3.3 million). These
forward foreign exchange contracts had been taken out in previous years to align broadly
the currency profile of Vesuvius’ borrowings with the net assets of Vesuvius and formed
part of the hedge on investments of Vesuvius’ foreign investments.
Purchase of treasury shares: a cash outflow of £7.8 million (2010: £nil) arose in respect of
the purchase during 2011 of Cookson ordinary shares to satisfy the actual and potential
vesting of shares under the Cookson Group share-based payment plans.
Dividends paid: a cash outflow of £51.8 million (2010: £nil) arose in respect of the payment
in June 2011 of the final dividend for 2010 of £31.8 million and the payment in October
2011 of the interim dividend for 2011 of £20.0 million.
Capital contribution from Alent businesses: this totalled £50.1 million during the year
(2010: £24.2 million).
Net increase in cash and cash equivalents
The net increase in cash and cash equivalents arising from the cash flows described above
was £14.3 million in 2011, compared with £15.4 million in 2010. After a £2.5 million
negative foreign exchange adjustment (2010: £4.5 million positive adjustment), this resulted
in cash and cash equivalents at the end of the year of £128.6 million (2010: £116.8 million),
an increase of £11.8 million over 2010.
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