Welcome to the Luxfer Group’s Fourth Quarter Conference Call. We will first hear from Luxfer Chief Executive, Brian Purves, who will provide an overview, followed by Group Financial Director, Andy Beaden, who will review the financial performance for the quarter and year. Brian will then return to sum up and offer an outlook. After that, Brian and Andy will be glad to take your questions. [Operator Instructions] Thank you for your cooperation. We will now turn the call over to Brian Purves.

Thank you. Good morning, ladies and gentlemen and welcome to the Luxfer conference call on the fourth quarter 2015 and full year 2015. Turning to Slide 4. As previously forecast, the fourth quarter was consistent with the earlier quarters of the year, with little in the way of buoyancy, particularly in the top line. We experienced continued weak demand for automotive catalyst products and this was only partly offset by the first sales of our new SoluMag product. Overall, however, our cost-cutting actions meant that although during the last year profitability was slightly ahead of forecast. Our German operation continued to lose money during the quarter, but was closed on schedule at the end of the year. The important North American SCBA sector remains strong and the Luxfer Magtech acquisition continued to perform well, with $8 million of sales in the quarter. Adjusted fully diluted EPS of $0.27 was between $0.01 and $0.02 above consensus, although $0.04 below quarter four last year. And quarter four was again very good for cash flow. Turning to Slide 5. The North American market for self-contained breathing air kits is now strong again. We completed the rationalization of our alternative fuel business on the North American part of the alternative fuel business was profitable in the quarter. Since our last conference call, sterling has weakened. Overall, this is good news for us as it has improved the euro exchange rate. On file, this is still worse than 2 years ago, it is no longer the potential adverse in 2016 about 4 months ago, it looked like it could be. Sales of high-performance magnesium alloys continued to be lower than last year, with both military and civilian helicopter build or refurbishment rates haven’t been cut back. The situation however does appear to have bottomed out…

Thank you, Brian and welcome everyone to the call. Brian cleared the divisional sales analysis and my first slide, Slide 16, shows how that consolidates since the group revenue changes for Q4 2015 and full year. Total revenue for Q4 2015 was $107.4 million, with no separate rare earth chemical surcharge now required and this compares to net revenue of $123.1 million for Q4 2014. From the slide, you can see that FX translation differences reduced net revenue in the quarter by $3.8 million. Other underlying revenue was down $11.9 million or 10% as Brian’s slide showed and this was a result of lower revenues in both divisions. For the full year, FX translation differences reduced revenue by $24.6 million. Surcharge changes accounted for a $2.2 million reduction, Luxfer Magtech added $15.1 million and other revenues were down $17.5 million, the majority of this reduction being Q4 2015. After Q3, we had warned Q4 would also be difficult. Though since then, order books have now picked up for Q1 2016 in zirconium and alternative fuels. Slide 17 shows the trend in sales for Q4 2015 by geographic region. The percentage improvement in North American sales to 56% from 51% represents that region holding up better, with stronger self-contained breathing apparatus sales, improving AF and the impact of FX on non-U.S. markets. The UK was also weaker with lower UK auto cat sales, with the additional industrial catalyst sales being in North America. Turning to the trading profits and adjusted EBITDA result on Slide 18. For Q4 2015 group trading profit was $9.5 million, $1.2 million below Q4 2014. Improvements in the self-contained breathing apparatus composite cylinder markets and the initial sales of SoluMag were offset by lower sales of other magnesium and zirconium products. FX translation differences improved trading profit…

Thank you, Andy. Summarizing quarter four then, the profitability of our cylinder business in quarter four was improved with North American SCBA back to growth and our rationalization program in the alternative fuel business stream in its final stages. The Elektron division had a couple of key sectors below par, with sales of aerospace alloys down for the reasons given earlier and our auto cat sales also down. Although our revenue was down in the quarter, the cost reductions that we have implemented meant the profit impact was small. Our adjusted Q4 EPS was above consensus and the cash flow performance was again, good. Slide 27, Gas Cylinders’ major activities during the year were to service the expected increase in the North American SCBA market and rationalize the alternative fuel business. And both of these they did well. We did have some issues with our 4,000-ton press [indiscernible] aluminum plant that restricted capacity, especially for U.S. medical cylinders. The press was temporarily repaired over the Christmas shutdown and is performing alright at the moment. A more permanent solution will be implemented in the summer shutdown. It was a difficult year in some Elektron sectors, but overall the group result held up. We achieved most of our key objectives for the year and achieved a good step forward in managing our pension deficit. Turning to the outlook, we expect sales of aerospace alloys and auto cat products to recover somewhere in 2016, although remaining below at 2014 levels. Elektron is expected to get a boost from sales of the new SoluMag material for the oil and gas industries and we are very encouraged by the strong order intake that we are getting for zirconium-based industrial catalyst materials, both of them we have ever seen before. The North American side of the…

[Operator Instructions] Our first question comes from the line of Julian Mitchell of Credit Suisse.

Hi. This is Brian Gibbons in for Julian this morning. Raw materials is a benefit $5 million in ‘15. I was just wondering if you could talk about how that looks for ‘16? I know you are saying that it looks like a benefit again, but maybe you break it down by segment you see weighted equally in both segments or is one standout as a better benefit?

Well, the bigger impact is certainly on the cylinder side of the business where aluminum has been low for long enough now that we are starting to get the benefit. Obviously, our hedging policy means that as the aluminum price falls, we don’t get the benefit right away, but it’s been low for long enough now that we are starting to see that come through. It’s also the case that the delivery premium on aluminum fell quite dramatically during the course of 2015 and so as an annualized benefit that we get from that in 2016 as well. Then the price of carbon fiber, which is heavily oil derived, the price of carbon fiber has come down. We do under our contractual arrangements, we do pass through share of that benefit to our end customers, but nonetheless, there is a net benefit to us. So, it’s – it’s primarily in the cylinder business. There are some benefits on Elektron where we buy Chinese magnesium, the price of change of Chinese magnesium has fallen below $2,000 a ton for the first time I can remember. U.S. magnesium under the tariff buyers hasn’t really fallen at all. So, it’s only where we buy and use Chinese-based magnesium that we are getting that benefit, but [indiscernible] nonetheless.

Great, thanks. And then I was just wondering on you said your working capital gains have largely been realized, I was wondering what you are expecting for a cash conversion rate in 2016?

I don’t expect to change much working capital ratio from where we are at the moment. So based on we are expecting a slight improvement in the overall demand, 2016 to 2015, I would expect a slight outflow therefore in working capital. There is probably still slightly too high levels of inventory in the Elektron division, but that’s going to require a sort of longer term project in terms of working on contractual terms and other things. So, I think over a 2, 3-year period, maybe 2 years, I still think there is $3 million to $5 million of longer term working capital together with the system. However, Q4 we did very well. So, I think we have got ahead of our program in the short-term as reducing working capital, which is a program for several years. It’s not just over 2015. So, I am probably ahead of the game at the moment for the first few quarters of 2016. Back into 2016, I might be hoping to get a bit more out of inventory, another $2 million or $3 million out of it compared to the level of sales. So probably a net outflow if we see an improvement in the top line neutral, if the top line is flat.

Great. That’s helpful. Thank you.

[Operator Instructions] Your next question comes from the line of Garo Norian of Palisade Capital.

Hi. I wanted to see if you guys could discuss a little further the line in the release about being approached by two different, I guess entities to acquire the company and no other reason resulting in executable offer etcetera, just what kind of color can you provide around that?

Very little, I am afraid, Garo it’s obviously a very sensitive area followed by all sorts of rules. You can see that with the expenses that we incurred [Technical Difficulty] and certainly with one of the two we thought at one stage that might get to the point where we could come to the shareholders with something, but I am afraid it didn’t get three.

Got it. And just switching gears on the auto catalysis side of things, is there a competitor that you are suing still selling the product that you believe is infringing currently?

Yes, it is. And this is public information, so obviously the people that are buying the product are aware of our view on the matter and we might hope that they take note of that. However, the only certainty than we can have really is by winning a court case. And our objective really is to achieve a cease and desist order to prevent them from importing their product into – for instance, into the UK and Europe. So the information is public, and we do hope that influences our customer’s buying patents. But at the moment, they are still selling quite large quantities of the material. On the consequence, our market share is much reduced from where it was. Now, we are not just relying on the court action to recover that market share, we are doing other things as well, both commercially. But I think most importantly, working on new product developments and really sort of jumping a generation in terms of the technology, because that’s obviously the best way to stay ahead of competition. And in particular, the Chinese competition, which tends to use intellectual property, which has been around for a little while and they have been able to absorb it. The problem of course that we had with the G4 technology is that being process patent. The information as to how to do it is out there in the patent. And the only way to protect it is to identify, fingerprint the process that they are using, which is what we have done. And then pursue them in the courts. But we – we are not relying solely on that to recover the market share.

Got it. And just lastly, on some of the areas that seem to be on the improvement side, I guess the industrial catalysts demand, what do you attribute the strength there to. And then also separately on the SoluMag, what kind of impact do you expect in the first 12 months to 24 months?

Well, the industrial catalysts side, I mean you will be aware that we have been working away of this market for many, many years now. And one particular customer we have entered into an agreement with, which is very much, shortened their lead times for the product. We are actually building a stock for them that they you can call on. And that seems to be paying dividends. So for us, our sort of overall tonnage each year has sort of fluctuated to 100 tons and 200 tons. We have got orders now for 2016 for about 175 tons from this one customer. And that is the sort of breakthrough that we have – we have been looking for. Obviously, we have a lot more than one customer and we hope eventually to migrate more of them onto that level of scale. But the efforts that we have made to stimulate demand with this one customer after several years of working with them, I have to say do seem to be starting to pay off. On the SoluMag side, obviously we are very encouraged by the fact that BIOTRONIK who previously under our non-disclosure agreement wouldn’t allow us to name them. The fact that they have changed their mind, we believe indicates that they are getting quite close to market launch, but not very much in their hands. They did announce at a medical conference in October last year the sort of latest follow-up studies from the last clinical trial, which seemed quite satisfactory. And we would anticipate that at some point in the next few months, they will launch the product. We obviously – the main benefit to us is from royalty payments on their sales. And so there is a like involved. So, I don’t anticipate that it will generate that much income for 2016. We should manage to start making sales of the material, but the main revenue stream comes from the royalties and that would follow on later. It’s more like to start to impact in early 2017.

Great. Thanks very much.

[Operator Instructions] The next question comes from the line of Arnaud Ajdler of Engine Capital.

Hi, guys. Can you hear me?

Yes. Hi, Arnaud.

Hi, how are you?

Good.

Good. I have the question on the – as a follow-up of the earlier question of, I think it was Palisades, regarding the $1.1 million of expenses you incurred, dealing with the approach that you received from two potential buyers. I was curious when you received these approaches, did you basically just answer to these approaches or you opened it up and effectively started a broader strategic review process where you guys went and solicited potentially other offers or you just examined these two approaches that – these two, of course from – in these two inbound interest?

Well, we don’t have an intention to put the business up for sale. We have our own strategy to increase shareholder value organically and that’s our core program. However, if we are – if we do receive our approach, then obviously we are really bound to examine it properly. We appointed financial advisors and that’s what we did and had those approaches turned into a natural offer that our financial advisers felt they could recommend without us investigating other avenues than we would have brought back to the shareholders. But that didn’t arise, because for various reasons, I think you would have to ask the approaching parties. But I am afraid I can’t tell you who they are. It didn’t get to that stage. So, the answer is we did explore the specific approaches rather than go to the market and we were responding to those with financial advice in observance of our fiduciary releases.

And at the end, the reason why it didn’t happen would you say to as price, where their price was too low compared to what your view is of the value of the company or so there was a price difference between the buyer and the seller or you just – it’s even – it didn’t even go to that point?

It didn’t get to the point where they made a formal offer. So, we didn’t have a valid consideration as a board to make. We incurred a lot of expense, actually $1.8 million, between the two and that was obviously responding to their request for information. So, we did open up our books with – more with one part than the other, but we did open up our groups and took relative expense responding to their inquiries, legal costs and financial advisory costs, but we got to the point where they put an offer on the table that we could take financial advice on and consider taking to the shareholders. Would that have been different? Has the economic environment in the second half of last year been different, who knows? But certainly, the backdrop of plunging stock markets, tightening debt markets and the worsening economic outlook was not exactly auspicious to doing any M&A transaction in the second half of last year estimate.

Right. And so is that – why you guys didn’t open it up and did a full strategic process, because you didn’t think it was the right time to do it, because it seems to me that when you guys are approached and you are actually going that route of exploring that trying to bring in competition would have been the right thing to do. So, I am just trying to understand the thought process for not doing that?

Well, as I said earlier, there was an overlap between the two approaches. So, we did have a direct comparison between two interested parties. And while it never got to an offer position, they did obviously also give an indicated value otherwise wouldn’t have followed opening the books to them. So, we did have a degree of competition there. And we also took as required under the UK Takeover Code, we also took independent financial advice. But the Board is not of the view that it would be the best for the shareholders to go out and market the business to any third parties. We have our own views on how to generate best return for shareholders and that is following the strategy – the strategic path that we have. However, if along the way, we received an approach, which offers the opportunities to the shareholders to generate shorter term gains, we will give it to a consideration and that’s what we did with these two.

So at this point, these efforts are done or is it still ongoing or this isn’t over?

The two approaches are dead. If that weren’t the case, we wouldn’t have been able to go back into the market and restart our buyback program, unable to buyback any shares in the second half of last year, because under – we learned the Takeover Court rules in the UK.

Okay. Well, first of all, thank you for disclosing this information. And my own feedback for what’s it worth, that given your approaches that you received, I would have as a shareholder, I would have been in favor of you guys opening that up to other potential parties, because that could have led to an offer that could have made sense to shareholders. And I would encourage all the shareholders who are listening to potentially calling of use on that. So but in any case, thank you for disclosing the information. I will talk to you soon.

Thank you, Arnaud.

Your next question comes from the line of Jonathan Sacks of Stonehill Capital.

Hi. Thanks for answer all the questions. Just a few follow-ups, on the industrial catalysis, in the past, you have mentioned that you were working with a potential customer, who I think might have had a North American facility where you thought the end use was in a North American facility, was this order from the customer with whom you have been talking for a long time?

Well, it is for the customer that we have been talking with for a long time. But I don’t think it’s the same one that you are thinking of. This is a different application and a little scale of the ARPU similar to what I talked about a couple of years ago. It is different customer with different application, which is just indicative of the fact that we do talk to six to seven different customers in this area. And any of them are capable of generating this volume. It’s just getting the technology out into the market and starting to attract a fan base, if you like and gradually building up repeat orders, so the one that I referred to 2 years or 3 years ago is potentially still out there. As indeed are others, but this is a different one, for the similar scale. It has mainly come here to the North American plant, but it’s going to a variety of different facilities.

And is that for a chemicals business or oil and gas or refining related business, just at a high level?

I don’t believe this one is oil and gas. One of the applications that we sell product into is for isomerization and I think this is a general chemical plant application rather than the petrochemical.

Okay, great. And then on SoluMag, I note it’s early days still, but can you give us any sense of the potential revenues that, that business might have if things go well?

Well, I would love it if we were launching it into a more buoyant oil and gas sector. In which case, I would be quite bullish about the outlook. As it is, as you know, oil exploration is at a very low point at the moment. We are generating quite a lot of interest with the product and of course with coming from a zero base. So any sales is incremental to us. But ideally, what we would want just for new exploration activities to be going on. I think what we are doing at the moment is selling into people who are still sort of extending existing wells or re-fracking existing wells. And the product we believe results in a cost saving against the operating cost of the traditional technology. So we do think there is a potential there for us to sell several million dollars worth of the product, even this year, based on the indication of interest that we have seen, but the potential for it in the medium-term could be much larger, but we would really like to see a more resurgent exploration sector to get confident about it. In a buoyant oil and gas sector, yes, this could be up there with some of the growth opportunities that we talked about at the IPO where it could be a $20 million a year revenue business for us, but right at the moment, it’s harder to see that, but we still think that we could get, I don’t know, $3 million, $4 million, $5 million worth of business this year.

That’s great. And then just one quick question on the pension changes, which certainly had a very beneficial impact on the deficit, how does that impact your annual cash contributions?

It won’t impact on the annual cash contributions. What it will do is shorten the duration of the remediation period. So, we will pay the same amount each year, but for fewer years. So, I think the last time that we agreed a remediation program with the trustees, 3 years ago, that program went out to 2024. And with the reduced deficit and a similar level of remediation, it could be as early as 2022 now that you could get to a balanced situation on the pension scheme. And that’s what we are aiming for really, because once you get to that, you switch over equities into so-called matching assets and in theory then, there should be no further cash call on the company, unless there are further extensions to longevity, for example. So, it’s bringing in closer to the point where it no longer becomes a problem for the company.

Great, thank you very much.

At this time, there are no further questions. And now, I will turn the call to Brian Purves for any additional or closing remarks.

Yes, I think we are out of time. So, thank you very much for some interesting questions and we will speak to you again in 3 months time. Thank you. Goodbye.

An Encore recording of this conference call will be available in about 2 hours. Telephone numbers to access the recording will be available on the Luxfer Group website at www.luxfer.com. Thank you for joining us today. You may now disconnect.