Building the future

Annual Report and Accounts 2017 1

Contents Financial Performance ÕÞìùïâùìâìÚàåèÛÚååÞÚÝÞëâçæèåøÞçæÞøÚåěèðÞçàâçÞÞëâçà

Strategic Report Vesuvius develops innovative, customised high-quality products, Revenue Return on sales2 Headline earnings Section One: Our Business per share3 4 Vesuvius at a Glance services and solutions, to be used in extremely demanding, 40.7 pence 8 Our Markets £1,683.9m 9.8% 2016: 30.4 pence 10 Our Strategy 2016: £1,401.4m 2016: 9.5% high-temperature industrial environments. Our goal is to create 33.9% increase 12 Business Model +20.2% on a reported basis +30 basis points value for our customers, using our expertise to improve the +12.5% on an underlying +30 basis points on an Recommended Our Business Section Two: Our Performance 1 1 basis underlying basis ĚçÚåÝâïâÝÞçÝ 16 Chairman’s Statement ìÚßÞøòÚçÝÞßĚÜâÞçÜòèßøáÞâëæÚçùßÚÜøùëâçàéëèÜÞììÞì 18 Chief Executive’s Strategic Review 12.50 pence per share 20 Key Performance Indicators ÓëÚÝâçàéëèĚø2 ÏëèĚøÛÞßèëÞøÚñ 18.00 pence Group enhance their end product quality and reduce their costs. 22 Risk full year dividend 26 Financial Review £165.5m £97.1m 2016: 16.55 pence 32 Innovation Group full year dividend ÈçÝèâçàøáâìðÞÚâæøèÝÞåâïÞëìùìøÚâçÚÛåÞéëèĚøÚÛåÞàëèðøáÚçÝ 2016: £133.3m 2016: £79.4m 36 Operating Review Year-end net debt2 36 Steel Flow Control +24.2% on a reported basis 22.3% increase provide our shareholders with a superior return on their investment, £274.3m 40 Advanced Refractories +16.1% on an underlying 1 1.3x net debt to 44 Digital Services basis whilst providing each of our employees with a safe workplace EBITDA ratio 46 Foundry 2016: £320.3m where he or she is recognised, developed and properly rewarded. 50 Board of Directors 1.8x 52 Group Executive Committee

Section Three: Our Responsibility Revenue £m Trading profit2 £m 56 Our Principles 17 1,683.9 17 165.5 60 Health and Safety 64 Sustainability 16 1,401.4 16 133.3 67 People and Community 15 1,322.0 15 124.0 Section Four: Governance 76 Chairman’s Governance Letter At a Glance Ourur SStrategytrategy 2,3 78 Governance Report Operating Profit £m Headline earnings £m What we do & where Ourur aims 85 Audit Committee 17 109.7 17 110.1 See page 4 SeeSee pagepage 10 93 Nomination Committee 96 Directors’ Remuneration Report 16 92.9 16 82.1 96 Remuneration Overview 15 92.8 15 75.7 98 Remuneration Policy 106 Annual Report on Directors’ Remuneration Statutory EPS pence Free cash flow2 £m 117 Directors’ Report 17 14.1 17 93.1 121 Statement of Directors’ Responsibilities 16 21.1 16 61.4 Innovation Section Five: Financial Statements 15 18.1 15 65.3 Our R&D Focus 124 Independent Auditors’ Report See page 32

130 Group Income Statement 1. Underlying basis is at constant currency and excludes separately reported items and the impact of acquisitions 131 Group Statement of Comprehensive and disposals. Income  ÅèëÝÞĚçâøâèçìèßÚåøÞëçÚøâïÞéÞëßèëæÚçÜÞæÞÚìùëÞìëÞßÞëøèÍèøÞ èßøáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøì 132 Group Statement of Cash Flows 3. Headline results refer to continuing operations and exclude separately reported items. 133 Group Balance Sheet 134 Group Statement of Changes of Equity Forward-looking statements This Annual Report contains certain forward-looking statements with respect 135 Notes to the Group Financial øèøáÞèéÞëÚøâèçììøëÚøÞàòéÞëßèëæÚçÜÞĚçÚçÜâÚåÜèçÝâøâèçÚçÝàëèðøáèééèëøùçâøâÞìèßøáÞÕÞìùïâùì Group. By their nature, these statements involve uncertainty and are based on assumptions and involve risks, Statements uncertainties and other factors that could cause actual results and developments to differ materially from 181 Company Balance Sheet øáèìÞÚçøâÜâéÚøÞÝÓáÞßèëðÚëݘåèèäâçàìøÚøÞæÞçøìëÞěÞÜøäçèðåÞÝàÞÚçÝâçßèëæÚøâèçÚïÚâåÚÛåÞÚøøáÞÝÚøÞ 183 Notes to the Company Financial of preparation of this Annual Report and, other than in accordance with its legal and regulatory obligations, Statements the Company undertakes no obligation to update these forward-looking statements. Nothing in this Annual ÑÞéèëøìáèùåÝÛÞÜèçìøëùÞÝÚìÚéëèĚøßèëÞÜÚìø 188 Five-year Summary: Divisional Results 189 Shareholer Information 191 Glossary Melvin Bond, Plastic Operator & Union Steward, Chicago Heights, USA Vesuvius plc 2 Annual Report and Accounts 2017 3

Section One Our Business Our Business In this section

4 Vesuvius at a Glance

8 Our Markets

10 Our Strategy

12 Business Model

The Strategic Report set out on pages 1 to 73 contains a fair review of our businesses, strategy, and business model and the associated principal risks and uncertainties. We also deliver a review of our 2017 performance and set out an overview of “I joined Vesuvius in our markets. Details of our principles, our people and community engagement, together with our focus on safety, are also contained in the Strategic Report. Brazil as part of Approved by the Board on 28 February 2018 and signed on its behalf by Project Columbus” Patrick André Guy Young ÂáâÞßÄñÞÜùøâïÞ ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë Aline Barros, Quality Coordinator and Production Manager Assistant, Vesuvius Fluxes, Germany

Building on my degree in Chemical mould powder plant in Mülheim. Engineering and several industry Whilst there, I worked on the internships, I joined Vesuvius in Brazil optimisation of spraying processes, in 2013, as part of Project Columbus, improved packaging standards and the Group’s international graduate implemented other safety standards programme. I always wanted to work – all whilst learning to speak German. èïÞëìÞÚììâçÜÞĚëìøìøÚëøâçàÜèååÞàÞ More recently, I was pleased to and was excited to start my nine- accept the additional responsibility month international assignment. of working as the Quality Coordinator at Mülheim, which allows me to After initial training at home in Brazil, work with Vesuvius’ many different I moved to India where over the departments and learn how the course of my nine month secondment, company works as a whole. I developed three projects, focusing on resin production and machine ÈáÚïÞÚÜáâÞïÞÝÚåèøâçæòĚëìøĚïÞ maintenance at Foseco in Pune, years at Vesuvius, developing technical and on VISO production in Vesuvius skills, growing in experience and Calcutta . This enabled me to apply expanding my language capabilities my interest and expertise in process and geographical horizons. management and optimisation. It also gave me the opportunity to immerse myself in a culturally very different operation. Having enjoyed the challenge of working abroad, I then moved to Germany as a Production Manager Assistant at the newly acquired

See more about Vesuvius careers People and community on p 67-73 Vesuvius plc 4 Annual Report and Accounts 2017 5

Vesuvius Our global presence Americas EMEA ÀìâژÏÚÜâĚÜ £487.0m £735.2m £461.7m at a Glance 37 11,010 Revenue Revenue Revenue Countries Employees (2016: £415.3m) (2016: £585.6m) (2016: £400.5m) 77.2% Steel 67.5% Steel 59.9% Steel 22.8% Foundry 32.5% Foundry 40.1% Foundry We are a global group with a business model based on offering customised products, 6 88 Our Business Continents ÒÚåÞìèßĚÜÞì 17 5 30 10 19 2 solutions and services from production facilities Production sites R&D centres Production sites R&D centres Production sites R&D centres in close proximity to our customers. See our Business Model on p12-13 66 17 3,183 21 4,472 34 3,355 33 See more about our Steel and Foundry divisions on p6-7 Production sites R&D centres Employees ÒÚåÞìèßĚÜÞì Employees ÒÚåÞìèßĚÜÞì Employees ÒÚåÞìèßĚÜÞì

The map shows our production, R&D and commercial sites worldwide

Steel Flow Control Operating Advanced Refractories Digital Services Operating Foundry Operating Review Review See p36 Operating Review See p40 Review See p44 See p46

Michelle Chapman, HR Associate, Pittsburgh West, USA Vesuvius plc 6 Annual Report and Accounts 2017 7

Steel Division Revenue ÓëÚÝâçàéëèĚø Return on sales Foundry Division Revenue ÓëÚÝâçàéëèĚø Return on sales £1,148.7m £100.4m 8.7% £535.2m £65.1m 12.2% 2016: £942.0m 2016: £79.2m 2016: 8.4% 2016: £459.4m 2016: £54.1m 2016: 11.8%

Overview Business Units Key Strengths Overview Key Strengths

Our customers are steel producers, Steel Flow Control Scale: One of the world’s largest Our primary customers are ferrous and Product offering: Full range of high manufacturers in our market quality products and services manufacturers of steel production Specialised parts used to protect and non-ferrous foundries serving various end

equipment and other high-temperature ÜèçøëèåøáÞěèðèßæèåøÞçæÞøÚå Technology: Leading products and markets, from large bespoke castings to Innovation: Industry-leading Our Business industries. Vesuvius is a world leader in the services high-volume automotive pieces. Trading as technologies with a focus on Advanced Refractories continuous innovation Integration: Deep knowledge of supply of refractory products, systems and Specialised materials for lining Foseco, we are a world leader in products solutions. These help our customers increase customers’ processes allows us to offer and services that serve the global foundry Integration: Detailed knowledge of vessels for steel making (furnaces, bespoke systems customers’ processes allows us to provide øáÞâëÞßĚÜâÞçÜòÚçÝéëèÝùÜøâïâøòÞçáÚçÜÞ ladles and tundishes) and other industry, improving casting quality and customised solutions quality, improve safety and reduce their high temperature industries Innovation: Capability to develop new ßèùçÝëòÞßĚÜâÞçÜò value-adding solutions Technical support: Access to Foseco’s costs and their environmental impact. Digital Services extensive application engineering Proximity: ÄßßÞÜøâïÞÚçÝÞßĚÜâÞçøìùééåò See Foundry Division Operating Review on p46-49 resources See Steel Flow Control, Advanced Refractories and Digital products focus on the to customers Digital Services Operating Reviews on p36-45 capture, interpretation and use Proximity: Global presence of key manufacturing data for process management

ULD R O E O M ST T A IN C G S N U Linings, bottoms I O R U U O IN P T N O Ladle C Robotic arm Ladle, slide gate, LADLE tube changer Stopper rod ING S IN EF R Linings D N Purging Plug ION A Tundish CT DU R Linings O O R T & bricks P ­BEF Pouring cup EM ORE R LD IT FE E T U S T V Temperature T Convertor repair Ladle shroud O A L N C I Stopper & rigging measurement M N O Linings Downsprue G

C ® Impact pad

Tundish slide gate Nozzle Tundish tube Cope ÑÞĚçâçàåÚÝåÞì changer

Robotic arm ÷èùåÝěùñ E C Mould level A N control Feeder R STEEL SLA U B O F Mould R T Stack repair B L S O Filter A O L M B

Core & coatings Iron trough Runner Tap hole clay Mould coatings Drag

Torpedo ladle Sand binder

The Steel The Foundry Process Manufacturing Digital Services – Our Convertor and Continuous Technical services The foundry process is highly Process caster business unit dedicated to ëÞĚçâçàåÚÝåÞì sequential and consistency Blast furnace Our Technical Services data capture technologies Steel manufacturing is a offering spans of quality and productivity is Flow Control, Advanced highly demanding process all of our businesses. essential. The conditioning of Refractories and Foundry for which consistent quality molten metal, the nature of – Providing services and the mould, and the way metal ÚçÝÞßĚÜâÞçøéëèÝùÜøâèçâì solutions complementary to ěèðìâçøáÞæèùåÝÚßßÞÜøìÛèøá essential. Our products, For more on Technical or independent of the sale systems and solutions services , See p44-45 of consumables øáÞêùÚåâøòèßøáÞĚçâìáÞÝ enable this through every casting and the effort, energy part of the process. Induction Treatment / Mould Final and metal usage. furnace pouring ladle production casting and pouring Vesuvius plc 8 Annual Report and Accounts 2017 9

Our Markets

Steel Foundry Our Business

Steel Division Steel quality as a driver for demand Foundry Division end marketsCasting quality as a driver for demand end markets Customers of the Steel Division Steel manufacturers are Association, this trend has To do this our products need to The vehicle sector, comprising and mining industries, Whilst Foseco products ÞßĚÜâÞçÜòÀìÜÚìøâçàìÛÞÜèæÞ are principally steel producers increasingly searching for been seen in China over the be highly resistant to erosion, light vehicles (passenger cars petrochemicals, power typically represent less than 5% increasingly complicated and manufacturers of steel products that can support the past few years and is expected corrosion and thermal shock and light trucks) and heavy generation equipment, railroad of a foundry’s production cost, (driven in the case of production equipment. production of higher grades of to continue. The quality to ensure that they do not trucks, is the largest end and general engineering øáÞòÜèçøëâÛùøÞìâàçâĚÜÚçøåò automotive casting by the need Steel production volumes ìøÞÞåÓáÞĊěÚøċìøÞÞåùìÞÝâç demands are even higher themselves contaminate market for worldwide castings. sectors. Our customers include to improving product for lightness), they demand are the critical driver of ‘later cycle’ consumer goods, for production of speciality the steel during casting. Other end markets for foundry the world’s major automotive quality and manufacturing ÜåÞÚçÞëæÞøÚåÛÞøøÞëěèðâçøè demand as the Steel e.g. cars and fridges, requires and high-strength steels. The capabilities of Vesuvius’ castings include machinery for OEMs, truck producers and ÞßĚÜâÞçÜòðáâåìøëÞÝùÜâçà the mould, and more consistent Division primarily sells products ìâàçâĚÜÚçøåòáâàáÞëùçâßèëæâøò products – particularly when the agricultural, construction equipment manufacturers. the environmental impact ìèåâÝâĚÜÚøâèçÓáâììùééèëøì Our highly technical, innovative that are consumed during than the ‘long’ steel used in used as a total solution - are of the casting process the computer modelling, refractory products are the steel making process. ‘early cycle’ construction much more in demand for and improving the ratio of ěèðìâæùåÚøâèçÚçÝÜÚìøâçà designed to preserve the This is particularly true in the and infrastructure. In the higher quality steel grades ĚçâìáÞÝÜÚìøâçàìøèøáÞ methoding capabilities that quality of molten steel during production of higher-quality developed market of NAFTA, where the consistency of the amount of metal poured – are central to the services the steel making process. steels where our highly the production ratio is ĚçâìáÞÝìøÞÞåâìéÚëÚæèùçø a key parameter for foundry provided by Foseco. Vesuvius’ engineered technical products deliver ÜùëëÞçøåò"! !Y›ěÚøåèçàœ refractories prevent the build- the most value. As developing countries move up of impurities in the steel, from infrastructure-based The Advanced Refractories protect the molten metal from economies to consumer-based business also supplies èñâÝâìÚøâèçæèÝÞëÚøÞâøìěèð ÞÜèçèæâÞìøáÞëÚøâèèßěÚø other high-temperature ÚçÝæÚçÚàÞâøìěùâÝÝòçÚæâÜì Demand drivers for castings Technology changes and to long steel consumption industries such as primary to harmonise consistency and also transitions. According to environmental drivers aluminium, copper, cement, reduce the pick-up of inclusions. the Chinese Iron and Steel petrochemical and energy Light vehicle demand is largely are consumption-driven, such New technologies, such as and the use of silica within the from waste. Around 7% of ÝëâïÞçÛòÜèçìùæÞëÜèçĚÝÞçÜÞ as construction, mining, 3D printing, are expected industry, are also expected to revenues in the Steel Division and, in commercial purchasing, agriculture and heavy truck, øèÜèçøâçùÞøèâçěùÞçÜÞ continue to tighten. This will arise from non-steel related øáÞÚàÞèßøáÞèïÞëÚååěÞÞø where usage drives demand the metal casting industry, ÝëâïÞøáÞøëÞçÝøèĚçÝ process industries. Demand in the majority of for replacement parts allowing for faster prototyping processes and consumable the remaining casting (e.g. bulldozer blades, digger and production of smaller products which support end-markets is driven by the teeth, track pads and bowls, volume parts. Environmental éëèÝùÜøâèçÞßĚÜâÞçÜòÚçÝ Steel production Growth in crude steel production (2017 vs. 2016) vs. 2017 steel production volume cost of capital and the level etc.) based on actual wear. regulations, driven by the reduce a foundry’s impact (Top-15 producers and EU28) èßÜùëëÞçøéëèĚøÚÛâåâøòâçøáÞ desire to reduce volatile on the environment. According to the World Steel given sector. Certain sectors organic compound emissions Association (‘WSA’), the 24 Iran Chinese reported steel production growth was 5.7% however, +21.4% worldwide steel industry saw 22 due to the closure of induction furnaces previously not reported growth of 5.3% in 2017 with 20 in statistics, Vesuvius estimates China’s actual steel production 1,691.2 million tonnes (‘mt’) 18 growth in 2017 was between 0% and 2% produced globally. 16 Turkey +13.1% Iron casting Steel casting Aluminium/ For many years, China has 14 Non-ferrous casting been the world’s largest 12 China France USA (WSA reported) Iron casting is split between system utilisation due to Steel is used in casting for Aluminium casting is the producer of steel. In 2017, 10 +7.6% India +5.7% Taiwan +4.0% +6.2% the WSA reported that 8 +6.8% South grey and ductile iron with its lower shrinkage on manufacturing components segment of the foundry Brazil Korea EU28 China’s crude steel production 6 +9.9% +3.7% +4.1% grey iron representing the ìèåâÝâĚÜÚøâèçÂèçïÞëìÞåò with very high mechanical market growing the fastest. majority of metal being cast. ductile iron production requires performance. Steel casting is ÈøáÚìÜÚéøùëÞÝÚìâàçâĚÜÚçø increased by 5.7% to 832mt 4 Mexico +6.3% ÓáâìâìÚÜèìø˜ÞßĚÜâÞçøÚçÝ the most demanding casting share of the light vehicle

Crude steel productionCrude steel growth more sophisticated products to and accounted for 49% of 2 China Germany (Vesuvius robust process to produce cope with the high shrinkages process due to higher melting market. Being molten below the world’s steel production. 0 Italy +3.5% estimate) +2.9% +0% – 2% Russia Japan components that do not need of metal whilst solidifying. temperatures and greater 700°C aluminium can be Production in Japan was -2 +1.3% (0.1)% Ukraine to tolerate extreme mechanical tendency for shrinkage, cast in iron moulds which æèìøåòěÚøÚø!æøâç# -4 (6.4%) stress. All iron casting requires thus the greater demand can then be reused. Foseco whilst India’s steel production -6 ĚåøÞëìÚçÝÜèÚøâçàìÛùøàëÞò for products and technical concentrates on supplying increased by 6.2% to 101mt, -8 iron is not as reliant on feeding expertise in this segment. ěùñÞìĚåøÞëìÚçÝæÚÜáâçÞì 2017 steel production volume and South Korea’s increased Size of bubble represents relative revenue of Vesuvius steel division øáÚøëÞĚçÞøáÞÜèæéèìâøâèç by 3.7% to 71mt. and cleanliness of the metal. Vesuvius plc 10 Annual Report and Accounts 2017 11

Our Strategy

Vesuvius focuses on the following strategic ÕÞìùïâùìáÚìÚëøâÜùåÚøÞÝĚïÞäÞòÞñÞÜùøâèçéëâèëâøâÞìÓáÞìÞðâååÞçÚÛåÞ

Strategic objectives, which we measure and monitor Execution us to achieve our core strategic objectives of delivering long-term Our Business Objectives through our Key Performance Indicators (KPI’s) Priorities ìùìøÚâçÚÛåÞÚçÝéëèĚøÚÛåÞàëèðøá

Description Progress in 2017 Reinforce our ÕÞìùïâùìðÚìÛùâåøÚçÝàëÞðèçøÞÜáçèåèàòÛëÞÚäøáëèùàáì ÓáÞéÞëÜÞçøÚàÞèßëÞïÞçùÞÚÜÜèùçøÞÝßèëÛòĊÍÞðÏëèÝùÜøìċøáÚøâì ÓáÞìÞÞçÚÛåÞÝøáÞìøÞÞåÜèçøâçùèùìÜÚìøâçàÚçÝßèùçÝëò éëèÝùÜøìåÚùçÜáÞÝðâøáâçøáÞåÚìøĚïÞòÞÚëìàëÞðßëèæ$Yâç  technology leadership âçÝùìøëâÞìøèâæéëèïÞøáÞâëÞßĚÜâÞçÜòÚçÝêùÚåâøòìùÛìøÚçøâÚååò øèçÞÚëåò!Yâç#ÎùëèÛöÞÜøâïÞâìßèëøáâìøèëÞÚÜáYÓáÞçÞð Deliver growth ÅèÜùìâçàèçøÞÜáçèåèàòåÞÚÝÞëìáâéÜèçøâçùÞìøèÝëâïÞèùëùçâêùÞ іÃÜÞçøëÞßèëÀÝïÚçÜÞÝÑÞßëÚÜøèëâÞìÚøÕâìÚäáÚéÚøçÚæÈçÝâÚ ÒÞÞé ˜ ! ïÚåùÞéëèéèìâøâèçÚçÝùçÝÞëéâçìèùëÚÛâåâøòøèÝÞåâïÞëèçàèâçà ðÚìâçÚùàùëÚøÞÝâçÍèïÞæÛÞë#ÎùëìéÞçÝèçіÃâçÜëÞÚìÞÝ ïÚåùÞÞçáÚçÜÞæÞçøøèèùëÜùìøèæÞëì òÞÚë˜èç˜òÞÚëøèx æÛÞâçàYèßèùëøèøÚåëÞïÞçùÞÚçÝðÞ âçÜëÞÚìÞÝøáÞÞßĚÜâÞçÜòèßèùëіÃÛòßèÜùìâçàèùëÞßßèëøìèçÚ ÆÞçÞëÚøÞìùìøÚâçÚÛåÞéëèĚøÚÛâåâøò ëÞÝùÜÞÝçùæÛÞëèßéèøÞçøâÚååòáâàá˜âæéÚÜøіÃéëèöÞÜøìÖÞÚåìè moved the R&D function closer to our customers, embedding R&D and create shareholder value ðâøáâçøáÞÛùìâçÞììùçâøìðáâÜáðâååÞçìùëÞÚÜåèìÞëåâçäÛÞøðÞÞçіÃ ÚÜøâïâøâÞìÚçÝøáÞëÞøùëçðÞëÞÜÞâïÞèçèùëâçïÞìøæÞçø Increase penetration of ÎùëøÞÜáçèåèàòáÚìÛÞÞçðâÝÞåòÚÝèéøÞÝÛòøáÞæèìøìèéáâìøâÜÚøÞÝ ÎùëèùøéÞëßèëæÚçÜÞâçøáÞæÚöèëâøòèßÞçÝæÚëäÞøìÚÜëèììÛèøá éëèÝùÜÞëìâçøáÞæèìøÝÞïÞåèéÞÝæÚëäÞøìÇèðÞïÞëæÚëäÞÝ èùëÒøÞÞåÚçÝÅèùçÝëòÃâïâìâèçìâìÞïâÝÞçÜÞèßøáÞéÞçÞøëÚøâèç Maintain strong cash generation value-creating solutions ÝâßßÞëÞçÜÞìëÞæÚâçâçøáÞéÞçÞøëÚøâèçèßèùëìèåùøâèçìðâøáâçøáÞ gains we are achieving due to increased customer interest in our ÚçÝÚçÞßĚÜâÞçøÜÚéâøÚåìøëùÜøùëÞ âçÝùìøëòÂèçìÞêùÞçøåòøáÞëÞâìÚðâÝÞëÚùÝâÞçÜÞèßÜùìøèæÞëìðáèæ ïÚåùޘÜëÞÚøâçàìèåùøâèçìÅèëèùëÒøÞÞåÃâïâìâèçøáâìèùøéÞëßèëæÚçÜÞ ÒÞÞé "˜ $ ðÞÛÞåâÞïÞÜÚçÛÞçÞĚøßëèæøáÞæÀììøÞÞåÚçÝßèùçÝëòæÚëäÞøìâç âìëÞěÞÜøÞÝâçèùëùçÝÞëåòâçà#ëÞïÞçùÞàëèðøáèß YïÞëìùì ÝÞïÞåèéâçàæÚëäÞøìÛÞÜèæÞæèëÞêùÚåâøòßèÜùìÞÝðÞáÚïÞøáÞ ! YàëèðøáâçàåèÛÚåìøÞÞåéëèÝùÜøâèçïèåùæÞìÅèëèùëÅèùçÝëò èééèëøùçâøòøèìâàçâĚÜÚçøåòâçÜëÞÚìÞèùëéÞçÞøëÚøâèçèßøáÞìÞ ÃâïâìâèçùçÝÞëåòâçà#ëÞïÞçùÞàëèðøáèß% YâìßùëøáÞë Provide a safe working environment æÚëäÞøìøáëèùàáèßßÞëâçàïÚåùÞÜëÞÚøâçàìèåùøâèçì ÞïâÝÞçÜÞèßøáâìèùøéÞëßèëæÚçÜÞ

for our people

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Using our global spread of expertise to identify Low-cost Lean manufacturing, close to customers, Our technology centres develop value-adding solutions Serving our customers reliably, competitively and consistently and create market opportunities provides reliable, ‘just-in-time’ products involving engineered systems and high-value consumables with consumables critical for their manufacturing processes ÕÞìùïâùìâìéëÞìÞçøèçìâñÜèçøâçÞçøììùééèëøâçàøáÞ ÎùëìùÜÜÞììßùååòøÞìøÞÝéëèÝùÜøìÜÚçÛÞæÚçùßÚÜøùëÞÝÚø ÎùëÜèçøâçùâçàâçïÞìøæÞçøâçøáÞÂèæéÚçòċìіÃÜÞçøëÞì ÀåèçàìâÝÞÝÞïÞåèéâçàèùëàåèÛÚåéëÞìÞçÜÞðÞÞçìùëÞÚ ÝÞïÞåèéæÞçøèßàåèÛÚåìøÞÞåÚçÝßèùçÝëòæÚçùßÚÜøùëâçà ÚìáèëøÝâìøÚçÜÞßëèæèùëÜùìøèæÞëìċéåÚçøìàùÚëÚçøÞÞâçà âìëÞěÞÜøÞÝâçÚååÚëÞÚìèßèùëèßßÞëâçàÖÞáÚïÞäçèðåÞÝàÞ åèÜÚåìÞëïâÜÞøèèùëÜùìøèæÞëìßëèæâçïÞçøèëòæÚçÚàÞæÞçø éëèÜÞììÞìðâøáçÞðøÞÜáçèåèàâÞìÖÞáÚïÞæÚçùßÚÜøùëâçà Üèìø˜ÜèæéÞøâøâïÞÚçÝøâæޘÞßĚÜâÞçøÝÞåâïÞëòÖÞèéøâæâìÞ èßøáÞæèìøÚÝïÚçÜÞÝÜÞëÚæâÜÚçÝæÞøÚååùëàâÜÚåøÞÜáçâêùÞì øèáâàá˜êùÚåâøòøÞÜáçâÜÚåìùééèëøÚøøáÞâëìâøÞìÚçÝøáÞÚÛâåâøò ÜÚéÚÛâåâøòâçÚååøáÞæÚâçìøÞÞåÚçÝßèùçÝëòæÚëäÞøìÚçÝáâëÞ èùëÜèìøÜèæéÞøâøâïÞçÞììÛòâçïÞìøâçàâçøáÞåèðÞìøÜèìø ùìâçàìøÚøޘèߘøáޘÚëøÞêùâéæÞçøÚçÝøáÞæèìøÚÝïÚçÜÞÝ øèìðâßøåòæèÝâßòéëèÝùÜøâèçÚçÝìùééåòøèëÞěÞÜøÜáÚçàÞì ÚçÝøëÚâçåèÜÚåÞçàâçÞÞëìÓáÞòÚëÞéëèàëÞììâïÞåòâçøÞàëÚøÞÝ éëèÝùÜøâèçìâøÞâçøáÞÚëÞÚÚçÝáÚïÞÞìøÚÛåâìáÞÝ øÞÜáçèåèàâÞìèßěèðìâæùåÚøâèçÚçÝĚçâøÞÞåÞæÞçøÚçÚåòìâì âçÜùìøèæÞëëÞêùâëÞæÞçøìÎùëäçèðåÞÝàÞèßÞçݘæÚëäÞø ðâøáâçøáÞÕÞìùïâùìçÞøðèëäèßÞñéÞëøìÚçÝèßßÞëÞÝ æÚçùßÚÜøùëâçàßÚÜâåâøâÞìâçÞæÞëàâçàæÚëäÞøìßëèæøáÞ ÖÞÚëÞøáÞëÞßèëÞÚÛåÞøèéëèïâÝÞèùëÜùìøèæÞëìðâøá éëèÜÞììÞììéÞÜâĚÜÚøâèçìÚçÝøÞÜáçâêùÞìÚëèùçÝøáÞðèëåÝ âçøÞëçÚøâèçÚåÜÚëÞÞëìÎùëåèÜÚåæÚçùßÚÜøùëâçàåèÜÚå ÛÞàâççâçàèßøáÞâëâçÝùìøëâÚåâìÚøâèçÓáâìøèàÞøáÞëðâøáøáÞ ìèéáâìøâÜÚøÞÝâççèïÚøâïÞÜùìøèæ˜ÝÞìâàçÞÝìèåùøâèçìðâøá àâïÞìèùëÞñéÞëøìÚçùçéÚëÚååÞåÞÝÚÛâåâøòøèìùééèëøèùë ÞñéÞëøâìÞÚçÝàåèÛÚåäçèðåÞÝàÞèßèùëÜùìøèæÞëìċéëèÜÞììÞì áâàáïèåùæÞèßéâÞÜÞìðÞÚëÞÚÛåÞøèéëèÝùÜÞéëèïâÝÞì øáÞáâàáÞìøåÞïÞåèßÜèçĚÝÞçÜÞâçøáÞâëìùâøÚÛâåâøòÜëÞÚøâçà ÜùìøèæÞëìÓáâìùçâêùÞåÞïÞåèßìÞëïâÜÞëÞåâÞìèçèùëøÞÜáçâÜâÚçìċ àâïÞùìÚìéÞÜâÚåëÞåÚøâèçìáâéðâøáèùëÜùìøèæÞëìáÞåéâçà èùëÜùìøèæÞëìðâøáøáÞÛÞìøÛÚåÚçÜÞÛÞøðÞÞçïÚåùÞ ïÚåùÞÚçÝáÞåéâçàøáÞæÝâßßÞëÞçøâÚøÞßëèæøáÞâëÜèæéÞøâøâèç éÞëæÚçÞçøéëÞìÞçÜÞÚøèùëÜùìøèæÞëìċìâøÞìÚçÝøáÞâëÚÛâåâøò øáÞæøèèéøâæâìÞøáÞâëéëèÜÞììÚçÝéëèÝùÜøéÞëßèëæÚçÜÞ ÜèìøÚçÝìÞëïâÜÞßèëèùëáâàá˜øÞÜáçèåèàòìèåùøâèçì ÖÞÞçáÚçÜÞøáâìÞñéÞëøâìÞðâøáèùëàëèðâçàÜÚéÚÛâåâøâÞìâç øèåÞïÞëÚàÞøáÞðèëåÝðâÝÞÞñéÞëøâìÞÚÜÜùæùåÚøÞÝÚÜëèììøáÞ ÀååèïÞëøáÞðèëåÝçÞðéåÚçøìùìÞÕÞìùïâùìÚçÝÅèìÞÜè ÝÚøÚÜÚéøùëÞÚçÝâçøÞëéëÞøÚøâèçøèÝÞåâïÞëÞñéÞëøéëèÜÞìì ÕÞìùïâùìçÞøðèëä éëèÝùÜøìøèÜëÞÚøÞøáÞÛÞìøéèììâÛåÞÜèçÝâøâèçìßèëìùÜÜÞìì æÚçÚàÞæÞçøâæéëèïÞæÞçøìøèèùëÜùìøèæÞëì

ÒÞÞæèëÞÚÛèùøour global presence èçé ˜! ÒÞÞæèëÞÚÛèùøsustainability èçé" ˜"" ÑÞÚÝæèëÞÚÛèùøinnovationèçé ˜ ! ÑÞÚÝæèëÞÚÛèùøquality and reliabilityèçé "˜ $ Vesuvius plc 14 Annual Report and Accounts 2017 15

Section Two Our Performance In this section

16 Chairman’s Statement Our Performance 18 Chief Executive’s Strategic Review

20 Key Performance Indicators

22 Risk

26 Financial Review

32 Innovation

36 Operating Review 36 Steel Flow Control 40 Advanced Refractories 44 Digital Services 46 Foundry

50 Board of Directors

52 Group Executive Committee

Enno Hilgenhoener Director Solutions Group, Steel Flow Control, Borken, Germany Vesuvius plc 16 Annual Report and Accounts 2017 17

Against this backdrop, we continued to ÃÞÜÞæÛÞë#›" éÞçÜޜ for Board attention, with the Board Chairman’s Statement focus on the execution of our strategy which would result in a total dividend fully recognising the importance of ÚçÝæÚÝÞàèèÝéëèàëÞììèçèùëĚïÞ for the year of 18.0 pence per share developing talent and maintaining äÞòÞñÞÜùøâèçéëâèëâøâÞì›ìÞÞéÚàÞœ ›""!!éÞçÜޜÚçâçÜëÞÚìÞèß a cadre of diverse and highly capable ÖÞëÞæÚâçÜèçĚÝÞçøøáÚøøáÞìÞðâåå 8.8%. If approved at the Annual General people throughout the business. enable us to create value and deliver ÷ÞÞøâçàøáâìĚçÚåÝâïâÝÞçÝðâååÛÞéÚâÝ The need for greater diversity ìùìøÚâçÚÛåÞéëèĚøÚÛâåâøòßèëèùë on 25 May 2018 to shareholders on the throughout the business is a goal upon shareholders. We continue to recognise register at 13 April 2018. which the Board remains focused. the fundamental importance to the As ever, I continue to be impressed by Group of the capabilities of our people. Board and Governance the way in which our leadership teams Our highly talented leadership teams and In April 2017, we appointed Holly and our people go the ‘extra mile’ to operational staff ensure that we are able “We have outperformed Koeppel as a Non-executive Director, exceed our own, and our customers’ to drive our strategy forward, with quality replacing Nelda Connors, who resigned expectations, as evidenced by our 2017 underpinning not only the premium from the Board in late 2016. Holly has results. On behalf of the Board, I thank the market and delivered promise of our products, services and more than 35 years’ industry and them all. solutions, but also our overall approach ĚçÚçÜâÚåÞñéÞëâÞçÜÞÚçÝáÚìðèëäÞÝ to business excellence. a strong set of results” with businesses in Australia, China, the Annual General Meeting UK and the US. We are delighted to John McDonough CBE Chairman The Annual General Meeting will be Performance and Dividend áÚïÞáÞëìâàçâĚÜÚçøÞñéÞëâÞçÜÞÚëèùçÝ held on 10 May 2018. The Notice Our Performance In 2017, reported sales were £1,683.9m, the Board table. of Meeting and explanatory notes an increase from 2016 of 20.2%. The Board continues to place great containing details of the resolutions to Our margins improved to 9.8%, delivering importance on furthering our be put to the meeting accompany this ëÞéèëøÞÝøëÚÝâçàéëèĚøèßx"!!æ Overview New Chief Executive understanding of the Vesuvius business Annual Report and Accounts and are Whilst we experienced some headwinds 2017 was a year of good progress for The appointment of our new Chief by visiting key operations and engaging ÚïÚâåÚÛåÞèçèùëðÞÛìâøÞ›ðððïÞìùïâùì throughout the second half, over the year the Group as we saw improvements Executive, Patrick André, was a key event with as many of our people as possible. ÜèæœÈÚçÝÚååæòÁèÚëÝÜèååÞÚàùÞìéåÚç we outperformed our markets in terms of in our trading environment following for Vesuvius this year. It was the result of This year, the full Board visited our to attend the Annual General Meeting growth. These results serve to emphasise the challenging market conditions a rigorous process, during which both Foundry operations and customers in and we look forward to the opportunity the strength of our management team experienced in 2015 and 2016. We also internal and external candidates were Brazil, meeting management from all to meet with as many shareholders as and their ability to operate effectively completed a successful transition of considered. We are delighted that the business lines and gaining a broader possible on the day. against the backdrop of a volatile Chief Executive, with the appointment ÛÞìøĚøßèëøáÞëèåÞÜÚæÞßëèæðâøáâç understanding of the overall South market. Vesuvius remains an intrinsically of Patrick André to the role as part of our own ranks. I would like to take this American business. As Chairman, John McDonough CBE Chairman cash-generative business and we saw a planned succession process. Global opportunity to thank Patrick’s predecessor, I personally visited our operations in strong cash generation throughout 2017, 28 February 2018 steel production growth exceeded our François Wanecq, for his many years of China in May and, during the year, ending the year with a stronger balance expectations and pleasingly our overall dedicated service to the business and his other Non-executive Directors visited See the Chief Executive’s Strategic sheet than in previous years. Review on p18-19 sales growth outperformed the global diligence in ensuring a smooth transition. operations in Skawina in Poland, steel market. We also experienced We look forward to the years ahead The Group continued to make good Cleveland and Pittsburgh in the US, See more about our Markets on p8-9 positive momentum in the majority of under Patrick’s executive leadership. progress in delivering the previously and Borken in Germany. The Board will See our Financial Review on p26-31 foundry end markets. Overall, despite announced restructuring programme continue to visit sites across the Group, experiencing headwinds relating to which focused mainly on our Flow increasing individual knowledge and See more about our Governance in the Market Dynamics and Strategy ìâàçâĚÜÚçøëÚðæÚøÞëâÚåéëâÜÞâçÜëÞÚìÞì Control business. We also commenced ensuring that we remain connected Governance Section on p74-121 During the year, we saw global steel and some temporary increased a completely new programme focusing with our operations, management production increase by 5.3% with inter-company sourcing costs, the Group on the Foundry Division in Europe and teams and people around the world. production in the majority of major steel saw a 24.2% increase in reported trading NAFTA, the Advanced Refractories countries up year-on-year. In our Foundry The 2017 externally facilitated Board éëèĚø›"YèçÚçùçÝÞëåòâçàÛÚìâìœ business unit in Europe, and Group Division the overall trading environment ÞïÚåùÚøâèçÜèçĚëæÞÝøáÚøøáÞÁèÚëÝ and a 20.2% increase in reported corporate functions. and demand for our products was continues to function effectively. ëÞïÞçùÞ›!YèçÚçùçÝÞëåòâçàÛÚìâìœ positive across the majority of our key Our Headline PBT was £152.9m, 27.6% We believe it remains well balanced, with cash generation strengthening end markets. higher than last year on a reported basis. setting the right tone from the top, with further. The Group continued to make Including amortisation of £19.5m and a strong mix of relevant experience good progress with the restructuring Throughout the year we faced notable restructuring costs of £36.3m, our PBT and skills, ensuring that a collaborative programme and we remained focused âçěÚøâèçÚëòéëÞììùëÞìßëèæìâàçâĚÜÚçø of £97.1m was 22.3% higher than 2016. yet challenging culture is embedded on the delivery of our strategy and its price increases in several key raw Statutory EPS is 14.1p. throughout the Group. execution priorities. Finally, in December, materials. These initially impacted our we strengthened our balance sheet, Advanced Refractories business, but Our dividend policy aims to deliver Our People repaying existing borrowing with the subsequently price rises were also long-term dividend growth, provided issuance of debt in the US Private experienced in the Steel Flow Control øáâìâììùééèëøÞÝÛòÜÚìáěèðÚçÝ In 2016, I noted that to secure the Placement market. and Foundry businesses. We responded ùçÝÞëåòâçàÞÚëçâçàìÚçÝâìöùìøâĚÞÝâç current and future performance of proactively to the pressure placed on the context of our capital expenditure the Group, the Board had widened its our business making good progress in requirements and the prevailing market focus on succession planning issues, ëÞÜèïÞëâçàÜèìøâçěÚøâèçøáëèùàááâàáÞë outlook. With this in mind, the Board additionally reviewing the management selling prices by year-end. áÚìëÞÜèææÞçÝÞÝÚĚçÚåÝâïâÝÞçÝèß level immediately below the Board. 12.5 pence per share for the year ended This continues to be a critical area Vesuvius plc 18 Annual Report and Accounts 2017 19

we continued to focus our R&D efforts £60m of savings at a total cost of Our objective is to improve this Chief Executive’s Strategic Review on a reduced number of potentially £75m. A completely new restructuring performance further year-on-year. high-impact R&D programmes. programme focused on the Foundry A new safety management organisation, The new Advanced Refractory R&D Division in Europe and NAFTA, the updating responsibility and accountability centre in Visakhapatnam, India, was Advanced Refractories business unit in for the management of safety across inaugurated in November, reinforcing Europe and global corporate functions the Group, was established at the end our presence in this key market for our was launched at the end of 2017, with of 2017 and will be fully operational in future growth, strengthening links with expected recurring savings of £15m by øáÞĚëìøáÚåßèß$ customers and enabling us to better 2020. In parallel to these restructuring tap into the growing talent pool of programmes, Vesuvius is reinforcing “Our main objective is to engineers and scientists in the country. its focus on operational excellence Sustainability The decision was also made to and continuous improvement in its Vesuvius R&D reinforced its efforts in accelerate the implementation reorganise the Flow Control R&D manufacturing operations. 2017 to develop products and services network around three main R&D helping our Steel and Foundry customers > Develop our Technical Services ÜÞçøëÞìâçøáÞÔÒ›ÏâøøìÛùëàáœÄùëèéÞ to reduce their energy consumption and offering: Our Technical Services èßèùëéëèĚøÚÛåÞàëèðøá ›ÆáåâçÅÞâàçâÞìœÚçÝÂáâçÚ›Òùóáèùœ carbon footprint through the improved offering has continued to develop operating under a common leadership. service life of our products and reduction in 2017, not only within our Digital This structure will be fully operational of waste in their manufacturing processes. strategy over the coming years” Services business unit but also within in 2020 and will enable us to increase At the same time, we continued our Flow Control, Foundry and Advanced øáÞÞßĚÜâÞçÜòèßèùëëÞìÞÚëÜáßùëøáÞë efforts to reduce waste and energy Our Performance Patrick André Chief Executive Refractories. Late in 2017, we made a by reinforcing our proximity with consumption in our own manufacturing strategic investment in Sapotech Oy, customers and accessing a wider processes. a Finnish technology company éèèåèßðèëåÝðâÝÞìÜâÞçøâĚÜøÚåÞçøì Introduction intangibles and restructuring costs, capacity of the Flow Control EMEA developing optical defect detection èéÞëÚøâçàéëèĚøðÚìx%#æ$Y plants and this ramp-up is now > Increase penetration of our value- services in the steel continuous casting Outlook It is an honour to have been selected to ahead of prior year on a reported basis. complete, substituting imports from creating solutions: The growth of sales process. This investment will reinforce Our main Steel and Foundry markets lead Vesuvius and I am grateful to our non-EMEA plants. in our Steel and Foundry Divisions the Flow Control business unit. remain positively oriented at the Chairman, John McDonough, and the ÎùëĚçÚçÜâÚåéÞëßèëæÚçÜÞðèùåÝ outperformed underlying market beginning of 2018. However, we expect Board of Directors for their trust. however, have been even stronger in Improved Financial Position àëèðøáâçæèìøÚëÞÚìÜèçĚëæâçàøáÞ Attracting, Developing and a lower growth rate of steel production 2017 if we had not been impacted by I would also like to thank François mounting interest of customers in our outside China in 2018 compared to 2017, two temporary headwinds. Despite the strong growth in our turnover Retaining Talent Wanecq for his exceptional commitment and increased capital investment of advanced solutions, enabling them to ÚìøáÞìâàçâĚÜÚçøÝÞÜëÞÚìÞâçÂáâçÞìÞ The success of our strategy ultimately in leading Vesuvius over the past 12 years. Some of the key raw materials used £44.3m in 2017 versus £35.2m in 2016, âæéëèïÞøáÞâëæÚçùßÚÜøùëâçàÞßĚÜâÞçÜò steel exports which occurred in 2017 may relies on the quality and motivation of Thanks to his achievements and the by our Steel and Foundry Divisions our cash conversion ratio increased to whilst at the same time raising the not repeat in 2018. Our self-help and our people. In 2017, we continued our efforts of all our teams, the foundations ÞñéÞëâÞçÜÞÝìâàçâĚÜÚçøéëâÜÞâçÜëÞÚìÞìâç  Yâç#ÝùÞøèèùëßèÜùìèçÞßĚÜâÞçø êùÚåâøòèßøáÞâëĚçâìáÞÝéëèÝùÜøì manufacturing optimisation programme efforts to attract, develop and retain the of the Group are strong and sound. 2017, particularly during the second half working capital management. Our trade We were particularly pleased with will continue to develop and expand in best talents worldwide. This will intensify Our main objective is now to build on of the year. The speed of these increases working capital to sales ratio decreased our progress in China, where Steel 2018. The temporary raw material and in 2018. these foundations and to generate was such that it was not possible to fully to 24.9% from 26.6% in 2016. Division sales increased by 7% and product supply headwinds that impacted ÚçÝÚÜÜÞåÞëÚøÞøáÞÆëèùéċìéëèĚøÚÛåÞ recover the increased costs through the Foundry Division sales increased by We believe in diversity of talents and our 2017 results have now been mostly ÓáâììøëèçàÜÚìáěèðàÞçÞëÚøâèç growth over the coming years. ìÚåÞìéëâÜÞèßèùëĚçâìáÞÝéëèÝùÜøìÚìðÞ 13% on an underlying basis. origins and in the importance of an mitigated and will substantially unwind reduced our net debt to £274.3m at were bound by contractual obligations entrepreneurial and decentralised during the year, subject to any further The strong performance of the Group 31 December 2017 versus £320.3m > Capture growth in developing with some customers. This situation culture, with empowered, accountable, raw material cost increases. We remain âç#âìÚçâæéèëøÚçøĚëìøìøÞéâçøáÞ at 31 December 2016. We also partly markets: Steel Division sales grew improved towards the end of 2017 due innovative and results-oriented ÜèçĚÝÞçøâçèùëÚÛâåâøòøèßùëøáÞëâæéëèïÞ implementation of this growth strategy. ëÞĚçÚçÜÞÝèùëÝÞÛøâçÃÞÜÞæÛÞë# faster than the market in the key to prices stabilising for several key raw developing regions of China, India managers, operating close to our working capital management and with the issuance of a €100m US Private àÞçÞëÚøÞìøëèçàèéÞëÚøâçàÜÚìáěèð materials and major progress being and the Middle East. However, sales markets and our customers. Strong Performance æÚÝÞâçëÞÜèïÞëâçàÜèìøâçěÚøâèçøáëèùàá ÏåÚÜÞæÞçøëÞìùåøâçàâçÚìâàçâĚÜÚçø ÅèëøáÞìÞëÞÚìèçìøáÞÁèÚëÝâìÜèçĚÝÞçø ÝÞÜëÞÚìÞèßèùëĚçÚçÜâçàÜèìøì growth in Latin America, while positive, I will strongly support the reinforcement In a globally favourable economic higher selling prices. Whilst the price of that in comparison to 2017, further strong going forward. was slightly below general steel of this culture within the Group going environment, both our Steel and Foundry magnesite, the largest contributor to progress will be made in 2018. market growth. Foundry sales also forward. Divisions succeeded in outperforming ëÚðæÚøÞëâÚåéëâÜÞâçěÚøâèçâç# Strategic Progress outperformed markets in most Patrick André Chief Executive the general market growth. This was has now stabilised, the price of other developing countries, with the Stable Safety Performance particularly the case in China. raw materials such as bauxite, silicon Our strategy remains centred around exception of India where priority was 28 February 2018 carbide and zirconia are still on an ĚïÞäÞòÞñÞÜùøâèçéëâèëâøâÞìÝÞìâàçÞÝ given to the management of working in 2017 Thanks to this performance, Vesuvius’ upward trend. As a result, the process to ensure the achievement of our core capital and customer credit risk. With a lost time injury frequency rate of global sales in 2017 reached £1,683.9m, of price adjustment will continue into strategic objectives of delivering long-term, 1.63 per million hours in 2017, our safety an increase of 20.2% over 2016 on a 2018, until realised cost increases have > Improve cost leadership and margins: ìùìøÚâçÚÛåÞÚçÝéëèĚøÚÛåÞàëèðøá performance improved slightly over reported basis. At constant currency, been fully recovered. Our previously announced Lean and "›#œ and adjusted for the effect of acquisitions, Each of these execution priorities saw self-help programme to improve the Additionally, the very strong growth underlying revenue was up 12.5% as ìâàçâĚÜÚçøéëèàëÞììâç# ÜèìøÜèæéÞøâøâïÞçÞììÚçÝÞßĚÜâÞçÜòèß The Group’s injury severity rate improved compared with 2016. of our Flow Control sales in EMEA our manufacturing network continued > Reinforce our technology leadership: more markedly in 2017 with a severity temporarily exceeded the capacity of to develop in 2017, extending from ÎùëøëÚÝâçàéëèĚøâç#ëÞÚÜáÞÝ With a global R&D spend of £33.2m in rate of 62.8 days lost per million hours our manufacturing plants in the region, Flow Control Europe to Flow Control £165.5m, an increase of 24.2% over 2016 #›"x$"æœëÞéëÞìÞçøâçà worked versus 74.6 days lost per million requiring the import of products from our NAFTA operations. £16.2m of savings on a reported basis and 16.1% on an 2.0% of revenue, Vesuvius continues to hours worked in 2016, highlighting the facilities in Asia and NAFTA, incurring were delivered in 2017, bringing the underlying basis. Our return on sales åÞÚÝøáÞâçÝùìøëòðâøáÚìâàçâĚÜÚçøåò success of the Group’s efforts to address additional freight, export duty and total savings delivered since launching improved from 9.5% to 9.8%. After the larger R&D spend to sales ratio than the most dangerous situations in our overtime costs. Measures were the programme to £43.2m. This inclusion of amortisation of acquired most of our competitors. In 2017, manufacturing plants. immediately taken to increase the programme is expected to deliver Vesuvius plc 20 Annual Report and Accounts 2017 21

Key Performance Strategic Alignment KPI ÏùëéèìÞ Performance ËâçäøèëÞæùçÞëÚøâèç

ÃÞåâïÞëàëèðøá Underlying Provides an important indicator of organic Underlying revenue growth % Indicators ëÞïÞçùÞàëèðøá ›åâäޘßèë˜åâäޜàëèðøáèßÆëèùéÛùìâçÞììÞì 17 12.5 between reporting periods. This measure ÞåâæâçÚøÞìøáÞâæéÚÜøèßÞñÜáÚçàÞëÚøÞì 16 -4.0 ÚÜêùâìâøâèçìÝâìéèìÚåìÚçÝìâàçâĚÜÚçø 15 -7.7 ÛùìâçÞììÜåèìùëÞì The Board and management

ëÞàùåÚëåòæèçâøèëÛèøáĚçÚçÜâÚå Generate ÓëÚÝâçàéëèĚøÚçÝ Used to assess the trading performance Trading profit £m Return on sales % ÃÞåâïÞëòèßïÚåùÞøèìáÚëÞáèåÝÞëìâìåâçäÞÝøè sustainable return on sales of Group businesses ëÞæùçÞëÚøâèçøáëèùàáøáÞÕÞìùïâùìÒáÚëÞÏåÚç ÚçÝçèç˜ĚçÚçÜâÚåéÞëßèëæÚçÜÞ 17 165.5 17 9.8 éëèĚøÚÛâåâøò ›ĊÕÒÏċœðáâÜáæÞÚìùëÞìøáÞïÞìøâçàèßÚðÚëÝì indicators to measure and create 16 133.3 16 9.5 ÚàÚâçìøøèøÚåìáÚëÞáèåÝÞëëÞøùëç shareholder 15 124.0 15 9.4 éÞëßèëæÚçÜÞÚàÚâçìøèÛöÞÜøâïÞì VSP ™ÑÞÚÝæèëÞÚÛèùøøáâìèçé˜ ïÚåùÞ ÓáÞÁèÚëÝëÞïâÞðìøáÞìÞÊÏÈìÚì

éÚëøèßâøìàèïÞëçÚçÜÞÚçÝëâìä ÇÞÚÝåâçÞéëèĚø ÔìÞÝøèÚììÞììøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞ Headline profit before tax £m èßøáÞÆëèùéÚìÚðáèåÞ before tax 17 152.9 æÚçÚàÞæÞçøéëèÜÞììÞì 16 119.8 15 108.6 Our Performance

Headline earnings ÔìÞÝøèÚììÞììøáÞùçÝÞëåòâçàÞÚëçâçàì Headline EPS pence ÄÏÒâìåâçäÞÝøèëÞæùçÞëÚøâèçÚìÚæÞÚìùëÞ éÞëìáÚëÞ éÞëßèëæÚçÜÞèßøáÞÆëèùéÚìÚðáèåÞ ùìÞÝâçøáÞÀççùÚåÈçÜÞçøâïÞéåÚç›ĊÀÈÏċœÚçÝ 17 40.7 the VSP 16 30.4 AIP and VSP – Read more about them in the 15 28.1 ÃâëÞÜøèëìċÑÞæùçÞëÚøâèçÑÞéèëøèçé%"˜"

Return on net ÔìÞÝøèÚììÞììøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞ Return on net assets % assets and asset management of the Group 17 24.2

16 21.1 15 21.1

Maintain strong ÅëÞÞÜÚìáěèð ÔìÞÝøèÚììÞììøáÞùçÝÞëåòâçàÜÚìáàÞçÞëÚøâèç Free cash flow £m Average working capital to sales % Èç#ðèëäâçàÜÚéâøÚåéÞëßèëæÚçÜÞðÚì of the Group. One of the factors driving the åâçäÞÝøèëÞæùçÞëÚøâèçøáëèùàáøáÞùìÞèß cash generation 17 93.1 17 24.9 ÚçÝÚçÞßĚÜâÞçø ÀïÞëÚàÞðèëäâçà àÞçÞëÚøâèçèßßëÞÞÜÚìáěèðâìøáÞÚïÞëÚàÞ the Group’s ‘cash conversion ratio’ as one of ÜÚéâøÚåìøëùÜøùëÞ ÜÚéâøÚåøèìÚåÞì ðèëäâçàÜÚéâøÚåøèìÚåÞìëÚøâèðáâÜáâçÝâÜÚøÞì 16 61.4 16 26.6 øáÞæÞÚìùëÞìùìÞÝâçøáÞÀÈÏ ratio øáÞåÞïÞåèßðèëäâçàÜÚéâøÚåùìÞÝâçøáÞÛùìâçÞìì 15 65.3 15 26.3 AIP˜ÑÞÚÝæèëÞÚÛèùøøáâìèçé%˜

ÈçøÞëÞìøÜèïÞë ÁèøáëÚøâèìÚëÞùìÞÝøèÚììÞììøáÞĚçÚçÜâÚå Interest cover Net debt to EBITDA ratio éèìâøâèçèßøáÞÆëèùéÚçÝâøìÚÛâåâøòøèßùçÝ 17 15.8x 17 1.3x future growth Ratio of net debt 16 13.4x 16 1.8x to EBITDA 15 11.7x 15 1.8x

Íèç˜ĚçÚçÜâÚåÊÏÈì Strategic Alignment KPI Performance Strategic Alignment KPI Performance

ÏëèïâÝÞÚìÚßÞ ËèìøøâæÞâçöùëò Lost time injury frequency rate* —Öèëä˜ëÞåÚøÞÝâååçÞììèëâçöùëâÞìðáâÜáëÞìùåøÞÝ ÑùçøèéêùÚåâøò Total energy Energy Used kWh per metric tonne product ßëÞêùÞçÜòëÚøÞ âçÚçÞæéåèòÞÞÛÞâçàÚÛìÞçøßèëÚøåÞÚìøèçÞ ÜèìøÞßĚÜâÞçø Üèçìùæéøâèç packed for shipment ðèëäâçà 17 1.6 ÞçïâëèçæÞçø ÝÚò™æÞÚìùëÞÝéÞëæâååâèçáèùëìðèëäÞÝ and sustainable 16 1.7 17 1,378 ßèëèùëéÞèéåÞ èéÞëÚøâèçì Read more about Safetyèçé"˜" 16 1,395 15 1.5 15 1,424 Read more about Sustainabilityèçé" ˜""

Be at the іÃìéÞçÝ Total R&D spend** £m ——ÂèçìøÚçø#ÜùëëÞçÜò Note: ÓáÞéÞëßèëæÚçÜÞæÞÚìùëÞßèëøáâìÊÏÈáÚìÛÞÞçÚæÞçÝÞÝøáâìòÞÚëÓáÞÂèæéÚçò ÛÞåâÞïÞìøáÚøøáÞçÞðéÞëßèëæÚçÜÞæÞÚìùëÞùìâçàĊçèëæÚåâìÞÝċÜèçìùæéøâèçàâïÞìÚæèëÞ forefront of 17 33.2 âççèïÚøâèç áÞåéßùåâçÝâÜÚøâèçèßøáÞÆëèùéċìéÞëßèëæÚçÜÞâçøáâìÚëÞÚ 16 28.6 15 25.8

Vesuvius plc 22 Annual Report and Accounts 2017 23

Risk

our markets and intensive training of Viability Statement Whilst the review has considered all the The Board continually monitors the internal and our employees. Additionally, we seek éëâçÜâéÚåëâìäìâÝÞçøâĚÞÝÛòøáÞÆëèùé In accordance with the UK Corporate to mitigate risk through contractual the following were selected for enhanced Governance Code, the Directors have ÞñøÞëçÚåëâìäìðáâÜáÜèùåÝìâàçâĚÜÚçøåòâæéÚÜø measures. Where cost-effective, the risk stress testing: an unplanned drop in assessed the viability of the Group over a is transferred to insurers. customer demand, debt recovery risk three year period to 31 December 2020, the long-term performance of the Group due to customer default, raw material taking into account the Group’s current Board Monitoring éëâÜÞâçěÚøâèçëÞÝùÜøâèçâçÞÚëçâçàì position and the potential impact of the from increased interest charges and the The Board defines the Group’s risk principal risks and uncertainties. appetite, considering the nature and impact of volatility in foreign currency extent of the principal risks that the The Directors have determined that a earnings. The Group’s prudent balance Group should take. The Board’s three year period is an appropriate ìáÞÞøæÚçÚàÞæÞçøěÞñâÛåÞÜèìøÛÚìÞøè Finally, the Board continued its oversight Risk Management in 2017 Changes to Risk in 2017 oversight of principal risks also involves period over which to provide the Viability react quickly to end market conditions, of cyber issues as an emerging risk. The The Board is responsible for setting the The Board believes that there has been a Board review of the processes by Statement because this is the period that access to long-term capital at acceptable Board’s view on each of these issues was which the Group manages those risks, the strategic business plan focuses on ĚçÚçÜâçàÜèìøìÚçÝðÞååÝâïÞëìâĚÞÝ Group’s risk appetite and ensuring that no material change to the Group’s Our Performance integrated into management discussions appropriate risk management systems principal risks and uncertainties during establishing a clear understanding at ÚçÝâììùßĚÜâÞçøåòßùçÝÞÝÛòĚçÚçÜâçà international businesses in different on risk and factored into the approach are in place. The Group undertakes a øáÞòÞÚëÇèðÞïÞëøáÞÁèÚëÝëÞěÞÜøÞÝ Board level of the individuals and groups facilities with average maturity terms of ÜùëëÞçÜòÞÚëçâçàéëèĚåÞìåÞÚïÞìâøðÞåå the Group takes to successful mitigation. ÜèçøâçùèùìéëèÜÞììèßëâìäâÝÞçøâĚÜÚøâèç on the implications of certain emerging in the business formally responsible for approximately six years. placed to manage these principal risks. and review, which includes both a ‘macro’ trends during the year. These øáÞæÚçÚàÞæÞçøèßìéÞÜâĚÜëâìäì Risk Mitigation In making this statement, the Directors In performing the stress testing, certain top-down and bottom-up process, included the increase in automation See more in GovernanceèçéÚàÞì# ˜ have carried out a robust assessment of assumptions were made including that: independently gathering views on risk in manufacturing as a competitive ÓáÞëâìäìâÝÞçøâĚÞÝÚëÞÚÜøâïÞåòæÚçÚàÞÝ the principal risks that may threaten the customer failures result in write-offs of from each business unit, and from disruption and the potential for negative in order to mitigate exposure. Senior Principal Risks business model, future performance, the full value of the receivables with no operational, functional and senior implications for the business from the æÚçÚàÞæÞçøĊèðçÞëìċÚëÞâÝÞçøâĚÞÝ solvency and liquidity of the Group. lost revenue replacement; and partial ÓáÞëâìäìâÝÞçøâĚÞÝèçéÚàÞì ÚçÝ! executive management, and the Board Brexit process, the outcome of which for each principal risk to manage the This is embodied in the annual review ÜÚìáěèðæâøâàÚøâèçâìéèììâÛåÞßëèæ are those the Board considers to be the of Directors. Building on the process remains unclear, but which is not æâøâàÚøâèçìèßøáÚøìéÞÜâĚÜëâìäÚçÝ of a three year bottom-up business working capital releases, restricted most relevant to the Group in relation to conducted in 2016, where a clean sheet expected to be material in the context of contribute to the analysis of its likelihood plan process which includes a review capital expenditure and operating cost their potential impact on the achievement review of the Group’s principal risks was the Group. The Board also discussed the and materiality. This is reported to the of sensitivity to ‘business as usual’ risks, reductions. Under the enhanced stress of its strategic objectives. All of the risks undertaken, the Group’s assessment of risks that could arise from a failure by Board. The risks are analysed in the ìùÜáÚìéëèĚøàëèðøáÚçÝðèëäâçàÜÚéâøÚå testing described above, a potential ìÞøèùøèçéÚàÞì ÚçÝ!ÜèùåÝæÚøÞëâÚååò principal risks has been reviewed and the Group to foster the correct culture context of our business structure which variances, severe but plausible events breach of a covenant would only occur affect the Group, its businesses, future considered against a further group for success. In addition to these wider gives protection against a number of and the impact on the central debt and in the event of an unforeseen reduction èéÞëÚøâèçìÚçÝĚçÚçÜâÚåÜèçÝâøâèçÚçÝ of emerging risks and uncertainties øëÞçÝìøáÞÁèÚëÝßèÜùìÞÝèçâÝÞçøâĚÞÝ éëâçÜâéÚåëâìäìðÞßÚÜÞðâøáÝâïÞëìâĚÞÝ áÞÚÝëèèæéëèĚåÞÚçÚåòìâìÓáÞëÞìùåøì âçëÞïÞçùÞàëÞÚøÞëøáÚç !Y could cause actual results to differ âÝÞçøâĚÞÝøáëèùàáèùë#ÁèÚëÝ risks where issues had arisen during the currencies, a widespread customer base, take account of the availability and likely materially from expected or historical ÀÜÜèëÝâçàåòøáÞÃâëÞÜøèëìÜèçĚëæøáÚø process. year – the interruption of supply of quality local production matching the diversity of effectiveness of the mitigating actions results. These risks are not the only ones they have a reasonable expectation raw materials, the related challenges of that could be taken to avoid or reduce that the Group will face. Some risks are that the Group will be able to continue instigating price increases as input costs the impact or occurrence of the not yet known and some currently not in operation and meet its liabilities as go up, the more protectionist approach underlying risks. being implementedplemented in some major deemed to be material could become so. they fall due over the three year period æÚëäÞøìÚçÝøáÞéèøÞçøâÚåßèëĚçÚçÜâÚåÚçÝøáÞéèøÞçøâÚåßèëĚçÚçÜâÚå to 31 December 2020. instability and worldwide recession.

Viability Process

Identify Assess Model Report

Viability time horizon and risk Principal risks Viability against risk See Viability Statement analysis framework and stress scenarios scenarios, examining above Todd Steele, probabilities and impacts Technical Specialist,alist, M&T – Ferrous, Foundry USA  Vesuvius plc ! Annual Report and Accounts 2017

Risk continued Strategic Deliver growth Generate sustainable Maintain strong Provide a safe Be at the forefront Run top-quality, Foster talent, Alignment éëèĚøÚÛâåâøòÚçÝ cash generation working environment of innovation Üèìø˜ÞßĚÜâÞçø skill and motivation create shareholder ÚçÝÚçÞßĚÜâÞçø for our people and sustainable in our people value capital structure operations

See more about Our Strategy on p10-11 Principal Risks and Uncertainties

Risk and Context Potential Impact Mitigation Risk and Context Potential Impact Mitigation

Demand volatility Unplanned drop in demand and/or ÆÞèàëÚéáâÜÝâïÞëìâĚÜÚøâèçèßëÞïÞçùÞì Business interruption Loss of a major plant temporarily ÃâïÞëìâĚÞÝæÚçùßÚÜøùëâçàßèèøéëâçø revenue due to reduced production or permanently impairing our ability Product innovation and service offerings securing long-term Disaster recovery planning Vesuvius’ expectations of The Group is subject to operational to serve our customers Margin reduction revenue streams and maintaining performance differential future trading are based upon risks including natural catastrophe, Business continuity planning with strategic maintenance of Damage to or restriction in ability an assessment of end-market Customer failure leading to increased Increase in service and product lines by the development of the øÞëëèëâìøÚÜøâèçĚëޝÞñéåèìâèç excess capacity to use assets conditions, which are subject bad debts Technical Services offering environmental regulation, Physical and IT control systems security, access and training to some uncertainty. Vesuvius’ industrial action, supply chain Denial of access to critical systems Loss of market share to competition іÃâçÜåùÝÞìÚììÞììæÞçøèßÞæÞëàâçàøÞÜáçèåèàâÞì end-markets are historically issues and cyber risk. or control processes Cyber risks integrated into wider risk-management structure Cost pressures at customers leading ÷ÚçùßÚÜøùëâçàÜÚéÚÜâøòëÚøâèçÚåâìÚøâèçÚçÝěÞñâÛåÞÜèìøÛÚìÞ somewhat cyclical in nature. Disruption of manufacturing Well-established global insurance programme to use of cheaper solutions ÃâïÞëìâĚÞÝÜùìøèæÞëÛÚìÞçèÜùìøèæÞëâìàëÞÚøÞëøáÚçY Strategic processes alignment Group-wide safety management programmes Strategic of revenue Our Performance Inability to source critical alignment Dual sourcing strategy and development of substitutes ÑèÛùìøÜëÞÝâøÚçÝðèëäâçàÜÚéâøÚåÜèçøëèåøèæâøâàÚøÞøáÞëâìä raw materials of default by counterparties

Failure to secure innovation Product substitution by customers ÄçÝùëâçàÚçÝìâàçâĚÜÚçøâçïÞìøæÞçøâçіÃðâøáæÚëäÞø˜ Restricted access to market due to ÇâàáåòÝâïÞëìâĚÞÝæÚçùßÚÜøùëâçàßèèøéëâçøðâøáæÚçùßÚÜøùëâçà leading research Protectionism ÍèøæÚâçøÚâçâçàÚçݝèë Increased competitive pressure enforced preference of local suppliers sites located in 26 countries and globalisation developing the necessary through lack of differentiation of A shared strategy for innovation throughout the Group, Local, national or regional political Increased barriers to entry for new Strong local management with delegated authority to run their sustainable differentiation in Vesuvius offering ÝÞéåèòÞÝïâÚèùëіÃÜÞçøëÞì businesses or expansion business and manage customer relationships ëÞêùâëÞæÞçøìÜèçěâÜøðâøáøáÞ products, systems and services Commoditisation of product portfolio Stage gate process from innovation to commercialisation to êùÚåâøòÚçÝÞßĚÜâÞçÜòÝÞåâïÞëÞÝ Increased costs from import duties ÂèìøěÞñâÛâåâøò by driving innovative solutions. through lack of development foster innovation and increase alignment with strategy or taxation by scale and standardisation. Tax risk management and control framework together with Competitive advantage derived Lack of response to changing Programme of Manufacturing and Process Excellence Loss of market share a strong control of inter-company trading from proprietary intellectual customer needs Quality programme, focused on quality and consistency Strategic property is lost through alignment Loss of intellectual property inadequate protection. Stringent intellectual property registration and defence protection

Strategic alignment Financial uncertainty Customer and other counterparty Capital allocation discipline default Fluctuations in the value of ÂÚéâøÚåìøëùÜøùëâçàâçÜåùÝâçàĚñÞÝëÚøÞÛèëëèðâçàÚçÝæÚøÜáâçà currencies, interest rates or rates Restricted access to capital hampering èßÝÞÛøøèÜÚìáěèðÞÚëçâçàìÜùëëÞçÜò Attracting talent and Organisational culture of high Internal focus on talent development and training, with ability to fund growth performance is not achieved tailored career-stage programmes and clear performance èßâçěÚøâèçæÚòÚÝïÞëìÞåòâæéÚÜø Alignment of cost structure with revenue where possible performance management management strategies øáÞÆëèùéċìĚçÚçÜâÚåéèìâøâèçèë Reduction in earnings from increased ÄßßÞÜøâïÞéåÚççâçàèßøáÞÝÞÛøëÞĚçÚçÜâçàéëèĚåÞøèÚïèâÝÞñéèìùëÞ ÅÚâåùëÞøèÚøøëÚÜøìùßĚÜâÞçø Staff turnover in growing economies results of operations. Availability interest charges and regions Contacts with universities to identify and develop talent to short-term market disruptions new talent to the Group based èßìùßĚÜâÞçøÜÚéâøÚåâìÜëâøâÜÚå Reduced market liquidity and on industry perception and Stagnation of ideas and development Career path planning and global opportunities for high- to allow Vesuvius to deliver its increased cost of capital competition. Failure to maintain opportunities potential staff business plan. and develop a talent pipeline Loss of expertise and critical Internal programmes for the structured transfer of technical and internal succession business knowledge and other knowledge Strategic options for middle and senior alignment Reduced management pipeline Clearly elucidated values to underpin business culture management positions. for succession to senior positions

Strategic alignment

Complex and changing Revenue reduction from reduced end- Globally disseminated Code of Conduct highlighting ethical market access approach to business regulatory environment Quality, health and safety Injury to staff and contractors Active safety programmes, with ongoing wide-ranging monitoring Disruption of supply chain and route ÖèëåÝðâÝÞÜèçĚÝÞçøâÚåÒéÞÚä˜ùééëèÜÞÝùëÞ and safety training Vesuvius is subject to worldwide Product or application failures lead to market Vesuvius works in highly legal and regulatory regimes, Compliance programmes and training across the Group challenging manufacturing øèÚÝïÞëìÞĚçÚçÜâÚåâæéÚÜøèëåèììèß Quality management programmes including stringent quality some of which impose extra- Increased internal control processes reputation as technology leader control standards, monitoring and reporting Independent Internal Audit function environments, providing products, jurisdictional obligations on Increased frequency of regulatory systems and services that are Health and safety breach, Experienced technical staff knowledgeable in the application of Experienced Internal Legal function companies and are continually investigations mission critical and for which manufacturing downtime or our products and technology updated. damage to infrastructure from Reputational damage reliability is paramount. Targeted global insurance programme incident at customer plant Strategic Experienced Internal Legal function controlling third-party Strategic Customer claims from product alignment contracting alignment quality issues Vesuvius plc 26 Annual Report and Accounts 2017 27

Financial Review Underlying revenue growth % Return on sales* % R&D spend* £m !Y %$Y~ Y x æ~"Y

17 12.5 17 9.8 17 33.2 16 -4.0 16 9.5 16 28.6 15 -7.7 15 9.4 15 28.6 “ ÒâàçâĚÜÚçøéëèàëÞììáÚìÛÞÞçæÚÝÞ  —ÀøÜèçìøÚçø#ÜùëëÞçÜò —ÀøÜèçìøÚçø#ÜùëëÞçÜò âçâæéëèïâçàøáÞìøëÞçàøáèßèùë

ÛÚåÚçÜÞìáÞÞøøáëèùàáÚßèÜùìèç Dividend  ÑÞæèïâçàøáÞëÞìùåøìèßÛùìâçÞììÞì ëÞìÞÚëÜáÚçÝÝÞïÞåèéæÞçøÈç# ÚÜêùâëÞÝâçÛèøáøáÞÜùëëÞçøòÞÚë ðÞìéÞçøx æ›"x$"æœèç ÓáÞÁèÚëÝáÚìëÞÜèææÞçÝÞÝÚĚçÚå ðèëäâçàÜÚéâøÚåÚçÝÜÚìáàÞçÞëÚøâèç ÚçÝéëâèëòÞÚëì іÃÚÜøâïâøâÞìðáâÜáëÞéëÞìÞçøìY ÝâïâÝÞçÝèß!éÞçÜÞéÞëìáÚëÞøèÛÞ èßèùëëÞïÞçùÞ›"Yœ ÝùëâçàÚéÞëâèÝèßëÞïÞçùÞàëèðøáĎ éÚâÝèç!÷Úò$øèìáÚëÞáèåÝÞëì ÓáÞëÞßèëÞßèë#ðÞáÚïÞ èçøáÞëÞàâìøÞëÚø Àéëâå$ÖáÞç  ÑÞøëÚçìåÚøÞÝ"ëÞìùåøìÚøøáÞ ÚÝÝÞÝøèøáÞ#âçøÞëâæÝâïâÝÞçÝ Objective: Deliver attractive Guy Young ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë Å×ëÚøÞìùìÞÝâçÜÚåÜùåÚøâçàøáÞ éëèĚøÚÛâåâøò èß!!éÞçÜÞéÞëìáÚëÞéÚâÝèç Our Performance #ëÞìùåøì ÒÞéøÞæÛÞë#øáâìëÞéëÞìÞçøì ÊÏÈÓëÚÝâçàéëèĚøÚçÝëÞøùëçèçìÚåÞì Úßùåå˜òÞÚëÝâïâÝÞçÝèß$éÞçÜÞ  ÑÞæèïÞÝøáÞëÞìùåøìèßèùëæèùåÝ ÖÞÜèçøâçùÞøèæÞÚìùëÞùçÝÞëåòâçà éÞëìáÚëÞ ÚçÝøùçÝâìáěùñÛùìâçÞììâçÁëÚóâå øëÚÝâçàéëèĚøèßøáÞÆëèùéÚìðÞååÚì Basis of Preparation 2017 Performance Overview ÷ÚìøÞëÜèÝâðáâÜáðÚìÚÜêùâëÞÝ ÈøëÞæÚâçìøáÞÁèÚëÝċìâçøÞçøâèçøèÝÞåâïÞë øëÚÝâçàéëèĚøÚìÚéÞëÜÞçøÚàÞèßìÚåÞì âç" x"$ %æ ÀååëÞßÞëÞçÜÞìâçøáâìĚçÚçÜâÚåëÞïâÞð ÈçÜèçøëÚìøøè"ÞçݘæÚëäÞøìðÞëÞ åèçà˜øÞëæÝâïâÝÞçÝàëèðøáéëèïâÝÞÝøáâì ðáâÜáðÞëÞßÞëøèÚìèùëëÞøùëçèçìÚåÞì ÚëÞøèáÞÚÝåâçÞéÞëßèëæÚçÜÞùçåÞìì ìøëèçàÞëÝùëâçà#ÚçÝèùëëÞïÞçùÞ Revenue âììùééèëøÞÝÛòùçÝÞëåòâçàÞÚëçâçàìÜÚìá èëÑèÒ ìøÚøÞÝèøáÞëðâìÞÒÞÞÍèøÞ øèøáÞ ÛÞçÞĚøÞÝßëèæøáÞâæéëèïÞÝÝÞæÚçÝßèë ěèðìÜÚéâøÚåÞñéÞçÝâøùëÞëÞêùâëÞæÞçøì Objective: Deliver growth over ÑÞéèëøÞÝ ÔçÝÞëåòâçà ÓëÚÝâçàéëèĚøèßx"!!æâçÜëÞÚìÞÝÛò ÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøìèç èùëéëèÝùÜøìâçÛèøáÒøÞÞåÚçÝÅèùçÝëò ÚçÝøáÞéëÞïÚâåâçàæÚëäÞøèùøåèèä the long term "YèçÚçùçÝÞëåòâçàÛÚìâìïÞëìùìåÚìø ~Y ~!Y éÚàÞ $ ÚìÚëÞìùåøÚìðÞååÚìÛùìâçÞììàÚâçìâç KPI: Underlying revenue growth òÞÚëðáâåìøÑèÒèçÚÜèçìøÚçøÜùëëÞçÜò æÚçòèßèùëäÞòæÚëäÞøìéëâçÜâéÚååò Key Performance Indicators ÛÚìâìðÚì%$YÚ ÛéìâæéëèïÞæÞçø Ä÷ÄÀÚçÝÍÀÅÓÀÑÞéèëøÞÝëÞïÞçùÞ ÑÞéèëøÞÝëÞïÞçùÞßèë"ðÚìx  æ Introduction ÖÞáÚïÞâÝÞçøâĚÞÝÚçùæÛÞëèßÊÏÈì èïÞë"ÓáÞâæéëèïÞÝøëÚÝâçàéëèĚøâì âçÜëÞÚìÞÝÛòx$!æèïÞëøáÞéëâèëòÞÚë ðáâÜáÚßøÞëÅ×øëÚçìåÚøâèçÞßßÞÜøìÚçÝ ÖÞáÚïÞæÚÝÞàèèÝéëèàëÞììøèðÚëÝì 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ÛÞøðÞÞçéÞëâèÝìâëëÞìéÞÜøâïÞèß ëÞéèëøÞÝøëÚÝâçàéëèĚøèßx"!!æðáâÜá èß!YòÞÚë˜èç˜òÞÚëÓáÞàëèðøááÚì âçÜùëëÞÝâçâæéèëøâçàçèç˜ÄùëèéÞÚç ìøëÚøÞàòøèÚÜáâÞïÞøáâìðÞëÞìùÜÜÞììßùååò ÜùëëÞçÜòěùÜøùÚøâèçìÚçÝÚçò ðÚì YáâàáÞëøáÚçéëâèëòÞÚëÑÞøùëç ÛÞÞçÚìÚëÞìùåøèßìøëèçàÞëÞçݘæÚëäÞø ÛÚìÞÝéëèÝùÜøâçøèÄ÷ÄÀÚìðÞååÚìøáÞ åÚùçÜáÞÝâç#âçÜåùÝâçàìøëùÜøùëÚåÚçÝ ÛùìâçÞììÚÜêùâìâøâèçìÚçÝÝâìéèìÚåì èçìÚåÞìßèë#èçÚëÞéèëøÞÝÛÚìâìÚø ÝÞæÚçÝÚçÝÛùìâçÞììàÚâçìÝùëâçàøáÞ ìùÛìøÚçøâÚåâçÜëÞÚìÞìâçëÚðæÚøÞëâÚå  é éÞèéåÞÜáÚçàÞìøèøáÞÅâçÚçÜÞøÞÚæøáÞ %$YðÚìáâàáÞëøáÚçøáÞéëâèëòÞÚëÛò ÓáâìâìÝèçÞÛò éÞëâèÝéÚëøâÜùåÚëåòâçÄ÷ÄÀÚçÝÍÀÅÓÀ ÜèìøìÞñéÞëâÞçÜÞÝâçÀÝïÚçÜÞÝ Statutory EPS ÛùâåÝâçàèßÚÄùëèéÞÚçìáÚëÞÝìÞëïâÜÞ ÛéìÝÞìéâøÞÚçùæÛÞëèßáâàáÞëÜèìøì KPI: R&D spend ÑÞßëÚÜøèëâÞìÅèùçÝëòëÞéèëøÞÝÚY ÑÞéèëøÞÝ ÜÞçøëÞÚçÝâæéëèïÞÝéÞëßèëæÚçÜÞ  ÑÞìøÚøâçàøáÞéëÞïâèùìéÞëâèÝċìëÞìùåøì âçøáÞéÞëâèÝÓáÞáâàáÞëÜèìøìëÞåÚøÞÝ ÑèÒÚçèøáÞëâæéëèïÞæÞçøèïÞëøáÞ ëÞéèëøâçàÚçÝæÞÚìùëÞæÞçøÖáâåìøøáÞëÞ ÚøøáÞìÚæÞßèëÞâàçÞñÜáÚçàÞ›Åל ÖÞÛÞåâÞïÞøáÚøèùëæÚëäÞø˜åÞÚÝâçà ˜ Y øèéëâÜÞâçÜëÞÚìÞìèçìÞïÞëÚåäÞòëÚð éëâèëòÞÚë›"$YœðâøáéëèÝùÜøâèç ëÞæÚâçìÚåèøìøâååøèÝèÛÞßèëÞÚååèßèùë ëÚøÞìùìÞÝâçøáÞÜùëëÞçøéÞëâèÝ éëèÝùÜøøÞÜáçèåèàòÚçÝìÞëïâÜÞìÝÞåâïÞë æÚøÞëâÚåìÚìðÞååÚìøÞæéèëÚëòÜèìøì ÞßĚÜâÞçÜòàÚâçìÚçÝèéÞëÚøâçàÞñéÞçìÞ âæéëèïÞæÞçøéåÚçìÚëÞâæéåÞæÞçøÞÝ ßùçÝÚæÞçøÚåïÚåùÞøèèùëÜùìøèæÞëìÚçÝ ÚììèÜâÚøÞÝðâøáâæéèëøâçàéëèÝùÜøâçøè  ÑÞæèïâçàøáÞëÞìùåøìèßÝâìéèìÞÝ ëÞÝùÜøâèçìèßßìÞøøâçàëÚðæÚøÞëâÚåÜèìø øáÞéåÞÚìâçàéëèàëÞììøèÝÚøÞâìøáÚçäì øáÚøøáÞéëâæÚëòæÞÜáÚçâìæøèÝÞåâïÞë ÄùëèéÞßëèæèøáÞëßÚÜâåâøâÞìâçøáÞÆëèùé ÛùìâçÞììÞìâçÛèøáøáÞÜùëëÞçøÚçÝ âçÜëÞÚìÞìøáÚøìøÚëøÞÝøèâæéÚÜøëÞìùåøì øèøáÞÝÞÝâÜÚøâèçÚçÝéëèßÞììâèçÚåâìæèß øáÚøïÚåùÞâìøèâçïÞìøìâàçâĚÜÚçøåòâç øèìÚøâìßòøáÞáâàáÞëÝÞæÚçÝÈçÚ éëâèëòÞÚëì âçøáÞìÞÜèçÝáÚåß %$Y èùëĚçÚçÜÞéÞëìèççÞåÚÜëèììøáÞÆëèùé Return on sales2 òÞÚëèßìøëèçàìÚåÞìàëèðøáèùëÜÚìá æÚçÚàÞæÞçøéÞëßèëæÚçÜÞðÚììøëèçà ÑÞéèëøÞÝ ÔçÝÞëåòâçà ÚÜáâÞïâçàÚ YÜÚìáÜèçïÞëìâèç ~ Ûéì ~ Ûéì ÝùÞåÚëàÞåòøèÛÞøøÞëðèëäâçàÜÚéâøÚå Revenue æÚçÚàÞæÞçøÀìÚëÞìùåøðÞáÚïÞ 2017 Revenue "ÑÞïÞçùÞ YÜáÚçàÞ  ÔçÝÞëåòâçàÛÚìâìâìÚøÜèçìøÚçøÜùëëÞçÜòÚçÝ ÝÞÜëÞÚìÞÝèùëçÞøÝÞÛøéèìâøâèçÚçÝ ÞñÜåùÝÞììÞéÚëÚøÞåòëÞéèëøÞÝâøÞæìÚçÝøáÞ Acquisitions/ ÀÜêùâìâøâèçì âæéÚÜøèßÚÜêùâìâøâèçìÚçÝÝâìéèìÚåì âæéëèïÞÝèùëåÞïÞëÚàÞëÚøâèèßçÞø xæ As reported Disposals Underlying ÀìëÞéèëøÞÝ ÂùëëÞçÜò ÃâìéèìÚåì ÔçÝÞëåòâçà ÑÞéèëøÞÝ ÔçÝÞëåòâçà  ÅèëÝÞĚçâøâèçìèßÚåøÞëçÚøâïÞéÞëßèëæÚçÜÞ ÝÞÛøøèÄÁÈÓÃÀøè ñßëèæ$ñÚø ÒøÞÞå 1,148.7 (5.5) 1,143.2 %  " –  %Y  Y æÞÚìùëÞìëÞßÞëøèÍèøÞ èßøáÞÆëèùé ÃÞÜÞæÛÞë" ÅâçÚçÜâÚåÒøÚøÞæÞçøì ÅèùçÝëò 535.2 – 535.2 !%   – $%$ "!Y % Y ÓèøÚåÆëèùé 1,683.9 (5.5) 1,678.4    %" –  % Y !Y $ Vesuvius plc Annual Report and Accounts 2017 29

Financial Review ÜèçøâçùÞÝ

ÎéÞëÚøâçàéëèĚø£m Headline earnings per share pence Statutory earnings per share pence RONA moving average* % Net debt* £m Unutilised committed debt facilities £m x%#~$Y #é~ %Y  é˜ Y  Y x#  æ x! #æ

17 109.7 17 40.7 17 14.1 17 24.2 17 274.3 17 153.7 16 92.9 16 30.4 16 21.1 16 21.1 16 320.3 16 158.3

15 92.8 15 28.1 15 18.1 15 21.1 15 291.6 15 181.1  —ÅèëÝÞĚçâøâèçìèßÚåøÞëçÚøâïÞéÞëßèëæÚçÜÞæÞÚìùëÞìëÞßÞëøèÍèøÞ èßøáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøì

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ðÞëÞx"æÛÞåèð"ÓáÞëÞÝùÜøâèç ÅëÞÞÜÚìáěèðßëèæÜèçøâçùâçà ßëèæøáâìÜÚåÜùåÚøâèçÚìÜÚéâøÚåÞßĚÜâÞçÜò ÓëÚÝâçàéëèĚø 165.5   âçĚçÚçÜÞÜèìøìðÚìåÚëàÞåòÝùÞøè èéÞëÚøâèçìðÚìx% æßèëøáÞòÞÚë âìÚçâæéèëøÚçøÜèçìâÝÞëÚøâèçâçèùë ÂÚìáÜèçïÞëìâèç 104% % Y åèðÞëçÞøÝÞÛøåÞïÞåìøáÚøøëâààÞëÞÝÚ ðáâÜáâìÚååøáÞæèëÞéåÞÚìâçàÚàÚâçìø éèëøßèåâèÝÞÜâìâèçìÈøâìÜÚåÜùåÚøÞÝÛò æèëÞßÚïèùëÚÛåÞâçøÞëÞìøÜèìøèçøáÞ ÚÛÚÜäÝëèéèßëÞïÞçùÞàëèðøáøáÚø ÝâïâÝâçàøëÚÝâçàéëèĚøéåùìèùëìáÚëÞèß ÂèæéÚçòċìëÞïèåïâçàÜëÞÝâøßÚÜâåâøò âçÞïâøÚÛåòëÞêùâëÞììèæÞÜÚìáâçïÞìøæÞçø éëèĚøìßëèæöèâçøïÞçøùëÞìÛòèùëÚïÞëÚàÞ ÃùëâçàøáÞòÞÚëøáâìßÚÜâåâøòðÚì âçðèëäâçàÜÚéâøÚåÅëÞÞÜÚìáěèðßëèæ èéÞëÚøâçàÚììÞøì›éëèéÞëøòéåÚçøÚçÝ ìùÜÜÞììßùååòÞñøÞçÝÞÝßèëÚßùëøáÞë ÜèçøâçùâçàèéÞëÚøâèçìâç#ðÚì ÞêùâéæÞçøÚçÝøëÚÝÞðèëäâçàÜÚéâøÚåœ Objective: Maintain a strong ÀøøáÞÞçÝèß#øáÞçÞøÝÞÛøøè çÞâøáÞëâìÞñéÞÜøÞÝøèáÚïÞÚæÚøÞëâÚå øðèòÞÚëìøèÚçÝvæèßøáÞÔÒ x #æáâàáÞëøáÚçåÚìøòÞÚëèçÚ ĚçÚçÜâÚåéèìâøâèç ÄÁÈÓÃÀëÚøâèðÚì ñÚçâæéëèïÞæÞçø âæéÚÜøèçøáÞÛùìâçÞììÚßøÞëÜèçìâÝÞëâçà ÀìðâøáæèìøèßèùëÊÏÈìðÞæÞÚìùëÞ ÏëâïÚøÞÏåÚÜÞæÞçøéëèàëÚææÞ›ĊÔÒÏÏċœ ëÞéèëøÞÝÛÚìâìÛÞÜÚùìÞèßøáÞÛÞøøÞë èïÞëåÚìøòÞÚë›"$ñœÚçÝÄÁÈÓÃÀ øáÞÜèçøëèåìðÞáÚïÞâçéåÚÜÞ øáâìèçÚ˜æèçøáæèïâçàÚïÞëÚàÞ KPI: Interest cover and net debt ðÚìëÞÝÞÞæÞÝÚçÝëÞéåÚÜÞÝÛòÚ ðèëäâçàÜÚéâøÚåéÞëßèëæÚçÜÞéÚëøâÚååò øèâçøÞëÞìøðÚì!$ñ›"  ñœ ÛÚìâìÚøÜèçìøÚçøÜùëëÞçÜòøèÞçìùëÞ ÎùëäÞòæâøâàÚøâèçèßÝÞæÚçÝïèåÚøâåâøò Äùëè˜ÝÞçèæâçÚøÞÝÔÒÏÏèßøáÞìÚæÞ èßßìÞøÛòáâàáÞëÜÚìáëÞìøëùÜøùëâçàÜèìøì ÀìÚø ÃÞÜÞæÛÞë#øáÞÆëèùé øáÚøðÞßèÜùìèçìùìøÚâçÚÛåÞùçÝÞëåòâçà ÅùëøáÞëâçßèëæÚøâèçèçèùëĚçÚçÜÞ âìøèæÚçÚàÞøáÞÆëèùéċìÞñéèìùëÞ ïÚåùÞÛùøèçæèëÞßÚïèùëÚÛåÞøÞëæì ÎùëÜÚìáÜèçïÞëìâèçâç#âæéëèïÞÝ áÚÝÜèææâøøÞÝÛèëëèðâçàßÚÜâåâøâÞìèß âæéëèïÞæÞçøìÎùëÑÎÍÀßèë# x!"  æ›"x!#"%æœèßðáâÜá ÜèìøìÜÚçÛÞßèùçÝâçÍèøÞ%øèøáÞÆëèùé øáëèùàáÛÚåÚçÜâçàèùëéèëøßèåâèèß ÎùëáÞÚÝåâçÞÏÁÓðÚìx!%æ#"Y øè Y›"% Yœ ðÚì Y›"Yœ x! 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Innovation Katarzyna Szafraniec, Quality Engineer, Poland “ As a Quality Engineer I continue to draw on my R&D experience.”

Having studied Chemical Two years later, I was promoted In 2016, I was selected to join “We engage the creativity of Technology at university, to the position of R&D Engineer Skawina’s new Casting & I joined Vesuvius in 2011, at Skawina where part of my Precast Department as a beginning as a R&D Assistant role was to conduct on-site Quality Engineer, where I our people across the entire at the Vesuvius site in Skawina, product analysis for customers, continue to draw on my R&D Poland working on refractory solving production issues for experience to monitor and organisation to drive innovation” material. In this role, them. I was also responsible further improve production I collaborated with engineers for the development of processes. My career at Alan Charnock ÕâÜÞÏëÞìâÝÞçøÚçÝÂáâÞßÓÞÜáçèåèàòÎßĚÜÞë across numerous projects, new products such as the Vesuvius has enabled me to

conducting physical and industrialisation of our develop my technical expertise, Our Performance chemical analysis. Using X-ray ìéâçÞå˜ßèëæâçàìÞåߘěèð as well as understand diffraction, Thermogravimetric castable. During this time, production processes, Analysers and Scanning I also participated in develop training programmes ma Vesuvius’ R&D organisation has been support to the Steel and Foundry Electron Microscopy, I was Vesuvius’ in-house technical and manage a team of a major factor in maintaining our industries. Our customers already nc

able to gain a thorough ‘HeaTt’ training. motivated colleagues.colleagues. e technology leadership position. We are recognise our expertise in developing understanding of Vesuvius’ now three years into our initiative to engineering solutions using our products and their structure. engage the creativity of people across understanding of our own technology the whole organisation, and to drive platforms and our customers’ processes. innovation across the entire Group. This is borne out of our long-term daily Like all our other major Group initiatives presence at customer plants, working £33.2m – safety, quality and excellence – in partnership with them to improve Spend on R&D embedding a culture of innovation the performance of our products, 2016: £28.6m requires focus on leadership, structure, and providing the continuous process, tools, training and incentivisation. process improvement that our The structures are in place with the customers demand to maintain 2.0% necessary process and tools, which their own competitiveness. % of Revenue are constantly being streamlined 2016: 2.0% and improved. Ideation Understanding our customers’ processes Digital Transformation and the application of our products, 14.5% Digital Transformation is a key theme knowing what to look for and then % of new product sales1 ßèëÜèæéÚçâÞìøÚëàÞøâçàìâàçâĚÜÚçø understanding what we see, are the 2016: 14.2% growth, strategic regeneration or ĚëìøÞììÞçøâÚåâçàëÞÝâÞçøìèßøáÞÜëÞÚøâïÞ market disruption with breakthrough process of ideation. Ideation links 1. Sales of products launched within the last 5 years technologies. For Vesuvius, this has experience and knowledge with the as a % of total revenue been manifested by our Digital Services situation in front of you, generating business unit. This also engages each new ways to make improvements. of the Group’s other business units Occasionally this can lead to in adopting a business model breakthrough ideas giving a step change complementary to and independent of in performance or a disruptive new their existing consumables business. technology platform. It is this presence Vesuvius is extremely well positioned to at, and interaction with, the customer harness the digital transformation trend that is at the heart of the Vesuvius by creating this new market offering built business model. It is also illustrated in our on the reputation of over 100 years as Technical Services strategy: developing a leader of innovation giving technical sensors, software tools and techniques to Vesuvius plc 34 Annual Report and Accounts 2017 35

Ideation Innovation continued Understanding our customers’ processes and the application of our products, knowing what to look for and then understanding ðáÚøðÞìÞÞÚëÞøáÞĚëìøÞììÞçøâÚåâçàëÞÝâÞçøì of the creative process of ideation.

Global Research & Development centres

Barlborough UK constantly monitor customer processes R&D Performance new technology platforms may have Bettsville USA and our products in use, interpreting the applications across multiple business During 2017, our new product sales Enschede Netherlands data obtained, reacting with process units, and be integrated into many Feignies France growth rate (for products launched within adjustments in real time and allowing for different products, multiplying the value Ghlin Belgium the last 5 years) slowed slightly after an new process and product developments. of the technology. Technology platforms Pittsburgh USA initial two years of very healthy growth. This model can create new services, that come from these unorthodox Suzhou China By the end of 2017, we reached c. 15% Visakhapatnam India add value to our existing product beginnings are more likely to lead to from our starting position of 8% in 2014. offering and accelerate our traditional breakthrough and disruptive innovations. We launched a total of 26 new products ideation process. We have several such new technology in 2017, with more than 30 new products platforms that are ready to move into Innovation is the creative process of planned for 2018 launch. the NPI process and therefore look Training Joining Up Innovation ìéÞÜâĚÜøèéâÜìÞçìùëâçàøáÚøøáÞëÞìèùëÜÞì

converting ideas into value-creating Our Performance The R&D resource allocation to forward to exciting prospects for these with the most knowledge and experience technologies or creating value by doing During 2017, we extended our Vesuvius consists of two divisions and technology projects has steadily in the years ahead. âçÚçòĚÞåÝÚëÞëÞßÞëÞçÜÞÝæÚäâçàßèë things differently. But to be effective we training efforts to the broader Vesuvius four business units. Whilst this creates an increased in all business units. The æèëÞÞßĚÜâÞçøéëèàëÞììèßèùëéëèöÞÜøì need to identify and prioritise the right Another important group in Vesuvius’ community. To date, our project opportunity to cross-fertilise products, maturity of our NPI process means we ideas, and have the courage to put the drive for innovation is the Solutions management training programme has services, processes and technologies, can now monitor additional KPIs to Excellence other ones aside. Group. This group’s activities have included over 300 people, giving each the divisional structure does not naturally provide a deeper level of analysis on become a differentiator for Vesuvius in an understanding of the full innovation facilitate the sharing of knowledge. Our innovation activities are supported Our new product introduction (‘NPI’) our innovation performance so we can our Steel market and an essential driver process – covering not only their role in In 2017, we launched a Technology by the Group Excellence programme, process has been in place for three years, continue to improve and ensure that for the development of our Technical the process, but also providing them Bridge Initiative, taking experts from the which allows for self-assessment against enabling us to identify and focus on we achieve the targets we set ourselves. Services strategy. The team translates with the skills to function more effectively R&D department of each division, our designated benchmarks. Within the the ideas and projects which are most In 2018, we will introduce new input and what we see in customer processes, either in the cross-functional teams required fundamental research group and our R&D community, progress has already aligned with our strategic plans, injecting output indicators for innovation to directly or through data analysis, into to deliver new product introduction. central process development group. been made on the various Excellence greater rigour into decision-making monitor our pipeline of breakthrough new solutions ranging from new designs The training provided interactions with roadmaps, not only in Innovation, but with a stage gate approach. Today, we éëèöÞÜøìáèðÞßĚÜâÞçøåòðÞæèïÞ The ‘bridges’ are structured around for existing products, to new products their future collaborators, identifying also with respect to other initiatives such have no shortage of ideas, but actively projects through the NPI process, and various technology themes related to and process control functionalities. the good practices and operating as standardising the career ladder for work on a much smaller number of how effective we are at achieving materials, processes and the new More fundamentally, it looks at the entire skills necessary to drive our NPI projects R&D staff, developing standard job prioritised projects than we worked on our forecasted project targets. We spend technology platforms with the goal of: customer process and all the products to greater successes. descriptions across all divisions, four years ago. We operate a continuous YèßëÞïÞçùÞèçіÃÚìâàçâĚÜÚçøåò in use rather than just a single element, > Ïëèæèøâçànew ideas and enhancing performance assessment, portfolio review process to ensure larger proportion of sales than most of Training will continue with a new enabling the root cause of a problem applications for technology and supporting the career and personal that the R&D technology roadmaps our competition and expect to deliver programme called ‘Quality in the NPI øèÛÞâÝÞçøâĚÞÝëÚøáÞëøáÚçøÚÜäåâçà development of our staff. Making steady emphasise both current needs and the ìâàçâĚÜÚçøÛÞçÞĚøìßëèæøáâìâçïÞìøæÞçø éëèÜÞììċìéÞÜâĚÜÚååòßèÜùìâçàèç > ÷ÞÚìùëâçà the evolution of individual symptoms. progress along all the roads of the essential longer-term programmes. technologies that are key to our > ÏëèöÞÜøÝÞĚçâøâèç to ensure that Excellence road map will ensure that the The Solutions Group, combining its industries In 2017, we launched an Ideation New Product Development Innovation pillar of the Vesuvius strategy process application, modelling and projects going into the NPI process all Platform where new ideas are reviewed Enabling Technologies, our fundamental > ÁùâåÝâçàTechnology Maps that will continue to strengthen, maintaining a metallurgical expertise, is in high have clear success criteria, converting ÚçÝëÞĚçÞÝðâøáïâÚÛåÞÚçÝïÚåùÚÛåÞ research group, continues to pursue a will include internal and external solid foundation on which we continue to demand from both the Vesuvius the customer need/voice of the ideas funnelled into the NPI pipeline. range of new technology platforms. information build for the future. regional organisations and our customer into SMART objectives The Ideation Platform is presently The team monitors technology trends customers because of the positive > ÃÞìâàçÅÚâåùëÞ÷èÝÞÚçÝÄßßÞÜø > ÂèçìøëùÜøâçàa knowledge network Alan Charnock Vice President targeted only at new products and across a broad range of industries, results it has demonstrated in solving ÀçÚåòìâì›Å÷ÄÀœÚçÝÝÞìâàçèß ÚçÝÂáâÞßÓÞÜáçèåèàòÎßĚÜÞë manufacturing processes, but our both inside and outside our own We launched the initiative with ten areas complex problems. ÞñéÞëâæÞçøì to accelerate the R&D intention is to broaden its scope to markets. The team looks for previously of focus and will gradually add new stage of the NPI process, reducing include ideas on all topics for all unimagined or unconventional ways to themes over time. All generated data IP portfolio the risk that the solutions developed functions, each with their own ùìÞæÚøÞëâÚåìÚçÝéëèÜÞììÞìĚåøÞëâçà is collated and stored in our R&D and tested in the laboratory do not review process. these concepts through our front-end The protection of our IP is as important as collaboration platform – TechConnect – éÞëßèëæÚìÞñéÞÜøÞÝâçøáÞĚÞåÝ innovation process and incubating them its generation. In 2017, we tested, and are making the sharing of information causing recycled developments and until they become new technology now ready to roll out, an enhanced audit as simple as possible and avoiding project delays platforms. These can then be used by process to measure the security of our IP duplication. The learning generated by R&D departments across our business across the Group starting with R&D and > ÏëèÜÞììÅ÷ÄÀ to ensure that our these community practice groups will be to foster new product or process manufacturing locations in 2018. Our IP industrialisation process is effective converted into tutorial presentations to development projects. Our NPI projects portfolio was reviewed in 2015 and 2016, and the product we ultimately allow for dissemination throughout ùìùÚååòìøÚëøßëèæÚçâÝÞçøâĚÞÝÜùìøèæÞë and we continued with a stable level of manufacture consistently achieves the technical community of Vesuvius. need but this front-end innovation Ěåâçàìâç#øèæÚâçøÚâçèùëéèëøßèåâè the desired performance objectives The ‘community of practice groups’ éëèÜÞìììøÚëøìðâøáçèìéÞÜâĚÜéëèÝùÜø at 156 families, 1,569 granted patents ÚìÝÞøÚâåÞÝâçøáÞéëèöÞÜøÝÞĚçâøâèç became the go to experts for these or market in mind, meaning that the and 518 applications pending. Vesuvius plc 36 Annual Report and Accounts 2017 37

> Purging systems These are used to stir Operating Review steel in the ladle > Control devices These are used to čÎùëøÞÚæìðèëäÞÝøèàÞøáÞë Steel Flow Control æèçâøèëÚçÝëÞàùåÚøÞìøÞÞåěèðâçøè the mould to provide a solution for the 2017 Performance ÜùìøèæÞëùøâåâìâçàøáÞĚëìø čÈç#ÒøÞÞåÅåèðÂèçøëèå ÒøÞÞåÅåèðÂèçøëèåìÚåÞìàëèðøááÚì ÜèçøâçùÞÝøèèùøéÞëßèëæàëèðøáâçøáÞ ðèëåÝðâÝÞÚééåâÜÚøâèçèßçÞð àåèÛÚåìøÞÞåæÚëäÞøÈç#ðÞëÞéèëøÞÝ ìÚåÞìàëèðøáÜèçøâçùÞÝøè revenues of £605.9m, an increase of 11.8% on an underlying basis compared patented sealing technology” èùøéÞëßèëæàëèðøáâçøáÞ ðâøá"ÀååëÞàâèçìèùøéÞëßèëæÞÝ ùçÝÞëåòâçàìøÞÞåïèåùæÞàëèðøáÚçÝ Andrew Morrison and Linna Sun, heads of NAFTA and Asia VISO Development teams global steel market” Ä÷ÄÀðÚìèùëßÚìøÞìøàëèðâçàëÞàâèç ÒøÞÞåéëèÝùÜøâèçâçÄ÷ÄÀâçÜëÞÚìÞÝ %Y Roel van der Sluis ÏëÞìâÝÞçøÒøÞÞåÅåèðÂèçøëèå in 2017, and Vesuvius outperformed the The Challenge Global Development team to provide ÀåÚëàÞâçøÞàëÚøÞÝìøÞÞåéëèÝùÜÞëâç ÚìèåùøâèçÀçÝëÞð÷èëëâìèçÚçÝ

æÚëäÞøðâøáùçÝÞëåòâçàëÞïÞçùÞùé Our Performance #!Yøèx æëÞěÞÜøâçàæÚëäÞø ÍÀÅÓÀëÞìèåïÞÝøèÜèçïÞëøæèìøèß ËâççÚÒùçøáÞáÞÚÝìèßøáÞÍÀÅÓÀ ÚçÝÀìâÚÕÈÒÎÃÞïÞåèéæÞçøøÞÚæì share gains. øáÞâëéëèÝùÜøâèçøèÕÞìùïâùìċÅåÞñ ÂèåÝÒøÚëøûÓùçÝâìáÒáëèùÝðáâÜá respectively, collaborated in the Ãùëâçà#ðÞÞñéÞëâÞçÜÞÝïÞëòìøëèçà ÜáÚççÞåìøáÞěèðèßìøÞÞåâçøèøáÞ development of an innovation born ÕÞìùïâùìċÅåèðÂèçøëèåÛùìâçÞììùçâø ÒøÞÞåÅåèðÂèçøëèåéëèÝùÜøììùééåâÞÝÛò âçèùëіÃÜÞçøëÞâçÒùóáèùÂáâçÚ àëèðøáèßèùëÅåèðÂèçøëèåìÚåÞìâç ĚçÚåæèùåÝßèëìèåâÝâĚÜÚøâèç Steel Flow Control revenue £m ìùééåâÞìøáÞàåèÛÚåìøÞÞåâçÝùìøëòðâøá Vesuvius include: ÓáÞÜèåݘìøÚëøøÞÜáçèåèàòÞåâæâçÚøÞì the combination of an intumescent Ä÷ÄÀðáâÜáøÞæéèëÚëâåòÞñÜÞÞÝÞÝøáÞ consumable ceramic products used to the need for preheat, increasing the coating and an integral groove sealant > Viso™ isostatically pressed alumina capacity of our manufacturing plants £605.9m ÜèçøÚâçÚçÝÜèçøëèåøáÞěèðèßæèåøÞç safety of the tube changing process, ðáâÜáéëèïâÝÞìÚêùâÜäÞëàÚìøâàáøìÞÚå graphite and VAPEX® extruded clay in the region, requiring the import of ÛòÞñéÚçÝâçàæÚçòæùåøâéåÞìèßâøì steel in the continuous casting process. and reducing energy consumption. 17 605.9 graphite products These include ladle éëèÝùÜøìßëèæèùëßÚÜâåâøâÞìâçÀìâÚ ÇèðÞïÞëÚìÜèåÝìøÚëøøùÛÞìëÞêùâëÞ original thickness on commencement, This process enables steel manufactured 16 506.4 shrouds, stopper rods, submerged ÚçÝÍÀÅÓÀâçÜùëëâçàÚÝÝâøâèçÚå ÚÝÝâøâèçÚåøâæÞøèÞñéÚçÝÚßøÞë and for the duration, of service. in a blast furnace or electric arc furnace production starts to form an airtight 15 487.3 ÞçøëòçèóóåÞìÚçÝìáëèùÝìðáâÜá ßëÞâàáøÞñéèëøÝùøòÚçÝèïÞëøâæÞÜèìøì øèÛÞÜÚìøðâøáèùøâçøÞëëùéøâèçðáâåìø seal at the joint of the tundish and the ÜáÚççÞåÚçÝÜèçøëèåøáÞěèðèßæèåøÞç ÷ÞÚìùëÞìðÞëÞâææÞÝâÚøÞåòøÚäÞçøè ÓáÞÁÞçÞĚøì protecting it from the atmosphere. tube to prevent air contamination, a This combination of the coating and steel from ladle to tundish and from âçÜëÞÚìÞøáÞÜÚéÚÜâøòèßøáÞÅåèðÂèçøëèå ÒøÞÞåÅåèðÂèçøëèåìùééåâÞìøáÞ ÀïèâÝâçàÚøæèìéáÞëâÜÜèçøÚÜøâìÜëùÜâÚå éëÞáÞÚøðèùåÝìøâååáÚïÞÛÞÞçëÞêùâëÞÝ àëèèïÞìÞÚåÚçøÚååèðìøáÞÜùìøèæÞë tundish to mould Ä÷ÄÀéåÚçøìÚçÝøáâìëÚæé˜ùéâìçèð stoppers and tubes used to channel ÚìâøìâàçâĚÜÚçøåòëÞÝùÜÞìÜèçøÚæâçÚøâèç ßèëìèæÞìéÞÜâĚÜÚùøèæèøâïÞìøÞÞå to reliably use the cold start piece for ÚçÝÜèçøëèåøáÞěèðèßæèåøÞç complete, substituting imports from grades to improve sealing times. áâàáÞëìøÞÞåàëÚÝÞìÓáÞçÞðéÚøÞçøÞÝ ÚçÝèñâÝÚøâèçåÞïÞåìâçøáÞìøÞÞå > Slide-gate refractories These include steel from ladle to tundish and çèç˜Ä÷ÄÀéåÚçøì øÞÜáçèåèàòÜëÞÚøÞìÚøâàáøìÞÚåðâøáâç nozzles, plates and speciality shapes from tundish to mould; slide gate The products Vesuvius supplies into the Our Solution one minute of service commencement, used in furnace, ladle and tundish slide ÈçøáÞÀæÞëâÜÚìÒøÞÞåÅåèðÂèçøëèåċì ÃÚåÞÁèðÞëåÞÚÝâçàøáÞåèÜÚåÍÀÅÓÀ resulting in immediate reduction in refractories for ladles and tundishes; continuous casting process have a short gate systems underlying revenues increased 8.8% sales team, challenged the VISO ìøÞÞåëޘèñâÝÚøâèçëÞÝùÜÞÝìøÞÞå slide gate systems; tundish and ìÞëïâÜÞåâßÞ›èßøÞçÚæÚøøÞëèßÚßÞðáèùëìœ to £201.7m in 2017, against a 5.9% ĚçâìáâçàÚçÝèïÞëÚååâæéëèïÞÝ æèùåÝěùñÞìÚçÝÜèçøëèåÝÞïâÜÞì ÝùÞøèøáÞìâàçâĚÜÚçøðÞÚëÜÚùìÞÝÛòøáÞ > Temperature measurement and increase in steel production volumes. steel quality. øèæèçâøèëÚçÝëÞàùåÚøÞìøÞÞåěèð ÞñøëÞæÞåòÝÞæÚçÝâçàÞçïâëèçæÞçøâç RADAR™ These provide optical Our outperformance relativeative to steel into the mould. These products ðáâÜáøáÞòÚëÞùìÞÝÓáÞìÞéëèÝùÜøì temperature measurement and slag éëèÝùÜøâèçðÚìÝùÞøèæÚëäÞøìáÚëÞÚëäÞøìáÚëÞ have been designed to resist æùìøðâøáìøÚçÝÞñøëÞæÞøÞæéÞëÚøùëÞ detection àÚâçìâçÍèëøáÀæÞëâÜÚÈçøáÞÔÒâççøáÞÔÒâç ÞñøëÞæÞøáÞëæèæÞÜáÚçâÜÚåìøëÞìì ÜáÚçàÞìðáâåìøëÞìâìøâçàåâêùâÝìøÞÞå > Gaskets These create an airtight seal particular, our market shareare is and corrosive environments. and slag corrosion. In addition, the ÛÞøðÞÞçëÞßëÚÜøèëòÜèæéèçÞçøìøè ÜèçøâçùâçàøèëÞÜèïÞëßëèæøáÞåèðæøáÞåèð The majority of these products ÜÞëÚæâÜéÚëøìâçÜèçøÚÜøðâøáøáÞåâêùâÝ minimise the risk of air ingress and point of the second half ofof 2015 are consumed during the process ìøÞÞåæùìøçèøâçÚçòðÚòÜèçøÚæâçÚøÞâø ìøÞÞåèñâÝâìÚøâèç ðáÞçðÞðÞëÞâæéÚÜøÞÝÛòÜùìøèæÞëÛòÜùìøèæÞë of making steel and, consequently, The quality, reliability and consistency closures and volume losseses due toto demand is primarily linked to steel of the products and process control > Fluxes ÓáÞìÞÚëÞéèðÝÞëììéëÞÚÝ market pricing pressure. éëèÝùÜøâèçïèåùæÞìÂèçøâçùâçà equipment are therefore critical on the surface of the molten steel âççèïÚøâèçÚååèðìùìøèèßßÞëÞçëâÜáÞÝ øèøáÞêùÚåâøòèßøáÞĚçâìáÞÝæÞøÚå ðáâÜáéëèïâÝÞøáÞëæÚåÚçÝÜáÞæâÜÚå solutions that create additional being produced and the productivity, insulation and remove inclusions ïÚåùÞâçèùëÜùìøèæÞëìċéëèÜÞììÞì éëèĚøÚÛâåâøòÚçÝìÚßÞøòèßèùëÜùìøèæÞëìċ processes. Vesuvius plc 38 Annual Report and Accounts 2017 39

ÂáâçÚâìøáÞðèëåÝċìåÚëàÞìøéëèÝùÜÞëèß Operating Review continued ìøÞÞåÚÜÜèùçøâçàßèëÚééëèñâæÚøÞåò!Y Steel Flow Control of global production. The adjustment of ÄßĚÜâÞçøøÞÜáçèåèàò øáÞÂáâçÞìÞìøÞÞåâçÝùìøëòßëèæéëèÝùÜâçà ĊåèçàċìøÞÞåßèëâçßëÚìøëùÜøùëÞøèéëèÝùÜâçà ĊěÚøċìøÞÞåøòéâÜÚååòùìÞÝßèëÜèçìùæÞë transfer improves customer products and automotives, is highly ÛÞçÞĚÜâÚåßèëÕÞìùïâùìÅåÚøìøÞÞåøòéâÜÚååò production reliability and ÔçÝÞëåòâçàëÞïÞçùÞâçÜëÞÚìÞÝÛò#$Y An SEM 3085 tube changer, uses three times as much Vesuvius âçÀìâژÏÚÜâĚÜâç#øèx" æ for the robotic tube éëèÝùÜøìÛòïÚåùÞÚçÝÚìÚëÞìùåøðÞ reduces cost compared to a 5.7% increase in steel changing process ÛÞåâÞïÞøáÞÚÜÜÞììâÛåÞæÚëäÞøßèëÕÞìùïâùìċ ÅåèðÂèçøëèåÛùìâçÞììâçÂáâçÚÜèùåÝàëèð production volume in the region. ÓáÞàåèðâçàÕÈÒÎìùۘÞçøëò Joe Gu, Production Manager of Slide Gate Refractories and Purge Revenues increased faster than the nozzle channels molten ìâàçâĚÜÚçøåòâçøáÞåèçàøÞëæ Plugs, North Asia steel market in the key regional markets steel into the mould ÅùëøáÞëæèëÞÂáâçÚċìÆèïÞëçæÞçøâì èßÂáâçÚÈçÝâÚÚçÝÒèùøáÊèëÞÚ focused on a comprehensive upgrade The Challenge visiting Vesuvius R&D sites and èßÂáâçÞìÞæÚçùßÚÜøùëâçàæÚäâçàâø ÓáÞÛÞçÞĚøìèßøáÞëÞìøëùÜøùëâçà ÓáÞÂÚìøëâéÿéëèÜÞììâìÚëÞÜÞçø manufacturing plants, and also steel programme implemented during 2016 âççèïÚøâèç˜ÝëâïÞçÞæéáÚìâìâçàêùÚåâøò technology developed to directly cast producers using the technology. and 2017 started to deliver a positive èïÞëêùÚçøâøòÚçÝÚÜáâÞïâçàĊàëÞÞçċ steel in a thin strip. This enables the ÎçÜÞìùßĚÜâÞçøâçßèëæÚøâèçáÚÝÛÞÞç âæéÚÜøèçøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞ ÝÞïÞåèéæÞçøøáèùàáĊ÷ÚÝÞâçÂáâçÚ éëèÝùÜøâèçèßìøÞÞåÜèâåìðâøáåÞìì àÚøáÞëÞÝøáÞÂáâçÞìÞøÞÚæìðÞëÞ Our Performance of the business unit. !ċÓáâìøëÞçÝøèðÚëÝìáâàáÞëêùÚåâøò energy consumption and a reduced øëÚâçÞÝèçáèðøèìùééèëøøáÞçÞð âçÝùìøëâÚåæÚçùßÚÜøùëâçàâìÛÞçÞĚÜâÚåøè éëèÝùÜøâèçÜèìøÜèæéÚëÞÝðâøáøáÞ ÂáâçÞìÞÜùìøèæÞëìÜèïÞëâçàëÞßëÚÜøèëò ÜèçïÞçøâèçÚåéëèÜÞììðáâÜáëÞêùâëÞì ÝÞìâàçÚçÝæÚçùßÚÜøùëâçàÚçÝèç˜ìâøÞ ÕÞìùïâùìċìøÞÞåÝâïâìâèçÎùëÜùëëÞçøìøëèçà Strategic Highlights from hot rolling after casting to reduce operational support. ÝÞåâïÞëâçàéëèÜÞììÞßĚÜâÞçÜòÚçÝ ëÞÝùÜâçàøáÞâëðÚìøÞÚçÝÜèìøÀììáèðç éèìâøâèçâçøáâìæÚëäÞøðâååáÞåéùìøè the Year removing personnel from the harsh âçøáÞÜÚìÞìøùÝòèçéÚàÞ #ðÞáÚïÞ slab thickness. ÛÞçÞĚøßëèæøáÞìÞøëÞçÝì ÓáÞÁÞçÞĚøì ÅèååèðâçàøáÞìùÜÜÞììèßøáÞ environment around the caster. In 2017, also developed complementary For this technology, Vesuvius has ÈçÝâÚâìÚçèøáÞëäÞòàëèðøáæÚëäÞøÚçÝ ÝÞïÞåèéÞÝìéÞÜâĚÜøÞÜáçèåèàòßèë With local production and support manufacturing rationalisation ðÞìÚðÚçâçÜëÞÚìÞâçÝÞæÚçÝßèë øÞÜáçèåèàòøèÚååèðßèëøáÞùìÞèßøáâì ÜÚéÚÛâåâøâÞìðÞìÞÜùëÞÝÚçâæéèëøÚçø robotics solutions and received orders product in higher grade steel production. èçÞðáÞëÞðÞÞçöèòáâàáéÞçÞøëÚøâèç core refractory materials and designs, éëèàëÚææÞâçÄ÷ÄÀÚìâæâåÚëâçâøâÚøâïÞ ÚìðÞååÚìÚììèÜâÚøÞÝäçèð˜áèðèç ÜèçøëÚÜøèßßÞëâçàøáÞĚëìøÂáâçÞìÞùìÞë ðÚìåÚùçÜáÞÝßèëøáÞÍÀÅÓÀëÞàâèç øèÜèçïÞëøìøÞÞåéåÚçøìâçÒèùøáÊèëÞÚ ëÚøÞìÈøðÚìèçÞèßøáÞßÚìøÞìøàëèðâçà èßøáÞÂÚìøëâéÿéëèÜÞììøáÞìáèëøÞìø We continued to develop our service operational best practices from our ðáÞëÞøáëèùàáÚÜèæÛâçÚøâèçèß ÒèùøáÀæÞëâÜÚÚçÝÄùëèéÞÓáâì steel markets in 2017 and closely tied to ÝÞåâïÞëòøâæÞÚøøáÞÛÞìøéëâÜÞðáâåÞ offering helping our customers to ÞñéÞëâÞçÜÞÚøìâøÞìëùççâçàøáâì âæéëèïâçàÞßĚÜâÞçÜòÚçÝÚÝÚéøâçà éèìâøâèçìÕÞìùïâùìðÞååøèìùééèëøèùë øáÞÆèïÞëçæÞçøċìÞÜèçèæâÜÝÞïÞåèéæÞçø øÞÜáçèåèàòâçÍÀÅÓÀÑÞÜÞçøåò maintaining the original product ùçÝÞëìøÚçÝÛÞøøÞëøáÞâëæèùåÝěèð êùÚåâøòÝÞïÞåèéÞÝâçÍÀÅÓÀÓáÞ éëèÝùÜøâèçïèåùæÞìÛÞøðÞÞçéåÚçøì customers in facing the future challenges plans is the target to increase steel ÂÚìøëâéÿæÚÜáâçÞìðÞëÞâçìøÚååÞÝ pattern. This is a key element in the ÂáâçÞìÞÚçÝÍÀÅÓÀøÞÚæìÜèçøâçùÞ improvements in cost base have been of automation and a greater focus capacity to 300 million tonnes per annum ÚøÚÂáâçÞìÞìøÞÞåéëèÝùÜÞëðáè casting process, as it is the last step required local refractory sourcing. øèìáÚëÞøáÞÞñéÞëøâìÞàÚâçÞÝèçøáâì æÚÝÞÖÞðâååÜèçøâçùÞøèéùëìùÞøáâì on quality. by 2030, versus a production level in ÛÞøðÞÞçåâêùâÝÚçÝìèåâÝìøÞÞåÓáâìÚùÝâø éëèÜÞììøèÚååèðßèëÚÜèçøâçùèùì effort in 2018 in order to deliver #èßÜæâååâèçøèççÞìÀìÚëÞìùåø improvement of the refractory parts. Èç#ðÞÚåìèßùëøáÞëÝÞïÞåèéÞÝèùë service is carried out by our process Our Solution ßùëøáÞëÛÞçÞĚøì Vesuvius also considers that this market capabilities in data capture and ÞñéÞëøìùìâçàìéÞÜâĚÜÚååòÝÞìâàçÞÝøèèåì ÀÓëÚçìßÞëèßÓÞÜáçèåèàòøÞÚæðÚìðÚì presents an opportunity for Vesuvius to formed inside Vesuvius before thehe ÖÞÚëÞçèðøëÚçìåÚøâçàøáâìæÞøáèÝèåèàò continuous temperature measurement. ÚçÝìèßøðÚëÞøèæÞÚìùëÞěèðéÚøøÞëç àëèðìÚåÞìÛòÚßÚÜøèëèßÚééëèñâæÚøÞåò ĚëìøÂÚìøëâéÿæÚÜáâçÞÜèææÞçÜÞÝÜÞÝ ÎùëâçïÞìøæÞçøâçÚçÝÞñÜåùìâïÞ through monitoring temperature, mould øèçÞðøÞëëâøèëâÞìøáëèùàáðáâÜá three times in the long term. éëèÝùÜøâèçâçÂáâçÚÉèÞÆùðÚìì ðÞÞñéÞÜøøèÝëâïÞßùëøáÞëÜèìø ÝâìøëâÛùøâèçÚàëÞÞæÞçøðâøáÒÚéèøÞÜá level and meniscus velocity. We can then ÚééèâçøÞÝÚìøáÞÂáâçÞìÞøÞÚæåÞÚÝÞëÞÚÝÞë improvements. The additional projects Oy, a Finnish technology company ÜèæéÚëÞøáâìðâøáøáÞÝÚøÚàÞçÞëÚøÞÝ We also remain optimistic about the ßèëøáâìéëèöÞÜøðáâÜáÝëÞðÞñéÞëøìëøì âÝÞçøâĚÞÝâçÜåùÝÞÚßèÜùìèçâçÝùìøëâÚå offering optical defect detection services ßëèæèùëÂèæéùøÚøâèçÚåÅåùâÝÃòçÚæâÜ èùøåèèäßèëßùøùëÞìøÞÞåéëèÝùÜøâèçàëèðøá ßëèæøáÞéëèÝùÜøåâçÞìèßÀÝïÚçÜÞÝÜÞÝ ÞßĚÜâÞçÜâÞìâçÁëÚóâåÚçÝÈçÝâÚ ÚçÝëÞÚå˜øâæÞÝÚøÚèçìøÞÞåìùëßÚÜÞ ìâæùåÚøâèçÜÚéÚÛâåâøâÞìÂèæéÚëâçàøáÞ âçÜèùçøëâÞììùÜáÚìÁëÚóâå÷ÞñâÜèÓùëäÞò Refractories, VISO and Systems,, the êùÚåâøòçèðéåÚÜÞìùìðÞååøèÚÝÝëÞììøáÞ ÝÚøÚÚååèðìùìøèëÞÜèææÞçÝâæéëèïÞÝ the Middle East, Russia and Vietnam. design and manufacturing teams,ms, and the local sales team. He and his teamteam ÈçÚÝÝâøâèçøèøáÞìÞðâÝÞëâçâøâÚøâïÞìðÞ requirements for data management at solutions to our customers. More details Roel van der Sluis âÝÞçøâĚÞÝÚìèåâÝÛÞçÜáæÚëäÛÚìÞÝìÞÝ targeted process improvements aimed our customers. From the start of 2018, èçøáÞðèëäèßèùëÒèåùøâèçìÆëèùéÚëÞ ÏëÞìâÝÞçøÒøÞÞåÅåèðÂèçøëèå èçÕÞìùïâùìċÞñéÞëâÞçÜÞâçÍÀÅÓÀÓÀ ÚøâçÜëÞÚìâçàøáÞèùøéùøâçìéÞÜâĚÜ øáâìÛùìâçÞììâìÛÞâçàæÚçÚàÞÝðâøáâç contained in the Innovation Section on ÚëÞÚììùÜáÚìâçèùëæâñéåÚçøâçÂáâçÚ øáÞÒøÞÞåÅåèðÂèçøëèåÛùìâçÞììùçâø pages 32 to 35. ÎéøâæâìÚøâèçðèëäéÞëßèëæÞÝáÞëÞáÚì ÚååèðÞÝùìøèìâæéåâßòèùëìùééåòÜáÚâç ÎùëіÃÞßßèëøìÚåìèÝÞåâïÞëÞÝçÞð Looking Ahead æÚäÞâøæèëÞÜèìø˜ÞßĚÜâÞçøÚçÝÜëÞÚøÞ éëèÝùÜøìøèìùééèëøøáÞàëèðøáâçøáÞ ÜÚéÚÜâøòøèÚÛìèëÛàëèðøá åÚÝåÞìåâÝޘàÚøÞÛùìâçÞììðâøáøáÞ ÈøâìèùëÞñéÞÜøÚøâèçøáÚøÝÞìéâøÞøáÞ âçøëèÝùÜøâèçèßèùëçÞñøàÞçÞëÚøâèç ëÞåÚøâïÞåòáâàáàëèðøáÚÜáâÞïÞÝâç# ÎïÞëøáÞåÚìøßÞðòÞÚëìÕÞìùïâùìáÚì ìåâÝޘàÚøÞæÞÜáÚçâìæðáâÜáâìëèÛèø˜ and a broadly positive outlook for 2018, invested in developing robotics solutions ready and uses optimised refractory steel production in the mature economies ðáâÜáâæéëèïÞøáÞìÚßÞøòÚçÝÜèçìâìøÞçÜò plates creating value for our customers èßÄùëèéÞÚçÝÍèëøáÀæÞëâÜÚðâååçèø èßèùëÜùìøèæÞëìċèéÞëÚøâèçìðáâåÞ in terms of ergonomics, safety and ÞñáâÛâøæÚøÞëâÚåàëèðøáâçøáÞæÞÝâùæ supporting our sales. Our unique value ëÞåâÚÛâåâøòðáâåÞëÞÝùÜâçàøáÞâëèéÞëÚøâçà long term, given that the nature of proposition is the result of the integration ÜèìøÈçÚÝÝâøâèçðÞåÚùçÜáÞÝèùëçÞð ÞÜèçèæâÜàëèðøáëÞêùâëÞìåÞìììøÞÞåøáÚç èßìéÞÜâĚÜëÞßëÚÜøèëòìòìøÞæÚçÝëèÛèøâÜ ÅåÞñÂèåÝÒøÚëøûÓùçÝâìáÒáëèùÝðáâÜá in the past. This is a key driver behind the ÝÞìâàç˜øáëÞÞÜèëÞÜèæéÞøÞçÜâÞìâçìâÝÞ ÚååèðìÜùìøèæÞëìøèèéÞëÚøÞøáÞâëÜÚìøÞëì efforts to adapt our manufacturing Vesuvius. Several steel makers have been ðâøáæèëÞěÞñâÛâåâøòâçøÞëæìèßìÞêùÞçÜÞ footprint and overhead structure in the pioneers in adopting this technology, åÞçàøáÚçÝÝÚâåòèéÞëÚøâèçÚìðÞååÚì mature markets. Vesuvius plc 40 Annual Report and Accounts 2017 41

Operating Review Advanced Refractories “Vesuvius has supported and rewarded my professional “Our outperformance of development”

steel production volume growth Andy Toner, Director of Marketing and Technology for Iron and Steel , NAFTA was supported by increased My career at Vesuvius began Two years after that, I was At Vesuvius I have been in 2008, when I joined as promoted to Product supported , challenged and customer interest in our a Service Technician, Manager for the Ladle rewarded in the development responsible for the Program and in 2014, I moved of my professional and preparation of tundishes at to become the Marketing technical expertise. I have

value-creating solutions” Our Performance Gerdau’s steel manufacturing Manager for our Advanced been given the opportunity to Tanmay Ganguly President, Advanced Refractories plant at Midlothian, Texas, in Refractory business not only work in different areas of the the United States. As a result for ladles, but also for the business thereby broadening of my work there, I was offered basic oxygen furnaces and my experience and my career the opportunity to become the electric arc furnaces operated opportunities. Customers of Advanced Refractories The service life of the products Advanced Application Specialist for by our steel manufacturing Advanced Refractories revenue £m are principally steel producers and Refractories supplies into the steel Brick Products, based at our customers. In 2016, I became £499.1m manufacturers of steel production making process can vary (some a matter site at Pittsburgh, United Regional Manager for the equipment. Our products accompany of hours and others for a period of years) States, but also working in East Region USA in Steel the steel-making process from the 17 499.1 based upon the type of refractory steel manufacturing plants ÀééåâÜÚøâèçìÚçÝĚçÚååòâç early steps of the process all the way and the level of wear caused by the 16 398.8 across America. I then moved #ÈðÚìçÚæÞÝÃâëÞÜøèëèß ÝèðçìøëÞÚæøèøáÞĚçâìáâçàÞçÝâçøáÞ demanding environment in which they 15 378.7 on to work as an Application Marketing and Technology for rolling mill. This array of heat-intensive are used. Specialist for Ladles, with Iron and Steel, NAFTA. In this production processes and physical role, I am responsible for the Advanced Refractories produces Advanced Refractories’ key products are: a focus on ladle bottoms, transformation of the iron ore into expansion of our product specialised refractory materials working with customers in ìÞæâ˜ĚçâìáÞÝéëèÝùÜøìÚÜÜèùçøì > Blast furnace casthouse applications portfolio and the technical for lining steelmaking vessels such their steel mills to ensure for two thirds of the revenue of the These are special refractories used to product development to as blast furnaces, ladles and that they were deriving the business unit. In addition, Vesuvius’ line the blast furnace and a network of æÚñâæùæÛÞçÞĚøßëèæ support this growth across tundishes, which are subject to Advanced Refractories business services runners to transfer molten iron from our products. the entire NAFTA region. extreme temperatures, corrosion other high-temperature industries such torpedo ladles to the melt shop for and abrasion. These materials are as primary aluminium, copper, cement, further processing into steel in the form of powder mixes, which petrochemicals and energy from waste. are spray-applied or cast onto the These refractory lining materials are > Blast furnace tap hole clay This is vessel to be lined (‘monolithics’) and supplied in the form of powder mixes, a refractory mass used to plug the refractory shapes (e.g. bricks, pads which are spray-applied or cast onto the tapping hole in a blast furnace. and dams). Vesuvius is one of the vessels to be lined (‘monolithics’), or in When molten iron is ready to be world’s largest manufacturers of pre-cast shapes and bricks. extracted from the blast furnace, monolithic refractory linings. a drilling machine perforates a hole Advanced Refractories delivers An integral part of our success depends øáëèùàáøáÞìèåâÝâĚÞÝÜåÚòøèìøÚëø installation technologies, products upon the level of collaboration with our the tapping process ÚÝÚéøÞÝøèĚøÜùìøèæÞëìċìéÞÜâĚÜ customers. Our experts’ presence at > Steel ladle applications These are processes and plants, and effective our customers’ facilities allows us a refractories (typically bricks) used to ÚçÝÞßĚÜâÞçøåèàâìøâÜììÞëïâÜÞì fundamental understanding of their line a steel vessel which contains the These factors are combined with needs. The level of trust our business molten metal and transports it from ìâàçâĚÜÚçøіÃÚÝÞÞéäçèðåÞÝàÞ model creates makes it more resilient to the furnace to a casting machine of customers’ processes and project market cycles enabling us to generate management capability to deliver growth by adding new products and market-leading solutions for services throughout the business cycle. our customers. Vesuvius plc 42 Annual Report and Accounts 2017 43

Operating Review continued Precast Monolithic Steel Ladle Bottom Advanced Refractories Manufactured in Chicago Heights, USA

> Steel tundish monolithics These are powder-mix refractories used to line the tundish, which receives molten steel Integrated material from the ladle then acts as a reservoir øèÜèçøëèåøáÞěèðèßøáÞåâêùâÝæÞøÚå supply, robotic and feed the continuous casting machine at the required rate installation equipment > Aluminium applications These products are used for secondary as we were bound by contractual Our business model is underpinned by ÈæéëèïâçàøáÞéëèĚøÚÛâåâøòèßÀÝïÚçÜÞÝ and laser scanning for aluminium production, and are mostly obligations with some customers. our focus on value-creating solutions and Refractories is a key area of focus. used in furnace lining We have made major progress in maintaining technological leadership Market share, whilst important, is not Our Performance > Cement applications Monolithic ëÞÜèïÞëâçàøáâìÜèìøâçěÚøâèçøáëèùàá ßëèæâçïÞìøæÞçøâçіÃÖÞâæéëèïÞÝ the main driver of our strategy as there Electric Arc Furnace technology used in the pre-heater higher selling prices. This process of price èùëіÃßèèøéëâçøâç#ðâøáøáÞ âììâàçâĚÜÚçøßëÚàæÞçøÚøâèçÛèøáèçÚ stage before materials are transferred adjustment will continue into 2018, until âçÚùàùëÚøâèçèßèùëçÞðÞìøіÃßÚÜâåâøò global and regional basis in our area of maintenance into the rotary kiln during the realised cost increases have been fully in Visakhapatnam, India. The addition the refractory supply business. Achieving continuous calcination process for ëÞÜèïÞëÞÝÓáâìÜèçĚëæìèùëÚÛâåâøòøè of this state-of-the- art facility will allow consolidation at the expense of margins cement making ëÞÜèïÞëëÚðæÚøÞëâÚåÜèìøâçěÚøâèç us to complement our existing technical will not meet our goals for value creation. through price rises over time. ÜÚéÚÛâåâøâÞìÚçÝøÚÜäåÞìéÞÜâĚÜéëèÛåÞæì In the developing markets of India, China The Challenge ðÞëÞìéÞÜâĚÜÚååòÜèçìøëùÜøÞÝøèìùâø in the local market. Our investment in this ÚçÝÁëÚóâåèùëßèÜùìâìøèÜÚéøùëÞèë Vesuvius has a historically well- øáÞâçÝâïâÝùÚåéåÚçøÜèçĚàùëÚøâèç 2017 Performance established business in Electric Arc Using the latest laser scanner devices Strategic Highlights from new facility is proof of our commitment exceed the growth rate of the industry. Furnace maintenance, using entirely from our subsidiary Process Metrix Advanced Refractories reported to staying at the forefront of new the Year Our long-standing presence and local manual application techniques. to identify the areas of the furnace revenues of £499.1m in 2017, an increase øÞÜáçèåèàòÎùëÞñâìøâçàіÃÜÞçøëÞì manufacturing capabilities position us An ongoing dialogue with the customer lining that required repair, we of 25.2% compared to 2016. On an The addition of new customers in Europe are well positioned to support our âÝÞçøâĚÞÝìèæÞäÞòâæéëèïÞæÞçø achieved accurate, targeted and well to take advantage of future growth underlying basis, the year-on-year âçøáÞæÞåøâçàÚçÝëÞĚçâçàìÞàæÞçøðÚì existing markets whilst this new facility safe material placement. opportunities. These improvements increase was 17.4%. This outperformance ÚìâàçâĚÜÚçøÜèçøëâÛùøèëøèèùëàëèðøá opportunities in India. Solidifying our were centred around three main is the next building block to support our relative to steel volume growth was in 2017. This was also boosted by a presence with the installation of our drivers: (1) the application of the ÓáÞÁÞçÞĚøì future growth in developing markets. positive volume growth in the steel çÞðÞìøіÃßÚÜâåâøòâçÈçÝâÚâìÚìøëèçà material; (2) the accurate assessment The ability to safely repair refractory supported by increased customer interest industry in Europe. step forward. As the country continues of the condition of the active lining åâçâçàâçÚáèøÚçÝÝâßĚÜùåøÞçïâëèçæÞçø in our value-creating solutions and the Looking Ahead in service; and (3) safety for the demanding more technology with the was a key demand. The robot arm and successful launch of new products such An increased focus on value-added operation and application teams. åÚìÞëìÜÚççÞëìâàçâĚÜÚçøåòâæéëèïÞøáÞ As 70% of Advanced Refractories’ evolution of the market, we are well as our Supergard™ Tundish refractory solutions in niche segments like steel safe working conditions for the plant line, which is a patented tundish lining revenue comes from the steel making positioned to maintain our leadership operations. The integration of the ĚçâìáâçàÚåìèÚååèðÞÝùìøèÚÜáâÞïÞ Our Solution product for improving steel quality. industry, steel production is a key driver position in the segments we currently Working with established partner robot and laser equipment also good momentum during the period. ÖÞÚåìèÛÞçÞĚøÞÝßëèæÜùìøèæÞëì for the business. In mature economies, operate in, whilst at the same time, companies and cross-functional enables more accurate gunning of it is our expectation that these regions look at new avenues for growth. expertise, the Vesuvius team refractory material in the areas where seeking to diversify their supplier base We continuously review and seek to will not exhibit material growth in the developed an optimised design for it is most required. This delivers better in response to recent consolidation. âæéëèïÞèùëæÚçùßÚÜøùëâçàÞßĚÜâÞçÜò Tanmay Ganguly performance and improved material medium/ long term, given that the nature a Robotic Application unit for the with targeted capital investment President, Advanced Refractories customer’s furnaces. These units consumption rates for the customer. We achieved attractive underlying ÝÞåâïÞëâçàìâàçâĚÜÚçøÛÞçÞĚøìâçéëèÜÞìì of economic growth requires less steel revenue growth in each of our key regions ěèðâçïÞçøèëòæÚçÚàÞæÞçøÚçÝåÚÛèùë than in the past. However, as growth in 2017, with the Americas up 8.6%, ÚçÝÞçÞëàòÞßĚÜâÞçÜòÈçÁëÚóâåðÞ in emerging markets moves forward Ä÷ÄÀùé$ YÚçÝÀìâژÏÚÜâĚÜùé rationalised our manufacturing footprint and our business in mature markets 9.4%. The particularly high growth level and maximised capacity utilisation by continues to evolve, we are constantly âçÄ÷ÄÀðÚìÝùÞøèìâàçâĚÜÚçøéëèàëÞìì ëÞåèÜÚøâçàèùëÁëÚóâåâÚçæÚçùßÚÜøùëâçà developing our resource base to align regaining market share in Europe despite facilities to Rio de Janeiro from Sao Paulo with activity levels. competitive market conditions. in 2017. In the developed markets of Europe and Some of the key raw materials used by ÖÞÚåìèÜèææÞçÜÞÝÚÜèìøÞßĚÜâÞçÜò North America, we are experiencing Advanced Refractories experienced study in Europe to review our a greater demand for higher quality ìâàçâĚÜÚçøéëâÜÞâçÜëÞÚìÞìâç# manufacturing footprint as part of our refractories. In response to recent particularly during the second half of ðâÝÞëßèÜùìèçÜèìøÞßĚÜâÞçÜòÖÞÚëÞ consolidation, we are also seeing the year. The speed of these increases initiating a similar exercise in 2018 at increased interest in certain segments, was such that there was a time lag in our facilities in the NAFTA region. such as bricks, as customers in these recovering the increased costs through regions seek to diversify their supplier øáÞìÚåÞìéëâÜÞèßèùëĚçâìáÞÝéëèÝùÜøì base as well as market evolution towards other technologies like monolithic refractories. We expect this to continue going forward. Vesuvius plc 44 Annual Report and Accounts 2017 45

Operating Review

Digital Services Shaping of a thermocouple quartz tube

čÖÞÚëÞÜëÞÚøâçàçÞð offerings to participate in the digitalisation of our customers’ processes”

Alexander Laugier-Werth President, Digital Services Our Performance

ÓáÞëÞÚëÞøðèäÞòÞåÞæÞçøìèßÕÞìùïâùìċ > Laser technology Technology used for 2017 Performance We also initiated restructuring actions ÆèâçàßèëðÚëÝðÞÚëÞèéøâæâìâçàèùë Digital Services revenue £m ÓÞÜáçâÜÚåÒÞëïâÜÞììøëÚøÞàòĚëìøåòøáÞ æÞÚìùëâçàøáÞðÞÚëèßëÞßëÚÜøèëò øèèéøâæâìÞèùëÜèìøÛÚìÞÚçÝ manufacturing footprint for sensors and Digital Services generated revenues ÃâàâøÚåÒÞëïâÜÞìÛùìâçÞììùçâøðáâÜá materials in furnaces and ladles. manufacturing footprint, and to éëèÛÞìðâøáøáÞÜåèìùëÞèßÚìâøÞâçÅëÚçÜÞ of £43.7m in 2017, an increase of £43.7m ßèÜùìÞìèçâçÜùÛÚøâçàèùëÝÚøÚÜÚéøùëÞ This is an important area of focus as reduce operating costs. and in Germany. To reduce operating $ YòÞÚë˜èç˜òÞÚëèçÚëÞéèëøÞÝÛÚìâì technologies, and, secondly, the other øáÞæÚëäÞøæèïÞìøèðÚëÝìøáÞùìÞèß ÜèìøìßùëøáÞëðÞáÚïÞâçâøâÚøÞÝÚç 17 43.7 ÎçÚçùçÝÞëåòâçàÛÚìâìëÞïÞçùÞì ÖÞâçøëèÝùÜÞÝÚçùæÛÞëèßçÞðßÞÚøùëÞì ÛùìâçÞììùçâøìðáâÜáéåÚòÚÜëâøâÜÚåëèåÞâç åÚÝåÞěÞÞøì investment programme to automate 16 36.9 âçÜëÞÚìÞÝ$%YÓáâìëÞěÞÜøÞÝæÚëäÞø in laser technology in 2017 through integrating these products into our the manufacturing process. > Continuous temperature measurement share gains in North America and ÜèæéåÞøÞåòëÞïÚæéÞÝìèßøðÚëÞÚçÝøáÞ 15 31.7 ÛëèÚÝÞëÜèçìùæÚÛåÞìèßßÞëâçàÚìðÞååÚì This provides real-time continuous ÈçÝâÚÚçÝøáÞìâàçâĚÜÚçøìùÜÜÞììðÞ ÓðèÂèåèùëÏòëèæÞøÞëðáâÜáÜèæÛâçÞì ÖÞðâååÜèçøâçùÞøèëÞïâÞðÚÜêùâìâøâèç ÞçìùëâçàÜùìøèæÞëÚÜÜÞììÈçøáâìðÚòèùë temperature data in the tundish. experienced in South America as a ÝâæÞçìâèçÚåæÞÚìùëÞæÞçøìðâøáèùë opportunities for additional technological Digital Services offers digitalised ÓÞÜáçâÜÚåÒÞëïâÜÞììøëÚøÞàòâìÞæÛÞÝÝÞÝ ÓáâìÚååèðìÜùìøèæÞëìøèÛÞøøÞë result of increased penetration of our most accurate surface temperature solutions to complement our existing solutions to our customers to make âçøáÞÚÜøâïâøâÞìèßÛèøáèùëÒøÞÞåÚçÝ understand temperature correlations ìÞçìèëìÚçÝéëèÛÞìÛùìâçÞìì measurements to date. customer offerings, focused on data their underlying processes more ÅèùçÝëòÝâïâìâèçìðáâÜáÜÚçðèëäÛèøá ÞßĚÜâÞçøÚçÝëÞåâÚÛåÞÃâàâøÚå ðâøáìøÞÞåêùÚåâøòëÞÝùÜÞÞçÞëàò gathering and information analysis to ðâøáÚçÝâçÝÞéÞçÝÞçøåòèßèùëÃâàâøÚå ÈçèùëÏëèÜÞìì÷ÞøëâñåÚìÞëìÛùìâçÞììðÞ Our focus on increasing sales in the costs and optimise caster speed. éëèïâÝÞÜùìøèæÞëìðâøáøáÞâçßèëæÚøâèç Services complements existing ÒÞëïâÜÞìÛùìâçÞìì áÚÝÚëÞÜèëÝòÞÚëèßìÚåÞìðâøáìáâéæÞçøì continuous temperature measurement éëèÝùÜøåâçÞìÛòéëèïâÝâçàçÞð Current solutions include Accuoptix ™, they need to deliver process improvements. up over 50% versus 2016. Avemis, our ìéÚÜÞÛÞàÚçøèÝëâïÞìÚåÞìïèåùæÞìÚçÝ Our digital services products assist our Accucone ™, and the Accumetrix® ÓáÞÚæèùçøèßÝÚøÚàÞçÞëÚøÞÝÛò services to our existing customers. mould level sensors and continuous éëèĚøìâçøáâìÚëÞÚÚçÝðÞÞñéÞÜøøáâìøè customers to meet the increasing end continuous temperature ìÞçìèëìâìàëèðâçàÞñéèçÞçøâÚååòìèÚååâÞÝ Digital Services focuses on the temperature measurement products, continue in the years ahead. éëèÝùÜøÜèçìâìøÞçÜòÚçÝêùÚåâøò measurement systems ðâøáøáâìÚééëèÚÜáðÞâçøÞçÝøèßèÜùìèç capture and interpretation ÚåìèáÚÝÚìøëèçàòÞÚëðâøáëÞïÞçùÞì of key manufacturing data, ëÞêùâëÞæÞçøì˜ÞçÚÛåâçàøáÞæøèÜÚéøùëÞ solutions for converting this data into > Mould level sensors and control up c.30%. Looking ahead complementing Vesuvius’ strong ÚçÝÚçÚåòìÞåÚëàÞêùÚçøâøâÞìèß ïÚåùÚÛåÞÝÞÜâìâèçìùééèëøâçßèëæÚøâèç systems These are critical to ensure presence and expertise in molten production data and harness them to The development of a digital offering maximising the value our various sensor øáÞìøÚÛåÞÜèçøëèååÞÝěèðèßæÞøÚå Strategic Highlights from metal engineering to create ÝÞåâïÞëëÞåâÚÛåÞÚçÝÚùÝâøÚÛåÞéëèÜÞìì for our customers, complementary to øÞÜáçèåèàâÞìÛëâçàøèÜùìøèæÞëì during the casting process and have çÞðøÞÜáçèåèàâÞìÚçÝâçøÞàëÚøÞ and product improvements. the Year èùëÜèçìùæÚÛåÞìèßßÞëâçàëÞæÚâçìÚ ÚìâàçâĚÜÚçøâæéÚÜøèçìåÚÛêùÚåâøò Alexander Laugier-Werth them into expert process fundamental priority of our Group In addition, mould audit services, ÈçÃÞÜÞæÛÞë#ðÞĚçÚåâìÞÝÚ President, Digital Services ìøëÚøÞàòÓèÞçìùëÞøáÚøðÞÜèçøâçùÞøè management systems. Key Products ùìâçàèùëùçâêùÞ×÷ÀÓûÝÞïâÜÞâç strategic investment in Sapotech Oy, a maximise the opportunities to leverage ÎùëÛùìâçÞììßèÜùìÞìèçéëèïâÝâçà ÜèæÛâçÚøâèçðâøáÜèæéùøÞëâìÞÝ Finnish technology company developing optical defect detection services in the our existing customer relationships to solutions that enhance the control and ěèðæèÝÞååâçàéëèïâÝÞèùëÒøÞÞå steel continuous casting process. This ÞñéÚçÝøáâìÚëÞÚèßÛùìâçÞììøáÞ monitoring of our customers’ production ÜùìøèæÞëìðâøáÚçĊÞñéÞëøÞòÞċâçìâÝÞ âçïÞìøæÞçøðâååÛÞæÚçÚàÞÝÛòøáÞÅåèð èçàèâçàìùééèëøèßèùëÅåèðÂèçøëèå éëèÜÞììÞìÃùëâçà#øáÞÛùìâçÞììùçâø øáÞæèùåÝÚååèðâçàøáÞæøèàÚâçÚç ÂèçøëèåÛùìâçÞììùçâø ÚçÝÀÝïÚçÜÞÝÑÞßëÚÜøèëâÞìÛùìâçÞìì comprised four key product lines: âçøâæÚøÞùçÝÞëìøÚçÝâçàèßåâêùâÝ ùçâøìâìÜëâøâÜÚåÅåèðÂèçøëèåċìâçïèåïÞæÞçø ÛÞáÚïâèùëÚììøÞÞåâìÜÚìø We continued to integrate the Digital > Disposable sensors and probes These is focused on developing value-added Services companies, ECIL Met Tec and æÞÚìùëÞÚïÚëâÞøòèßåâêùâÝæÞøÚå By using each of these technologies, services around the tundish and the Sidermes into the existing Group sales ÜáÚëÚÜøÞëâìøâÜìðáâÜáÚëÞæèìøåò customers can focus on critical mould in the continuous casting part of çÞøðèëäìÓáâìÞçÚÛåÞÝøáÞÛùìâçÞììÞìøè used in the primary and secondary éÚëÚæÞøÞëìðâøáâçøáÞâëéëèÜÞììÞì the steel process. SERT, Avemis and the ÚÜÜÞììøáÞðâÝÞëßèèøéëâçøèßøáÞÕÞìùïâùì steel-making stages.Current solutions ÞçÚÛåâçàøáÞæøèëÞĚçÞøáÞâëéëèÝùÜøâèç çÞðâçïÞìøæÞçøâçÒÚéèøÞÜáÎòÚëÞäÞòøè ÜùìøèæÞëÛÚìÞÀìÚëÞìùåøðÞæÚÝÞ include temperature, oxygen, æÞøáèÝìøèâæéëèïÞêùÚåâøòåèðÞë these efforts. For Advanced Refractories, ìâàçâĚÜÚçøéëèÝùÜøéÞëßèëæÚçÜÞ hydrogen, iron oxide and aluminium production costs and maximise åÚìÞëøÞÜáçèåèàòÛùìâçÞììÏëèÜÞìì÷Þøëâñ âæéëèïÞæÞçøìâçäÞòåâçÞììùÜáÚìéëèÛÞì æÞÚìùëÞæÞçøìÚìðÞååÚìæÞøÚå ÞßĚÜâÞçÜòÓáÞâçßèëæÚøâèçÝÞëâïÞÝßëèæ has a key role to play in the development for measuring hydrogen and oxygen. sampling at all production stages øáÞìÞæÞÚìùëÞæÞçøìÜÚçÛÞâçÜåùÝÞÝÚì of its technical services offering. of steelmaking and casting a consulting service and used as support for improvements in refractory solutions. Vesuvius plc 46 Annual Report and Accounts 2017 47

Our R&D facility in Enschede, Operating Review Netherlands Foundry Foseco offers a wide range of foundry products and services to meet the requirements of iron, steel and non ferrous foundries to help them to reduce defects, improve casting quality and optimise “Our growth in 2017 was achieved production costs. through developing our business in China, gains in our established markets and new product

launches” Our Performance

Glenn Cowie President, Foundry

The Foundry Division supplies ceramic > Filtration ÎùëĚåøëÚøâèçéëèÝùÜøì 2017 Performance Brazil growing our feeding systems, organisational culture and accountability, Foundry revenue £m ÜèçìùæÚÛåÞììùÜáÚìĚåøÞëìÚçÝßÞÞÝâçà remove impurities from the liquid metal ĚåøÞëìÚçÝçèç˜ßÞëëèùìæÞøÚåøëÞÚøæÞçø which has allowed us to move decision- There was positive momentum in the systems, and chemical coatings and before it enters the mould and reduce revenues. making closer to the customer and majority of Foundry end markets £535.2m binders to foundries which use these turbulence during pouring improve our speed of doing business. during 2017, with particular strength in Underlying revenue in EMEA increased products in the production of metal We continued our efforts to rationalise 17 535.2 > Feeding Systems ÎùëìéÞÜâĚÜÚååò˜ heavy trucks and a recovery in mining 8.8% year-on-year as a result of growth castings. Working alongside customers our manufacturing footprint and 16 459.4 shaped insulating and exothermic equipment as well as construction and across the majority of foundry end at their sites, our engineers provide maximise capacity utilisation with the ßÞÞÝâçàìòìøÞæìÚååèðßèëøáÞÞßĚÜâÞçø agricultural equipment after several markets with particular strength in 15 424.4 on-site technical expertise in addition to ÜåèìùëÞèßøáÞÂåÞïÞåÚçÝĚåøÞëéåÚçøÚçÝ supply of molten metal to key areas years of weakness. heavy trucks as well as high growth in simulation software to develop the best Conneaut shank production. We also of complex or large castings, and the non-ferrous market. We were also Vesuvius’ Foundry Division, trading individualised solutions. Each of our Revenue in the Foundry Division continued to focus on the implementation prevent liquid shrinkage defects in the successful in gaining market share as as Foseco, is a world leader in the products typically represents a small increased 16.5% to £535.2m in 2017 on a of Lean principles and improvement ĚçâìáÞÝÜÚìøâçàâæéëèïâçàòâÞåÝìÚçÝ a result of new product introductions. supply of consumable products, element of the overall cost of the foundry reported basis, whilst underlying revenue in our support and planning systems productivity by reducing the amount solutions and associated services éëèÜÞììÞìÛùøÜèçøëâÛùøÞììâàçâĚÜÚçøåòøè âçÜëÞÚìÞÝÛò% YÓëÚÝâçàéëèĚø ÈçÀìâژÏÚÜâĚÜùçÝÞëåòâçàëÞïÞçùÞ for operations. of molten metal required per casting. related to the foundry industry. The product quality and yield. improved by 12.0% on an underlying increased by 8.8%, with sales increasing Our exothermic feeding aids also In addition, we have initiated a cost foundry process is highly sequential ÛÚìâìÎùë#éÞëßèëæÚçÜÞÛÞçÞĚøÞÝ in all major markets. Our revenues in We support our customer offering with provide a secondary heat source ÞßĚÜâÞçÜòìøùÝòÚøèùëßÚÜâåâøâÞìâçÁèëäÞç and is critically dependent on materially from our commitment to China were up c.13%, due to booming the ‘Foseco University’, an online library which can also control metal cooling, and Grossalmerode in Germany as part consistency of product quality technological leadership through demand in heavy truck production of expertise in foundry practice which minimising the adverse effects of èßèùëðâÝÞëßèÜùìèçÜèìøÞßĚÜâÞçÜò and productivity optimisation. investment in R&D, which resulted in as well as our tangible progress in demonstrates our expertise and provides ìáëâçäÚàÞÝùëâçàìèåâÝâĚÜÚøâèç The Foundry Division’s products, 13 new product launches during the year, developing a strong local sales force The investment in our world-class R&D technical support to our engineers and solutions and use of advanced > Crucibles These are used in a wide the highest on record. These new product and marketing organisation. In India, facility in Enschede, The Netherlands, customers across the globe. computer simulation techniques range of melting and holding launches supported double-digit revenue èùëëÞïÞçùÞìðÞëÞùéÜ!YÛÞçÞĚøâçà continues to generate new products. In allow foundries to reduce defects applications for non-ferrous alloys, growth across Foundry’s highest margin from growth in light vehicle production 2017, New Product sales as a percentage and hence reduce labour intensive Key Products particularly aluminium, copper and éëèÝùÜøåâçÞì™ßÞÞÝâçàìòìøÞæìĚåøÞëì as well as strength in construction and of Foundry sales reached 10%. fettling and machining, minimise Foseco’s key products are: zinc. Each of these applications ÚçÝÜèÚøâçàìÓëÚÝâçàéëèĚøÚåìè agricultural equipment, and mining To drive penetration into Japanese metal usage requirements, ëÞêùâëÞìÚÜëùÜâÛåÞðâøáìéÞÜâĚÜ benefited from the ongoing organisational equipment. Our revenue growth in India > Binders These are used to prepare the foundries in ASEAN, we appointed âçěùÞçÜÞøáÞæÞøÚåìèåâÝâĚÜÚøâèç properties to maximise productivity restructuring in North America, which could potentially have been higher, sand moulds and cores, the quality of a Japanese business development process and automate moulding and minimise energy costs commenced in 2016 and is focused on had it not been for high raw material which improves the precision and manager in Thailand and also refocused and casting, thus reducing cost, ÝÞïÞåèéâçàÚěÚøøÞëåÞÚçÞëìøëùÜøùëÞ costs and supply issues as well as an ìùëßÚÜÞĚçâìáèßøáÞĚçÚåÜÚìøâçà > Other products These include our efforts on our business in Vietnam. energy usage and mould size. increased focus by Foseco on customer The conditioning of molten metal, innoculants used for ferrous and In the Americas, underlying revenue > Coatings These are designed to payment terms. ÀçÞðĚåøÞëéëèÝùÜøâèçåâçÞðÚìåÚùçÜáÞÝ the nature of the mould used and, çèç˜ßÞëëèùìÜÚìøâçàìěùñÝÞàÚììâçà increased 11.2% despite weakness in protect both sand and permanent in India and is expected to be completed especially, the design of the way equipment for removing unwanted gas the light vehicle and rail sectors in North æèùåÝìßëèæøáÞÞßßÞÜøìèßÛÞâçàĚååÞÝ Strategic Highlights from the Year by Q3 2018. The availability of a local æÞøÚåěèðìâçøèøáÞæèùåÝÚëÞ in liquid aluminium; and refractory America and the closure of a number with liquid metal. This is especially ĚåøÞëìèùëÜÞðâååâæéëèïÞÜùìøèæÞë key parameters in a foundry, materials used for the transportation of customer plants in the steel foundry The organisational restructuring in North important on cores, where liquid metal service levels and support increased determining both the quality of of liquid metal sector. This was offset by growth in America, which commenced in 2016, may cover up to three sides of the sand market penetration. øáÞĚçâìáÞÝÜÚìøâçàìÚçÝøáÞ heavy trucks as well as increases in iron continued through the year with a focus labour, energy and metal usage casting output related to construction èçÝÞïÞåèéâçàÚěÚøøÞëåÞÚçÞëìøëùÜøùëÞ In China, the focus remains on further ÞßĚÜâÞçÜòèßøáÞßèùçÝëò and agricultural equipment. We were We also focused on improved succession developing the local sales and marketing Vesuvius’ products and successful in gaining market share as a planning with several key new employees organisation and growing market share associated services to foundries result of new product introductions and joining during the year. Each of these in our major product segments, mainly improve these parameters. ðÞÞñéÞëâÞçÜÞÝìâàçâĚÜÚçøìùÜÜÞììâç initiatives saw a focus on improving ÜèÚøâçàìĚåøÞëìÚçÝßÞÞÝâçàìòìøÞæì Vesuvius plc 48 Annual Report and Accounts 2017 49

Operating Review continued Foundry

Looking Ahead In Europe, we expect modest growth in The foundry market in Mexico continues the Foundry market for the next few to see rapid growth, with foreign The potential revenue per customer years, with an improving outlook for investment from Asia, Europe, and the “Vesuvius has invested in my future” and per tonne of castings produced is growth in the steel foundry segment US in new foundry facilities and the ìøëèçàåòâçěùÞçÜÞÝÛòøáÞøÞÜáçâÜÚå mainly due to growth in the construction ongoing expansion of existing facilities. Kerstin Berndt, Product Manager, Germany sophistication of the customer, the and mining industries. Consolidation of We are positioning ourselves to end-market for the casting, and the the Foundry industry continues, reducing ÛÞçÞĚøßëèæøáâìàëèðøáðâøáÚçÞð I started working in the Foundry I was then moved to the R&D My time at Vesuvius has enabled processes used in its production. These the gap between capacity on offer and manufacturing site in Monterrey. The Division of Vesuvius GmbH in department, during which time me to gain important academic factors tend to correlate with the level of real demand. We anticipate that plant market recovery in mining, agriculture 2006, following an apprenticeship I obtained two degrees: as a ÚçÝéëèßÞììâèçÚåêùÚåâĚÜÚøâèçì as a chemical-technical assistant. ìøÚøޘÜÞëøâĚÞÝøÞÜáçâÜâÚçÚçÝ whilst at the same time receiving industrial development within a given closures and mergers and acquisitions and construction that started in 2017 is æÚëäÞøÓáÞëÞßèëÞðÞìÞÞìâàçâĚÜÚçø ÈìéÞçøæòĚëìøøðèÚçÝÚáÚåß as a training supervisor through critical on-the-job technical will continue in the industry, as will the expected to accelerate in 2018 for both years working in the SGI the German Chamber of Industry experience. Whilst doing this,

growth potential in markets where Our Performance trend to transfer production from NAFTA and South America. Organisation, covering and Commerce. I have developed a considerable industrial development continues to western countries to Eastern Europe international projects, including international network, working gather momentum, particularly certain Further growth is also anticipated in India and Turkey. Cheaper labour and energy the development of data for the Since 2015, I have worked as a on a daily basis with Vesuvius rfo and South East Asia, with increasing parts of Eastern Europe and Asia. costs, together with the availability of Coveral ® MTS 1582, which is now Local Product Manager for colleagues in different countries. rm quality requirements expected to drive ÚåÞÚÝâçàéëèÝùÜøâçøáÞĚÞåÝèß non-ferrous metal treatment ÓèéèìâøâèçÅèìÞÜèøèÛÞçÞĚøßëèæøáâì a

technical skills, remain key for the future See more about Vesuvius careers nc trend we are expanding our network of increased penetration of Foseco’s Non-Ferrous Metal Treatment. and am the customer contact for in PPeopleeople and CommunityCommunity on e development of the industrial footprint our Foundry Division’s chemical technical sales staff and application ßÞÞÝâçàìòìøÞæìĚåøëÚøâèçÜèÚøâçàì pages 667-737-73 in these developing markets. In the production lines in Germany, and non-ferrous product lines. engineers within developing markets, automotive industry, the trend to Austria, Switzerland and the ensuring that customers there have develop lighter vehicles is pushing Netherlands. Glenn Cowie local access to the same high levels further growth of aluminium castings, President, Foundry of expertise and technical support in increasing volumes in the non-ferrous all markets. foundry segment.

Consistent application of coatings through automated density control

The Challenge Our Solution coating products are diluted to their When manufacturing a casting, The development team investigated optimum application density on a applying the correct thickness of potential solutions, but realised that ÜèçøâçùèùìÛÚìâìÓáâììâàçâĚÜÚçøåò mould coating is critical in providing a available technology would either reduces the risk of defects in the protective barrier between the liquid adversely affect the mixing of the ĚçâìáÞÝÜÚìøâçàëÞÝùÜÞììÜëÚééÞÝ metal and the core or mould surface. coating or used delicate pipes and casting and lowers cleaning costs. A challenge for all foundries is to ensure pumps that were impractical requiring The ICU also continuously records the that coating is applied correctly. In a extra cleaning and maintenance application density data providing ëÞÜÞçøëÞïâÞððÞâÝÞçøâĚÞÝèçÞæÚöèë (and therefore potential production an audit trail for use in process problem - the coating is often diluted downtime). Working with a third-party optimisation and quality reviews. manually and its density is checked engineering unit we developed a new only periodically during a shift. design that did not impact the mixing Inevitably, this can lead to variations process and provides very accurate in performance, as coating that is too continuous density and level thick can compromise dimensional measurement with no moving parts. accuracy and gas permeability and coating that is too thin can fail to ÓáÞÁÞçÞĚøì prevent steel penetration into the The Intelligent Coating Unit (ICU) helps mould sand and can result in surface our customers achieve better and more defects on the casting. consistent casting results, by ensuring that at all points in the production cycle, Vesuvius plc 50 Annual Report and Accounts 2017 51

Key to Committee A Audit Committee R Remuneration Committee membership Board of Directors N Nomination Committee R Committee Chairman

N N

John McDonough CBE Chairman Patrick André ÂáâÞßÄñÞÜùøâïÞ Guy Young ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë Christer Gardell Non-executive Director ÀééèâçøÞÝ ÎÜøèÛÞë ÀééèâçøÞÝÒÞéøÞæÛÞë# Appointed: 1 November 2015 ÀééèâçøÞÝ ÎÜøèÛÞë

Career experience: John was appointed as a Director and Chairman Career experience:ÏÚøëâÜäðÚìÚééèâçøÞÝÚìÚÃâëÞÜøèëÚçÝÂáâÞß Career experience:ÆùòðÚìÚééèâçøÞÝÚìÚÃâëÞÜøèëÚçÝÂáâÞß Career experience: Christer was appointed as a Director of the Our Performance èßøáÞÂèæéÚçòèç ÎÜøèÛÞëÉèáçðÚìàëèùéÂáâÞßÄñÞÜùøâïÞ ÄñÞÜùøâïÞèßøáÞÂèæéÚçòèçÒÞéøÞæÛÞë#áÚïâçàöèâçÞÝøáÞ ÅâçÚçÜâÚåÎßĚÜÞëèßøáÞÂèæéÚçòèçÍèïÞæÛÞë!Ïëâèëøèöèâçâçà ÂèæéÚçòèç ÎÜøèÛÞëáÚïâçàéëÞïâèùìåòöèâçÞÝøáÞÛèÚëÝèß ÎßĚÜÞëèßÂÚëâååâèçéåÜøáÞìùééèëøìÞëïâÜÞìÚçÝÜèçìøëùÜøâèçĚëæ ÆëèùéÚìÏëÞìâÝÞçøèßøáÞÒøÞÞåÅåèðÂèçøëèåÛùìâçÞììùçâøâçÅÞÛëùÚëò øáÞÆëèùéßëèæÉÚçùÚëòøèÎÜøèÛÞë!áÞìÞëïÞÝÚìÂáâÞß ÂèèäìèçÆëèùééåÜâçÉùçÞÂáëâìøÞëÜè˜ßèùçÝÞÝÂÞïâÚçÂÚéâøÚåâç ßèëòÞÚëìùçøâåáÞëÞøâëÞÝâçÏëâèëøèöèâçâçàÂÚëâååâèçáÞìéÞçø "ÏÚøëâÜäáÚìáÚÝÚåèçààåèÛÚåÜÚëÞÞëâçøáÞìøÞÞåâçÝùìøëòÚçÝéëâèë ÅâçÚçÜâÚåÎßĚÜÞëèßÓÚëæÚÜÚçÝåÚøøÞëåòËÚßÚëàÞÓÚëæÚÜøáÞÁëâøâìá ÚçÝìÞëïÞìÚì÷ÚçÚàâçàÏÚëøçÞëÂÞïâÚçÂÚéâøÚåâìÚìáÚëÞáèåÝÞë nine years in the automotive systems division at Johnson Controls øèöèâçâçàøáÞÆëèùéìÞëïÞÝðâøáËáèâìøÜèæéÚçòøáÞðèëåÝåÞÚÝÞëâç ÛùâåÝâçàæÚøÞëâÚåìÜèæéÚçòÆùòáÞåÝÚçùæÛÞëèßìÞçâèëĚçÚçÜâÚå èßøáÞÂèæéÚçòÚçÝÚø$ÅÞÛëùÚëò$áÞåÝYèßÕÞìùïâùìċ ÈçÜâçâøâÚååòâçøáÞÔÊÛÞßèëÞæèïâçàøèÛÞÜèæÞÕâÜÞÏëÞìâÝÞçøèßøáÞ åâæÞéëèÝùÜøâèçðáÞëÞáÞáÞåÝøáÞéèìâøâèçìèßÄñÞÜùøâïÞÕâÜÞÏëÞìâÝÞçø ÚçÝÛùìâçÞììÝÞïÞåèéæÞçøéèìâøâèçìÚøÀçàåèÀæÞëâÜÚçéåÜßëèæ%%# âììùÞÝèëÝâçÚëòìáÚëÞÜÚéâøÚåÅëèæ%%"øèÂáëâìøÞëðÚìøáÞ ÝâïâìâèçċìÄùëèéÞÚçèéÞëÚøâèçìÚçÝùåøâæÚøÞåòæèïâçàøèÒâçàÚéèëÞ ÒøëÚøÞàâÜÆëèðøáÂÄÎÄùëèéÞÚçÝÂÄÎßèëÀìâÚÂÈÒÚçÝÀßëâÜÚÏëâèë øèâçÜåùÝâçàøáÞéèìâøâèçèßÂÅÎèßÒÜÚð÷ÞøÚåìÆëèùéøáÞÒèùøá ÂáâÞßÄñÞÜùøâïÞÎßĚÜÞëèßÀÁÂùìøèìøáÞÒðÞÝâìáâçïÞìøæÞçøÜèæéÚçò øèÝÞïÞåèéøáÞÛùìâçÞììâçÀìâژÏÚÜâĚÜÇÞëÞøùëçÞÝøèøáÞÔÊÚìÕâÜÞ øèøáâìáÞðèëäÞÝÚøÄÑÀ÷ÄÓàëèùéÚàåèÛÚåæÚçùßÚÜøùëÞëèßçâÜäÞå ÀßëâÜÚçìøÞÞåéëèÝùÜøìæÚçùßÚÜøùëÞëÆùòâìêùÚåâĚÞÝðâøáøáÞÒèùøá ÏëâèëøèöèâçâçàÀÁÂùìøèìáÞáÚÝÛÞÞçÚéÚëøçÞëèßÍèëÝâÜÂÚéâøÚåÚçÝ ÏëÞìâÝÞçøèßøáÞâçøÞàëÚøÞÝßÚÜâåâøâÞìæÚçÚàÞæÞçøÝâïâìâèçßèëÄ÷ÄÀ ÚçÝìéÞÜâÚåÚååèòìðáÞëÞáÞðÚìÂÄÎèßøáÞÍâÜäÞåÝâïâìâèçøáÞçÂÄÎ ÀßëâÜÚçÈçìøâøùøÞèßÂáÚëøÞëÞÝÀÜÜèùçøÚçøìÚçÝÛëâçàìøèøáÞÁèÚëÝÚ ÷ÜÊâçìÞò–ÂèæéÚçòÇÞìÞëïÞÝÚìÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèßÀÁ He served as Chairman of the Remuneration Committee of Tomkins èßøáÞ÷ÚçàÚçÞìÞÝâïâìâèçÏÚøëâÜäìáèðÞÝìâàçâĚÜÚçøÝëâïÞÚçÝÞçÞëàò ðÞÚåøáèßĚçÚçÜâÚåÚçÝèéÞëÚøâèçÚåâçìâàáøàÚâçÞÝøáëèùàááâìÞñøÞçìâïÞ ËâçÝÞñùçøâåÃÞÜÞæÛÞë#ÚçÝèßÓâÞøèÂèëéèëÚøâèçùçøâå÷ÚëÜá éåÜßëèæ#øèÉèáçáÚìÚìøëèçàÞçàâçÞÞëâçàÛÚÜäàëèùçÝÚçÝ âçìøëÞçàøáÞçâçàøáÞÅåèðÂèçøëèåÛùìâçÞììÚçÝáÞÛëâçàìøèøáÞÁèÚëÝ âçøÞëçÚøâèçÚåÞñéÞëâÞçÜÞâçøáÞæâçâçàÚçÝâçÝùìøëâÚåìÞÜøèëìÆùòâìÚ ÂáëâìøÞëÛëâçàìÚðÞÚåøáèßÜèææÞëÜâÚåÚÜùæÞçøèøáÞÁèÚëÝøáëèùàááâì considerable international commercial and listed company experience, this commitment, together with his industry experience, strategic vision, ÁëâøâìáÚçÝÒèùøáÀßëâÜÚçÜâøâóÞç extensive business management experience and the ability to focus and ðáâÜáÞçÚÛåÞáâæÚÛåòøèåÞÚÝøáÞÕÞìùïâùìÁèÚëÝÉèáçðÚìÚðÚëÝÞÝ constant customer focus and proven record of delivery that will enable drive change. Christer is a Swedish citizen. ÚÂÁÄâçßèëìÞëïâÜÞìøèâçÝùìøëòÚçÝâìÚÁëâøâìáÜâøâóÞç áâæøèåÞÚÝøáÞÆëèùéâçøáÞçÞñøìøÚàÞìèßâøìÝÞïÞåèéæÞçøÏÚøëâÜäâìÚ Other appointments:ÂáëâìøÞëâì÷ÚçÚàâçàÏÚëøçÞëèßÂÞïâÚçÂÚéâøÚå ÅëÞçÜáÜâøâóÞç Other appointments:ÉèáçâìÂáÚâëæÚçèßÓáÞÕâøÞÜÆëèùééåÜÇÞâì ÚçÝÕâÜÞÂáÚâëæÚçèßøáÞàåèÛÚåÅâççâìáøÞÜáçèåèàòÚçÝìÞëïâÜÞì ÚåìèÂáÚâëæÚçèßÂèëçÞëìøèçÞÏëèéÞëøòÀììÞøìËâæâøÞÝÚçÝÒùçÛâëÝ ÜèæéÚçò÷ÞøìèÂèëéèëÚøâèç ÁùìâçÞììÒÞëïâÜÞìËâæâøÞÝÚçÝÚÓëùìøÞÞèßÓÞÚæÑùÛâÜèçÔÊ

A N R A N R A N R A N R

Hock Goh Independent Non-executive Director Jane Hinkley Independent Non-executive Director Douglas Hurt Senior Independent Director Holly Koeppel Independent Non-executive Director

Appointed: 2 April 2015 Appointed: 3 December 2012 Appointed: 2 April 2015 ÀééèâçøÞÝ Àéëâå#

Career experience: Hock was appointed as a Director of the Company Career experience: Jane was appointed as a Director of the Company Career experience: Douglas was appointed as a Director of the Career experience: Holly was appointed as a Director of the Company on 2 April 2015. Hock has more than 30 years’ experience in the oil and on 3 December 2012 and as Chairman of the Remuneration Committee Company on 2 April 2015, and as Senior Independent Director and èç Àéëâå#ÇèååòáÚìæèëÞøáÚç !òÞÚëìċàåèÛÚåâçÝùìøëòÚçÝ gas industry, having spent 25 years with Schlumberger, the leading in June 2013. Jane spent a large part of her executive career working at Chairman of the Audit Committee at the close of the 2015 Annual ĚçÚçÜâÚåÞñéÞëâÞçÜÞáÚïâçàìéÞçøøáÞÞÚëåòéÚëøèßáÞëÜÚëÞÞëÚø àåèÛÚåèâåĚÞåÝìÞëïâÜÞìéëèïâÝÞëÇâìëèåÞìâçÜåùÝÞÝÏëÞìâÝÞçøèßÍÞøðèëä ÆèøÚÚì˜ËÚëìÞçÒáâééâçàÂèëéèëÚøâèçøáÞåâêùÞĚÞÝçÚøùëÚåàÚììáâééâçà ÆÞçÞëÚå÷ÞÞøâçàÃèùàåÚìáÚììâàçâĚÜÚçøĚçÚçÜâÚåÞñéÞëâÞçÜÞ ÂèåùæÛâÚÆÚìÃâìøëâÛùøâèçÂèæéÚçòÚçÝÂèçìèåâÝÚøÞÝÍÚøùëÚåÆÚì ÚçÝÈçßëÚìøëùÜøùëÞÒèåùøâèçìâçËèçÝèçÏëÞìâÝÞçøèßÀìâÚÏÚÜâĚÜÚçÝ ìéÞÜâÚåâìøðáâÜáðÚìåâìøÞÝèçÛèøáøáÞËèçÝèçÒøèÜäÄñÜáÚçàÞÚçÝ áÚïâçàìÞëïÞÝÚìÅâçÚçÜÞÃâëÞÜøèëèßÈ÷ÈéåÜøáÞàåèÛÚåÞçàâçÞÞëâçà Corporation in a variety of management roles which included four years ÕâÜÞÏëÞìâÝÞçøÚçÝÆÞçÞëÚå÷ÚçÚàÞëèßÂáâçÚÅëèæ!øè ÍÀÒÃÀÐÒáÞìÞëïÞÝÚìÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëßëèæ%$$øè%% àëèùéßëèæ"øè!ÏëâèëøèøáâìáÞáÞåÝÚçùæÛÞëèßìÞçâèë ÛÚìÞÝâçÀùìøëÚåâÚÒáÞöèâçÞÝøáÞÀæÞëâÜÚçÄåÞÜøëâÜÏèðÞëÂèæéÚçò ÇèÜäðÚìÚÏÚëøçÞëèßÁÚâëÝÂÚéâøÚåÏÚëøçÞëìÀìâÚøáÞéëâïÚøÞÞêùâøò ÚçÝÚì÷ÚçÚàâçàÃâëÞÜøèëùçøâå%%#Èç%%$ÉÚçÞðÚìÚééèâçøÞÝ ĚçÚçÜÞÚçÝàÞçÞëÚåæÚçÚàÞæÞçøéèìâøâèçìÚøÆåÚñèÒæâøáÊåâçÞéåÜ ÈçÜâçÚçÝâç"ðÚìÚééèâçøÞÝÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÈç ÚëæèßøáÞÔÒâçïÞìøæÞçøÛÚçäÑèÛÞëøÖÁÚâëÝ–ÂèÁÚìÞÝâçÂáâçÚ ÷ÚçÚàâçàÃâëÞÜøèëèßÍÚïâèçÒáâééâçàÀÒÚÜèæéÚçòæÚöèëâøòèðçÞÝ ðáâÜááÞöèâçÞÝâç%$ éëÞïâèùìåòáÚïâçàðèëäÞÝÚøÏëâÜÞÖÚøÞëáèùìÞ ÇèååòöèâçÞÝÂâøâÈçßëÚìøëùÜøùëÞÈçïÞìøèëìÚìÂè˜ÇÞÚÝÚv  ÛçßùçÝ he focused on the industrial, business services and healthcare sectors. by Statoil, the Norwegian multinational oil and gas company, a position ÇâìÜÚëÞÞëáÚìâçÜåùÝÞÝìÞïÞëÚåòÞÚëìðèëäâçàâçøáÞÔÒÚçÝìâàçâĚÜÚçø set up to capitalise on the growing need for infrastructure around the ÇèÜäìøëÞçàøáÞçìøáÞÁèÚëÝøáëèùàááâìÞñøÞçìâïÞÞñéÞëâÞçÜÞèßøáÞ she held until 2001. She previously was a Non-executive Director ÞñéÞëâÞçÜÞâçÄùëèéÞÚçÛùìâçÞììÞìÚìÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚçÝÚì ðèëåÝÈç!øáÞßùçÝðÚìëÞçÚæÞÝÆÚøÞðÚòÚçÝøëÚçìâøâèçÞÝøè global services industry and his understanding of Asian markets. èßÑÞïùìÄçÞëàòÀÒÀÚÍèëðÞàâÚçèâåÞñéåèëÚøâèçÚçÝéëèÝùÜøâèç ÎéÞëÚøâèçÚå÷ÚçÚàâçàÃâëÞÜøèëÃèùàåÚìâìÚÂáÚëøÞëÞÝÀÜÜèùçøÚçø ÂèëìÚâëÈçßëÚìøëùÜøùëÞ÷ÚçÚàÞæÞçøËÏ›ÂÈ÷œéÚëøèßÂèëìÚâëÂÚéâøÚå Hock is a Singaporean citizen. company. Jane is a Chartered Accountant and has strong experience ÚçÝÚáâàáåòäçèðåÞÝàÞÚÛåÞÜèëéèëÚøÞÚçÝèéÞëÚøâèçÚåĚçÚçÜÞ ÇèååòëÞøâëÞÝÚìÇÞÚÝèßÂÈ÷âçÉÚçùÚëò#ÚçÝÜèçøâçùÞÝÚìÚ gained in the shipping industry of working with highly international Other appointments:ÇèÜäâìÂáÚâëæÚçèß÷ÄÂÑÞìèùëÜÞìËøÝ éëèßÞììâèçÚåÛëâçàâçàìâàçâĚÜÚçøÔÒÚçÝÄùëèéÞÚçÞñéÞëâÞçÜÞÚì ÒÞçâèëÀÝïâìèëÚçÝÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèçÂÈ÷ċìßèùëéèëøßèåâè øÞÚæìÉÚçÞâìÚÁëâøâìáÜâøâóÞç ÚçÝÀÝïÞçøÄçÞëàòËøÝÚçÝâìÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèßÀÁÒÊÅ ðÞååÚìàÞçÞëÚåæÚçÚàÞæÞçøÚçÝĚçÚçÜâÚååÞÚÝÞëìáâéÞñéÞëâÞçÜÞ ÜèæéÚçâÞìùçøâåÉùçÞ#Åëèæøè!ÇèååòðÚìÚÃâëÞÜøèëèß ÃèùàåÚìâìÚÁëâøâìáÜâøâóÞç ÈçøÞàëòìÄçÞëàòÆëèùéÈçÜÚçÝÚÃâëÞÜøèëèßÑÞòçèåÝìÀæÞëâÜÚçÈçÜ ÒÚçøèìËøÝÇÚëÛèùëÄçÞëàòËøÝÚçÝÒøèëÚÄçìèÎòö Other appointments:ÉÚçÞâìÂáÚâëæÚçèßÓÞÞäÚòÆÏËËÂÚçÝÚ ßëèæ$øè#ÇèååòÛëâçàìÞñøÞçìâïÞàåèÛÚåâçÝùìøëòĚçÚçÜâÚåÚçÝ Non-executive Director and Chairman of the Remuneration Committee Other appointments: Douglas is Senior Independent Director and æÚçÚàÞæÞçøÞñéÞëâÞçÜÞøèøáÞÁèÚëÝÇèååòâìÚçÀæÞëâÜÚçÜâøâóÞç èßÏëÞæâÞëÎâåéåÜ ÂáÚâëæÚçèßøáÞÀùÝâøÂèææâøøÞÞèßÓÚøÞ–ËòåÞéåÜÒÞçâèëÈçÝÞéÞçÝÞçø ÃâëÞÜøèëÚçÝÂáÚâëæÚçèßøáÞÀùÝâøÂèææâøøÞÞèßÂèùçøëòìâÝÞÏëèéÞëøâÞì Other appointments: Holly currently serves as a Non-executive Director Changes to the Board during the year ÏËÂÚçÝÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèßøáÞÁëâøâìáÒøÚçÝÚëÝìÈçìøâøùøâèç èßÓáÞÀÄÒÂèëéèëÚøâèçÚçÝÁëâøâìáÀæÞëâÜÚçÓèÛÚÜÜèéåÜ ÀìÝâìÜåèìÞÝÚÛèïÞÇèååòÊèÞééÞåÚçÝÏÚøëâÜäÀçÝëŲðÞëÞÚééèâçøÞÝøèøáÞÁèÚëÝèç Àéëâå#ÚçÝÒÞéøÞæÛÞë#ëÞìéÞÜøâïÞåò ÅëÚçʼnèâìÖÚçÞÜêëÞøâëÞÝßëèæøáÞÁèÚëÝèç Àùàùìø# Vesuvius plc 52 Annual Report and Accounts 2017 53

Group 1 Henry Knowles General Counsel 4 Guy Young ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë 6 Patrick Bikard President, Operations 9 Patrick André Chief Executive & Company Secretary Appointed November 2015 Appointed February 2014 Appointed September 2017 Executive Appointed September 2013 2 years with Group 9 years with Group 2 years with Group 4 years with Group Based in London, UK and is a South African Based in Ghlin, Belgium and is a Based in London, UK and is a French citizen Based in London, UK and is a British citizen and British citizen French citizen Committee 10 Ryan van der Aa Chief Human 2 Glenn Cowie President, Foundry 5 Roel van der Sluis President, Flow Control 7 Alexander Laugier-Werth President, ÑÞìèùëÜÞìÎßĚÜÞë Appointed November 2014 Appointed October 2017 Digital Services Appointed May 2013 36 years with Group 27 years with Group Appointed July 2016 18 years with Group Based in Cleveland, US and is a South Based in Ghlin, Belgium and is a 9 years with Group Based in London, UK and is a Dutch citizen African and British citizen Dutch citizen Based in Ghlin, Belgium and is a French and US citizen The date appointed is the date the 3 Tanmay Ganguly President, individual was appointed to their Advanced Refractories 8 Alan Charnock Vice President and Chief current role. Appointed November 2014 ÓÞÜáçèåèàòÎßĚÜÞë 10 years with Group Appointed April 2015 Based in Barlborough, UK and is an 33 years with Group Indian citizen Based in Ghlin, Belgium and is a British citizen Our Performance

3 8 10 4 6

2 1 7 5 9 Vesuvius plc 54 Annual Report and Accounts 2017 55

Section Three Our Responsibility In this section

56 Our Principles

60 Health and Safety

64 Sustainability

67 People and Community Our Responsibility

Nancy Han HR Generalist ChangShu, China Vesuvius plc 56 Annual Report and Accounts 2017 57

Our Principles

Working together as a community with shared values makes Vesuvius stronger.

Evaristo Beltran Saenz Process Engineer, Slide Gate, Monterrey

Vesuvius is a geographically and Code of Conduct principles Speak Up Our Values Code of Conduct culturally diverse group, employing The foundation of our compliance Our Code of Conduct sets out the more than 11,000 people in 37 countries. programme is the ability to speak up Creativity Integrity standards of conduct expected, without This geographical diversity places us Our commitment to technology and quality is the without fear of retaliation, either to At the heart of our promise lies the trustworthiness ÇÞÚåøáìÚßÞøòÚçÝøáÞÞçïâëèçæÞçø exception, of everyone who works close to our customers across the globe, basis for our competitive advantage. Creativity of all Vesuvius employees in their acts and words. Vesuvius management or independent allows us to develop innovative products and for Vesuvius in any of its worldwide but also highlights the importance of Integrity, honesty and transparency are essential of them. A third party-operated solutions and the continuous improvements in all our exchanges. operations. The Code emphasises our maintaining and applying strong and ÜèçĚÝÞçøâÚåÄæéåèòÞÞÂèçÜÞëçÇÞåéåâçÞ that generate value through performance commitment to ethics and compliance consistent ethical values in our worldwide enhancement. Employees are actively Embracing Diversity (Speak Up) is available for employees encouraged to be innovative and to register their Trading, customers, products with the law, and covers every aspect approach to business. Our employees’ Vesuvius is a global company built upon wishing to raise concerns anonymously ideas in our newly developed Ideation database. and services of our approach to business, from the engagement with our values and culture a true respect for local customs and experience. or in situations where they feel unable We recognise and embrace the potential that way that we engage with customers, is vital to our success and the sustainable Cooperation to report internally. This independent comes from the coexistence of so many different employees, the markets, and each of delivery of the Group’s strategy. Encouraging internal and external cooperation cultures and of diversity in its broadest sense. helpline provides the ability to make enables us to create unique solutions with our our other stakeholders, to the safety

reports online through a web portal, by Our Responsibility partners. Through cooperation, each Vesuvius Excellence of our employees and workplaces. Vesuvius’ Values employee is committed to the success of their Anti-bribery and corruption phone or by voicemail. Ensuring global This new value, introduced in 2017, represents Everyone within Vesuvius is individually community of colleagues and customers and accessibility, employees can now speak The behaviours we champion in our our aim to deliver optimised performance to our accountable for upholding its that of the wider Group. with operators in any of our 29 functional employees are represented by the six customers and stakeholders, eliminating waste requirements. We recognise that lasting and striving for continuous improvement. languages. No individual is ever Vesuvius Values. They are an expression Reliability business success is measured not only in Excellence is our attitude as we engage with our penalised or disadvantaged for reporting of the common culture of the Group, Our solutions involve us in critical aspects of colleagues, our customers and our communities. Employees and human rights èùëĚçÚçÜâÚåéÞëßèëæÚçÜÞÛùøâçøáÞ our customers’ manufacturing processes. a legitimate concern in good faith. way in which we deal with our customers, promoting our image to external Our commitment to deliver consistent products stakeholders, and underpinning the ÚçÝìÞëïâÜÞìàâïÞìøáÞæøáÞåÞïÞåèßÜèçĚÝÞçÜÞ business associates, employees, investors Reports received via Speak Up are commercial promise we provide to our they require. and local communities. The Code of managed by the General Counsel, customers. The Values are displayed in Conduct is published in our 29 major assisted by senior managers from the ÚååèùëßÚÜâåâøâÞìÚçÝâçÕÞìùïâùìèßĚÜÞì Disclosure and investors functional languages. Vesuvius’ Framework for Business Integrity ËÞàÚåÃÞéÚëøæÞçøÚçÝÇÑÀååëÞéèëøì at customer sites. are investigated following a protocol for Vesuvius has established a framework for explaining and delivering the culture Policies and Procedures review, action, closure and feedback. During 2017, we continued to engage and principles we consider to be fundamental to our sustained success: For complex issues, formal investigation our employees on the importance of the We continue to enhance the policies that Government, society and local plans are drawn up, and support from Vesuvius Values through the addition of a underpin the principles set out in the Code 1. 2. 3. 4. 5. communities external experts is engaged where new value of ‘Excellence’. Our approach of Conduct. These assist employees to Vesuvius’ Values Code of Policies and Training Monitoring necessary. Feedback is recognised as to our customers and business operations comply with our ethical standards and the Conduct Procedures and Evaluation an important element of the Speak Up has always been to strive for Excellence, legal requirements of the jurisdictions in process and we aim to provide an update and the addition of this sixth Value which we conduct our business. They also on all reports within 28 days of receipt. reinforces our objective to integrate ÂèçěâÜøìèßâçøÞëÞìø give practical guidance on how this can be continuous improvement into our achieved. Amongst these policies are: business approach.

Our Values are celebrated annually through the Group’s Living the Values Competitors Awards (‘LTVA’). In 2017, we came together to celebrate the outstanding individual contributions to the implementation of Vesuvius’ Values The Code of Conduct is available in by 74 employees from 11 countries 29 languages at www.vesuvius.com who were nominated by their peers.

See more about the Living the Values Awards in our People and Community section on p67-73 Vesuvius plc 58 Annual Report and Accounts 2017 59

Our Principles continued

Operations meeting Skawina, Poland

Anti-Bribery and Corruption and Human Rights Training provided during 2017 included: Speak Up Prevention of Slavery and Human Data Protection Working With Third Parties ÓáÞÆëèùéáùæÚçëâàáøìéèåâÜòëÞěÞÜøì The Group continues to monitor the ÓëÚßĚÜäâçà In 2017, we spent considerable time > E-learning modules for modern Vesuvius engages with various third- the principles contained within the volume, geographic distribution and During 2017 we published our second reviewing our approach to data slavery, data protection and trade party representatives and intermediaries United Nations Universal Declaration range of reports made to its Speak Up transparency statement outlining the protection, in anticipation of the sanctions which can present an increased anti- èßÇùæÚçÑâàáøìøáÞÈçøÞëçÚøâèçÚå facility to ascertain not only whether Group’s approach to the prevention of implementation of the EU General bribery and corruption risk. Our Labour Organisation’s Fundamental > Webex and video conference øáÞëÞÚëÞìâàçâĚÜÚçøëÞàâèçÚåÜèæéåâÚçÜÞ ìåÚïÞëòÚçÝáùæÚçøëÚßĚÜäâçàâçèùë Data Protection Regulation in May. procedure on working with third parties Conventions on Labour Standards and workshops on data protection concerns, but also whether there are business and supply chain. You can ÖÞßèëæÚååòâÝÞçøâĚÞÝÚÃÚøÚ clearly outlines our zero-tolerance the United Nations Global Compact. countries where access to this facility ĚçÝÚÜèéòèßèùëåÚøÞìøìøÚøÞæÞçøèç ÏëèøÞÜøâèçÎßĚÜÞë›ĊÃÏÎċœâçÉùåò# > Face-to-face training by the Legal approach to bribery and provides The policy applies to all Group is less well understood or publicised. our home page at www.vesuvius.com. whose role includes setting Group policy, and Compliance team to staff at practical guidance for our employees in employees. It sets out the principles for The Audit Committee continues to ÒâçÜÞøáÞéùÛåâÜÚøâèçèßèùëĚëìø implementing procedures, monitoring several sites covering anti-bribery identifying concerns and how to report our actions and behaviour in conducting monitor and oversee the Group’s statement we have conducted a compliance with data protection and corruption, gifts, hospitality and them. Vesuvius engages with third-party our business and provides guidance procedures for reporting allegations of Group-wide risk assessment as well as provisions and championing Vesuvius’ entertainment and trade sanctions developing our internal policies and sales agents, many of whom operate to those working for us on how we improper behaviour, and throughout approach to the protection of personal Our Responsibility in countries where we do not have a approach human rights issues. The Our e-learning platform supplements 2017 the Audit Committee received enhancing our supplier assessment data. Our review involved Group-wide physical presence. Our employees’ Group commits not to discriminate in the face-to-face training provided to updates on the volume of reports programme. To ensure effective due diligence to clarify the data we interaction with sales agents is supported any of our employment practices and employees by the Legal and Compliance ëÞÜÞâïÞÝßëèæøáÞÜèçĚÝÞçøâÚåÒéÞÚä ÜèææùçâÜÚøâèçèßèùëÇùæÚçÑâàáøì control and process, the methods by by an ongoing training programme for to offer equal opportunities to all. team, enabling us to reach more ÔéÇÞåéåâçÞäÞòøáÞæÞìÞæÞëàâçàßëèæ Policy we have provided training to our which we do this, the security of the øáèìÞðáèáÚïÞìéÞÜâĚÜëÞìéèçìâÛâåâøò The Group respects the principles of employees, more quickly and in a more these reports and the results of any key purchasing staff and introduced an systems that hold our data and the for these relationships. freedom of association and the effective targeted way. In 2018, we will continue investigations undertaken. In 2017, online e-learning module to upgrade the assignment of responsibilities for recognition of the right to collective to develop our training processes and we received 76 reports through the training given to all supplier-facing staff, responding to this. Data Protection bargaining and opposes the use of, modules available in the e-learning Speak Up facility, a number of which which provides key guidance on the red The DPO is also responsible for raising Our data protection policy requires a and will not use, forced, compulsory platform to help our staff understand the related to the same set of facts. Each one ěÚàìÚììèÜâÚøÞÝðâøáæèÝÞëçìåÚïÞëòøè awareness of data protection issues uniform approach in the handling of or child labour. These principles have Vesuvius policies and procedures relating of these was investigated. A substantial assist them in identifying these during across the Group and training staff personal data to manage the privacy been integrated into the work of our to our Code of Conduct and regulatory majority of reports received in 2017 were supplier visits and accreditation. who undertake roles that involve the obligations of the Group. Everyone has procurement teams as we assess our compliance requirements. human resource issues which indicated processing of data. rights in respect of how their personal suppliers and their business practices. no compliance concerns, nor serious Working with Third Parties data is handled. Our policy recognises Monitoring and Evaluation breaches of the Code of Conduct. In During 2017 the Group continued the Other Due Diligence that the lawful and correct treatment of review of our third-party representatives Training relation to the repetitive reports, even The Group continues to undertake personal data is vital to our continued Alongside our training programme, we though these did not identify compliance and intermediaries. This included During the year we continued to operate ßèÜùìÞÝÜèùçøëò˜ÚçÝßùçÜøâèç˜ìéÞÜâĚÜ success in an increasingly regulated assist employees with the implementation concerns, steps were taken to ensure detailed review of our due diligence our training programme on the principles ëâìäÚììÞììæÞçøìëÞïâÞðâçàĚçÚçÜâÚå global marketplace. During the course of and interpretation of the Group’s policies, that changes were implemented locally, activities for active sales agents across contained in the Vesuvius Code of records and the quality of implementation our activities we may collect, store and and their application through a process including in certain cases entity-wide the Group. This process covers Conduct and associated anti-bribery, of our policies and procedures, often process personal data about our staff, of monitoring and evaluation. Part of this management training, recommunication reputation, public information searches, corruption and other compliance policies engaging the assistance of external customers, suppliers and other third process involves performing ongoing and of policies and reinforcement of our regulatory searches and ultimate and procedures. Training gives our advisers. The outputs of these parties. We are committed to treating targeted due diligence to understand business culture, supported by senior ÛÞçÞĚÜâÚåèðçÞëìáâéÚçÝáÚìÛÞÞç employees a clearer understanding of assessments are used to identify activities this data in an appropriate manner. the background to policy design and management oversight. Of the small applied to each one of our active sales the scope of risks that exist as we conduct that require further improvement, ensure application. This forms part of our number of reports received that agents. The review of our due diligence our business, and gives context to how that our Group policies and procedures compliance framework to ensure that our contained allegations in breach of processes will continue to be extended the Group expects each one of us to for the management of anti-bribery and ÞøáâÜÚåÚçÝåÞàÚåÚééëèÚÜáëÞæÚâçìĚøßèë our Code of Conduct, thorough on a risk-based approach during 2018 respond to those risks. In 2017, our corruption risk continue to be appropriate purpose and is understood throughout investigations were performed and, and beyond. training processes have developed for the business, and ensure that within the business. where appropriate, disciplinary action to include an integrated learning our business there is the necessary taken, including one termination. management system which allows us awareness and understanding to be øèÝÞåâïÞëÕÞìùïâùì˜ìéÞÜâĚÜޘåÞÚëçâçà able to manage risks appropriately. modules to employees on topics relevant to their role through an online interactive platform. Vesuvius plc 60 Annual Report and Accounts 2017 61

consistent Group-wide basis. In addition, Turbo S Health and Safety this team will systematically audit Group locations worldwide, including customer ÓáÞÜùëëÞçøéáÚìÞèßøáÞÒÚßÞøòÁëÞÚäøáëèùàá > Employees are routinely engaged in safety âçâøâÚøâïÞ™ÓùëÛèÒ™ÛùâåÝìèçøáÞßèùçÝÚøâèçèß audits locations, against these policies and Safety Breakthrough and includes a strong  ÖÞâçïÞìøìâàçâĚÜÚçøåòâçìÚßÞøòøëÚâçâçàßèë standards, providing recommendations focus on the standardisation of all our repetitive all employees, irrespective of their roles and on improvements and assisting the ÚÜøâïâøâÞìÓùëÛèÒÚåìèâçøÞàëÚøÞìàèèÝ functions within our business locations with their implementation. management practices in the workplace, with a Vesuvius remains fundamentally committed to strong emphasis on the need to implement an > All employees are expected to routinely organisation which enables everybody to work to raise and implement safety improvement protecting the health and safety of employees, Health and Safety Policy the same high standards in safety performance. opportunities; we focus on the number of All employees are expected to adhere ÀìéÚëøèßøáÞÜèçøâçùâçàÓùëÛèÒâçâøâÚøâïÞ implemented ideas to the Group’s health and safety policy. > Senior executives regularly lead safety tours > Safety standards are continually updated, contractors, visitors, customers and any other translated and deployed throughout Vesuvius A copy of the policy signed by all at all locations  ÀååâçöùëâÞìÚçÝÝÚçàÞëèùìèÜÜùëëÞçÜÞìÚëÞ members of the Group Executive > Severe accidents are formally reviewed by the persons affected by our activities. Group Executive Committee analysed locally, with a formal presentation of Committee is translated into local ĚçÝâçàìëèèøÜÚùìÞìÚçÝâæéëèïÞæÞçøÚÜøâèçì languages and displayed prominently cascaded through management. in all locations.

Our approach to health and safety is based on the following beliefs Safety Breakthrough Training Employees to Work Safely Vesuvius has developed machinery Safety Breakthrough is Vesuvius’ global ÓùëÛèÒøëÚâçâçàéùååìøèàÞøáÞëÚåå safety training with an outside industry initiative to reduce the number of Good health and safety Safety is everybody’s Working safely All work-related Vesuvius’ good safety management leader, Pilz GmbH & Co, a company ÚÜÜâÝÞçøìĚëÞìÚçÝåèìøøâæÞâçöùëâÞìÚçÝ is good business responsibility is a condition of injuries and work- practices that are aimed at enabling all specialising in safe automation to increase safety awareness through employment related ill-health Vesuvius employees to work in a safe technology. We are now extending greater employee engagement. Our aim are preventable environment. Using a train-the-trainer recognised best practices throughout is to raise health and safety performance ÚééëèÚÜáÓùëÛèÒøëÚâçâçàìÞììâèçìÚëÞ the Group through a series of machinery to best-in-class levels throughout the tailored to the audience and their activities. assessments and training programmes. Vesuvius business. Safety Breakthrough For example, there is a special training ÓáâìàèÚåâìéùëìùÞÝøáëèùàáÚëÚçàÞèß Working Safely Health and safety is one of Vesuvius’ core Every business facility has an appointed sets a goal of attaining the lowest level course developed for customer locations principles, and our commitment to health policies, standards and procedures, health and safety manager, who works of accidents within our industry sector øáÚøßèÜùìÞììéÞÜâĚÜÚååòèçøáÞëâìäìßÚÜÞÝ ÓáÞÞñÞÜùøâïÞìÚßÞøòøèùëìÜÚëëâÞÝèùøÛò and safety is embedded throughout the which are reviewed and updated on an with management and all employees with the ultimate goal of reaching zero by our employees at our customers’ senior managers provide visible safety èëàÚçâìÚøâèçÓáÞÕÞìùïâùìÞøáèìâìøè Our Responsibility ongoing basis. In 2017, the accident and to review site health and safety, assess accidents throughout Vesuvius, as premises and how best to manage them. åÞÚÝÞëìáâéèçøáÞìáèéěèèëâçÕÞìùïâùìċ identify, eliminate, reduce or control all incident reporting, personal protective training needs and develop and âÝÞçøâĚÞÝâçèùëìÚßÞøòàèÚåìÓáÞìéÞÜâĚÜ Vesuvius conducts Permit to Work ìâøÞìÚçÝâçÜùìøèæÞëåèÜÚøâèçìÓáÞìÞ workplace risks and an ongoing system equipment, road vehicle and machine implement site safety improvement focus on employees based at customer training in all Group facilities, including along with our daily safety audits are éåÚçìÓáÞìÞåèÜÚåáÞÚåøáÚçÝìÚßÞøò of training, assessment and improvement safety standards were all reviewed and locations continues to yield results not customer locations and extends a pillar of our Safety Breakthrough is in place to focus on achieving this. updated to maintain their relevance to managers are assisted by a central only for the safety of our employees but recognised best practices throughout the initiative. In 2017, 111 Executive Safety øáÞÜùëëÞçøÕÞìùïâùìëâìäéëèĚåÞ team of experts who not only identify also our customers’ employees – helping ÆëèùéÓáâìÞçìùëÞìøáÚøÚååçèç˜ìøÚçÝÚëÝ ÓèùëìèßðáâÜáðÞëÞâçÜùìøèæÞë Safety Leadership adverse trends and respond to them, to support the strong relationships built work conducted in our facilities, whether locations, were carried out by the but also enable the sharing of best between customers and Vesuvius. members of the Executive Committee ÒÚßÞøòéÞëßèëæÚçÜÞëÞæÚâçìøáÞĚëìø Health and Safety by Vesuvius employees or contractors, practice across Vesuvius. and their direct reports across all item on the agenda at all our Group Health and safety is regarded as a core âìøáÞìùÛöÞÜøèßÚéëޘÜèææÞçÜÞæÞçøé territories where Vesuvius operates. Executive Committee and management management responsibility, with In 2017, a thorough review was riskrisk assessmentassessment and a foformal permission In our plants, more than 76% of our meetings, and safety performance is executives and line managers directly undertaken of the operation of the health to commence activity, settingse out the working population performed routine reported to the Board by the Chief responsible for health and safety matters and safety function in Vesuvius. Followingowing safetysafety requirements. safety audits, generating an average Executive as a matter of priority at each in the operations under their control. this review, the function was restructuredured of nine improvement opportunities per Board meeting. Any site experiencing ÓáâìøèçÞßëèæøáÞøèéâìÝÞæèçìøëÚøÞÝ with the creation of a new position of person, resulting in an improvement in a serious dangerous occurrence or by the requirement for all senior Group Vice President Quality, Health and ðèëäÞëìÚßÞøòÓáÞÚùÝâøéëèàëÚææÞ æÞÝâÜÚååòøëÞÚøÞÝâçöùëòâìëÞêùâëÞÝøè managers to perform executive safety Safety and the restructuring of centralal involves employees at all levels – from carry out a full 8D investigation and øèùëìëÞéèëøèçøáÞâëĚçÝâçàìøèåèÜÚå ßùçÜøâèçìÓáÞÕâÜÞÏëÞìâÝÞçøÐÇÒÄðâååðâåå the Group Executive Committee and âçÜèëéèëÚøÞøáÞĚçÝâçàìâçøèøáÞâëìâøÞ operations management and follow be responsible for setting the Group’s safety specialists through to local site âæéëèïÞæÞçøéåÚçÓáÞÆëèùéÄñÞÜùøâïÞ up on improvement requirements. policies for quality and safety and management, employees and contractors. Committee reviews the more serious Management is accountable for health controlling their application, with the incidents and the responses from the and safety performance against business units taking full responsibility for ìâøÞìÓáÞÆëèùéëÞæÚâçìßùååòÜèææâøøÞÝ èÛöÞÜøâïÞìÚçÝÚååÞæéåèòÞÞìùçÝÞëìøÚçÝ their implementation and accountabilityity to continuing safety improvement with a that they have a responsibility to take for performance against them. A new Group health and safety policy stating care of themselves and others whilst at safety auditing team will be established,d, a clear goal of: work. We expect everyone to participate to develop and maintain policies and positively in the task of preserving standards, improving them in the light No lost time injuries workplace health and safety. of external and internal changes on a No repeat injuries No harm to our people or contractors

Aaron Gonzalez, Quality Engineer, Flow Control, Monterrey, Mexico Vesuvius plc 62 Annual Report and Accounts 2017 63

Health and Safety continued

In 2018, the business units will continue Accident and Incident Reporting cascaded through management.As part Safety performance in 2017 Health and Safety highlights to build on the embedded behaviour- and Analysis of management reporting, the Board As part of the customer’s Steel Zone Safety Lost time injuries per million hours worked LTIFR 12 month rolling based safety approach taken to date receives a monthly update on all lost ÷èçøá›ÃÞÜÞæÛÞë#œÚøèùëÉÒÖÜùìøèæÞë ÀìâàçâĚÜÚçøâçïÞìøæÞçøâçøâæÞÚçÝ to drive continual improvement in øâæÞâçöùëâÞì location in India, three of our employees received resources has been made over recent awards from the Customer: 10 safety performance. years to develop robust, comprehensive Involving Accountable Management for > Mr Chandrakant for Best Essay on Steel and timely reporting of incidents Safety Performance Plant Safety 8 Working in Tidy Plants ›âçÜåùÝâçàÚååĚëÞìÞñéåèìâèçìÚçÝÚçò  ÷ëÕÞçùÉÚòÚÏëÚäÚìáßèëÁÞìøÃëÚðâçà ÓáÞÜèçøâçùâçàùìÞèß!ÒøáÞðèëäéåÚÜÞ Site safety improvement plans are now æÚöèëìéâååèëèøáÞëÜáÞæâÜÚåëÞåÞÚìÞìœ competition on Steel Plant Safety 6 organisation method, throughout in place for all production sites with In its internal standards, Vesuvius > Mr Srinath and Vishnu Arat for Hazard øáÞÆëèùéáÚìÝëâïÞçìâàçâĚÜÚçø deployment being the direct responsibility 4 continues to use more stringent ÈÝÞçøâĚÜÚøâèçâçøáÞðèëäâçàÚëÞÚ improvements in our workplace of local managers. Any site experiencing ÝÞĚçâøâèçìßèëåèìøøâæÞâçöùëâÞì›ËÓÈìœ 2 environment. Employees are encouraged ÚÝÚçàÞëèùìèÜÜùëëÞçÜÞèëìÞïÞëÞâçöùëò ÕÞìùïâùìÂáÞìøÞëĚÞåÝâçøáÞÔÊàÚâçÞÝçÚøâèçÚå ÚçÝĊìÞïÞëÞÚÜÜâÝÞçøìċøáÚçøáÞÝÞĚçâøâèçì to develop ownership of their working is required to investigate using 8D and to recognition for its efforts to improve the working 0 used by local regulatory bodies. Our Responsibility environment by reducing the amount of airborne areas, and take pride in their cleanliness share their incident investigation and 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 ÓáâìÞñøÞçÝìâçïÞìøâàÚøâèçøèÚååæÞÝâÜÚååò ÝùìøÓáÞÏâåèøÝùìøëÞÝùÜøâèçÚçÝÚðÚëÞçÞìì ÚçÝèëàÚçâìÚøâèçÓáÞÚÝÝÞÝìùééèëøèß action plans across the Group. In 2017, øëÚâçâçàÜèùëìÞðÚìÚðÚëÝÞÝÚÜÞëøâĚÜÚøÞ øëÞÚøÞÝâçöùëâÞìÚçÝìÞëâèùìÝÚçàÞëèùì Vesuvius Lean specialists has been key øáÞëÞðÞëÞçèìÞïÞëÞâçöùëâÞìÛùø # of achievement by the Health and Safety Training activities undertaken in 2017 include: occurrences. Vesuvius has implemented Executive-endorsed awarding body at the to improving plant safety by removing dangerous occurrences. Vesuvius a full investigation based on the 8D annual Ceramic Industry H&S Pledge Awards. In Poland a Road Safety Champion was Safety Champion and a Road Safety Committee hazards for employees and offering encourages the reporting of all established and a Road Safety training plan ðÞëÞÚééèâçøÞÝÓáÞøÞÚæÝÞïÞåèéÞÝÚ ÏëÚÜøâÜÚåÏëèÛåÞæÒèåïâçà›Ċ$Ãċœøèèåøè Furthermore, the training initiative has since a clear, bright and safe working ÝÚçàÞëèùìèÜÜùëëÞçÜÞìÚçÝâçöùëâÞì been developed into the Group Global Dust developed. In addition, work was undertaken on road safety action plan, safe driving policy, identify the true root causes to prevent machinery safety. Four presses were assessed by øëÚâçâçàßèëìéÞÜâĚÜÜÚøÞàèëâÞìèßÝëâïÞëìÚçÝ ÞçïâëèçæÞçøÃÚâåò!ÒÚùÝâøìåÞÝÛòøÞÚæ as only through a sound root cause and Vibration initiative which was deployed repeat incidents with a formal throughout 2017. ÏâåóÓáÞòâÝÞçøâĚÞÝìÚßÞøòâæéëèïÞæÞçøÚÜøâèçì ùéÝÚøÞÝÜÚëéèèåéëèÜÞììÓáÞìÞéëèàëÚææÞì leaders ensure continuous improvement analysis and preventative action plan and a plan was put in place to complete these. policies were shared and adopted by Canada éëÞìÞçøÚøâèçèßĚçÝâçàì$ØÛÚìÞÝ implementation can future occurrences One piece of equipment which could not be made and Mexico. of working conditions and promote a In ArcelorMittal Galati, Vesuvius took on root causes and improvement actions compliant, a friction press, was dismantled. safer workplace. be prevented. ìâñĚøøÞëìßëèæøáÞâëéëÞïâèùìÜèæéÚçòÚçÝ ÓáÞìÚßÞÝëâïâçàéèåâÜòðÚììÞçøøèÚååÝëâïÞëìðáè øëÚâçÞÝøáÞæâçÚååÕÞìùïâùìéèåâÜâÞìðâøáÚ!Ò ÈçøáÞÍÞøáÞëåÚçÝìÓùëÛèÒøëÚâçâçàðÚì signed and returned it to their manager. Monthly implemented workshop as part of the renewed ÜèæéåÞøÞÝßèë éÚëøâÜâéÚçøìÚçÝÞæéåèòÞÞì general awareness topics were created and sent contract covering additional activities in the were trained in machinery safety by Pilz. out, and the basic level of training was completed customer’s plant. ÈçÆÞëæÚçòÝùìøÜèçøëèåÓùëÛèÒéÞëæâø for all categories of drivers. Skid control training øèðèëäÚçÝ!ÒËÞÚçøëÚâçâçàðÞëÞÚååÜèæéåÞøÞÝ was completed for high-risk drivers in Canada ÚçÝ÷ÞñâÜèÈçÚÝÝâøâèçÓùëÛèÒéÞëæâøøèðèëä In 2017, Vesuvius Ibérica Refractarios was In the USA, 11 production employees and dust and vibration and furfural training were Executive Safety Tours carried out Vesuvius 8D Practical Problem Solving awarded with an ‘honourable mention’ in %ÍÀÅÓÀÇÒÄéëèßÞììâèçÚåìðÞëÞøëÚâçÞÝ undertaken. in 2017 Methodology the National and International Prevention on machinery safety, by Pilz. In addition a Road Awards as a recognition of the work done in the prevention of accidents. D1 clarify the problem ÎùëÓÚäÞâçâøâÚøâïÞÞçìùëÞìøáÚø Safety Performance in 2017 D2 grasp the current situation employees think again before We continue to work hard to reduce performing any unusual or non-standard incident severity and develop robust D3 contain and set target 111 Executive activity. Simply stated, the employees policies, standards and practices aimed Safety Tours take 2 minutes to discuss the task, any at improving the safety and health of à analyse causes hazards and how to prevent accidents our people in all that they do and to before any work is started. develop actionable insight from the Ã! ÝÞĚçÞÜèùçøÞëæÞÚìùëÞì éÞëßèëæÚçÜÞâçÝâÜÚøèëìÓáÞåèìøøâæÞ For new contracts in customer locations, âçöùëâÞìßëÞêùÞçÜòÜáÚëøìáèðìáèð D6 execute and track progress Vesuvius uses a formal risk assessment âçöùëâÞìáÚïÞÛÞÞçëÞÝùÜÞÝÚçÝáèð ðáâÜáÚâæìøèâÝÞçøâßòìâàçâĚÜÚçøëâìäì China that reduction has been maintained D7 check results to our employees and contractors. Europe through a combination of a behaviour- ÓáâìÞçÚÛåÞìÚééëèéëâÚøÞÜèçøëèå India based approach to safety and the NAFTA D8 standardise and establish control measures to be agreed and implemented implementation of physical safeguards. North Asia with the support of our customers in South America advance of work commencing. South Asia Vesuvius plc 64 Annual Report and Accounts 2017 65

Sustainability

Greenhouse Gas Reporting Our solutions improve the quality Global GHG emissions (kg of CO2e) In line with our total energy consumption, 2017 2016 both total emissions and normalised of our customers’ products Emissions source emissions increased in 2017, driven and reduce the environmental predominantly by the issue mentioned Combustion of fuel and operation of facilities 396m 340m above – the increased production of Electricity, heat, steam and cooling purchased for own use 120m 98m footprint of their processes. Slagdol which generated high process Total GHG emissions 516m 438m

CO2 emissions, and increase in +17.9% production of our brick plants, although we also undertook a switch from coal to Vesuvius’ chosen intensity measurement Vesuvius’ senior engineers to drive a cleaner gas fuel during the year in our Vesuvius and its Processes Emissions reported above, normalised to per tonne 526.4 511.0 Sustainability Highlights improvements across the business. Chinese brick plant. In 2017, Vesuvius also of product output +3.0% Vesuvius France installed a water network The Board recognises that good included the emission from our newly separation and rain water collection system environmental management is aligned ÚÜêùâëÞÝěùñéåÚçøâçÁëÚóâåÈßøáÞìÞ åâçäÞÝøèÚçèç˜ìâøÞĚëÞĚàáøâçàðÚøÞëåÚàèèç Environmental Monitoring Methodology We have reported to the extent reasonably practicable on all the emission sources required with our focus on cost optimisation and products are excluded, then there is an ùçÝÞëÏÚëø#èßøáÞÀÜÜèùçøâçàÑÞàùåÚøâèçìðáâÜáßÚååðâøáâçèùëÜèçìèåâÝÚøÞÝĚçÚçÜâÚåìøÚøÞæÞçøì operational excellence. Whilst Vesuvius’ All our factory emissions are proactively underlying downward year-on-year Scope 1ÜèïÞëìÞæâììâèçìßëèæßùÞåìùìÞÝâçèùëßÚÜøèëâÞìÚçÝèßĚÜÞì In Korea, 4,891 square metres of asbestos éëèÝùÜøìÝèïÚëòìâàçâĚÜÚçøåòâçøáÞ managed in accordance with local ÜèçøÚâçâçàëèèĚçàðÚììÚßÞåòëÞéåÚÜÞÝðâøá trend in normalised emissions of CO2e energy intensity of their manufacture, the Scope 2 relates to the indirect emissions resulting from the generation of electricity, heat, steam and steel cladding to improve the health, safety regulations. Regular analysis enables us of 7.7% and of normalised energy áèøðÚøÞëðÞéùëÜáÚìÞøèìùééåòèùëèßĚÜÞìÚçÝßÚÜøèëâÞìÖÞáÚïÞùìÞÝÝÚøÚàÚøáÞëÞÝøèßùåĚåèùë ÚçÝÞçïâëèçæÞçøÚåëâìäéëèĚåÞèßøáÞìâøÞ majority of our manufacturing processes to take action to reduce our emissions consumption of 7.3%. ëÞêùâëÞæÞçøìùçÝÞëøáÞÂÑÂÄçÞëàòÄßĚÜâÞçÜòìÜáÞæÞÚçÝÞæâììâèçßÚÜøèëìßëèæÔÊÆèïÞëçæÞçøċì are not energy intensive, nor do they where possible and to operate more and the IEA GHG Conversion Factors for Company Reporting 2016 in the calculation of our GHG. Process Metrix shipped a record number produce large quantities of waste and ÞßĚÜâÞçøåòÓáÞÆëèùéæèçâøèëìâøìÞçÞëàò In reporting greenhouse gas (‘GHG’) of laser systems in 2017 with the new emissions, we have used the GHG HyperionTM software. emissions. Vesuvius’ total energy costs consumption, worldwide CO2e emissions are less than 3% of revenue, with only Protocol Corporate Accounting and and usage of water. Vesuvius proactively Reporting Standard (revised edition) Our Responsibility Process Metrix also released their new 1.8% of the total energy requirements seeks to reduce waste in production Two-Color Pyrometer for surface temperature across the Group consumed in the UK. and to reuse and to recycle materials methodology to identify our GHG measurement in conjunction with lining thickness New Insural® furnace lining where practical. inventory of Scope 1 (direct) and Scope 2 measurement. The systems typically increase (indirect) CO e. We report in kg of CO ladle refractory lifetime by 10–30% with a Total Energy Consumption 2 2 In 2017, Vesuvius recorded nine minor system increases productivity concomitant reduction in waste with less brick equivalent (‘CO2e’). consumed over the lifetime of the ladle. Overall gas use increased by 6.4% environmental incidents. These included in 2017 and electricity use by 11.9%, items such as encroachment of waste The Group also meets all of its obligations and casting quality primarily as a result of the increased water from a neighbouring property, in relation to the Carbon Reduction production of energy-intensive bricks complaints about a factory odour and ÂèææâøæÞçø›ĊÂÑÂċœÄçÞëàòÄßĚÜâÞçÜò and of our South African production of contained spillages. All of the incidents Scheme, the Producer Responsibility Packaging Waste regulations and the Slagdol, an energy-intensive product were contained via Vesuvius’ site The Insural furnace lining system is Energy Saving Opportunity Scheme The Challenge used in converters. In this way, changes environmental response plans and The need to improve productivity, completely water free. Consequently, by which the UK has implemented the in product mix can have a positive reported through the Vesuvius incident commercial competitiveness and hydrogen pick-up from the new lining or negative effect on our energy reporting system. Two of these incidents ÄÔÄçÞëàòÄßĚÜâÞçÜòÃâëÞÜøâïÞ environmental impact is increasingly system is negligible and the aluminium performance, such that they can in China were reported to the local ÝëâïâçàøáÞÚÝèéøâèçèßÞçÞëàòÞßĚÜâÞçø æÞåøÝÞçìâøòâçÝÞñìéÞÜâĚÜÚøâèçÜÚç be achieved immediately following outweigh any underlying changes. environmental regulators. No action Energy Conservation Plan furnaces in aluminium foundries. ÇèðÞïÞëøáÞÞßĚÜâÞçÜòèßøáÞìÞßùëçÚÜÞì installation. Furnace downtime is The underlying data for 2017 does was taken by the authorities after The Vesuvius Energy Conservation Plan is often undermined by the choice of the dramatically reduced and the risk of indicate improvements in energy Vesuvius made process changes. was launched in 2011 with the objective refractory lining. increased rejects associated with re-lining consumption in some areas. This detailed In all cases we complied with our of reducing our normalised energy work is avoided. analysis of normalised data is used by local reporting requirements. consumption by 10% over the following Our Solution With conventional linings, the external three years. In June 2015, we reset our Foseco has developed a new, multi-part furnace body temperature often runs in and highly insulating lining made of Insural focus and set the objective of a 10% excess of 100° C, while with Insural material. The lining is delivered ready to furnace lining systems installed an Energy conservation improvement (using 2014 as our base install, and combines energy saving external furnace body temperature of only year) by 2018. Against that 2014 base, Energy used kWh per metric tonne product packed for shipment potential with long service life and " ÂÜÚçÛÞÚÜáâÞïÞÝÓáâììâàçâĚÜÚçøåò a 4.2% improvement has been realised resistance to oxide build-up. improves the foundry working towards this target (making a 7.1% environment and reduces energy loss. 1,520 improvement since 2010). Managing ÓáÞÁÞçÞĚøì Our tests show that Insural lining runs on As most of the lining system is made of 33% less energy than a tradional lining. 1,480 our energy intensity not only has an pre-cast Insural shapes, the installation ÞçïâëèçæÞçøÚåÛÞçÞĚøÛùøâìÚåìèéÚëø The Insural furnace lining system offers can be completed in under three days 1,440 the foundry a reduction in cost, increased of our long-term strategy to enhance unlike traditional linings which require productivity and security in casting quality. 1,400 our cost competitiveness. several weeks to fully stabilise. In addition, no sintering is necessary. The furnace just 1,360 needs to be pre-heated and maintained at working temperature for 48 hours and is 1,320 then ready for service. 2010 2011 2012 2013 2014 2015 2016 2017 Vesuvius plc 66 Annual Report and Accounts 2017 67

Sustainability continued People and Community

Our people are unique and important to us. We are unequivocally committed to helping them to be the best they can at what they do.

Water Conservation Thermal optimisation and reject How Does Vesuvius Contribute? Our aim at Vesuvius is to foster a working For 2018, a strengthening of both the senior managerial level, there is the reduction are key factors in the processes environment that is inclusive and diverse, Talent Management and Reward appropriate level of alignment in Whilst water is not a scarce resource in Since 2011 we have used a CO impact for which we supply solutions. We 2 where people can be themselves functions is planned, to equip them better strategic outlook and performance the places where Vesuvius operates, stamp to highlight the most energy- contribute to the reduction of our without fear of harassment, bullying or for the ever-increasing battle for talent in goals. This increases accountability and Vesuvius works to reduce the consumption ÞßĚÜâÞçøìèåùøâèçìâçèùëéèëøßèåâèèß customers’ energy usage and subsequent discrimination. We recognise that the the marketplace. drives results. We encourage and reward of water in its manufacturing processes products and services and to support CO emissions through insulating dedication and professionalism of our high performance, foster talent and aim by recycling and improving processes 2 øáÞÝÞéåèòæÞçøèßÞçÞëàò˜ÞßĚÜâÞçøÚçÝ æÚøÞëâÚåìæÞøÚåěèðæÚçÚàÞæÞçø people, their capacity for owning their to create an environment where all can to reduce consumption. Normalised sustainable solutions engineered by Talent Management facilitating extended manufacturing roles and their drive for results, are the realise their individual potential. To meet consumption of water does vary with our technology departments. Strengthening the leadership pipeline sequences (meaning less reheating) æèìøìâàçâĚÜÚçøÜèçøëâÛùøèëìøèÕÞìùïâùìċ the demands of the business and add product mix; however, there is an overall and facilitating people development and reduced downtime. Vesuvius products and services facilitate success. In order to get the best from rigour to our employee value proposition, downward trend for both absolute water throughout the organisation remain ÞçïâëèçæÞçøÚåÛÞçÞĚøìÛò our people, we emphasise that one of we have launched a number of consumption, and normalised water The iron and steel industry accounts for key areas of focus for Vesuvius. We work the most important tasks of being a programmes to assist our employees in consumption – that is water use per tonne approximately 6.7% of total world CO2 > Enabling lighter, thinner and stronger hard to ensure that across all operational

manager in Vesuvius is the development growing their careers through utilising Our Responsibility of product manufactured. emissions and 18% of industrial CO components, leading to lighter vehicles and functional areas of the business, at a 2 of their direct reports. We recognise that world-class learning opportunities. emissions, with, on average, 1.8 tonnes and less energy consumption we attain our goals through our people. Our Customers and Their of CO2 being emitted for every tonne of > Improving customer processes through steel produced. With around 10 kg of Line and functional managers are guided Processes the supply of innovative consumables Our Training Programmes is highly structured and takes place over a refractory material required per tonne in managing and developing their people nine-month period, involving initial online to reduce energy intensity and the Under the Vesuvius and Foseco brands, of steel produced, careful selection by a central HR function, head-quartered ADVANCE modules, face-to-face workshops and individual CO e intensity ratio ÓáâìâìÚĚëìøàÞçÞëÚøâèçæÚçÚàÞæÞçø and group projects, in which participants are we deliver a wide range of solutions of energy-saving refractories can 2 in London delivering support through that help our customers improve the development programme aimed at developing assessed individually and also against each other. ÛÞçÞĚÜâÚååòâæéÚÜøèçøáÞçÞøÞæâììâèç > Reducing customers’ refractory its expertise in Reward, Talent individual contributors who are likely to occupy a Participants are supported by senior executives productivity of their operations. line management role in the short to medium term and senior HR management for the duration of of CO2. usage per tonne of steel produced Management, and Global Mobility, and These solutions also improve the and managers who have no direct reports but the programme and thereafter. Participants on through higher-quality, longer backed up by modern HR information quality of our customers’ products In the foundry process, the amount of need to be familiar with a broad range of people øáâìéëèàëÚææÞÚëÞøáèìÞâÝÞçøâĚÞÝÚìÛÞâçà service-life products systems. Management in the business management skills to use in one-off projects. potential future senior management of the Group. metal melted versus the amount sold and reduce the environmental footprint units and regional and local HR staff ÈçâøìĚëìøòÞÚëøáÞéëèàëÚææÞâìÝÞìâàçÞÝøè âìÜëâøâÜÚåøèÚßèùçÝëòċìéëèĚøÚÛâåâøò of their processes. > Increasing the level of sound castings draw upon this expertise and cascade take place over 12 months, and includes a blended HeaTt learning approach of online learning, face-to-face Foseco continuously works with its produced per tonne of metal melted These courses form part of the Vesuvius Technical it to their respective business units and workshops and individual projects. Participants customers to increase the ratio of metal University aimed at the continuous technical through improved mould design and are supported by line management and local organisations. Much care is taken development of Vesuvius personnel. Courses sold to metal melted. Sometimes this is HR business partners throughout the duration of the application of molten metal to ensure that Corporate HR initiatives range from entry to expert levels, and are the programme and thereafter where additional as low as 40% and we work with them ĚåøëÚøâèçÚçÝßÞÞÝâçàìòìøÞæì continuously updated to keep pace with are properly communicated and support is needed. The programme includes a to increase it to 70%. developing technology, thereby guaranteeing 360° assessment of each participant to enable implemented at local level, with the that Vesuvius staff are at the forefront of them to compile a personal development plan ÜèèéÞëÚøâèçèßâÝÞçøâĚÞÝÞæéåèòÞÞ technical innovation. for the next stage of their career. representatives. HR4HR WINGS The main area of attention for the central During 2016/17, under the Vesuvius HR4HR This is the Vesuvius middle management project, 30 HR professionals underwent HR function is identifying and fostering development programme aimed at those accredited professional training in psychometric talent across the organisation and who manage other managers. Wings, now Water conservation assessment and evaluation, and simulation of key in its eighth year, is held in Spring each year making sure that those individuals talent management processes, each achieving at Vlerick University in Belgium. In 2017, âÝÞçøâĚÞÝÚìáÚïâçàáâàáéèøÞçøâÚåÚëÞ ĊÄñéÞëøċìøÚøùìÓáÞìÞÇÑ ÇÑàëÚÝùÚøÞìðâååÚÜø 26 employees successfully completed the course. 1,200,000 1.2 QWater used in metric tonnes now as catalysts for implementing innovative seen as a company-wide resource, with The programme entails an introduction to ëÞÜëùâøæÞçøÚçÝøÚåÞçøâÝÞçøâĚÜÚøâèçøÞÜáçâêùÞì Water used in metric tonnes per metric general management theory and practice and, 1,000,000 1.0 appropriate development plans put in across the business. The project will be progressed like the ADVANCE programme, includes a 360° tonne of product packed for shipment place. In recruiting talent, whether it in 2018. 800,000 0.8 assessment of each participant. be recent graduates or seasoned 0.6 600,000 professionals, we are looking for ASCENT 400,000 0.4 individuals who embody an entrepreneurial This is the Vesuvius high potential and senior mindset and an international outlook. leadership development programme, which 200,000 0.2 Vesuvius offers in partnership with Insead. It is Special attention is paid in addressing aimed at accelerating the development of top 0 0.0 talent within the organisation. The programme 2010 2011 2012 2013 2014 2015 2016 2017 matters such as gender balance and the employment of a diverse workforce. Vesuvius plc 68 Annual Report and Accounts 2017 69

People and Community continued

SuccessFactors and to reinforce the vision, strategy and race, disability, sexual orientation, Global Mobility expectations set by the Board. gender, marital, civil partnership or Vesuvius has invested heavily in a new parental status, religion or beliefs. Although Vesuvius is active worldwide, believe that local Vesuvius companies therefore limited in time, usually to three people platform and key digital We have adopted the Willis Towers we keep the number of international should be managed and staffed by local years. Currently 29 employees are on products. The SuccessFactors HRIS Watson job grading model, which The Corporate Annual Incentive Plan for assignments as low as possible as we personnel. International assignments are long-term assignments. project was launched globally in January enables us to compare roles and deploy managers ensures that our people are 2017. It provides greater transparency a structured assessment methodology motivated to achieve their objectives, Global mobility at Vesuvius > Career development. We believe that > Enhancing diversity. Management teams across the business, facilitating better across countries and specialisms to with awards linked to business the personal development plan of any employee ÛÞçÞĚøßëèæáÚïâçàÚæâñèßàÞçÝÞëÚçÝ performance management and focused ensure that roles are rewarded performance. The Mid-Term Incentive > Providing Vesuvius companies with skills that are being developed for a senior management, or ÜùåøùëÞìÈçìéÞÜâĚÜÜÚìÞìðÞùìÞâçøÞëçÚøâèçÚå not locally available and that are required at øÚåÞçøâÝÞçøâĚÜÚøâèçÚçÝÝÞïÞåèéæÞçø consistently throughout the organisation. Plan for managers and senior managers senior expert position should include a posting assignments to achieve this goal short notice. This typically occurs in countries outside their home country. This encourages and has been implemented across all our Employees can also visualise their acts as a retention tool for key talent, where we are establishing a new presence. them to develop the skills necessary to function businesses and geographies. potential career paths within Vesuvius on reducing employee turnover and The number of expatriates working on this basis successfully in an international environment. the grade map. Vesuvius is committed diversifying our pay methods. The diminishes over time as the organisation These postings are tailored to the needs of the matures and we recruit and train local talent organisation and the needs of the individual Reward to creating reward systems which are Vesuvius Share Plan for Executive to take over transparent and objective, where Directors and Group Executive ÕÞìùïâùìċëÞðÚëÝìòìøÞæìÚëÞÝÞìâàçÞÝ employees receive equal pay for work Committee members encourages to create a market competitive and fair of equal value, regardless of their age, decisions based on long-term goals Vesuvius expatriates do not come from programme shows that our expatriate ÛÞçÞĚøìÝÞåâïÞëâçàìùééèëøÚééëèéëâÚøÞ pay environment for all of our employees rather than short-term gains and works one or two countries alone, we have a population is as diverse as our Group. to the nature of the assignment. to align the interests of participants truly international mix of nationalities in By accessing this broad range of policies, Vesuvius operates a number of and shareholders. our expatriate population. Individuals we can manage our international international assignment policies to move not only within a region, but ÚììâàçæÞçøìðâøáàëÞÚøÞëěÞñâÛâåâøòøáùì provide for the different circumstances also between regions, with existing catering for changing expectations and of these assignments – whether they assignments including Malaysia to demands from employees, whilst at the be short term, longer term, or require China, China to Germany, Poland to the same time meeting the demands of

extended commuting. These policies are Our Responsibility USA and Brazil to China. Our mobility the business. ìùééåÞæÞçøÞÝðâøáÜåÞÚëåòâÝÞçøâĚÞÝ

č÷òĚëìøâçøÞëçÚøâèçÚåéèìøâçà Employee Diversity Vesuvius believes that the diversity of its employees is one of the core strengths of the Group. Having a balance of cultures, was to Suzhou, China” ethnicities and genders helps to promote the innovation and creativity that is key to our success. We recognise that, in line with other engineering companies of our size and nature, we have an unbalanced gender representation. We are seeking to address this as Bill Cousineau, Vice President Advanced Refractories, NAFTAA part of our wider commitment to diversity.

Following an early career in In 2013, I moved back to Female Male Total Female Male construction and refractory Canada to take over the Generalal manufacturing, I joined Vesuvius Manager role once again and, Group Executive Committee member 0 10 10 0% 100% Canada as a Sales Account in November 2015, became the Senior management1 9941039%91% Manager in 2000. I was gradually Operations Director for Advancedced Middle management 41 305 346 12% 88% promoted to the roles of District Refractories NAFTA, responsiblele 2 Manager and Steel Sales for managing our production sitestes Directors of subsidiaries included in consolidation 35 447 482 7% 93% Manager, before becoming in the US, Canada and Mexico. All other employees 1,368 9,183 10,551 13% 87% General Manager of the Canadian Finally, in May 2017, I moved to Grand total 1,418 9,592 11,010 13% 87% ÛùìâçÞììâç!÷òĚëìø Pittsburgh to take on the positionn international posting was to of Vice President of Advanced 1. Of these 103 senior managers, 42 directly report to members of the Group Executive Committee, and of these, three are women. Suzhou, China where I became Refractories NAFTA, leading thehe 2. 482 individuals in the Group are Directors of Group subsidiaries. Of these 7% are women. This disclosure is made to comply with regulatory requirements. Vice President Advanced business in this region. Vesuvius It includes Directors of dormant companies and those with multiple directorships. ÑÞßëÚÜøèëâÞìÀìâÚÏÚÜâĚÜÓáÞëÞ has given me the chance to workk I oversaw all of our Advanced overseas gaining international aandnd Refractories operations for the intercultural experience enablingg ÀìâÚÏÚÜâĚÜëÞàâèçÜèïÞëâçà me to take on senior managementent Korea, Japan, Taiwan and China, roles around the world. including our Chinese joint venture with Angang Steel. My next move was to Australia, where I became the General Manager, overseeing the opening of the new Port Kembla manufacturing site and the sale of some of our non-core businesses. Vesuvius plc 70 Annual Report and Accounts 2017 71

People and Community continued 8D Awards 2017 The Awards champion unique solutions ÝÞìâàçÞÝøèÚÝÝëÞììÜùìøèæÞëìċ requirements

Employee Consultation and In addition to formal discussion and and to recognise excellence in quality. In the Netherlands, Foseco Nederland In addition, Vesuvius France SA again Vesuvius International Industrial Relations consultation mechanisms, in many During a two-day programme, Vesuvius BV operates an employee charity ðèëäÞÝðâøáÅÞâàçâÞìċåèÜÚåĚëÞÛëâàÚÝÞì Scholarship Programme ÜèùçøëâÞìèùëèéÞëÚøâèçìáèåÝĊøèðçáÚååċ employees were invited to present case donation competition. Employees write this time conducting four major exercises In most of the countries in which we The Vesuvius International Scholarship meetings on a regular basis. These studies evidencing the application of the an essay explaining why the charity to learn more about managing chemical operate we discuss matters concerning ÏëèàëÚææÞâììÞøùéøèÚììâìøêùÚåâĚÞÝ provide an opportunity for local 8D methodology to offer to customers organisation with which they have a risk at high temperatures. We helped the Vesuvius business with local works dependent children of Vesuvius management to meet with staff and sustainable business solutions. A panel, connection, should win the donation. them explore how best to assess councils and trade unions. These ÞæéåèòÞÞìâçáÞåéâçàøèĚçÚçÜÞùçÝÞë˜ provide an update on corporate ÜáÚâëÞÝÛòÕÞìùïâùìċÂáâÞßÄñÞÜùøâïÞ In June 2017, Marloes Goorhuis won situations without prior knowledge, processes and procedures are regulated graduate and graduate education at developments and matters material to judged the presentations, selecting the the award for her contribution to an how to evaluate circumstantial and ÛòåèÜÚååÚðÚçÝðÞĚçÝøáÚøøáÞ accredited institutions. Awards are the business. winning team from Olifantsfontein, organisation named MeeReizen. environmental factors under pressure, constructive dialogue that takes place granted globally without regard to South Africa. This team demonstrated MeeReizen organises holidays for as well as how to communicate effectively between employee representatives and race, colour, creed, religion, sexual Valuing our Employees outstanding capabilities in pushing the mentally disabled people, providing the ðâøáøÞÚæìðáÞçßÚÜâçàìéÞÜâĚÜÜáÞæâÜÚå æÚçÚàÞæÞçøéëèïâÝÞìÛÞçÞĚøøèèùë orientation, age, gender, disability or boundaries in high temperature participants with an exciting adventure ěèðáÚóÚëÝì Vesuvius operates a number of awards business. In addition to local employee solutions. Their case study demonstrated national origin. Vesuvius has been and their carers with some respite at Our Responsibility representation we operate a European and initiatives aimed at recognising the In China, Vesuvius Suzhou sponsors involved in this programme for 22 years, the use of 8D in a joint effort between home. Marloes has been a volunteer on ÖèëäìÂèùçÜâå›ĊÄÖÂċœøáÚøÜèçøÚâçì contribution of particular individuals and primary school pupils from lower income during which period Vesuvius has øáÞÜùìøèæÞëÚçÝèùëĚÞåÝìÞëïâÜÞ these holidays for years. The trip is paid representatives from each of the EU disseminating best practice throughout families so that they can join in with assisted 902 students to achieve their engineers, to develop a unique solution for by the participants themselves, so countries where Vesuvius has employees. the Group. Examples of these include the extracurricular activities. Now in its higher education goals at a cost of ßèëøáÞÜùìøèæÞëċìøÞÚæøèâçÜëÞÚìÞ there is a very limited budget. Additional European management and the EWC Living the Values Awards and the EMEA seventh year, our Vesuvius Youth Team $1.08m. Individual scholarships have èéÞëÚøâèçÚåÞßĚÜâÞçÜòÚçÝøèÝÞïÞåèé donations are used to provide additional meet formally once a year. At this 8D PPS Awards. project at the China-Singapore Suzhou ÛÞÞçÚðÚëÝÞÝøèÞæéåèòÞÞìċÜáâåÝëÞç new business for Vesuvius. experiences such as a visit to the zoo, meeting management provides an Industrial Park Youth and Children Centre living in: Belgium, Brazil, China, the Our Living the Values Awards a theme park or a museum. update on the performance of the originally began with three teams: Czech Republic, France, India, Indonesia, programme is central to maintaining Vesuvius in the Local Community business, with a particular focus on In France, colleagues from Vesuvius unicycle, aerobics and chorus. Since then, Malaysia, Netherlands, Poland, èùëÆëèùéċìÜèååÞÜøâïÞßèÜùìèçÕÞìùïâùìċ developments likely to impact European Our social responsibility activities France SA trained a futsal (a special form the project has grown to include jump Romania, South Africa, Spain, UAE Values. On 14 December 2017, employees. Additional ‘Special Event complement our values in driving our èßßèèøÛÚååøÞÚæœøèéÚëøâÜâéÚøÞâçÚç rope and music teams, with 30–40 and the UK. ðÞàÚøáÞëÞÝßèëèùëĚßøáÚðÚëÝì ÷ÞÞøâçàìċÚëÞáÞåÝðáÞçøáÞÆëèùéâì culture. Our operating sites engage with inter-company competition organised children in each team. ceremony to celebrate and acknowledge required to consult with the EWC about their local communities through various by the local association. This annual the efforts of 74 employees. Awards particular matters, including proposed social action projects. competition is organised to support were presented to 14 individuals and restructurings in the European øáÞÜáÚëâøòËċÄçßÚçøÁåÞùðáâÜáĚàáøì 13 teams from 11 different countries, In Germany, Vesuvius GmbH opened organisation. One such meeting was against the maltreatment of children. all of whom, nominated by their peers, its doors to junior researchers from held in 2017. The EWC Select Committee ðÞëÞÜëÞÝâøÞÝðâøáÞæÛèÝòâçàÕÞìùïâùìċ Borken kindergartens. About 30 children also meets twice a year to receive Values. They were rewarded with a interested in research, accompanied by additional updates, and the Chief specially designed trophy, with Vesuvius their nursery school teachers, turned ÇùæÚçÑÞìèùëÜÞìÎßĚÜÞëèßÕÞìùïâùì æÚäâçàÚĚçÚçÜâÚåÜèçøëâÛùøâèçøèÞÚÜá the Vesuvius canteen into an exciting joins part of these meetings. All EWC ðâççÞëċìÜáèìÞçÜáÚëâøò research island. At ten research stations representatives receive four dedicated Our employees the boys and girls experimented with training days per year, to ensure they The EMEA 8D PPS Awards 2017 took colours, sowed herbs, and built noise Employees by employment type Employees by region Employees by business unit ÚëÞÚééëèéëâÚøÞåòÞêùâééÞÝøèßùåĚå place in Pavia, Italy, in October. These G protectors and boats. C F F their duties. ÚðÚëÝììáèðÜÚìÞøáÞÛÞçÞĚøìèßøáÞ A D E E 8 Disciplines approach to practical A C A problem-solving. They were launched to D reinforce the messages of our intensive B training courses, to promote the use of C B practical problem-solving in the business B

A. Salaried 3,983 A. China 1,884 E. North Asia 337 A. Flow Control 4,302 D. Digital Services 526 B. Hourly 5,897 B. Europe 4,472 F. South America 1,009 B. Foundry 2,836 ÄÇÞÚÝÎßĚÜÞ49 C. Temps 1,130 C. India 838 G. South Asia 296 C. Advanced Ref 2,474 F. Others 823 D. NAFTA 2,174 Vesuvius plc 72 Annual Report and Accounts 2017 73

People and Community continued

Developing talent in our facilities in Brazil “My family and I had a great experience working in Germany” and China is critical to the success of our Site: Suzhou, China ÉÞëëòÇùÚçàÈÓÃâëÞÜøèë˜ÀìâÚÏÚÜâĚÜ

strategic priority to capture growth in Jerry joined Vesuvius on an After growing his remit across 2002: Graduated and joined âçøÞëçìáâéåÞÚëçâçàÚÛèùøøáÞïÚåùÞ ÄùëèéÞÚçèéÞëÚøâèçìåÞÚÝâçàÚ Vesuvius as intern developing markets èßÈÓøèÞïÞëòéÚëøèßøáÞÜèæéÚçò çùæÛÞëèßéëèöÞÜøìâçÄùëèéÞÉÞëëò 2004: ÈÓÒéÞÜâÚåâìø ÀåðÚòììÞÞäâçàøèùçÝÞëìøÚçÝøáÞ ÛÞÜÚæÞÃâëÞÜøèëèßÈÓÀìâÚÏÚÜâĚÜ 2006: IT Manager needs of other functions, he soon managing a loyal team that he built a strong culture around him. ensures have access to many 2013: ÈÓ÷ÚçÚàÞëÁèëäÞç èïÞëìÞÚìèééèëøùçâøâÞì Germany “My work is exciting, we are building the future together” 2015: ÈÓÃâëÞÜøèë˜ÀìâÚÏÚÜâĚÜ

Site: Piedade, Brazil ÷ÚçùÞåÃÞåĚçèÒÚåÞì–÷ÚëäÞøâçàÃâëÞÜøèëÃâàâøÚåÒÞëïâÜÞì South America Joining Vesuvius a year after 2002: Joined Vesuvius as VISO “ I am proud to be able to share àëÚÝùÚøâçà÷ÚçùÞååÞÚëçÞÝêùâÜäåò ÒéÞÜâÚåâìøÀçÝÞÚçëÞàâèç ÚçÝðÚìèéÞçøèçÞðÜáÚååÞçàÞì 2008: Sales manager, Steel my technical expertise with my He initially joined the VISO team 2012: General and Country ÚìÚéëèÝùÜøìéÞÜâÚåâìøéùøøâçà colleagues around the world” Manager, Steel, Andean áâìøÞÜáçâÜÚåìäâååìøèàèèÝùìÞ Region ÝÞïÞåèéâçàâççèïÚøâïÞìèåùøâèçì Site: Kobe, Japan ÒáâàÞëùÓÚäââ÷ÚëäÞøâçà÷ÚçÚàÞë for customers. Showing strong 2017: South America Director Foundry åÞÚÝÞëìáâéÜÚéÚÛâåâøâÞì÷ÚçùÞå ÒÚåÞì–÷ÚëäÞøâçàÃâàâøÚå moved into a managerial role, Services ÒáâàÞëùÛùâåøùéÚìøëèçàøëÚÜä and now heads South America’s record after beginning his career growing Digital Services team ÚìéÚëøèßÉÚéÚçċììÚåÞìøÞÚæ ßëèæøáÞÒÚèÏÚùåèèßĚÜÞ ÇÞðÚìéëèæèøÞÝøè÷ÚçÚàÞëèß Our Responsibility Filter Products following nine years ÚøøáÞÜèæéÚçòðáÞëÞáÞðÚì ìùÜÜÞììßùåÝÞìéâøÞâçáÞëâøâçàÚ ÜáÚååÞçàâçàæÚëäÞøËÚìøòÞÚëáÞ “Vesuvius gave me the opportunity to manage ÛÞÜÚæÞ÷ÚëäÞøâçà÷ÚçÚàÞëèß Steel and Non-Ferrous Products, worldwide projects and work with global teams” where he has grown a global çÞøðèëäÚÜëèììøáÞÜèæéÚçòÚçÝ Site: Piedade, Brazil Rafael Lorenzo Jacob, Global Product Manager Hydrogen Systems, continues to deliver strong results. Hardware and Instruments, Digital Services 1996: ÒÚåÞìøÞÚæÅèìÞÜèÉÚéÚç Following his graduation from 2013: Joined ECIL Met Tec as university, Rafael has enjoyed a Technical Salesman 2004: ÀééåâÜÚøâèçÄçàâçÞÞëÊèÛÞ ÉÚéÚç ìùÜÜÞììßùåĚïÞòÞÚëÞçàâçÞÞëâçà 2014: ÀïÞæâìéëèÝùÜøìéÞÜâÚåâìø career at Vesuvius. In this time 2007: Manager, Filter Products 2016: ÖèëåÝðâÝÞéëèÝùÜø áÞáÚìÛÞÞçÚÛåÞøèÝÞïÞåèé manager, Hydrogen 2010: Manager, Metal Treatment his technical and commercial Systems & Probes Products äçèðåÞÝàÞÚÜëèììÚçùæÛÞëèß 2017: ÷ÚëäÞøâçà÷ÚçÚàÞëÒøÞÞå roles, and he is currently using 2017: Global Product Manager, and Non Ferrous Products áâìÞñéÞëâÞçÜÞÚìÚðèëåÝðâÝÞ Hydrogen Systems, éëèÝùÜøæÚçÚàÞë Hardware & Instruments

čÈÜÚçùìÞøáÞäçèðåÞÝàÞÈÚÜêùâëÞÝâçøáÞÒøÞÞåÝâïâìâèçøèÛÞçÞĚøøáÞ “Vesuvius has really welcomed me and my company into the Foundry business” international group” Site: ChangShu, China Benny Yang, BU Manager, Foundry China

Site: Resende, Brazil ÂÚëèåâçÚÂÚæéÞååèÁÞóÞëëÚÂÚæéèì÷ÚçÚàâçàÃâëÞÜøèëÕÞìùïâùìÅåùñÞì Four years after university, fostered a successful 1999: Joined Vesuvius as Sales Benny joined Vesuvius as a éÚëøçÞëìáâéâæéëèïÞÝéëèÝùÜø Engineer Carolina’s career began at Following its acquisition by 1992: Joined Carboox Resende ÒÚåÞìÄçàâçÞÞëÚééåòâçàáâì êùÚåâøòÚçÝàëÞðæÚëäÞøìáÚëÞ 2001: Slide Gate Refractories Carboox 25 years ago, where she Vesuvius, Carolina became Quimica, Brazil øÞÜáçâÜÚåÞñéÞëøâìÞøèÞçáÚçÜÞ Most recently, as Manager of (‘SGR’)/Purging Plugs (‘PP’) delivered R&D success with new Managing Director, and has 2016: Carboox acquired by éëèÝùÜøÞñÜÞååÞçÜÞßèë the Foundry team, he oversaw ÏëèÝùÜøÒéÞÜâÚåâìø ÜÚìøâçàěùñéëèÝùÜøìÚçÝ been instrumental in enabling Vesuvius customers across China. A ÚàèèÝìÞøèßĚçÚçÜâÚåëÞìùåøì initiatives to assist customers. As ÚìæèèøáøëÚçìâøâèçðèëäâçà 2006: SGR/PP Technical Director 2017: Promoted to Managing ìÞëâÞìèßéëèæèøâèçìÞçÚÛåÞÝ last year. ÕâÜÞÏëÞìâÝÞçøìáÞéåÚòÞÝÚäÞò hard to integrate the Vesuvius 2012: General Manager, WG Director, Vesuvius Fluxes, Benny to grow his commercial ëèåÞâçÞìøÚÛåâìáâçàøáÞÜèæéÚçò culture and achieve strong Brazil ëÞìéèçìâÛâåâøòðáÞëÞáÞ 2016: Foundry Manager, China as a leader across Brazil and ĚçÚçÜâÚåëÞìùåøì Mexico. Vesuvius plc 74 Annual Report and Accounts 2017 75

Section Four Governance In this section

76 Chairman’s Governance Letter

78 Governance Report

85 Audit Committee

93 Nomination Committee

96 Directors’ Remuneration Report 96 Remuneration Overview 98 Remuneration Policy 106 Annual Report on Directors’ Remuneration

117 Directors’ Report

121 Statement of Directors’ Responsibilities

“I moved from Mexico to Brussels to Governance join the Corporate HR team.”

Carlos Bersoza, Human Resources Director, Advanced Refractories, NAFTA

I joined Vesuvius in 2006, taking Following the completion of this my responsibilities for HR across the role of HR Coordinator at 5-year assignment in Brussels, I the US, Canada and Mexico, I also Monterrey, Mexico whilst Vesuvius returned to Mexico in 2013 as support the Digital Services was expanding the production Operations HR Business Partner, business unit, as their HR contact. lines at its Mexico facility. supporting the deployment Following the inauguration of the and training of standardised Moving around the world has new Pre-Cast production line, I working teams across the facility. given me an international mindset, was offered the opportunity to join I continued to travel internationally enabling me to support and guide the Corporate HR team, and in to deliver workshops and train Vesuvius colleagues in HR matters. 2008 I moved to Brussels to work company leaders in China, Brazil, as the HR Project Coordinator for Poland and the US on the basis of øáÞáÞÚÝèßĚÜÞøÞÚæÖáâåìøøáÞëÞ my experience in Mexico. I helped to organise the Group’s expatriation processes, develop Two years later, I was promoted to internal training modules and HR Director for Advanced worked on the HR SAP Refractories NAFTA, moving to implementation project. Pittsburgh. In this role, as well as

See more about Vesuvius careers People and community on p67-73 Vesuvius plc 76 Annual Report and Accounts 2017 77

Chairman’s Governance Letter

Dear shareholder, ÜáÚæéâèçìÚßÞøòÚçÝêùÚåâøòøáëèùàáèùøøáÞÆëèùéÖÞøáÚçä Board Evaluation and Training Financial Reporting and Risk áâæßèëáâìÝÞÝâÜÚøâèçåÞÚÝÞëìáâéÚçÝìøÞðÚëÝìáâéèßøáÞÆëèùé ÎçÛÞáÚåßèßøáÞÁèÚëÝÈÚæÝÞåâàáøÞÝøèéëÞìÞçøøáÞ# This year the Board’s formal evaluation process was again Èç"øáÞÀùÝâøÂèææâøøÞÞÜèçÝùÜøÞÝÚÜèæéÞøâøâïÞ ÂèëéèëÚøÞÆèïÞëçÚçÜÞÑÞéèëøÀìÚÁèÚëÝðÞëÞæÚâç ÏëâèëøèùçÝÞëøÚäâçàøáÞìÞçÞðÚééèâçøæÞçøìøáÞÍèæâçÚøâèç ÞñøÞëçÚååòßÚÜâåâøÚøÞÝÛòøáÞÜèëéèëÚøÞÚÝïâìèëòĚëæËâçøìøèÜä tender for the external audit which led to the appointment committed to applying the highest standards of corporate ÂèææâøøÞÞìéÞçøøâæÞëÞěÞÜøâçàèçøáÞÛÚåÚçÜÞèßìäâååìÚçÝ ÈøùøâåâìÞÝÚßëÞìáÚééëèÚÜáðâøáøáÞäÞòÞåÞæÞçøÜèçìøâøùøâçà èßÏëâÜÞðÚøÞëáèùìÞÂèèéÞëìËËÏ›ĊÏðÂċœÚìøáÞÂèæéÚçòċì àèïÞëçÚçÜÞëÞÜèàçâìâçàøáÚøëèÛùìøàèïÞëçÚçÜÞÚçÝÜùåøùëÞ ÞñéÞëâÞçÜÞèßøáÞÞñâìøâçàÁèÚëÝæÞæÛÞëìÚçÝÜèçìâÝÞëâçà one-on-one interviews with each Director conducted by çÞðÚùÝâøèëâç#ÏðÂßèëæùåÚøÞÝÚÝÞøÚâåÞÝøëÚçìâøâèç ùçÝÞëéâçÛùìâçÞìììùÜÜÞììÓáâìòÞÚëøáÞÂèæéÚçòâìëÞéèëøâçà øáÞìÞÚàÚâçìøøáÞßùøùëÞçÞÞÝìèßøáÞÛùìâçÞììÁÚåÚçÜâçà ËâçøìøèÜäÚâæÞÝÚøàÚâçâçàÚÝÞÞéÞëâçìâàáøâçøèÃâëÞÜøèëìċ éåÚçðèëäâçàðâøáéÞèéåÞÚÜëèììøáÞÛùìâçÞììøèÛùâåÝèçøáÞâë ÚàÚâçìøøáÞ"ÔÊÂèëéèëÚøÞÆèïÞëçÚçÜÞÂèÝÞ›øáÞĊÂèÝÞċœ âçÝÞéÞçÝÞçÜÞðâøáøáÞìäâååìäçèðåÞÝàÞÚçÝÞñéÞëâÞçÜÞ ëÞìéèçìÞìÎïÞëÚååøáÞÞïÚåùÚøâèçÜèçÜåùÝÞÝøáÚøøáÞÁèÚëÝ ùçÝÞëìøÚçÝâçàèßøáÞÆëèùéÚçÝëÞĚçÞøáÞéåÚççÞÝÚééëèÚÜá ÓáâìïÞëìâèçèßøáÞÂèÝÞâçÜåùÝÞìæâçèëÜáÚçàÞìßèååèðâçàøáÞ ëÞêùâëÞÝèçøáÞÁèÚëÝÚçÝèçøáÞÂèææâøøÞÞìðáâÜáìùééèëø ëÞæÚâçÞÝèßÚáâàáÜÚåâÛëÞÚçÝðÚìßùçÜøâèçâçàðÞååðâøá øèøáÞÚùÝâøÃùëâçàøáÞòÞÚëÏðÂéëèïâÝÞÝëÞàùåÚëùéÝÚøÞì âæéåÞæÞçøÚøâèçèßøáÞÄùëèéÞÚçÔçâèçċìÀùÝâøÑÞàùåÚøâèçÚçÝ âøâìÜëùÜâÚåøèøáÞÆëèùéċììùÜÜÞììÖâøáøáÞÚééèâçøæÞçøìèß open and challenging debate and transparent information øèøáÞÀùÝâøÂèææâøøÞÞèçøáÞìøÚøùìÚçÝéëèàëÞììèßøáÞ ÃâëÞÜøâïÞÈÚæéåÞÚìÞÝøèëÞéèëøøáÚøøáÞÂèæéÚçòâìßùååò ÇèååòÚçÝÏÚøëâÜäðÞÚëÞÜèçĚÝÞçøøáÚøøáÞÁèÚëÝáÚìøáÞ ěèðÓáÞÍèæâçÚøâèçÂèææâøøÞÞðÚìßÞåøøèáÚïÞÝÞÚåø ÚùÝâøèëøëÚçìâøâèçéåÚçÚåèçàðâøáïÚåùÚÛåÞâçìâàáøìâçøèøáÞ ÜèæéåâÚçøðâøáøáÞÂèÝÞ appropriate composition to ensure the continued long-term ìùÜÜÞììßùååòðâøáÁèÚëÝìùÜÜÞììâèçÝùëâçàøáÞòÞÚëâÝÞçøâßòâçà ÆëèùéċìÚùÝâøÞçïâëèçæÞçøÅùëøáÞëÝÞøÚâåìÚÛèùøøáÞøëÚçìâøâèç ìùÜÜÞììèßøáÞÛùìâçÞììÂèçìÞêùÞçøåòÈÞçÜèùëÚàÞÚåå an accomplished candidate to replace François Wanecq éëèÜÞììÚëÞÜèçøÚâçÞÝâçøáÞÀùÝâøÂèææâøøÞÞÑÞéèëø There was much debate in 2017 about the future direction shareholders to support the election and re-election of our ÚìÂáâÞßÄñÞÜùøâïÞÚçÝìÞÜùëâçàÚçÞñÜÞååÞçøçÞðÍèç˜ÞñÞÜùøâïÞ èßÜèëéèëÚøÞàèïÞëçÚçÜÞðâøáøáÞéùÛåâÜÚøâèçâçÀéëâåèß ÓáÞÁèÚëÝÜèçøâçùÚååòÚììÞììÞìøáÞÆëèùéċìäÞòëâìäìÚçÝøáÞ âçÜùæÛÞçøÃâëÞÜøèëìÚøøáÞ$ÀççùÚåÆÞçÞëÚå÷ÞÞøâçà ÃâëÞÜøèëÒâæâåÚëåòøáÞÀùÝâøÂèææâøøÞÞÜèçøâçùÞÝøèÝÞåâïÞë øáÞÁùìâçÞììÄçÞëàòÚçÝÈçÝùìøëâÚåÒøëÚøÞàò›ÁÄÈҜÒÞåÞÜø æÞøáèÝìÛòðáâÜáðÞæÚçÚàÞèùëëâìäìÓáÞâæéÚÜøìèßøáÞ ëèÛùìøÜáÚååÞçàÞøèæÚçÚàÞæÞçøèçĚçÚçÜâÚåæÚøøÞëìÚçÝáÚÝ ÂèææâøøÞÞċìëÞéèëøèçÜèëéèëÚøÞàèïÞëçÚçÜÞÚçÝøáÞ ÅùëøáÞëÝÞøÚâåìÚÛèùøøáÞëÞÜëùâøæÞçøéëèÜÞììÞìßèëÏÚøëâÜä ëâìäìÚëÞÚåìèëÞïâÞðÞÝÚçÝøÞìøÞÝÚìéÚëøèßèùëèçàèâçàëâìä èïÞëìÞÞçÚìæèèøáøëÚçìâøâèçèßÞñøÞëçÚåÚùÝâøèëÅâçÚååòøáÞ Government’s publication of its response to the Green Paper ÚçÝÇèååòÜÚçÛÞßèùçÝâçøáÞÍèæâçÚøâèçÂèææâøøÞÞÑÞéèëø æÚçÚàÞæÞçøÚééëèÚÜáÓáâìéëèÜÞììÜèçøâçùÞÝâç# ÑÞæùçÞëÚøâèçÂèææâøøÞÞáÚÝéëÞéÚëÞÝÚçÝëÞÜèææÞçÝÞÝ èçÂèëéèëÚøÞÆèïÞëçÚçÜÞÑÞßèëæâçÀùàùìøÃùëâçàøáÞ ÀçùæÛÞëèßÞæÞëàâçàëâìäìðÞëÞëÚâìÞÝÚçÝÝâìÜùììÞÝ ÚçùéÝÚøÞÝÑÞæùçÞëÚøâèçÏèåâÜòßèë# òÞÚëâçìøâøùøâèçìÚçÝïèøâçàÚàÞçÜâÞìÚåìèâììùÞÝàùâÝÚçÜÞ Culture and Diversity ëÞěÞÜøâçàÝÞïÞåèéâçàĊæÚÜëèċøëÞçÝìÚçÝâÝÞçøâĚÞÝëâìäì èçàèïÞëçÚçÜÞÚçÝïèøâçàâììùÞìÚçÝøáÞÅÑÂéëèÝùÜÞÝ The evaluation highlighted a number of Board priorities for ðáÞëÞâììùÞìáÚÝÚëâìÞçÝùëâçàøáÞòÞÚëÖáâåìøçèçÞèßøáÞìÞ ÂèëéèëÚøÞÜùåøùëÞÜèçøâçùÞìøèÛÞÚçâæéèëøÚçøßèÜùìßèë ÜèææÞçøÚëâÞìèçäÞòàèïÞëçÚçÜÞâììùÞìÚçÝëÞìéèçÝÞÝøèøáÞ $âçÜåùÝâçàøáÞçÞÞÝøèâçøÞàëÚøÞøáÞçÞðÂáâÞßÄñÞÜùøâïÞ ðÚìÜèçìâÝÞëÞÝìâàçâĚÜÚçøÞçèùàáøèÜáÚçàÞøáÞèïÞëÚåå èùëèëàÚçâìÚøâèçÅèååèðâçàøáÞëÞÜëùâøæÞçøèßÚçÞðÂáâÞß ÆèïÞëçæÞçøċìÚççèùçÜÞæÞçøìÓáâìÜùåæâçÚøÞÝâçÃÞÜÞæÛÞë ÚçèçàèâçàÞæéáÚìâìèçìøëÚøÞàòÚçÝâøìÝÞåâïÞëòÚçÝøáÞ ÜáÚëÚÜøÞëâìÚøâèçèßøáÞÆëèùéċìëâìäìÚçÝùçÜÞëøÚâçøâÞìøáÞ ÄñÞÜùøâïÞøáÞÁèÚëÝåèèäìøèáâæøèÜèçøâçùÞøáÞðèëäèßáâì ðâøáøáÞÅÑÂċìéùÛåâÜÚøâèçèßâøìÜèçìùåøÚøâèçèçÚçÞðÝëÚßøèß need for the Board to continue to set the right tone from the Board’s view on each of these issues was integrated into øáÞÔÊÂèëéèëÚøÞÆèïÞëçÚçÜÞÂèÝÞÓáÞÁèÚëÝæèçâøèëÞÝ predecessor in ensuring that appropriate values and a robust øèéÚçÝæèçâøèëøáÞÜùåøùëÞèßøáÞÆëèùéÓáÞÝÞïÞåèéæÞçøèß æÚçÚàÞæÞçøÝâìÜùììâèçìèçëâìäÚçÝßÚÜøèëÞÝâçøèøáÞ ÞøáâÜÚåìøÚçÜÞÚëÞëÞěÞÜøÞÝÜèçìâìøÞçøåòâçèùëÛÞáÚïâèùëÚìðÞ ÞÚÜáèßøáÞìÞÝÞïÞåèéæÞçøìÚçÝëÞæÚâçìßèÜùìÞÝèçÞçìùëâçà ìÞçâèëæÚçÚàÞæÞçøåÞïÞåøÚåÞçøÚçÝìùÜÜÞììâèçéåÚçìßèëøáÞæ ÚééëèÚÜáøáÞÆëèùéøÚäÞìøèæâøâàÚøâèçÓáÞÁèÚëÝÜèçøâçùÞì ÜèçÝùÜøèùëÛùìâçÞììÎçÞèßøáÞäÞòìøëÞçàøáìèßÕÞìùïâùìáÚì øáÚøøáÞÂèæéÚçòÜèçøâçùÞìøèÜèæéåòðâøáÚååâøìàèïÞëçÚçÜÞ ðÚìÚàÚâççèøÞÝÚìÛÞâçàÚäÞòÚëÞÚßèëßèÜùìâç$ðâøá øèæèçâøèëÚååéÞëÜÞâïÞÝëâìäìÚçÝøáÞæÞøáèÝìÛòðáâÜáøáÞìÞ ÚåðÚòìÛÞÞçâçøáÞÝâïÞëìâøòèßèùëÞæéåèòÞÞìÖâøáÚðâÝÞ èÛåâàÚøâèçìâçÜåùÝâçàßùååÜèæéåâÚçÜÞðâøáøáÞÔÊÂèëéèëÚøÞ çÞðøëÚâçâçàéëèàëÚææÞìâæéåÞæÞçøÞÝÚçÝÜèçøâçùâçà ÚëÞæÚçÚàÞÝ àÞèàëÚéáâÜìéëÞÚÝÚçÝåèÜÚåáâëâçàèßøáÞÜåÞÚëæÚöèëâøòèß ÆèïÞëçÚçÜÞÂèÝÞ initiatives in place to ensure greater Board access to these ìøÚßßøáÞÆëèùéÞçÜèæéÚììÞìâçÝâïâÝùÚåìßëèæÚæùåøâøùÝÞ Yours sincerely áâàá˜éèøÞçøâÚåâçÝâïâÝùÚåì èßÝâßßÞëÞçøçÚøâèçÚåâøâÞìÚçÝÞøáçâÜâøâÞìÀøÚÁèÚëÝåÞïÞå Governance John McDonough CBE ÂáÚâëæÚç Board Composition ðÞëÞÜèàçâìÞøáÞìâàçâĚÜÚçøÛÞçÞĚøìèßÝâïÞëìâøòâçèùë ÀìÂáÚâëæÚçÈëÞÜèàçâìÞøáÚøÈÚæëÞìéèçìâÛåÞßèëÞçìùëâçà #áÚìÛÞÞçÚòÞÚëèßìâàçâĚÜÚçøÝÞïÞåèéæÞçøßèëøáÞÁèÚëÝ ÛùìâçÞììÚçÝùçÝÞëìøÚçÝâøìâæéèëøÚçÜÞâçìùééèëøâçà øáÚøøáÞÁèÚëÝÜèçøâçùÞìøèèéÞëÚøÞÞßßÞÜøâïÞåòÚçÝøáÚøéÚëø 28 February 2018 ðâøáøðèçÞðÁèÚëÝÚééèâçøæÞçøì ÜÚçÝâÝÚçÝÜèçìøëùÜøâïÞÛèÚëÝëèèæÝÞÛÚøÞÃùëâçà# of this role is to ensure that all Directors attain an appropriate øáÞÁèÚëÝëÞěÞÜøÞÝßùëøáÞëèçøáâìøáÞæÞæèçâøèëâçàøáÞ ùçÝÞëìøÚçÝâçàèßøáÞÛùìâçÞììÚçÝÜèçøâçùÞøèëÞßëÞìáøáÞâë ÈçÀéëâåøáÞÁèÚëÝðÚììøëÞçàøáÞçÞÝÛòøáÞÚééèâçøæÞçøèß ëÞÜèææÞçÝÚøâèçìèßøáÞÇÚæéøèç˜ÀåÞñÚçÝÞëÏÚëäÞëÚçÝ ìäâååìÚçÝäçèðåÞÝàÞÃùëâçàøáÞòÞÚëÛèøáçÞðÃâëÞÜøèëì ÇèååòÊèÞééÞåÚìÚçâçÝÞéÞçÝÞçøÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèë ÷ÜÆëÞàèë˜ÒæâøáÑÞïâÞðìèçàÞçÝÞëÚçÝÞøáçâÜÝâïÞëìâøòÚçÝ ùçÝÞëøèèäÚøÚâåèëÞÝâçÝùÜøâèçéëèàëÚææÞøèÞçìùëÞøáÚøøáÞò ëÞéåÚÜâçàÍÞåÝÚÂèççèëìðáèëÞìâàçÞÝßëèæøáÞÁèÚëÝâç ÚééëèïâçàÚÁèÚëÝÝâïÞëìâøòéèåâÜòÓáâìéèåâÜòìÞøìèùøèùë êùâÜäåòàÚâçÞÝÚàèèÝùçÝÞëìøÚçÝâçàèßøáÞÆëèùéÚçÝøáÞâë "ÇÚïâçàìéÞçø !òÞÚëìðèëäâçàâçàåèÛÚåùøâåâøòéèðÞë ÜèææâøæÞçøøèÝâïÞëìâøòÚçÝÞñéåÚâçìøáÞÚÜøâèçìðÞðâååøÚäÞ ëÞìéèçìâÛâåâøâÞìÚçÝèÛåâàÚøâèçìÀìðÞååÚìëÞÜÞâïâçàÛëâÞĚçàì ÚçÝâçßëÚìøëùÜøùëÞÛùìâçÞììÞìÇèååòÛëâçàìðâøááÞëÞñøÞçìâïÞ øèÚßĚëæøáâìàèâçàßèëðÚëÝÖáâåìøëÞÜèàçâìâçàøáÚøøáÞ ÚçÝùéÝÚøÞìèçäÞòĚçÚçÜâÚååÞàÚåÚçÝàèïÞëçÚçÜÞâììùÞì âçøÞëçÚøâèçÚåÞñéÞëâÞçÜÞ ÇÚæéøèç˜ÀåÞñÚçÝÞëÑÞïâÞðáÚììÞøÚøÚëàÞøèß YßÞæÚåÞ âæéÚÜøâçàøáÞèëàÚçâìÚøâèçøáÞÃâëÞÜøèëìßùëøáÞëÞÝøáÞâë ÈçÒÞéøÞæÛÞëðÞðÞåÜèæÞÝÏÚøëâÜäÀçÝëŲøèøáÞÁèÚëÝÚì ëÞéëÞìÞçøÚøâèçèçÅÓÒÄ !ÁèÚëÝìÛòøáÞÁèÚëÝ äçèðåÞÝàÞÛòùçÝÞëøÚäâçàïâìâøìøèïÚëâèùìèéÞëÚøâèçìÝùëâçà ÂáâÞßÄñÞÜùøâïÞëÞéåÚÜâçàÅëÚçʼnèâìÖÚçÞÜêðáèëÞøâëÞÝßëèæ ÜèçìâÝÞëìâøìÝâïÞëìâøòìâóÞÚçÝÜèæéèìâøâèçøèÛÞÚééëèéëâÚøÞ øáÞòÞÚëÓáÞÁèÚëÝïâìâøÞÝÆëèùéèéÞëÚøâèçìÚçÝÚÜùìøèæÞëċì øáÞÁèÚëÝèç Àùàùìø#ÏÚøëâÜäðÚìÚééèâçøÞÝÚìéÚëøèß ßèëøáÞëÞêùâëÞæÞçøìèßøáÞÛùìâçÞììÚçÝÝèÞìçèøÛÞåâÞïÞøáÚø ßÚÜâåâøâÞìâçÁëÚóâåÈïâìâøÞÝèùëèéÞëÚøâèçìâçÂáâçÚÚçÝèøáÞë ÚéåÚççÞÝìùÜÜÞììâèçéëèÜÞììðáâÜáâçïèåïÞÝÚÜèæéëÞáÞçìâïÞ at this time it needs to accelerate the usual rotation of Directors Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìïâìâøÞÝèéÞëÚøâèçìâçÏèåÚçÝøáÞÔÒ ëÞïâÞðèßÞñøÞëçÚåÚçÝâçøÞëçÚåÜÚçÝâÝÚøÞìÏÚøëâÜäöèâçÞÝøáÞ øèæÞÞøøáâìøÚëàÞøÇèðÞïÞëøáÞÁèÚëÝðâååÜèçøâçùÞøèÜèçìâÝÞë ÚçÝÆÞëæÚçòÃùëâçà$øáÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìðâåå ÆëèùéâçÞÚëåò"ÚçÝáÚìÝâìéåÚòÞÝìâàçâĚÜÚçøÝëâïÞÚçÝ øáÞÚÜäçèðåÞÝàÞÝÛÞçÞĚøìèßàëÞÚøÞëÝâïÞëìâøòâçÚååßùøùëÞ continue to broaden their understanding of the Group through In this section: ÀåìèìÞÞ ÞçÞëàòìâçÜÞøáÞçìøëÞçàøáÞçâçàøáÞÅåèðÂèçøëèåÛùìâçÞìì ÃâëÞÜøèëëÞÜëùâøæÞçøÝÞÜâìâèçìÖâøáëÞìéÞÜøøèøáÞÆëèùéÚì âçÝâïâÝùÚåìâøÞïâìâøìÚìðÞååÚììÜáÞÝùåÞÝÁèÚëÝïâìâøì Board effectiveness on p80 Risk on p22 ÚçÝÞñáâÛâøâçàìøëèçàåÞÚÝÞëìáâéìäâååìÚçÝÚÜèçìøÚçøÜùìøèæÞë ÚðáèåÞðÞëÞÜèàçâìÞøáÚøèùëÜèææâøæÞçøøèÝâïÞëìâøòâìçèø Board accountabilityèçé$ Principlesèçé!" ßèÜùìÓáÞÁèÚëÝÛÞåâÞïÞìøáÚøÏÚøëâÜäâìøáÞâÝÞÚåÜÚçÝâÝÚøÞøè ÜùëëÞçøåòëÞěÞÜøÞÝâçøáÞàÞçÝÞëÝâïÞëìâøòèßèùëÞæéåèòÞÞì åÞÚÝøáÞÆëèùéâçøáÞçÞñøìøÚàÞìèßâøìÝÞïÞåèéæÞçø ËâäÞæÚçòèøáÞëâçÝùìøëâÚåÞçàâçÞÞëâçàÜèæéÚçâÞìðÞäçèð Audit Committee Report øáÚøèùëèëàÚçâìÚøâèçæùìøðèëäáÚëÝÞëøèÚøøëÚÜøÝÞïÞåèé èçé$! ÅèååèðâçàÚéÞëâèÝèßøëÚçìâøâèçÅëÚçʼnèâìÖÚçÞÜêëÞøâëÞÝßëèæ ÚçÝëÞøÚâçøÚåÞçøÞÝðèæÞç Nomination Committee Report øáÞÆëèùéèç ÃÞÜÞæÛÞë#ÅëÚçʼnèâìåÞÝøáÞÛùìâçÞìì èçé% øáëèùàáÚéÞëâèÝèßìâàçâĚÜÚçøÜáÚååÞçàÞìÚçÝÜáÚçàÞÇÞ ÀÜèéòèßøáÞÁèÚëÝÃâïÞëìâøòÏèåâÜòÜÚçÛÞßèùçÝâçøáÞ Directors’ Remuneration ÆèïÞëçÚçÜÞÑÞéèëø ðèëäÞÝøâëÞåÞììåòøèìøëÞçàøáÞçÕÞìùïâùìċÛùìâçÞììÚçÝøè Report on p96 Vesuvius plc 78 Annual Report and Accounts 2017 79

Governance Report

The Board of Vesuvius plc (the ‘Company’) is responsible for the æèçâøèëìøáÞéÞëßèëæÚçÜÞèßøáÞÆëèùéÈøâìëÞìéèçìâÛåÞßèë Governance Structure Group’s system of corporate governance and is committed to ÞßßÞÜøâïÞëâìäÚììÞììæÞçøÚçÝæÚçÚàÞæÞçø maintaining high standards of governance and to developing The Board øáÞæøèëÞěÞÜøéëèàëÞììâèçâçÛÞìøéëÚÜøâÜÞÓáâìëÞéèëø The Board Responsible for Group strategy, risk management, describes the Company’s corporate governance structure ìùÜÜÞììâèçÚçÝéèåâÜòâììùÞìÒÞøìøáÞøèçÞïÚåùÞìÚçÝ The Board has a formal schedule of matters reserved to it and ÜùåøùëÞßèëøáÞÆëèùé÷èçâøèëìøáÞÆëèùéċìéëèàëÞììÚàÚâçìø and explains how, during the year ended 31 December 2017, ÝÞåÞàÚøÞìÜÞëøÚâçæÚøøÞëìøèâøìÂèææâøøÞÞìÈøâìÚçøâÜâéÚøÞÝ the targets set Vesuvius applied the Main Principles of the UK Corporate that the Board will convene on seven occasions during 2018, Governance Code 2016 issued by the Financial Reporting áèåÝâçàÚÝáèÜæÞÞøâçàìøèÜèçìâÝÞëçèç˜ìÜáÞÝùåÞÝÛùìâçÞìì ÂèùçÜâå›øáÞĊÂèÝÞċœÓáëèùàáèùøøáÞòÞÚëÚçÝùéùçøâåøáÞ Chairman Chief Executive âßëÞêùâëÞÝ date of this report, Vesuvius was in full compliance with Provides leadership and guidance for the Board, Develops strategy for review and approval of the øáÞëÞêùâëÞæÞçøìèßøáÞÂèÝÞÓáÞÁèÚëÝáÚìçèøÞÝøáÞ promoting a high standard of corporate ÁèÚëÝÃâëÞÜøìæèçâøèëìÚçÝæÚâçøÚâçìøáÞ The Chairman and Chief Executive àèïÞëçÚçÜÞÒÞøìøáÞÁèÚëÝÚàÞçÝÚÚçÝæÚçÚàÞì èéÞëÚøâèçÚåéÞëßèëæÚçÜÞèßøáÞÂèæéÚçò consultation that has commenced regarding a new revised UK æÞÞøâçàìÈçÝÞéÞçÝÞçøèçÚééèâçøæÞçøáÞâì Responsible for the application of Group policies, Corporate Governance Code, and has begun to consider the The division of responsibilities between the Chairman and the the link between the Executive and implementation of Group strategy and the resources changes that the Company would need to make to its existing Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì ßèëøáÞâëÝÞåâïÞëòÀÜÜèùçøÚÛåÞøèøáÞÁèÚëÝßèë ÂáâÞßÄñÞÜùøâïÞâììÞøèùøâçðëâøâçàÓáâìðÚìëÞïâÞðÞÝÝùëâçà Group performance practices and procedures to ensure continuing full compliance the year on the appointment of our new Chief Executive, âçøáÞßùøùëÞÀçùæÛÞëèßøáÞéëèéèìÞÝçÞðëÞêùâëÞæÞçøìÚëÞ as well as being part of the Company’s annual corporate ÚåëÞÚÝòëÞěÞÜøÞÝâçøáÞÂèæéÚçòċìÚééëèÚÜáøèàèïÞëçÚçÜÞ àèïÞëçÚçÜÞëÞïâÞðÍèÚæÞçÝæÞçøìðÞëÞÜèçìâÝÞëÞÝ Senior Independent Director Non-executive Directors Company Secretary çÞÜÞììÚëòÓáÞâçøÞëÚÜøâèçìâçøáÞàèïÞëçÚçÜÞéëèÜÞììÚëÞ ÀÜèéòèßøáÞÜùëëÞçøÂèÝÞÜÚçÛÞßèùçÝèçøáÞÅÑÂðÞÛìâøÞÚø ÀÜøìÚìÚìèùçÝâçàÛèÚëÝßèëøáÞÂáÚâëæÚç Exercise a strong, independent voice, challenging ÀÝïâìÞìøáÞÂáÚâëæÚçèçàèïÞëçÚçÜÞ áøøé읝ßëÜèëàùäÝâëÞÜøèëìÜèëéèëÚøޘàèïÞëçÚçÜޘÚçݘ ìáèðçâçøáÞìÜáÞæÚøâÜÛÞåèð an alternative contact for shareholders and ÚçÝìùééèëøâçàÄñÞÜùøâïÞÃâëÞÜøèëìÒÜëùøâçâìÞ together with updates on regulatory and ÚçâçøÞëæÞÝâÚëòßèëèøáÞëÍèç˜ÞñÞÜùøâïÞ éÞëßèëæÚçÜÞÚàÚâçìøèÛöÞÜøâïÞìÚçÝæèçâøèë ÜèæéåâÚçÜÞæÚøøÞëìÒùééèëøìøáÞÁèÚëÝ ìøÞðÚëÝìáâéùä˜ÜèëéèëÚøޘàèïÞëçÚçÜޘÜèÝÞ ÃâëÞÜøèëìËÞÚÝìøáÞÚççùÚåÞïÚåùÚøâèçèß ĚçÚçÜâÚåëÞéèëøâçà÷èçâøèëÚçÝèïÞëìÞÞëâìäì ÚàÞçÝÚðâøáÜåÞÚëâçßèëæÚøâèçěèðÀÜøìÚìÚ Board Committees the Chairman and recruitment process for and controls, determine Executive Director link between the Board and its Committees ÓáÞéëâçÜâéÚåàèïÞëçÚçÜÞÂèææâøøÞÞìèßøáÞÁèÚëÝÚëÞøáÞÀùÝâø áâìáÞëëÞéåÚÜÞæÞçøðáÞçëÞêùâëÞÝ remuneration and manage Board succession ÚçÝÛÞøðÞÞçÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÚçÝ Roles and Responsibilities of the Board through their Committee responsibilities senior management ÑÞæùçÞëÚøâèçÚçÝÍèæâçÚøâèçÂèææâøøÞÞìÄÚÜáÂèææâøøÞÞ Ultimate responsibility for the management of the Group rests ðâøáøáÞÁèÚëÝèßÃâëÞÜøèëì has written terms of reference, which were reviewed during the òÞÚëÍèÚæÞçÝæÞçøìðÞëÞÜèçìâÝÞëÞÝøèÛÞëÞêùâëÞÝÓáÞìÞÚëÞ The Board focuses primarily upon strategic and policy issues available to view on the Company’s website ðððïÞìùïâùìÜèæ Board and Committee Attendance ÚçÝâìëÞìéèçìâÛåÞßèëøáÞÆëèùéċìåèçà˜øÞëæìùÜÜÞììÈøìÞøìøáÞ The attendance of Directors at the Board meetings and at meetings of the principal Committees of which they are members held Group’s strategy, oversees the allocation of resources and For biographical details see Board of Directors on pages 50 ÚçÝ! Ýùëâçà#âììáèðçâçøáÞøÚÛåÞÛÞåèðÓáÞæÚñâæùæçùæÛÞëèßæÞÞøâçàìâçøáÞéÞëâèÝÝùëâçàðáâÜáøáÞâçÝâïâÝùÚåðÚìÚÁèÚëÝ èëÂèææâøøÞÞæÞæÛÞëâììáèðçâçÛëÚÜäÞøì ÀùÝâø Remuneration ÍèæâçÚøâèç Board Board Committee Committee Committee Chairman Governance Governance Committees Administrative Committees John McDonough CBE 8 (9) – – 6 (6) Audit Committee Chairman: ÈçÚÝÝâøâèçøáÞÁèÚëÝÝÞåÞàÚøÞìÜÞëøÚâçëÞìéèçìâÛâåâøâÞìèçÚçÚÝáèÜÛÚìâì Executive Directors to a Finance Committee and Share Scheme Committee, which operate in ÓèæèçâøèëøáÞâçøÞàëâøòèßĚçÚçÜâÚå Douglas Hurt ÏÚøëâÜäÀçÝëŲ›ÚééèâçøÞÝÒÞéøÞæÛÞë#œ 3 (3) – – – reporting and to assist the Board in accordance with the delegated authority agreed by the Board its review of the effectiveness of the Membership: Guy Young 9 (9) – – – ÀååâçÝÞéÞçÝÞçø Group’s internal controls and risk ÅëÚçʼnèâìÖÚçÞÜê›ëÞøâëÞÝ Àùàùìø#œ 6 (6)––– management systems Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì Finance Committee Chairman: Non-Executive Directors Remuneration Committee Chairman: ÓèÚééëèïÞìéÞÜâĚÜßùçÝâçàÚçÝ John McDonough, To determine the appropriate Jane Hinkley ÓëÞÚìùëò˜ëÞåÚøÞÝæÚøøÞëìâç Chairman Christer Gardell 9 (9) – – 5 (6) remuneration packages for the Group’s accordance with the Group’s Hock Goh 8 (9) 4 (5) 3 (5) 5 (6) Chairman, Executive Directors Membership: delegated authorities or as Membership: and Company Secretary, and to ÀååâçÝÞéÞçÝÞçø delegated by the Board Chairman, Chief Executive, Jane Hinkley 9 (9) 5 (5) 5 (5) 6 (6) recommend and monitor the level and Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚçÝ Douglas Hurt 8 (9) 5 (5) 4 (5) 6 (6) structure of remuneration for other Group Head of Corporate senior management Finance ÇèååòÊèÞééÞå›ÚééèâçøÞÝ Àéëâå#œ 7 (7) 2 (3) 4 (4) 4 (4) Share Scheme Committee Chairman: Nomination Committee Chairman: Éèáç÷ÜÃèçèùàáðÚìÚÛìÞçøßëèæÚÁèÚëÝæÞÞøâçàÝùÞøèÚßÚæâåòÞæÞëàÞçÜòÓáÞæÞÞøâçàðÚìÜáÚâëÞÝâçáâìÚÛìÞçÜÞÛòøáÞ To advise the Board on appointments, John McDonough, To facilitate the administration of ÀçòÁèÚëÝæÞæÛÞë retirements and resignations from Chairman the Company’s share schemes ÒÞçâèëÈçÝÞéÞçÝÞçøÃâëÞÜøèë›ĊÒÈÃċœÃèùàåÚìÇùëøÇèÜäÆèáÚçÝÃèùàåÚìÇùëøðÞëÞùçÚÛåÞøèæÚäÞÚÝÝâøâèçÚåÁèÚëÝÚçÝ the Board and its Committees and (except when considering Membership: ÑÞæùçÞëÚøâèçÂèææâøøÞÞæÞÞøâçàììÜáÞÝùåÞÝÚøìáèëøçèøâÜÞÝùÞøèéëâèëÞçàÚàÞæÞçøì to review succession planning and his own succession, in which ÀçòøðèÃâëÞÜøèëìèë talent development for the Board case the Committee is a Director and the To the extent that Directors are unable to attend scheduled meetings, or additional meetings called on short notice, they receive the and senior management chaired by an appropriate Company Secretary Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëœ éÚéÞëìâçÚÝïÚçÜÞÚçÝëÞåÚòøáÞâëÜèææÞçøìøèøáÞÂáÚâëæÚçßèëÜèææùçâÜÚøâèçÚøøáÞæÞÞøâçàÓáÞÂáÚâëæÚçßèååèðìùéÚßøÞë øáÞæÞÞøâçàâçëÞåÚøâèçøèøáÞÝÞÜâìâèçìøÚäÞçÈç#øáÞÂáÚâëæÚçìèùàáøÇèÜäÆèáÚçÝÃèùàåÚìÇùëøċìïâÞðìèçøáÞæÚøøÞëìøè Membership: Chairman and any three be discussed at the Board meeting they were due to miss, in each case prior to the meeting, and provided feedback to them on Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì øáÞèùøÜèæÞèßÝâìÜùììâèçìÓáÞÂèææâøøÞÞÂáÚâëæÞçåâäÞðâìÞÜèçøÚÜøÞÝøáèìÞÃâëÞÜøèëìðáèðÞëÞùçÚÛåÞøèÚøøÞçÝÂèææâøøÞÞ meetings in advance of those meetings, to canvass their views and understand any issues they wished to raise in respect of the ìùÛöÞÜøæÚøøÞëìÛÞâçàÝâìÜùììÞÝÓáÞÒÈÃæÚâçøÚâçÞÝÜèçøÚÜøðâøáøáÞÂáÚâëæÚçëÞàÚëÝâçàáâìéëâèëâøâÞìßèëøáÞæÞÞøâçàáÞðÚì Group Executive Committee The Group also operates a Group Executive Committee (‘GEC’), which is convened and chaired by the Chief Executive and assists him in discharging his ùçÚÛåÞøèÚøøÞçÝøèàÞøáÞëðâøáøáÞÝâìÜùììâèçìùçÝÞëøÚäÞçÚçÝøáÞÚÜøâèçéèâçøìøáÚøìøÞææÞÝßëèæøáÚøæÞÞøâçà ëÞìéèçìâÛâåâøâÞìÓáÞÆÄÂÜèæéëâìÞìøáÞÂáâÞßÄñÞÜùøâïÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëøáÞßèùëÁùìâçÞììÔçâøÏëÞìâÝÞçøìøáÞÂáâÞßÇùæÚçÑÞìèùëÜÞìÎßĚÜÞë øáÞÂáâÞßÓÞÜáçèåèàòÎßĚÜÞëøáÞÏëÞìâÝÞçøÎéÞëÚøâèçìÚçÝøáÞÆÞçÞëÚåÂèùçìÞåÚçÝÂèæéÚçòÒÞÜëÞøÚëòÓáÞÆÄÂæÞøìâñøâæÞìÝùëâçà#ÚçÝâììÜáÞÝùåÞÝ øèæÞÞøìÞïÞçøâæÞìÝùëâçà$ÈøìæÞÞøâçàìÚëÞàÞçÞëÚååòáÞåÝÚøæÚöèëèéÞëÚøâèçÚåìâøÞìèëâçøáÞËèçÝèçáÞÚÝèßĚÜÞÇÚïâçàëÞïâÞðÞÝøáÞëèåÞèßøáÞÆÄ øáÞçÞðÂáâÞßÄñÞÜùøâïÞáÚìÜáèìÞçøèæÚâçøÚâçâøìèéÞëÚøâèçâçâøìÜùëëÞçøßèëæ Vesuvius plc 80 Annual Report and Accounts 2017 81

Governance Report continued

Board Effectiveness Committee composition is set out in the relevant Committee ÀøøáÞøâæÞèßáÞëÚééèâçøæÞçøÇèååòÊèÞééÞåìÞëïÞÝèçÚ Board Diversity Policy ëÞéèëøìÍèèçÞèøáÞëøáÚçøáÞÂèææâøøÞÞÂáÚâëæÚçÚçÝ çùæÛÞëèßÁèÚëÝìÚçÝðÚìâçøáÞéëèÜÞììèßÚÝöùìøâçàáÞë Board Composition Purpose members of the Committee, is entitled to participate in meetings éèëøßèåâèÚçÝëÞøâëâçàßëèæáÞëÞñÞÜùøâïÞéèìâøâèçìÃùëâçà# This policy sets out the approach to diversity in respect of the Board of èßøáÞÀùÝâøÍèæâçÚøâèçÚçÝÑÞæùçÞëÚøâèçÂèææâøøÞÞì she stepped down from all but one of her board appointments, ÓáÞÁèÚëÝÜèæéëâìÞìÞâàáøÃâëÞÜøèëì™øáÞÍèç˜ÞñÞÜùøâïÞ ÃâëÞÜøèëìèßÕÞìùïâùìéåÜÓáÞéèåâÜòâìâçøÞçÝÞÝøèÚììâìøøáÞÁèÚëÝøáëèùàá However, as detailed in the Committee reports, where the ÚçÝçèðèçåòìÞëïÞìÚìÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèçøðèèøáÞë Chairman, John McDonough CBE; the Chief Executive, øáÞðèëäèßøáÞÍèæâçÚøâèçÂèææâøøÞÞâçÜëÞÚøâçàÚçÝæÚâçøÚâçâçà agenda permits, other Directors and senior management ÛèÚëÝìáÚïâçàøÚäÞçèçÚçÞðÍèç˜ÞñÞÜùøâïÞéèìâøâèçÚø èéøâæùæÁèÚëÝÚçÝÂèææâøøÞÞÜèæéèìâøâèç ÏÚøëâÜäÀçÝëŲøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÆùòØèùçàÚçÝ regularly attend by invitation, supporting the operation of ÁëâøâìáÀæÞëâÜÚçÓèÛÚÜÜèéåÜâçÉùåò# The broad principles of diversity contained in this policy apply to all ĚïÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÏÚøëâÜäÀçÝëŲöèâçÞÝøáÞÁèÚëÝ ÞÚÜáèßøáÞÂèææâøøÞÞìâçÚçèéÞçÚçÝÜèçìÞçìùÚåæÚççÞë ÞæéåèòÞÞìèßøáÞÕÞìùïâùìÆëèùéÓáÞÕÞìùïâùìÂèÝÞèßÂèçÝùÜøëÞěÞÜøì The Board notes that Hock Goh holds a number of other as Chief Executive on 1 September 2017, replacing François ÕÞìùïâùìċÜèææâøæÞçøøèÝâïÞëìâøòÚçÝëÞìéÞÜøßèëâøìÞæéåèòÞÞì ÖÚçÞÜêðáèëÞøâëÞÝßëèæøáÞÁèÚëÝèç Àùàùìø#Úì The Board considers that, for the purposes of the UK Corporate directorships, but that these other commitments typically only Policy Statement éÚëøèßÚéåÚççÞÝìùÜÜÞììâèçéëèÜÞììÇèååòÊèÞééÞåöèâçÞÝ ÆèïÞëçÚçÜÞÂèÝÞßèùëÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì›ÞñÜåùÝâçàøáÞ ëÞêùâëÞÚøèøÚåèß!ÝÚòìċðèëäéÞëòÞÚë÷ÄÂÑÞìèùëÜÞìËøÝ Vesuvius plc recognises the value of a diverse and skilled workforce and is Íèç˜ÞñÞÜùøâïÞÂáÚâëæÚçœçÚæÞåòÇèÜäÆèáÉÚçÞÇâçäåÞò âìøáÞåâìøÞÝéÚëÞçøÜèæéÚçòèßÀÝïÞçøÄçÞëàòËøÝÚç øáÞÁèÚëÝÚìÚçâçÝÞéÞçÝÞçøÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèç committed to creating and maintaining an inclusive and collaborative Àéëâå#ÃèùàåÚìÇùëøâìøáÞÒÞçâèëÈçÝÞéÞçÝÞçøÃâëÞÜøèë workplace culture that will provide sustainability for the organisation into Douglas Hurt and Holly Koeppel, are independent of âçïÞìøæÞçøÜèæéÚçòøáÚøâìçèøÜùëëÞçøåòèéÞëÚøâèçÚåÀìÚ ÇÞçëòÊçèðåÞìâìøáÞÂèæéÚçòÒÞÜëÞøÚëò øáÞßùøùëÞ management and free from any business or other relationship result, Hok Goh’s commitments as Chairman of these ðáâÜáÜèùåÝÚßßÞÜøøáÞÞñÞëÜâìÞèßøáÞâëâçÝÞéÞçÝÞçøöùÝàÞæÞçø companies are currently minimal and he is only required to The Board focuses on ensuring that both it, and its Committees, Policy Objectives ÓáÞÍèæâçÚøâèçÂèææâøøÞÞðâååßèÜùìèçÞçìùëâçàøáÚøâøøáÞÁèÚëÝÚçÝøáÞ Christer Gardell is Managing Partner of Cevian Capital which ÚøøÞçÝøðèÁèÚëÝæÞÞøâçàìÚòÞÚëÇâìèøáÞëÝâëÞÜøèëìáâéì have the appropriate range of diversity, skills, experience, Board’s other Committees have the appropriate range of diversity, skills, áèåÝìYèßÕÞìùïâùìċâììùÞÝèëÝâçÚëòìáÚëÞÜÚéâøÚåÚçÝâìçèø require attendance at a small number of Board meetings each independence and knowledge of the Company, and the experience, independence and knowledge of the Company to enable them ÜèçìâÝÞëÞÝøèÛÞâçÝÞéÞçÝÞçøÇÞÛëâçàìÚðÞÚåøáèßÜèææÞëÜâÚå òÞÚëÇÚïâçàëÞïâÞðÞÝøáâìøáÞÁèÚëÝÛÞåâÞïÞìøáÚøÇèÜäċì øèÝâìÜáÚëàÞøáÞâëÝùøâÞìÚçÝëÞìéèçìâÛâåâøâÞìÞßßÞÜøâïÞåò markets in which it operates, to enable it to discharge its duties ÚÜùæÞçøèøáÞÁèÚëÝÓáÞÂáÚâëæÚçìÚøâìĚÞÝøáÞâçÝÞéÞçÝÞçÜÞ additional commitments do not prevent him from properly ÚçÝëÞìéèçìâÛâåâøâÞìÞßßÞÜøâïÞåòÓáÞÁèÚëÝÜèçøâçùÞìøèåèèä ÓáÞÍèæâçÚøâèçÂèææâøøÞÞðâååÞçìùëÞøáÚøÚååÚééèâçøæÞçøìøèøáÞÁèÚëÝ ÜëâøÞëâÚèçáâìÚééèâçøæÞçøøèøáÞÁèÚëÝÁâèàëÚéáâÜÚåÝÞøÚâåìèß ßùåĚååâçàáâìÝùøâÞìÚìÚÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëèßÕÞìùïâùìéåÜ ÚøÝâïÞëìâøòâçâøìÛëèÚÝÞìøìÞçìÞ™ëÞěÞÜøÞÝâçøáÞëÚçàÞèß ÚëÞÛÚìÞÝèçæÞëâøðâøáÞÚÜáÜÚçÝâÝÚøÞÚììÞììÞÝÚàÚâçìøèÛöÞÜøâïÞÜëâøÞëâÚ focused on the skills, experience and knowledge required of the position, øáÞÃâëÞÜøèëìÚëÞìÞøèùøèçéÚàÞì!ÚçÝ! backgrounds and experience of our Board members who are ÚçÝðâøáÝùÞëÞàÚëÝøèøáÞÛÞçÞĚøìèßÝâïÞëìâøòèçøáÞÁèÚëÝ Information and Support drawn from different nationalities and have managed a variety ÓáÞÍèæâçÚøâèçÂèææâøøÞÞðâååÞçàÚàÞðâøáÞñÞÜùøâïÞìÞÚëÜáĚëæìâçÚ Appointment to the Board èßÜèæéåÞñàåèÛÚåÛùìâçÞììÞìÃùëâçàøáÞòÞÚëøáÞÁèÚëÝ manner which ensures that opportunities are taken for a diverse range of The Board ensures that it receives, in a timely manner, ëÞěÞÜøÞÝèçøáÞëÞÜèææÞçÝÚøâèçìèßøáÞÇÚæéøèç˜ÀåÞñÚçÝÞë ÜÚçÝâÝÚøÞìøèÛÞÜèçìâÝÞëÞÝßèëÚééèâçøæÞçøÓáâìðâååâçÜåùÝÞÞçìùëâçàøáÚø Recommendations for appointments to the Board are made information of an appropriate quality to enable it adequately øáÞÂèææâøøÞÞèçåòùìÞììÞÚëÜáĚëæìøáÚøÚëÞìâàçÞÝùéøèøáÞÕèåùçøÚëò ÛòøáÞÍèæâçÚøâèçÂèææâøøÞÞÅùëøáÞëâçßèëæÚøâèçâììÞøèùø øèÝâìÜáÚëàÞâøìëÞìéèçìâÛâåâøâÞìÏÚéÞëìÚëÞéëèïâÝÞÝøèøáÞ ÏÚëäÞëÚçÝ÷ÜÆëÞàèë˜ÒæâøáëÞïâÞðìèçàÞçÝÞëÚçÝÞøáçâÜ ÂèÝÞèßÂèçÝùÜøßèëÄñÞÜùøâïÞÒÞÚëÜáÅâëæì âçøáÞÍèæâçÚøâèçÂèææâøøÞÞëÞéèëøèçéÚàÞì% øè%! Directors in advance of the relevant Board or Committee diversity and formalised its approach to diversity with the ÓáÞÍèæâçÚøâèçÂèææâøøÞÞìùééèëøììÞçâèëæÚçÚàÞæÞçøÞßßèëøìøèâçÜëÞÚìÞ ÚééëèïÚåèßÚÁèÚëÝÃâïÞëìâøòÏèåâÜòÓáÞéèåâÜòìÞøìèùøøáÞ diversity in the senior management pipeline to facilitate succession planning meeting to enable them to make further enquiries about any ÁèÚëÝċìèÛöÞÜøâïÞìðâøáëÞàÚëÝøèÝâïÞëìâøòøèÞçìùëÞøáÚøøáÞ øèðÚëÝìÞñÞÜùøâïÞÁèÚëÝéèìâøâèçì Time Commitment of the Chairman and the æÚøøÞëìéëâèëøèøáÞæÞÞøâçàìáèùåÝøáÞòìèðâìáÓáâìÚåìè Company maintains the optimum Board and Committee With respect to the representation of women on the Board, highlighted by Non-executive Directors allows Directors who are unable to attend to submit views in øáÞÃÚïâÞìÚçÝÇÚæéøèç˜ÀåÞñÚçÝÞëÑÞïâÞðìøáÞÁèÚëÝâììùééèëøâïÞèßøáÞ composition, underpinning the fundamental requirement ÚÝïÚçÜÞèßøáÞæÞÞøâçà initiative to increase the proportion of women on the boards of FTSE 350 ÓáÞÂáÚâëæÚçÚçÝÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÞÚÜááÚïÞÚåÞøøÞë to maintain the right balance of independence, skills and ÜèæéÚçâÞìÕÞìùïâùìðáâÜáÚøøáÞÝÚøÞèßøáâìéèåâÜòáÚìÚÁèÚëÝÜèæéëâìâçà of appointment which sets out the terms and conditions of their ÈçÚÝÝâøâèçøèøáÞßèëæÚåÁèÚëÝéëèÜÞììÞìøáÞÂáâÞßÄñÞÜùøâïÞ äçèðåÞÝàÞâçøáÞÛèÚëÝëèèæÃÞøÚâåìèßøáÞÍèæâçÚøâèç !YßÞæÚåÞæÞæÛÞëìáâéðâååÜèçøâçùÞøèÞçìùëÞøáÚøøáÞÁèÚëÝèßÕÞìùïâùì éåÜëÞěÞÜøìøáâìåÞïÞåèëàëÞÚøÞëåÞïÞåìèßàÞçÝÞëÝâïÞëìâøòÚìÚëÞÚééëèéëâÚøÞ ÝâëÞÜøèëìáâéÀçâçÝâÜÚøâèçèßøáÞÚçøâÜâéÚøÞÝøâæÞÜèææâøæÞçø provides written updates on important Company business Committee’s activities in compliance with the policy during ßèëâøììâóÞÚçÝÝòçÚæâÜìøèÞçÚÛåÞâøøèÜèçøâçùÞøèÝÞåâïÞëèçøáÞ âìéëèïâÝÞÝâçÚçòëÞÜëùâøæÞçøëèåÞìéÞÜâĚÜÚøâèçÚçÝÞÚÜá issues between meetings, and the Board is provided with Governance øáÞòÞÚëÚëÞâçÜåùÝÞÝâçøáÞÍèæâçÚøâèçÂèææâøøÞÞÑÞéèëø ëÞêùâëÞæÞçøìèßøáÞÕÞìùïâùìÛùìâçÞìì Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëċìåÞøøÞëèßÚééèâçøæÞçøéëèïâÝÞìÝÞøÚâåì ÚÜèæéëÞáÞçìâïÞæèçøáåòëÞéèëøèßäÞòĚçÚçÜâÚåÚçÝ Monitoring and Reporting of the meetings that they are expected to attend, along with the æÚçÚàÞæÞçøâçßèëæÚøâèçÑÞàùåÚëùéÝÚøÞìèçìáÚëÞáèåÝÞë Board Composition ÓáâìéèåâÜòÚçÝéëèàëÞììÚàÚâçìøâøìèÛöÞÜøâïÞìðâååÛÞëÞïâÞðÞÝÚççùÚååò çÞÞÝøèÚÜÜèææèÝÚøÞøëÚïÞååâçàøâæÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì issues are provided to the Directors, who also receive copies of ÓáÞÍèæâçÚøâèçÂèææâøøÞÞâìëÞìéèçìâÛåÞßèëøáÞâæéåÞæÞçøÚøâèçèßøáâì ÚëÞëÞêùâëÞÝøèìÞøÚìâÝÞìùßĚÜâÞçøøâæÞøèéëÞéÚëÞßèëæÞÞøâçàì ÚçÚåòìøìċçèøÞìâììùÞÝèçøáÞÂèæéÚçòÅèëøáÞÝâìøëâÛùøâèçèß éèåâÜòÚçÝßèëæèçâøèëâçàéëèàëÞììøèðÚëÝìøáÞÚÜáâÞïÞæÞçøèßâøìèÛöÞÜøâïÞì ÚçÝëÞàùåÚëåòøèëÞßëÞìáÚçÝùéÝÚøÞøáÞâëìäâååìÚçÝäçèðåÞÝàÞ all information, Directors have access to a secure online portal, 7 8 ÀååÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìáÚïÞÚàëÞÞÝøèÜèææâøìùßĚÜâÞçø which contains a reference section containing background ÓáÞÁèÚëÝċìèïÞëÚååìäâååìÚçÝÞñéÞëâÞçÜÞÚìðÞååÚìÍèç˜ time for the proper performance of their responsibilities, âçßèëæÚøâèçèçøáÞÂèæéÚçò executive Director independence, were reviewed during the acknowledging that this will vary from year to year depending ÀååÃâëÞÜøèëìáÚïÞÚÜÜÞììøèøáÞÚÝïâÜÞÚçÝìÞëïâÜÞìèßøáÞ òÞÚëÚìéÚëøèßøáÞéëèÜÞììèßëÞÜëùâøâçàøáÞøðèçÞðÃâëÞÜøèëì on the Group’s activities, and will involve visiting manufacturing ÂèæéÚçòÒÞÜëÞøÚëòÓáÞëÞâìÚåìèÚçÚàëÞÞÝéëèÜÞÝùëÞâçéåÚÜÞ ÚçÝÜùìøèæÞëìâøÞìÚëèùçÝøáÞÆëèùéÓáÞÂáÚâëæÚçâç 4 The Board’s composition also formed part of the Board ßèëÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìâçøáÞßùëøáÞëÚçÜÞèßøáÞâëÝùøâÞì 7 éÚëøâÜùåÚëÝÞÝâÜÚøÞìÚìâàçâĚÜÚçøÚæèùçøèßøâæÞøèÕÞìùïâùì ÞïÚåùÚøâèçéëèÜÞììÓðèèßøáÞÞâàáøÃâëÞÜøèëì›!YœÚëÞðèæÞç øèøÚäÞâçÝÞéÞçÝÞçøåÞàÚåÚÝïâÜÞÚøøáÞÂèæéÚçòċìÞñéÞçìÞ ÚçÝßèùë›!YœÚëÞçèç˜ÔÊÜâøâóÞçìÓáÞÁèÚëÝÚåìèÜèçøÚâçì âçÝâìÜáÚëàâçàáâìÝùøâÞìÓáÞÁèÚëÝçèøÞìøáÚøøáÞÂáÚâëæÚç âçÝâïâÝùÚåìßëèæÚëÚçàÞèßÞøáçâÜÛÚÜäàëèùçÝìÓáÞÁèÚëÝ holds chairmanships other than Vesuvius, but that only one of 4 Induction and Training ÜèçìÞêùÞçøåòÜèçìâÝÞëìâøìÝâïÞëìâøòìâóÞÚçÝÜèæéèìâøâèçøè øáÞìÞâìßèëÚåâìøÞÝÜèæéÚçòÓáÞèøáÞëøðèÜáÚâëæÚçìáâéì ÀÜèæéëÞáÞçìâïÞâçÝùÜøâèçéëèàëÚææÞâìÚïÚâåÚÛåÞøèçÞð 6 be appropriate for the requirements of the business, and in are for much smaller private companies where the time 4 åâçÞðâøáâøìÚÝèéøÞÝéèåâÜòÓáÞÁèÚëÝëÞÜèàçâìÞìøáÚøøáÞ ÜèææâøæÞçøâìåâæâøÞÝ ÃâëÞÜøèëìÓáÞÜèëÞèßøáÞâçÝùÜøâèçéëèàëÚææÞâìÝÞìâàçÞÝâç compliance with the UK Corporate Governance Code, and is ÇÚæéøèç˜ÀåÞñÚçÝÞëÑÞïâÞðáÚììÞøÚøÚëàÞøèß YßÞæÚåÞ ÀååÃâëÞÜøèëìÚëÞÞñéÞÜøÞÝøèÚøøÞçÝÚååìÜáÞÝùåÞÝÁèÚëÝÚçÝ tailored to meet the requirements of the individual appointee Number of Directors with key skills and experience ëÞéëÞìÞçøÚøâèçèçÅÓÒÄ !ÁèÚëÝìÛòÖáâåìøøáÞÁèÚëÝ ÂèææâøøÞÞæÞÞøâçàìÚçÝÚçòÚÝÝâøâèçÚåæÞÞøâçàìÚìëÞêùâëÞÝ ÚçÝøáÞÝòçÚæâÜìèßøáÞÆëèùéÓáâìéëèÜÞììðÚìùçÝÞëøÚäÞç Chairman, Chief Executive or CFO experience does not believe that it is appropriate to accelerate its planned ÄÚÜáÃâëÞÜøèëċìèøáÞëìâàçâĚÜÚçøÜèææâøæÞçøìÚëÞÝâìÜåèìÞÝøè twice during the year, on the appointment of Holly Koeppel as Safety and Risk rotation of Directors purely to meet this target, it will continue to the Board during the process for their appointment and they are Financial ÚÍèçÞñÞÜùøâïÞÃâëÞÜøèëÚçÝøáÞÚééèâçøæÞçøèßÏÚøëâÜäÀçÝëŲ ÜèçìâÝÞëøáÞÛÞçÞĚøìèßàëÞÚøÞëÝâïÞëìâøòâçÚååßùøùëÞÃâëÞÜøèë ëÞêùâëÞÝøèçèøâßòøáÞÁèÚëÝèßÚçòìùÛìÞêùÞçøÜáÚçàÞìÓáÞ Global engineering and manufacturing ëÞÜëùâøæÞçøÝÞÜâìâèçì ÚìÂáâÞßÄñÞÜùøâïÞ Related industrial experience Company has reviewed the availability of the Chairman and the Operational leadership Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÚçÝÜèçìâÝÞëìøáÚøÞÚÜáèßøáÞæÜÚç The Chairman, through the Company Secretary, continues to Strategic planning and in practice does, devote the necessary amount of time to ensure that there is an ongoing process to review training and øáÞÂèæéÚçòċìÛùìâçÞìì ÝÞïÞåèéæÞçøçÞÞÝìÃâëÞÜøèëìÚëÞéëèïâÝÞÝðâøáÝÞøÚâåìèß seminars and training courses relevant to their role, and are Vesuvius plc 82 Annual Report and Accounts 2017 83

Governance Report continued

ÞçÜèùëÚàÞÝÚçÝìùééèëøÞÝÛòøáÞÂèæéÚçòâçÚøøÞçÝâçàøáÞæ The 2016 evaluation had highlighted several priorities for 2017, ÷ÞÞøâçà›ĊÀÆ÷ċœÚßøÞëáâìáÞëÚééèâçøæÞçøÀÃâëÞÜøèëðáè way they consider would be most likely to promote the success Èç#ëÞàùåÚøèëòùéÝÚøÞìðÞëÞéëèïâÝÞÝÚìÚìøÚçÝâçàâøÞæ including strategy and Board succession, and had also ëÞøâëÞìâçøáâìðÚòâìøáÞçÞåâàâÛåÞßèëëÞÚééèâçøæÞçøÓáÞÁèÚëÝ of the Company, and may impose limits or conditions when ÚøÞÚÜáÁèÚëÝæÞÞøâçàâçÚÒÞÜëÞøÚëòċìÑÞéèëøÄñøÞëçÚåâçéùø âÝÞçøâĚÞÝÚëÞÚìßèëèçàèâçàâæéëèïÞæÞçøâçÜåùÝâçààëÞÚøÞë æÚòÚééèâçøèçÞèëæèëÞÃâëÞÜøèëìøèÚçòÞñÞÜùøâïÞèßĚÜÞ giving authorisation or subsequently if they think this is on legal and regulatory developments impacting the business efforts to support the development of staff members below èçìùÜáøÞëæìÚçÝßèëìùÜáéÞëâèÝÚìâøøáâçäìĚøÚçÝâøÜÚçÚåìè ÚééëèéëâÚøÞÓáÞÂèæéÚçòÒÞÜëÞøÚëòëÞÜèëÝìøáÞÜèçìâÝÞëÚøâèç was also given, with specialist advisers invited to the Board ìÞçâèëæÚçÚàÞæÞçøåÞïÞåÀìéÚëøèßøáÞ#ÞïÚåùÚøâèçøáÞ øÞëæâçÚøÞèëïÚëòìùÜáÚçÚééèâçøæÞçøÚøÚçòøâæÞÓáÞÀëøâÜåÞì èßÚçòÜèçěâÜøÚçÝëÞÜèëÝìÚçòÚùøáèëâìÚøâèçìàëÚçøÞÝ ÚçÝâøìÂèææâøøÞÞìøèéëèïâÝÞÛëâÞĚçàìèçèïÞëÚååæÚëäÞø ÁèÚëÝÚììÞììÞÝøáÚøøáÞÍèæâçÚøâèçÂèææâøøÞÞáÚÝÝÞÚåø ìéÞÜâßòøáÚøÚøÞïÞëòÀÆ÷ÚçòÃâëÞÜøèëðáèáÚìÛÞÞçÚééèâçøÞÝ The Board believes that the approach it has in place for and economic developments including Brexit, forthcoming successfully with Board succession during the year, securing ÛòøáÞÕÞìùïâùìÁèÚëÝìâçÜÞøáÞåÚìøÀÆ÷ÚçÝÚçòÃâëÞÜøèëðáè ëÞéèëøâçàìâøùÚøâèçÚåÜèçěâÜøìÜèçøâçùÞìøèèéÞëÚøÞÞßßÞÜøâïÞåò accounting changes, legal developments in data protection and ÚçÞñÜÞååÞçøçÞðÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëÚçÝâÝÞçøâßòâçàÚç áÞåÝèßĚÜÞÚøøáÞøâæÞèßøáÞøðèéëÞÜÞÝâçàÀÆ÷ìÚçÝðáèÝâÝ ÍèìâøùÚøâèçÚåÜèçěâÜøìðÞëÞÛëèùàáøøèøáÞÁèÚëÝßèë øÚñæÚøøÞëìÚçÝèøáÞëàÞçÞëÚåÜèëéèëÚøÞàèïÞëçÚçÜÞâììùÞì accomplished candidate to replace François Wanecq as Chief çèøëÞøâëÞÚøÞâøáÞëèßøáÞæìáÚååëÞøâëÞßëèæèßĚÜÞÇèðÞïÞëâç ÚùøáèëâìÚøâèçÝùëâçàøáÞòÞÚëùçÝÞëëÞïâÞð ÄñÞÜùøâïÞÎïÞëÚååøáÞÁèÚëÝßÞåøøáÚøøáÞøëÚçìâøâèçèßÂáâÞß accordance with the requirements of the Code, all the Directors ÈçÚÝÝâøâèçâç#øáÞßùååÁèÚëÝïâìâøÞÝèùëèéÞëÚøâèçìÚçÝ ÄñÞÜùøâïÞáÚÝÛÞÞçÞßßÞÜøâïÞåòæÚçÚàÞÝÓáÞÝÞïÞåèéæÞçø ðâååèßßÞëøáÞæìÞåïÞìßèëÞåÞÜøâèçèëëޘÞåÞÜøâèçÚøøáâìòÞÚëċì ÜùìøèæÞëìâçÁëÚóâåàÚâçâçàÚÛëèÚÝÞëùçÝÞëìøÚçÝâçàèßøáÞ Board Accountability of staff members below senior management level continued ÀÆ÷ÓáÞÛâèàëÚéáâÜÚåÝÞøÚâåìèßøáÞÃâëÞÜøèëìèßßÞëâçà ÒèùøáÀæÞëâÜÚçÛùìâçÞììÓáÞÂáÚâëæÚçïâìâøÞÝèùëèéÞëÚøâèçì during 2017 and remains a focus for 2018, with new training øáÞæìÞåïÞìßèëÞåÞÜøâèçÚçÝëޘÞåÞÜøâèçâçÜåùÝâçàÝÞøÚâåìèß âçÂáâçÚâç÷ÚòÚçÝèøáÞëÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìïâìâøÞÝ Risk Management and Internal Control programmes implemented, and continuing initiatives in place their other directorships and relevant skills and experience, èéÞëÚøâèçìâçÏèåÚçÝøáÞÔÒÚçÝÆÞëæÚçòÝùëâçàøáÞòÞÚë øèÞçìùëÞàëÞÚøÞëÁèÚëÝÚÜÜÞììøèøáÞìÞâçÝâïâÝùÚåì ðâååÛÞìÞøèùøâçøáÞ$ÍèøâÜÞèßÀÆ÷ÓáÞÛâèàëÚéáâÜÚå The Board has overall responsibility for establishing and Èç$øáÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìðâååÜèçøâçùÞøèÛëèÚÝÞç ÝÞøÚâåìèßøáÞÃâëÞÜøèëìÚëÞÚåìèìÞøèùøèçéÚàÞì!ÚçÝ! maintaining a system of risk management and internal control, øáÞâëùçÝÞëìøÚçÝâçàèßøáÞÆëèùéøáëèùàáßùëøáÞëìâøÞïâìâøì Regarding priorities for 2018, the evaluation highlighted the ÚçÝßèëëÞïâÞðâçàâøìÞßßÞÜøâïÞçÞììÓáâììòìøÞæâìÝÞìâàçÞÝøè The Board believes that each of the current Directors is need to continue to support the integration of the new Chief effective and demonstrates commitment to his or her respective manage, rather than eliminate, the risks facing the Group and Executive, to ensure he establishes effective working relationships ëèåÞÀÜÜèëÝâçàåòøáÞÁèÚëÝëÞÜèææÞçÝìøáÚøìáÚëÞáèåÝÞëì ìÚßÞàùÚëÝâøìÚììÞøìÍèìòìøÞæèßâçøÞëçÚåÜèçøëèåÜÚçéëèïâÝÞ Governance in Action – Chief Executive Induction with members of the Board and senior management, and is ÚééëèïÞøáÞëÞìèåùøâèçìøèÛÞéëèéèìÞÝÚøøáÞ$ÀÆ÷ ÚÛìèåùøÞÚììùëÚçÜÞÚàÚâçìøæÚøÞëâÚåæâììøÚøÞæÞçøèëåèìì  ÅèååèðâçàáâìÚééèâçøæÞçøÚìÂáâÞßÄñÞÜùøâïÞøáÞÁèÚëÝëÞêùÞìøÞÝøáÚø ìùééèëøÞÝâçßèëæùåÚøâçàÚçÝâæéåÞæÞçøâçàáâìèÛöÞÜøâïÞì The Group’s system is designed to provide the Directors with the Company Secretary arrange a comprehensive induction programme ëÞåÚøâçàøèøáÞëޘÞåÞÜøâèçèßÚååøáÞÃâëÞÜøèëìøáÞçìøÚçÝâçà ßèëÏÚøëâÜäÀçÝëŲÓáâìëÞÜèàçâìÞÝáâìéëâèëÞæéåèòæÞçøðâøáøáÞÆëèùé ßèëøáÞÆëèùéÓáÞÁèÚëÝçèøÞÝøáÞëÞðèùåÝÛÞÚçèçàèâçà ëÞÚìèçÚÛåÞÚììùëÚçÜÞøáÚøéëèÛåÞæìÚëÞâÝÞçøâĚÞÝèçÚøâæÞåò as President, Flow Control and was therefore tailored to focus on the emphasis on strategy, and recognising the increasing corporate ÛÚìâìÚçÝÚëÞÝÞÚåøðâøáÚééëèéëâÚøÞåò ÜèëéèëÚøÞÚìéÞÜøìèßáâìçÞðëèåÞÚçÝøáÞðèëäèßøáÞèøáÞëÛùìâçÞììùçâøì governance focus on stakeholder communication, the Board ÃâëÞÜøèëìċÂèçěâÜøìèßÈçøÞëÞìø ÓáÞÀùÝâøÂèææâøøÞÞÚììâìøìøáÞÁèÚëÝâçëÞïâÞðâçàøáÞ  ÑÞßÞëÞçÜÞæÚøÞëâÚåìðÞëÞéëèïâÝÞÝâçÜåùÝâçàâçßèëæÚøâèçÚÛèùøøáÞ would need to continue to develop plans to interact with The Board has established a formal system to authorise Board, its Committees, procedures for dealing in the Company’s shares effectiveness of the Group’s system of internal control, ìøÚäÞáèåÝÞëìÚçÝèïÞëìÞÞøáÞÜùåøùëÞèßøáÞÆëèùéÓáÞÞïÚåùÚøâèç ìâøùÚøâèçìðáÞëÞÚÃâëÞÜøèëáÚìÚçâçøÞëÞìøøáÚøÜèçěâÜøìèëæÚò ÚçÝèøáÞëëÞàùåÚøèëòÚçÝàèïÞëçÚçÜÞæÚøøÞëìÀååÚìéÞÜøìèßëâìäÚçÝ âçÜåùÝâçàĚçÚçÜâÚåèéÞëÚøâèçÚåÚçÝÜèæéåâÚçÜÞÜèçøëèåìÚçÝ its management through insurance, compliance and relevant corporate ÚåìèâÝÞçøâĚÞÝÚÜèçìâìøÞçøøáÞæÞëÞàÚëÝâçàéÞëìèçÚå éèììâÛåòÜèçěâÜøðâøáøáÞâçøÞëÞìøìèßøáÞÂèæéÚçò›ìâøùÚøâèçÚå ëâìäæÚçÚàÞæÞçøìòìøÞæìÓáÞäÞòßÞÚøùëÞìèßøáÞÆëèùéċì éèåâÜâÞìÚçÝéëèÜÞÝùëÞìðÞëÞÜèïÞëÞÝÏÚøëâÜäðÚìÚÝïâìÞÝèßáâìåÞàÚå ÝÞïÞåèéæÞçøéåÚçìÈøðÚìÚàëÞÞÝøáÚøøáÞÁèÚëÝðèùåÝßèÜùì ÜèçěâÜøìœÃâëÞÜøèëìÝÞÜåÚëÞìâøùÚøâèçÚåÜèçěâÜøììèøáÚøøáÞòÜÚç ìòìøÞæèßâçøÞëçÚåÜèçøëèåÚëÞìÞøèùøâçøáÞøÚÛåÞÛÞåèð ÚçÝèøáÞëÝùøâÞìÚçÝèÛåâàÚøâèçìÚìÚÃâëÞÜøèëèßÚåâìøÞÝÜèæéÚçò èçøáâìÝùëâçàâøìèïÞëìâàáøèßìÞçâèëæÚçÚàÞæÞçøÈçëÞìéÞÜøèß ÛÞÜèçìâÝÞëÞÝßèëÚùøáèëâìÚøâèçÛòøáÞçèç˜ÜèçěâÜøÞÝÃâëÞÜøèëì These matters were discussed in detail in a series of meetings conducted ÛòâçøÞëçÚåæÚçÚàÞæÞçøÚçÝÞñøÞëçÚåÚÝïâìÞëì âøìèðçÚÜøâïâøâÞìâçÝâïâÝùÚåÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìðèùåÝÛÞ ÈçÜèçìâÝÞëâçàÚìâøùÚøâèçÚåÜèçěâÜøøáÞìÞÃâëÞÜøèëìÚÜøâçøáÞ  ÏÚøëâÜäáÞåÝèçޘøè˜èçÞæÞÞøâçàìðâøáÚååèøáÞëÁèÚëÝæÞæÛÞëìÚçÝ encouraged to continue undertaking site visits to operations conducted meetings with key executives throughout the Group, including øáëèùàáèùøøáÞÆëèùé ëÞàùåÚëæÞÞøâçàìÚçÝöèâçøìâøÞÚçÝÜùìøèæÞëïâìâøìðâøáøáÞèùøàèâçà Risk Management and Internal Control – Key Features ÂáâÞßÄñÞÜùøâïÞÇÞÚåìèáÞåÝÚðÞÞäèßèßߘìâøÞæÞÞøâçàìðâøáøáÞÆëèùé On more practical matters, there was a continuing need to Executive Committee to strengthen the relationship with his new team and âæéëèïÞÁèÚëÝéëèÜÞììÞìðâøáøáÞëÞĚçÞæÞçøèßÁèÚëÝéÚÜäì Governance ßèÜùìèçøáÞèëàÚçâìÚøâèçÚåìøëùÜøùëÞèßøáÞäÞòßùçÜøâèçìèßøáÞÆëèùé Strategy and > Comprehensive strategic planning and forecasting process ÚçÝøáÞéëèæèøâèçèßÜèçìâìøÞçÜòâçÁèÚëÝéëÞìÞçøÚøâèçì ĚçÚçÜâÚåëÞéèëøâçà  ÒâçÜÞáâìÚééèâçøæÞçøÏÚøëâÜäáÚìÛÞÞçùçÝÞëøÚäâçàÚÜèæéëÞáÞçìâïÞ  ÀççùÚåÛùÝàÞøÚééëèïÞÝÛòøáÞÁèÚëÝ ÀìâçéëÞïâèùìòÞÚëìÚìÞøèßÚÜøâèçéèâçøìðÚìÜèæéâåÞÝßëèæ programme of site visits, with a view to visiting all the Group’s key R&D  ÷èçøáåòèéÞëÚøâçàĚçÚçÜâÚåâçßèëæÚøâèçëÞéèëøÞÝÚàÚâçìøÛùÝàÞø ÚçÝæÚçùßÚÜøùëâçàßÚÜâåâøâÞì øáÞèùøéùøèßøáÞÞïÚåùÚøâèçøèÞçìùëÞøáÚøâøìĚçÝâçàìÚëÞ > Key trends and variances analysed and action taken as appropriate ! ÏÚøëâÜäáÚìæÞøðâøáøáÞÆëèùéċìéëâçÜâéÚåÚÝïâìÞëìøáÞÂèæéÚçòċìÛëèäÞëì âæéåÞæÞçøÞÝâçøèøáÞÁèÚëÝċìÚÜøâïâøâÞìÓáâìâììùéÞëïâìÞÝÛò and investor community, using this as an opportunity to understand their øáÞÂáÚâëæÚçÚçÝëÞïâÞðÞÝøáëèùàáèùøøáÞòÞÚë Vesuvius GAAP  ÀÜÜèùçøâçàéèåâÜâÞìÚçÝéëèÜÞÝùëÞìßèëæùåÚøÞÝÚçÝÝâììÞæâçÚøÞÝøèÚååÆëèùéèéÞëÚøâèçì ëèåÞìÚçÝøáÞÜèëéèëÚøÞàèïÞëçÚçÜÞÞçïâëèçæÞçøâçàëÞÚøÞëÝÞøÚâå  ÂèïÞëìøáÞÚééåâÜÚøâèçèßÚÜÜèùçøâçàìøÚçÝÚëÝìøáÞæÚâçøÞçÚçÜÞèßÚÜÜèùçøâçàëÞÜèëÝìÚçÝäÞòĚçÚçÜâÚåÜèçøëèåéëèÜÞÝùëÞì " ÓáÞÁèÚëÝæèçâøèëÞÝøáÞâçÝùÜøâèçéëèÜÞììÚçÝÚìäÞÝøáÞÂèæéÚçò The Chairman noted that, overall, the evaluation had concluded ÒÞÜëÞøÚëòøèéëèïâÝÞùéÝÚøÞìèçâøìéëèàëÞìì that the Board remained of a high calibre and was functioning Operational controls  ÎéÞëÚøâçàÜèæéÚçâÞìÚçÝÜèëéèëÚøÞèßĚÜÞìæÚâçøÚâçâçøÞëçÚåÜèçøëèåìÚçÝéëèÜÞÝùëÞìÚééëèéëâÚøÞøèøáÞâëìøëùÜøùëÞÚçÝ ðÞååðâøáèéÞçÝÞÛÚøÞÚçÝàèèÝâçßèëæÚøâèçěèðÓáÞâçÝâïâÝùÚå business environment assessment of Directors concluded that all continued to contribute > Compliance with Group policies on items such as authorisation of capital expenditure, treasury transactions, the management of Performance Evaluation effectively, devoting adequate time to their duties and being âçøÞååÞÜøùÚåéëèéÞëøòÚçÝåÞàÚåëÞàùåÚøèëòâììùÞì The Board carries out an evaluation of its performance and that ÞçàÚàÞÝÚçÝéëèÚÜøâïÞâçÝÞÛÚøÞÚøÚååæÞÞøâçàìÄÚÜáèßøáÞ  ÔìÞèßÜèææèçÚÜÜèùçøâçàéèåâÜâÞìÚçÝéëèÜÞÝùëÞìÚçÝĚçÚçÜâÚåëÞéèëøâçàìèßøðÚëÞùìÞÝâçĚçÚçÜâÚåëÞéèëøâçàÚçÝÜèçìèåâÝÚøâèç èßâøìÂèææâøøÞÞìÞïÞëòòÞÚëÈç#øáâìÞïÚåùÚøâèçøèèäéåÚÜÞ Committees was considered to have operated effectively during  ÒâàçâĚÜÚçøĚçÚçÜâçàÚçÝâçïÞìøæÞçøÝÞÜâìâèçìëÞìÞëïÞÝøèøáÞÁèÚëÝ in the fourth quarter and was again externally facilitated by the year, with recognition that the Remuneration Committee > Monitoring of policy and control mechanisms for managing treasury risk by the Board øáÞÜèëéèëÚøÞÚÝïâìèëòĚëæËâçøìøèÜäÓáÞÆëèùéìùÛìÜëâÛÞì had overseen the successful implementation of the new øèÚÜÜÞììËâçøìøèÜäċìÈçìâÝÞëÝÚøÚÛÚìÞÛùøáÚìçèèøáÞë ÑÞæùçÞëÚøâèçÏèåâÜòøáÞÀùÝâøÂèææâøøÞÞáÚÝèïÞëìÞÞçøáÞ Risk assessment  ÂèçøâçùèùìéëèÜÞììßèëâÝÞçøâßòâçàÞïÚåùÚøâçàÚçÝæÚçÚàâçàÚçòìâàçâĚÜÚçøëâìäì and management ÜèççÞÜøâèçðâøáøáÞèëàÚçâìÚøâèçÓáâìòÞÚëċìÞïÚåùÚøâèçùøâåâìÞÝ ìæèèøáøëÚçìâøâèçâçÞñøÞëçÚåÚùÝâøèëÚçÝøáÞÍèæâçÚøâèç > Risk management process designed to identify the key risks facing each business ÚßëÞìáÚééëèÚÜáÑÚøáÞëøáÚçÜèçÝùÜøâçàøáÞÞïÚåùÚøâèçïâÚ ÂèææâøøÞÞáÚÝùçÝÞëøÚäÞçøðèéëèÝùÜøâïÞëèùçÝìèßëÞÜëùâøæÞçø > Reports made to the Board on how those risks are managed ÚìÞëâÞìèßêùÞìøâèççÚâëÞìøáâìòÞÚëËâçøìøèÜäâììùÞÝÚìáèëø  ÄÚÜáæÚöèëÆëèùéÛùìâçÞììùçâøéëèÝùÜÞìÚëâìäæÚéøèâÝÞçøâßòäÞòëâìäìÚììÞììøáÞåâäÞåâáèèÝèßëâìäìèÜÜùëëâçàøáÞâëâæéÚÜøÚçÝ êùÞìøâèççÚâëÞÚçÝøáÞçÜèçÝùÜøÞÝÚìÞëâÞìèßâç˜ÝÞéøáâçøÞëïâÞðì Appointment and Replacement of Directors mitigating actions with each Director and the Company Secretary aimed at  Óèé˜ÝèðçëâìäâÝÞçøâĚÜÚøâèçùçÝÞëøÚäÞçÚøÆëèùéÄñÞÜùøâïÞÂèææâøøÞÞÚçÝÁèÚëÝæÞÞøâçàì ÁèÚëÝæÞæÛÞëìáâéìáèùåÝçèøÛÞßÞðÞëøáÚçĚïÞçèëæèëÞ ÚçÚåòìâçàÚçÝàÚâçâçàßùëøáÞëâçìâàáøâçøèøáÞâëëÞìéèçìÞì > Board review of insurance and other measures used in managing risks across the Group than 15 Directors, save that the Company may, by ordinary ÀìðâøáéëÞïâèùìòÞÚëìøáÞÞïÚåùÚøâèççèøèçåòÜèïÞëÞÝøáÞ  ÓáÞÁèÚëÝâìçèøâĚÞÝèßæÚöèëâììùÞìÚçÝæÚäÞìÚçÚççùÚåÚììÞììæÞçøèßáèðëâìäìáÚïÞÜáÚçàÞÝ ëÞìèåùøâèçßëèæøâæÞøèøâæÞïÚëòøáâìæâçâæùæÚçݝèë performance of the Board but also that of its Committees,  ÎçàèâçàÚììùëÚçÜÞéëèÜÞììÞìÛòøáÞËÞàÚåßùçÜøâèçÚçÝÈçøÞëçÚåÀùÝâøâçÜåùÝâçàøáÞÚççùÚåÜÞëøâĚÜÚøâèçéëèÜÞìì æÚñâæùæçùæÛÞëèßÃâëÞÜøèëìÃâëÞÜøèëìæÚòÛÞÚééèâçøÞÝ along with individual reviews of each Director and analysis of > Externally supported “Speak Up” whistleblowing line ÛòèëÝâçÚëòëÞìèåùøâèçèëÛòøáÞÁèÚëÝÀÃâëÞÜøèëÚééèâçøÞÝÛò øáÞéÞëßèëæÚçÜÞèßøáÞÂáÚâëæÚçÀçÚëëÚøâïÞëÞéèëøÛëèäÞç øáÞÁèÚëÝæùìøëÞøâëÞßëèæèßĚÜÞÚøøáÞĚëìøÀççùÚåÆÞçÞëÚå ÝèðçâçøèøáÞæÚøâÜÚëÞÚìðÚìøáÞçéëÞìÞçøÞÝøèøáÞÁèÚëÝ Vesuvius plc 84 Annual Report and Accounts 2017 85

Governance Report continued Audit Committee

Reviewing the Effectiveness of Risk Management Share Capital and Voting Dear shareholder, Committee Members and Internal Control Disclosure of the information regarding share capital, the On behalf of the Audit Committee, I am pleased to present the Douglas Hurt (Committee Chairman) The internal control system covers the Group as a whole, and authorisation received by Directors at the AGM regarding the Audit Committee Report for 2017. The Committee works largely Hock Goh is monitored and supported by the Group’s Internal Audit issue of shares and the authority to purchase own shares, is to a recurring and structured programme of activities which Jane Hinkley function, which conducts reviews of Vesuvius’ businesses and contained on page 118 within the Directors’ Report. There are ÚëÞÝÞĚçÞÝâçÚçÚççùÚåëèååâçàÀùÝâøÂèææâøøÞÞøâæÞøÚÛåÞ Holly Koeppel (appointed on 3 April 2017) reports objectively both on the adequacy and effectiveness no restrictions on voting contained in the Company’s Articles of Additional items are then added and the Committee agenda is of the system of internal control and on those businesses’ Association. Further details are set out in the Directors’ Report æèÝâĚÞÝÚìøáÞòÞÚëéëèàëÞììÞìøèÚÜÜèææèÝÚøÞçÞðøèéâÜì The Audit Committee compliance with Group policies and procedures. The Audit on page 119. ÚçÝéëâèëâøâÞìÒâàçâĚÜÚçøçèç˜ìøÚçÝÚëÝâøÞæìøáÚøëÞêùâëÞÝ ÓáÞÀùÝâøÂèææâøøÞÞÜèæéëâìÞìÚååøáÞâçÝÞéÞçÝÞçøÍèç˜ Committee receives reports from the Group Head of Internal Committee focus during the year were the appointment of executive Directors of the Company, who bring a wide range Audit and reports to the Board on the results of its review. the new external auditor and updating of the Internal Audit Relations with Shareholders èßĚçÚçÜâÚåÚçÝÜèææÞëÜâÚåÞñéÞëøâìÞøèøáÞÂèææâøøÞÞċì reporting process. The Committee also continued its review of The Board is committed to communicating with shareholders ÝÞÜâìâèç˜æÚäâçàÚçÝÞïÚåùÚøâèçéëèÜÞììÞìÃèùàåÚìÇùëøâì As part of the Board’s process for reviewing the effectiveness ĊÝÞÞéÝâïÞċøèéâÜìÝùëâçàøáÞòÞÚëÜèïÞëâçàÝÞĚçÞÝÛÞçÞĚø and other stakeholders in a clear and open manner, and seeks the Senior Independent Director and Chairman of the Audit of the system of internal control, it delegates certain matters pension schemes and cyber security. to the Audit Committee. to ensure effective engagement through the Company’s Committee, having been appointed to these roles by the Board regular communications, the AGM and other investor relations Following the completion of the formal audit tender in 2016, following the 2015 AGM. He was the Finance Director of IMI plc ÅèååèðâçàøáÞÀùÝâøÂèææâøøÞÞċìëÞïâÞðèßâçøÞëçÚåĚçÚçÜâÚå activities. The Company undertakes an ongoing programme and the appointment of PricewaterhouseCoopers LLP (‘PwC’) ßèëçâçÞòÞÚëìéëâèëøèøáÚøÚçÝáÚìðèëäÞÝâçïÚëâèùìĚçÚçÜâÚå controls and of the processes covering other controls, the Board of meetings with investors, which is managed by the Chief in May 2017, the Committee oversaw the seamless transition of roles throughout his career. Douglas is also Chairman of the annually evaluates the results of the internal control and risk ÄñÞÜùøâïÞÚçÝÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÓáÞæÚöèëâøòèß the external audit from KPMG LLP to PwC during the year. PwC Audit Committees of Countryside Properties PLC and Tate & management procedures conducted by senior management. meetings with investors are led by them. Following the followed a detailed transition plan, focused on gaining a good Lyle plc, and a Chartered Accountant. This background ÓáâìâçÜåùÝÞìÚìÞåߘÜÞëøâĚÜÚøâèçÞñÞëÜâìÞÛòðáâÜáìÞçâèë ÚççèùçÜÞæÞçøèßáâìÚééèâçøæÞçøÚìÂáâÞßÄñÞÜùøâïÞÏÚøëâÜä understanding of the Group and establishing contact with key éëèïâÝÞìáâæðâøáøáÞĊëÞÜÞçøÚçÝëÞåÞïÚçøĚçÚçÜâÚåÞñéÞëâÞçÜÞċ ĚçÚçÜâÚåèéÞëÚøâèçÚåÚçÝßùçÜøâèçÚåæÚçÚàÞæÞçøÜÞëøâßò André accompanied Guy Young and François Wanecq on the management and local personnel. The Committee received ëÞêùâëÞÝùçÝÞëøáÞÂèÝÞÓáÞÂèæéÚçòÒÞÜëÞøÚëòâìÒÞÜëÞøÚëò the compliance throughout the year of the areas under their investor roadshows conducted to communicate the half-year ëÞàùåÚëùéÝÚøÞìèçéëèàëÞììÚàÚâçìøøáâìéåÚçÚçÝÛÞçÞĚøÞÝ to the Committee. responsibility with the Group’s policies and procedures and ëÞìùåøìÒâçÜÞßèëæÚååòøÚäâçàùéáâìÂáâÞßÄñÞÜùøâïÞéèìâøâèç from PwC’s insights into the Group’s risk control framework as highlight any material issues that have occurred during the year. The Code and Financial Conduct Authority Disclosure Patrick has been continuing to meet with investors, attending they conducted their initial meetings and reviews. ÒâçÜÞøáÞÝÚøÞèßøáâìëÞïâÞðøáÞëÞáÚïÞÛÞÞççèìâàçâĚÜÚçø ÆùâÝÚçÜÞÚçÝÓëÚçìéÚëÞçÜòÑùåÞìÚåìèÜèçøÚâçëÞêùâëÞæÞçøì investor conferences and meeting with market analysts. ÜáÚçàÞìâçâçøÞëçÚåÜèçøëèåìèëèøáÞëæÚøøÞëìâÝÞçøâĚÞÝðáâÜá During the year, the approach to internal audit was updated to for the Audit Committee as a whole to have competence ÜèùåÝìâàçâĚÜÚçøåòÚßßÞÜøøáÞæ In advance of the 2017 AGM, we wrote to our largest allow for clearer focus at the Audit Committee on key control relevant to the sector in which the Company operates. shareholders inviting discussion on any questions they might issues, albeit that the overall scope and coverage of the annual ÕÞìùïâùìċÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìáÚïÞìâàçâĚÜÚçøÛëÞÚÝøá In accordance with the provisions of the Code, the Directors like to raise and making the Chairmen of the Board, the Audit Internal Audit plan remained as broad as in previous years. of experience and depth of knowledge on matters related to ÜèçĚëæøáÚøøáÞòáÚïÞÜÚëëâÞÝèùøÚëèÛùìøÚììÞììæÞçøèß Committee and the Remuneration Committee available to ÈçøÞëçÚåÚùÝâøìÚëÞçèðâÝÞçøâĚÞÝÛòìÞéÚëÚøÞÝÞìâàçÚøâèçì™ Vesuvius’ operations, both from their previous roles and from the principal risks facing the Company, including those that meet shareholders should they so wish. In 2017, other than ÂèæéåâÚçÜÞ–Âèçøëèå›Ċ–ÂċœèëÄßßÞÜøâïÞçÞìì–ÄßĚÜâÞçÜò their induction and other activities since joining the Board of threaten its business model, future performance, solvency one institutional shareholder, no requests for discussions were ›ĊĖÄċœ–ÂÚùÝâøÚÜøâïâøâÞìßèÜùìÞçøâëÞåòèçâçøÞëçÚåĚçÚçÜâÚå Vesuvius. The Directors’ biographies on pages 50 and 51 outline or liquidity. They have also reviewed the effectiveness of received from shareholders following this communication. control and key Board compliance issues, with the E&E audits øáÞâëëÚçàÞèßæùåøâçÚøâèçÚåÛùìâçÞìì˜øè˜ÛùìâçÞììÞñéÞëâÞçÜÞ øáÞÆëèùéċììòìøÞæèßâçøÞëçÚåÜèçøëèåÚçÝÜèçĚëæøáÚøøáÞ The Chairman, Senior Independent Director and Committee examining a broader constituency of business performance ÚçÝÞñéÞëøâìÞâçĚÞåÝìâçÜåùÝâçàÞçàâçÞÞëâçàæÚçùßÚÜøùëâçà Governance necessary actions have been taken to remedy any control Chairmen remain available for discussion with shareholders issues. The Audit Committee receives detailed feedback on ìÞëïâÜÞìÚçÝåèàâìøâÜìÚìðÞååÚìĚçÚçÜâÚåÚçÝÜèææÞëÜâÚå ðÞÚäçÞììÞìâÝÞçøâĚÞÝÝùëâçàøáÞòÞÚë throughout the year on matters under their areas of ÚçòâììùÞìâÝÞçøâĚÞÝâç–ÂÚùÝâøÚÜøâïâøòÚçÝæèëÞàÞçÞëÚå acumen. The Board therefore considers that the Audit The Group’s principal risks and how they are being managed responsibility, either through contacting the Company oversight of the results of E&E audit activity. The latter highlight Committee as a whole has competence relevant to Vesuvius’ or mitigated are detailed on pages 24 and 25, and the Viability Secretary or directly at the AGM. ÛëèÚÝÞëéÞëßèëæÚçÜÞâììùÞìâÝÞçøâĚÞÝÛòøáÞÈçøÞëçÚåÀùÝâø business sector. Statement which considers the Group’s future prospects is team for management response and remediation. ÓáÞÂèæéÚçòëÞéèëøìâøìĚçÚçÜâÚåëÞìùåøìøèìáÚëÞáèåÝÞëìøðâÜÞ detailed on page 23. Risk management and internal control ÚòÞÚëðâøáøáÞéùÛåâÜÚøâèçèßâøìÚççùÚåÚçÝáÚåߘòÞÚëĚçÚçÜâÚå The Audit Committee Report describes the work of the Meetings is discussed in greater detail in the Audit Committee report. reports. In addition, to maintain transparency in performance, Committee during the year including its role in monitoring ÓáÞÂèææâøøÞÞæÞøĚïÞøâæÞìÝùëâçà#ÓáÞÂèææâøøÞÞáÚì The Audit Committee it also issued two scheduled trading updates during 2017. øáÞâçøÞàëâøòèßøáÞÂèæéÚçòċìĚçÚçÜâÚåìøÚøÞæÞçøìÚçÝøáÞ ÚåìèæÞøøðâÜÞìâçÜÞøáÞÞçÝèßøáÞĚçÚçÜâÚåòÞÚëÚçÝéëâèëøè ÎçÞðÚìéùÛåâìáÞÝâææÞÝâÚøÞåòéëâèëøèøáÞ#ÀÆ÷èç effectiveness of the internal and external audit processes. the signing of this Annual Report. The Board Chairman, the The members of the Audit Committee are set out on page 85. 10 May 2017, and the second was published on 14 November ÈøéëèïâÝÞìÚçèïÞëïâÞðèßøáÞìâàçâĚÜÚçøâììùÞìøáÞÂèææâøøÞÞ çèç˜âçÝÞéÞçÝÞçøÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëøáÞÂáâÞßÄñÞÜùøâïÞ The Audit Committee report which describes the Audit 2017. In conjunction with these announcements, presentations has considered during the year and its material judgements. øáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëøáÞÆëèùéÅâçÚçÜâÚåÂèçøëèååÞëøáÞ Committee’s work in discharging its responsibilities, is set èëøÞåÞÜèçßÞëÞçÜÞÜÚååìðÞëÞáÞåÝÛòøáÞÂáâÞßÄñÞÜùøâïÞÚçÝ ÈøÚåìèÝÞìÜëâÛÞìáèðøáÞÂèææâøøÞÞßùåĚååÞÝâøìëÞìéèçìâÛâåâøâÞì Head of Internal Audit and the external auditor were all invited out on pages 85 to 92. ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëðâøáâçìøâøùøâèçÚåâçïÞìøèëìÚçÝÚçÚåòìøì to assist the Board in reviewing the effectiveness of the Group’s to each meeting. Other management staff were also invited to ìòìøÞæèßâçøÞëçÚåÜèçøëèåâçÜåùÝâçàĚçÚçÜâÚåèéÞëÚøâèçÚåÚçÝ attend as appropriate. In preparation for their tenure as the ÀååÃâëÞÜøèëìÚëÞÞñéÞÜøÞÝøèÚøøÞçÝøáÞÂèæéÚçòċìÀÆ÷ Executive Compensation and Risk compliance controls, and risk management systems. new external auditor, PwC attended Audit Committee meetings providing shareholders with the opportunity to question them prior to their formal appointment by shareholders at the ÀååèßøáÞâçÝÞéÞçÝÞçøÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëììÞëïÞèç about issues relating to the Group, either during the meeting or Yours sincerely 2017 AGM. both the Audit and Remuneration Committees. They therefore informally afterwards. Douglas Hurt Chairman, Audit Committee ÛëâçàøáÞâëÞñéÞëâÞçÜÞÚçÝäçèðåÞÝàÞèßøáÞÚÜøâïâøâÞìèß In February 2017, the Audit Committee held a preliminary each Committee to bear when considering critical areas of æÞÞøâçàèçòÞÚë˜ÞçÝâììùÞìâçÚÝïÚçÜÞèßøáÞĚçÚåâìÚøâèçèß öùÝàÞæÞçøÓáâìæÞÚçìøáÚøßèëÞñÚæéåÞøáÞÃâëÞÜøèëìÚëÞ øáÞĚçÚçÜâÚåìøÚøÞæÞçøìâçÞÚëåò÷ÚëÜáÓáâìÚééëèÚÜáðÚì able to consider carefully the impact of incentive arrangements judged to be effective and has been integrated into the Audit èçøáÞÆëèùéċìëâìäéëèĚåÞÚçÝøèÞçìùëÞøáÚøøáÞÆëèùéċì Committee schedule going forward. Remuneration Policy and programme are structured to align with the long-term objectives and risk appetite of the Company. Vesuvius plc 86 Annual Report and Accounts 2017 87

Audit Committee continued

Audit Committee meetings are conducted to promote an open Within these terms, the Committee and its individual members Financial Reporting ÈçÜèæÞÓÚñ ÝÞÛÚøÞøèÜáÚååÞçàÞÜèçìøëùÜøâïÞåòìâàçâĚÜÚçøÚÜÜèùçøâçà are empowered to obtain outside legal or other independent ÈçÜèæÞøÚñëÞæÚâçìÚÜèæéåÞñÚëÞÚðáÞëÞìâàçâĚÜÚçø ÓáÞÂèææâøøÞÞßùåĚååÞÝâøìéëâæÚëòëÞìéèçìâÛâåâøòøèëÞïâÞð judgements, to provide guidance and oversight to management professional advice at the cost of the Company. These powers öùÝàÞæÞçøìÚëÞëÞêùâëÞÝøèÞìøâæÚøÞÛèøáùçÜÞëøÚâçøÚñ øáÞâçøÞàëâøòèßøáÞ#áÚåߘòÞÚëÚçÝ#ÚççùÚåĚçÚçÜâÚå to ensure that the business maintains an appropriately robust were not utilised during the year. The Committee may also liabilities and the value of deferred tax assets. control environment and to provide informed advice to the secure the attendance at its meetings of any employee or other statements and recommended their approval to the Board. ÁèÚëÝèçĚçÚçÜâÚåæÚøøÞëìÓáÞÂáÚâëæÚçèßøáÞÀùÝâø parties with relevant experience and expertise should it be The Committee also reviewed the two trading updates released The Committee challenged the assumptions used to arrive at Committee encourages open dialogue between the external considered necessary. during the year. the £34.3m (2016: 34.9m) provided for income tax payable which includes £23.2m (2016: £24.5m) for uncertain tax auditors, the management team and the Head of Internal Audit In forming its views, the Committee assessed: provisions as set out in Note 10.5. After discussions with internal between Audit Committee meetings to ensure that emerging Activities in 2017 issues are addressed in a timely manner.  ÓáÞêùÚåâøòÚÜÜÞéøÚÛâåâøòÚçÝÜèçìâìøÞçÜòèßøáÞÚÜÜèùçøâçà tax experts and considering the results of recent tax audits and  ÓáÞÂèææâøøÞÞċìÚàÞçÝÚÜèïÞëÞÝøáÞùìùÚåìøÚçÝâçàâøÞæì™øáÞëÞïâÞð policies and practices the views of the external auditors, the Committee concurred During the year, as is the Audit Committee’s established èßĚçÚçÜâÚåëÞìùåøìøáÞÞßßÞÜøâïÞçÞììèßøáÞÆëèùéċìâçøÞëçÚåĚçÚçÜâÚå with management’s judgement. practice, the Committee members met and discussed business controls, and the review of the internal control and risk management > The clarity and consistency of the disclosures, including ìòìøÞæì™ÚìðÞååÚìçèç˜ìøÚçÝÚëÝâøÞæìâçÜåùÝâçàèïÞëìâàáøèßøáÞ ÜèæéåâÚçÜÞðâøáëÞåÞïÚçøĚçÚçÜâÚåëÞéèëøâçàìøÚçÝÚëÝìÚçÝ ÀøøáÞÞçÝèß#øáÞÆëèùéëÞÜèàçâìÞÝÚÔÒÝÞßÞëëÞÝøÚñ and control matters with senior management during site visits, transition of the external audit from KPMG to PwC. ÚììÞøèßx "æ›"x"!%æœÓáÞÆëèùéáÚììâàçâĚÜÚçø informal meetings and Board presentations. The Committee èøáÞëëÞéèëøâçàëÞêùâëÞæÞçøì 2. The Audit Committee continued to devote time to ensure that initiatives additional tax losses and other temporary differences in the also met privately with the Head of Internal Audit, and the øèæâøâàÚøÞéèøÞçøâÚåëâìäìÚçÝĚçÚçÜâÚåÞñéèìùëÞëÞæÚâçÞÝëèÛùìøÚçÝ  ÒâàçâĚÜÚçøâììùÞìðáÞëÞæÚçÚàÞæÞçøöùÝàÞæÞçøìÚçݝèë ÔÒÚçÝÞåìÞðáÞëÞðáâÜááÚïÞçèøÛÞÞçëÞÜèàçâìÞÝðáâÜáÚëÞ external auditor without any executives present. ÚééëèéëâÚøÞÓáÞÂèææâøøÞÞÜáÚååÞçàÞÝøáÞÚÝÞêùÚÜòèßâçïÞçøèëòÚçÝ estimates had been made that were material to the reporting receivables provisions, the assumed growth rates and discount rates used kept under review. The recognition of deferred tax assets for The outcomes of Audit Committee meetings were reported to for asset impairment assessments, as well as the accounting for and or where discussions had taken place with the external tax losses and other temporary differences is a highly technical the Board and all members of the Board received the agenda, éëÞìÞçøÚøâèçèßøáÞÆëèùé˜ðâÝÞëÞìøëùÜøùëâçàéëèàëÚææÞùçÝÞëøÚäÞç auditor in arriving at the judgement or estimate area and the Committee has drawn on internal experts to âçëÞìéèçìÞøèøáÞÜáÚååÞçàâçàÜèçÝâøâèçìðâøáâçèùëÞçݘæÚëäÞøì papers and minutes of the Committee. > In relation to the overall Annual Report, whether the Annual ùçÝÞëìøÚçÝøáÞøëÞÚøæÞçøÓáÞßùøùëÞéëèìéÞÜøìßèëÔÒ 3. The Committee considered the Company’s going concern statement and éëèĚøÚÛâåâøòðÞëÞÜÚëÞßùååòæèÝÞååÞÝÛòæÚçÚàÞæÞçøÚçÝ ÜáÚååÞçàÞÝøáÞçÚøùëÞêùÚçøùæÚçÝÚììÞììæÞçøèßøáÞìâàçâĚÜÚçøëâìäì Report and Accounts taken as a whole was fair, balanced and Role and Responsibilities øèøáÞÛùìâçÞììæèÝÞåßùøùëÞéÞëßèëæÚçÜÞìèåïÞçÜòÚçÝåâêùâÝâøòèßøáÞ understandable, taking into consideration all the information challenged by the Committee, as was the impact of the Group that were modelled as part of the scenarios and stress testing ìâàçâĚÜÚçøøÚñëÞßèëæÚççèùçÜÞÝâçåÚøÞÃÞÜÞæÛÞë#âçøáÞ The main role and responsibilities of the Committee continue to available to the Committee undertaken to support the Viability Statement made by the Company in ÔÒÓÚñÂùøìÚçÝÉèÛìÀÜø›ĊÓÂÉÀċœÓáÞÂèææâøøÞÞéÚëøâÜùåÚëåò be to: the 2016 Accounts. The 2017 Viability Statement, which was also critically > The application of the FRC’s guidance on clear and concise reviewed, is contained within the Strategic Report and can be found on noted that this reform had a material impact on the Group’s  ÷èçâøèëøáÞâçøÞàëâøòèßøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßøáÞ page 23. reporting ÝÞßÞëëÞÝøÚñéèìâøâèçÚçÝèßâøìÞåßÜÚùìÞÝÚðëâøޘÝèðçâç ÕÞìùïâùìċÔÒÝÞßÞëëÞÝøÚñÚììÞøèßx!#æðáâÜáâçÚÝÝâøâèçøè Company and the Group, and any formal announcements 4. The Committee monitored the resourcing and delivery of the 2017 Internal > The disclosure and presentation of alternative performance ëÞåÚøâçàøèøáÞÆëèùéċìĚçÚçÜâÚåéÞëßèëæÚçÜÞâçßèëæâçàøáÞ Audit plan and approved the 2018 Internal Audit plan. The Committee measures, in view of the new guidance from the European other normal movements in the year and exchange revaluation, æèçâøèëÞÝÛèøáøáÞëÞìéèçìÞìßëèæÚçÝßèååèð˜ùéÛòæÚçÚàÞæÞçøøè Board of the outcome of the audit Securities and Markets Association ëÞìùåøÞÝâçøáÞìâàçâĚÜÚçøÝÞÜëÞÚìÞâçøáÞïÚåùÞèßøáâìÚììÞøâç Internal Audit recommendations arising during the year and, where 2017. The Committee also noted that, as there is uncertainty in > Monitor and review the effectiveness of the Group’s internal necessary, the Committee tasked management to verify their successful ÜåèìùëÞðâøáâçÝÞĚçÞÝøâæÞìÜÚåÞì The Committee actively deliberated and challenged reports áèðìèæÞèßøáÞéëèïâìâèçìèßÓÂÉÀðâååèéÞëÚøÞìùÛìÞêùÞçø ĚçÚçÜâÚåÜèçøëèåìÚçÝøáÞÆëèùéċìâçøÞëçÚåÜèçøëèåÚçÝëâìä ßëèæøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚçÝÆëèùéÅâçÚçÜâÚåÂèçøëèååÞë àùâÝÚçÜÞâììùÞÝÛòÔÒÓëÞÚìùëòæÚòâæéÚÜøÕÞìùïâùìċëÞéèëøÞÝ management systems ! ÓáÞÂèææâøøÞÞÞñÚæâçÞÝìéÞÜâĚÜÚùÝâøâììùÞììùÜáÚìøÚñæÚøøÞëì These were well prepared and, for areas of judgement and/or including the judgements inherent in the partial recognition of deferred tax position. The Committee reviewed the Group’s projections Governance > Establish and review procedures for detecting fraud, systems øÚñÚììÞøìßèëÔÒøÚñåèììÞìÚçÝùçÝÞëøèèäĊÝÞÞéÝâïÞċëÞïâÞðìèßÜòÛÞë estimation, set out the rationale for the accounting treatment ßèëøëÚÝâçàâçøáÞÔÒðáâÜááÚÝâæéëèïÞÝâç#ÚçÝ and controls for the prevention of bribery and oversee the ìÞÜùëâøòÚçÝøáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøéÞçìâèçÚëëÚçàÞæÞçøì and disclosures, and the pertinent assumptions and the ÜèçÜùëëÞÝðâøáæÚçÚàÞæÞçøøáÚøøáÞÔÒßèëÞÜÚìøéëèĚøìÚëÞ Company’s arrangements for employees to raise concerns 6. The Committee considered the impact of new accounting standards sensitivities of the estimates to changes in the assumptions. ÜèçìâÝÞëÞÝìùßĚÜâÞçøøèìùìøÚâçøáÞÝÞßÞëëÞÝøÚñÚììÞøâçøáÞ ÚÛèùøéèììâÛåÞðëèçàÝèâçàâçĚçÚçÜâÚåëÞéèëøâçàèëèøáÞë including IFRS 9 Financial Instruments and IFRS 15 Revenue from ÏðÂÚåìèÝÞåâïÞëÞÝæÞæèëÚçÝÚßèëøáÞáÚåߘòÞÚëÚçÝòÞÚë˜ÞçÝ ÔÒÚøøáÞÞçÝèß# ÜèçøëÚÜøìðâøáÜùìøèæÞëì™ÚçÝëÞïâÞðÞÝøáÞâæéåÞæÞçøÚøâèçéåÚçßèë ìøÚøâçàøáÞâëïâÞðìèçøáÞøëÞÚøæÞçøèßìâàçâĚÜÚçøâììùÞìÏð matters øáÞìÞâçøáÞ$ĚçÚçÜâÚåòÞÚëÁÚìÞÝèçÚçÚììÞììæÞçøèßøáÞìÞ Other Provisions ìøÚçÝÚëÝìøáÞÆëèùéÝèÞìçèøÛÞåâÞïÞøáÞëÞðâååÛÞÚìâàçâĚÜÚçøâæéÚÜø provided a summary for each issue, including its assessment > Monitor and review the effectiveness of the Company’s on its Group Financial Statements. of the prudence of management’s judgements or estimates. The Committee has been made aware of a number of potential Internal Audit function The Committee considered the overall level of prudence applied exposures and claims arising from ongoing litigation, product this year, compared this with the prior year and concluded that it êùÚåâøòâììùÞìÞæéåèòÞÞÝâìéùøÞìëÞìøëùÜøùëâçàÞçïâëèçæÞçøÚå > Make recommendations to the Board on the appointment, ÓáÞÂèææâøøÞÞæÞæÛÞëìÛÞåâÞïÞøáÚøøáÞòëÞÜÞâïÞÝìùßĚÜâÞçø remained unchanged. matters, onerous leases, indirect tax disputes and indemnities reappointment and removal of the external auditor and relevant and reliable information throughout the year from or warranties outstanding for disposed businesses. Due to approve the remuneration and terms of engagement of the management and the external auditor to enable the Committee the long gestation period before settlement can be reached, external auditor to fully discharge its responsibilities. The work of the Audit ÒâàçâĚÜÚçøÈììùÞìÚçÝ÷ÚøÞëâÚåÉùÝàÞæÞçøì éëèïâìâèçâçàßèëøáÞìÞâøÞæìëÞêùâëÞìÜÚëÞßùåöùÝàÞæÞçøâç Committee is further elaborated in the paragraphs below. ÓáÞÂèææâøøÞÞÜèçìâÝÞëÞÝøáÞßèååèðâçàìâàçâĚÜÚçøâììùÞìâç > Monitor and review the external auditor’s independence, order to establish a reasonable estimate of future liabilities. øáÞÜèçøÞñøèßøáÞ#ĚçÚçÜâÚåìøÚøÞæÞçøìÈøÜèçìâÝÞëÞÝ objectivity and effectiveness, taking into consideration any The Committee also assessed the strength of any insurance øáÞìÞÚëÞÚìøèÛÞìâàçâĚÜÚçøøÚäâçàâçøèÚÜÜèùçøøáÞåÞïÞå çèç˜ÚùÝâøìÞëïâÜÞìéëèïâÝÞÝÚçÝøáÞëÞåÞïÚçøÔÊ Statement of compliance with the Competition and coverage for certain of these liabilities and challenged the of materiality and the degree of judgement exercised by éëèßÞììâèçÚåÚçÝëÞàùåÚøèëòëÞêùâëÞæÞçøì Markets Authority (‘CMA’) Order accounting treatment for any amounts deemed to be management. The Committee resolved that the judgements ëÞÜèïÞëÚÛåÞßëèæâçìùëÞëìÒùÛìÞêùÞçøøèøáâìÜáÚååÞçàÞÜÞëøÚâç  ÓÚäÞÚÜÜèùçøèßøáÞĚçÝâçàìÚçÝÜèçÜåùìâèçìèßÚçòÅÑ The Committee considers that the Company has complied with ÚçÝÞìøâæÚøÞìæÚÝÞèçÞÚÜáèßøáÞìâàçâĚÜÚçøâììùÞìÝÞøÚâåÞÝ insured liabilities have been represented in the balance sheet audit inspection undertaken, when monitoring the The Statutory Audit Services for Large Companies Market below were appropriate and acceptable. on a gross basis. After due consideration and challenge, with performance of the audit ÈçïÞìøâàÚøâèç›÷ÚçÝÚøèëòÔìÞèßÂèæéÞøâøâïÞÏëèÜÞììÞìÚçÝ Audit Committee Responsibilities) Order 2014 (Article 7.1), ÞñéÞëøÚÝïâÜÞìèùàáøâçÜÞëøÚâçÚëÞÚìøáÞÂèææâøøÞÞâììÚøâìĚÞÝ The Committee operates under formal terms of reference published by the CMA on 26 September 2014, including with that there are appropriate levels of provisions set aside to settle approved by the Board, which were reviewed during the year. respect to the Audit Committee’s responsibilities for agreeing øáâëݘéÚëøòÜåÚâæìÚçÝÝâìéùøÞì›ÍèøÞ œÚçÝøáÚøÚÝÞêùÚøÞ They are available in the Investors/Corporate Governance øáÞÚùÝâøìÜèéÞÚçÝßÞÞìÚçÝÚùøáèëâìâçàçèç˜ÚùÝâøìÞëïâÜÞì disclosure has been made under International Accounting section of the Company’s website, www.vesuvius.com. Standards (IAS) 1 (paragraph 129) in respect of estimation uncertainties that might impact the accounts in the following Vesuvius plc 88 Annual Report and Accounts 2017 89

Audit Committee continued

ĚçÚçÜâÚåòÞÚëÖáÞëÞøáÞèùøÜèæÞèßÚçÞñâìøâçàâììùÞâì Fair, Balanced and Understandable Reporting The Committee considered the Company’s going concern The Group is made up of several large operating units, but uncertain, or where no reliable estimate of the potential liability ìøÚøÞæÞçøÚçÝÜáÚååÞçàÞÝøáÞçÚøùëÞêùÚçøùæÚçÝ also many small units in geographically diverse locations. The Committee considered all the information available to can be made, no provision has been made and appropriate ÜèæÛâçÚøâèçèßøáÞùçåâäÞåòÛùøìâàçâĚÜÚçøëâìäìøèøáÞÛùìâçÞìì ÂèçìÞêùÞçøåòìÞàëÞàÚøâèçèßÝùøâÞìèïÞëåÚééâçàÚÜÜÞìì it in reviewing the overall content of the Annual Report and disclosure is included under contingent liabilities (Note 34). æèÝÞåßùøùëÞéÞëßèëæÚçÜÞìèåïÞçÜòÚçÝåâêùâÝâøòèßøáÞÆëèùé controls on systems and remote management oversight can Accounts and the process by which it was compiled and that were modelled as part of the scenarios and stress testing give rise to control vulnerabilities and fraud opportunities. reviewed, to enable it to provide advice to the Board that the Restructuring Charges undertaken to support the Viability Statement. As part of this The Group has not adopted a common Enterprise Resource Annual Report is fair, balanced and understandable. In doing The Group restructuring programme continued in 2017 in review, the Committee considered the Group’s forecast funding ÏåÚççâçàìòìøÞæÚìÚÆëèùé˜ðâÝÞìøÚçÝÚëÝÎïÞëøâæÞ so, the Committee ensured that time was again dedicated to ëÞìéèçìÞøèøáÞìøëùÜøùëÚåÜáÚçàÞìâçøáÞÞçݘæÚëäÞøìøáÚøðÞ position over the next three years and analysed the impact of management intends to move to more sharing of services, the drafting and review process so that internal linkages were serve. The Committee critically reviewed the treatment of the various scenarios based upon pertinent key risks faced by the enabled by process and systems standardisation between âÝÞçøâĚÞÝÚçÝÜèçìâìøÞçÜòðÚìøÞìøÞÝÓáÞÂèææâøøÞÞ restructuring costs disclosed as separately reported items in Group and with reference to the Group’s debt covenants. businesses. This is likely to improve the overall internal controls welcomed the attention that had been paid in the 2017 Annual 2017 and concluded that these have been treated consistently The scenarios considered the impact of multiple risks occurring in the smaller operating units. Report to explain further the strategy, markets, execution ðâøáøáÞÚÜÜèùçøâçàéèåâÜòÓáâìÞçìùëÞìøáÚøèçåòìâàçâĚÜÚçø simultaneously and additional mitigating actions that the priorities and business model of the Group. Drafts of the Annual The Group undertakes a range of activities to mitigate the risk ëÞìøëùÜøùëâçàéëèàëÚææÞìøáÚøáÚïÞÚÝÞĚçÞÝìÜèéÞÚçÝÚëÞ Group could take. The Committee noted that the Group’s debt Report and Accounts were also reviewed by a senior executive of fraud. This framework is regularly reviewed to determine material in nature are reported separately, which enables the éëèĚåÞáÚÝâæéëèïÞÝâçøÞëæìèßæÚøùëâøòðâøáøáÞÜèæéåÞøâèçèß çèøÝâëÞÜøåòâçïèåïÞÝâçøáÞòÞÚë˜ÞçÝéëèÜÞììðáèëÞéèëøÞÝøèøáÞ areas for improvement. In assessing the effectiveness of the reader more clearly to understand the underlying results of ÚçÞðéåÚÜÞæÞçøèßzæÔÒÏÏÍèøÞìÚçÝøáÚøøáÞëÞìùåøÚçø Committee on his impressions of clarity, comprehensiveness, Group’s internal controls, the Committee considered the following the Group. ÝÞÛøáÞÚÝëèèæðÚììùßĚÜâÞçøøèÚÜÜèææèÝÚøÞøáÞæèÝÞååÞÝ balance and disclosure in the document. On completion of the initiatives which had been implemented over the past two years: stress scenarios. As a result of their review, the Committee was ÈæéÚâëæÞçøèßÈçøÚçàâÛåÞÀììÞøì éëèÜÞììøáÞÂèææâøøÞÞðÚììÚøâìĚÞÝøáÚøâøÜèùåÝëÞÜèææÞçÝ ìÚøâìĚÞÝøáÚøøáÞàèâçàÜèçÜÞëçÚçÝÕâÚÛâåâøòÒøÚøÞæÞçøìáÚÝ > The publication of a revised Group authority matrix to ÓáÞòÞÚë˜ÞçÝÜÚëëòâçàïÚåùÞèßàèèÝðâååèßx" æðÚìøÞìøÞÝ to the Board that the Annual Report and Accounts is fair, been prepared on an appropriate basis. The 2017 going emphasise a clear assignment of responsibilities against the current and planned performance of the Steel balanced and understandable. concern statement is contained in the Directors’ Report on and authorities ÚçÝÅèùçÝëòÜÚìá˜àÞçÞëÚøâçàùçâøì›ÂÆÔìœÓáÞÂèææâøøÞÞ page 117 and the 2017 Viability Statement is contained within ÜáÚååÞçàÞÝÛèøáøáÞÝÞøÞëæâçÚøâèçèßøáÞëÞåÞïÚçøÂÆÔìøáÞ ÀÜèçøâçùÞÝßèÜùìÛòëÞàâèçÚåĚçÚçÜÞÝâëÞÜøèëìÚçÝøáÞ Ñâìä÷ÚçÚàÞæÞçøÚçÝÈçøÞëçÚåÂèçøëèåì the Strategic Report and can be found on page 23. planned and terminal growth assumptions as well as the ÜÞçøëÚåĚçÚçÜÞøÞÚæèçÛÚåÚçÜÞìáÞÞøëÞÜèçÜâåâÚøâèçì As highlighted in the reviews of strategy and principal risks in the discount rates used in the assessments and the relevant ÓáÞÂèææâøøÞÞÚåìèæÚâçøÚâçìÚéëèàëÚææÞèßâç˜ÝÞéøá Strategic Report, risk management is inherent in management’s > The ongoing review by Internal Audit of the separation of sensitivities that were evaluated. The detailed assumptions, ëÞïâÞðìâçøèìéÞÜâĚÜĚçÚçÜâÚåèéÞëÚøâèçÚåÚçÝëÞàùåÚøèëòÚëÞÚì thinking and is embedded in the business planning processes of duties and access rights at operating entities, to ensure that no éëèïâÝÞÝâçÍèøÞ#ëÞěÞÜøÛèøáÚëÞÝùÜøâèçâçàåèÛÚåëâìä˜ßëÞÞ for the business. These reviews allow the Committee to meet the Group. The Board has overall responsibility for establishing one person is in sole control of all aspects of any transaction, rates offset by the impact of the increasing contribution from with the business colleagues responsible for these areas and and maintaining a system of risk management and internal to mitigate the risk of fraud the Group’s operations in emerging markets. àÚâçàëÞÚøÞëâç˜ÝÞéøáùçÝÞëìøÚçÝâçàÚÛèùøäÞòÚëÞÚìßèëøáÞ control, and for reviewing its effectiveness. The Audit Group. In 2017, the Committee undertook ‘deep dive’ reviews > An updated employee vetting process for prospective senior ÓáÞÂèææâøøÞÞÜèçìâÝÞëÞÝøáÞÁèÚëݘÚééëèïÞÝæÞÝâùæ˜øÞëæ Committee assists the Board in reviewing the effectiveness of of pensions and cyber security. The former provided the ÞæéåèòÞÞìâçáâàáÞë˜ëâìäÜèùçøëâÞì ÛùìâçÞììéåÚçìøáÞëÚçàÞèßâçÝùìøëòåèçàÞë˜øÞëæéëèöÞÜøâèçì øáÞÆëèùéċììòìøÞæèßâçøÞëçÚåÜèçøëèåâçÜåùÝâçàĚçÚçÜâÚå Committee with a detailed overview of the Group’s principal operational and compliance controls, and risk management and expert views on discount rates. Given that the models åâÚÛâåâøâÞìùçÝÞëÝÞĚçÞÝÛÞçÞĚøìÜáÞæÞìÚçÝøáÞìøÞéìøáÚøðÞëÞ > Ongoing internal communications on the heightened risk âçÝâÜÚøÞÝøáÚøøáÞëÞëÞæÚâçììâàçâĚÜÚçøáÞÚÝëèèæÛÞøðÞÞçøáÞ systems. This framework is consistent with the Code. ÛÞâçàøÚäÞçøèæÚçÚàÞøáÞìÞçèøâçàøáÚøÝޘëâìäâçàëèÚÝæÚéì èßìèÜâÚå˜ÞçàâçÞÞëâçàßëÚùÝÜèùéåÞÝðâøáâçÜëÞÚìÞÝÜòÛÞë value in use and the carrying value, the Committee concurred security training to raise awareness of the use of malware As part of its review of the Group’s principal risks and are in place for each of the funds. The cyber review covered the Governance øáÚøçèàèèÝðâååâæéÚâëæÞçøÜáÚëàÞìðÞëÞëÞêùâëÞÝ uncertainties, the Committee supported the Board in its review assessment of the Group’s cyber security risks, the operation of > The formation of a cyber security working group, to focus Working Capital Provisions èßëâìäìâç#ÀìâçéëÞïâèùìòÞÚëìÚÛèøøèæ˜ùéæÚééâçàèß the Group’s Cyber Security Steering Committee and the actions on enhancing the Group’s resilience to cyber risks that were being taken throughout the organisation to improve The Committee challenged the level of provisions held against the risks was constructed and reviewed in each major business cyber security. It was noted that improvements had been seen Eliminating the risk of fraud remains one of the key areas of both receivables and inventories (Notes 18 and 19) and, unit, delivering a risk register that was then reviewed by the in overall cyber awareness following two successful training focus for Internal Audit, forming a fundamental part of ‘full after reviewing ageing analyses, regional analyses and Head of Internal Audit, to deliver a coordinated picture of the campaigns and that plans were in place to allocate additional ìÜèéÞċÚçÝĚçÚçÜâÚåÚùÝâøìÓáÞìÞÚììÞììøáÞêùÚåâøòèßøáÞ ìéÞÜâĚÜÜùìøèæÞëÚÜÜèùçøìÜèçÜåùÝÞÝøáÚøøáÞéëèïâìâèçì äÞòèéÞëÚøâèçÚåëâìäìâÝÞçøâĚÞÝÛòøáÞÛùìâçÞììÈçÜèçöùçÜøâèç resources to cyber security during 2018. balance sheet reconciliation, review key judgement matters, held were appropriate. with this, all the members of the Committee and the Board ÜèçøëâÛùøÞÝøáÞâëâçÝâïâÝùÚåïâÞðìèßøèé˜ÝèðçìøëÚøÞàâÜëâìäì ÜèçìâÝÞëÄÑÏÚÜÜÞììëâàáøìëÞïâÞðøÞçÝÞëìÚçÝêùèøÚøâèçì ÈçÚÝÝâøâèçøáÞÂèææâøøÞÞëÞïâÞðÞÝøáÞÝëÚßøÔÊÓÚñÒøëÚøÞàò Pensions ßÚÜâçàøáÞÆëèùéâçøèøáâìéëèÜÞìì™ÝëÚðâçàèçøáÞÛëèÚÝ review the entity’s controls over master data changes, and disclosure, noting that this had been prepared for publication ÜèææÞëÜâÚåÚçÝĚçÚçÜâÚåÞñéÞëâÞçÜÞàÚâçÞÝÛèøáâçìâÝÞÚçÝ controls over payments and associated applications. Determining the current value of the Group’s future pension èçøáÞÆëèùéċìðÞÛìâøÞâçåâçÞðâøáìøÚøùøèëòëÞêùâëÞæÞçøì outside the Group. This information was collated by the Head èÛåâàÚøâèçìëÞêùâëÞìÚçùæÛÞëèßÚììùæéøâèçìÓáÞ and recommended that it be approved by the Board. Ãùëâçà#øáÞÆëèùéÜèçøâçùÞÝâøìëÞïâÞðèßøáâëݘéÚëøò appropriateness of assumptions used (described in Note 28) of Internal Audit into a paper for discussion in the context of representatives and intermediaries. This included detailed due ðÚìêùÞìøâèçÞÝÛòøáÞÂèææâøøÞÞÚììæÚååÜáÚçàÞìâçøáÞ øáÞÆëèùéċìâÝÞçøâĚÞÝéëâçÜâéÚåëâìäìÓáâìðÚìëÞïâÞðÞÝÚçÝ The key features of the Group’s internal control system, ÝâåâàÞçÜÞßèëÚÜøâïÞìÚåÞìÚàÞçøìÚçÝðáÞëÞëÞêùâëÞÝùéÝÚøÞì assumptions could have material effects and bond yields in discussed at the Board, and, taking note of the Board’s which provides assurance on the accuracy and reliability of to the contractual basis on which these agents are engaged. particular have been volatile. The assumptions made by ÜèææÞçøììùÛìÞêùÞçøåòÛòøáÞÆëèùéÄñÞÜùøâïÞÂèææâøøÞÞ øáÞÆëèùéċìĚçÚçÜâÚåëÞéèëøâçàÚëÞÝÞøÚâåÞÝâçøáÞÆèïÞëçÚçÜÞ ÓáÞëÞïâÞððâååÛÞÞñøÞçÝÞÝøèèøáÞëøáâëݘéÚëøòëÞéëÞìÞçøÚøâïÞì management for each of the major schemes were compared In monitoring the overall process, Committee members also Report on page 83. During 2017, the Committee considered and intermediaries during 2018. The Committee continued its by PwC with other similar schemes. The Committee agreed fully participated in the Board review of existing risks and the process by which management evaluates internal controls assessment of the Group’s potential exposure to bribery and the reasonableness of the assumptions. ongoing mitigating actions. The Committee determined that across the Group. The Head of Internal Audit provided the corruption risks, noting the ongoing work conducted by the this approach once again enhanced the Group’s process for Committee with a summary overview of the assurance provided ÆëèùéâçøáâìÜèçøÞñøìùÜáÚìßÚÜޘøè˜ßÚÜÞïâìâøìøèèéÞëÚøâèçì identifying and understanding the Group’s principal risks by the Group’s control framework and the testing of these éëèïâÝâçàßèÜùìÞÝÜèùçøëò˜ìéÞÜâĚÜøëÚâçâçàÚçÝëÞïâÞðâçà and uncertainties, which are set out on pages 24 and 25. controls. PwC also reviewed controls in the businesses within the ĚçÚçÜâÚåëÞÜèëÝììèæÞøâæÞìðâøáøáÞÚììâìøÚçÜÞèßÞñøÞëçÚå The Committee continues to consider that this process is robust scope of its audit. This review indicated an appropriate control advisers. The output of these processes and previous risk and appropriate. ÞçïâëèçæÞçøðâøáâÝÞçøâĚÞÝâæéëèïÞæÞçøÚÜøâèçìùçÝÞëÜÚëÞßùå assessments continue to be used to develop Group policies and management by the Group. éëèÜÞÝùëÞìßèëøáÞæÚçÚàÞæÞçøèßÚçøâ˜ÛëâÛÞëòÚçÝÜèëëùéøâèç ëâìäëÞěÞÜøâçàÚçÚééëèéëâÚøÞåÞïÞåèßÜèçøëèåßèëøáÞÛùìâçÞìì Vesuvius plc 90 Annual Report and Accounts 2017 91

Audit Committee continued

The Committee continues to monitor and oversee procedures considered and approved changes to the Internal Audit plan as ÄñøÞëçÚåÀùÝâø éëèĚøÛÞßèëÞøÚñèßx!%æÈæéèëøÚçøåòæùÜáåèðÞëåÞïÞåìèß regarding allegations of improper behaviour and employee ëÞêùâëÞÝÓáÞìÞÜáÚçàÞìæÞÚçøøáÚøøáÞÈçøÞëçÚåÀùÝâøÜèïÞëÚàÞ æÚøÞëâÚåâøòÚëÞùìÞÝâçøáÞÚùÝâøĚÞåÝðèëäèçøáÞâçÝâïâÝùÚå complaints. Further details of the operation of the Group’s was greater than in previous years and audits were carried out Auditor Appointment ÛùìâçÞììÞìÚÜëèììøáÞÆëèùéÚçÝøáÞìÞåèðÞëĚàùëÞìÝëâïÞøáÞ ÒéÞÚä˜ÔééèåâÜòÚçÝáÞåéåâçÞÜÚçÛÞßèùçÝâçøáÞĊÎùë ðâøáæèëÞâç˜ÝÞéøáÚçÚåòìâìÚÜëèììåÞàÚåÞçøâøâÞìÚçÝèéÞëÚøâçà In 2016, the Committee undertook a tender process to scope and depth of audit work. Any misstatement at or above Principles’ section. Throughout the year the Audit Committee ùçâøìÈçÚÝÝâøâèçâç#æÚçòéëèöÞÜø˜ÛÚìÞÝëÞïâÞðìðÞëÞ ÚééèâçøÚçÞðìøÚøùøèëòÚùÝâøèëßèëøáÞĚçÚçÜâÚåòÞÚëÞçÝâçà £0.4m was reported to the Committee. received updates on the volume of reports, key themes emerging also undertaken. 31 December 2017. The tender culminated in the appointment ÓáÞëÞðÞëÞçèìâàçâĚÜÚçøÜáÚçàÞìøáâìòÞÚëøèøáÞÜèïÞëÚàÞèß from these reports and the results of investigations undertaken. of PricewaterhouseCoopers LLP (‘PwC’) as external auditor In 2017, a total of 56 audit assignments, including three ÚçÝøáÞÚééèâçøæÞçøèß÷ÚóÚëìËËÏøèÚùÝâøøáÞçèç˜æÚøÞëâÚå the audit which stood at 68% of the Group’s revenue and 76% of ÄÚÜáòÞÚëøáÞìÞçâèëĚçÚçÜâÚåèéÞëÚøâèçÚåÚçÝßùçÜøâèçÚå unplanned audits, were undertaken by Internal Audit, covering entities within the Group. As a result, KPMG concluded its tenure áÞÚÝåâçÞéëèĚøÛÞßèëÞøÚñÓáâìÜèïÞëÚàÞðÚìÜèçìâÝÞëÞÝøèÛÞ æÚçÚàÞæÞçøèßøáÞÛùìâçÞììÞììÞåߘÜÞëøâßòÜèæéåâÚçÜÞðâøá "!YèßøáÞÆëèùéċìëÞïÞçùÞÚçÝ"YèßøáÞÆëèùéċìéëèĚø as the Group’s external auditor during the year and, further to ìùßĚÜâÞçøÛòøáÞÂèææâøøÞÞÓáÞÚùÝâøÜèïÞëÚàÞâìëÞěÞÜøâïÞ Group policies and procedures for the areas of the business before tax. The Committee received a ‘dashboard’ from the the approval of the Company’s shareholders at the 2017 AGM, of the long tail of smaller businesses within the Group that ùçÝÞëøáÞâëëÞìéèçìâÛâåâøòÚçÝÜèçĚëæøáÞÞñâìøÞçÜÞèßÚÝÞêùÚøÞ Head of Internal Audit at each of its meetings, detailing PwC was appointed as the Group’s external auditor for the year individually are not ‘material’ to the Group result. internal control systems throughout the year. The Committee progress against the agreed plan and identifying key trends ending 31 December 2017. PwC nominated Julian Jenkins as The PwC audit fee approved by the Audit Committee was ëÞïâÞðìÚçòÞñÜÞéøâèçìçèøÞÝâçøáâìÛèøøèæ˜ùéÞñÞëÜâìÞ ÚçÝĚçÝâçàìßëèæÈçøÞëçÚåÀùÝâøëÞéèëøìÚåèçàðâøáéëèàëÞììèç the audit partner responsible for the Group audit. In line with the x æÓáâìðÚìÜèçìøëùÜøÞÝÛèøøèæ˜ùéèçÚåèÜÚåÜùëëÞçÜò the resolution of actions agreed. Common themes emerging After considering these various inputs, the Committee was regulations on auditor rotation, the external audit contract will ÛÚìâìÚçÝðÚìÚììÞììÞÝâçåâàáøèßøáÞÚùÝâøðèëäëÞêùâëÞÝÛòøáÞ from Internal Audit reports were discussed and these able to provide assurance to the Board on the effectiveness be put out to tender at least every ten years. In addition, PwC agreed materiality level and scope. It was agreed as part of the discussions have informed the compilation of the 2018 Internal èßâçøÞëçÚåĚçÚçÜâÚåÜèçøëèåðâøáâçøáÞÆëèùéÚçÝèçøáÞ ðâååÛÞëÞêùâëÞÝøèëèøÚøÞøáÞÚùÝâøéÚëøçÞëÞïÞëòĚïÞòÞÚëì audit tender process and updated for changes in scope that Audit plan. When necessary Internal Audit uses external ÚÝÞêùÚÜòèßøáÞÆëèùéċìÛëèÚÝÞëâçøÞëçÚåÜèçøëèåìòìøÞæì ðÞëÞëÞêùâëÞÝÝùëâçàøáÞòÞÚëÓáÞßÞÞÚééëèïÞÝÛò÷ÚóÚëìßèë èùøìèùëÜÞÝÚùÝâøèëìøèìùééåÞæÞçøÈçøÞëçÚåÀùÝâøèçÚçÚݘáèÜ Auditor Transition and 2017 Audit Plan øáÞÚùÝâøèßøáÞçèç˜æÚøÞëâÚåÞçøâøâÞìðÚìx æëÞìùåøâçàâçÚ basis. The outsourcing process provides valuable learning ÏðÂċìøëÚçìâøâèçéåÚçßèÜùìÞÝèçÞñâøâçàøáÞçèç˜ÚùÝâøìÞëïâÜÞì combined fee with PwC of £1.7m, compared to £2.0m paid to ÈçøÞëçÚåÀùÝâø opportunities and we expect to continue to use outsourcing that PwC provided to the Group, and working with people from KPMG LLP in 2016. The reduction in fee follows from the tender in specialist areas and geographies in the future. Where control across the business to build on their understanding of the Group The Group’s Internal Audit function operates on a global basis ÚçÝøáÞùøâåâìÚøâèçèßøðèÚùÝâøĚëæìÓáÞÂèææâøøÞÞçèøÞÝøáÞ øáëèùàáéëèßÞììâèçÚååòêùÚåâĚÞÝÚçÝÞñéÞëâÞçÜÞÝâçÝâïâÝùÚå âììùÞìèëèøáÞëéëèÛåÞæìÚëÞěÚààÞÝÛòøáÞĚÞåÝðèëäøáÞòÚëÞ ÚçÝëÞĚçÞøáÞéåÚççÞÝÚééëèÚÜáøèøáÞÚùÝâøÊÞòÞåÞæÞçøìèß ruling by the Securities Exchange Board of India regarding the members located around the world, including an auditor with ëÞÜèëÝÞÝâçÚåâïÞðÞۘÛÚìÞÝÝÚøÚÛÚìÞâçøèðáâÜáæÚçÚàÞæÞçø the transition plan included: meeting with senior management, prohibition placed on PwC network companies performing specialist IT knowledge. They report to the Head of Internal ÚçÝèéÞëÚøâèçÚåÞçøâøâÞìÚëÞëÞêùâëÞÝøèëÞéèëøéëèàëÞìì local management, key functional heads and wider business audits of listed entities for two years from 1 January 2018. The Audit, based in London, who in turn reports directly to the against audit exceptions. In this way, Internal Audit monitors ìøÚäÞáèåÝÞëìøèàÚâçâçìâàáøâçøèøáÞÛùìâçÞììæÞÞøâçàðâøá Committee is watching developments on this matter carefully in Chairman of the Audit Committee. øáÞéëèàëÞììÚçÝÚÝÞêùÚÜòèßøáÞëÞæÞÝâÚøâèçìøÞéìøÚäÞç ÊÏ÷ÆÚçÝéÞëßèëæâçàÚÝÞøÚâåÞÝëÞïâÞðèßøáÞâëðèëäâçàéÚéÞëì the context of the Group’s two listed Indian subsidiaries Foseco Additionally, regular meetings are held with each business unit ÚøøÞçÝâçàÂèææâøøÞÞæÞÞøâçàìéëâèëøèøáÞßèëæÚåÚééèâçøæÞçø India Limited and Vesuvius India Limited. During the year the approach to internal audit was updated, ÏëÞìâÝÞçøøèÝâìÜùììøáÞéëèàëÞììÚàÚâçìøáâàá˜éëâèëâøòâììùÞì ùçÝÞëøÚäâçàÚëâìäÚììÞììæÞçøøèâÝÞçøâßòìâàçâĚÜÚçøÚçÝ with audit activities subdivided into two different categories: ÂèçìÞêùÞçøåòøáÞÂèææâøøÞÞáÚìèïÞëìâàáøèßÚééëèéëâÚøÞÚçÝ ÞåÞïÚøÞÝÚùÝâøëâìäìÚçÝßèëæùåÚøâçàÚçÝÜèææùçâÜÚøâçàÚ ÈçÝÞéÞçÝÞçÜÞÚçÝÎÛöÞÜøâïâøò ÂèæéåâÚçÜÞ–Âèçøëèå›Ċ–ÂċœÚçÝÄßßÞÜøâïÞçÞìì–ÄßĚÜâÞçÜò timely actions taken by the responsible management. The Audit detailed audit plan. During the year PwC provided regular ›ĊĖÄċœ–ÂÚùÝâøÚÜøâïâøâÞìßèÜùìÞçøâëÞåòèçâçøÞëçÚåĚçÚçÜâÚå The Committee is responsible for safeguarding the Committee also involved senior management as necessary to updates to the Committee on the status and progress of the control and key Board compliance issues, whereas the E&E independence and objectivity of the external auditors in éëèïâÝÞÚçùéÝÚøÞÚàÚâçìøáâàá˜éëâèëâøòÚÜøâèçìÚçÝÈçøÞëçÚå auditor transition plan, and valuable insights into the Group’s audit activities examine a broader constituency of business order to ensure the integrity of the external audit process. In

ÀùÝâøéëèïâÝÞÝßèååèð˜ùéëÞïâÞðìÚìëÞêùâëÞÝøèÞçìùëÞøáÚø Governance audit environment from the results of their review. discharging this responsibility during 2017, the Committee: performance issues. Characterising the audit process in this way there was clarity on the responsibility for delivery of solutions to ÞçÚÛåÞìøáÞÀùÝâøÂèææâøøÞÞøèÜèçÜÞçøëÚøÞæèëÞìéÞÜâĚÜÚååò øáÞÚùÝâøĚçÝâçàìÈçìâøùÚøâèçìðáÞëÞÚùÝâøĚçÝâçàìëÞêùâëÞÝ In February 2018, the Audit Committee held a preliminary  ÒèùàáøëÞàùåÚëÜèçĚëæÚøâèçßëèæøáÞâçÜùæÛÞçøÞñøÞëçÚå æÞÞøâçàèçòÞÚë˜ÞçÝâììùÞìâçÚÝïÚçÜÞèßøáÞĚçÚåâìÚøâèçèß on key control issues for resolution, with reporting focused on åèçàÞë˜øÞëæìèåùøâèçìøáÞÂèææâøøÞÞèïÞëìÚðøáÞéëèÜÞììßèë auditor that it considered itself to be independent of the øáÞĚçÚçÜâÚåìøÚøÞæÞçøìâçÞÚëåò÷ÚëÜáÃùëâçàøáÞòÞÚëéëâïÚøÞ C&C audit activity, and more general commentary provided ÞçìùëâçàøáÚøÚÝÞêùÚøÞæâøâàÚøâèçÚÜøâèçìðÞëÞøÚäÞçðáâåÞ Company in its own professional judgement, and within sessions were held with PwC without management being on the outcome of E&E audit activities. The detailed outcomes permanent solutions are pursued. the context of applicable professional standards of E&E audits are then used to engage management on the present, covering reporting and control issues in the context of ÛëèÚÝÞëéÞëßèëæÚçÜÞâììùÞìâÝÞçøâĚÞÝÛòøáÞÈçøÞëçÚåÀùÝâø During the year, a review was undertaken of the effectiveness the resourcing of the Group Finance team. The Chairman of the > Evaluated all the relationships between the external auditor øÞÚæÃùëâçàøáÞòÞÚëøáÞßëÞêùÞçÜòèßæÞÞøâçàìÛÞøðÞÞçøáÞ of the Internal Audit function. The review, which canvassed the Audit Committee met on a number of occasions with PwC to and the Group, including compliance with the Group’s policy ÇÞÚÝèßÈçøÞëçÚåÀùÝâøÚçÝøáÞÁùìâçÞììÔçâøÏëÞìâÝÞçøìðÚì ïâÞðìèßÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÚçÝìÞçâèëæÚçÚàÞæÞçø æèçâøèëøáÞéëèàëÞììèßøáÞÚùÝâøÚçÝÝâìÜùììêùÞìøâèçìÚìøáÞò on the employment of former employees of the external also increased, to ensure that engagement on the resolution ÜèçĚëæÞÝøáÚøøáÞÈçøÞëçÚåÀùÝâøßùçÜøâèçÜèçøâçùÞÝøèèéÞëÚøÞ ÚëèìÞÓáÞìøëÞçàøáèßøáÞĚçÚçÜÞøÞÚæìÚÜëèììøáÞÆëèùéðÚì auditor, to determine whether these impaired, or appear to of issues is clearly understood at all levels of the business and to a high standard, with a good understanding of the business ÚåìèÜèçìâÝÞëÞÝÈçøáÞìÞìÞììâèçìÏðÂÜèçĚëæÞÝøáÚøâøìðèëä impair, the auditor’s independence and an appropriate scope. Respondents noted the high degree had not been constrained in any way and that it was able to responsibility for remediation taken accordingly. > Reviewed compliance against the policy on the provision of of energy, professionalism and independence exhibited by the exercise appropriate professional scepticism and challenge The Committee received, considered and approved the 2017 çèç˜ÚùÝâøìÞëïâÜÞìÛòøáÞÞñøÞëçÚåÚùÝâøèë function, and welcomed the steps that had been taken to throughout the audit process. ÈçøÞëçÚåÀùÝâøéåÚçðáâÜáðÚìÜèçìøëùÜøÞÝùìâçàÚëâìä˜ÛÚìÞÝ improve the interface with the management of each of the  ÑÞïâÞðÞÝÝÞøÚâåìèßøáÞçèç˜ÚùÝâøìÞëïâÜÞìéëèïâÝÞÝÛòøáÞ The Independent Auditors’ Report provided by PwC on pages approach to cover the Group’s control environment. The plan business units. external auditor and associated fees was based on the premise that all operating units are internally 124 to 129 includes PwC’s assessment of the risks of material ÚùÝâøÞÝÚøåÞÚìøèçÜÞâçÞïÞëòøáëÞޘòÞÚëéÞëâèÝðáâåìø Having considered the work of the Internal Audit function misstatement in the accounts. These risk areas are discussed ÓáÞÂèææâøøÞÞçèøÞÝøáÚøâçÒðÞÝÞçÚçèç˜éÞëæâøøÞÝìÞëïâÜÞ maintaining a focus on smaller operating units. A third of during 2017, including progress against the 2017 Internal âçøáÞìâàçâĚÜÚçøâììùÞìÚçÝæÚøÞëâÚåöùÝàÞæÞçøìÜèææÞçøì had been performed by PwC during the transition process, operating units are now subject to internal audit twice in every ÀùÝâøéåÚçøáÞêùÚåâøòèßëÞéèëøìéëèïâÝÞÝøèøáÞÂèææâøøÞÞ above. The report also summarises the scope, coverage and being supporting compliance in respect of payroll taxes. Given øáëÞޘòÞÚëéÞëâèÝÚçÝÈçøÞëçÚåÀùÝâøÚççùÚååòÚùÝâøìÞÚÜá and the results of the review of the function’s effectiveness, materiality levels applied by PwC in its audit. As part of the audit the de minimis nature of the fee incurred and balances involved, èßøáÞåÚëàÞèéÞëÚøâçàÞçøâøâÞìåèÜÚøÞÝâçÆÞëæÚçòøáÞÔÒ the Committee concluded that the Internal Audit function planning process and based on a detailed risk assessment, the the Committee concluded that the conduct of this work had not China, Mexico and Brazil. During the year the Committee also operated effectively during 2017. ÂèææâøøÞÞÚàëÞÞÝÚæÚøÞëâÚåâøòĚàùëÞèßx#"æßèëÆëèùé affected PwC’s independence. ĚçÚçÜâÚåëÞéèëøâçàéùëéèìÞìðáâÜáâìáâàáÞëøáÚçåÚìøòÞÚë As a result of its review the Committee concluded that PwC (£4.0m) and, in line with similar groups, is set at 5% of headline remained appropriately independent. Vesuvius plc 92 Annual Report and Accounts 2017 93

Audit Committee continued Nomination Committee

Dear shareholder, Committee Members On behalf of the Nomination Committee, I am pleased to John McDonough CBE (Committee Chairman) Non-audit Services  ÓáÞÞßßÞÜøâïÞçÞììèßøáÞâëëÞåÚøâèçìáâéðâøáøáÞÂèææâøøÞÞ present the Nomination Committee Report for 2017. Christer Gardell Vesuvius operates a policy for the approval of non-audit ðâøáæÚçÚàÞæÞçøÚçÝðâøáÈçøÞëçÚåÀùÝâø The primary responsibility of the Nomination Committee is to Hock Goh services. This was revised in 2016, with the new policy applying focus on Board succession planning to ensure that the Board is Jane Hinkley  ÅÞÞÝÛÚÜäßëèæøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚçÝÆëèùé øèøáÞÚùÝâøèßøáÞĚçÚçÜâÚåòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë#ÚçÝ made up of individuals with the appropriate drive, abilities and Douglas Hurt ÅâçÚçÜâÚåÂèçøëèååÞëèçøáÞêùÚåâøòèßåèÜÚåÚùÝâøøÞÚæì ßèëĚçÚçÜâÚåòÞÚëìøáÞëÞÚßøÞëÀÜèéòâìÚïÚâåÚÛåÞøèïâÞðèçøáÞ experience to lead the Company in the delivery of its strategy. Holly Koeppel (appointed 3 April 2017) ĊÈçïÞìøèëìÂèëéèëÚøÞÆèïÞëçÚçÜÞċìÞÜøâèçèßøáÞÂèæéÚçòċì ÓáÞÂèææâøøÞÞÚåìèÜèçìâÝÞëÞÝøáÞÅÑÂċìÀùÝâøÐùÚåâøò In 2017 the Committee presided over the appointment of a new ðÞÛìâøÞðððïÞìùïâùìÜèæÆëèùéÜèæéÚçâÞìÚëÞçèø ÈçìéÞÜøâèçèßÏðÂéùÛåâìáÞÝâçÉùçÞ# Chief Executive as part of a planned succession process for The Nomination Committee éÞëæâøøÞÝøèùìÞøáÞÞñøÞëçÚåÚùÝâøèëßèëÚçòčéëèáâÛâøÞÝ François Wanecq, who retired from his role as Chief Executive at ÀéëèÜÞììøèßèëæÚååòÚììÞììÏðÂċìéÞëßèëæÚçÜÞâçëÞìéÞÜø The Nomination Committee is made up of myself as Chairman çèç˜ÚùÝâøìÞëïâÜÞìĎÚììéÞÜâĚÞÝÛòøáÞÔÊÅâçÚçÜâÚåÑÞéèëøâçà the end of August 2017. We also appointed a new independent èßøáÞ#ĚçÚçÜâÚåòÞÚëðâååÛÞÜèæéåÞøÞÝßèååèðâçàøáÞ of the Company and any three of the Non-executive Directors. ÂèùçÜâåċì›ÅÑÂċìœÑÞïâìÞÝÄøáâÜÚåÒøÚçÝÚëÝ"ùçåÞìììùÛöÞÜø Non-executive Director, Holly Koeppel, in April 2017, who ÜèæéåÞøâèçèßøáÞâëòÞÚë˜ÞçÝðèëäøÚäâçàÚÜÜèùçøèßøáÞ During the year I continued as Chairman of the Committee, øèÚéÞëæâøøÞÝÝÞëèàÚøâèçÓáÞëÞìøëâÜøâèçìÛëèÚÝåòéëèáâÛâø strengthens the Board in terms of its knowledge, skills and àùâÝÚçÜÞßèëÚùÝâøÜèææâøøÞÞìéëÞéÚëÞÝÛòøáÞÅÑÂÀìéÚëø though I would not act as Chairman if the Committee was ÞñøÞëçÚåÚùÝâøèëìċâçïèåïÞæÞçøâçøÚñìÞëïâÜÞìÚçòìÞëïâÜÞì experience, replacing Nelda Connors who stepped down èßøáâìëÞïâÞðÏðÂðâååÛÞÚìäÞÝøèâÝÞçøâßòÚçòâììùÞìøáÞò considering the appointment of my successor. In that case, the øáÚøâçïèåïÞéåÚòâçàÚéÚëøâçæÚçÚàÞæÞçøÝÞÜâìâèç˜æÚäâçà from the Board in late 2016. ÜèçìâÝÞëÜèùåÝéèìÞÚëâìäøèÚùÝâøêùÚåâøò Chairman would be an appropriate Non-executive Director. éëÞéÚëâçàÚÜÜèùçøâçàëÞÜèëÝìÝÞìâàçâçàèëâæéåÞæÞçøâçà The Committee reviews the current and future needs of the The Company Secretary is Secretary to the Committee. âçøÞëçÚåÜèçøëèåëâìäæÚçÚàÞæÞçøìÞëïâÜÞìèëĚçÚçÜâÚåìòìøÞæì ÈçÚçâçâøâÚåÚììÞììæÞçøèßÏðÂċìéÞëßèëæÚçÜÞÝùëâçàøáÞâëĚëìø Board and its Committees on an ongoing basis. In line with this, Members’ biographies are set out on pages 50 and 51. ÜÞëøÚâçÇÑìÞëïâÜÞìÚçÝèøáÞëåÞàÚåâçïÞìøæÞçøÚçÝìáÚëޘ òÞÚëèßÚùÝâøøáÞÂèææâøøÞÞÜèçÜåùÝÞÝøáÚøÏðÂáÚÝéëèïâÝÞÝ during 2017, the Committee reviewed the tenure of all of the ÝÞÚåâçàìÞëïâÜÞìÓáÞÞñøÞëçÚåÚùÝâøèëÜÚçÛÞâçïâøÞÝøèéëèïâÝÞ ÚçÞßßÞÜøâïÞÚùÝâøßèë#ÓáÞòáÚÝÞñáâÛâøÞÝÚàèèÝ Directors and discussed future Board rotation. çèç˜ÚùÝâøìÞëïâÜÞìðáâÜáâçâøìéèìâøâèçÚìÞñøÞëçÚåÚùÝâøèëâø ùçÝÞëìøÚçÝâçàèßøáÞÆëèùéċìÛùìâçÞììÞìÚçÝâçøÞëçÚåÜèçøëèå Key Activities during the Year æùìøèëâìÛÞìøéåÚÜÞÝøèùçÝÞëøÚäÞÚçÝðáâÜáÝèçèøâæéÚÜø ÞçïâëèçæÞçø›ÛÚìÞÝèçÚìâàçâĚÜÚçøéëèÜÞììèßÞçàÚàÞæÞçø In additon, as part of the annual corporate governance > Completion of Chief Executive recruitment: The Committee ÚùÝâøèëèÛöÞÜøâïâøòèëâçÝÞéÞçÝÞçÜÞÀååÚùÝâø˜ëÞåÚøÞÝÚçÝ ðâøáøáÞÛùìâçÞììÚìéÚëøèßÚùÝâøøëÚçìâøâèçœÚçÝáÚÝéëèïâÝÞÝ review conducted each year, the Committee examines the completed the Chief Executive succession process which éÞëæâììâÛåÞçèç˜ÚùÝâøìÞëïâÜÞìéëèéèìÞÝøèÛÞÜÚëëâÞÝèùøßèë ìèùçÝßÞÞÝÛÚÜäøèøáÞÂèææâøøÞÞèçøáÞéëèÝùÜøèßøáÞâë independence of the Board and the balance of skills, and culminated in the selection and recommended appointment ÚçòÆëèùéÜèæéÚçòðèëåÝðâÝÞÛòøáÞÞñøÞëçÚåÚùÝâøèëæùìøÛÞ øëÚçìâøâèçðèëäÓáÞòáÚÝÞìøÚÛåâìáÞÝÞßßÞÜøâïÞðèëäâçà development needs, of Board members. The output from this of Patrick André as Chief Executive, succeeding François éëޘÚééëèïÞÝÛòøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëðáèøáÞëÞÚßøÞë ëÞåÚøâèçìáâéìðâøáøáÞÂèææâøøÞÞÚçÝðâøáæÚçÚàÞæÞçøÚçÝ éëèÜÞììðÚìùìÞÝøèÝÞĚçÞøáÞëÞÜëùâøæÞçøëÞêùâëÞæÞçøìßèëøáÞ Wanecq on his retirement from the Company ðâååëÞßÞëæÚøøÞëìøèÛÞßùëøáÞëÚééëèïÞÝÛòøáÞÂáÚâëæÚçèß áÚÝÞñáâÛâøÞÝÚçÚééëèéëâÚøÞåÞïÞåèßéëèßÞììâèçÚåìÜÞéøâÜâìæ çÞðÃâëÞÜøèëìðâøáÞÚÜáøáÞçáÚïâçàÚöèÛìéÞÜâĚÜÚøâèçÝëÚðç øáÞÀùÝâøÂèææâøøÞÞèëøáÞßùååÀùÝâøÂèææâøøÞÞÛÞßèëÞÚç ÚçÝëèÛùìøÜáÚååÞçàÞèßæÚçÚàÞæÞçøċìöùÝàÞæÞçøìÚì up to target the attributes required. > Non-executive appointment: The Committee led the search ÞçàÚàÞæÞçøâìÚàëÞÞÝÀçòÚììâàçæÞçøéëèéèìÞÝøèÛÞÜÚëëâÞÝ ÚééëèéëâÚøÞÓáÞÂèææâøøÞÞáÚìøáÞëÞßèëÞëÞÜèææÞçÝÞÝøè for a new Non-executive Director resulting in the selection The Committee’s succession planning activities do not èùøÛòøáÞÞñøÞëçÚåÚùÝâøèëæùìøÚåìèáÚïÞÜåÞÚëÞÝøáÞÞñøÞëçÚå øáÞÁèÚëÝøáÚøÏðÂÛÞëÞÚééèâçøÞÝßèë$ÈøÜèçĚëæìøáÚøâøì and recommended appointment of Holly Koeppel exclusively relate to the Board, but also encompass the ÚùÝâøèëċìèðçâçøÞëçÚåéëޘÚééëèïÚåéëèÜÞììøèÜèçĚëæøáÞ ëÞÜèææÞçÝÚøâèçâìßëÞÞßëèæøáÞâçěùÞçÜÞèßÚçòøáâëÝéÚëøò senior management levels immediately below the Board. > Board composition: The Committee reviewed the skills, ĚëæċìÞøáâÜÚåÚÛâåâøòøèÝèøáÞðèëä and that there are no contractual restrictions on the choice of The Committee is working to support and encourage the knowledge and experience required for the Board to ÚùÝâøèëÀëÞìèåùøâèçéëèéèìâçàøáÞëÞÚééèâçøæÞçøèßÏðÂâì ÈçéëÚÜøâÜÞøáÞÆëèùéÝâÝçèøìÞÞäøèÞçàÚàÞÏðÂßèëçèç˜ÚùÝâø growth of a consistent pool of talent able to step up to the top continue to function effectively, and evaluated the current âçÜåùÝÞÝâçøáÞçèøâÜÞèßÀÆ÷ßèë$ Governance ìÞëïâÜÞìÝùëâçà#ùçåÞììøáÞëÞðÞëÞÜèæéÞååâçàÚÝïÚçøÚàÞì roles in future years. The oversight of senior management Board composition against an assessment of these future øèÝèâçàìèÈç#øáÞßÞÞìßèëçèç˜ÚùÝâøìÞëïâÜÞìéÚòÚÛåÞøè succession planning and talent development will be a key area business needs Audit Committee Evaluation ÏðÂÚæèùçøÞÝøèxæìâæâåÚëøèøáÞçèç˜ÚùÝâøßÞÞìèßxæ for emphasis in 2018. > Board succession: The Committee reviewed the ongoing éÚòÚÛåÞøèÊÏ÷ÆËËÏåÚìøòÞÚëÓáÞ#ßÞÞìëÞéëÞìÞçøéÚòæÞçø ÓáÞÀùÝâøÂèææâøøÞÞċìéÞëßèëæÚçÜÞðÚìÞïÚåùÚøÞÝÚìéÚëø During 2017 the Board formalised its approach to diversity, requirements for Board rotation to maintain the correct skills, ßèëÚììùëÚçÜÞìÞëïâÜÞìëÞåÚøÞÝøèøáÞëÞïâÞðèßøáÞÂèæéÚçòċì èßøáÞèïÞëÚååÞñøÞëçÚååòßÚÜâåâøÚøÞÝÁèÚëÝÚçÝÂèææâøøÞÞ and approved a Board Diversity Policy. In line with this, the experience and diversity at Board level áÚåߘòÞÚëĚçÚçÜâÚåìøÚøÞæÞçøìÚçÝêùÚëøÞëåòëÞïâÞðìÚçÝøÚñ éÞëßèëæÚçÜÞÞïÚåùÚøâèçðáâÜáâìÝÞìÜëâÛÞÝâçÝÞéøáèçéÚàÞ Committee continues to consider the mix of skills, experience > Directors’ elections: The Committee considered the Directors’ ÚÜÜèùçøìâçÈçÝâÚ›ëÞêùâëÞÝÛòëÞàùåÚøâèçœÓÚñÜèæéåâÚçÜÞÚçÝ $ÓáÞéÞëßèëæÚçÜÞèßøáÞÂèææâøøÞÞðÚìëÚøÞÝáâàáåòðâøá and knowledge required on the Board, and to promote diversity annual re-election at the 2017 AGM èøáÞëçèç˜ÚùÝâøìÞëïâÜÞìðÞëÞßèëøáÞéëÞïâèùìåòæÞçøâèçÞÝ âøìèïÞëìâàáøìÞÞçøèÛÞèßÚïÞëòáâàáìøÚçÝÚëÝÀçùæÛÞëèß not only on the Board but also throughout the wider business. ÒðÞÝâìáìÞëïâÜÞÚçÝøáÞøëÚçìâøâèçèßÞñéÚøëâÚøÞøÚñìÞëïâÜÞìøè ÚëÞÚìèßßèÜùìáÚÝÛÞÞçâÝÞçøâĚÞÝÛòøáÞ"ÞïÚåùÚøâèçÚçÝâø > Committee evaluation: The Committee reviewed its the new outsourced provider. ðÚìßÞåøøáÚøøáÞìÞáÚÝÚååÛÞÞçæÚçÚàÞÝÞßßÞÜøâïÞåòâç# Yours sincerely performance and effectiveness during 2017 ÓáÞøëÚçìâøâèçèßøáÞÞñøÞëçÚåÚùÝâøèëáÚÝéëèàëÞììÞÝìæèèøáåò Effectiveness and Reappointment of PwC for 2018 John McDonough CBE Chairman ÚçÝøáÞâçìøâøùøâèçÛòøáÞÀùÝâøÂèææâøøÞÞÂáÚâëæÚçèßæèëÞ ÓáÞÂèææâøøÞÞÚçÝøáÞÁèÚëÝÚëÞÜèææâøøÞÝøèæÚâçøÚâçâçà Role and Responsibilities ëÞàùåÚëæÞÞøâçàìðâøáæÚçÚàÞæÞçøèùøìâÝÞßèëæÚåÂèææâøøÞÞ øáÞáâàáêùÚåâøòèßøáÞÞñøÞëçÚåÚùÝâøéëèÜÞììÓáëèùàáèùøøáÞ æÞÞøâçàìáÚÝÞçáÚçÜÞÝøáÞěèðèßâçßèëæÚøâèçðâøáøáÞ The Nomination Committee’s foremost priorities are to ensure òÞÚëøáÞÂèææâøøÞÞÚììÞììÞÝøáÞéÞëßèëæÚçÜÞèßøáÞÞñøÞëçÚå ÂèææâøøÞÞÓáÞĊÝÞÞéÝâïÞċâçâøâÚøâïÞáÚÝèçÜÞÚàÚâçéëèïÞÝ that the Company has the best possible leadership, maintains ÚùÝâøèëøÚäâçàâçøèÜèçìâÝÞëÚøâèç ùìÞßùåâçéëèïâÝâçàøáÞÂèææâøøÞÞðâøáÝÞøÚâåÞÝâçßèëæÚøâèç a clear plan for orderly Executive and Non-executive Director  ÓáÞêùÚåâøòèßëÞéèëøìéëèïâÝÞÝøèøáÞÂèææâøøÞÞÚçÝøáÞ èçäÞòøèéâÜìÚçÝðèùåÝÛÞÜèçøâçùÞÝâç$ÚçÝøáÞ succession, and cultivates the appropriate skills, experience and êùÚåâøòèßâììùÞìÚçÝÜáÚååÞçàÞìëÚâìÞÝðâøáøáÞÂèææâøøÞÞ âæéåÞæÞçøÚøâèçèßÚçÚÝÝâøâèçÚåÀùÝâøÂèææâøøÞÞæÞÞøâçà diversity in the Board’s overall composition. Its primary focus is ÚçÝðâøáæÚçÚàÞæÞçøÚÜëèììøáÞÆëèùé ÞÚëåòâçøáÞòÞÚëÞçÝÜòÜåÞáÚÝÛÞÞçéèìâøâïÞåòëÞÜÞâïÞÝÚçÝ therefore on the strength of the Board, for which appointments ðèùåÝÛÞÜèçøâçùÞÝ are made on merit, against objective criteria, selecting the best  ÓáÞåÞïÞåèßâçìâàáøÞñáâÛâøÞÝâçøáÞßÞÞÝÛÚÜäøáÞòéëèïâÝÞÝ candidate for the post. The Nomination Committee advises the as part of the transition process ÎçÛÞáÚåßèßøáÞÀùÝâøÂèææâøøÞÞ Board on appointments, retirements and resignations from the  ÷ÚçÚàÞæÞçøċìÚììÞììæÞçøèßøáÞøëÚçìâøâèçéëèÜÞìì Douglas HurtÂáÚâëæÚçÀùÝâøÂèææâøøÞÞ Board and its Committees.

 ÓáÞâëÝÞĚçâøâèçÚçÝÜèæéåÞøâèçèßøáÞ#ÚùÝâøéåÚç $ÅÞÛëùÚëò$

 ÓáÞâëéÞëßèëæÚçÜÞÝùëâçàøáÞâëëÞïâÞðèßøáÞ#áÚåß year results Vesuvius plc 94 Annual Report and Accounts 2017 95

Nomination Committee continued

The Committee operates under formal terms of reference engaged external assistance to benchmark the skills and governance review conducted during the year, the Committee Committee Evaluation ðáâÜáðÞëÞëÞïâÞðÞÝÚçÝÜèçĚëæÞÝÝùëâçàøáÞòÞÚë ÞñéÞëâÞçÜÞëÞêùâëÞÝßèëøáÞÂáâÞßÄñÞÜùøâïÞëèåÞÝÞĚçâçàøáÞ examined the independence of the Board and the balance of The Committee’s activities were part of the externally facilitated The terms of reference are available on the Group’s website issues fundamental to the Vesuvius role, given the Group’s skills, and development needs of Board members. Based on evaluation of Board effectiveness during the year. The Committee www.vesuvius.com. business, scale, geographical diversity, performance and this analysis in 2016, the Committee concluded that the Board was considered to have performed effectively over the past the stage of its development. The search was conducted ðèùåÝÛÞçÞĚøßëèæøáÞÚééèâçøæÞçøèßÚçÞðÍèç˜ÞñÞÜùøâïÞ The Committee and its members are empowered to obtain year and the oversight of the Chief Executive succession process globally and a long-list of potential appointees was produced, Director with expert knowledge of the industrial sector, together outside legal or other independent professional advice at the was commented on favourably. Priorities for the Committee including external, internal, international and female with a high degree of commercial acumen and global markets cost of the Company in relation to its deliberations. These rights going forward include Board rotation over the longer term, candidates. The Committee reviewed the long-list and a äçèðåÞÝàÞÓáÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÞÚëÜáâÝÞçøâĚÞÝ were not exercised during the year. The Committee may also as well as succession planning and talent development for shortlist of candidates for interview was drawn up for the above was commenced on this basis. In addition, the secure the attendance at its meetings of any employee or other senior management. ëèåÞÛÚìÞÝùéèçøáÞèÛöÞÜøâïÞÜëâøÞëâÚâÝÞçøâĚÞÝÚøâçÜÞéøâèç Nomination Committee considered the future needs of the parties it considers necessary. The Chairman, and the Chairman of the Remuneration business, its corporate strategy, culture and direction in On behalf of the Nomination Committee Committee interviewed an initial short-list of candidates, assessing its requirements of a new Chief Executive and used John McDonough CBE Chairman, Nomination Committee Process for Board Appointments with a shorter list of candidates then interviewed by the this analysis to inform the recruitment process. The Committee The Committee follows formal, rigorous and transparent Senior Independent Director and again by the Chairman. recognised that the business needed an individual who had 28 February 2018 procedures for the appointment of new Directors. When ÓáÞøðèĚçÚåéëÞßÞëëÞÝÜÚçÝâÝÚøÞìøáÞçæÞøðâøáÚååøáÞ a proven track record of enhanced strategic thinking and considering a Board appointment, the Nomination Committee other Board members. Finally, detailed external references managing complexity, who also excelled at managing and ÝëÚðìùéÚìéÞÜâĚÜÚøâèçßèëøáÞëèåÞøÚäâçàâçøèÜèçìâÝÞëÚøâèç were taken up and following this the Committee made formal developing relationships with a cross-section of people. the balance of skills, knowledge and experience of its existing recommendations to the Board for the appointment of members, the diversity of the Board, the independence of Patrick André as the new Chief Executive. Patrick André was Diversity continuing Board members, and the ongoing requirements and supported in undertaking due diligence on the Company All Directors have served at a very senior level in global anticipated strategic developments of the Group. The search in areas not connected to his previous role as President organisations, have international experience across a variety of process is then able to focus on appointing a candidate with Flow Control. industries, and most have spent a considerable amount of time the necessary attributes to enhance the Board’s performance. Non-executive Director resident outside the UK. The Nomination Committee believes ÓáÞÂèææâøøÞÞùìÞìøáÞìÞëïâÜÞìèßìÞÚëÜáĚëæìøèâÝÞçøâßò that diversity underpins the successful operation of the Board. ÚééëèéëâÚøÞÜÚçÝâÝÚøÞìÞçìùëâçàøáÚøÚçòìÞåÞÜøÞÝĚëæâìçèø The search was conducted globally and a long-list of potential It recognises that this is a key ingredient in creating a balanced âçÚçòðÚòÜèçěâÜøÞÝâçøáÞÝÞåâïÞëòèßâøìëèåÞÈçÚÝÝâøâèçøáÞ appointees was produced by Spencer Stuart. The Committee culture for discussions and minimising ‘group-think’, and ÂèææâøøÞÞðâååèçåòùìÞøáèìÞĚëæìøáÚøáÚïÞÚÝèéøÞÝøáÞ reviewed the long-list and a short-list of candidates for interview continues with its policy to review the requirements for different Voluntary Code of Conduct addressing gender diversity and ðÚìÝëÚðçùéÛÚìÞÝùéèçøáÞèÛöÞÜøâïÞÜëâøÞëâÚâÝÞçøâĚÞÝÚø skills, experience, background and gender in respect of the best practice in search assignments. inception. The Chairman and the Chief Executive interviewed the short listed candidates, and the preferred candidate then Board’s composition. During the year, the Board formalised its During 2017, the Committee oversaw a selection process to met with all other Board members. Detailed external references approach to diversity, and approved a Board Diversity Policy, identify a new Chief Executive to succeed François Wanecq were taken up and, following this, the Committee made a details of which are set out on page 80. The Committee will on his retirement from the Company, and the ongoing search formal recommendation to the Board for the appointment of continue to consider the mix of skills, experience and knowledge

for a new Non-executive Director, following Nelda Connors’ Holly Koeppel as a new Non-executive Director. Holly Koeppel required on the Board, and promote diversity not only on the Governance retirement from the Board in 2016. The Committee reviewed was supported in undertaking her own due diligence on the Board but also throughout the wider business. the skills and attributes required for each role, and agreed Company and meeting with its advisers. She was also required âçÝâïâÝùÚåöèÛìéÞÜâĚÜÚøâèçìÓáÞÂèææâøøÞÞùøâåâìÞÝøáÞ øèÝÞæèçìøëÚøÞøáÚøìáÞáÚÝìùßĚÜâÞçøøâæÞÚïÚâåÚÛåÞøèÝÞïèøÞ Senior Management Succession services of specialist recruitment agencies to search for suitable øèøáÞëèåÞÚçÝøèâÝÞçøâßòÚçòéèøÞçøâÚåÜèçěâÜøìèßâçøÞëÞìøÍè During the year, the Committee’s succession planning activities candidates – Korn Ferry to identify prospective candidates ÜèçěâÜøìðÞëÞâÝÞçøâĚÞÝ did not exclusively relate to the Board, but continued to for the Chief Executive role, and Spencer Stuart to search for encompass the senior management levels immediately below a new Non-executive Director. Both agencies have adopted Following their appointment, the Committee has continued to the Board, aiming to support and encourage the growth of a the Voluntary Code of Conduct, and neither have any monitor the development and integration onto the Board of the consistent pool of talent able to step up to the top roles in future other connection with the Group other than in respect of two new Directors. Holly Koeppel and Patrick André both years. Consequently, the Committee continued to monitor the management recruitment work undertaken during normal undertook a full induction programme and have continued to execution of development plans for the Group Executive trading activities. Each agency was selected for their gain insight into the business and meet executives throughout Committee and supported the Board in understanding the assignment following a review of potential agencies based the organisation. process for the development of high potentials throughout on their skills, expertise and price. Board Composition the business. The Board met key executives throughout the Chief Executive Group to gain a greater understanding of the breadth and On an ongoing basis, the Committee reviews the current and As part of the Group’s ongoing senior management succession depth of management talent. This process included a series of ßùøùëÞçÞÞÝìèßøáÞÁèÚëÝÚçÝâøìÂèææâøøÞÞì™ëÞěÞÜøâçàèç planning processes, a detailed independent review of internal presentations to the Board by business unit, functional and the balance of skills and experience of current Directors, candidates was undertaken, to consider candidates for geographical heads providing the basis for a more informed and comparing this against the Board’s list of key skills. succession to the role of Chief Executive, with those individuals approach to executive succession planning and talent The Committee also considers existing lengths of tenure and âÝÞçøâĚÞÝÚìéèøÞçøâÚåÜÚçÝâÝÚøÞìßùååòâçøÞàëÚøÞÝÛòÊèëçÅÞëëò ÝÞïÞåèéæÞçøÚÜëèììøáÞÆëèùéÀìâÝÞçøâĚÞÝÛòøáÞÁèÚëÝ the prospective rotation and retirement of Board members, so into the search process. The Nomination Committee also evaluation process, the oversight of senior management that it can plan accordingly. As part of the annual corporate succession planning will be a key area for emphasis in 2018. Vesuvius plc 96 Annual Report and Accounts 2017 97

Directors’ Remuneration Report Remuneration Overview

Dear shareholder, In 2017, our retranslated headline EPS of 39.1p was above the ÈçÜèçĚëæâçàøáÞïÞìøâçàèßøáÞÏÞëßèëæÚçÜÞÒáÚëÞìøáÞ – Effective working capital management: through an maximum Annual Incentive target of 35.6p. The Group’s 2017 Committee reviewed the underlying performance of the updated target of working capital to sales ratio (based On behalf of the Remuneration Committee, I am pleased to cash conversion of 104% was between the threshold of 90% and ÂèæéÚçòøèìÚøâìßòâøìÞåßøáÚøøáÞèùøÜèæÞðÚìöùìøâĚÞÝ on the 12-month moving average) to be used in the present the Directors’ Remuneration Report for 2017, which the target of 105%. This results in awards of 75% and 11.38% of Awards will vest in April 2018. Annual Incentive sets out details of the pay received by Directors in 2017 and how base salary respectively, being 86.38% in total for the current we intend to apply our Remuneration Policy in 2018. This report – Delivery of shareholder value: through the TSR measure Executive Directors, Patrick André and Guy Young, and for will be subject to an advisory shareholder vote at the 2018 Other Key Decisions made by the Committee used in the Vesuvius Share Plan – as in 2017 ÅëÚçʼnèâìÖÚçÞÜêâçëÞìéÞÜøèßøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞ AGM. In 2017, Shareholders approved a new Remuneration for 2017 metrics. In addition, we assessed each Executive Director’s > In addition, the Committee also took decisions about the Policy for the Group. If no changes are made prior to the 2020 Key decisions made by the Committee in 2017 included: completion of the personal objectives they were set for 2017, grant and vesting of Share Plan awards in 2017 and the AGM, then the Company will next need to formally table a awarding Mr André and Mr Young 19.65% and 15.75% Annual Incentive Plan payments made in 2017 in respect Remuneration Policy at that meeting. All payments received > Review, consideration and approval of an appropriate respectively of their maximum entitlements of 25%, and of 2016. by Directors in 2017 were in line with our Remuneration Policy. remuneration package for Patrick André, our new Chief Mr Wanecq 15.00%. As a result, the overall Annual Incentive I have set out details below of the key decisions made by the Executive. The principal features of his remuneration payable to Mr André for 2017 is 106.03% of base salary Committee during 2017. More details about these are included package were announced at the time of his appointment Shareholders’ Views (pro-rated in respect of his service as an Executive Director), and they are included in the applicable sections of this year’s in the Annual Report on Directors’ Remuneration. The Committee encourages dialogue with its major Mr Young 102.13% of base salary, and Mr Wanecq 101.38% Remuneration Report. of base salary against maximum bonus opportunities of 125%. ìáÚëÞáèåÝÞëìÈøâììÚøâìĚÞÝøáÚøøáÞÜùëëÞçøÑÞæùçÞëÚøâèçÏèåâÜò Performance in 2017 In addition, Mr André received an Annual Incentive payout > In conjunction with the transition of Chief Executive, the is designed to promote the long-term success of the Company, and that the performance-related elements of remuneration, As described in the Strategic Report, 2017 was a year of of 65.04% of his pro-rated base salary for 2017, out of a Committee also considered the retirement arrangements for which are kept under review, are transparent, stretching and good progress for the Group with revenue growth of 20.2% maximum bonus opportunity of 80%, in respect of his tenure François Wanecq. A summary of these arrangements was rigorously applied. The Committee was encouraged by the outperforming end markets and the global steel market. as President, Flow Control prior to his appointment as Chief included in the Section 430(2B) statement published on the ìâàçâĚÜÚçøìùééèëøìáèðçßèëøáÞçÞðÑÞæùçÞëÚøâèçÏèåâÜò Despite experiencing headwinds related to rising raw material Executive. Mr Wanecq received an Annual Incentive payout Company’s website, and details are also included in this year’s when it was tabled at the 2017 AGM (99% of votes in favour). prices and inter-company imports required by Flow Control in of 106.38% of his pro-rated base salary for the period of Remuneration Report. Europe, the Group saw a 24.2% increase in reported trading service from 1 September 2017 to 31 December 2017, when > The Remuneration Policy approved in 2017 states that, whilst I remain keen to hear shareholders’ views on remuneration éëèĚøðâøáÜÚìáàÞçÞëÚøâèçëÞæÚâçâçàìøëèçàÓáëèùàáèùøøáÞ he had ceased to be a Director but remained as an employee an individual’s performance is reviewed annually, changes to matters and look forward to an ongoing dialogue with year, the Group remained focused on its strategic priorities of the Group. base salary are normally appraised over a two or three-year shareholders and their continued support for our Directors’ and made good progress with the restructuring programme The performance period for the awards made under the period. In line with this policy, the Committee reviewed Guy Remuneration Report resolution at the AGM. delivering increased annualised savings, strong progress in Vesuvius Share Plan in 2015 matured at the end of December Young’s salary in 2017. It was agreed that his salary should be developing markets and further investment in R&D. Yours sincerely 2017. Performance was measured equally by reference to Total increased by 7.7% to £350,000 with effect from 1 January In 2017, Annual Incentive awards for the Executive Directors Shareholder Return (TSR) relative to the FTSE 250 (excluding $ÓáâìâìøáÞĚëìøâçÜëÞÚìÞâçÆùòċììÚåÚëòìâçÜÞáÞöèâçÞÝ Jane Hinkley Chairman, Remuneration Committee ÕÞìùïâùìâç!ÚçÝëÞěÞÜøìøáÞÜèçìâÝÞëÚÛåÞÝâåâàÞçÜÞÚçÝ were based 60% on Group headline earnings per share (EPS), investment trusts) and headline EPS growth above compound 28 February 2018 YèçøáÞÆëèùéċìÜÚìáÜèçïÞëìâèç›ÝÞĚçÞÝÚìèéÞëÚøâçàÜÚìá annual GDP growth over the three-year period. Relative TSR dedication he has brought to the role and his development in ěèðÝâïâÝÞÝÛòøëÚÝâçàéëèĚøœÚçÝYèçìéÞÜâĚÞÝéÞëìèçÚå performance was between median and upper quintile; as a it since the time of his appointment.

objectives. In order to further align the interests of our Directors result 27.1% of Performance Share awards will vest under the > The Committee considered the structure of performance Governance with those of our shareholders, we introduced a requirement TSR element (out of a maximum 50%). The annual compound measures for incentives in 2018. Having reviewed the existing in the 2017 Remuneration Policy for deferral of a proportion headline EPS growth above GDP for the period was 4.3%. arrangements, the Committee intends to use the same (normally 33%) of the Annual Incentive into awards over shares As a result, 16.6% of Performance Share awards will vest under framework for performance measures in 2018 that was used for three years. Given the appointment part way through the EPS performance element (out of a maximum of 50%). in 2017 for Executive Directors’ incentive awards, updating the year of a new Chief Executive, both Mr Wanecq’s and èçÞèßøáÞæÞøëâÜìøèëÞěÞÜøæèëÞÞßßÞÜøâïÞåòøáÞìøëÚøÞàâÜ Mr André’s awards, as Chief Executives, were accordingly demands of the business. Thus, these measures reward: pro-rated. – Growth: through the EPS measure used in the Annual Incentive and the Vesuvius Share Plan – as in 2017

Remuneration Strategic Alignment Deliver growth Generate sustainable Maintain strong cash Provide a safe Be at the forefront of Run top-quality, Foster talent, éëèĚøÚÛâåâøòÚçÝ generation and an working environment innovation Üèìø˜ÞßĚÜâÞçø skill and motivation create shareholder ÞßĚÜâÞçøÜÚéâøÚå for our people and sustainable in our people value structure operations

Annual Incentive Plan

Vesuvius Share Plan Vesuvius plc 98 Annual Report and Accounts 2017 99

Directors’ Remuneration Report Remuneration Policy

The Company’s existing Remuneration Policy was approved at the AGM held on 10 May 2017. The previous policy applied in its entirety up until this date and after this date those elements of the previous policy that related to remuneration that remained Pension extant on this date (such as outstanding share awards) continued to apply until these commitments cease. Alignment/purpose Operation Opportunity The full policy report, as approved by shareholders, can be found in the 2016 Annual Report (a copy of which is available under the Helps to recruit and retain key employees. An allowance is given as a percentage of Maximum of 30% of base salary. Ensures income in retirement. base salary. This may be used to participate ÑÞéèëøìøÚÛâçøáÞĊÈçïÞìøèëìċìÞÜøâèçèßøáÞÆëèùéðÞÛìâøÞðððïÞìùïâùìÜèæœÅèëøáÞÛÞçÞĚøèßìáÚëÞáèåÝÞëìðÞáÚïÞëÞéëâçøÞÝ in Vesuvius’ pension arrangements, invested Performance øáÞÏèåâÜòÛÞåèðÓèÞçìùëÞøáÚøøáÞÏèåâÜòâìëÞåÞïÚçøøèøáÞ$ĚçÚçÜâÚåòÞÚëðÞáÚïÞæÚÝÞæâçèëøÞñøùÚåÜáÚçàÞìøèëÞßÞëøèøáÞ in own pension arrangements or taken as a None ÚééåâÜÚÛåÞĚçÚçÜâÚåòÞÚëâçøáÞßèååèðâçàìÞÜøâèçìÈååùìøëÚøâèçèßøáÞÀééåâÜÚøâèçèßøáÞÑÞæùçÞëÚøâèçÏèåâÜòßèë$›ðáâÜáÚåìè cash supplement (or any combination of the above options). contains, as described, 2017 data); and Consideration of Shareholder Views. We have amended the ‘Service contracts’ section to refer to the terms of the current Executive Directors and the ‘Terms of service’ section to refer to the dates of appointment of the current non-executive directors. Annual Incentive

ÓáÞÑÞæùçÞëÚøâèçÂèææâøøÞÞëÞìÞëïÞìøáÞëâàáøøèæÚäÞÚçòëÞæùçÞëÚøâèçéÚòæÞçøìÚçÝéÚòæÞçøìßèëåèììèßèßĚÜÞ›âçÜåùÝâçà Alignment/purpose The Committee has the discretion to Performance exercising any discretions available to it in connection with such payments), notwithstanding that they are not in line with the policy Incentivises Executive Directors to achieve determine that actual incentive payments Annual Incentive is measured on targets set at äÞòìáèëø˜øÞëæĚçÚçÜâÚåÚçÝìøëÚøÞàâÜ should be lower than levels calculated by ìÞøèùøáÞëÞðáÞëÞøáÞøÞëæìèßøáÞéÚòæÞçøðÞëÞÚàëÞÞÝ›âœÛÞßèëÞøáÞÝÚøÞøáÞÂèæéÚçòċìĚëìøÑÞæùçÞëÚøâèçÏèåâÜòÚééëèïÞÝ the beginning of each year. The Committee targets of the Group. reference to achievement against targets establishes threshold and maximum by shareholders in accordance with section 439A of the Companies Act came into effect; (ii) before the policy set out here came if it considers this to be appropriate. éÞëßèëæÚçÜÞøÚëàÞøìßèëÞÚÜáĚçÚçÜâÚåòÞÚë into effect, provided that the terms of the payment were consistent with the shareholder-approved Remuneration Policy in force Additional alignment with shareholders’ The majority of the Annual Incentive will be interests through the operation of The Committee has the discretion to at the time they were agreed; or (iii) at a time when the relevant individual was not a Director of the Company and, in the opinion ÝÞøÞëæâçÞÝÛòæÞÚìùëޛìœèßÆëèùéĚçÚçÜâÚå bonus deferral. award participants the equivalent value performance. The remainder of the Annual of the Remuneration Committee, the payment was not in consideration for the individual becoming a Director of the Company. of dividends accrued during the vesting ÈçÜÞçøâïÞðâååÛÞÛÚìÞÝèçĚçÚçÜâÚåìøëÚøÞàâÜ For these purposes, ‘payments’ includes the Remuneration Committee satisfying awards of variable remuneration and, in relation Operation period on any shares that vest. or operational measures appropriate to the to an award over shares, the terms of the payment are ‘agreed’ at the time the award is granted. Normally 33% of any Annual Incentive Subject to malus and clawback. individual Director. Performance is measured earned by Executive Directors will be over a one-year period. Actual performance deferred into awards over shares under Opportunity targets will be disclosed after the the Vesuvius Deferred Share Bonus Plan performance period has ended. They are Remuneration Policy Table for Executive Directors ÁÞåèðøáëÞìáèåÝY which normally vest after at least three not disclosed in advance due to their òÞÚëìèøáÞëøáÚçâçìéÞÜâĚÞÝÜâëÜùæìøÚçÜÞì Îç˜øÚëàÞø"!YèßÛÚìÞìÚåÚëò commercial sensitivity. Base salary outlined elsewhere in this Policy. These may be cash or share settled. ÷Úñâæùæ!YèßÛÚìÞìÚåÚëò Alignment/purpose Opportunity Payments made between threshold Helps to recruit and retain key employees. Salary increases will normally be in line with In line with the two to three-year period for and on-target and between on-target ÑÞěÞÜøìøáÞâçÝâïâÝùÚåċìÞñéÞëâÞçÜÞëèåÞ the average increase awarded to other base salary appraisal, individual increases and maximum are pro-rated. and contribution within the Company. employees in the Group over a similar period. when paid are likely to be in excess of those In considering any increase in base salary, for the wider population of employees for Operation øáÞÂèææâøøÞÞðâååÚåìèÜèçìâÝÞë that year. The individual’s performance is reviewed Vesuvius Share Plan annually, with changes to base salary (i) the role and value of the individual; No absolute maximum has been set for Executive Director base salaries. Current Alignment/purpose Awards vest three years after their award Performance normally appraised over a two to three- (ii) changes in job scope or responsibility; year period. Executive Directors’ salaries are set out in the Flexible ‘umbrella’ plan. ÝÚøÞèøáÞëøáÚçâçìéÞÜâĚÞÝÜâëÜùæìøÚçÜÞì Vesting of Performance Share awards is (iii) progression in the role (e.g. for a new Annual Report on Directors’ Remuneration outlined elsewhere in this policy, subject to usually dependent on measures of Group Governance Aligns Executive Directors’ interests with Any change will normally be effective appointee); section of this Remuneration Report. øáÞÚÜáâÞïÞæÞçøèßìéÞÜâĚÞÝÜèçÝâøâèçì EPS and relative TSR with the precise from 1 January in the year of the increase. those of shareholders through the delivery measures and weighting of the measures ›âïœÚìâàçâĚÜÚçøâçÜëÞÚìÞâçøáÞìÜÚåÞèßëèåÞ Performance of shares. Rewards Executive Directors The Committee may decide that the shares in determined by the Committee ahead of each Base salary is positioned to be market and/or size, value or complexity of the for achieving the strategic objectives of respect of which an award vests are delivered award. These details are disclosed in the competitive when considered against other Any increase will take into account the Group; and growth in shareholder value and earnings. to participants at that point or that awards Annual Report on Directors’ Remuneration global industrial companies, and relevant individual’s performance, contribution will then be subject to an additional holding and increasing experience. section of this Remuneration Report. international and FTSE 250 companies (v) the need to maintain market Assists retention of Executive Directors period before participants are entitled to (excluding Investment Trusts). competitiveness. over a three-year performance period. receive their shares. The Company reserves the right only to disclose EPS performance targets after the Paid in cash, subject to local tax and social Operation The Committee has the discretion to award performance period has ended, due to their security regulations. participants the equivalent value of dividends ÀðÚëÝìæÚòÛÞàëÚçøÞÝÚì commercial sensitivity. accrued during the vesting period on any > Performance share awards shares that vest. Prior to any vesting, the Remuneration Committee also reviews the underlying ÎøáÞëÛÞçÞĚøì > Deferred share bonus awards Subject to malus and clawback. ĚçÚçÜâÚåéÞëßèëæÚçÜÞèßøáÞÂèæéÚçòèïÞë the performance period to ensure the vesting Alignment/purpose Opportunity > Restricted share awards dependent children), life insurance, disability Opportunity âìöùìøâĚÞÝ ÏëèïâÝÞìçèëæÚåæÚëäÞøéëÚÜøâÜÞÛÞçÞĚøì and health insurance, together with ÓáÞëÞâìçèßèëæÚåæÚñâæùæÚìÛÞçÞĚøÜèìøì > Market-price options Executive Directors are eligible to receive ëÞåèÜÚøâèçÚååèðÚçÜÞÚçÝÞñéÚøëâÚøÞÛÞçÞĚøì ÜÚçěùÜøùÚøÞÝÞéÞçÝâçàèçÜáÚçàÞìâç an annual award with a face value of up Operation in some instances grossed up for tax, in provider, cost and individual circumstances. These may be cash or share settled. to 200% of base salary in Performance accordance with the Group’s policies, and ÀëÚçàÞèßìøÚçÝÚëÝÛÞçÞĚøìâçÜåùÝâçà share awards. participation in any employee share scheme ÛùøçèøåâæâøÞÝøèÜÚëÚååèðÚçÜÞéëâïÚøÞ Performance Individuals are entitled to an aggregate operated by the Group. medical care (including spouse and None annual maximum amount of awards. Vesting at threshold performance is 25% If more than one type of award is granted, rising to vesting of the full award at maximum. the individual limit for all awards is reduced to remain within the maximum. Vesuvius plc 100 Annual Report and Accounts 2017 101

Remuneration Policy continued

Malus/Clawback Arrangements Within the policy period, the Committee will continually review Illustration of the Application of the Remuneration Service Contracts of Executive Directors the performance measures used, including TSR and the The Executive Directors’ variable remuneration is subject to Policy for 2018 The Committee will periodically review the contractual terms ÚééåâÜÚÛåÞÜèæéÚëÚøèëàëèùéÚçÝÄÏÒÚçÝèøáÞëĚçÚçÜâÚå malus and clawback provisions. These provide the Committee ßèëçÞðÄñÞÜùøâïÞÃâëÞÜøèëìøèÞçìùëÞøáÞìÞëÞěÞÜøÛÞìøéëÚÜøâÜÞ measures, to ensure that awards are made on the basis of The charts below show the total remuneration for Executive ðâøáøáÞěÞñâÛâåâøòâßëÞêùâëÞÝøèðâøááèåÝèëëÞÜèïÞëéÚòæÞçøì Service contracts currently operate on a rolling basis and are challenging targets that clearly support the achievement of Directors for 2018 for minimum, on-target and maximum made to Executive Directors under the Annual Incentive Plan éÞëßèëæÚçÜÞÓáÞĚñÞÝÞåÞæÞçøìèßëÞæùçÞëÚøâèçÜèæéëâìÞ limited to a 12-month notice period. the Group’s strategic aims. (including deferred awards) and/or to withhold or recover share ÛÚìÞìÚåÚëòéÞçìâèçÚçÝèøáÞëÛÞçÞĚøìùìâçà$ìÚåÚëòÝÚøÚ Patrick André is employed as Chief Executive of Vesuvius plc awards granted to Executive Directors under the Vesuvius The Committee may vary or waive any performance ÓáÞÚììùæéøâèçìèçðáâÜáøáÞòÚëÞÜÚåÜùåÚøÞÝÚëÞÚìßèååèðì pursuant to the terms of a service agreement made with Share Plan, including any dividends granted on such awards. condition(s) if circumstances occur which cause it to determine Vesuvius plc dated 17 July 2017. Guy Young is employed as The circumstances in which the Committee could potentially that the original condition(s) have ceased to be appropriate, Minimum: Fixed remuneration only. ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëéùëìùÚçøøèøáÞøÞëæìèßÚìÞëïâÜÞ ÞåÞÜøøèÚééåòæÚåùìÚçÝÜåÚðÛÚÜäéëèïâìâèçìâçÜåùÝÞÚ provided that any such variation or waiver is fair, reasonable On-target: Fixed remuneration plus on-target Annual Incentive agreement with Vesuvius plc dated 16 September 2015. æÚøÞëâÚåæâììøÚøÞæÞçøâçøáÞÂèæéÚçòċìĚçÚçÜâÚåìøÚøÞæÞçøì ÚçÝçèøæÚøÞëâÚååòåÞììÝâßĚÜùåøøèìÚøâìßòøáÚçøáÞèëâàâçÚå (made at 62.5% of base salary for Patrick André and Each Executive Director’s appointment is terminable by an error in the calculation of the extent of payment or vesting of condition (in its opinion). In the event that the Committee were Guy Young) and threshold vesting (i.e. median performance Vesuvius on not less than 12 months’ written notice, and by each ÚçâçÜÞçøâïÞàëèììæâìÜèçÝùÜøÛòÚçâçÝâïâÝùÚåèëìâàçâĚÜÚçø to make an adjustment of this sort, a full explanation would be for TSR and threshold for EPS) for Performance Share awards Executive Director on not less than six months’ written notice. ĚçÚçÜâÚååèììèëìÞëâèùìëÞéùøÚøâèçÚåÝÚæÚàÞøèÕÞìùïâùìéåÜ provided in the next Remuneration Report. (made at 200% of base salary for Patrick André and 150% of resulting from an individual’s conduct, a material failure of ÓáÞÂèææâøøÞÞæÚò›ÚœâçøáÞÞïÞçøèßÚïÚëâÚøâèçèßøáÞ base salary for Guy Young) under the Vesuvius Share Plan. risk management or a serious breach of health and safety. External Appointments of Executive Directors Company’s share capital, demerger, special dividend or any Maximum: Fixed remuneration plus maximum Annual Incentive These malus and clawback provisions apply for a period of The Executive Directors do not currently serve as Non-executive èøáÞëÜèëéèëÚøÞÞïÞçøðáâÜáâøëÞÚìèçÚÛåòÝÞøÞëæâçÞìöùìøâĚÞì ›ÛÞâçàßùååÚÜáâÞïÞæÞçøèßĚçÚçÜâÚåÚçÝéÞëìèçÚåøÚëàÞøìæÚÝÞ up to three years after the end of a performance period Directors of any other quoted company. Subject always to such an adjustment, adjust; and (b) amend the terms of at 125% of base salary for Patrick André and Guy Young) and (or end of the deferral period in respect of deferred awards). consent being granted by the Company for them to take up such awards granted under the share schemes referred to above 100% vesting for Performance Share awards (made at 200% an appointment, were they to so serve, the Company would in accordance with the rules of the relevant plans. of base salary for Patrick André and 150% of base salary for Performance Measures allow them to retain any fees they received for the performance Guy Young) under the Vesuvius Share Plan. Share awards may be settled by the issue of new shares or of their duties. In selecting performance measures for the Annual Incentive, by the transfer of existing shares. In line with prevailing best Note: In addition the Committee retains the discretion to award dividends øáÞÂèææâøøÞÞìÞÞäìøèëÞěÞÜøäÞòìøëÚøÞàâÜÚâæìÚçÝøáÞ practice at the time this Policy Report was approved, any (either shares or their cash equivalent) on any shares that vest. çÞÞÝßèëÚëâàèëèùìßèÜùìèçĚçÚçÜâÚåéÞëßèëæÚçÜÞÄÚÜáòÞÚë issuance of new shares is limited to 5% of share capital over a the Committee agrees challenging targets to ensure that rolling ten-year period in relation to discretionary employee underperformance is not rewarded. The Company will not be share schemes and 10% of share capital over a rolling ten-year ÝâìÜåèìâçàøáÞìéÞÜâĚÜĚçÚçÜâÚåèëéÞëìèçÚåèÛöÞÜøâïÞììÞøùçøâå Remuneration Illustrations £000 period in relation to all employee share schemes. after the relevant performance period has ended because of Patrick André, Chief Executive Guy Young, CFO commercial sensitivities. The personal objectives are all çèç˜ĚçÚçÜâÚåèëöèۘìéÞÜâĚÜâççÚøùëÞÚçÝøëÚÜäéÞëßèëæÚçÜÞ against key strategic, organisational and operational goals. Minimum Minimum 100% £692k 100% £456k

In selecting performance measures for the Vesuvius Share Governance Plan, the Committee seeks to focus Executive Directors on the execution of long-term strategy and also align their On-Target On-Target 16% rewards with value created for shareholders. On this basis, 54% 26% 20% £1,282k 57% 27% £806k the performance conditions for the Vesuvius Performance Share awards will usually be dependent on measures based on TSR and EPS performance. Maximum Maximum 29% 27% 44% £2,398k 32% 31% 37% £1,418k

0 500 1,000 1,500 2,000 2,500 3,000 0 500 1,000 1,500 2,000 2,500 3,000

Fixed Elements Annual Variable Elements Long-Term Variable Elements Vesuvius plc 102 Annual Report and Accounts 2017 103

Remuneration Policy continued

Remuneration Policy for Non-executive Directors ÓáÞøÚÛåÞÛÞåèðìáèðìøáÞÝÚøÞèßÚééèâçøæÞçøßèëÞÚÜáèßøáÞÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì

The Company seeks to appoint Non-executive Directors who have relevant professional knowledge, and have gained experience Non-Executive Director Date of Appointment in a relevant industry and geographical sector, to support diversity of expertise at the Board and match the wide geographical John Mc Donough CBE 31 October 2012 spread of the Company’s activities. Christer Gardell 31 October 2012 Non-executive Directors attend Board, Committee and other meetings, held mainly in the UK, together with an annual strategy Hock Goh 2 April 2015 review to debate the Company’s strategic direction. All Non-executive Directors are expected to familiarise themselves with the Jane Hinkley 3 December 2012 ìÜÚåÞÚçÝìÜèéÞèßøáÞÂèæéÚçòċìÛùìâçÞììÚçÝøèæÚâçøÚâçøáÞâëìéÞÜâĚÜøÞÜáçâÜÚåìäâååìÚçÝäçèðåÞÝàÞ Douglas Hurt 2 April 2015 The Board sets the level of fees paid to the Non-executive Directors after considering the role and responsibilities of each Director Holly Koeppel 3 April 2017 and the practice of other companies of a similar size and international complexity. The Non-executive Directors do not participate in Board discussions on their own remuneration. No variable remuneration is available to Non-executive Directors. Non-executive Recruitment Policy In addition to the annual remuneration elements noted above, Directors receive reimbursement of reasonable expenses incurred in attending the Board, Committee and other ad hoc meetings, the Committee may consider buying out terms, incentives and On appointment or promotion of a new Executive Director, including gross up payments to cover any personal tax owed on such expenses. any other compensation arrangements forfeited on leaving the Committee will typically use the Remuneration Policy in a previous employer that an individual forfeits in accepting force at the time of the Committee’s decision to determine an appointment with Vesuvius. The Committee will have the Fees ongoing remuneration. authority to rely on Listing Rule 9.4.2R(2) or to apply the Alignment/purpose The Chairman is paid a single fee and Base fees paid to Non-executive Base salary levels will generally be set in accordance with the existing limits within the Vesuvius Share Plan to make Restricted To attract and retain Non-executive Directors receives administrative support from Directors will in aggregate remain within Remuneration Policy current at the time of the Committee’s Share awards on recruitment. In making any such awards, the Company. the aggregate limit stated in our Articles, of the necessary skill and experience by decision, taking into account the experience and calibre of the the Committee will review the terms of any forfeited awards, offering market-competitive fees. currently being £500,000. Opportunity appointee. If it is appropriate to appoint an individual on a base including, but not limited to, vesting periods, the expected value Operation Non-executive Directors and the Chairman Performance salary initially below what is adjudged to be market positioning, of such awards on vesting and the likelihood of the performance Fees are usually reviewed every other will be paid market-appropriate fees, with None contingent on individual performance, the Committee retains targets applicable to such awards being met, while retaining year by the Board. ÚçòâçÜëÞÚìÞëÞěÞÜøâçàÜáÚçàÞìâçøáÞæÚëäÞø the discretion to realign base salary over the one to three years the discretion to make any buy-out award the Committee èëÚÝöùìøæÞçøìøèÚìéÞÜâĚÜÍèç˜ÞñÞÜùøâïÞ Non-executive Directors are paid a base Director’s role. following appointment, which may result in a higher rate of determines is necessary and appropriate. The Committee may fee for the performance of their role, annualised increase than might otherwise be awarded under also require the appointee to purchase shares in Vesuvius to a ÍèÞåâàâÛâåâøòßèëÛèçùìÞìëÞøâëÞæÞçøÛÞçÞĚøì payable in cash, plus additional fees for pre-agreed level prior to vesting of any such awards. The value Committee chairmanship or acting as or to participate in the Group’s employee the policy. If the Committee intends to rely on this discretion, the Senior Independent Director. share plans. âøðâååÛÞçèøÞÝâçøáÞĚëìøÑÞæùçÞëÚøâèçÑÞéèëøßèååèðâçà of any buy-out award will be capped, to ensure its maximum an individual’s appointment. Other than in exceptional value is no higher than the value of the awards that the circumstances, other elements of annual remuneration will, individual forfeited on joining Vesuvius. Any such awards will ÁÞçÞĚøìÚçÝÞñéÞçìÞì typically, be set in line with the Remuneration Policy including a be subject to malus and clawback. Alignment/purpose Operation Opportunity limit on awards under the Annual Incentive and Vesuvius Share With respect to the appointment of a new Chairman or To facilitate execution of responsibilities All Non-executive Directors are reimbursed Non-executive Directors’ expenses are Plan of 325% of salary in aggregate. The Committee retains

Non-executive Director, appointment terms will be consistent Governance and duties required by the role. for reasonable expenses incurred in carrying paid in accordance with Vesuvius’ øáÞÝâìÜëÞøâèçøèæÚäÞøáÞßèååèðâçàßùëøáÞëÞñÜÞéøâèçì out their duties (including any personal tax expense procedures. with those applicable at the time the appointment is agreed. owing on such expenses). > In the event that an internal appointment is made, or where Variable pay will not be considered. With respect to Performance a Director is appointed as a result of transfer into the Group Non-executive Directors, fees will be consistent with the None on an acquisition of another Company, the Committee policy at the time the appointment is agreed. If, in exceptional may continue with existing remuneration provisions for this circumstances, a Non-executive Director was asked to assume Terms of Service of the Chairman and other Non-executive Directors individual, including pension entitlements, where appropriate an interim executive role, the Company retains the discretion to pay them appropriate executive compensation, in line > If necessary and appropriate to secure the appointment The terms of service of the Chairman and the Non-executive Directors are contained in letters of appointment. Each Non-executive with the policy. ÃâëÞÜøèëâìÚééèâçøÞÝìùÛöÞÜøøèøáÞâëÞåÞÜøâèçÚøøáÞÂèæéÚçòċìĚëìøÀççùÚåÆÞçÞëÚå÷ÞÞøâçàßèååèðâçàøáÞâëÚééèâçøæÞçøÚçÝ of a candidate who has to move locations as a result of the appointment, whether internal or external, the Committee ëޘÞåÞÜøâèçÚøìùÛìÞêùÞçøÀççùÚåÆÞçÞëÚå÷ÞÞøâçàìÃùëâçàøáÞĚëìøòÞÚëèßáâìáÞëÚééèâçøæÞçøøáÞÂáÚâëæÚçâìÞçøâøåÞÝøè Exit Payment Policy 12 months’ notice from the Company; thereafter, he/she is entitled to six months’ notice from the Company. None of the other may make additional payments linked to relocation, Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìâìÞçøâøåÞÝøèëÞÜÞâïÞÜèæéÞçìÚøâèçßèëåèììèßèßĚÜÞÚøÚçòøâæÞÀååÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÚëÞìùÛöÞÜø above those outlined in the policy table, and would Vesuvius has the option to make a payment in lieu of part or all to retirement, and election or re-election, in accordance with the Company’s Articles of Association. The current policy is for authorise the payment of a relocation allowance and of the required notice period for Executive Directors. Any such Non-executive Directors to serve on the Board for a maximum of nine years, with review at the end of three and six years, repatriation, as well as other associated international payment in lieu will consist of the base salary, pension contributions subject always to mutual agreement and annual performance evaluation. The Board retains discretion to extend the tenure of æèÛâåâøòøÞëæìÒùÜáÛÞçÞĚøìðèùåÝÛÞìÞøÚøÚåÞïÞåðáâÜá ÚçÝïÚåùÞèßÛÞçÞĚøìøèðáâÜáøáÞÃâëÞÜøèëðèùåÝáÚïÞÛÞÞç Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìÛÞòèçÝøáâìøâæÞìùÛöÞÜøøèøáÞëÞêùâëÞæÞçøìèßÁèÚëÝÛÚåÚçÜÞÚçÝâçÝÞéÞçÝÞçÜÞÛÞâçàìÚøâìĚÞÝ the Committee considers appropriate for the role and the entitled for the duration of the remaining notice period, net of individual’s circumstances statutory deductions in each case. Half of any payments in lieu of notice would be made in a lump sum, the remainder in equal > If appropriate the Committee may apply different monthly instalments commencing in the month in which the performance measures and/or targets to a Director’s midpoint of their foregone notice period falls (and are reduced ĚëìøâçÜÞçøâïÞÚðÚëÝìâçáâìáÞëòÞÚëèßÚééèâçøæÞçø or extinguished by salary from any role undertaken by the Service contracts will be entered into on terms similar to those departing Executive in this time). Executive Directors are subject for the existing Executive Directors, summarised in the ‘Service to certain non-compete covenants for a period of nine months, contracts of Executive Directors’ section above. and non-solicitation covenants for a period of 12 months, following the termination of their employment. Their service agreements are governed by English law. Vesuvius plc 104 Annual Report and Accounts 2017 105

Remuneration Policy continued

Executive Directors’ contracts do not contain any change of in different leaver scenarios and on a change of control. Comparison of Remuneration Policy for Executive Consideration of Conditions elsewhere in the Group control provisions; they do contain a duty to mitigate should Whilst the Committee retains overall discretion on determining Directors with that for other Employees in Developing Policy øáÞÃâëÞÜøèëĚçÝÚçÚåøÞëçÚøâïÞéÚâÝèÜÜùéÚøâèçâçÚçòéÞëâèÝ ĊàèèÝåÞÚïÞëċìøÚøùìâøøòéâÜÚååòÝÞĚçÞìÚĊàèèÝåÞÚïÞëċâç The Remuneration Policy for Executive Directors is designed The Company does not consult directly with employees on during which the Company must otherwise pay compensation circumstances such as retirement with agreement of the in line with the remuneration philosophy set out in this report Executive Directors’ remuneration arrangements. However, on early termination. Company, ill health, disability, death, redundancy, or part of the business in which the individual is employed or engaged – which also underpins remuneration for the wider Group. the Remuneration Committee will take into account the pay The table below summarises how the awards under the ceasing to be part of the Group. Final treatment is subject to Remuneration arrangements for Executive Directors draw on and employment conditions of other Group employees when annual bonus and Vesuvius Share Plan are typically treated the Committee’s discretion. the same elements as those for other employees – base salary, determining Executive Directors’ remuneration, particularly ĚñÞÝÛÞçÞĚøìÚçÝëÞøâëÞæÞçøÛÞçÞĚøì™ðâøáéÞëßèëæÚçÜޘ when determining base salary increases, when the Committee related pay extending down into the management cadres and will consider the salary increases for other Group employees in Event Timing Calculation of vesting/payment beyond. However, given that remuneration structures for other the same jurisdiction. Annual Incentive Plan ÞæéåèòÞÞìçÞÞÝøèëÞěÞÜøÛèøáìÞçâèëâøòÚçÝåèÜÚåæÚëäÞø Good leaver Paid at the same time as to continuing Annual bonus is paid only to the extent practice, they differ from the policy for Executive Directors. Consideration of Shareholder Views employees. that any performance conditions have been In particular, Executive Directors receive a higher proportion Vesuvius is committed to open and transparent dialogue with ìÚøâìĚÞÝÚçÝâìéëèëÚøÞÝßèëøáÞéëèéèëøâèç of their remuneration in performance-related pay and its shareholders on remuneration as well as other governance èßøáÞĚçÚçÜâÚåòÞÚëðèëäÞÝÛÞßèëÞÜÞììÚøâèç ìáÚëޘÛÚìÞÝéÚòæÞçøìÈçÝâïâÝùÚåéÞëÜÞçøÚàÞìèßĚñÞÝ matters. As Chairman of the Committee, Jane Hinkley of employment. versus variable remuneration and participation in share-based welcomes shareholder engagement and is available for any Bad leaver Not applicable. Individuals lose the right to their annual bonus. structures decline as seniority decreases. discussions investors wish to have on remuneration matters. Change of control Paid on the effective date of change Annual bonus is paid only to the extent that The process for delivering salary increases on a two to During 2017, remuneration matters were discussed at a number of control. any performance conditions have been three-year cycle for Executive Directors is also applied to of meetings with investors. The feedback from such meetings is ìÚøâìĚÞÝÚçÝâìéëèëÚøÞÝßèëøáÞéëèéèëøâèç other members of the Group Executive Committee and their always shared with the Committee and taken into consideration èßøáÞĚçÚçÜâÚåòÞÚëðèëäÞÝ direct managerial reports. Whilst all employees receive an when decisions are made about future remuneration strategy Vesuvius Share Plan annual performance appraisal, other employees continue to and arrangements. Good leaver On normal vesting date (or earlier at Unvested awards vest to the extent that any receive salary reviews on an annual basis. the Committee’s discretion). éÞëßèëæÚçÜÞÜèçÝâøâèçìáÚïÞÛÞÞçìÚøâìĚÞÝ As with Executive Directors, middle and senior managers Shareholding Guidelines and a pro rata reduction applies to the value participate in the Annual Incentive Plan. For members of the of the awards to take into account the The Remuneration Committee encourages Executive Directors Group Executive Committee and functional employees, proportion of vesting period not served, unless to build and hold a shareholding in the Company. The required the award is predominantly based on Group performance, the Committee decides that the reduction in holding of the Chief Executive is to be equivalent in value to at with the remainder awarded against achievement of personal the number of vested shares is inappropriate. least 2x salary and that required of other Executive Directors objectives. For operational employees, any potential award is to be equivalent in value to at least 1x salary. Bad leaver Unvested awards lapse. Unvested awards lapse on cessation is based upon achieving three measures relating to Group of employment. performance, business unit performance, and individual Compliance with the shareholding policy is tested at the end of 1 each year for application in the following year using the average Change of control On the date of the event. Unvested awards vest to the extent that any achievement of personal objectives. Governance éÞëßèëæÚçÜÞÜèçÝâøâèçìáÚïÞÛÞÞçìÚøâìĚÞÝ of the closing prices of a Vesuvius ordinary share for the trading and a pro rata reduction applies for the All members of the Group Executive Committee participate in days in that December. proportion of the vesting period not served. the Vesuvius Share Plan and receive awards of Performance Shares, which vest in accordance with measures and targets set General Note: against EPS and TSR. The level of awards granted to members 1. In certain circumstances, the Committee may determine that unvested awards under the Vesuvius Share Plan will not vest on a change of control but will instead be replaced The Committee may make minor amendments to the policy by an equivalent grant of a new award, as determined by the Committee, in the new company. of the Group Executive Committee who don’t serve on the Board are lower than those payable to the Executive Directors. set out in this Policy Report (for regulatory, exchange control, tax or administrative purposes or to take account of a change In the case of the Vesuvius Deferred Share Bonus Plan if the The Committee reserves the right to make any other For certain senior and middle managers, awards are made in legislation) without obtaining shareholder approval for individual leaves for any reason (other than dismissal for cause) éÚòæÞçøìâçÜèççÞÜøâèçðâøáÚÃâëÞÜøèëċìÜÞììÚøâèçèßèßĚÜÞèë under the Vesuvius Medium Term Plan (‘MTP’). These managers that amendment. or in the event of a change in control, the deferred award will employment where the payments are made in good faith in participate in the MTP at varying percentage levels, and vest in full, unless the Committee determines otherwise. discharge of an existing legal obligation (or by way of damages awards are based on the same measures and targets as the for breach of such an obligation) or by way of a compromise or ÁÞçÞĚøìçèëæÚååòÜÞÚìÞøèÛÞéëèïâÝÞÝèçøáÞÝÚøÞÞæéåèòæÞçø Annual Incentive Plan. Senior managers have their MTP awards settlement of any claim arising in connection with the cessation ends. However, the Committee has the discretion to allow some made over Vesuvius shares, whilst middle managers receive èßÚÃâëÞÜøèëċìèßĚÜÞèëÞæéåèòæÞçø æâçèëÛÞçÞĚøì›ìùÜáÚìáÞÚåøáâçìùëÚçÜÞøÚñÚÝïâÜÞÚçÝ their awards in cash. In each case, awards are granted following repatriation expenses) to continue to be provided for a period In certain circumstances, the Committee may approve new øáÞÞçÝèßøáÞëÞåÞïÚçøĚçÚçÜâÚåòÞÚëÓáÞ÷ÓÏìáÚëÞÚðÚëÝì following cessation where this is considered fair and reasonable contractual arrangements with departing Executive Directors vest on the second anniversary of the date of grant, subject to or appropriate on the basis of local market practice. In addition, âçÜåùÝâçà›ÛùøçèøåâæâøÞÝøèœìÞøøåÞæÞçøÜèçĚÝÞçøâÚåâøò continuing employment. the Committee retains discretion to fund other expenses for the restrictive covenants and/or consultancy arrangements. Executive Director, for example, payments to meet legal fees These would be used only where the Committee believed it incurred in connection with termination of employment, or to was in the best interests of the Company to do so. meet the costs of providing outplacement support, and de minimis termination costs up to £5,000 to cover transfer of mobile phone or other administrative expenses. Vesuvius plc 106 Annual Report and Accounts 2017 107

Directors’ Remuneration Report Annual Report on Directors’ Remuneration

Remuneration Committee Structure Advice Provided to the Remuneration Committee As in previous years, the Committee was the subject of an issued shares. Awards made under the Deferred Share Bonus externally moderated performance evaluation. The performance Plan, to satisfy shares awarded to Directors under the Annual The current members of the Remuneration Committee are all Deloitte is appointed directly by the Remuneration Committee of the Remuneration Committee was rated positively overall. Incentive, and awards made to senior managers by the the independent Non-executive Directors of the Company. to provide advice on executive remuneration matters, including ÒÞïÞëÚåâøÞæìáÚÝÛÞÞçâÝÞçøâĚÞÝâçøáÞ"ÞïÚåùÚøâèçÚçÝâø Company over shares pursuant to the Medium Term Incentive The Committee Chairman is Jane Hinkley. Jane Hinkley, remuneration structure and policy, updates on market practice was noted that these had been effectively managed in 2017, ÏåÚçæùìøÛÞìÚøâìĚÞÝèùøèßÕÞìùïâùììáÚëÞìáÞåÝßèëøáâì Hock Goh and Douglas Hurt have all served on the Committee and trends, and guidance on the implementation and operation with, in particular, the Committee gaining greater insight into purpose by the Company’s employee share ownership plan throughout 2017. Holly Koeppel has served on the Committee of share incentive plans. The Committee appointed Deloitte, the remuneration arrangements for employees below the senior trust (ESOP). The decision on how to satisfy awards is taken by since her appointment to the Board on 3 April 2017. All continue a signatory to the Remuneration Consultants Group Code of management tier and global remuneration policies. Going the Remuneration Committee which considers the most prudent âçèßĚÜÞÚìÚøøáÞÝÚøÞèßøáâìëÞéèëøÓáÞÂèææâøøÞÞÜèæéåâÞì Conduct in relation to Executive Remuneration Consulting in ßèëðÚëÝÜèææùçâÜÚøâèçðÚìâÝÞçøâĚÞÝÚìÚçÚëÞÚèßßèÜùì and appropriate sourcing arrangement for the Company. with the requirements of the UK Corporate Governance Code the UK, following a formal tender process in 2014. Deloitte also with the Committee expressing the view that the appointment for the composition of remuneration committees. Each of the provides the Remuneration Committee with ongoing calculations At 31 December 2017, the Company held 7,271,174 ordinary of the new Chief Executive should be taken as an opportunity to members brings a broad experience of international businesses of total shareholder return (TSR) to enable the Committee to shares in Treasury and 877,744 ordinary shares in the ESOP. review the level of dialogue between the Committee Chairman, and an understanding of their challenges to the work of the monitor the performance of long-term share incentive plans. The ESOP can be gifted Treasury shares by the Company, can management and the external advisers. In addition, as with the Committee. The Company Secretary is Secretary to the In addition in 2017, within the wider Group, Deloitte was procured purchase shares in the open market or can subscribe for newly Board in general, it was felt that the Remuneration Committee Committee. Members’ biographies are on pages 50 and 51. in various jurisdictions to provide accounting and tax advisory issued shares, as required, to meet obligations to satisfy options ðèùåÝÛÞçÞĚøßëèæøáÞæèëÞÜèçÜâìÞéëÞìÞçøÚøâèçèßÝÚøÚâç work. During 2017, Deloitte’s fees for advice to the Remuneration and awards that vest. Committee papers. Committee, charged on a time spent basis, amounted to £71,975. Meetings The Vesuvius Share Plan complies with the current Investment The Committee conducted a review of the performance of Regulatory Compliance ÓáÞÂèææâøøÞÞæÞøĚïÞøâæÞìÝùëâçàøáÞòÞÚëÓáÞÆëèùéċì Association guidelines on headroom which provide that overall Deloitte as remuneration adviser during the year and concluded ÂáÚâëæÚçÂáâÞßÄñÞÜùøâïÞÚçÝÂáâÞßÇùæÚçÑÞìèùëÜÞìÎßĚÜÞë dilution under all plans over a rolling ten-year period should that Deloitte continued to provide effective, objective and The Remuneration Policy, which is set out on pages 98 to 105 were invited to each meeting, together with Christer Gardell, our not exceed 10% of the Company’s issued share capital, with âçÝÞéÞçÝÞçøÚÝïâÜÞøèøáÞÂèææâøøÞÞÍèÜèçěâÜøèßâçøÞëÞìøÚëâìÞì was prepared in accordance with the Companies Act 2006 non-independent Non-executive Director, though none of them a further limitation over a rolling ten-year period of 5% for as a result of other services provided by Deloitte to the Group. and the Large and Medium-sized Companies and Groups participated in discussions regarding their own remuneration. (Accounts and Reports) (Amendment) Regulations 2013. discretionary share schemes. More than 9.9% of the 10% limit In addition, a representative from Deloitte, the Remuneration It also meets the requirements of the Financial Conduct and more than 4.9% of the 5% limit is available as headroom for Activities of the Remuneration Committee Committee adviser, attended the majority of meetings and the Authority’s Listing Rules and the Disclosure Guidance and the issue of new shares or the transfer of Treasury shares for the ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚøøÞçÝÞÝðáÞëÞøáÞÚàÞçÝÚèßøáÞ The key matters the Remuneration Committee considered Transparency Rules. This Remuneration Report sets out how the Company. No Treasury shares have been transferred or newly meeting required it. The attendees supported the work of the ÝùëâçàâøìĚïÞæÞÞøâçàìâç#âçÜåùÝÞÝ provisions of the UK Corporate Governance Code are applied issued shares allotted under the Vesuvius Share Plan during the Committee, giving critical insight into the operational demands by the Company in relation to matters of remuneration. We year under review. > Considering, formulating and approving the remuneration of the business and their application to the overall remuneration have complied for the year under review with these provisions. arrangements for the new Chief Executive strategy within the Group. In receiving views on remuneration Policy Implementation matters from the Executive Directors and senior management, > Agreeing the retirement arrangements for the outgoing Share Usage The following section provides details of how the Company’s øáÞÂèææâøøÞÞëÞÜèàçâìÞÝøáÞéèøÞçøâÚåßèëÜèçěâÜøìèßâçøÞëÞìø Chief Executive ÑÞæùçÞëÚøâèçÏèåâÜòðÚìâæéåÞæÞçøÞÝÝùëâçàøáÞĚçÚçÜâÚåòÞÚë to arise and considered the advice accordingly. The Chairman Under the rules of the Vesuvius Share Plan, the Company has #ÚçÝáèðâøðâååÛÞâæéåÞæÞçøÞÝâçøáÞĚçÚçÜâÚåòÞÚë$ of the Committee reported the outcomes of all meetings to > Considering and approving the 2018 salary review proposals the discretion to satisfy awards either by the transfer of Treasury ßèëøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëÚçÝëÞïâÞðâçàéëèéèìÚåìßèë Governance the Board. shares or other existing shares, or by the allotment of newly senior management, as appropriate The Committee operates under formal terms of reference which were reviewed during the year. The terms of reference > Reviewing and approving achievement against performance Directors’ Remuneration – Audited targets for the 2016 annual incentive arrangements are available on the Group website www.vesuvius.com. ÓáÞøÚÛåÞÛÞåèðìÞøìèùøøáÞøèøÚåëÞæùçÞëÚøâèçëÞÜÞâïÞÝÛòÄñÞÜùøâïÞÃâëÞÜøèëìâçøáÞĚçÚçÜâÚåòÞÚëùçÝÞëëÞïâÞð

The Committee members are permitted to obtain outside > Setting performance targets and approving the structure of Patrick André1 François Wanecq2 Guy Young legal advice at the Company’s expense in relation to their the 2017 annual incentive arrangements 2017 2016 2017 2016 2017 2016 deliberations. These powers were not exercised during the year. (£000) (£000) (£000) (£000) (£000) (£000) > Reviewing and assessing the Company’s attainment of The Committee may also secure the attendance at its meetings Total salary3 175 – 393 590 325 325 performance conditions applicable to the Vesuvius of any employee or other parties it considers necessary. ÓÚñÚÛåÞÛÞçÞĚøì4 56 – 156 35 18 19 Performance Share awards made in 2014 Pension5 44 – 118 177 81 81 Role and Responsibilities > Setting the performance measures and targets, and ÓèøÚåĚñÞÝéÚò 6 275 – 667 802 424 425 authorising the grant of new awards in 2017 under the The Committee is responsible for: Annual Incentive7 186 – 399 371 332 166 Vesuvius Share Plan and Medium Term Incentive Plan > Determining the overall remuneration policy for the Executive Long-term incentives8 – – 609 – – – Directors including the terms of their service agreements, > Considering the Company’s ongoing share sourcing Total variable pay 9 186 – 1,008 371 332 166 requirements to meet obligations under the Company’s share pension rights and compensation payments Total10 461 – 1,675 1,173 756 591 plans, and funding of the ESOP > Setting the appropriate remuneration for the Chairman, the Executive Directors and the Company Secretary > In the light of advice received from the external advisers and trends in remuneration practice and governance, discussing > Recommending and monitoring the level and structure of the Company’s overall approach to executive remuneration ëÞæùçÞëÚøâèçßèëìÞçâèëæÚçÚàÞæÞçøÛÞâçàøáÞĚëìøåÚòÞë and reviewing whether any changes should be made of management below Board level and their direct reports > Reviewing the Remuneration Committee’s terms of reference > Overseeing the operation of the executive share incentive plans > Approving the 2016 Directors’ Remuneration Report and reviewing the 2017 Directors’ Remuneration Report Vesuvius plc 108 Annual Report and Accounts 2017 109

Annual Report on Directors’ Remuneration continued

ÓáÞøÚÛåÞÛÞåèðìÞøìèùøøáÞßÞÞìÚçÝøÚñÚÛåÞÛÞçÞĚøìëÞÜÞâïÞÝÛòÍèç˜ÞñÞÜùøâïÞÃâëÞÜøèëìâçøáÞĚçÚçÜâÚåòÞÚëùçÝÞëëÞïâÞðÚçÝ 430(B) Statement that it would pay his removal costs, the Annual Incentive the total remuneration received by both Executive and Non-executive Directors during the year under review: reasonable costs of any international tax advice required in The Executive Directors are eligible to receive an Annual connection with his retirement from employment and any tax 2017 2016 Incentive calculated as a percentage of base salary, based support to meet his ongoing obligations to correctly report ÓÚñÚÛåÞ Taxable èçÚÜáâÞïÞæÞçøÚàÚâçìøìéÞÜâĚÞÝĚçÚçÜâÚåøÚëàÞøìÚçÝ Total fees 3 ÛÞçÞĚøì4 Total Total fees 3 ÛÞçÞĚøì4 Total income received from the Company for a three-year period (£000) (£000) (£000) (£000) (£000) (£000) personal objectives. Each year the Remuneration Committee ßèååèðâçàáâìëÞøâëÞæÞçøÈçÚÝÝâøâèçøáÞÒøÚøÞæÞçøÜèçĚëæÞÝ establishes the performance criteria for the forthcoming year. John McDonough CBE 185 21 206 185 21 206 that the Company will also pay de minimis administrative ÓáÞĚçÚçÜâÚåøÚëàÞøìÚëÞìÞøÛòëÞßÞëÞçÜÞøèøáÞÂèæéÚçòċì Christer Gardell 45 7 52 45 14 59 ÞñéÞçìÞìÚçÝÛÞçÞĚøìâçÜùëëÞÝâçÜèççÞÜøâèçðâøááâì ĚçÚçÜâÚåÛùÝàÞøÓáÞøÚëàÞøëÚçàÞâììÞøøèÞçìùëÞøáÚøÀççùÚå Hock Goh 45 8 53 45 8 53 retirement. ÈçÜÞçøâïÞìÚëÞèçåòéÚâÝèùøÚøæÚñâæùæßèëìâàçâĚÜÚçøåò Jane Hinkley 60 3 63 60 4 64 No further termination payment will be made to Mr Wanecq. exceeding performance expectations. The Remuneration Douglas Hurt 65 2 67 65 2 67 Committee considers that the setting and attainment of ÓáÞëÞðÞëÞçèéÚòæÞçøìæÚÝÞøèÚçòÃâëÞÜøèëßèëåèììèßèßĚÜÞ Holly Koeppel11 34 7 41 ––– these targets is important in the context of achievement of during the year ended 31 December 2017, and no payments ÓèøÚå#Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëëÞæùçÞëÚøâèç 482 the Company’s longer-term strategic goals. were made to any other past Directors of the Company during ÓèøÚå#ÄñÞÜùøâïÞÃâëÞÜøèëëÞæùçÞëÚøâèç 2,892 the year ended 31 December 2017. The Annual Incentive has a threshold level of performance Total 2017 Director remuneration 3,374 below which no award is paid, a target level and a maximum performance level at which a maximum award is earned. Note: Base Salary and Fees  ÏÚøëâÜäÀçÝëŲöèâçÞÝøáÞÁèÚëÝèçÒÞéøÞæÛÞë#ÅâàùëÞìâçøáÞøÚÛåÞëÞåÚøÞøèìÚåÚëòÛÞçÞĚøìÚçÝÀççùÚåÈçÜÞçøâïÞÞÚëçÞÝâçëÞìéÞÜøèßøáÞéÞëâèÝÒÞéøÞæÛÞë ÈçøáÞòÞÚëùçÝÞëëÞïâÞðøáÞÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëëÞÜÞâïÞÝ – 31 December 2017. 2017 Annual Incentive 2. François Wanecq stepped down from the Board on 31 August 2017, and retired from the Company on 31 December 2017. Figures in the table relate to salary, a base salary of £325,000 per annum. François Wanecq For 2017 the maximum Annual Incentive potential for the ÛÞçÞĚøìÚçÝÀççùÚåÈçÜÞçøâïÞÞÚëçÞÝâçëÞìéÞÜøèßáâìÞæéåèòæÞçøÚìÂáâÞßÄñÞÜùøâïÞéëè˜ëÚøÞÝßèëøáÞéÞëâèÝßëèæøáÞÛÞàâççâçàèßøáÞĚçÚçÜâÚåòÞÚëøè Àùàùìø received a base salary of £590,000 per annum, and following Executive Directors was 125% of base salary and their target 2017. Also included in the table is the full value of his Vesuvius Share Plan award due to vest in 2018 based on performance over the performance period 2015-2017 his promotion to Chief Executive, Patrick André received a base (see footnote 8 for more details). Annual Incentive potential was 62.5% of base salary. Following  ÁÚìÞìÚåÚëò›èëßÞÞìÚìÚééëèéëâÚøޜÞÚëçÞÝâçëÞåÚøâèçøèìÞëïâÜÞìÚìÚÃâëÞÜøèëÝùëâçàøáÞĚçÚçÜâÚåòÞÚë salary of £525,000 per annum. The Non-executive Directors’ his appointment as Chief Executive on 1 September 2017, it  ÓáÞÔÊëÞàùåÚøâèçìëÞêùâëÞøáÞâçÜåùìâèçèßÛÞçÞĚøìßèëÃâëÞÜøèëìðáÞëÞøáÞìÞðèùåÝÛÞøÚñÚÛåÞâçøáÞÔÊèçøáÞÚììùæéøâèçøáÚøøáÞÃâëÞÜøèëâìøÚñëÞìâÝÞçøâçøáÞ fees were set at £45,000 per annum. Supplementary fees of was agreed that Patrick André would participate in the Annual ÔÊÓáÞĚàùëÞìâçøáÞøÚÛåÞøáÞëÞßèëÞâçÜåùÝÞÞñéÞçìÞëÞâæÛùëìÞæÞçøÚçÝÚììèÜâÚøÞÝøÚñëÞåÚøâçàøèøëÚïÞåÚÜÜèææèÝÚøâèçÚçÝìùÛìâìøÞçÜÞâçÜèççÞÜøâèçðâøá £15,000 per annum were paid to the Chairmen of the Audit ÚøøÞçÝÚçÜÞÚøÁèÚëÝæÞÞøâçàìÚçÝèøáÞëÁèÚëÝÛùìâçÞììÝùëâçàøáÞòÞÚëðáâÜáÚëÞÜèçìâÝÞëÞÝÛòÇ÷ÑÂøèÛÞøÚñÚÛåÞâçøáÞÔÊÁÞçÞĚøìßèëÄñÞÜùøâïÞÃâëÞÜøèëì Incentive at these incentive levels with effect from that date. include car allowance, private medical care, relocation expenses, tax advice, commuting costs, school fees and de minimis amounts for Directors’ spouse’s travel and and Remuneration Committees. A supplementary annual fee With respect to his service with the Group prior to that date ÚÝæâçâìøëÚøâïÞÞñéÞçìÞìÚçÝÛÞçÞĚøìâçÜùëëÞÝâçÜèççÞÜøâèçðâøáÅëÚçʼnèâìÖÚçÞÜêċìëÞøâëÞæÞçø of £5,000 was also paid to the Senior Independent Director. he remained entitled to receive any payouts due under the ! ÏÚøëâÜäÀçÝëŲÚçÝÆùòØèùçàëÞÜÞâïÞÚéÞçìâèçÚååèðÚçÜÞèß!YèßÛÚìÞìÚåÚëòÅëÚçʼnèâìÖÚçÞÜêëÞÜÞâïÞÝÚéÞçìâèçÚååèðÚçÜÞèß YèßÛÚìÞìÚåÚëòÓáÞĚàùëÞì The Chairman was paid an annual fee of £185,000. Neither the âçøáÞøÚÛåÞëÞéëÞìÞçøøáÞïÚåùÞèßÚååÜÚìáÚååèðÚçÜÞìÚçÝÜèçøëâÛùøâèçìëÞÜÞâïÞÝâçëÞìéÞÜøèßéÞçìâèçÛÞçÞĚøì Flow Control business unit Annual Incentive Plan. " ÓáÞìùæèßøèøÚåìÚåÚëòøÚñÚÛåÞÛÞçÞĚøìÚçÝéÞçìâèç Chairman nor the other Non-executive Directors are members # ÓáâìĚàùëÞâçÜåùÝÞìÚçòÀççùÚåÈçÜÞçøâïÞéÚòæÞçøìæÚÝÞøèøáÞÄñÞÜùøâïÞÃâëÞÜøèëìâçëÞåÚøâèçøèìÞëïâÜÞìÚìÚÃâëÞÜøèëâçøáÞòÞÚëùçÝÞëëÞïâÞðÒÞÞéÚàÞì%øè of the Group’s pension plans, nor do they participate in the Following his retirement as a Director, François Wanecq 111 for more details. Group’s incentive schemes. remained entitled to be considered for an Annual Incentive in 8. This represents the Performance Share award granted to François Wanecq in 2015 under the Vesuvius Share Plan, that is due to vest in 2018. See Note 6 of the respect of services rendered in the calendar year 2017. It was Vesuvius Performance Share Awards Allocations table on page 113. At an average Vesuvius mid-market closing share price (from 1 October 2017-31 December In line with the Group’s longer-term approach of reviewing the 2017) of 580 pence, the total value of the awards that are due to vest, along with the cash payment for the dividend that has accrued on these vested shares was agreed that the amount payable, if any, would be calculated salaries of Executive Directors and senior Executives every

£609,364. and paid in 2018 at the same time as other Executives. Governance % ÓáÞìùæèßøáÞïÚåùÞèßøáÞÀççùÚåÈçÜÞçøâïÞÚçÝøáÞåèçà˜øÞëæâçÜÞçøâïÞìðáÞëÞøáÞéÞëßèëæÚçÜÞéÞëâèÝÞçÝÞÝÝùëâçàøáÞĚçÚçÜâÚåòÞÚë two to three years, Guy Young’s base salary was reviewed for  ÓáÞìùæèßÛÚìÞìÚåÚëòÛÞçÞĚøìéÞçìâèçÀççùÚåÈçÜÞçøâïÞÚçÝåèçà˜øÞëæâçÜÞçøâïÞìðáÞëÞøáÞéÞëßèëæÚçÜÞéÞëâèÝÞçÝÞÝÝùëâçàøáÞĚçÚçÜâÚåòÞÚë ÚééåâÜÚøâèçâç$ÓáâìðÚìøáÞĚëìøøâæÞáâìÛÚìÞìÚåÚëò ÅèëøáÞĚçÚçÜâÚåòÞÚë#øáÞÄñÞÜùøâïÞÃâëÞÜøèëìċÀççùÚå 11. Holly Koeppel joined the Board on 3 April 2017. had been reviewed since he joined the Company in 2015 and, Incentives were based 60% on Group headline earnings Additional note: following this review, it was resolved that his salary should be éÞëìáÚëÞYèçøáÞÆëèùéċìÜÚìáÜèçïÞëìâèç›ÝÞĚçÞÝÚì ÓèøÚå"ÃâëÞÜøèëëÞæùçÞëÚøâèçßèëøáÞÃâëÞÜøèëìðáèìÞëïÞÝÝùëâçà"ðÚìx!!æÓáâìâçÜåùÝÞÝßÞÞìèßx äÚçÝøÚñÚÛåÞÛÞçÞĚøìèßx$äéÚâÝøèÍÞåÝÚ increased by 7.7%, with effect from 1 January 2018, up to èéÞëÚøâçàÜÚìáěèðÝâïâÝÞÝÛòøëÚÝâçàéëèĚøœÚçÝYèç Connors in 2016. Nelda retired from the Board on 30 September 2016. £350,000 per annum, in recognition of his leadership of the ìéÞÜâĚÞÝéÞëìèçÚåèÛöÞÜøâïÞì Group’s Finance function over the past three years and his Financial Targets ÑÞæùçÞëÚøâèçßèëøáÞÅèëæÞëÂáâÞßÄñÞÜùøâïÞ™ In addition, the Remuneration Committee exercised its development in the role. In considering this increase, the The 2017 Vesuvius Group headline earnings per share discretion to treat François Wanecq as a good leaver for the Committee also noted that over the previous two years the Audited performance targets set out below were set at the December purposes of the Vesuvius Share Plan, retaining his right to the average salary increase for UK salaried employees had been François Wanecq stepped down as an Executive Director and 2016 full-year average foreign exchange rates, being the rates awards granted in 2015 in full (as he was employed by Vesuvius 3.36%. Following his recent promotion, there is no change to Chief Executive on 31 August 2017 and, to assist the transition of used for the 2017 budget process: for the full performance period) and those granted in 2016 and Patrick André’s salary in 2018, but, as announced at the time èßĚÜÞøèøáÞçÞðÂáâÞßÄñÞÜùøâïÞáÞÜèçøâçùÞÝâçÞæéåèòæÞçø 2017 on a pro-rated basis. The vesting of all these awards is of his appointment, the Remuneration Committee has ëÞÜÞâïâçàáâììÚåÚëòÛÞçÞĚøìÚçÝéÞçìâèçÚååèðÚçÜÞøèøÚååâçà subject to the achievement of the applicable performance ÜèææâøøÞÝøèëÞïâÞðáâììÚåÚëòÚççùÚååòßèëøáÞĚëìøøáëÞÞ Threshold: On-target: ÷Úñâæùæ £471k, until he retired from the Company on 31 December 2017. criteria over the full performance period, the rules of the years of his appointment (January 2019, 2020 and 2021). 30.4 pence 33.0 pence 35.6 pence François Wanecq remained entitled to be considered for an Vesuvius Share Plan, and the approval of the Remuneration Annual Incentive in respect of services rendered in the calendar Committee. The extent of vesting of the 2016 and 2017 awards Pension Arrangements – Audited The 2017 Group’s cash conversion targets were set as follows: year 2017. It was agreed that the amount payable, if any, will be determined by the Remuneration Committee in 2019 In accordance with their service agreements, Patrick André would be calculated and paid in 2018 at the same time as other and 2020. Details of the vesting of François Wanecq’s 2015 Threshold: On-target: ÷Úñâæùæ and Guy Young are entitled to pension allowances of 25% Executives, and at a maximum would equal 125% of his base award, the extent of which has already been determined by 90% 105% 120% of base salary. (François Wanecq was entitled to a pension salary in 2017. Calculation and payment of the 2017 Annual the Remuneration Committee, are included in the Directors’ allowance of 30% of base salary up until the date of his Incentive was subject to the Company’s achievement of the Remuneration table and also detailed in the Longer-term Pay retirement.) This allowance can be used to participate in In assessing the Group’s performance against these targets, the ĚçÚçÜâÚåøÚëàÞøìÚçÝáâìÚÜáâÞïÞæÞçøèßáâìéÞëìèçÚåèÛöÞÜøâïÞì section below. Vesuvius’ pension arrangements, be invested in their own Committee uses a constant currency approach. Thus, the 2017 for this period (see Annual Incentive section below). The Annual Under the applicable company relocation policy, François pension arrangements or be taken as a cash supplement full-year EPS performance was retranslated at December Incentive earned in relation to the period 1 September – 2016 full-year average foreign exchange rates to establish Wanecq has received one month’s salary as a relocation (or any combination of these alternatives). 31 December 2017 totalled £209k, being 106% of his base ÚååèðÚçÜÞÈçÚÝÝâøâèçøáÞÂèæéÚçòÜèçĚëæÞÝâçøáÞÒÞÜøâèç performance. This is consistent with practice in previous years. salary for this period. Vesuvius plc 110 Annual Report and Accounts 2017 111

Annual Report on Directors’ Remuneration continued

In 2017, Vesuvius’ retranslated EPS performance was 39.1 pence, Personal Objectives In summary, after considering performance as outlined above, of the FTSE 250 (excluding investment trusts), and 50% on and cash conversion was 104%. Consequently EPS performance In 2017, a proportion (20%) of the Annual Incentive for the Committee approved an Annual Incentive payoutof 15% of headline EPS growth. The level of compound headline EPS was above maximum and the cash conversion performance was Executive Directors (representing 25% of the maximum 125% pro-rated base salary, out of the 25%, in respect of the personal àëèðøáìéÞÜâĚÞÝâçøáÞøÚëàÞøìâììÞøÛòøáÞÑÞæùçÞëÚøâèç between threshold and target. Payments of 75% and 11.38% of bonus entitlement) was based on the achievement of personal objectives of Francois Wanecq for the period of his tenure as Committee each year, taking into account the Group’s base salary respectively, 86.38% in total were therefore due to objectives. A summary of the objectives set and performance Chief Executive during the year. prospects and the broader global economic environment. the Executive Directors and François Wanecq under the Annual achieved is set out below. The schedule of EPS targets is designed at the maximum level to The total Annual Incentive awards payable to Patrick André and ÈçÜÞçøâïÞâçëÞìéÞÜøèßøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞæÞøëâÜì be highly challenging, whilst remaining an effective incentive for Guy Young in respect of their services as a Director during 2017 the management team. The EPS and TSR measures operate are therefore 106% of pro-rated salary and 102% of salary independently. The use of these performance measures is Patrick André respectively. The total Annual Incentive award payable to intended to align executive remuneration with shareholders’ Summary of objective Summary outcome François Wanecq in respect of 2017 is 101% of salary. François interests. UK Executives receive awards in the form of nil-cost Drive Group performance > Launched new incremental restructuring programme with different scope Wanecq will receive his Annual Incentive payment in cash in èéøâèçìðâøáÚěÞñâÛåÞÞñÞëÜâìÞÝÚøÞÚçÝçèç˜ÔÊÄñÞÜùøâïÞì > Introduced and drove upgraded budget process for 2018 line with the Remuneration Policy. 33% of Patrick André and receive awards which are exercised on the date of vesting. Transition to Chief Executive > Completed tailored induction and handover of key contacts Guy Young’s Annual Incentive payments will be deferred into and engage the senior > Developed relationship with investor community awards over shares, to be held for a period of three years. On 16 March 2017, François Wanecq and Guy Young received management team > Developed relationships with senior teams in the Foundry, Advanced Refractories and allocations of Performance Shares worth 200% and 150% of 2018 Annual Incentive Digital Services business units their base salaries, respectively. Following his appointment The Remuneration Committee has determined that for 2018 Manage the succession in Flow > Selected successor, and continued to manage the Flow Control business unit until as Chief Executive on 1 September 2017, it was agreed that the structure of the Annual Incentive will remain broadly the Control business unit leadership handover Patrick André would receive a pro-rated ‘top up’ of his 2017 same as for 2017: 60% of the Executive Directors’ Annual > Assisted in induction of new Flow Control President Performance Share award. As a result on 1 September 2017, Incentives will therefore be based on Group headline earnings he was granted an additional Performance Share award of Review Group organisation and ÑÞïâÞðÞÝÚçÝÜèçĚëæÞÝÛùìâçÞììùçâøåÞÚÝÞëìáâéÚçÝùéÝÚøÞÝèëàÚçâìÚøâèçÚå per share, 20% on working capital using an updated objective 42,257 shares. This award, in addition to the Performance âæéåÞæÞçøÜáÚçàÞìâÝÞçøâĚÞÝ responsibility of business units of the Group’s working capital to sales ratio (based on the Share award of 60,413 shares awarded to him on 16 March ÑÞÝÞĚçÞÝÜèëéèëÚøÞßùçÜøâèçÚåëèåÞìèëàÚçâìÚøâèçÚçÝåÞÚÝÞëìáâéðâøáÜåÞÚëÜèææùçâÜÚøâèç 12-month moving average) and 20% on the achievement of 2017, brought his total award of Performance Shares in 2017 to In summary, after considering performance as outlined above, the Committee approved an Annual Incentive payout of 19.65% of personal objectives. The Company will not be disclosing the YèßáâììÚåÚëòèçÚéëè˜ëÚøÞÝÛÚìâìÈøëÞěÞÜøÞÝøáÞâçÜëÞÚìÞ base salary, out of the 25%, in respect of the personal objectives of Patrick André for the period of his tenure as Chief Executive. targets set until after the relevant performance period has in his Performance Share percentage entitlement and the For the period of his tenure as President Flow Control, Mr André was awarded 9.76% of base salary, out of 16%, in respect of his ended because of commercial sensitivities. The personal âçÜëÞÚìÞâçáâììÚåÚëòßèëøáÞĚçÚåßèùëæèçøáìèßøáÞòÞÚë èÛöÞÜøâïÞìßèë$ÚëÞÚååçèç˜ĚçÚçÜâÚåèëöèۘìéÞÜâĚÜâççÚøùëÞ personal objectives. and track performance against key strategic, organisational The Remuneration Committee has determined that Patrick André will receive a Performance Share award in 2018 Guy Young and operational goals. The maximum Annual Incentive potential for 2018 will be 125% of base salary. 33% of any equivalent in value to 200% of his base salary and Guy Young Summary of objective Summary outcome Annual Incentive earned will be deferred into awards over an award equivalent in value to 150% of his base salary. Develop people and team > Developed updated functional strategy and plans, including full team evaluation shares, to be held for a period of three years. ÃÞïÞåèéÞÝùéÝÚøÞÝìùÜÜÞììâèçéåÚçìßèëäÞòĚçÚçÜÞßùçÜøâèçì The performance period applicable to the awards made in > Drove performance across the team 2015 ended on 31 December 2017. The TSR performance Governance Malus/Clawback Arrangements in 2018 during this three-year performance period was assessed Improve working capital ÈæéåÞæÞçøÞÝçÞðìùééåâÞëĚçÚçÜÞìÜáÞæÞ against the comparator group and it was determined that the management process > Introduced clearer working capital management and reporting processes, with Vesuvius has malus and clawback arrangements in respect of Company’s performance was between median and upper demonstrable impact on working capital performance Executive Directors’ variable remuneration. The structure of those arrangements is outlined in our Remuneration Policy. quintile. As a result, 27.1% of Performance Share awards Manage the Implementation of > Delivered strategy. Oversaw launch of project and commenced transition with will vest under the TSR performance element. The Committee Shared Service Strategy appropriate performance metrics put in place reviewed statistics from various sources which gave a large Longer-term Pay (“LTIPs”) – Audited Develop Group IR strategy > Implemented updated strategy and broker performance reviews range of outcomes of global GDP growth. The Committee > Managed clear investor engagement and enhanced share register Performance Share awards are allocated to the Executive concluded that 2½% p.a. was a reasonable base against which Enhance processes for monitoring > Increased robustness of internal processes Directors under the Vesuvius Share Plan (VSP). In accordance to measure the Company’s EPS growth of 6.8% p.a. for the corporate activity ÄçáÚçÜÞÝøáÞÜÚéÚÛâåâøâÞìßèëÚììÞììæÞçøèßĚçÚçÜâÚåéÞëßèëæÚçÜÞßèëÜèëéèëÚøÞÚÜøâïâøò with the Remuneration Policy and the rules of the VSP, they are 2015-2017 performance period. As a result the Group’s annual eligible to receive, on an annual basis, a Performance Share compound headline EPS growth above this GDP measure In summary, after considering performance as outlined above, the Committee approved an Annual Incentive payout of 15.75% of award with a face value of up to 200% of salary. Vesting of 50% for the period was 4.3%. Therefore, 16.6% of Performance base salary out of the 25%, in respect of the personal objectives of Guy Young. of shares awarded is based upon the Company’s three-year Share awards will vest under the EPS performance element. TSR performance relative to that of the constituent companies These awards will vest in April 2018. François Wanecq Summary of objective Summary outcome Target for the 2015 Performance Share Awards – Audited Drive Group performance for 2017 > Maintained clear control of capital expenditure TSR ranking relative to FTSE 250 Annual compound headline > Reduced working capital percentage, improvement in cash conversion ÞñÜåùÝâçàâçïÞìøæÞçøøëùìøì Vesting percentage EPS growth above global GDP Vesting percentage Support the process for CEO > Strong support of succession process with appropriate assistance provided Below median 0% Below 3% 0% succession > Effective transfer of key relationships both within and outside the Group Median 12.50% 3% 12.50% Complete implementation of agreed > Delivered expected savings from existing plan Between median and Pro rata between 12.50% Between 3% and 15% Pro rata between 12.50% restructuring plan > Existing plan perimeter extended to increase savings and return upper quintile and 50% and 50% Implement the Board approved > Increased performance focus on key growing markets of China and India Upper quintile 50% At or above 15% 50% strategy > Continued the development of the Technical Service offering Target corporate activity > Continued focus on opportunities for corporate development and business growth > Supported incremental growth in key areas of strategic focus Vesuvius plc 112 Annual Report and Accounts 2017 113

Annual Report on Directors’ Remuneration continued

Targets for the 2016, 2017 and 2018 Performance Share Awards – Audited Note: 1. In 2016, François Wanecq and Guy Young received allocations of Performance Shares worth 200% and 125% of their base salaries, being 373,938 shares and 128,739 shares respectively. In addition, prior to his appointment as Chief Executive, Patrick André received an award of 92,746 shares in respect of his role as TSR ranking relative to FTSE 250 Annual compound headline ÞñÜåùÝâçàâçïÞìøæÞçøøëùìøì Vesting percentage EPS growth Vesting percentage President, Flow Control. On the date of his retirement from the Company on 31 December 2017, François Wanecq’s entitlement to the shares he was granted in 2016 ðÚìëÞÝùÜÞÝéëè˜ëÚøÚøèëÞěÞÜøáâìÝÞéÚëøùëÞéÚëøðÚòøáëèùàáøáÞïÞìøâçàéÞëâèÝÀìÚëÞìùåø!$ ìáÚëÞìåÚéìÞÝèçøáâìÝÚøÞ Below median 0% Below 3% 0% 2. On 16 March 2017, François Wanecq and Guy Young received allocations of Performance Shares worth 200% and 150% of their base salaries, being 225,967 shares Median 12.50% 3% 12.50% and 93,355 shares respectively. In addition, prior to his appointment as Chief Executive, Patrick André received an award of 60,413 shares in respect of his role as ÏëÞìâÝÞçøÅåèðÂèçøëèåÓáÞìÞÚååèÜÚøâèçìðÞëÞÜÚåÜùåÚøÞÝÛÚìÞÝùéèçøáÞÚïÞëÚàÞÜåèìâçàæâݘæÚëäÞøéëâÜÞèßÕÞìùïâùìċìáÚëÞìèçøáÞĚïÞÝÞÚåâçàÝÚòìÛÞßèëÞøáÞ Between median and upper Pro rata between 12.50% and Between 3% and 6% Pro rata between 12.50% and award was made, being £5.222. The total value of these awards based on this share price on the date of grant was £1,180,000, £487,500 and £315,477 respectively. quintile 50% 25% On the date of his retirement from the Company on 31 December 2017, François Wanecq’s entitlement to the shares he was granted in 2017 was reduced pro-rata to ëÞěÞÜøáâìÝÞéÚëøùëÞéÚëøðÚòøáëèùàáøáÞïÞìøâçàéÞëâèÝÀìÚëÞìùåø""##ìáÚëÞìåÚéìÞÝèçøáâìÝÚøÞ Upper quintile 50% 6% 25% 3. Patrick André’s March 2017 Performance Share award is subject to Flow Control performance conditions. Under these, 7,552 of the 60,413 shares awarded are Between 6% and 15% Pro rata between 25% and 50% ÝÞÞæÞÝøèáÚïÞæÞøøáÞéÞëßèëæÚçÜÞÜèçÝâøâèçÚééåâÜÚÛåÞâçøáÞĚëìøòÞÚëÓáÞÚÜáâÞïÞæÞçøèßøáÞéÞëßèëæÚçÜÞÜèçÝâøâèçðâååÛÞëÞÚììÞììÞÝÚøøáÞÞçÝèß$ and 2019. At above 15% 50% 4. Following his promotion to Chief Executive on 1 September 2017, Patrick André received an additional award of 42,257 Performance Shares in the form of a conditional award. This award brought his total award of Performance Shares in 2017 to 200% of his salary on a pro-rated basis, which is the maximum annual award for the Chief Executive as determined by the Vesuvius Remuneration Policy. The allocation was calculated based upon the average closing mid-market price Vesuvius Performance Share Award Allocations – Audited èßÕÞìùïâùìċìáÚëÞìèçøáÞĚïÞÝÞÚåâçàÝÚòìÛÞßèëÞøáÞÚðÚëÝðÚìæÚÝÞÛÞâçàx!#% éÞëìáÚëÞÓáÞøèøÚåïÚåùÞèßøáÞÚðÚëÝÛÚìÞÝèçøáâììáÚëÞéëâÜÞèçøáÞÝÚøÞ The following table sets out those Performance Share awards that were allocated in 2014, 2015, 2016 and 2017 under the Vesuvius of grant was £244,837. ! ÓáÞÏÞëßèëæÚçÜÞÒáÚëÞìøáÚøðÞëÞÚååèÜÚøÞÝâç áÚÝéÞëßèëæÚçÜÞÜèçÝâøâèçìøèÛÞøÞìøÞÝèïÞëøáÞĚçÚçÜâÚåòÞÚëì !ÚçÝ"ÀìøáÞëÞêùâìâøÞ Share Plan: performance was not achieved, François Wanecq’s award lapsed on the third anniversary of grant in March 2017. Total share Additional Total share Market price of " ÓáÞÏÞëßèëæÚçÜÞÒáÚëÞìøáÚøðÞëÞÚååèÜÚøÞÝâç!áÚÝéÞëßèëæÚçÜÞÜèçÝâøâèçìøèÛÞøÞìøÞÝèïÞëøáÞĚçÚçÜâÚåòÞÚëì!"ÚçÝ#ÓáÞéÞëßèëæÚçÜÞ allocations shares Allocations allocations the shares on  éÞëâèÝßèëøáÞËÓÈÏÈçÚÜÜèëÝÚçÜÞðâøáøáÞÂèæéÚçòċìÚÜáâÞïÞæÞçøèßøáÞìéÞÜâĚÞÝéÞëßèëæÚçÜÞÜèçÝâøâèçì #YèßÅëÚçʼnèâìÖÚçÞÜêċìÏÞëßèëæÚçÜÞ as at allocated lapsed Shares vested as at the day before Performance Earliest Shares,96,809 shares, are due to vest on 1 April 2018. In addition the Remuneration Committee has determined that Mr Wanecq will receive a cash payment of Grant and type of award 31 Dec 2016 during the year during the year during the year 31 Dec 2017 award (p) period vesting date £47,872 which is equivalent to the value of the dividends that would have been paid on the number of shares that are due to vest in respect of dividend record dates Patrick André occurring during the period between the award date and the date of vesting. 8 April 20161 1 Jan 16 – Additional notes: 7. All of François Wanecq and Guy Young’s awards have been made in the form of nil cost options with no exercise price. Patrick André’s award were made in the form of 31 Dec 18 conditional awards. Performance Shares92,746–––92,746 291.7 8 Apr 2019 8. If the performance conditions for these awards are not met then these awards will lapse. If the threshold level of either of the two performance conditions applicable 2,3 to these awards is met, then 12.50% of the award will vest. 16 March 2017 1 Jan 17 – 9. The Remuneration Committee also has the discretion to award cash or shares equivalent in value to the dividend that would have accrued during the vesting period 31 Dec 19 on the number of shares that vest. Performance Shares – 60,413 – – 60,413 524.5 16 Mar 2020 10. The mid-market closing price of Vesuvius’ shares during 2017 ranged between 400 pence and 606 pence per share and on 29 December 2017, the last dealing day of the year, was 584 pence per share. 1 September 20174 1 Jan 17 – 31 Dec 19 Restricted Share Award Performance Shares – 42,257 – – 42,257 578 1 Sep 2020 Total 92,746 102,670 – – 195,416 ÎçÆùòØèùçàċìÚééèâçøæÞçøÚìÂáâÞßÅâçÚçÜâÚåÎßĚÜÞëâç!øáÞÂèææâøøÞÞëÞìèåïÞÝøáÚøâøðèùåÝéÚëøâÚååòÜèæéÞçìÚøÞáâæßèë long-term incentives that he forfeited as a result of joining Vesuvius by granting a one-off Restricted Share award over 17,115 shares François Wanecq under the Vesuvius Share Plan. The value of this award was included in the Directors’ Remuneration table in the 2015 Remuneration 5

17 March 2014 1 Jan 14 – Governance Report. 31 Dec 16 Performance Shares 253,748 – 253,748 – – 429.3 – Half of this award vested in 2016, and the remainder vested on 1 November 2017, the second anniversary of the date of his 1 April 20156 1 Jan 15 – commencement of employment. Details of the portion of the Restricted Share award that vested during 2017 are given in the 31 Dec 17 table below: Outstanding Outstanding Performance Shares 221,533 – – – 221,533 491.1 1 Apr 2018 share allocation Shares vested share allocation 8 April 20161 1 Jan 16 – Date of award 1 Jan 2017 during the year1 31 Dec 2017 31 Dec 18 13 May 2016 8,557 8,557 –

Performance Shares 373,938 – 158,113 – 215,825 291.7 8 Apr 2019 Note: 16 March 20172 1 Jan 17 – 1. 8,557 shares vested to Guy Young on 1 November 2017. The mid-market closing price of the Company’s shares on the date of vesting was £5.885 per share. The total 31 Dec 19 ïÚåùÞèßìáÚëÞìøáÚøáÞëÞÜÞâïÞÝèçøáÞÝÚøÞèßïÞìøâçàðÚìøáÞëÞßèëÞx! !$ÈçÚÝÝâøâèçÆùòØèùçàëÞÜÞâïÞÝÚÜÚìáéÚòæÞçøèßx$ $#$øèëÞěÞÜøøáÞÝâïâÝÞçÝì that would have accrued on the shares between his date of joining and the vesting date. Performance Shares – 225,967 166,177 – 59,790 524.5 16 Mar 2020 Total 849,219 225,967 578,038 – 497,148 Guy Young 8 April 20161 1 Jan 16 – 31 Dec 18 Performance Shares 128,739 – – – 128,739 291.7 8 Apr 2019 16 March 20172 1 Jan 17 – 31 Dec 19 Performance Shares – 93,355 – – 93,355 524.5 16 Mar 2020 Total 128,739 93,355 – – 222,094 Vesuvius plc 114 Annual Report and Accounts 2017 115

Annual Report on Directors’ Remuneration continued

Statement of Directors’ Shareholding – Audited ÀççùÚåÂáÚçàÞìâçÂáâÞßÄñÞÜùøâïÞÏÚòïìÄæéåèòÞÞÏÚò The interests of Directors and their closely associated persons in ordinary shares as at 31 December 2017, including any interests in ÓáÞøÚÛåÞÛÞåèðìáèðìøáÞéÞëÜÞçøÚàÞÜáÚçàÞâçøáÞëÞæùçÞëÚøâèçèßøáÞÂáâÞßÄñÞÜùøâïÞ™ÜèæéëâìâçàìÚåÚëòøÚñÚÛåÞÛÞçÞĚøì share options and shares provisionally awarded under the Vesuvius Share Plan are set out below: and Annual Incentive – and comparable data for UK salaried employees. The UK salaried employee workforce was chosen as Outstanding a fair representation of a suitable comparator group as both the former Chief Executive François Wanecq and the incumbent ÁÞçÞĚÜâÚå incentive Chief Executive Patrick André are based in the UK (albeit with a global role and responsibilities) and levels of pay vary widely holding awards1 across the Group depending on geography and local market conditions. ÄñÞÜùøâïÞÃâëÞÜøèëì Patrick André –195,416 UK salaried employee François Wanecq 1,363,930 497,148 workforce (average Guy Young 14,551 222,094 Chief Executive per capita) Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëì 20171 2016 John Mc Donough CBE (Chairman) 100,000 – (£000) (£000) % change % change Salary 568 590 (3.73) 1.01 Christer Gardell2 –– ÓÚñÚÛåÞÛÞçÞĚøì2 212 35 505 0.89 Hock Goh 5,000 – Annual bonus 585 371 57.68 55.30 Jane Hinkley 12,000 – Douglas Hurt 18,000 – Note:  ÒÚåÚëòøÚñÚÛåÞÛÞçÞĚøìÚçÝÀççùÚåÈçÜÞçøâïÞÚæèùçøìâçëÞìéÞÜøèßøáÞÂáâÞßÄñÞÜùøâïÞßèë#ëÞěÞÜøøáÞìùæèßÚæèùçøìéÚòÚÛåÞøèÅëÚçʼnèâìÖÚçÞÜêâçëÞìéÞÜø Holly Koeppel 7,50 0 – of service from 1 January 2017 to 31 August 2017, and amounts payable to Patrick André in respect of service from 1 September 2017 to 31 December 2017.  ÓáÞâçÜëÞÚìÞâçÛÞçÞĚøìéëâçÜâéÚååòëÞìùåøìßëèæøáÞÜáÚçàÞâçÂáâÞßÄñÞÜùøâïÞÝùëâçàøáÞòÞÚëÅùëøáÞëâçßèëæÚøâèçèçøáÞÛÞçÞĚøìéÚâÝøèÏÚøëâÜäÀçÝëŲÚçÝÅëÚçʼnèâì Note: Wanecq during 2017 can be found in Note 4 to the Directors’ Remuneration table on page 108. 1. Patrick André holds conditional awards of 195,416 shares, and François Wanecq and Guy Young hold 497,148 and 222,094 nil cost options respectively, granted as Performance Shares under the Vesuvius Share Plan. These are all subject to performance conditions.  ÂáëâìøÞëÆÚëÝÞååâì÷ÚçÚàâçàÏÚëøçÞëèßÚçÝáÚìÚĚçÚçÜâÚåâçøÞëÞìøâçÂÞïâÚçÂÚéâøÚåðáâÜááÞåÝYèßÕÞìùïâùìċâììùÞÝìáÚëÞÜÚéâøÚåÚìÚø ÃÞÜÞæÛÞë# Annual Spend on Employee Pay vs Shareholders’ Distributions and at the date of this report. The charts below show the annual spend on all employees (including Executive Directors) compared with distributions made and Additional notes:  ÍèçÞèßøáÞèøáÞëÃâëÞÜøèëìçèëøáÞâëìéèùìÞìçèëøáÞâëæâçèëÜáâåÝëÞçáÞåÝçèç˜ÛÞçÞĚÜâÚåâçøÞëÞìøìâçøáÞèëÝâçÚëòìáÚëÞìèßøáÞÂèæéÚçòÝùëâçàøáÞòÞÚë proposed to be made to shareholders for 2016 and 2017: 4. There were no changes in the interests of the Directors in the ordinary shares of the Company in the period from 1 January 2018 to the date of this Report. 5. All awards under the Vesuvius Share Plan are subject to performance conditions and continued employment until the relevant vesting date as set out on pages 112 Relative importance of spend on pay (2017) £m Relative importance of spend on pay (2016) £m and 113. 6. Full details of Directors’ shareholdings and incentive awards are given in the Company’s Register of Directors’ Interests, which is open to inspection at the Company’s £48.6m £44.7m ëÞàâìøÞëÞÝèßĚÜÞÝùëâçàçèëæÚåÛùìâçÞììáèùëì 10% 10%

Shareholding Guidelines The Remuneration Committee encourages Executive Directors to build and hold a shareholding in the Company. The required

holding of the Chief Executive is to be equivalent in value to at least 2x salary and that required of other Executive Directors is to Governance be equivalent in value to at least 1x salary. To this end, Executive Directors are required to retain at least 50% (measured as the Remuneration Remuneration B Dividends Dividends value after tax) of any shares received through the operation of share schemes; in addition, permission to sell shares held – whether acquired through the operation of share schemes or otherwise – will not be given, other than in exceptional circumstances, if, following the disposal, the shareholding requirements have not been achieved.

Compliance with the shareholding policy is tested at the end of each year for application in the following year using the average of the closing prices of a Vesuvius ordinary share for the trading days in that December. 90% 90% £441.5m £384.8m ÄñÞÜùøâïÞÃâëÞÜøèëìċÒáÚëÞáèåÝâçàì™ÀùÝâøÞÝ (£m) (£m) As at 31 December 2017, the Executive Directors’ shareholdings against the current shareholding guidelines (using the Company’s 2017 2016 Change share price averaged over the trading days of the period 1 December to 31 December 2017, of 565.97 pence per share) were Group remuneration of continuing operations (see Note 8) 441.5 384.8 14.73% as follows: ÃâïâÝÞçÝì›ÛÚìÞÝèçĚçÚåéëèéèìÞÝÝâïâÝÞçݜ 48.6 44.7 8.72% Actual share ownership as a percentage of salary Policy share ownership Director at 31 Dec 2017 as a percentage of salary Policy met? Patrick André 0% 200% In the build-up period Guy Young 25% 100% In the build-up period Vesuvius plc 116 Annual Report and Accounts 2017 117

Annual Report on Directors’ Remuneration continued Directors’ Report

TSR Performance and Chief Executive Pay Directors’ Report Research and Development The TSR performance graph compares Vesuvius TSR performance with that of the same investment in the FTSE 250 Index The Directors submit their Annual Report together with the The Group’s investment in research and development ›ÞñÜåùÝâçàâçïÞìøæÞçøøëùìøìœÓáâìâçÝÞñáÚìÛÞÞçÜáèìÞçÚìøáÞÜèæéÚëÚøèëâçÝÞñøèëÞěÞÜøøáÞìâóÞâçøÞëçÚøâèçÚåìÜèéÞÚçÝ audited accounts of the Group and of the Company, Vesuvius ›Ñ–ÃœÝùëâçàøáÞòÞÚëùçÝÞëëÞïâÞðÚæèùçøÞÝøèx æ ÝâïÞëìâøòèßøáÞÂèæéÚçòÓÒÑâìøáÞæÞÚìùëÞèßøáÞëÞøùëçìøáÚøÚÜèæéÚçòáÚìéëèïâÝÞÝßèëâøììáÚëÞáèåÝÞëìëÞěÞÜøâçàìáÚëÞ plc, registered in England and Wales No. 8217766, for the year ›ëÞéëÞìÞçøâçàÚééëèñâæÚøÞåòYèßÆëèùéëÞïÞçùÞ price movements and assuming reinvestment of dividends. A spot rate has been used for this graph. The demerger of Vesuvius plc ended 31 December 2017. ›"YœÅùëøáÞëÝÞøÚâåìèßøáÞÆëèùéċìіÃÚÜøâïâøâÞìÜÚç was effective on 19 December 2012 and therefore the graph shows the period from 19 December 2012 to 31 December 2017. be found in the Innovation section of the Strategic Report. The Companies Act 2006 requires the Company to provide Vesuvius’ total shareholder return a Directors’ Report for Vesuvius plc for the year ended compared against total shareholder Vesuvius plc FTSE 250 Index (excluding Investment Trusts) ÃÞÜÞæÛÞë#ÓáÞâçßèëæÚøâèçøáÚøßùåĚåìøáâìëÞêùâëÞæÞçø Dividends return of the FTSE 250 index and which is incorporated by reference into, and forms part ÀçâçøÞëâæÝâïâÝÞçÝèß!!éÞçÜÞ›"!!éÞçÜޜéÞë (excluding investment trusts) 250 of, this report is included in the following sections of the Vesuvius ordinary share was paid on 22 September 2017 to since demerger Annual Report: ÕÞìùïâùììáÚëÞáèåÝÞëìÓáÞÁèÚëÝâìëÞÜèææÞçÝâçàÚĚçÚå 200 ÝâïâÝÞçÝâçëÞìéÞÜøèß#èß!éÞçÜÞ›" éÞçÜޜ > The Our Responsibility section per ordinary share which, if approved, will be paid on 25 May 150 > The Governance section 2018 to shareholders on the register at 13 April 2018.  ÅâçÚçÜâÚåÈçìøëùæÞçøìøáÞâçßèëæÚøâèçèçĚçÚçÜâÚåëâìä 100 management objectives and policies contained in Notes Accountability and Audit 19/12/12 20 and 27 to the Group Financial Statements A responsibility statement of the Directors and a statement by 50 the auditor about its reporting responsibilities can be found on This Directors’ Report and the Strategic Report contained in 1 2 éÚàÞìÚçÝ øè%ëÞìéÞÜøâïÞåòÓáÞÃâëÞÜøèëìßùåĚåøáÞ François Wanecq Patrick André pages 1 to 73 together represent the management report for responsibilities set out in their statement within the context of an ÂáâÞßÄñÞÜùøâïÞéÚò™ĚçÚçÜâÚåòÞÚëÞçÝâçà 31/12/12 31/12/13 31/12/14 31/12/15 31/12/16 31/12/17 31/12/17 the purpose of compliance with DTR 4.1.8R of the UK Listing overall control environment of central strategic direction and ÓèøÚåëÞæùçÞëÚøâèç›ìâçàåÞĚàùëÞ›xœœ x# x # x!% x#! x# 1,675 461 Authority’s Disclosure and Transparency Rules. The Company delegated operating responsibility. As at the date of this report, does not have any overseas branches within the meaning of the Annual variable pay (% of maximum) 0% 100% 64% 0% 63% 101% 106% so far as each Director of the Company is aware, there is no Companies Act 2006. Long-term variable pay (% of maximum) 67% 28% 27% 0% 0% 43.7% n/a relevant audit information of which the Company’s auditor is ùçÚðÚëÞÚçÝÞÚÜáÃâëÞÜøèëáÞëÞÛòÜèçĚëæìøáÚøøáÞòáÚïÞ Note: Going Concern  ÀæèùçøììáèðçâçëÞìéÞÜøèßÅëÚçʼnèâìÖÚçÞÜêßèë#ëÞěÞÜøéÚòæÞçøìâçëÞìéÞÜøèßáâììÞëïâÜÞÚìÂáâÞßÄñÞÜùøâïÞßëèæÉÚçùÚëò#øè Àùàùìø#ÚçÝøáÞ øÚäÞçÚååøáÞìøÞéìøáÚøøáÞòèùàáøøèáÚïÞøÚäÞçÚìÚÃâëÞÜøèë full value of his Vesuvius Share Plan award in relation to the performance period 2015–2017. Information on the business environment in which the Group âçèëÝÞëøèæÚäÞøáÞæìÞåïÞìÚðÚëÞèßÚçòëÞåÞïÚçøÚùÝâø  ÀæèùçøììáèðçâçëÞìéÞÜøèßÏÚøëâÜäÀçÝëŲßèë#ëÞěÞÜøéÚòæÞçøìâçëÞìéÞÜøèßáâììÞëïâÜÞÚìÂáâÞßÄñÞÜùøâïÞßëèæÒÞéøÞæÛÞë#øè ÃÞÜÞæÛÞë# èéÞëÚøÞìâçÜåùÝâçàøáÞßÚÜøèëìøáÚøÚëÞåâäÞåòøèâæéÚÜøøáÞ information and to establish that the Company’s auditor is future prospects of the Group, is included in the Strategic aware of that information. Statement on Shareholder Voting ÑÞéèëøÓáÞéëâçÜâéÚåëâìäìÚçÝùçÜÞëøÚâçøâÞìøáÚøøáÞÆëèùé At the last AGM (which was held on 10 May 2017) the resolution concerning the advisory vote on the Remuneration Report faces throughout its global operations are shown on pages Auditor Appointments

 ÚçÝ!ÓáÞĚçÚçÜâÚåéèìâøâèçèßøáÞÆëèùéâøìÜÚìáěèðì Governance ßèë#ëÞÜÞâïÞÝ %%  ïèøÞì›%$%%YœâçßÚïèùëÚçÝ !ïèøÞìÚàÚâçìø›Yœ  ïèøÞìðÞëÞðâøááÞåÝ A competitive tender process for the appointment of a liquidity position and debt facilities are also described in the ÓáÞÑÞæùçÞëÚøâèçÏèåâÜòëÞÜÞâïÞÝ $# # ›%$$"YœâçßÚïèùëÚçÝ#"$$$ïèøÞì› YœÚàÚâçìø ! $# ïèøÞìðÞëÞ statutory auditor was conducted during 2016. Following Strategic Report. In addition, the Group’s Viability Statement ðâøááÞåÝÀøøáÞÀÆ÷øèÛÞáÞåÝèç÷Úò$ìáÚëÞáèåÝÞëìðâååÚàÚâçÛÞâçïâøÞÝøèéÚëøâÜâéÚøÞâçÚçÚÝïâìèëòïèøÞèçøáÞ the completion of this the Company recommended that is set out within the Strategic Report on page 23. Notes 20 and Remuneration Report. ÏëâÜÞðÚøÞëáèùìÞÂèèéÞëìËËÏ›ÏðœÛÞÚééèâçøÞÝÚìÞñøÞëçÚå 27 to the Group Financial Statements set out the Group’s auditor for Vesuvius plc for the year ended 31 December 2017, objectives, policies and processes for managing its capital; ëÞéåÚÜâçàÊÏ÷ÆËËÏÒáÚëÞáèåÝÞëÚééëèïÚåøèÜèçĚëæøáÞ ĚçÚçÜâÚåëâìäìĚçÚçÜâÚåâçìøëùæÞçøìÚçÝáÞÝàâçàÚÜøâïâøâÞìÚçÝ The Directors’ Remuneration Report has been approved by the Board and is signed on its behalf by appointment of PwC was given at the 2017 AGM. PwC has âøìÞñéèìùëÞìøèÜëÞÝâøæÚëäÞø›ÛèøáÜùëëÞçÜòÚçÝâçøÞëÞìøëÚøÞ ÞñéëÞììÞÝâøìðâååâçàçÞììøèÜèçøâçùÞâçèßĚÜÞÚìÚùÝâøèëèßøáÞ Jane HinkleyÂáÚâëæÚçÑÞæùçÞëÚøâèçÂèææâøøÞÞ ëÞåÚøÞݜÚçÝåâêùâÝâøòëâìäÅùëøáÞëÝÞøÚâåìèßøáÞÆëèùéċìÜÚìá Company, and consequently, resolutions for the reappointment balances and borrowings are included in Notes 13, 14 and 27 28 February 2018 of PwC as auditor of the Company and to authorise the to the Group Financial Statements. Directors to determine its remuneration are to be proposed ÓáÞÃâëÞÜøèëìáÚïÞéëÞéÚëÞÝÜÚìáěèðßèëÞÜÚìøìßèëøáÞÆëèùé at the AGM. for a period in excess of 12 months from the date of approval èßøáÞ#ĚçÚçÜâÚåìøÚøÞæÞçøìÓáÞìÞßèëÞÜÚìøìëÞěÞÜøÚç Directors ÚììÞììæÞçøèßÜùëëÞçøÚçÝßùøùëÞÞçݘæÚëäÞøÜèçÝâøâèçìÚçÝ ÓáÞÃâëÞÜøèëìèßøáÞÂèæéÚçòÚëÞÏÚøëâÜäÀçÝëŲÂáëâìøÞë their impact on the Group’s future trading performance. ÆÚëÝÞååÇèÜäÆèáÉÚçÞÇâçäåÞòÃèùàåÚìÇùëøÇèååòÊèÞééÞå The forecasts show that the Group will be able to operate within Éèáç÷ÜÃèçèùàáÂÁÄÚçÝÆùòØèùçàÏÚøëâÜäÀçÝëŲöèâçÞÝ the current committed debt facilities and show continued the Board as Chief Executive on 1 September 2017, replacing ÜèæéåâÚçÜÞðâøáøáÞÂèæéÚçòċìĚçÚçÜâÚåÜèïÞçÚçøìÎçøáÞ François Wanecq who retired from the Board on 31 August basis of the exercise described above and the Group’s available 2017. Holly Koeppel joined the Board as an additional committed debt facilities, the Directors consider that the independent Non-executive Director on 3 April 2017. All the Group and Company have adequate resources to continue in Directors will retire at the AGM and offer themselves for operational existence for a period of at least 12 months from election or re-election at the AGM. Biographical information the date of signing of these accounts. Accordingly, they continue for the current Directors is given on pages 50 and 51. Further øèÚÝèéøÚàèâçàÜèçÜÞëçÛÚìâìâçéëÞéÚëâçàøáÞĚçÚçÜâÚå information on the remuneration of, and contractual statements of the Group and the Company. Vesuvius plc 118 Annual Report and Accounts 2017 119

Directors’ Report continued

arrangements for, the current Executive and Non-executive Further information relating to the Company’s issued share These shares were purchased pursuant to the Board’s Equal Opportunities Employment Directors is given on pages 96 to 116 in the Directors’ capital can be found in Note 8 to the Company Financial commitment to return the majority of the net proceeds of Vesuvius plc is an equal opportunities employer, and decisions Remuneration Report. The Non-executive Directors do not Statements. the disposal of the Precious Metals Processing division to on recruitment, development, training and promotion, and have service agreements. shareholders. These shares are currently held as Treasury The Company’s Articles specify that, subject to the authorisation other employment-related issues are made solely on the shares. The Company has not subsequently disposed of any of of an appropriate resolution passed at a General Meeting of grounds of individual ability, achievement, expertise and the repurchased shares. During the year, the Company did not Directors’ Indemnities the Company, Directors can allot relevant securities under conduct. These principles are operated on a non-discriminatory æÚäÞÚçòßùëøáÞëÚÜêùâìâøâèçìèßìáÚëÞìÚçòÚÜêùâìâøâèçìÛò The Directors have been granted qualifying third party Section 551 of the Companies Act up to the aggregate nominal basis, without regard to race, colour, nationality, culture, nominee, nor did it dispose of any shares previously acquired. indemnity provisions by the Company and the Directors of the ÚæèùçøìéÞÜâĚÞÝÛòøáÞëÞåÞïÚçøëÞìèåùøâèçÈçÚÝÝâøâèç ethnic origin, religion, belief, gender, sexual orientation, age, The Company does not have a lien over any of its shares. ÆëèùéċìÔÊÏÞçìâèçÏåÚçÓëùìøÞÞÁèÚëÝ›çèçÞèßðáèæâìÚ øáÞÀëøâÜåÞììøÚøÞøáÚøøáÞÃâëÞÜøèëìÜÚçìÞÞäøáÞÚùøáèëâøòèß disability or any other reason not related to job performance Director of Vesuvius plc) have been granted qualifying pension shareholders in a General Meeting to allot equity securities for or prohibited by applicable law. In cases where employees are scheme indemnity provisions by Vesuvius Pension Plans Trustees ÜÚìáðâøáèùøĚëìøÛÞâçàëÞêùâëÞÝøèèßßÞëìùÜáìáÚëÞìøèÞñâìøâçà Share Plans injured or disabled during employment with the Group, support, Ltd. The indemnities for Directors of Vesuvius plc have been in ordinary shareholders in proportion to their existing holdings Vesuvius operates a number of share-based incentive plans. including appropriate training, is provided to those employees force since the date of their appointment. The Pension Trustee under Section 561 of the Companies Act, in connection with a Under these plans the Group can satisfy entitlements by the ÚçÝðèëäéåÚÜÞÚÝöùìøæÞçøìÚëÞæÚÝÞÚìÚééëèéëâÚøÞâçëÞìéÞÜø âçÝÞæçâøâÞìðÞëÞâçßèëÜÞøáëèùàáèùøøáÞåÚìøĚçÚçÜâÚåòÞÚëÚçÝ rights issue and in other circumstances up to the aggregate acquisition of existing shares, the transfer of Treasury shares èßøáÞâëÝùøâÞìÚçÝðèëäâçàÞçïâëèçæÞçøìùééèëøâçàëÞÜèïÞëò remain in force. çèæâçÚåÚæèùçøìéÞÜâĚÞÝÛòøáÞëÞåÞïÚçøëÞìèåùøâèç or by the issue of new shares. Existing shares are held in an and continued employment. ÞæéåèòÞÞìáÚëÞèðçÞëìáâééåÚçøëùìø›ĊÄÒÎÏċœÓáÞÓëùìøÞÞèß At the Annual General Meeting on 10 May 2017, the Directors øáÞÄÒÎÏéùëÜáÚìÞììáÚëÞìâçøáÞèéÞçæÚëäÞøÚìëÞêùâëÞÝøè Annual General Meeting were authorised to issue relevant securities up to an aggregate Employee Communications enable the Group to meet liabilities for the issue of shares to The Annual General Meeting of the Company will be held at çèæâçÚåÚæèùçøèßx%  " ÚçÝâçÜèççÞÜøâèçðâøáÚëâàáøì Vesuvius adopts an open and honest approach to employee satisfy awards that vest. The Trustee does not register votes The Lincoln Centre, 18 Lincoln’s Inn Fields, London WC2A 3ED issue, to issue relevant securities up to a further nominal value communications, supported by regular updates from senior in respect of these shares and has waived the right to receive on Thursday 10 May 2018 at 11.00 am. èßx%  " ÈçÚÝÝâøâèçøáÞÃâëÞÜøèëìðÞëÞÞæéèðÞëÞÝøè management across all businesses and operations within the any dividends. allot equity securities, or sell Treasury Shares, for cash on a Group. Regular communications include direct email updates Amendments of Articles of Association non pre-emptive basis up to an aggregate nominal amount of èçøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞèßøáÞÂèæéÚçòøáÞâçÝùìøëò x !""%ÚçÝßèëøáÞéùëéèìÞìèßĚçÚçÜâçà›èëëÞĚçÚçÜâçà Restrictions on Transfer of Shares and Voting ÞçïâëèçæÞçøâçðáâÜáÕÞìùïâùìèéÞëÚøÞìÚçÝèøáÞëìâàçâĚÜÚçø ÓáÞÂèæéÚçòæÚòæÚäÞÚæÞçÝæÞçøìøèøáÞÀëøâÜåÞìÛòðÚò if the authority is to be used within six months after the original ÓáÞÂèæéÚçòċìÀëøâÜåÞìèßÀììèÜâÚøâèç›ĊÀëøâÜåÞìċœÝèçèø operational developments. The Company operates an of special resolution in accordance with the Companies Act. transaction) a transaction which the Board of the Company ÜèçøÚâçÚçòìéÞÜâĚÜëÞìøëâÜøâèçìèçøáÞìâóÞèßÚáèåÝâçàèëèç employee intranet which distributes Company news and events, determines to be an acquisition or other capital investment, the transfer of shares. The Directors are not aware of any as well as local initiatives for employee engagement on a Greenhouse Gas Emissions to allot equity securities, or sell Treasury Shares, for cash on a agreements between holders of the Company’s shares that may site-by-site basis. The HR department is the primary point Information on our reporting of greenhouse gas emissions, and non pre-emptive basis up to an additional nominal amount of result in restrictions on the transfer of securities or voting rights. èßÜèçøÚÜøßèëÞæéåèòÞÞìèçÞæéåèòæÞçøÚçÝðèëäéåÚÜÞ x !""%ÄÚÜáèßøáÞÚùøáèëâøâÞìàâïÞçâçøáÞìÞëÞìèåùøâèçì matters, operating with an open-door policy and advising the methodology used to record these, is set out on page 65 of No person has any special rights with regard to the control of expires at the earlier of the date of the 2018 Annual General employees of any local legal, tax, pension or other employment the Strategic Report. the Company’s share capital and all issued shares are fully ÷ÞÞøâçàèë ÉùçÞ$ÓáÞëÞìèåùøâèçìðÞëÞÚååøÚÛåÞÝâç changes. There are numerous employee-sponsored and paid. This is a summary only and the relevant provisions of the accordance with the terms of the Pre-Emption Group’s led representative bodies within Vesuvius which differ with Donations Articles should be consulted if further information is required. Governance Statement of Principles. The Directors propose to renew these respect to jurisdiction and geography. Senior management, In accordance with Company policy, no political donations authorities at the 2018 Annual General Meeting for a further supported and facilitated by the HR department, encourages ðÞëÞæÚÝÞâç#›"çâåœ year. In the year ahead, other than in respect of Vesuvius’ Interests in the Company’s Shares èéÞçÝâÚåèàùÞÚçÝìÞÞäìèééèëøùçâøâÞìøèÜèçìùåøðâøáøáÞìÞ ability to satisfy rights granted to employees under its various ÓáÞÂèæéÚçòáÚìÛÞÞççèøâĚÞÝâçÚÜÜèëÝÚçÜÞðâøáÃÓÑ!èß employee representative bodies as appropriate. Change of Control Provisions share-based incentive arrangements, the Directors have no the Disclosure and Transparency Rules of the following interests present intention of issuing any share capital of Vesuvius plc. ÓáÞøÞëæìèßøáÞÆëèùéċìÜèææâøøÞÝÛÚçäßÚÜâåâøòÚçÝÔÒ èß YèëæèëÞèßâøìâììùÞÝèëÝâçÚëòìáÚëÞì Pensions Private Placement Loan Notes contain provisions entitling the In each country in which the Group operates, the pension Authority for Purchase of Own Shares As at As at counterparties to exercise termination or other rights in the 31 Dec 2017 28 Feb 2018 arrangements in place are considered to be consistent with ÞïÞçøèßÚÜáÚçàÞèßÜèçøëèåèçøÚäÞèïÞëèßøáÞÂèæéÚçò Subject to the provisions of company law and any other Cevian Capital 21.11 21.11 good employment practice in that particular area. Independent A number of the arrangements to which the Company and its applicable regulations, the Company may purchase its own Standard Life Aberdeen 5.92 5.92 advisers are used to ensure that the plans are operated in subsidiaries are party, such as other debt arrangements and shares. At the Annual General Meeting of the Company held accordance with local legislation and the rules of each plan. Artisan Partners 4.97 4.97 share incentive plans, may also alter or terminate on a change on 10 May 2017, Vesuvius shareholders gave authority to the Group policy prohibits direct investment of pension fund assets Aberforth Partners 4.93 4.93 èßÜèçøëèåâçøáÞÞïÞçøèßÚøÚäÞèïÞëÈçøáÞÜèçøÞñøèßøáÞÆëèùé ÂèæéÚçòøèæÚäÞæÚëäÞøéùëÜáÚìÞìèßùéøè# $% in the Company’s shares. Outside the UK, the US, Germany and as a whole, these other arrangements are not considered to ÕÞìùïâùìèëÝâçÚëòìáÚëÞìëÞéëÞìÞçøâçàYèßøáÞÂèæéÚçòċì Pelham Capital Management CfD 4.58 4.58 Belgium, the majority of pension plans in the Group are of a ÛÞìâàçâĚÜÚçø issued ordinary share capital as at the latest practicable day Phoenix Asset Management 3.10 3.10 ÝÞĚçÞÝÜèçøëâÛùøâèççÚøùëÞ prior to the publication of the Notice of AGM. This authority Èç"øáÞæÚâçÆÞëæÚçÝÞĚçÞÝÛÞçÞĚøéåÚçðÚìÜåèìÞÝßèë Share Capital ÞñéâëÞìèç ÉùçÞ$èëøáÞÝÚøÞèßøáÞÀÆ÷øèÛÞáÞåÝâç The interests of Directors and their connected persons in the new entrants and existing members were offered a buy-out of $ðáâÜáÞïÞëâìøáÞÞÚëåâÞëÓáÞÃâëÞÜøèëìðâååìÞÞäëÞçÞðÚå ordinary shares of the Company as disclosed in accordance As at the date of this report, the Company had an issued share øáÞâëÛÞçÞĚøìùçÝÞëøáâìéåÚçÓáèìÞðáèÚÜÜÞéøÞÝøáâìÛùò˜èùø of this authority at the forthcoming AGM. with the Listing Rules of the Financial Conduct Authority are as capital of 278,485,071 ordinary shares of 10 pence each; set out on pages 113 and 114 of the Directors’ Remuneration øáÞçöèâçÞÝøáÞçÞðÝÞĚçÞÝÜèçøëâÛùøâèçéåÚç 7,271,174 of these ordinary shares are held in Treasury. In 2013 the Company acquired 7,271,174 ordinary shares, Report and details of the Directors’ long-term incentive awards ÓáÞÆëèùéċìÔÊÝÞĚçÞÝÛÞçÞĚøìéåÚç›øáÞĊÔÊÏåÚçċœÚçÝøáÞ Therefore, the total number of Vesuvius plc shares with voting ëÞéëÞìÞçøâçàÚçèæâçÚåïÚåùÞèßx###ÚçÝ"YèßøáÞÞçøâëÞ are set out on page 114. æÚâçÔÒÝÞĚçÞÝÛÞçÞĚøìéåÚçìÚëÞÜåèìÞÝøèçÞðÞçøëÚçøìÚçÝ rights is 271,213,897. called-up share capital of the Company prior to the purchase. áÚïÞÜÞÚìÞÝéëèïâÝâçàßùøùëÞÛÞçÞĚøìÚÜÜëùÚåðâøáÚååÞåâàâÛåÞ ÞæéåèòÞÞìâçìøÞÚÝÛÞâçàéëèïâÝÞÝðâøáÛÞçÞĚøìøáëèùàá ÝÞĚçÞÝÜèçøëâÛùøâèçÚëëÚçàÞæÞçøì Vesuvius plc 120 Annual Report and Accounts 2017 121

Directors’ Report continued Statement of Directors’ Responsibilities in respect of the Annual Report and Financial Statements

For the Group’s closed UK Plan, a Trustee Board exists Vesuvius continues to seek ways to de-risk its existing pension The Directors are responsible for preparing the Annual Report Responsibilities Statement of the Directors in comprising employees, former employees and an independent plans through a combination of asset matching, buy-in ÚçÝøáÞĚçÚçÜâÚåìøÚøÞæÞçøìâçÚÜÜèëÝÚçÜÞðâøáÚééåâÜÚÛåÞåÚð respect of the Annual Financial Report trustee. The Board currently comprises six trustee Directors, opportunities and, where prudent, voluntary cash contributions. and regulation. ÄÚÜáèßøáÞÃâëÞÜøèëìÜèçĚëæøáÚøøèøáÞÛÞìøèßøáÞâë of whom two are member-nominated. The administration ÓáÞÆëèùéċìðèëåÝðâÝÞçÞøéÞçìâèçÝÞĚÜâøÚø ÃÞÜÞæÛÞë ÂèæéÚçòåÚðëÞêùâëÞìøáÞÃâëÞÜøèëìøèéëÞéÚëÞĚçÚçÜâÚå äçèðåÞÝàÞ of the UK Plan is outsourced. The Company is mindful of its #ðÚìx"!æ› ÃÞÜÞæÛÞë"x% æœÓáÞéëâçÜâéÚå ìøÚøÞæÞçøìßèëÞÚÜáĚçÚçÜâÚåòÞÚëÔçÝÞëøáÚøåÚðøáÞÃâëÞÜøèëì obligations under the Pensions Act 2004 and of the need to øáÞÂèæéÚçòĚçÚçÜâÚåìøÚøÞæÞçøìðáâÜááÚïÞÛÞÞç ëÞÚìèçìßèëøáÞx%æëÞÝùÜøâèçðÞëÞâçÜëÞÚìÞìèßx$æøè áÚïÞéëÞéÚëÞÝøáÞÆëèùéĚçÚçÜâÚåìøÚøÞæÞçøìâçÚÜÜèëÝÚçÜÞ comply with the guidance issued by the Pensions Regulator. éëÞéÚëÞÝâçÚÜÜèëÝÚçÜÞðâøáÔçâøÞÝÊâçàÝèæÆÞçÞëÚååò øáÞÝÞĚÜâøÚëâìâçàèùøèßÜáÚçàÞìøèÚÜøùÚëâÚåÚììùæéøâèçì ðâøáÈçøÞëçÚøâèçÚåÅâçÚçÜâÚåÑÞéèëøâçàÒøÚçÝÚëÝì›ÈÅÑÒìœÚì Regular dialogue is maintained between the Company and the ÀÜÜÞéøÞÝÀÜÜèùçøâçàÏëÚÜøâÜÞ›ÔçâøÞÝÊâçàÝèæÀÜÜèùçøâçà (attributable to increasing discount rates; updated mortality ÚÝèéøÞÝÛòøáÞÄùëèéÞÚçÔçâèçÚçÝÂèæéÚçòĚçÚçÜâÚå Trustee Board of the UK Plan to ensure that both the Company ÒøÚçÝÚëÝìÜèæéëâìâçàÅÑÒčÑÞÝùÜÞÝÃâìÜåèìùëÞ ÚììùæéøâèçìÚçÝéÞçìâèçæÞæÛÞëìáâéÝÚøڜÚçÝÚÝÝâøâèçÚå ìøÚøÞæÞçøìâçÚÜÜèëÝÚçÜÞðâøáÔçâøÞÝÊâçàÝèæÆÞçÞëÚååò ÚçÝÓëùìøÞÞÁèÚëÝÚëÞÚééëâìÞÝèßøáÞìÚæÞĚçÚçÜâÚåÚçÝèøáÞë ÅëÚæÞðèëäĎÚçÝÚééåâÜÚÛåÞåÚðœàâïÞÚøëùÞÚçÝßÚâë accrual and administrative expenditure paid for the year ÀÜÜÞéøÞÝÀÜÜèùçøâçàÏëÚÜøâÜÞ›ÔçâøÞÝÊâçàÝèæÀÜÜèùçøâçà information about the Group and the UK Plan. This is pertinent ïâÞðèßøáÞÚììÞøìåâÚÛâåâøâÞìĚçÚçÜâÚåéèìâøâèçÚçÝåèìì ›x"$æœèßßÞìøÛòëÞÝùÜøâèçìøèøáÞÝÞĚÜâøèßxæßëèæ ÒøÚçÝÚëÝìÜèæéëâìâçàÅÑÒčÑÞÝùÜÞÝÃâìÜåèìùëÞ to each being able to contribute to the effective functioning of èßøáÞÂèæéÚçò asset returns and cash contributions of £11.6m. ÅëÚæÞðèëäĎÚçÝÚééåâÜÚÛåÞåÚðœÔçÝÞëÜèæéÚçòåÚðøáÞ the UK Plan. ÃâëÞÜøèëìæùìøçèøÚééëèïÞøáÞĚçÚçÜâÚåìøÚøÞæÞçøìùçåÞìì øáÞÆëèùéĚçÚçÜâÚåìøÚøÞæÞçøìðáâÜááÚïÞÛÞÞçéëÞéÚëÞÝâç ÓáÞßèååèðâçàÝâìÜåèìùëÞìÚëÞæÚÝÞâçÜèæéåâÚçÜÞðâøáøáÞÅâçÚçÜâÚåÂèçÝùÜøÀùøáèëâøòċìËâìøâçàÑùåÞ%$ ÂÑ øáÞòÚëÞìÚøâìĚÞÝøáÚøøáÞòàâïÞÚøëùÞÚçÝßÚâëïâÞðèßøáÞìøÚøÞ ÚÜÜèëÝÚçÜÞðâøáÈÅÑÒìÚìÚÝèéøÞÝÛòøáÞÄùëèéÞÚçÔçâèç èßÚßßÚâëìèßøáÞÆëèùéÚçÝÂèæéÚçòÚçÝèßøáÞéëèĚøèßøáÞ àâïÞÚøëùÞÚçÝßÚâëïâÞðèßøáÞÚììÞøìåâÚÛâåâøâÞìĚçÚçÜâÚå Disclosure requirement under LR 9.8.6R Reference/Location ÆëèùéßèëøáÚøéÞëâèÝÈçéëÞéÚëâçàøáÞĚçÚçÜâÚåìøÚøÞæÞçøì éèìâøâèçÚçÝéëèĚøèßøáÞÆëèùéÚçÝ ›œÈçøÞëÞìøÜÚéâøÚåâìÞÝÛòøáÞÆëèùéÝùëâçàøáÞòÞÚë ÒÞÞÍèøÞ%èçéÚàÞ øáÞÃâëÞÜøèëìÚëÞëÞêùâëÞÝøè ›œÏùÛåâÜÚøâèçèßùçÚùÝâøÞÝĚçÚçÜâÚåâçßèëæÚøâèç Not applicable øáÞÃâëÞÜøèëìċÑÞéèëøâçÜåùÝÞìÚßÚâëëÞïâÞðèßøáÞ ìÞåÞÜøìùâøÚÛåÞÚÜÜèùçøâçàéèåâÜâÞìÚçÝøáÞçÚééåòøáÞæ ÝÞïÞåèéæÞçøÚçÝéÞëßèëæÚçÜÞèßøáÞÛùìâçÞììÚçÝøáÞ › œøáÞÚééëèéëâÚøÞçÞììèßÚÝèéøâçàøáÞàèâçàÜèçÜÞëçÛÚìâìèß Page 117 ÜèçìâìøÞçøåò éèìâøâèçèßøáÞÆëèùéÚçÝÂèæéÚçòøèàÞøáÞëðâøáÚ accounting and the Directors assessment of the prospects of the ÝÞìÜëâéøâèçèßøáÞéëâçÜâéÚåëâìäìÚçÝùçÜÞëøÚâçøâÞìøáÚø Company  ìøÚøÞðáÞøáÞëÚééåâÜÚÛåÞÈÅÑÒìÚìÚÝèéøÞÝÛòøáÞÄùëèéÞÚç it faces. › œÃÞøÚâåìèßÚçòåèçà˜øÞëæâçÜÞçøâïÞìÜáÞæÞì ÏÚàÞì%%ÚçÝ ÔçâèçáÚïÞÛÞÞçßèååèðÞÝßèëøáÞÆëèùéĚçÚçÜâÚåìøÚøÞæÞçøì ÚçÝÔçâøÞÝÊâçàÝèæÀÜÜèùçøâçàÒøÚçÝÚëÝìÜèæéëâìâçà ›!œÃâëÞÜøèëðÚâïÞëèßÞæèåùæÞçøì Not applicable ÓáÞçÚæÞìÚçÝßùçÜøâèçìèßøáÞÃâëÞÜøèëìèßÕÞìùïâùìéåÜÚëÞ ÅÑÒáÚïÞÛÞÞçßèååèðÞÝßèëøáÞÂèæéÚçòĚçÚçÜâÚå Úìßèååèðì ›"œÃâëÞÜøèëðÚâïÞëèßßùøùëÞÞæèåùæÞçøì Not applicable ìøÚøÞæÞçøììùÛöÞÜøøèÚçòæÚøÞëâÚåÝÞéÚëøùëÞìÝâìÜåèìÞÝ ›#œÀååèøæÞçøßèëÜÚìáèßÞêùâøòìÞÜùëâøâÞìæÚÝÞÝùëâçàøáÞòÞÚë Not applicable ÚçÝÞñéåÚâçÞÝâçøáÞĚçÚçÜâÚåìøÚøÞæÞçøì Éèáç÷ÜÃèçèùàáÂÁÄ ÂáÚâëæÚç ›$œÀååèøæÞçøßèëÜÚìáèßÞêùâøòìÞÜùëâøâÞìæÚÝÞÛòÚæÚöèë Not applicable ÏÚøëâÜäÀçÝëŲ ÂáâÞßÄñÞÜùøâïÞ unlisted subsidiary during the year æÚäÞöùÝàÞæÞçøìÚçÝÚÜÜèùçøâçàÞìøâæÚøÞìøáÚøÚëÞ ÆùòØèùçà ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë ëÞÚìèçÚÛåÞÚçÝéëùÝÞçøÚçÝ ›%œÃÞøÚâåìèßéÚëøâÜâéÚøâèçèßéÚëÞçøùçÝÞëøÚäâçàâçÚçòéåÚÜâçà Not applicable Christer Gardell Non-executive Director ÇèÜäÆèá Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèë made during the year éëÞéÚëÞøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèçøáÞàèâçàÜèçÜÞëçÛÚìâì ÉÚçÞÇâçäåÞò Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèë ›œÃÞøÚâåìèßëÞåÞïÚçøÜèçøëÚÜøìâçðáâÜáÚÃâëÞÜøèëèë Not applicable ùçåÞììâøâìâçÚééëèéëâÚøÞøèéëÞìùæÞøáÚøøáÞÆëèùéÚçÝ   ÚçÝÂáÚâëæÚçèßøáÞ controlling shareholder was interested during the year ÂèæéÚçòðâååÜèçøâçùÞâçÛùìâçÞìì   ÑÞæùçÞëÚøâèçÂèææâøøÞÞ ›œÂèçøëÚÜøìßèëøáÞéëèïâìâèçèßìÞëïâÜÞìÛòÚÜèçøëèååâçà Governance Not applicable ÓáÞÃâëÞÜøèëìÚëÞëÞìéèçìâÛåÞßèëäÞÞéâçàÚÝÞêùÚøÞÚÜÜèùçøâçà ÃèùàåÚìÇùëø Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèëÒÞçâèë shareholder during the year ëÞÜèëÝìøáÚøÚëÞìùßĚÜâÞçøøèìáèðÚçÝÞñéåÚâçøáÞÆëèùéÚçÝ   ÈçÝÞéÞçÝÞçøÃâëÞÜøèëÚçÝ ›œÃÞøÚâåìèßÚçòÚëëÚçàÞæÞçøùçÝÞëðáâÜáÚìáÚëÞáèåÝÞë Vesuvius plc holds 7,271,174 of its £0.10 ordinary shares as ÂèæéÚçòċìøëÚçìÚÜøâèçìÚçÝÝâìÜåèìÞðâøáëÞÚìèçÚÛåÞÚÜÜùëÚÜò   ÂáÚâëæÚçèßøáÞÀùÝâøÂèææâøøÞÞ has waived or agreed to waive any dividends Treasury shares. No dividends are payable on these shares. ÚøÚçòøâæÞøáÞĚçÚçÜâÚåéèìâøâèçèßøáÞÆëèùéÚçÝÂèæéÚçò ÇèååòÊèÞééÞå Íèç˜ÞñÞÜùøâïÞÃâëÞÜøèë ÂèèäìèçÈçïÞìøæÞçøì›ÉÞëìÞòœËâæâøÞÝøáÞÓëùìøÞÞèßøáÞ ÚçÝÞçÚÛåÞøáÞæøèÞçìùëÞøáÚøøáÞĚçÚçÜâÚåìøÚøÞæÞçøìÚçÝøáÞ Company’s ESOP, has agreed to waive, on an ongoing basis, ÃâëÞÜøèëìċÑÞæùçÞëÚøâèçÑÞéèëøÜèæéåòðâøáøáÞÂèæéÚçâÞì any dividends payable on shares it holds on trust for use under ÀÜø"ÚçÝÚìëÞàÚëÝìøáÞÆëèùéĚçÚçÜâÚåìøÚøÞæÞçøì ÎçÛÞáÚåßèßøáÞÁèÚëÝ the Company’s Employee Share Plans, details of which can be ÀëøâÜåÞ èßøáÞÈÀÒÑÞàùåÚøâèç ßèùçÝèçéÚàÞì#$ÚçÝ% Guy YoungÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë The Directors are also responsible for safeguarding the › œÃÞøÚâåìèßðáÞëÞÚìáÚëÞáèåÝÞëáÚìÚàëÞÞÝøèðÚâïÞ See above ÚììÞøìèßøáÞÆëèùéÚçÝÂèæéÚçòÚçÝáÞçÜÞßèëøÚäâçà $ÅÞÛëùÚëò$ future dividends reasonable steps for the prevention and detection of fraud › œÒøÚøÞæÞçøìëÞåÚøâçàøèÜèçøëèååâçàìáÚëÞáèåÝÞëìÚçÝ Not applicable and other irregularities. ensuring company independence ÓáÞÃâëÞÜøèëìÚëÞëÞìéèçìâÛåÞßèëøáÞæÚâçøÞçÚçÜÞÚçÝâçøÞàëâøò The Directors’ Report has been approved by the Board and is signed on its behalf by èßøáÞÂèæéÚçòċìðÞÛìâøÞËÞàâìåÚøâèçâçøáÞÔçâøÞÝÊâçàÝèæ àèïÞëçâçàøáÞéëÞéÚëÚøâèçÚçÝÝâììÞæâçÚøâèçèßĚçÚçÜâÚå Henry Knowles Company Secretary ìøÚøÞæÞçøìæÚòÝâßßÞëßëèæåÞàâìåÚøâèçâçèøáÞëöùëâìÝâÜøâèçì

$ÅÞÛëùÚëò$ ÓáÞÃâëÞÜøèëìÜèçìâÝÞëøáÚøøáÞÀççùÚåÑÞéèëøÚçÝÀÜÜèùçøì øÚäÞçÚìÚðáèåÞâìßÚâëÛÚåÚçÜÞÝÚçÝùçÝÞëìøÚçÝÚÛåÞÚçÝ éëèïâÝÞìøáÞâçßèëæÚøâèççÞÜÞììÚëòßèëìáÚëÞáèåÝÞëìøèÚììÞìì øáÞÆëèùéÚçÝÂèæéÚçòċìéÞëßèëæÚçÜÞÛùìâçÞììæèÝÞå ÚçÝìøëÚøÞàò Vesuvius plc 122 Annual Report and Accounts 2017 123

Section Five Financial Statements In this section

124 Independent Auditors’ Report

130 Group Income Statement

131 Group Statement of Comprehensive Income

132 Group Statement of Cash Flows

133 Group Balance Sheet

134 Group Statement of Changes in Equity

135 Notes to the Group Financial Statements 181 Company Balance Sheet “I relocated to the UAE 183 Notes to the Company Financial Statements to help set up our Ras 188 Five-Year Summary: Divisional Results

189 Shareholder Information Al Khaimah facility” Adam Liszka, Operations Director 191 Glossary Advanced Refractories, NAFTA

My career with Vesuvius began in Following this project, I took on my Poland in 2001, when I joined the next challenge, by becoming the Skawina Brick Plant as Production Operations Director for Advanced Coordinator. After a series of Refractories NAFTA, responsible promotions, I became Production for the manufacturing operations Financial Statements Manager for the whole Skawina of sites across the US, Canada and Brick Plant in 2009. Mexico. My career at Vesuvius has brought me professional I was later given the exciting advancement, the opportunity opportunity to work overseas, to work across cultures and to ëÞåèÜÚøâçàĚëìøøèøáÞÔÀÄâç become a real citizen of the world. to help start operations at our brand-new manufacturing facility in Ras Al Khaimah, and later moved to the United States as Operations Manager at our plant in Chicago Heights, Illinois. Whilst there, I worked with our Chicago Heights team to set the foundations for the Yellowstone project, targeting increased manufacturing ÞßĚÜâÞçÜòÚøèùëìâøÞ

See more about Vesuvius careers People and Community on p67-73 Vesuvius plc 124 Annual Report and Accounts 2017 125

ÈçÝÞéÞçÝÞçøÀùÝâøèëìċÑÞéèëø ÓèøáÞ÷ÞæÛÞëìèßÕÞìùïâùìéåÜ

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ÍÞøÜÚìáâçěèð›èùøěèðœßëèæèéÞëÚøâçàÚÜøâïâøâÞì 126.3 (0.8) 125.5 83.9 — 83.9 Financial Statements ÍÞøëÞøâëÞæÞçøÛÞçÞĚøèÛåâàÚøâèçì 4.8 — 4.8 7.7 — 7.7 ÈçøÞëÞìø˜ÛÞÚëâçàÛèëëèðâçàì 27.2 25.7 133.9 ÂÚéâøÚåÞñéÞçÝâøùëÞ (39.0) — (39.0) (31.3) — (31.3) ÓëÚÝÞÚçÝèøáÞëéÚòÚÛåÞì 30 292.6 239.7 ÏëèÜÞÞÝìßëèæøáÞìÚåÞèßéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçø 1.8 — 1.8 1.6 — 1.6 ÈçÜèæÞøÚñéÚòÚÛåÞ 10 34.3 34.9 ÃâïâÝÞçÝìëÞÜÞâïÞÝßëèæöèâçøïÞçøùëÞì 1.7 — 1.7 2.0 — 2.0 Ïëèïâìâèçì 32 29.8 26.6 ÃâïâÝÞçÝìéÚâÝøèçèç˜ÜèçøëèååâçàìáÚëÞáèåÝÞëì (2.5) — (2.5) (2.5) — (2.5) ÃÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì 20 — 0.9 ÅëÞÞÜÚìáěèð›ÍèøÞ œ 93.1 (0.8) 92.3 61.4 — 61.4 ÓèøÚåÜùëëÞçøåâÚÛâåâøâÞì 382.4 436.0 ÓèøÚååâÚÛâåâøâÞì 996.2 980.0 ÓèøÚåÞêùâøòÚçÝåâÚÛâåâøâÞì # 2,078.5

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Group Statement of Changes in Equity Notes to the Group Financial Statements

For the year ended 31 December 2017

Non- 1. General Information Issued share Other Retained Owners of controlling Total capital reserves earnings the parent interests equity Vesuvius plc (‘Vesuvius’ or ‘the Company’) is a public company limited by shares. It is incorporated and domiciled in England £m £m £m £m £m £m and Wales and listed on the London Stock Exchange. The nature of the operations and principal activities of the Company As at 1 January 2016 27.8 (1,501.9) 2,346.5 872.4 32.7 905.1 and its subsidiary and joint venture companies (‘the Group’) is set out in the Strategic Report on pages 1 to 73 and its registered ÏëèĚø — — 56.9 56.9 6.3 63.2 address is shown on page 189. ÑÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚììÞøì — — 9.5 9.5 — 9.5 ÈçÜèæÞøÚñëÞåÚøâçàøèâøÞæìçèøëÞÜåÚììâĚÞÝ — — (0.7) (0.7) — (0.7) 2. Basis of Preparation

ÄñÜáÚçàÞÝâßßÞëÞçÜÞìèçøëÚçìåÚøâèçèßøáÞçÞøÚììÞøì 2.1 Basis of accounting èßßèëÞâàçèéÞëÚøâèçì — 202.1 — 202.1 5.6 207.7 The Group Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRS) ÄñÜáÚçàÞÝâßßÞëÞçÜÞìèçøëÚçìåÚøâèçèßçÞøâçïÞìøæÞçøáÞÝàÞì —(41.6)— (41.6)—(41.6) as adopted by the European Union and with the Companies Act 2006 applicable to companies reporting under IFRS. The ÎøáÞëÜèæéëÞáÞçìâïÞâçÜèæÞçÞøèßâçÜèæÞøÚñ — 160.5 8.8 169.3 5.6 174.9 ĚçÚçÜâÚåìøÚøÞæÞçøìáÚïÞÛÞÞçéëÞéÚëÞÝùçÝÞëøáÞáâìøèëâÜÚåÜèìøÜèçïÞçøâèçðâøáøáÞÞñÜÞéøâèçèßÝÞĚçÞÝÛÞçÞĚøéÞçìâèç Total comprehensive income —160.565.7226.211.9238.1 éåÚçìÜÞëøÚâçéëèïâìâèçìÚïÚâåÚÛåޘßèë˜ìÚåÞâçïÞìøæÞçøìÚçÝÝÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì ÑÞÜèàçâøâèçèßìáÚëޘÛÚìÞÝéÚòæÞçøì — — 1.7 1.7 — 1.7 2.2 Basis of consolidation ÃâïâÝÞçÝìéÚâÝ›ÍèøÞ"œ — — (43.9) (43.9) (2.5) (46.4) ÓáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøìâçÜèëéèëÚøÞøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßøáÞÂèæéÚçòÚçÝÞçøâøâÞìÜèçøëèååÞÝÛòøáÞ ÓèøÚåøëÚçìÚÜøâèçìðâøáèðçÞëì — — (42.2) (42.2) (2.5) (44.7) Company (its ‘subsidiaries’). Control exists when the Company has the power to direct the relevant activities of an entity that As at 1 January 2017 27.8 (1,341.4) 2,370.0 1,056.4 42.1 1,098.5 ìâàçâĚÜÚçøåòÚßßÞÜøøáÞÞçøâøòċìëÞøùëçìèÚìøèáÚïÞëâàáøìøèøáÞïÚëâÚÛåÞëÞøùëçßëèæâøìÚÜøâïâøâÞìÈçÚììÞììâçàðáÞøáÞëÜèçøëèå ÏëèĚø — — 38.0 38.0 6.4 44.4 ÞñâìøìéèøÞçøâÚåïèøâçàëâàáøìøáÚøÚëÞÜùëëÞçøåòÞñÞëÜâìÚÛåÞÚëÞøÚäÞçâçøèÚÜÜèùçøÓáÞëÞìùåøìèßìùÛìâÝâÚëâÞìÚÜêùâëÞÝèë ÝâìéèìÞÝèßÝùëâçàøáÞòÞÚëÚëÞâçÜåùÝÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøßëèæøáÞÞßßÞÜøâïÞÝÚøÞèßÚÜêùâìâøâèçèëùéøèøáÞ ÑÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚììÞøì — — 8.4 8.4 — 8.4 ÞßßÞÜøâïÞÝÚøÞèßÝâìéèìÚåÚìÚééëèéëâÚøÞ ÈçÜèæÞøÚñëÞåÚøâçàøèâøÞæìçèøëÞÜåÚììâĚÞÝ — — (2.4) (2.4) — (2.4) ÄñÜáÚçàÞÝâßßÞëÞçÜÞìèçøëÚçìåÚøâèçèßøáÞçÞøÚììÞøì The principal accounting policies applied in the preparation of these Group Financial Statments are set out in the Notes. èßßèëÞâàçèéÞëÚøâèçì — (37.8) — (37.8) (0.5) (38.3) ÓáÞìÞéèåâÜâÞìáÚïÞÛÞÞçÜèçìâìøÞçøåòÚééåâÞÝøèÚååèßøáÞòÞÚëìéëÞìÞçøÞÝùçåÞììèøáÞëðâìÞìøÚøÞÝÖáÞëÞçÞÜÞììÚëò ÚÝöùìøæÞçøìÚëÞæÚÝÞøèøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßìùÛìâÝâÚëâÞìøèÛëâçàøáÞâëÚÜÜèùçøâçàéèåâÜâÞìâçøèåâçÞðâøáøáèìÞÝÞøÚâåÞÝ ÄñÜáÚçàÞÝâßßÞëÞçÜÞìèçøëÚçìåÚøâèçèßçÞøâçïÞìøæÞçøáÞÝàÞì — 9.8 — 9.8 — 9.8 áÞëÞâçøèÞçìùëÞøáÚøøáÞÆëèùéĚçÚçÜâÚåìøÚøÞæÞçøìÚëÞéëÞéÚëÞÝèçÚÜèçìâìøÞçøÛÚìâìÀååâçøëژÆëèùéøëÚçìÚÜøâèçì ÈçÜèæÞøÚñëÞåÚøâçàøèâøÞæìøáÚøæÚòÛÞëÞÜåÚììâĚÞÝ — — (0.7) (0.7) — (0.7) ÛÚåÚçÜÞìâçÜèæÞÚçÝÞñéÞçìÞìÚëÞÞåâæâçÚøÞÝèçÜèçìèåâÝÚøâèç Other comprehensive income / (loss) net of income tax — (28.0) 5.3 (22.7) (0.5) (23.2) Íèç˜ÜèçøëèååâçàâçøÞëÞìøìâçøáÞçÞøÚììÞøìèßÜèçìèåâÝÚøÞÝìùÛìâÝâÚëâÞìÚëÞâÝÞçøâĚÞÝìÞéÚëÚøÞåòßëèæøáÞÆëèùéċìâçøÞëÞìø Total comprehensive income / (loss) — (28.0) 43.3 15.3 5.9 21.2 øáÞëÞâçÍèç˜ÜèçøëèååâçàâçøÞëÞìøìÜèçìâìøèßøáÞÚæèùçøèßøáèìÞâçøÞëÞìøìÚøøáÞÝÚøÞèßøáÞèëâàâçÚåÛùìâçÞììÜèæÛâçÚøâèç ÑÞÜèàçâøâèçèßìáÚëޘÛÚìÞÝéÚòæÞçøì — — 2.6 2.6 — 2.6 øèàÞøáÞëðâøáøáÞçèç˜ÜèçøëèååâçàâçøÞëÞìøìċìáÚëÞèßéëèĚøèëåèììÞÚÜáÜèæéèçÞçøèßèøáÞëÜèæéëÞáÞçìâïÞâçÜèæÞÚçÝ ÃâïâÝÞçÝìéÚâÝ›ÍèøÞ"œ — — (45.6) (45.6) (2.6) (48.2) ÝâïâÝÞçÝìéÚâÝìâçÜÞøáÞÝÚøÞèßøáÞÜèæÛâçÚøâèçÓèøÚåÜèæéëÞáÞçìâïÞâçÜèæÞâìÚøøëâÛùøÞÝøèøáÞçèç˜ÜèçøëèååâçàâçøÞëÞìøì Total transactions with owners — — (43.0) (43.0) (2.6) (45.6) ÞïÞçâßøáâìëÞìùåøìâçøáÞçèç˜ÜèçøëèååâçàâçøÞëÞìøìáÚïâçàÚÝÞĚÜâøÛÚåÚçÜÞ

As at 31 December 2017 27.8 (1,369.4) 2,370.3 1,028.7 45.4 1,074.1 2.3 Going concern ÓáÞÃâëÞÜøèëìáÚïÞéëÞéÚëÞÝÜÚìáěèðßèëÞÜÚìøìßèëøáÞÆëèùéßèëÚéÞëâèÝâçÞñÜÞììèßæèçøáìßëèæøáÞÝÚøÞèßÚééëèïÚå èßøáÞ#ĚçÚçÜâÚåìøÚøÞæÞçøìÓáÞìÞßèëÞÜÚìøìëÞěÞÜøÚçÚììÞììæÞçøèßÜùëëÞçøÚçÝßùøùëÞÞçݘæÚëäÞøÜèçÝâøâèçìÚçÝ their impact on the Group’s future trading performance. The forecasts show that the Group will be able to operate within the ÜùëëÞçøÜèææâøøÞÝÝÞÛøßÚÜâåâøâÞìÚçÝìáèðÜèçøâçùÞÝÜèæéåâÚçÜÞðâøáøáÞÂèæéÚçòċìĚçÚçÜâÚåÜèïÞçÚçøìÎçøáÞÛÚìâìèß øáÞÞñÞëÜâìÞÝÞìÜëâÛÞÝÚÛèïÞÚçÝøáÞÆëèùéċìÚïÚâåÚÛåÞÜèææâøøÞÝÝÞÛøßÚÜâåâøâÞìøáÞÃâëÞÜøèëìÜèçìâÝÞëøáÚøøáÞÆëèùéÚçÝ ÂèæéÚçòáÚïÞÚÝÞêùÚøÞëÞìèùëÜÞìøèÜèçøâçùÞâçèéÞëÚøâèçÚåÞñâìøÞçÜÞßèëÚéÞëâèÝèßÚøåÞÚìøæèçøáìßëèæøáÞÝÚøÞèß ìâàçâçàèßøáÞìÞÚÜÜèùçøìÀÜÜèëÝâçàåòøáÞòÜèçøâçùÞøèÚÝèéøÚàèâçàÜèçÜÞëçÛÚìâìâçéëÞéÚëâçàøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèß the Group and the Company.

2.4 Functional and presentation currency Financial Statements ÓáÞĚçÚçÜâÚåìøÚøÞæÞçøìÚëÞéëÞìÞçøÞÝâçæâååâèçìèßéèùçÝìøÞëåâçàðáâÜáâìøáÞßùçÜøâèçÚåÜùëëÞçÜòèßøáÞÂèæéÚçò and rounded to one decimal place. Foreign operations are included in accordance with the policies set out in Note 27.1.

2.5 Disclosure of ‘separately reported items’ IAS 1 Presentation of Financial Statements encourages the disclosure of additional line items and the reordering of items éëÞìÞçøÞÝèçøáÞßÚÜÞèßøáÞâçÜèæÞìøÚøÞæÞçøðáÞçÚééëèéëâÚøÞßèëÚéëèéÞëùçÝÞëìøÚçÝâçàèßøáÞÞçøâøòċìĚçÚçÜâÚå éÞëßèëæÚçÜÞÓáÞÂèæéÚçòáÚìÚÝèéøÞÝÚÜèåùæçÚëéëÞìÞçøÚøâèçßèëâøìÆëèùéÈçÜèæÞÒøÚøÞæÞçøøèìÞéÚëÚøÞåòâÝÞçøâßò áÞÚÝåâçÞéÞëßèëæÚçÜÞëÞìùåøìÚìøáÞÃâëÞÜøèëìÜèçìâÝÞëøáÚøøáâìàâïÞìÚÛÞøøÞëïâÞðèßøáÞùçÝÞëåòâçàëÞìùåøìèßøáÞèçàèâçà ÛùìâçÞììÀìéÚëøèßøáâìéëÞìÞçøÚøâèçßèëæÚøøáÞÂèæéÚçòáÚìÚÝèéøÞÝÚéèåâÜòèßÝâìÜåèìâçàìÞéÚëÚøÞåòèçøáÞßÚÜÞèßâøì ÆëèùéÈçÜèæÞÒøÚøÞæÞçøðâøáâçøáÞÜèåùæçÞçøâøåÞÝĊÒÞéÚëÚøÞåòëÞéèëøÞÝâøÞæìċøáÞÞßßÞÜøèßÚçòÜèæéèçÞçøìèßĚçÚçÜâÚå éÞëßèëæÚçÜÞßèëðáâÜáøáÞÃâëÞÜøèëìÜèçìâÝÞëìÞéÚëÚøÞÝâìÜåèìùëÞðèùåÝÚììâìøÛèøáâçÚÛÞøøÞëùçÝÞëìøÚçÝâçàèßøáÞĚçÚçÜâÚå performance achieved and in making projections of future results. Both materiality and the nature and function of the components of income and expense are considered in deciding upon ìùÜáéëÞìÞçøÚøâèçÒùÜáâøÞæìæÚòâçÜåùÝÞâçøÞëÚåâÚøáÞĚçÚçÜâÚåÞßßÞÜøèßÞñÜÞéøâèçÚåâøÞæìðáâÜáèÜÜùëâçßëÞêùÞçøåòìùÜá ÚìæÚöèëëÞìøëùÜøùëâçàÚÜøâïâøòâçâøâÚåëÞÜèàçâøâèçÚçÝìùÛìÞêùÞçøâçÜëÞÚìÞÝÞÜëÞÚìÞùøâåâìÚøâèçÚçÝâæéÚÜøèßøÚñëÞßèëæèç ÔÒÝÞßÞëëÞÝøÚñÚììÞøìøèàÞøáÞëðâøáâøÞæìÚåðÚòìëÞéèëøÞÝìÞéÚëÚøÞåòìùÜáÚìÚæèëøâìÚøâèçÜáÚëàÞìëÞåÚøâçàøèÚÜêùâëÞÝ âçøÚçàâÛåÞÚììÞøìéëèĚøìèëåèììÞìÚëâìâçàèçøáÞÝâìéèìÚåèßÜèçøâçùâçàèëÝâìÜèçøâçùÞÝèéÞëÚøâèçìÚçÝøáÞøÚñÚøâèçâæéÚÜø of the aforementioned exceptional items and items reported separately. Vesuvius plc 136 Annual Report and Accounts 2017 137

Notes to the Group Financial Statements continued

2. Basis of Preparation (continued) IFRS 16 Leases ÈÅÑÒ"ËÞÚìÞì›ÞßßÞÜøâïÞÚßøÞëÉÚçùÚëò%ßèëøáÞòÞÚëÞçÝâçà%œëÞéåÚÜÞìøáÞÞñâìøâçààùâÝÚçÜÞâçÈÀÒ#ËÞÚìÞìÈÅÑÒ 2.5 Disclosure of ‘separately reported items’ (continued) "éëèïâÝÞìÚìâçàåÞåÞììÞÞÚÜÜèùçøâçàæèÝÞåëÞêùâëâçàåÞììÞÞìøèëÞÜèàçâìÞÚììÞøìÚçÝåâÚÛâåâøâÞìßèëÚåååÞÚìÞìùçåÞììøáÞåÞÚìÞ The amortisation charge in respect of intangible assets recognised on business combniations is excluded from the trading results term is 12 months or less or the underlying asset has a low value. The present value of the Group’s operating lease payments èßøáÞÆëèùéìâçÜÞøáÞòÚëÞçèç˜ÜÚìáÜáÚëàÞìÚçÝÚëÞçèøÜèçìâÝÞëÞÝëÞßåÞÜøâïÞèßøáÞÜèëÞøëÚÝâçàéÞëßèëæÚçÜÞèßøáÞÆëèùé ÚìÝÞĚçÞÝùçÝÞëøáÞçÞðìøÚçÝÚëÝðâååÛÞìáèðçÚìåÞÚìÞåâÚÛâåâøâÞìèçøáÞÛÚåÚçÜÞìáÞÞøÚçÝâçÜåùÝÞÝâççÞøÝÞÛøÓáÞëÞÚëÞ ÑÞìøëùÜøùëâçàÜáÚëàÞìÚëÞÞñÜåùÝÞÝßëèæøáÞøëÚÝâçàëÞìùåøìèßøáÞÆëèùéÝùÞøèøáÞæÚøÞëâÚåçÚøùëÞèßøáÞìÞçèç˜ëÞÜùëëâçà ÚçùæÛÞëèßÝâßßÞëÞçÜÞìÛÞøðÞÞçøáÞøðèÝÞĚçâøâèçìßèëÞñÚæéåÞðáÞëÞøáÞëÞâìÚçèéøâèçøèÞñøÞçÝøáÞåÞÚìÞéÚòæÞçøìßèë øëÚçìßèëæÚøâèçÚåâçâøâÚøâïÞìÈçâøìÚÝèéøâèçèßøáâìéèåâÜòøáÞÂèæéÚçòÚééåâÞìÚçÞïÞç˜áÚçÝÞÝÚééëèÚÜáøèÛèøáàÚâçìÚçÝ øáÞÞñøÞçìâèçéÞëâèÝðâååÛÞâçÜåùÝÞÝâçøáÞÈÅÑÒ"åâÚÛâåâøòâßøáÞÆëèùéâìëÞÚìèçÚÛåòÜÞëøÚâçøáÚøâøðâååÞñÞëÜâìÞøáÞèéøâèç losses and aims to be both consistent and clear in its accounting and disclosure of such items. but are not included as commitments under IAS 17. 2.6 New and revised IFRS The Group is currently assessing the potential impact on its Group Financial Statements resulting from the application of IFRS 16. Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2017 reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new IFRIC 23 Uncertainty over Income Tax Treatments ìøÚçÝÚëÝìÚçÝâçøÞëéëÞøÚøâèçìâììÞøèùøÛÞåèðÎøáÞëçÞðèëÚæÞçÝÞÝìøÚçÝÚëÝìèëâçøÞëéëÞøÚøâèçìÚëÞçèøÞñéÞÜøÞÝøè ÈÅÑÈ ÔçÜÞëøÚâçøòèïÞëÈçÜèæÞÓÚñÓëÞÚøæÞçøì›ÞßßÞÜøâïÞßëèæÉÚçùÚëò%ßèëøáÞòÞÚëÞçÝâçà%çèøòÞøÞçÝèëìÞݜ áÚïÞÚìâàçâĚÜÚçøâæéÚÜøèçøáÞÆëèùéċìĚçÚçÜâÚåìøÚøÞæÞçøì ÜåÚëâĚÞìáèðøèëÞÜèàçâìÞÚçÝæÞÚìùëÞÝÞßÞëëÞÝÚçÝÜùëëÞçøâçÜèæÞøÚñÚììÞøìÚçÝåâÚÛâåâøâÞìðáÞëÞøáÞëÞâìùçÜÞëøÚâçøòèïÞë tax treatment under IAS 12. The Group is currently assessing the potential impact on its Group Financial Statements resulting IFRS 9 Financial Instruments from the application of IFRIC 23. ÈÅÑÒ%ÅâçÚçÜâÚåÈçìøëùæÞçøì›ÞßßÞÜøâïÞßëèæÉÚçùÚëò$ßèëøáÞòÞÚëÞçÝâçà$œÚÝÝëÞììÞìøáÞÜåÚììâĚÜÚøâèç æÞÚìùëÞæÞçøÚçÝÝÞëÞÜèàçâøâèçèßĚçÚçÜâÚåâçìøëùæÞçøìâçøëèÝùÜÞìçÞðëùåÞìßèëáÞÝàÞÚÜÜèùçøâçàÚçÝÚçÞðâæéÚâëæÞçø IFRIC Interpretation - Interest and Penalties on Tax æèÝÞåßèëĚçÚçÜâÚåÚììÞøìÈøëÞéåÚÜÞìÈÀÒ %ÅâçÚçÜâÚåÈçìøëùæÞçøìàùâÝÚçÜÞÚçÝÜèæéëÞáÞçìâïÞùéÝÚøÞìáÚïÞÛÞÞçæÚÝÞ The impact of the interpretation regarding the accounting treatment of interest and penalties on tax is set out in Note 10.1. to IFRS 7 Financial Instrument: Disclosure and IAS 32 Financial Instruments: Presentation. The Group will apply IFRS 9 and øáÞùéÝÚøÞÝÈÅÑÒ#ÝâìÜåèìùëÞëÞêùâëÞæÞçøìßëèæøáÞâëÞßßÞÜøâïÞÝÚøÞ 3. Accounting Policies and Critical Accounting Judgements and Estimates ÓáÞâæéÚÜøÚììÞììæÞçøéÞëßèëæÞÝÛòøáÞÆëèùéâçÜåùÝÞÝÚëÞïâÞðèßøáÞÜåÚììâĚÜÚøâèçÚçÝæÞÚìùëÞæÞçøèßĚçÚçÜâÚå ÃÞøÞëæâçâçàøáÞÜÚëëòâçàÚæèùçøèßìèæÞÚììÞøìÚçÝåâÚÛâåâøâÞìëÞêùâëÞìÞìøâæÚøâèçèßøáÞÞßßÞÜøèßùçÜÞëøÚâçßùøùëÞÞïÞçøì âçìøëùæÞçøìøáÞâæéÚâëæÞçøèßĚçÚçÜâÚåÚììÞøìÚçÝøáÞàëèùéáÞÝàâçàéèåâÜòðáâÜáëÞìùåøÞÝâçøáÞßèååèðâçàÜèçÜåùìâèçì ÓáÞæÚöèëìèùëÜÞìèßÞìøâæÚøâèçùçÜÞëøÚâçøòøáÚøáÚïÞÚìâàçâĚÜÚçøëâìäèßëÞìùåøâçàâçÚæÚøÞëâÚåÚÝöùìøæÞçøøèøáÞÜÚëëòâçà amounts of assets or liabilities are noted below. All other accounting policies are included within the respective Notes to the  ÓáÞàëèùéëÞïâÞðÞÝøáÞÜåÚììâĚÜÚøâèçÚçÝæÞÚìùëÞæÞçøèßÞÚÜáèßâøìĚçÚçÜâÚåâçìøëùæÞçøìÀåøáèùàáøáÞÜåÚììâĚÜÚøâèç ĚçÚçÜâÚåìøÚøÞæÞçøì èßâçìøëùæÞçøìâìÚåøÞëÞÝùçÝÞëÈÅÑÒ%øáâìÝèÞìçèøëÞìùåøâçÚçòÜáÚçàÞìøèøáÞæÞÚìùëÞæÞçøÚééëèÚÜáÚéÚëøßëèæøáÞ impairment of trade receivables which is addressed below. 3.1 Provisions  ÓáÞçÞðâæéÚâëæÞçøæèÝÞåßèëĚçÚçÜâÚåÚììÞøìëÞêùâëÞìøáÞëÞÜèàçâøâèçèßâæéÚâëæÞçøéëèïâìâèçìÛÚìÞÝèçÞñéÞÜøÞÝ ÕÞìùïâùìáÚìÞñøÞçìâïÞâçøÞëçÚøâèçÚåèéÞëÚøâèçìÚçÝâììùÛöÞÜøøèïÚëâèùìåÞàÚåÚçÝëÞàùåÚøèëòëÞàâæÞìâçÜåùÝâçàøáèìÞ ÜëÞÝâøåèììÞì›čÄÂËϜëÚøáÞëøáÚçèçåòâçÜùëëÞÝÜëÞÝâøåèììÞìÚìâìøáÞÜÚìÞùçÝÞëÈÀÒ %ÓáÞÆëèùéðâååÚééåòøáÞìâæéåâĚÞÝ ÜèïÞëâçàøÚñÚøâèçÚçÝÞçïâëèçæÞçøÚåæÚøøÞëìÒÞïÞëÚåèßøáÞÆëèùéċììùÛìâÝâÚëâÞìÚëÞéÚëøâÞìøèåÞàÚåéëèÜÞÞÝâçàìÜÞëøÚâçèß ðáâÜáÚëÞâçìùëÞÝÜåÚâæìÚëâìâçàâçøáÞèëÝâçÚëòÜèùëìÞèßøáÞèéÞëÚøâèçìèßøáÞÜèæéÚçòâçïèåïÞÝÚçÝÚëÞÚðÚëÞèßÚçùæÛÞë approach to its trade receivables as per the scope exception in IFRS 9 in which all loss allowances for trade receivables will ÛÞæÞÚìùëÞÝÚøâçâøâÚåëÞÜèàçâøâèçÚçÝøáëèùàáèùøâøìåâßÞÚøÚçÚæèùçøÞêùÚåøèåâßÞøâæÞÄÂËÓáâìâìÜèçìâìøÞçøðâøáøáÞ èßâììùÞìðáâÜáÚëÞèëæÚòÛÞøáÞìùÛöÞÜøèßÝâìéùøÞðâøáøÚñÚùøáèëâøâÞìÏëèïâìâèçìÚëÞæÚÝÞßèëøáÞÞñéÞÜøÞÝÚæèùçøì çÚøùëÞèßøáÞàëèùéċìøëÚÝÞëÞÜÞâïÚÛåÞìÚìøáÞòÝèçèøâçÜåùÝÞÚìâàçâĚÜÚçøĚçÚçÜâçàÜèæéèçÞçøÁÚìÞÝèçøáÞÚììÞììæÞçøì éÚòÚÛåÞâçëÞìéÞÜøèßäçèðçèëéëèÛÚÛåÞÜèìøìëÞìùåøâçàÛèøáßëèæåÞàÚåèëèøáÞëëÞàùåÚøèëòëÞêùâëÞæÞçøìèëßëèæøáâëݘéÚëøò ùçÝÞëøÚäÞçøèÝÚøÞøáÞàëèùéÝèÞìçèøÞñéÞÜøÚæÚøÞëâÚåæèïÞæÞçøâçøáÞåèììÚååèðÚçÜÞßèëøëÚÝÞÝÞÛøèëì ÜåÚâæìÚìÝÞìÜëâÛÞÝâçÍèøÞ ÀìøáÞìÞøøåÞæÞçøèßæÚçòèßøáÞèÛåâàÚøâèçìßèëðáâÜáéëèïâìâèçâìæÚÝÞâììùÛöÞÜøøèåÞàÚåèë èøáÞëëÞàùåÚøèëòéëèÜÞììøáÞøâæâçàÚçÝÚæèùçøèßøáÞÚììèÜâÚøÞÝèùøěèðìÚëÞìùÛöÞÜøøèìèæÞùçÜÞëøÚâçøòÓáÞÃâëÞÜøèëì > The new hedge accounting rules will align the accounting for hedging instruments more closely with the Group’s risk ùìÞøáÞâëöùÝàÞæÞçøÚçÝÞñéÞëâÞçÜÞøèæÚäÞÚééëèéëâÚøÞÞìøâæÚøÞìèßéëèïâìâèçìâçøáÞĚçÚçÜâÚåìøÚøÞæÞçøìßèëÚæèùçøì æÚçÚàÞæÞçøéëÚÜøâÜÞìÓáÞÆëèùéáÚìÜèçĚëæÞÝøáÚøâøìÜùëëÞçøçÞøâçïÞìøæÞçøáÞÝàÞëÞåÚøâèçìáâéðâååêùÚåâßòÚìÚ relating to such matters. continuing hedge upon the adoption of IFRS 9. 3.2 Taxation ÁÚìÞÝèçèùëÚììÞììæÞçøèßøáÞÚÝèéøâèçèßÈÅÑÒ%øáÞÆëèùéÝèÞìçèøÛÞåâÞïÞøáÞëÞðâååÛÞÚæÚøÞëâÚåâæéÚÜøèçâøìÆëèùé (a) Current tax ÅâçÚçÜâÚåÒøÚøÞæÞçøìÅëèæÉÚçùÚëò$èçðÚëÝìøáÞÆëèùéðâååÚæÞçÝâøìĚçÚçÜâÚåâçìøëùæÞçøìÚçÝáÞÝàâçàÚÜÜèùçøâçà éèåâÜâÞìøèëÞěÞÜøÈÅÑÒ%øÞëæâçèåèàòÚçÝéëÞéÚëÞøáÞÚééëèéëâÚøÞÝâìÜåèìùëÞìëÞàÚëÝâçàøáÞÜåÚììâĚÜÚøâèçÚçÝæÞÚìùëÞæÞçø ÓÚñÛÞçÞĚøìÚëÞçèøëÞÜèàçâìÞÝùçåÞììâøâìéëèÛÚÛåÞøáÚøøáÞòðâååëÞìùåøâçßùøùëÞÞÜèçèæâÜÛÞçÞĚøìøèøáÞÆëèùéÈçÚììÞììâçà èßĚçÚçÜâÚåâçìøëùæÞçøìâæéÚâëæÞçøèßĚçÚçÜâÚåÚììÞøìÚçÝáÞÝàâçà øáÞÚæèùçøèßøáÞÛÞçÞĚøøèÛÞëÞÜèàçâìÞÝâçøáÞĚçÚçÜâÚåìøÚøÞæÞçøìøáÞÃâëÞÜøèëìÞñÞëÜâìÞøáÞâëöùÝàÞæÞçøâçÜèçìâÝÞëâçà øáÞÞßßÞÜøèßçÞàèøâÚøâèçìåâøâàÚøâèçÚçÝÚçòèøáÞëæÚøøÞëìøáÚøøáÞòÜèçìâÝÞëæÚòâæéÚÜøùéèçøáÞéèøÞçøâÚåìÞøøåÞæÞçø IFRS 15 Revenue from Contracts with Customers ÓáÞÆëèùéèéÞëÚøÞìâçøÞëçÚøâèçÚååòÚçÝâììùÛöÞÜøøèøÚñâçæÚçòÝâßßÞëÞçøöùëâìÝâÜøâèçìÀìÚÜèçìÞêùÞçÜÞøáÞÆëèùéâì ÈÅÑÒ!ÑÞïÞçùÞßëèæÂèçøëÚÜøìðâøáÂùìøèæÞëì›ÞßßÞÜøâïÞÚßøÞëÉÚçùÚëò$ßèëøáÞòÞÚëÞçÝâçà$œÞìøÚÛåâìáÞìÚ ëèùøâçÞåòìùÛöÞÜøøèøÚñÚùÝâøìÚçÝåèÜÚåÞçêùâëâÞìðáâÜáÛòøáÞâëïÞëòçÚøùëÞÜÚçøÚäÞÚÜèçìâÝÞëÚÛåÞéÞëâèÝèßøâæÞøè Financial Statements ÜèæéëÞáÞçìâïÞßëÚæÞðèëäßèëÝÞøÞëæâçâçàðáÞøáÞëáèðæùÜáÚçÝðáÞçëÞïÞçùÞâìëÞÜèàçâìÞÝÈøëÞéåÚÜÞìÞñâìøâçàëÞïÞçùÞ ÜèçÜåùÝÞÏëèïâìâèçìÚëÞæÚÝÞßèëäçèðçâììùÞìÛÚìÞÝèçÚååìùÛìøÚçøâïÞåòÞçÚÜøÞÝåÞàâìåÚøâèçøáÞÃâëÞÜøèëìċâçøÞëéëÞøÚøâèç ëÞÜèàçâøâèçàùâÝÚçÜÞâçÜåùÝâçàÈÀÒ$ÑÞïÞçùÞÈÀÒÂèçìøëùÜøâèçÂèçøëÚÜøìÚçÝÈÅÑÈ ÂùìøèæÞëËèòÚåøòÏëèàëÚææÞì èßÜèùçøëò˜ìéÞÜâĚÜøÚñåÚðÚçÝøáÞâëÚììÞììæÞçøèßøáÞåâäÞåòèùøÜèæÞøÚäâçàâçøèÜèçìâÝÞëÚøâèçøáÞÆëèùéċìÞñéÞëâÞçÜÞâç The Group will apply IFRS 15 from its effective date. ÚàëÞÞâçàøÚñåâÚÛâåâøâÞìðâøáøÚñÚùøáèëâøâÞìÚçÝÚééëèéëâÚøÞÞñøÞëçÚåÚÝïâÜÞÀìâçÝâÜÚøÞÝâçÍèøÞ!øáÞìÞéëèïâìâèçì amount to £23.2m (2016: £24.5m) at the end of 2017. Further discussion of these provisions is contained in that Note. All The impact assessment performed by the Group included a review of revenue streams and customer contracts to âçÜèæÞøÚñåâÚÛâåâøâÞìéëèïâìâèçìÚçÝÚììÞøìÚëÞøëÞÚøÞÝÚìâçÜèæÞøÚñéÚòÚÛåÞÚçÝëÞÜèïÞëÚÛåÞâçÚÜÜèëÝÚçÜÞðâøáÈÀÒ identify distinct performance obligations and the appropriate method for allocating the transaction price. Based on our ÚììÞììæÞçøèßøáÞÚÝèéøâèçèßÈÅÑÒ!øáÞÆëèùéÝèÞìçèøÛÞåâÞïÞøáÞëÞðâååÛÞÚæÚøÞëâÚåâæéÚÜøèçâøìÆëèùéÅâçÚçÜâÚå (b) Deferred tax ÒøÚøÞæÞçøìÃùëâçà$øáÞÆëèùéðâååëÞïâìÞøáÞëÞïÞçùÞëÞÜèàçâøâèçéèåâÜòøèëÞěÞÜøÈÅÑÒ!øÞëæâçèåèàòéëÞéÚëÞøáÞ The Group has recognised deferred tax assets in respect of unutilised losses and other timing differences arising in a number additional disclosures for the Group Financial Statements and continue to review contracts across all Segments. The Group èßøáÞÆëèùéċìÛùìâçÞììÞìßùëøáÞëÝÞøÚâåìèßðáâÜáÚëÞàâïÞçâçÍèøÞ ÀÜÜèùçøáÚìÛÞÞçøÚäÞçèßßùøùëÞßèëÞÜÚìøìèßøÚñÚÛåÞ will continue to disaggregate revenue over Steel and Foundry in the Segmental Analysis note. éëèĚøâçÚëëâïâçàÚøøáÞïÚåùÞìÚøðáâÜáøáÞìÞÚììÞøìÚëÞëÞÜèàçâìÞÝÈßøáÞìÞßèëÞÜÚìøéëèĚøìÝèçèøæÚøÞëâÚåâìÞèëÜáÚçàÞèë øáÞëÞÚëÞÜáÚçàÞìâçøÚñëÚøÞìèëøèøáÞéÞëâèÝèïÞëðáâÜáøáÞåèììÞìèëøâæâçàÝâßßÞëÞçÜÞìæâàáøÛÞëÞÜèàçâìÞÝøáÞçøáÞïÚåùÞ of deferred tax assets will need to be revised in a future period. Vesuvius plc 138 Annual Report and Accounts 2017 139

Notes to the Group Financial Statements continued

3. Accounting Policies and Critical Accounting Judgements and Estimates (continued) 4.7 Headline earnings per share ÇÞÚÝåâçÞÞÚëçâçàìéÞëìáÚëÞâìÜÚåÜùåÚøÞÝÛòÝâïâÝâçàáÞÚÝåâçÞéëèĚøÛÞßèëÞøÚñåÞììÚììèÜâÚøÞÝâçÜèæÞøÚñÜèìøìÚøøëâÛùøÚÛåÞ (b) Deferred tax (continued) to owners of the parent by the weighted average number of ordinary shares in issue during the year. It is one of the Group’s key ÓáÞÆëèùéÚåìèáÚìåèììÞìÚçÝèøáÞëøâæâçàÝâßßÞëÞçÜÞìÚåìèÚçÚåòìÞÝâçÍèøÞ ßèëðáâÜáçèÝÞßÞëëÞÝøÚñÚììÞøìáÚïÞ performance indicators and is used to assess the underlying earnings performance of the Group as a whole. It is also used ÛÞÞçëÞÜèàçâìÞÝâçøáÞìÞĚçÚçÜâÚåìøÚøÞæÞçøìëÞåÚøâçàÞâøáÞëøèåèìì˜æÚäâçàìùÛìâÝâÚëâÞìðáÞëÞøáÞßùøùëÞÞÜèçèæâÜÛÞçÞĚøèß as one of the targets against which the annual bonuses of certain employees are measured. Headline earnings per share is the timing difference is not probable or to where the timing difference is of such a nature that its value is dependent on certain disclosed in Note 11. øòéÞìèßéëèĚøÛÞâçàÞÚëçÞÝìùÜáÚìÜÚéâøÚåéëèĚøìÈßøëÚÝâçàèëèøáÞëÚééëèéëâÚøÞéëèĚøìÚëÞÞÚëçÞÝâçøáÞßùøùëÞâçøáÞìÞ ÜèæéÚçâÞìøáÞìÞåèììÞìÚçÝèøáÞëøâæâçàÝâßßÞëÞçÜÞìæÚòòâÞåÝÛÞçÞĚøøèøáÞÆëèùéâçøáÞßèëæèßÚëÞÝùÜÞÝøÚñÜáÚëàÞ $ ÎéÞëÚøâçàÜÚìáěèð ÎéÞëÚøâçàÜÚìáěèðâìÜÚìáàÞçÞëÚøÞÝßëèæÜèçøâçùâçàèéÞëÚøâèçìÛÞßèëÞëÞìøëùÜøùëâçàÚçÝçÞøëÞøâëÞæÞçøÛÞçÞĚø ÀìÞñéåÚâçÞÝâçÍèøÞøáÞÔÒÓÚñÂùøìÚçÝÉèÛìÀÜø›ĊÓÂÉÀċœÞçÚÜøÞÝâçåÚøÞÃÞÜÞæÛÞë#áÚÝÚæÚøÞëâÚåâæéÚÜøèç obligations but after deducting capital expenditure net of asset disposals. It is used in calculating the Group’s cash conversion. øáÞÆëèùéċìÝÞßÞëëÞÝøÚñéèìâøâèçÓÂÉÀðÚìâçøëèÝùÜÞÝïÞëòëÚéâÝåòÚçÝÜèçìÞêùÞçøåòøáÞëÞâìæùÜáùçÜÞëøÚâçøòÚÛèùøáèð ÀëÞÜèçÜâåâÚøâèçèßÜÚìáàÞçÞëÚøÞÝßëèæèéÞëÚøâèçìøèèéÞëÚøâçàÜÚìáěèðÜÚçÛÞßèùçÝâçøáÞÅâçÚçÜâÚåÑÞïâÞð ìèæÞèßøáÞéëèïâìâèçìðâååèéÞëÚøÞÀìÞñéåÚâçÞÝâçÍèøÞ"ÕÞìùïâùìÜùëëÞçøåòùçÝÞëìøÚçÝìøáÚøøáÞÁÚìÞÄëèìâèçÚçÝ Àçøâ˜ÀÛùìÞÓÚñ›ĊÁÄÀÓċœðâååâæéÚÜøâøìøÚñÜáÚëàÞâçøáÞÔÒâç$ÚçÝÛÞòèçÝâçëÞåÚøâèçøèÜÞëøÚâçéÚòæÞçøìæÚÝÞøè 4.9 Cash conversion çèç˜ÔÒëÞåÚøÞÝéÚëøâÞìÅùëøáÞëÜåÚëâĚÜÚøâèçâìÚðÚâøÞÝßëèæÔÒÓëÞÚìùëòìèøáÞéëÞÜâìÞâæéÚÜøèßÁÄÀÓÜÚççèøÛÞ ÂÚìáÜèçïÞëìâèçâìÜÚåÜùåÚøÞÝÚìèéÞëÚøâçàÜÚìáěèðßëèæÜèçøâçùâçàèéÞëÚøâèçìÝâïâÝÞÝÛòøëÚÝâçàéëèĚøÈøâìùìÞßùåßèë determined with certainty at this point. æÞÚìùëâçàøáÞëÚøÞÚøðáâÜáÜÚìáâìàÞçÞëÚøÞÝßëèæøëÚÝâçàéëèĚøÈøâìÚåìèùìÞÝÚìèçÞèßøáÞøÚëàÞøìÚàÚâçìøðáâÜáøáÞÚççùÚå ÎøáÞëëÞÚìèçÚÛåÞÞìøâæÚøâèçìáÚïÞÛÞÞçæÚÝÞâçÝÞøÞëæâçâçàáèðÔÒøÚñëÞßèëæðâååâæéÚÜøèçÕÞìùïâùìċÔÒ#ÝÞßÞëëÞÝ bonuses of certain employees are measured. The calculation of cash conversion is detailed in the Financial Review. øÚñéèìâøâèçâçéÚëøâÜùåÚëâçëÞåÚøâèçøèÞÚëçâçàìÚçÝéëèĚøìèßÕÞìùïâùìċçèç˜ÔÒâçïÞìøæÞçøìøèÛÞâçÜåùÝÞÝâçøáÞÝÞÞæÞÝ  ÅëÞÞÜÚìáěèð repatriation tolling charge calculations included in its 2017 taxable income. ÅëÞÞÜÚìáěèðâìÝÞĚçÞÝÚìçÞøÜÚìáěèðßëèæèéÞëÚøâçàÚÜøâïâøâÞìÚßøÞëçÞøèùøåÚòìßèëøáÞéùëÜáÚìÞÚçÝìÚåÞèßéëèéÞëøò ÀìàùâÝÚçÜÞâìàâïÞçÛòøáÞÔÒÓëÞÚìùëòÃÞéÚëøæÞçøèçáèðøáÞìÞÚçÝèøáÞëéëèïâìâèçìèßÓÂÉÀÚëÞøèèéÞëÚøÞÕÞìùïâùìċøÚñ éåÚçøÚçÝÞêùâéæÞçøÝâïâÝÞçÝìßëèæöèâçøïÞçøùëÞìÚçÝÝâïâÝÞçÝìéÚâÝøèçèç˜ÜèçøëèååâçàìáÚëÞáèåÝÞëìÛùøÛÞßèëÞÚÝÝâøâèçÚå position may be impacted. funding contributions to Group pension plans. It is one of the Group’s key performance indicators and is used to assess the underlying cash generation of the Group and is one of the measures used in monitoring the Group’s capital. A reconciliation 4. Alternative Performance Measures èßßëÞÞÜÚìáěèðâìâçÜåùÝÞÝùçÝÞëçÞÚøáøáÞÆëèùéÒøÚøÞæÞçøèßÂÚìáÅåèðì

The Company uses a number of alternative performance measures (APMs) in addition to those reported in accordance 4.11 Average trade working capital to sales ratio ðâøáÈÅÑÒÓáÞÃâëÞÜøèëìÛÞåâÞïÞøáÚøøáÞìÞÀÏ÷ìåâìøÞÝÛÞåèðÚëÞâæéèëøÚçøðáÞçÚììÞììâçàøáÞùçÝÞëåòâçàĚçÚçÜâÚåÚçÝ The average trade working capital to sales ratio is calculated as the percentage of average trade working capital balances èéÞëÚøâçàéÞëßèëæÚçÜÞèßøáÞÆëèùéÚçÝâøìÝâïâìâèçìéëèïâÝâçàæÚçÚàÞæÞçøðâøáäÞòâçìâàáøìÚçÝæÞøëâÜìâçìùééèëøèßøáÞ øèøáÞøèøÚåëÞïÞçùÞßèëøáÞòÞÚëÚøÜèçìøÚçøÜùëëÞçÜòÀïÞëÚàÞøëÚÝÞðèëäâçàÜÚéâøÚå›ÜèæéëâìâçàâçïÞçøèëâÞìøëÚÝÞ èçàèâçàæÚçÚàÞæÞçøèßøáÞÆëèùéċìéÞëßèëæÚçÜÞÚçÝÜÚìáěèðÀçùæÛÞëèßøáÞìÞÚåâàçðâøáÊÏÈċìÚçÝèøáÞëäÞòæÞøëâÜì ëÞÜÞâïÚÛåÞìÚçÝøëÚÝÞéÚòÚÛåÞìœâìÜÚåÜùåÚøÞÝÚìøáÞÚïÞëÚàÞèßøáÞéëÞïâèùìæèçøá˜ÞçÝÛÚåÚçÜÞìÈøâìèçÞèßøáÞÆëèùéċì ùìÞÝâçøáÞÛùìâçÞììÚçÝøáÞëÞßèëÞÚëÞÜèçìâÝÞëÞÝùìÞßùåøèÚåìèÝâìÜåèìÞøèøáÞùìÞëìèßøáÞĚçÚçÜâÚåìøÚøÞæÞçøìÓáÞßèååèðâçà key performance indicators and is useful for measuring the level of working capital used in the business and is one of the APMs do not have standardised meaning prescribed by IFRS and therefore may not be directly comparable with similar measures used in monitoring the Group’s capital. measures presented by other companies. 4.12 Earnings before interest, tax, depreciation and amortisation (EBITDA) 4.1 Headline ÄÁÈÓÃÀâìÜÚåÜùåÚøÞÝÚìøáÞøèøÚåèßøëÚÝâçàéëèĚøÛÞßèëÞÝÞéëÞÜâÚøâèçÚçÝÚæèëøâìÚøâèçèßçèç˜ÚÜêùâëÞÝâçøÚçàâÛåÞÚììÞøì ÇÞÚÝåâçÞéÞëßèëæÚçÜÞëÞéèëøÞÝìÞéÚëÚøÞåòèçøáÞßÚÜÞèßøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâìßëèæÜèçøâçùâçàèéÞëÚøâèçìÚçÝ It is used in the calculation of the Group’s interest cover and net debt to EBITDA ratios. A reconciliation of EBITDA is included before items reported separately on the face of the Group Income Statement. in Note 12.

 ÔçÝÞëåòâçàëÞïÞçùÞùçÝÞëåòâçàøëÚÝâçàéëèĚøÚçÝùçÝÞëåòâçàëÞøùëçèçìÚåÞì 4.13 Net interest ÔçÝÞëåòâçàëÞïÞçùÞùçÝÞëåòâçàøëÚÝâçàéëèĚøÚçÝùçÝÞëåòâçàëÞøùëçèçìÚåÞìÚëÞøáÞáÞÚÝåâçÞÞêùâïÚåÞçøìèßøáÞìÞæÞÚìùëÞì ÍÞøâçøÞëÞìøâìÜÚåÜùåÚøÞÝÚìâçøÞëÞìøéÚòÚÛåÞèçÛèëëèðâçàìåÞììâçøÞëÞìøëÞÜÞâïÚÛåÞÞñÜåùÝâçàÚçòâøÞæìÞéÚëÚøÞåòëÞéèëøÞÝ ÚßøÞëÚÝöùìøæÞçøìøèÞñÜåùÝÞøáÞÞßßÞÜøìèßÜáÚçàÞìâçÞñÜáÚçàÞëÚøÞìÛùìâçÞììÚÜêùâìâøâèçìÚçÝÝâìéèìÚåìÑÞÜèçÜâåâÚøâèçìèß It is used in the calculation of the Group’s interest cover ratio. ùçÝÞëåòâçàëÞïÞçùÞÚçÝùçÝÞëåòâçàøëÚÝâçàéëèĚøÜÚçÛÞßèùçÝâçøáÞÅâçÚçÜâÚåÑÞïâÞðÔçÝÞëåòâçàëÞïÞçùÞàëèðøáâìèçÞèß the Group’s key performance indicators and provides an important measure of organic growth of Group businesses between 4.14 Interest cover ëÞéèëøâçàéÞëâèÝìÛòÞåâæâçÚøâçàøáÞâæéÚÜøèßÞñÜáÚçàÞëÚøÞìÚÜêùâìâøâèçìÝâìéèìÚåìÚçÝìâàçâĚÜÚçøÛùìâçÞììÜåèìùëÞì Interest cover is the ratio of EBITDA to net interest. It is one of the Group’s key performance indicators and is used to assess the ĚçÚçÜâÚåéèìâøâèçèßøáÞÆëèùéÚçÝâøìÚÛâåâøòøèßùçÝßùøùëÞàëèðøáÓáâìæÞÚìùëÞâìÚåìèÚÜèæéèçÞçøèßøáÞÆëèùéċìÜèïÞçÚçø 4.3 Return on sales (ROS) calculations.

ÑÎÒâìÜÚåÜùåÚøÞÝÚìøëÚÝâçàéëèĚøÝâïâÝÞÝÛòëÞïÞçùÞÈøâìèçÞèßøáÞÆëèùéċìäÞòéÞëßèëæÚçÜÞâçÝâÜÚøèëìÚçÝâìùìÞÝøèÚììÞìì Financial Statements øáÞøëÚÝâçàéÞëßèëæÚçÜÞèßÆëèùéÛùìâçÞììÞìÀëÞÜèçÜâåâÚøâèçèßÑÎÒâìâçÜåùÝÞÝâçÍèøÞ!  4.15 Net debt ÍÞøÝÞÛøÜèæéëâìÞìøáÞçÞøøèøÚåèßÜùëëÞçøÚçÝçèç˜ÜùëëÞçøâçøÞëÞìø˜ÛÞÚëâçàÛèëëèðâçàìÚçÝÜÚìáÚçÝìáèëø˜øÞëæÝÞéèìâøì   ÓëÚÝâçàéëèĚø ÍÞøÝÞÛøâìÚæÞÚìùëÞèßøáÞÆëèùéċìçÞøâçÝÞÛøÞÝçÞììøèÛÚçäìÚçÝèøáÞëÞñøÞëçÚåĚçÚçÜâÚåâçìøâøùøâèçìÀëÞÜèçÜâåâÚøâèçèß ÓëÚÝâçàéëèĚøëÞéèëøÞÝìÞéÚëÚøÞåòèçøáÞßÚÜÞèßøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâìÝÞĚçÞÝÚìèéÞëÚøâçàéëèĚøÛÞßèëÞ the movement in net debt is included in Note 14 of the Group Financial Statements. separately reported items. It is one of the Group’s key performance indicators and is used to assess the trading performance of Group businesses. It is also used as one of the targets against which the annual bonuses of certain employees are measured. 4.16 Net debt to EBITDA ÍÞøÝÞÛøøèÄÁÈÓÃÀâìøáÞëÚøâèèßçÞøÝÞÛøÚøøáÞòÞÚë˜ÞçÝøèÄÁÈÓÃÀßèëøáÚøòÞÚëÈøâìèçÞèßøáÞÆëèùéċìäÞòéÞëßèëæÚçÜÞ ! ÇÞÚÝåâçÞéëèĚøÛÞßèëÞøÚñ âçÝâÜÚøèëìÚçÝâìùìÞÝøèÚììÞììøáÞĚçÚçÜâÚåéèìâøâèçèßøáÞÆëèùéÚçÝâøìÚÛâåâøòøèßùçÝßùøùëÞàëèðøáÚçÝâìèçÞèßøáÞ ÇÞÚÝåâçÞéëèĚøÛÞßèëÞøÚñëÞéèëøÞÝìÞéÚëÚøÞåòèçøáÞßÚÜÞèßøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâìÜÚåÜùåÚøÞÝÚìøáÞçÞøøèøÚåèß measures used in monitoring the Group’s capital. øëÚÝâçàéëèĚøéåùìøáÞÆëèùéċììáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞìÚçÝøèøÚåçÞøĚçÚçÜÞÜèìøìÚììèÜâÚøÞÝðâøááÞÚÝåâçÞ éÞëßèëæÚçÜÞÈøâìèçÞèßøáÞÆëèùéċìäÞòéÞëßèëæÚçÜÞâçÝâÜÚøèëìÚçÝâìùìÞÝøèÚììÞììøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞèßøáÞÆëèùé 4.17 Return on net assets (RONA) as a whole. ÑÎÍÀâìÜÚåÜùåÚøÞÝÚìøëÚÝâçàéëèĚøéåùììáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞìÝâïâÝÞÝÛòÚïÞëÚàÞçÞøèéÞëÚøâçàÚììÞøìÚø ÜèçìøÚçøÜùëëÞçÜò›ÛÞâçàøáÞÚïÞëÚàÞèïÞëøáÞéëÞïâèùìæèçøáìèßéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçøøëÚÝÞðèëäâçàÜÚéâøÚåÚçÝ 4.6 Effective tax rate (ETR) èøáÞëèéÞëÚøâçàëÞÜÞâïÚÛåÞìÚçÝéÚòÚÛåÞìœÈøâìèçÞèßøáÞÆëèùéċìäÞòéÞëßèëæÚçÜÞâçÝâÜÚøèëìÚçÝâìùìÞÝøèÚììÞììøáÞĚçÚçÜâÚå ÓáÞÆëèùéċìÄÓÑâìÜÚåÜùåÚøÞÝèçøáÞâçÜèæÞøÚñÜèìøìÚììèÜâÚøÞÝðâøááÞÚÝåâçÞéÞëßèëæÚçÜÞÝâïâÝÞÝÛòáÞÚÝåâçÞéëèĚø performance and asset management of the Group and is one of the measures used in monitoring the Group’s capital. ÛÞßèëÞøÚñÚçÝÛÞßèëÞøáÞÆëèùéċììáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞì 4.18 Constant currency Figures presented at constant currency represent 2016 amounts retranslated to average 2017 exchange rates. Vesuvius plc 140 Annual Report and Accounts 2017 141

Notes to the Group Financial Statements continued

5. Segment Information 2016 Continuing ÓáÞìÞàæÞçøâçßèëæÚøâèçÜèçøÚâçÞÝâçøáâìÍèøÞæÚäÞìëÞßÞëÞçÜÞøèìÞïÞëÚåÚåøÞëçÚøâïÞéÞëßèëæÚçÜÞæÞÚìùëÞìÝÞĚçâøâèçì Steel Foundry operations of which can be found in Note 4. £m £m £m Segment revenue 942.0 459.4   5.1 Business segments Operating segments for continuing operations Segment EBITDA 107.0 68.6 175.6 ÎéÞëÚøâçàìÞàæÞçøìÚëÞëÞéèëøÞÝâçÚæÚççÞëÜèçìâìøÞçøðâøáøáÞâçøÞëçÚåëÞéèëøâçàéëèïâÝÞÝøèøáÞÄñÞÜùøâïÞÃâëÞÜøèëìèß Segment depreciation (27.8) (14.5) (42.3) øáÞÁèÚëÝðáèæÚäÞøáÞäÞòèéÞëÚøâçàÝÞÜâìâèçìÚçÝÚëÞëÞìéèçìâÛåÞßèëÚååèÜÚøâçàëÞìèùëÜÞìÚçÝÚììÞììâçàéÞëßèëæÚçÜÞ èßøáÞèéÞëÚøâçàìÞàæÞçøìÑÞěÞÜøâçàøáÞÆëèùéċìæÚçÚàÞæÞçøÚçÝâçøÞëçÚåëÞéèëøâçàìøëùÜøùëÞìÞàæÞçøÚåâçßèëæÚøâèçâì ÒÞàæÞçøøëÚÝâçàéëèĚø 79.2 54.1 133.3 éëÞìÞçøÞÝâçëÞìéÞÜøèßøáÞøðèæÚâçÛùìâçÞìììÞàæÞçøìÒøÞÞåÚçÝÅèùçÝëòÓáÞÒøÞÞåìÞàæÞçøÚààëÞàÚøÞìøáÞÅåèðÂèçøëèå Return on sales margin 8.4% 11.8% 9.5% ÀÝïÚçÜÞÝÑÞßëÚÜøèëâÞìÚçÝÃâàâøÚåÒÞëïâÜÞìÝâïâìâèçìðáâÜáÚëÞìùÛöÞÜøøèÚìâæâåÚëëâìäéëèĚåÞÚçÝëÞøùëçÓáÞéëâçÜâéÚå activities of each of these segments are described in the Strategic Report on pages 32 to 49. ÀæèëøâìÚøâèçèßÚÜêùâëÞÝâçøÚçàâÛåÞÚììÞøì (17.1) ÒÞàæÞçøëÞïÞçùÞëÞéëÞìÞçøìëÞïÞçùÞßëèæÞñøÞëçÚåÜùìøèæÞëì›âçøÞë˜ìÞàæÞçøëÞïÞçùÞâìçèøæÚøÞëâÚåœÓëÚÝâçàéëèĚøâçÜåùÝÞì Restructuring charges (28.5) items directly attributable to a segment as well as those items that can be allocated on a reasonable basis. ÆÚâçèçÞæéåèòÞÞÛÞçÞĚøéåÚç 5.2 ÎéÞëÚøâçàéëèĚø 92.9 5.2 Revenue recognition ÍÞøĚçÚçÜÞÜèìøì (14.5) Revenue comprises the fair value of the consideration received or receivable for goods supplied and services rendered to ÜùìøèæÞëìÚßøÞëÝÞÝùÜøâçàëÞÛÚøÞìÝâìÜèùçøìÚçÝïÚåùޘÚÝÝÞÝøÚñÞìÚçÝÚßøÞëÞåâæâçÚøâçàìÚåÞìðâøáâçøáÞÆëèùéÑÞïÞçùÞ ÒáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞì 1.0 ßëèæøáÞìÚåÞèßàèèÝìâìëÞÜèàçâìÞÝðáÞçéÞëìùÚìâïÞÞïâÝÞçÜÞÞñâìøìøáÚøøáÞìâàçâĚÜÚçøëâìäìÚçÝëÞðÚëÝìèßèðçÞëìáâéáÚïÞ ÏëèĚøÛÞßèëÞøÚñ 79.4 ÛÞÞçøëÚçìßÞëëÞÝøèøáÞÜùìøèæÞëëÞÜèïÞëòèßøáÞÜèçìâÝÞëÚøâèçâìéëèÛÚÛåÞøáÞëÞâìçèÜèçøâçùâçàæÚçÚàÞæÞçøâçïèåïÞæÞçø Capital expenditure additions 23.7 11.5 35.2 ðâøáøáÞàèèÝìÚçÝøáÞÚæèùçøèßëÞïÞçùÞÜÚçÛÞæÞÚìùëÞÝëÞåâÚÛåòÀéëèïâìâèçßèëÚçøâÜâéÚøÞÝëÞøùëçìâìæÚÝÞÛÚìÞÝ primarily on historical return rates. Where a contractual arrangement consists of two or more separate elements that can 5.4 Geographical analysis ÛÞéëèïâÝÞÝøèÜùìøèæÞëìÞâøáÞëèçÚìøÚçݘÚåèçÞÛÚìâìèëÚìÚçÞñøëÚìùÜáÚìøáÞéëèïâìâèçèßìùééåÞæÞçøÚëòæÚøÞëâÚåìðâøá External revenue Íèç˜ÜùëëÞçøÚììÞøì ÞêùâéæÞçøëÞïÞçùÞâìëÞÜèàçâìÞÝßèëÞÚÜáÞåÞæÞçøÚìâßâøðÞëÞÚçâçÝâïâÝùÚåÜèçøëÚÜøùÚåÚëëÚçàÞæÞçø 2017 2016 2017 2016* £m £m £m £m 5.3 Income statement US 279.4 240.9 288.2 318.5 The operating segment results from continuing operations for 2017 and 2016 are presented below. Germany 232.1 192.4 101.0 121.5 2017 India 136.5 119.2 42.7 39.7 Continuing Steel Foundry operations China 127.6 113.1 86.9 93.2 £m £m £m Segment revenue 1,148.7 535.2 1,683.9 Brazil 90.5 70.7 65.1 69.2 ÔÊ 64.0 59.4 107.2 119.5 Segment EBITDA 128.9 80.3 209.2 France 55.4 48.0 26.1 20.1 Segment depreciation (28.5) (15.2) (43.7) Spain 49.4 42.5 31.9 27.7 ÒÞàæÞçøøëÚÝâçàéëèĚø 100.4 65.1 165.5 Rest of the world 649.0 515.2 355.6 349.0 Return on sales margin 8.7% 12.2% 9.8% Continuing operations 1,683.9   1,104.7 !$

ÀæèëøâìÚøâèçèßÚÜêùâëÞÝâçøÚçàâÛåÞÚììÞøì (19.5) * Restated as a result of the recording of a provision for which a related asset exists (Note 32). Restructuring charges (36.3) ÄñøÞëçÚåëÞïÞçùÞÝâìÜåèìÞÝâçøáÞøÚÛåÞÚÛèïÞâìÛÚìÞÝùéèçøáÞàÞèàëÚéáâÜÚååèÜÚøâèçèßøáÞèéÞëÚøâèçÍèç˜ÜùëëÞçøÚììÞøì

ÎéÞëÚøâçàéëèĚø 109.7 ÞñÜåùÝÞÞæéåèòÞÞÛÞçÞĚøìçÞøìùëéåùìÞìÚçÝÝÞßÞëëÞÝøÚñÚììÞøìÈçßèëæÚøâèçëÞåÚøâçàøèøáÞÆëèùéċìéëèÝùÜøìÚçÝìÞëïâÜÞì Financial Statements ÍÞøĚçÚçÜÞÜèìøì (13.9) is given in the Strategic Report on pages 36 to 49. The Group is not dependent upon any single customer for its revenue and çèìâçàåÞÜùìøèæÞëßèëÞâøáÞëèßøáÞòÞÚëìéëÞìÞçøÞÝâçøáÞøÚÛåÞÚÛèïÞÚÜÜèùçøìßèëæèëÞøáÚçYèßøáÞÆëèùéċìøèøÚå ÒáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞì 1.3 external revenue. ÏëèĚøÛÞßèëÞøÚñ 97.1 Capital expenditure additions 34.0 10.3 44.3 Vesuvius plc 142 Annual Report and Accounts 2017 143

Notes to the Group Financial Statements continued

6. Amounts Payable to PricewaterhouseCoopers LLP and their Associates 8.2 Average number of employees 2017 2016 2017 2016 no. no. £m £m Steel 7,868 ##! Fees payable to the Company’s auditors and their associates for the audit of the parent Company and Consolidated Financial Statements 0.4 0.4 Foundry 3,106  Fees payable to the Company’s auditors and their associates for other services: Continuing operations 10,974 $" Audit of the Company’s subsidiaries 0.8 1.5 Discontinued operations — — ÀùÝâø˜ëÞåÚøÞÝÚììùëÚçÜÞìÞëïâÜÞì 0.1 0.1 Total average number of employees 10,974 $" Tax compliance and advisory — — ÀìÚø ÃÞÜÞæÛÞë#øáÞÆëèùéáÚÝÞæéåèòÞÞì›"$ œ Total auditors’ remuneration 1.3 2.0 8.3 Remuneration of key management personnel ÏëâÜÞðÚøÞëáèùìÞÂèèéÞëìËËÏðÚìÚééèâçøÞÝÚìøáÞÆëèùéċìÞñøÞëçÚåÚùÝâøèëßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë#ëÞéåÚÜâçà ÓáÞëÞæùçÞëÚøâèçèßøáÞÃâëÞÜøèëìðáèÚëÞøáÞäÞòæÚçÚàÞæÞçøéÞëìèççÞåèßøáÞÆëèùéâììÞøèùøÛÞåèðâçÚààëÞàÚøÞßèë ÊÏ÷ÆËËÏ ÞÚÜáèßøáÞÜÚøÞàèëâÞììéÞÜâĚÞÝâçÈÀÒ ÑÞåÚøÞÝÏÚëøòÃâìÜåèìùëÞìÅùëøáÞëâçßèëæÚøâèçÚÛèùøøáÞëÞæùçÞëÚøâèçèßâçÝâïâÝùÚå Directors is provided in the audited part of the Directors’ Remuneration Report on pages 106 to 116. ÓèøÚåÚùÝâøèëìċëÞæùçÞëÚøâèçèßx æâç#ÚååëÞåÚøÞÝøèÜèçøâçùâçàèéÞëÚøâèçìèßðáâÜáxæëÞåÚøÞÝøèÚùÝâøßÞÞì

ÚçÝxæèßçèç˜ÚùÝâøßÞÞìâçëÞìéÞÜøèßøáÞâçøÞëâæëÞïâÞðßÞÞ›"xæâçÜåùÝâçàx%æèßÚùÝâøßÞÞìÚçÝxæèß 2017 2016 çèç˜ÚùÝâøßÞÞìøáÞåÚøøÞëÜèæéëâìâçàxæâçëÞìéÞÜøèßøáÞâçøÞëâæëÞïâÞðßÞÞÚçÝxçâåßèëøÚñÚøâèçÚÝïâÜޜ £m £m Òáèëø˜øÞëæÞæéåèòÞÞÛÞçÞĚøì 1.9 1.5 ÷ÚóÚëìËËÏðÚìÚééèâçøÞÝÞñøÞëçÚåÚùÝâøèëèßøáÞçèç˜æÚøÞëâÚåÞçøâøâÞìðâøáâçøáÞÆëèùéßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë #ÓèøÚåëÞæùçÞëÚøâèçßèëøáÞÚùÝâøèßøáÞçèç˜æÚøÞëâÚåÞçøâøâÞìðÚìx æâç#ÓáâìÚæèùçøâìçèøâçÜåùÝÞÝâçøáÞ Ïèìø˜ÞæéåèòæÞçøÛÞçÞĚøì 0.2 0.3 table above. ÒáÚëޘÛÚìÞÝéÚòæÞçøì 0.7 0.5 Total remuneration of key management personnel 2.8 2.3 ÈøâìøáÞÆëèùéċìéèåâÜòçèøøèùìÞøáÞÆëèùéċìÚùÝâøèëìßèëçèç˜ÚùÝâøìÞëïâÜÞìèøáÞëøáÚçâçïÞëòåâæâøÞÝÜâëÜùæìøÚçÜÞìÚçÝðáÞç they are best placed to do so. 9. Net Finance Costs

7. Restructuring Charges 9.1 Accounting policy ÓáÞ#ëÞìøëùÜøùëâçàÜáÚëàÞìðÞëÞx " æ›"x$!æœÓáÞÆëèùé˜ðâÝÞëÞìøëùÜøùëâçàéëèàëÚææÞâçâøâÚøÞÝâç! ÁèëëèðâçàÜèìøìøáÚøÚëÞÝâëÞÜøåòÚøøëâÛùøÚÛåÞøèøáÞÚÜêùâìâøâèçÜèçìøëùÜøâèçèëéëèÝùÜøâèçèßÚçÚììÞøøáÚøçÞÜÞììÚëâåò ÜèçøâçùÞÝëÞìùåøâçàâçÜáÚëàÞìèßx " æ›"x$!æœëÞěÞÜøâçàëÞÝùçÝÚçÜòÜèìøìèßx$æ›"x æœéåÚçøÜåèìùëÞ takes a substantial period of time to get ready for its intended use or sale are capitalised as part of the cost of that asset. Üèìøìèßx!æ›"x æœÜèçìùåøÚçÜòßÞÞìèßx"$æ›"xæœÚçâçïÞçøèëòÚììÞøðëâøޘèßßèßx!!æ›"x%æœ Capitalised borrowing costs for 2017 were £nil (2016: £nil). All other borrowing costs are recognised as an expense in the and travel of £0.7m (2016: £nil). Further details of restructuring programmes are provided in the Financial Review. Group Income Statement using the effective interest rate method.

The net tax credit attributable to the total restructuring charges was £4.3m (2016: £3.8m). % ÓèøÚåçÞøĚçÚçÜÞÜèìøì ÂÚìáÜèìøìèßx# æ›"x"$望ÍèøÞœðÞëÞâçÜùëëÞÝâçøáÞòÞÚëâçëÞìéÞÜøèßøáÞëÞìøëùÜøùëâçàéëèàëÚææÞåÞÚïâçà 2017 2016 éëèïâìâèçìæÚÝÞÛùøùçìéÞçøèßx%æ›ÍèøÞ œÚìÚø ÃÞÜÞæÛÞë#›"x$!æœèßðáâÜáx#æ›"x#æœ £m £m relates to future costs in respect of leases expiring between one and six years. Interest payable on borrowings ËèÚçìèïÞëÝëÚßøìÚçÝßÚÜøèëâçàÚëëÚçàÞæÞçøì 15.9 15.1 8. Employees ÎÛåâàÚøâèçìùçÝÞëĚçÚçÜÞåÞÚìÞì 0.2 0.2 Amortisation of capitalised arrangement fees 0.6 0.5 $ ÄæéåèòÞÞÛÞçÞĚøìÞñéÞçìÞ Total interest payable on borrowings 16.7 15.8 2017 2016 £m £m ÈçøÞëÞìøèççÞøëÞøâëÞæÞçøÛÞçÞĚøèÛåâàÚøâèçì 0.6 1.3 Wages and salaries 344.0 301.6 Adjustment to discounts on provisions and other liabilities 0.2 (0.2)

Social security costs 52.2 46.7 Adjustment to discounts on receivables (0.1) 0.3 Financial Statements Redundancy costs 22.8 21.4 Finance income (3.5) (2.7) ÎøáÞëëÞìøëùÜøùëâçàÜèìøì — 0.2 ÓèøÚåçÞøĚçÚçÜÞÜèìøì 13.9 14.5 ÒáÚëޘÛÚìÞÝéÚòæÞçøì›ÍèøÞ%œ 2.6 1.7 ÏÞçìâèçÜèìøì šÝÞĚçÞÝÜèçøëâÛùøâèçéÞçìâèçéåÚçì›ÍèøÞ$œ 12.5 10.7  šÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì›ÍèøÞ$œ 7.0 2.1 ÎøáÞëéèìø˜ëÞøâëÞæÞçøÛÞçÞĚøì›ÍèøÞ$œ 0.4 0.4 ÓèøÚåÞæéåèòÞÞÛÞçÞĚøìÞñéÞçìÞ 441.5 384.8

ÎßøáÞøèøÚåÞæéåèòÞÞÛÞçÞĚøìÞñéÞçìÞèßx !æ›"x $ $æœx $æ›"x "#æœðÚìÜáÚëàÞÝâçÚëëâïâçà ÚøøëÚÝâçàéëèĚøxçâå›"x!æœðÚìÜëÞÝâøÞÝßëèæìÞøøåÞæÞçøàÚâçìëÞåÚøâçàøèÞæéåèòÞÞÛÞçÞĚøéåÚçìx"æ ›"x æœðÚìÜáÚëàÞÝðâøáâçèëÝâçÚëòçÞøĚçÚçÜÞÜèìøìÚçÝx$æ›"x"æœðÚìÜáÚëàÞÝøèëÞìøëùÜøùëâçàÜèìøì ÖâøáâçëÞÝùçÝÚçÜòÜèìøìëÞéèëøÞÝâçøáÞøÚÛåÞÚÛèïÞÚëÞxçâå›"x æœèßÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçÜèìøìÚçÝxæ ›"xæœèßÝÞĚçÞÝÜèçøëâÛùøâèçéÞçìâèçéåÚçÜèìøì ÀøÜèçìøÚçøëÚøÞìøáÞøèøÚåÞæéåèòÞÞÛÞçÞĚøìÞñéÞçìÞßèë"ðÚìx %"æ Vesuvius plc 144 Annual Report and Accounts 2017 145

Notes to the Group Financial Statements continued

10. Income Tax Vesuvius has accordingly changed its accounting policy to include interest and penalties on tax in trade and other payables in accordance with IAS 37. This has resulted in a change to its Group Balance Sheet as at 31 December 2016 to reclassify £7.0m 10.1 Accounting policy from its liabilities and provisions previously reported as tax to trade and other payables. The effect of this change on its 2016 ÓÚñÞñéÞçìÞëÞéëÞìÞçøìøáÞìùæèßÜùëëÞçøøÚñÚçÝÝÞßÞëëÞÝøÚñÂùëëÞçøÚçÝÝÞßÞëëÞÝøÚñÚëÞëÞÜèàçâìÞÝâçéëèĚøèëåèìì éÞëßèëæÚçÜÞìøÚøÞæÞçøìâìâææÚøÞëâÚåÚçÝçèëÞìøÚøÞæÞçøâìøáÞëÞßèëÞëÞêùâëÞÝøèÛÞæÚÝÞ except to the extent that they relate to items charged or credited in the Group Statement of Comprehensive Income or Group ÒøÚøÞæÞçøèßÂáÚçàÞìâçÄêùâøòâçðáâÜáÜÚìÞøáÞÚììèÜâÚøÞÝøÚñâìÚåìèëÞÜèàçâìÞÝâçøáèìÞìøÚøÞæÞçøì 10.2 Income tax charge 2017 2016 ÈçÚëëâïâçàÚøâøìÜùëëÞçøøÚñÜáÚëàÞøáÞÆëèùéÚåìèæÚäÞìÜÚëÞßùåÚììÞììæÞçøèßøáÞåâäÞåòâæéÚÜøèßøÚñåÚðÜáÚçàÞì £m £m ÈçéÚëøâÜùåÚëâøáÚìÜèçìâÝÞëÞÝøáÞâæéÚÜøèßÔÒøÚñëÞßèëæÞçÚÜøÞÝâçÃÞÜÞæÛÞë#âçøáÞÔÒÓÚñÂùøìÚçÝÉèÛìÀÜø Current tax ›ĊÓÂÉÀċœÚçÝèøáÞëëÞÜÞçøåòÚççèùçÜÞÝøÚñëÞßèëæßèëÞñÚæéåÞâçÁÞåàâùæ ÎïÞëìÞÚìøÚñÚøâèç 37.1 38.3 Current tax Adjustments in respect of prior years (1.7) (2.9) ÂùëëÞçøøÚñâìÛÚìÞÝèçøÚñÚÛåÞéëèĚøßèëøáÞòÞÚëÓÚñÚÛåÞéëèĚøÝâßßÞëìßëèæéëèĚøÛÞßèëÞøÚñÚìëÞéèëøÞÝâçøáÞÆëèùé Total current tax, continuing operations 35.4 35.4 Income Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates and laws Deferred tax øáÚøáÚïÞÛÞÞçÞçÚÜøÞÝèëìùÛìøÚçøâïÞåòÞçÚÜøÞÝÛòøáÞÛÚåÚçÜÞìáÞÞøÝÚøÞ ÎëâàâçÚøâèçÚçÝëÞïÞëìÚåèßøÞæéèëÚëòøÚñÚÛåÞÝâßßÞëÞçÜÞì 19.0 (9.0) A provision is recognised when the Group considers it has a present tax obligation as the result of a past event and it is Adjustments in respect of prior years — — éëèÛÚÛåÞøáÚøøáÞÆëèùéðâååÛÞëÞêùâëÞÝøèìÞøøåÞøáÚøèÛåâàÚøâèçÏëèïâìâèçìÞìøÚÛåâìáÞÝßèëìùÜáùçÜÞëøÚâçøÚñéèìâøâèçìÚëÞ Total deferred tax, continuing operations 19.0 (9.0) æÚÝÞùìâçàÚÛÞìøÞìøâæÚøÞèßøáÞøÚñÞñéÞÜøÞÝøèÛÞéÚâÝÛÚìÞÝèçÚêùÚåâøÚøâïÞÚçÝêùÚçøâøÚøâïÞÚììÞììæÞçøèßÚååëÞåÞïÚçø âçßèëæÚøâèçÒùÜáÚéëèïâìâèçâìøòéâÜÚååòëÞêùâëÞÝðáÞëÞøáÞùçÝÞëåòâçàøÚñâììùÞâììùÛöÞÜøøèâçøÞëéëÞøÚøâèçÚçÝëÞæÚâçìøèÛÞ Total income tax charge 54.4 26.4 ÚàëÞÞÝÚçÝøáÞëÞßèëÞâìùçÜÞëøÚâçÚìøèèùøÜèæÞÏëâçÜâéÚååòøáÞùçÜÞëøÚâçøÚñéèìâøâèçìßèëðáâÜáÚéëèïâìâèçâìæÚÝÞëÞåÚøÞ Total income tax charge attributable to: to the interpretation of tax legislation and guidance regarding transfer pricing arrangements that have been entered into in Continuing operations — headline performance 36.4 31.4 øáÞçèëæÚåÜèùëìÞèßÛùìâçÞììÈçÚÜÜèëÝÚçÜÞðâøáÈÀÒøÚñéëèïâìâèçìÚëÞâçÜåùÝÞÝÚìâçÜèæÞøÚñéÚòÚÛåÞèçøáÞßÚÜÞèß — separately reported 18.0 (5.0) øáÞÆëèùéÁÚåÚçÜÞÒáÞÞøÚçÝæèïÞæÞçøìâçøÚñéëèïâìâèçìÚëÞâçÜåùÝÞÝðâøáâçâçÜèæÞøÚñÜáÚëàÞìèëÜëÞÝâøìâçøáÞÆëèùé Total income tax charge 54.4 26.4 Income Statement. ÈçÜåùÝÞÝâçøáÞÆëèùéċìøèøÚåâçÜèæÞøÚñÜáÚëàÞÚëÞÜáÚëàÞìÚçÝÜëÞÝâøìæÞÞøâçàøáÞÜëâøÞëâÚìÞøèùøâçÍèøÞ!øèÛÞøëÞÚøÞÝ ÈçÚììÞììâçàÚçòÚééëèéëâÚøÞéëèïâìâèçëÞêùâëÞæÞçøìßèëùçÜÞëøÚâçøÚñâøÞæìøáÞÆëèùéÜèçìâÝÞëìéëèàëÞììæÚÝÞâç ÚììÞéÚëÚøÞåòëÞéèëøÞÝâøÞæìÚìÚçÚåòìÞÝâçøáÞßèååèðâçàøÚÛåÞ ÝâìÜùììâèçìðâøáøáÞøÚñÚùøáèëâøâÞìÞñéÞëøÚÝïâÜÞèçøáÞåâäÞåòèùøÜèæÞÚçÝÚçòëÞÜÞçøÝÞïÞåèéæÞçøìâçÜÚìÞåÚðÃùÞøèøáÞ

ùçÜÞëøÚâçøòÚììèÜâÚøÞÝðâøáìùÜáøÚñâøÞæìâøâìéèììâÛåÞøáÚøÚøÚßùøùëÞÝÚøÞèçÜèçÜåùìâèçèßøáÞèéÞçæÚøøÞëìøáÞĚçÚå 2017 2016 èùøÜèæÞæÚòïÚëòìâàçâĚÜÚçøåòÀçòìùÜáïÚëâÚøâèçìðâååÚßßÞÜøøáÞĚçÚçÜâÚåëÞìùåøìâçøáÞòÞÚëâçðáâÜáìùÜáÚÝÞøÞëæâçÚøâèç Separately reported items £m £m is made. Impact of US tax reform 24.5 — ÎøáÞëùøâåâìÚøâèçèßéëÞïâèùìåòëÞÜèàçâìÞÝÔÒÝÞßÞëëÞÝøÚñÚììÞø 4.2 6.2 Deferred tax Additional recognition of US deferred tax asset (0.4) (4.1) ÃÞßÞëëÞÝøÚñâìëÞÜèàçâìÞÝèçÝâßßÞëÞçÜÞìÛÞøðÞÞçøáÞÜÚëëòâçàÚæèùçøìèßÚììÞøìÚçÝåâÚÛâåâøâÞìâçøáÞĚçÚçÜâÚåìøÚøÞæÞçøì ÚçÝøáÞÜèëëÞìéèçÝâçàøÚñÛÚìÞìùìÞÝâçøáÞÜèæéùøÚøâèçèßøÚñÚÛåÞéëèĚøÚçÝâìÚÜÜèùçøÞÝßèëùìâçàøáÞÛÚåÚçÜÞìáÞÞø Net movement in US deferred tax asset 28.3 2.1 liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax Restructuring charges (4.3) (3.8) ÚììÞøìÚëÞëÞÜèàçâìÞÝøèøáÞÞñøÞçøøáÚøâøâìéëèÛÚÛåÞøáÚøøÚñÚÛåÞéëèĚøìðâååÛÞÚïÚâåÚÛåÞÚàÚâçìøðáâÜáÝÞÝùÜøâÛåÞøÞæéèëÚëò ÆÚâçèçÞæéåèòÞÞÛÞçÞĚøéåÚç — 0.4 differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial ÀæèëøâìÚøâèçÚçÝùøâåâìÚøâèçèßÚÜêùâëÞÝâçøÚçàâÛåÞì (6.0) (3.7) recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a Total tax charge/(credit) separately reported 18.0 (5.0) øëÚçìÚÜøâèçøáÚøÚßßÞÜøìçÞâøáÞëøáÞøÚñÚÛåÞéëèĚøçèëøáÞÚÜÜèùçøâçàéëèĚøÃÞßÞëëÞÝøÚñâìÜÚåÜùåÚøÞÝÚøøáÞøÚñëÚøÞìøáÚøÚëÞ ÞñéÞÜøÞÝøèÚééåòâçøáÞéÞëâèÝðáÞçøáÞåâÚÛâåâøòâììÞøøåÞÝèëøáÞÚììÞøâìëÞÚåâìÞÝÛÚìÞÝèçøÚñëÚøÞìÚçÝåÚðìøáÚøáÚïÞÛÞÞç The US Tax Cuts and Jobs Act (‘TCJA’) enacted in the US in December 2017 has had a material impact on the value of the ÞçÚÜøÞÝèëìùÛìøÚçøâïÞåòÞçÚÜøÞÝÛòøáÞÛÚåÚçÜÞìáÞÞøÝÚøÞ ÝÞßÞëëÞÝøÚñÚììÞøøáÞÆëèùéëÞÜèàçâìÞìâçøáÞÔÒÈøáÚìëÞÝùÜÞÝøáÞÚììÞøÛòv æ›x!#æœèßðáâÜáv !æ›x !æœ Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests âìÜáÚëàÞÝøèøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚçÝv"æ›xæœâìÜáÚëàÞÝøèøáÞÆëèùéÒøÚøÞæÞçøèßÂèæéëÞáÞçìâïÞÈçÜèæÞ

âçöèâçøïÞçøùëÞìÞñÜÞéøðáÞëÞøáÞÆëèùéâìÚÛåÞøèÜèçøëèåøáÞëÞïÞëìÚåèßøáÞøÞæéèëÚëòÝâßßÞëÞçÜÞÚçÝâøâìéëèÛÚÛåÞøáÚøøáÞ ÚìâøëÞåÚøÞìøèøáÞÞßßÞÜøèßøáÞÜáÚçàÞâçøáÞÔÒÅÞÝÞëÚåëÚøÞèßøÚñèçøáÞïÚåùÞèßøáÞÝÞßÞëëÞÝøÚñÚììÞøèçéÞçìâèçÝÞĚÜâøì Financial Statements temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each recognised in that statement. ÛÚåÚçÜÞìáÞÞøÝÚøÞÚçÝëÞÝùÜÞÝøèøáÞÞñøÞçøøáÚøâøâìçèåèçàÞëéëèÛÚÛåÞøáÚøìùßĚÜâÞçøøÚñÚÛåÞéëèĚøìðâååÛÞÚïÚâåÚÛåÞøè ÓáÞëÞÝùÜøâèçðÚìéëâçÜâéÚååòÝùÞøèøáÞÜáÚçàÞâçÅÞÝÞëÚåøÚñëÚøÞßëèæ !YøèYøáÞÝÞÞæÞÝëÞéÚøëâÚøâèçøèååâçàÜáÚëàÞ allow all or part of the asset to be recovered. Deferred tax assets and liabilities are offset when there is a legally enforceable and the impact of other changes when measuring the value of the asset which is recognised in the Group Balance Sheet. right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation ÇèðÞïÞëçèÜùëëÞçøøÚñåâÚÛâåâøòáÚìëÞìùåøÞÝßëèæøáÞìÞéëèïâìâèçìâç#ÝùÞøèøáÞÚïÚâåÚÛâåâøòèßøÚñåèììÞìÚçÝßèëÞâàçøÚñ authority and the Group intends to settle its current tax assets and liabilities on a net basis. ÜëÞÝâøìøèèßßìÞøøáÞëÞìùåøÚçøÚÝÝâøâèçÚåøÚñÚÛåÞâçÜèæÞÓáÞâæéÚÜøèßÔÒøÚñëÞßèëæøèàÞøáÞëðâøáçèëæÚåÜáÚçàÞìøèøáÞ ÔÒÝÞßÞëëÞÝøÚñÚììÞøëÞìùåøÞÝâçøáÞÚììÞøëÞÝùÜâçàßëèæv$ æ›x"!%æœÚøøáÞÞçÝèß"øèv æ›x "æœÚøøáÞÞçÝ Change in accounting policy of 2017. ÏëÞïâèùìåòøáÞÜèææèçùçÝÞëìøÚçÝâçàÚçÝâçøÞëéëÞøÚøâèçèßÈÀÒÚååèðÞÝÚÜèæéÚçòøèâçÜåùÝÞâçâøìøÚñÜáÚëàÞìåâÚÛâåâøâÞì and provisions any associated delayed settlement interest and penalties. Vesuvius followed this approach. The recent Èç#ÁÞåàâùæëÞÝùÜÞÝâøìøÚñëÚøÞøè%Yâç$ÚçÝ!YâçÓáâìáÚìáÚÝøáÞâæéÚÜøèßëÞÝùÜâçàøáÞÝÞßÞëëÞÝøÚñ ÜåÚëâĚÜÚøâèçÛòøáÞÈÅÑÒÈçøÞëéëÞøÚøâèçìÂèææâøøÞÞ›éëÞïâèùìåòøáÞÈçøÞëçÚøâèçÚåÅâçÚçÜâÚåÑÞéèëøâçàÈçøÞëéëÞøÚøâèçì asset in Belgium by £1.4m in 2017 (2016: £nil). This impact is included in the total deferred tax charge on continuing operations. ÂèææâøøÞÞÈÅÑÈœáèðÞïÞëâìøáÚøÚÜèæéÚçòìáèùåÝâçÜåùÝÞâçâøìøÚñÜáÚëàÞìåâÚÛâåâøâÞìÚçÝéëèïâìâèçìèçåòâøÞæìæÞÞøâçà øáÞìøëâÜøÝÞĚçâøâèçèßøÚñÞìùçÝÞëÈÀÒÈøÜèçĚëæÞÝøáÚøâøÞæìçèøæÞÞøâçàøáÚøÝÞĚçâøâèçìáèùåÝÛÞëÞéèëøÞÝâçÚÜÜèëÝÚçÜÞ with IAS 37. Vesuvius plc 146 Annual Report and Accounts 2017 147

Notes to the Group Financial Statements continued

10. Income Tax (continued) 2017 2016 £m £m 10.2 Income tax charge (continued) Recognised in the Group Balance Sheet as: ÓáÞçÞøøÚñÜáÚëàÞëÞěÞÜøÞÝâçøáÞÆëèùéÒøÚøÞæÞçøèßÂèæéëÞáÞçìâïÞÈçÜèæÞâçøáÞòÞÚëÚæèùçøÞÝøèx æ›"x#æœ Íèç˜ÜùëëÞçøÝÞßÞëëÞÝøÚñÚììÞøì 61.0 92.1 x æèßðáâÜáëÞåÚøÞÝøèøÚñèççÞøÚÜøùÚëâÚåàÚâçìÚçÝåèììÞìèçøáÞÞæéåèòÞÞÛÞçÞĚøìéåÚçÈçÚÝÝâøâèçx#æ›"xçâåœ Íèç˜ÜùëëÞçøÝÞßÞëëÞÝøÚñåâÚÛâåâøâÞì (42.7) (48.6) ëÞåÚøÞÝøèÔÊøÚñâçëÞìéÞÜøèßßèëÞâàçÞñÜáÚçàÞÝâßßÞëÞçÜÞìÚëâìâçàèçáÞÝàÞÝéèìâøâèçì Net total deferred tax assets 18.3 43.5 ÓáÞÆëèùéèéÞëÚøÞìâçÚçùæÛÞëèßÜèùçøëâÞìøáÚøáÚïÞÝâßßÞëâçàøÚñëÚøÞìåÚðìÚçÝéëÚÜøâÜÞìÂáÚçàÞìâçÚçòèßøáÞìÞ ÚëÞÚìÜèùåÝÚÝïÞëìÞåòèëéèìâøâïÞåòâæéÚÜøøáÞÆëèùéċìøÚñÜáÚëàÞâçøáÞßùøùëÞÂèçøâçùâçàåèììÞìèëâçìùßĚÜâÞçÜòèßøÚñÚÛåÞ Included in these deferred tax assets and liabilities are amounts to be expected to be utilised in 2018 as follows: éëèĚøøèÚÛìèëÛÚååÞñéÞçìÞìâçÚçòìùÛìâÝâÚëòÜèùåÝáÚïÞøáÞÞßßÞÜøèßâçÜëÞÚìâçàøÚñÜáÚëàÞìâçøáÞßùøùëÞÚìÞßßÞÜøâïÞøÚñ 2017 2016 ëÞåâÞßæÚòçèøÛÞÚïÚâåÚÛåÞßèëøáèìÞåèììÞìèëÞñéÞçìÞìÎøáÞëìâàçâĚÜÚçøßÚÜøèëìÚßßÞÜøâçàøáÞøÚñÜáÚëàÞÚëÞÝÞìÜëâÛÞÝâç £m £m ÍèøÞì ÚçÝ" Deferred tax assets 11.3 16.9 Èç"éëèĚøßëèæÝâìÜèçøâçùÞÝèéÞëÚøâèçì›ÍèøÞœâçÜåùÝÞÝÚøÚñÜëÞÝâøèßx%æëÞåÚøâçàøèøáÞëÞåÞÚìÞèßÚéëèïâìâèçßèë Deferred tax liabilities (7.6) (6.7) éèììâÛåÞÂáâçÚøÚñÞìÚëâìâçàÝùëâçàøáÞÝÞæÞëàÞëèßøáÞÀåÞçøÛùìâçÞììâçÀßøÞëßùëøáÞëÜèçìùåøÚøâèçðâøáÚÝïâìÞëìÚçÝâç åâàáøèßøáÞéùÛåâÜÚøâèçâç!ÛòøáÞÂáâçÞìÞøÚñÚùøáèëâøâÞìèßÚÝÝâøâèçÚåàùâÝÚçÜÞèçøáÞÚééåâÜÚÛåÞøÚñÞìâøðÚìÝÞÜâÝÞÝ ÀìÝâìÜùììÞÝâçÍèøÞÔÒøÚñëÞßèëæÞçÚÜøÞÝâçÓÂÉÀáÚìáÚÝÚæÚöèëâæéÚÜøèçøáÞÆëèùéċìÔÒÝÞßÞëëÞÝøÚñéèìâøâèç øáâìéëèïâìâèçðÚìçèåèçàÞëëÞêùâëÞÝÍèìâæâåÚëÜëÞÝâøáÚìÚëâìÞçâç# Note 3.2 outlines the principal judgements and estimates taken in determining the impact of that reform on the valuation of this asset.   ÑÞÜèçÜâåâÚøâèçèßâçÜèæÞøÚñÜáÚëàÞøèéëèĚøÛÞßèëÞøÚñ ÈçÜåùÝÞÝâççèç˜ÜùëëÞçøÝÞßÞëëÞÝøÚñÚììÞøìâìx "æ›"x"!%æœâçëÞìéÞÜøèßøáÞéÚëøâÚåëÞÜèàçâøâèçèßøÞæéèëÚëò 2017 2016 £m £m ÝâßßÞëÞçÜÞìÚëâìâçàâçøáÞÔÒÜèæéùøÞÝâçÚÜÜèëÝÚçÜÞðâøáøáÞéèåâÜòìÞøèùøâçÍèøÞÚÛèïÞÓáÞÆëèùéëÞæÚâçìÜèçĚÝÞçø ÏëèĚøÛÞßèëÞøÚñ 97.1 79.4 of the recovery of this asset. £69.2m (2016: £100.4m) remains unrecognised. ÈçïâÞðèßâøìæÚøÞëâÚåìâóÞÚçÝçÚøùëÞÚçòøÚñÜëÞÝâøëÞěÞÜøÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚëâìâçàßëèæøáÞëÞÜèàçâøâèçèß Tax at the UK corporation tax rate of 19.25% (2016: 20%) 18.7 15.9 øáâìÚììÞøâìéëÞìÞçøÞÝìÞéÚëÚøÞåòßëèæøáÞøÚñÜáÚëàÞèçáÞÚÝåâçÞéÞëßèëæÚçÜÞâçÚÜÜèëÝÚçÜÞðâøáøáÞéëâçÜâéåÞìèùøåâçÞÝâç Impact of tax rate change on deferred tax asset 19.5 — ÍèøÞ!ÒùÛìÞêùÞçøâçÜëÞÚìÞÝÞÜëÞÚìÞÚçÝùøâåâìÚøâèçèßøáÞëÞìùåøÚçøÝÞßÞëëÞÝøÚñÚììÞøðèùåÝìâæâåÚëåòÛÞÞñéÞÜøÞÝøèÛÞ éëÞìÞçøÞÝâçøáâìæÚççÞëÚìøáÞÃâëÞÜøèëìÜèçìâÝÞëøáÚøøáÞìÞéÚëÚøÞâÝÞçøâĚÜÚøâèçèßÝÞßÞëëÞÝøÚñßèëæÚøÞëâÚåøÞæéèëÚëò ÎïÞëìÞÚìøÚñëÚøÞÝâßßÞëÞçÜÞì 9.8 2.7 ÝâßßÞëÞçÜÞìðèùåÝÚììâìøÛèøáâçÚÛÞøøÞëùçÝÞëìøÚçÝâçàèßøáÞĚçÚçÜâÚåéÞëßèëæÚçÜÞÚÜáâÞïÞÝÚçÝâçæÚäâçàéëèöÞÜøâèçì Withholding taxes 4.4 3.6 of future results of the Group. Amortisation of intangibles (0.2) (0.3) ÓÚñåèììÜÚëëò˜ßèëðÚëÝìÚçÝèøáÞëøÞæéèëÚëòÝâßßÞëÞçÜÞìðâøáÚøÚñïÚåùÞèßxæ›"x æœðÞëÞëÞÜèàçâìÞÝÛòìùÛìâÝâÚëâÞì Expenses not deductible for tax purposes 0.2 1.6 ëÞéèëøâçàÚåèììÎçøáÞÛÚìâìèßÚééëèïÞÝÛùìâçÞììéåÚçìèßøáÞìÞìùÛìâÝâÚëâÞìøáÞÃâëÞÜøèëìÜèçìâÝÞëâøéëèÛÚÛåÞøáÚøøáÞøÚñ Income taxed in advance 3.6 4.6 åèììÜÚëëò˜ßèëðÚëÝìÚçÝøÞæéèëÚëòÝâßßÞëÞçÜÞìÜÚçÛÞèßßìÞøÚàÚâçìøßùøùëÞøÚñÚÛåÞéëèĚøì Íèç˜øÚñÚÛåÞâçÜèæÞ — (1.2) ÓáÞøèøÚåÝÞßÞëëÞÝøÚñÚììÞøìçèøëÞÜèàçâìÞÝÚìÚø ÃÞÜÞæÛÞë#ðÞëÞx%%æ›"x" æœÚìÚçÚåòìÞÝÛÞåèð Deferred tax asset not previously recognised (1.4) (4.1) ÈçÚÜÜèëÝÚçÜÞðâøáøáÞÚÜÜèùçøâçàéèåâÜòâçÍèøÞøáÞìÞâøÞæìáÚïÞçèøÛÞÞçëÞÜèàçâìÞÝÚìÝÞßÞëëÞÝøÚñÚììÞøìèçøáÞ Deferred tax assets not recognised 3.5 7.5 ÛÚìâìøáÚøøáÞâëßùøùëÞÞÜèçèæâÜÛÞçÞĚøâìçèøéëèÛÚÛåÞÈçøèøÚåøáÞëÞðÚìÚÝÞÜëÞÚìÞèßx æ›"x" æâçÜëÞÚìޜâç Utilisation of previously unrecognised tax losses (2.0) (1.0) çÞøùçëÞÜèàçâìÞÝÝÞßÞëëÞÝøÚñÚììÞøìÝùëâçàøáÞòÞÚëéëâçÜâéÚååòÝùÞøèøáÞâæéÚÜøèßøáÞÜáÚçàÞâçøáÞÔÒÅÞÝÞëÚåøÚñëÚøÞ Adjustments in respect of prior years (1.7) (2.9) ßëèæ !YøèYÞçÚÜøÞÝâçÓÂÉÀ Total income tax charge 54.4 26.4 2017 2016 £m £m 10.4 Deferred tax ÎéÞëÚøâçàåèììÞì›ßùëøáÞëÝÞìÜëâÛÞÝÛÞåèðœ 102.3 118.6 ÎøáÞë ÎøáÞë operating Pension Intangible temporary ÔçëÞåâÞïÞÝÔÒâçøÞëÞìø›æÚòÛÞÜÚëëâÞÝßèëðÚëÝâçÝÞĚçâøÞåòœ 43.2 66.6 Interest losses costs assets differences Total ÂÚéâøÚååèììÞìÚïÚâåÚÛåÞøèèßßìÞøßùøùëÞÔÊÜÚéâøÚåàÚâçì›æÚòÛÞÜÚëëâÞÝßèëðÚëÝâçÝÞĚçâøÞåòœ 28.1 28.0 £m £m £m £m £m £m ÔÊÀÂÓÜëÞÝâøì›æÚòÛÞÜÚëëâÞÝßèëðÚëÝâçÝÞĚçâøÞåòœ 13.1 13.1

As at 1 January 2016 24.1 23.8 1.3 (30.4) 7.3 26.1 Financial Statements US tax credits 16.7 9.1 ÄñÜáÚçàÞÚÝöùìøæÞçøìèøáÞë 4.5 2.5 1.9 (4.2) 4.4 9.1 ÎøáÞëøÞæéèëÚëòÝâßßÞëÞçÜÞì 16.5 27.7 Charge to Group Statement of Comprehensive Income — — (0.7) — — (0.7) Total deferred tax assets not recognised 219.9 263.1 Credit to Group Income Statement 0.2 3.8 — 5.3 1.8 11.1 ÍÞø›ÜáÚëàޜÜëÞÝâøøèÆëèùéÈçÜèæÞÒøÚøÞæÞçøÔÒ (2.1) (0.2) — — 0.2 (2.1) x!!æëÞåÚøâçàøèÔÒøÚñÜëÞÝâøìáÚìÛÞÞçëÞÜåÚììâĚÞÝßëèæèøáÞëøÞæéèëÚëòÝâßßÞëÞçÜÞìøèÔÒøÚñÜëÞÝâøìâçøáÞ"ÜèæéÚëÚøâïÞ As at 1 January 2017 26.7 29.9 2.5 (29.3) 13.7 43.5 ÓáÞÆëèùéáÚììâàçâĚÜÚçøçÞøèéÞëÚøâçàåèììÞìðâøáÚøÚñïÚåùÞèßx% æ›"x $!æœèçåòx#æ›"x%%æœèß ÄñÜáÚçàÞÚÝöùìøæÞçøìèøáÞë (1.8) (1.8) — 0.2 (0.4) (3.8) which meet the criteria set out in Note 10.1 to be recognised on the Group Balance Sheet. Impact of tax rate change: — in Group Income Statement (6.8) (8.6) (0.8) — (3.3) (19.5) — in Group Statement of Comprehensive Income ——(1.2)——(1.2) ÎøáÞëÜáÚëàÞøèÆëèùéÒøÚøÞæÞçøèßÂèæéëÞáÞçìâïÞ Income ——(1.2)——(1.2) ÎøáÞëÜëÞÝâøøèÆëèùéÈçÜèæÞÒøÚøÞæÞçø — 0.6 0.1 6.2 3.8 10.7 ÎøáÞëçÞø›ÜáÚëàޜÜëÞÝâøøèÆëèùéÈçÜèæÞÒøÚøÞæÞçøÔÒ (8.2) (3.0) 0.6 (0.2) 0.6 (10.2) As at 31 December 2017 9.9 17.1 — (23.1) 14.4 18.3 Vesuvius plc 148 Annual Report and Accounts 2017 149

Notes to the Group Financial Statements continued

10. Income Tax (continued) 10.6 Key factors impacting the sustainability of the effective tax rate are as follows:  ÷ÚøÞëâÚåÜáÚçàÞìâçøáÞàÞèàëÚéáâÜæâñèßéëèĚøì 10.4 Deferred tax (continued) ÓáÞÆëèùéċìÞßßÞÜøâïÞøÚñëÚøÞâììÞçìâøâïÞøèÜáÚçàÞìâçøáÞàÞèàëÚéáâÜæâñèßéëèĚøìÚçÝåÞïÞåèßéëèĚøìÚçÝëÞěÞÜøìÚ Operating Operating ÎéÞëÚøâçà ÎéÞëÚøâçà losses losses not losses losses not ÜèæÛâçÚøâèçèßáâàáÞëëÚøÞìâçÜÞëøÚâçöùëâìÝâÜøâèçììùÜáÚìÈçÝâÚ÷ÞñâÜèÆÞëæÚçòÚçÝÁÞåàâùæçâåÞßßÞÜøâïÞøÚñëÚøÞìâç recognised recognised Total recognised recognised Total øáÞÔÊÚçÝøáÞÔÒÝùÞøèøáÞÚïÚâåÚÛâåâøòèßùçùøâåâìÞÝøÚñåèììÞìÚçÝëÚøÞìøáÚøåâÞìèæÞðáÞëÞâçÛÞøðÞÞç 2017 2017 2017 2016 2016 2016 £m £m £m £m £m £m Changes in tax rates, tax reform and its interpretation ÔÊ›æÚòÛÞÜÚëëâÞÝßèëðÚëÝâçÝÞĚçâøÞåòœ — 73.5 73.5 — 78.6 78.6 Changes in tax rates and laws in the jurisdictions in which the Group operates could have a material effect on the Group’s ÔÒÀ›ÝùÞøèÞñéâëÞ ˜ œ 13.3 3.7 17.0 26.5 4.9 31.4 ÞßßÞÜøâïÞøÚñëÚøÞÀììøÚøÞÝâçÍèøÞøáÞÆëèùéáÚìøÚäÞçâçøèÚÜÜèùçøøáÞâæéÚÜøèßÔÒÚçÝèøáÞëøÚñëÞßèëæÞçÚÜøÞÝ ÑÎÖ›æÚòÛÞÜÚëëâÞÝßèëðÚëÝâçÝÞĚçâøÞåòœ 3.5 21.5 25.0 3.4 23.0 26.4 in 2017. ÑÎÖ›ÝùÞøèÞñéâëÞðâøáâç!òÞÚëìœ 0.3 3.6 3.9 — 12.1 12.1 ÎçÞèßøáÞçÞðøÚñÞìâçøëèÝùÜÞÝÛòøáÞÔÒÓÚñÂùøìÚçÝÉèÛìÀÜø›ĊÓÂÉÀċœâçøáÞÔÒâçÃÞÜÞæÛÞë#âìøáÞÁÚìÞÄëèìâèçÚçÝ 17.1 102.3 119.4 29.9 118.6 148.5 Àçøâ˜ÀÛùìÞÓÚñ›ĊÁÄÀÓċœ›ìÞÞÚåìèÍèøÞ ›ÛœœÓáâìâìâçøÞçÝÞÝøèÜèùçøÞëðáÚøÔÒøÚñÚùøáèëâøâÞìëÞàÚëÝÚìÞëèìâèçèßøáÞÔÒ øÚñÛÚìÞèßÚÔÒÜèæéÚçòÜÚùìÞÝÛòéÚòæÞçøìèøáÞëøáÚçßèëÜèìøèßàèèÝììèåÝøèâøìøèçèç˜ÔÒÚßĚåâÚøÞìÈçâøìÛëèÚÝÞìø The £28.9m (2016: £38.5m) operating losses available to set against future income in the rest of the world arise in a number of ìÞçìÞøáâìðèùåÝÞìøÚÛåâìáÚÛÚìÞøÚñèßYèßÚÔÒÜèæéÚçòċìçèëæÚåøÚñÚÛåÞâçÜèæÞÚìàëèììÞÝùéÛòìùÜáéÚòæÞçøì ÜèùçøëâÞìëÞěÞÜøâçàøáÞìéëÞÚÝèßøáÞÆëèùéċìèéÞëÚøâèçì ÓáÞëÚøÞèßøÚñÚééåâÞÝâì!Yâç$âçÜëÞÚìâçàøèYßëèæ%ÖáâåìøøáâìÝèÞìçèøâæéÚÜøÕÞìùïâùìâç#âøâìÜùëëÞçøåò ÀìÚø ÃÞÜÞæÛÞë#øáÞÆëèùéáÚÝùçëÞÜèàçâìÞÝÔÒøÚñÜëÞÝâøìðâøáÚïÚåùÞèßx"#æ›"x%æœÚìßèååèðì estimated to result in a US cash tax cost from 2018 onwards and thus increase the Group’s effective rate of tax on Headline éÞëßèëæÚçÜÞ›ÛÞßèëÞâøììáÚëÞèßöèâçøïÞçøùëÞâçÜèæޜàèâçàßèëðÚëÝÛò#Yâç$ÚçÝYâç%ÓáÞÆëèùéċìÞßßÞÜøâïÞ 2017 2016 øÚñëÚøÞßèë$èçðÚëÝìâìÞñéÞÜøÞÝøèÛÞÛÞøðÞÞç#YÚçÝ$YâçÜåùÝâçàøáÞÞñéÞÜøÞÝÚÝïÞëìÞâæéÚÜøèßÔÒøÚñëÞßèëæ £m £m ëÞěÞÜøâçàøáÞÛÞçÞĚøèßâçâøâÚøâïÞìÛÞâçàøÚäÞç US research and experimentation credits (due to expire 2018–2033) 12.8 4.9 US foreign tax credits (due to expire 2022–2024) 3.9 4.2 ÓÂÉÀâìÚæÚöèëçÞðéâÞÜÞèßåÞàâìåÚøâèçâçøëèÝùÜÞÝïÞëòëÚéâÝåòÜèçìÞêùÞçøåòøáÞëÞâììøâååæùÜáùçÜÞëøÚâçøòÚÛèùøáèðìèæÞ US tax credits 16.7 9.1 èßøáÞäÞòéëèïâìâèçìðâååèéÞëÚøÞÓáÞâçøÞëçÚøâèçÚåéëèïâìâèçìâçéÚëøâÜùåÚëÚëÞÞñøëÞæÞåòÜèæéåÞñÚçÝðâøáåâøøåÞâììùÞÝ àùâÝÚçÜÞßëèæøáÞÔÒÓëÞÚìùëòÚëÞçèøòÞøßùååòùçÝÞëìøèèÝÛòøáÞÛùìâçÞììèëÚÝïâìÞëÜèææùçâøòÕÞìùïâùìáÚìøÚäÞçÚÝïâÜÞ There are no temporary differences associated with investments in subsidiaries and interests in joint ventures for which èçáèðÓÂÉÀâìåâäÞåòøèâæéÚÜøèçâøìøÚñéèìâøâèçÛùøâøâìøèÛÞÞñéÞÜøÞÝøáÚøÚìàùâÝÚçÜÞÚçÝâçøÞëéëÞøÚøâèçÜåÚëâĚÞìøáÞìÞ deferred tax liabilities have not been recognised. The aggregate temporary differences where the exemption not to provide çÞðåÚðìøáÞçßùëøáÞëÜáÚçàÞìøèâøìøÚñÜáÚëàÞìÚçÝÛÚåÚçÜÞìæÚòçÞÞÝøèÛÞæÚÝÞ for the deferred taxation liability has been taken is £197.1m (2016: £175.9m). Availability of tax advantaged rates ÔÊÜèëéèëÚøâèçøÚñëÚøÞëÞÝùÜøâèçìøè#YßëèæÀéëâåðÞëÞÞçÚÜøÞÝâç"ÀÜÜèëÝâçàåòøáÞÆëèùéċìÜåèìâçàÔÊ ÕÞìùïâùìâçÂáâçÚêùÚåâĚÞìßèëÚøÚñÚÝïÚçøÚàÞÝëÚøÞèß!Y›ëÚøáÞëøáÚçøáÞáÞÚÝåâçÞëÚøÞèß!YœèçéÚëøèßâøìéëèĚøìÝùÞ ÝÞßÞëëÞÝøÚñåâÚÛâåâøòáÚìÛÞÞçéëèïâÝÞÝùìâçàÚøÚñëÚøÞèß#YÞñÜÞéøðáÞëÞøáÞëÞïÞëìÚåìÚëÞÞñéÞÜøÞÝøèÚëâìÞéëâèëøè øèøáÞáâàá˜øÞÜáçèåèàòçÚøùëÞèßâøìÛùìâçÞììÄåâàâÛâåâøòßèëøáâìëÚøÞâìëÞïâÞðÞÝèçÚëÞàùåÚëÛÚìâìÛòøáÞÂáâçÞìÞøÚñÚùøáèëâøò 1 April 2020. ÚçÝðÚìðèëøáÚééëèñâæÚøÞåòx%æâç#›"xæœÖâøáèùøøáÚøÛÞçÞĚøøáÞÆëèùéċìÞßßÞÜøâïÞøÚñëÚøÞèçáÞÚÝåâçÞ éÞëßèëæÚçÜÞðèùåÝáÚïÞÛÞÞç"YáâàáÞëâç#›"$Yœ 10.5 Income tax payable and recoverable

2017 2016 Resolution of tax judgements £m £m ÀøÚçòèçÞøâæÞøáÞÆëèùéÜÚçÛÞìùÛöÞÜøøèÚçùæÛÞëèßÜáÚååÞçàÞìÛòøÚñÚùøáèëâøâÞìâçøáÞöùëâìÝâÜøâèçìâçðáâÜáâøèéÞëÚøÞì Liabilities for income tax payable 11.1 10.4 ÓáÞèùøÜèæÞèßøáÞìÞÜáÚååÞçàÞìâìâçáÞëÞçøåòùçÜÞëøÚâçéèøÞçøâÚååòëÞìùåøâçàâçÚÝâßßÞëÞçøøÚñÜáÚëàÞßëèæøáÞÚæèùçøì Provisions for uncertain tax provisions 23.2 24.5 initially provided. 34.3 34.9  ÑÞÜèàçâøâèçèßøÚñÛÞçÞĚøìÚëâìâçàßëèæÛëèùàáøßèëðÚëÝåèììÞìÚçÝèøáÞëøÞæéèëÚëòÝâßßÞëÞçÜÞìâçøáÞÔÒ ÈçÚÜÜèëÝÚçÜÞðâøáøáÞÜëâøÞëâÚìÞøèùøâçÍèøÞæèïÞæÞçøìâçÕÞìùïâùìċÔÒÝÞßÞëëÞÝøÚñÚììÞøÚëÞëÞÜèàçâìÞÝÚììÞéÚëÚøÞåò Income tax recoverable within one year 5.2 3.9 ëÞéèëøÞÝâøÞæìÂèçìÞêùÞçøåòìùÜáæèïÞæÞçøìáÚïÞçèâæéÚÜøèçøáÞÆëèùéċìÞßßÞÜøâïÞøÚñëÚøÞèçáÞÚÝåâçÞéÞëßèëæÚçÜÞ Income tax recoverable after more than one year 0.4 1.0 ÒáèùåÝáèðÞïÞëøáÞ#éëèĚøìÞÚëçÞÝâçøáÞÔÒáÚïÞÛÞÞçßùååòìùÛöÞÜøøèÔÒÅÞÝÞëÚåÚçÝÒøÚøÞøÚñÞìøáÞçøáÞÆëèùéċì Total income tax recoverable 5.6 4.9 ÞßßÞÜøâïÞøÚñëÚøÞèçáÞÚÝåâçÞéÞëßèëæÚçÜÞ›ÞñÜåùÝâçàøáÞÆëèùéċììáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞìœðèùåÝáÚïÞÛÞÞç ÚééëèñâæÚøÞåò YáâàáÞë›"  YáâàáÞëœ Financial Statements Net liability 28.7 30.0 Impact of Brexit on Vesuvius’ tax position ÇèðÁëÞñâøâæéÚÜøìèçÕÞìùïâùìðâååÝÞéÞçÝèçøáÞøÞëæìèßÁëÞñâøðáâÜáÚëÞÚìòÞøùçÜåÞÚëÚçÝøáÞëÞßèëÞâøâìçèøéèììâÛåÞÚø ÏëèïâìâèçìßèëùçÜÞëøÚâçøÚñéëèïâìâèçìÚëÞÜÚåÜùåÚøÞÝâçÚÜÜèëÝÚçÜÞðâøáøáÞéèåâÜòèùøåâçÞÝâçÍèøÞÚçÝÚëÞøëÞÚøÞÝÚì this stage to provide precise guidance on how it will impact on the Group. If the EU Parent Subsidiary and Interest and Royalty income tax payable and recoverable in accordance with IAS 12. ÝâëÞÜøâïÞìðÞëÞçèåèçàÞëøèÚééåòøèÝâïâÝÞçÝâçøÞëÞìøÚçÝèøáÞëéÚòæÞçøìøèÕÞìùïâùìâçøáÞÔÊÚÝÝâøâèçÚåðâøááèåÝâçàøÚñÞì These provisions cover litigated tax matters as well as provisions for other risks where the Group believes it is more likely than would become payable subject to reliefs available under applicable tax treaties. çèøøáÚøøáÞëÞðèùåÝÛÞÚìùÜÜÞììßùåÜáÚååÞçàÞÛòÚøÚñÚùøáèëâøòøèéèìâøâèçìâøáÚìøÚäÞçâçâøìøÚñĚåâçàìÁòâøìçÚøùëÞåâøâàÚøâèç ÜÚçëÞìùåøâçìáÚëéěùÜøùÚøâèçìâçÜÚìáěèðÛèøáâçÚçÝèùøëÞåÚøâçàøèøÚñÞìÂùëëÞçøåòæÚçÚàÞæÞçøÝèçèøÞñéÞÜøÚçò material adjustments to these provisions in 2018. Vesuvius plc 150 Annual Report and Accounts 2017 151

Notes to the Group Financial Statements continued

11. Earnings per Share (EPS) 12. Cash Generated from Operations Continuing Discontinued 2017 Continuing Discontinued 2016 11.1 Earnings for EPS operations operations total operations operations total ÁÚìâÜÚçÝÝâåùøÞÝÄÏÒßëèæÜèçøâçùâçàèéÞëÚøâèçìÚëÞÛÚìÞÝùéèçøáÞéëèĚøÚøøëâÛùøÚÛåÞøèèðçÞëìèßøáÞéÚëÞçøÚìëÞéèëøÞÝ £m £m £m £m £m £m âçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøèßx " æ›"x "#æœÛÞâçàøáÞéëèĚøßèëøáÞòÞÚëèßx #æ›"x! æœåÞìì ÎéÞëÚøâçàéëèĚø 109.7 1.7 111.4 92.9 1.2 94.1 çèç˜ÜèçøëèååâçàâçøÞëÞìøìèßx" æ›"x" æœÛÚìâÜÚçÝÝâåùøÞÝÄÏÒßëèæøèøÚåèéÞëÚøâèçìÚëÞÛÚìÞÝèçøáÞéëèĚø Adjustments for: ÚøøëâÛùøÚÛåÞøèèðçÞëìèßøáÞéÚëÞçøèßx $æ›"x!"%æœáÞÚÝåâçÞÚçÝÝâåùøÞÝáÞÚÝåâçÞÄÏÒÚëÞÛÚìÞÝùéèçáÞÚÝåâçÞ Amortisation of acquired intangible assets (Note 16) 19.5 — 19.5 17.1 — 17.1 éëèĚøßëèæÜèçøâçùâçàèéÞëÚøâèçìÚøøëâÛùøÚÛåÞøèèðçÞëìèßøáÞéÚëÞçøèßxæ›"x$æœÓáÞøÚÛåÞÛÞåèðëÞÜèçÜâåÞì Restructuring charges 36.3 — 36.3 28.5 — 28.5 øáÞìÞÝâßßÞëÞçøéëèĚøæÞÚìùëÞì ÆÚâçìëÞåÚøâçàøèÞæéåèòÞÞÛÞçÞĚøéåÚçì ———(5.2) — (5.2) Continuing Discontinued 2017 Continuing Discontinued " Depreciation 43.7 — 43.7 42.3 — 42.3 operations operations total operations operations total £m £m £m xæ xæ xæ EBITDA (Note 4.12) 209.2 1.7 210.9 175.6 1.2 176.8 ÏëèĚøÚøøëâÛùøÚÛåÞøèèðçÞëìèßøáÞéÚëÞçø 36.3 1.7 38.0 "#  !"% Net increase in inventories (19.4) — (19.4) (8.9) — (8.9) Adjustments for separately reported items: Net increase in trade receivables (36.9) — (36.9) (18.6) — (18.6) Amortisation of acquired intangible assets 19.5 # Net increase in trade payables 44.1 — 44.1 14.5 — 14.5 Restructuring charges 36.3 $! Net decrease/(increase) in other working capital 11.7 (2.5) 9.2 (7.9) (1.2) (9.1) ÆÚâçèçÞæéåèòÞÞÛÞçÞĚøéåÚç — ›!œ ÎùøěèðëÞåÚøÞÝøèëÞìøëùÜøùëâçàÜáÚëàÞì (27.3) — (27.3) (16.8) — (16.8) ÈçÜèæÞøÚñÜáÚëàޝ›ÜëÞÝâøœ 18.0 ›!œ ÍÞøëÞøâëÞæÞçøÛÞçÞĚøèÛåâàÚøâèçì (4.8) — (4.8) (7.7) — (7.7) ÇÞÚÝåâçÞéëèĚøÚøøëâÛùøÚÛåÞøèèðçÞëì Cash generated from operations 176.6 (0.8) 175.8 130.2 — 130.2 of the parent 110.1 $ 13. Cash and Cash Equivalents  ÖÞâàáøÞÝÚïÞëÚàÞçùæÛÞëèßìáÚëÞì 2017 2016 2017 " £m £m millions millions Cash at bank and in hand 161.9 144.4 For calculating basic and headline EPS 270.3 "%% Cash and short-term deposits 161.9 144.4 ÀÝöùìøæÞçøßèëéèøÞçøâÚååòÝâåùøâïÞèëÝâçÚëòìáÚëÞì 1.3 $ Bank overdrafts (21.9) (43.4) For calculating diluted and diluted headline EPS 271.6 ## Cash and cash equivalents in the Group Statement of Cash Flows 140.0 101.0

ÅèëøáÞéùëéèìÞìèßÜÚåÜùåÚøâçàÝâåùøÞÝÚçÝÝâåùøÞÝáÞÚÝåâçÞÄÏÒøáÞðÞâàáøÞÝÚïÞëÚàÞçùæÛÞëèßèëÝâçÚëòìáÚëÞìâìÚÝöùìøÞÝ Bank overdrafts that are repayable on demand and form an integral part of the Group’s cash management are included as a øèâçÜåùÝÞøáÞðÞâàáøÞÝÚïÞëÚàÞçùæÛÞëèßèëÝâçÚëòìáÚëÞìøáÚøðèùåÝÛÞâììùÞÝèçøáÞÜèçïÞëìâèçèßÚååéèøÞçøâÚååòÝâåùøâïÞ component of cash and cash equivalents for the purpose of the Group Statement of Cash Flows. èëÝâçÚëòìáÚëÞìÞñéÞÜøÞÝøèïÞìøëÞåÚøâçàøèøáÞÂèæéÚçòċììáÚëޘÛÚìÞÝéÚòæÞçøéåÚçìÏèøÞçøâÚåèëÝâçÚëòìáÚëÞìÚëÞèçåò øëÞÚøÞÝÚìÝâåùøâïÞðáÞçøáÞâëÜèçïÞëìâèçøèèëÝâçÚëòìáÚëÞìðèùåÝÝÞÜëÞÚìÞÄÏÒèëâçÜëÞÚìÞåèììéÞëìáÚëÞ

11.3 Per share amounts 14. Reconciliation of Movement in Net Debt Foreign Borrowing Continuing Discontinued 2017 Continuing Discontinued " Balance as at exchange facility costs Non-cash Balance as at operations operations total operations operations total 1 Jan 2017 adjustments capitalised movements ÂÚìáěèð 31 Dec 2017 pence pence pence pence pence pence £m £m £m £m £m £m ÄÚëçâçàìéÞëìáÚëÞ šÛÚìâÜ 13.4 0.7 14.1 # $  Cash and cash equivalents  — headline 40.7 Cash at bank and in hand 144.4 (4.5) — — 22.0 161.9 Bank overdrafts (43.4) 1.7 — — 19.8 (21.9) — diluted 13.4 0.6 14.0 # #  101.0 (2.8) — — 41.8 140.0

— diluted headline 40.5  Financial Statements Borrowings, excluding bank overdrafts Current (91.1) 4.1 — — 82.7 (4.3) Non-current (331.9) 12.8 — — (93.0) (412.1) (423.0) 16.9 — — (10.3) (416.4) Capitalised arrangement fees 1.7 — 1.0 (0.6) — 2.1 Net debt (320.3) 14.1 1.0 (0.6) 31.5 (274.3)

ÍÞøÝÞÛøâìÚæÞÚìùëÞèßøáÞÆëèùéċìçÞøâçÝÞÛøÞÝçÞììøèÛÚçäìÚçÝèøáÞëÞñøÞëçÚåĚçÚçÜâÚåâçìøâøùøâèçìÚçÝÜèæéëâìÞìøáÞ total of cash and short-term deposits and current and non-current interest-bearing borrowings.

15. Property, Plant and Equipment

15.1 Accounting policy Freehold land and construction in progress are carried at cost less accumulated impairment losses. Other items of property, plant and equipment are carried at cost less accumulated depreciation and accumulated impairment losses. Costs are ÜÚéâøÚåâìÞÝèçåòðáÞçâøâìéëèÛÚÛåÞøáÚøøáÞòðâååëÞìùåøâçßùøùëÞÞÜèçèæâÜÛÞçÞĚøìěèðâçàøèøáÞÆëèùéÚçÝðáÞçøáÞòÜÚçÛÞ measured reliably. Costs are capitalised to construction in progress where an asset is being developed. This is then transferred and depreciated when the asset is ready for use. All other repairs and maintenance expenditures are charged to the Group Income Statement in the period in which they are incurred. Vesuvius plc 152 Annual Report and Accounts 2017 153

Notes to the Group Financial Statements continued

ÓáÞçÞøÛèèäïÚåùÞèßøáÞÆëèùéċìéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçøÚììÞøìáÞåÝùçÝÞëĚçÚçÜÞåÞÚìÞÜèçøëÚÜøìðÚìx "æ (2016: £4.7m). Capital expenditure on customer-installation assets was £10.7m (2016: £6.5m). 15. Property, Plant and Equipment (continued) 16. Intangible Assets 15.1 Accounting policy (continued) ÅëÞÞáèåÝåÚçÝâìçèøÝÞéëÞÜâÚøÞÝÚìâøáÚìÚçâçĚçâøÞåâßÞÃÞéëÞÜâÚøâèçèçèøáÞëâøÞæìèßéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçøÛÞàâçì Intangible assets comprise goodwill and other intangible assets that have been acquired through business combinations. when the asset is available for use and is charged to the Group Income Statement on a straight-line basis so as to write off the 16.1 Accounting policy cost less residual value of the asset over its estimated useful life as follows: (a) Goodwill Asset category Estimated useful life Goodwill arising in a business combination is initially recognised as an asset at cost, measured as the excess of the aggregate Freehold property between ten and 50 years of the acquisition-date fair value of the consideration transferred and the amount of any non-controlling interest acquired Leasehold property the term of the lease èïÞëøáÞçÞøèßøáÞÚÜêùâìâøâèç˜ÝÚøÞßÚâëïÚåùÞÚæèùçøìèßøáÞâÝÞçøâĚÚÛåÞÚììÞøìÚÜêùâëÞÝÚçÝåâÚÛâåâøâÞìÚììùæÞÝÖáÞçøáÞ ÞñÜÞììâìçÞàÚøâïÞÚÛÚëàÚâçéùëÜáÚìÞàÚâçâìëÞÜèàçâìÞÝâææÞÝâÚøÞåòâçéëèĚøèëåèììÆèèÝðâååâììùÛìÞêùÞçøåòæÞÚìùëÞÝÚø Plant and equipment — motor vehicles and information technology equipment ÛÞøðÞÞçèçÞÚçÝĚïÞòÞÚëì cost less accumulated impairment losses, with impairment testing carried out annually, or more frequently when there is an — other between three and 15 years indication that the cash-generating unit to which the goodwill has been allocated may be impaired. On disposal of a business, øáÞÚøøëâÛùøÚÛåÞÚæèùçøèßàèèÝðâååâìâçÜåùÝÞÝâçøáÞÜÚåÜùåÚøâèçèßøáÞéëèĚøèëåèììèçÝâìéèìÚå The depreciation method used, residual values and estimated useful lives are reviewed annually and changed, if appropriate. As described in Note 17.1, an asset’s carrying amount is immediately written down to its recoverable amount if its carrying (b) Other intangible assets amount is greater than its estimated recoverable amount. Gains and losses arising on disposals are determined by comparing Intangible assets other than goodwill are recognised on business combinations if they are separable, or if they arise from sales proceeds with carrying amount and are recognised in the Group Income Statement. contractual or other legal rights, and their value can be measured reliably. They are initially measured at cost, which is equal to 15.2 Movement in net book value the acquisition-date fair value, and subsequently measured at cost less accumulated amortisation charges and accumulated impairment losses. Other intangible assets are subject to impairment testing when there is an indication that an impairment Freehold Leasehold Plant and Construction property property equipment in progress Total loss may have been incurred and are amortised over their estimated useful lives. £m £m £m £m £m Cost (c) Research and development costs As at 1 January 2016 169.7 2.3 477.2 28.8 678.0 ÓáÞÆëèùéċìëÞìÞÚëÜáÚÜøâïâøòâçïèåïÞìåèçà˜ëÚçàÞĊÛåùÞìäòċâçïÞìøâàÚøâèçøáÞĚçÝâçàìßëèæðáâÜáæÚòÛÞùìÞÝâçøáÞßùøùëÞ to develop new or substantially improved products. Expenditure on research activities is recognised in the Group Income Exchange adjustments 29.9 0.1 84.8 6.0 120.8 Statement as an expense in the year in which it is incurred. Capital expenditure additions 1.3 — 18.3 15.6 35.2 Acquisitions through business combinations — — 1.1 — 1.1 ÃÞïÞåèéæÞçøâìøáÞÚééåâÜÚøâèçèßëÞìÞÚëÜáĚçÝâçàìßèëøáÞéëèÝùÜøâèçèßçÞðèëìùÛìøÚçøâÚååòâæéëèïÞÝéëèÝùÜøìéëèÜÞììÞì and services before the start of commercial production. Development expenditure is capitalised only if the expenditure can Disposals (1.6) — (41.9) (0.2) (43.7) ÛÞæÞÚìùëÞÝëÞåâÚÛåòøáÞéëèÝùÜøèëéëèÜÞììâìøÞÜáçâÜÚååòÚçÝÜèææÞëÜâÚååòßÞÚìâÛåÞßùøùëÞÞÜèçèæâÜÛÞçÞĚøìÚëÞéëèÛÚÛåÞ ÑÞÜåÚììâĚÜÚøâèçì 4.0 — 10.5 (14.5) — ÚçÝøáÞÆëèùéâçøÞçÝìøèÚçÝáÚììùßĚÜâÞçøëÞìèùëÜÞìøèÜèæéåÞøÞÝÞïÞåèéæÞçøÚçÝøèùìÞèëìÞååøáÞÚììÞøÎøáÞëðâìÞâø As at 1 January 2017 203.3 2.4 550.0 35.7 791.4 is recognised in the Group Income Statement as an expense in the year in which it is incurred. Capitalised development Exchange adjustments (3.4) (0.1) (10.3) (2.1) (15.9) expenditure, where there is any, is stated at cost less accumulated amortisation and impairment losses. Capital expenditure additions 1.4 — 19.4 23.5 44.3 In determining whether development expenditure is capitalised as an intangible asset, management considers whether the Disposals (5.1) — (13.5) — (18.6) strict intangible asset recognition criteria set out in IAS 38, Intangible Assets, have been met at the time the expenditure is ÑÞÜåÚììâĚÜÚøâèçì 5.5 — 9.8 (15.3) — âçÜùëëÞÝÈçæÚäâçàøáâìÝÞøÞëæâçÚøâèçæÚçÚàÞæÞçøëÞÜèàçâìÞøáÚøÚìâàçâĚÜÚçøÚæèùçøèßøáÞÝÞïÞåèéæÞçøÞñéÞçÝâøùëÞ As at 31 December 2017 201.7 2.3 555.4 41.8 801.2 undertaken by the Group is focused on dealing with local customer technical support issues and incremental developments to existing products as opposed to new or substantially improved products, and that at the time the feasibility of the project Accumulated depreciation and impairment losses âìÝÞøÞëæâçÞÝÚìâàçâĚÜÚçøéëèéèëøâèçèßøáÞÝÞïÞåèéæÞçøÞñéÞçÝâøùëÞßèëøáÚøéëèöÞÜøáÚìÚåëÞÚÝòÛÞÞçâçÜùëëÞÝÈç# As at 1 January 2016 64.7 1.4 326.6 — 392.7 no projects met the criteria for IAS 38 capitalisation. Exchange adjustments 11.9 — 59.5 — 71.4 16.2 Movement in net book value Financial Statements

Depreciation charge 5.9 0.2 36.2 — 42.3 Other Other Impairment charge 0.4 — — — 0.4 intangible 2017 intangible 2016 Goodwill assets total Goodwill assets total Disposals (1.2) — (37.8) — (39.0) £m £m £m £m £m £m ÑÞÜåÚììâĚÜÚøâèçì 1.2 — (1.2) — — Cost As at 1 January 2017 82.9 1.6 383.3 — 467.8 As at 1 January 662.2 271.9 934.1 562.1 250.7 812.8 Exchange adjustments (2.0) (0.1) (7.7) — (9.8) Exchange adjustments (19.3) (0.7) (20.0) 97.0 17.4 114.4 Depreciation charge 6.1 0.3 37.3 — 43.7 Business combinations (Note 21) 0.3 — 0.3 3.1 3.8 6.9 Disposals (1.8) — (10.0) — (11.8) As at 31 December 643.2 271.2 914.4 662.2 271.9 934.1 ÑÞÜåÚììâĚÜÚøâèçì 0.3 — (0.3) — — Accumulated amortisation and impairment losses As at 31 December 2017 85.5 1.8 402.6 — 489.9 As at 1 January — 152.2 152.2 —128.2128.2 Exchange adjustments —(0.3)(0.3) —6.96.9 Net book value as at 31 December 2017 116.2 0.5 152.8 41.8 311.3 Amortisation charge for the year — 19.5 19.5 — 17.1 17.1 As at 31 December — 171.4 171.4 —152.2152.2 Net book value as at 31 December 2016 120.4 0.8 166.7 35.7 323.6

Net book value as at 1 January 2016 105.0 0.9 150.6 28.8 285.3 Net book value as at 31 December 643.2 99.8 743.0 662.2 119.7 781.9 Vesuvius plc 154 Annual Report and Accounts 2017 155

Notes to the Group Financial Statements continued

16. Intangible Assets (continued) The value in use calculations of the Group’s CGUs are based on three-year business plans and a terminal growth rate of !Y›"!YœÓáÞÜÚìáěèðìÚëÞÝâìÜèùçøÞÝøèøáÞâëÜùëëÞçøïÚåùÞùìâçàéëޘøÚñÝâìÜèùçøëÚøÞìðáâÜáëÞéëÞìÞçøÞÚÜá 16.3 Analysis of goodwill by cash-generating unit (CGU) ÂÆÔċìðÞâàáøÞÝÚïÞëÚàÞÜèìøèßÜÚéâøÚå›ÖÀÂœÆëèðøáëÚøÞìÚëÞÝÞøÞëæâçÞÝðâøáëÞßÞëÞçÜÞøèÜùëëÞçøæÚëäÞøÜèçÝâøâèçì ÆèèÝðâååÚÜêùâëÞÝâçÚÛùìâçÞììÜèæÛâçÚøâèçâìÚååèÜÚøÞÝøèÞÚÜáèßøáÞÆëèùéċìÂÆÔìÞñéÞÜøÞÝøèÛÞçÞĚøßëèæøáÞìòçÞëàâÞì ÞñøÞëçÚåßèëÞÜÚìøìÚçÝáâìøèëâÜÚåøëÞçÝìßèëøáÞÆëèùéċìäÞòÞçݘæÚëäÞøìèßÒøÞÞåÚçÝÅèùçÝëòÚçÝÞñéÞÜøÞÝàëèðøáâç of the combination. For the purposes of impairment testing, the Directors consider that the Group has two CGUs: the Steel output within the industries in which each major Group business unit operates. A perpetuity growth rate of 2.5% (2016: 2.5%) division and the Foundry division. These CGUs represent the lowest level within the Group at which goodwill is monitored. áÚìÛÞÞçÚééåâÞÝÓáÞéëޘøÚñÝâìÜèùçøëÚøÞâìøáÞÖÀÂÂÜÚåÜùåÚøÞÝßèëÞÚÜáÂÆÔÚìÚø ÃÞÜÞæÛÞë#ÛÚìÞÝèç âçÝùìøëò˜ìéÞÜâĚÜÛÞøÚÜèÞßĚÜâÞçøìßèëøáÞâçÝùìøëâÞìâçðáâÜáøáÞÂÆÔìèéÞëÚøÞëâìä˜ßëÞÞëÚøÞìÚçÝÞêùâøòëâìäéëÞæâùæì 2017 2016 £m £m related to the major countries in which the CGUs are located, selecting countries which contribute at least 80% of total Steel 426.3 438.7 CGU revenue. The pre-tax discount rate used for the Steel CGU was 11.0% (2016: 10.9%) and for the Foundry CGU was 11.6% (2016: 13.2%). The decrease in Foundry’s pre-tax discount rate is driven by improved global economic performance Foundry 216.9 223.5 ðáâÜáëÞìùåøìâçëÞÝùÜÞÝæÚëäÞøëâìäÚçÝÜèçìÞêùÞçøåòåèðÞëÞêùâøòëâìäéëÞæâùæìÚçÝøáÞÅèùçÝëòâçÝùìøëòáÚìéÞëßèëæÞÝ Total goodwill 643.2 662.2 well with limited volatility resulting in a reduced beta. In the Steel CGU, the impact of this decrease in equity risk premiums has been more than offset by increasing contributions from emerging markets, providing upward pressure on risk-free rates 16.4 Analysis of other intangible assets and equity risk premiums. Other intangible assets are amortised on a straight-line basis over their estimated useful lives. The assets acquired and their remaining useful lives are shown below. A sensitivity analysis undertaken in respect of the 2017 impairment testing, assuming a 1.0% increase in each of the CGU discount rates and a 1.0% perpetuity growth rate, still resulted in headroom remaining in which the recoverable amount of Net book each CGU exceeded its carrying value. A pre-tax discount rate of 16.0% would result in an impairment of Steel intangible Remaining value as at useful life 31 Dec 2017 assets and 22.7% for Foundry. years £m Foseco 17.3 Goodwill impairment — customer relationships (useful life: 20 years) 10.3 58.9 The Directors use their judgement to determine the extent to which goodwill and other capitalised intangible assets have a ïÚåùÞøáÚøðâååÛÞçÞĚøøáÞéÞëßèëæÚçÜÞèßøáÞÆëèùéèïÞëßùøùëÞéÞëâèÝìÓèÚììâìøâçæÚäâçàøáâìöùÝàÞæÞçøøáÞÃâëÞÜøèëì — trade name (useful life: 20 years) 10.3 37.1 undertake an assessment, at least annually, of the carrying value of the Group’s capitalised goodwill and other intangible — intellectual property rights (useful life: ten years) 0.3 2.0 assets. The projection period is, in the opinion of the Directors, an appropriate period over which to view the future results of Mould and tundish business of Carboox øáÞÆëèùéċìÛùìâçÞììÞìßèëøáâìéùëéèìÞÂáÚçàÞìøèøáÞÚììùæéøâèçìùìÞÝâçæÚäâçàøáÞìÞßèëÞÜÚìøìÜèùåÝìâàçâĚÜÚçøåòÚåøÞë — customer relationships (useful life: 20 years) 18.9 1.7 the Directors’ assessment of the carrying value of goodwill and other intangible assets. — trade name (useful life: two years) 0.9 0.1 In assessing goodwill for impairment, management performed its annual test at 31 October 2017 which is consistent with Total 99.8 the prior year. The Directors made use of detailed calculations of the recoverable amount of the Group’s CGUs as at ÎÜøèÛÞë#ÓáèìÞÜÚåÜùåÚøâèçìëÞìùåøÞÝâçëÞÜèïÞëÚÛåÞÚæèùçøììâàçâĚÜÚçøåòáâàáÞëøáÚçøáÞÜÚëëòâçàïÚåùÞìèßøáÞ 17. Impairment of Tangible and Intangible Assets Group’s CGUs and consequently no impairment charges were recognised. A further assessment for triggers of goodwill impairment was made at the year end and the calculations were also checked against the carrying values of the Group’s 17.1 Accounting policy ÂÆÔìÚìÚø ÃÞÜÞæÛÞë#ÍèâæéÚâëæÞçøøëâààÞëìðÞëÞâÝÞçøâĚÞÝ The Directors regularly review the performance of the business and the external business environment to determine whether there is any indication that the Group’s tangible and intangible assets have suffered an impairment loss. If such indication 18. Trade and Other Receivables exists, the higher of the value in use and the fair value less costs to sell of the asset is estimated and compared with the carrying ïÚåùÞâçèëÝÞëøèÝÞøÞëæâçÞøáÞÞñøÞçøâßÚçòèßøáÞâæéÚâëæÞçøåèììÖáÞëÞâøâìçèøßÞÚìâÛåÞøèÞìøâæÚøÞøáÞëÞÜèïÞëÚÛåÞ 18.1 Accounting policy amount of an individual asset, the Directors estimate the recoverable amount of the CGU to which the asset belongs. In Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost, using the addition, goodwill is tested for impairment on an annual basis. Goodwill acquired in a business combination is allocated to effective interest method, less impairment losses. ÞÚÜáèßøáÞÆëèùéċìÂÆÔìÞñéÞÜøÞÝøèÛÞçÞĚøßëèæøáÞìòçÞëàâÞìèßøáÞÜèæÛâçÚøâèçÚçÝøáÞÃâëÞÜøèëìÜÚëëòèùøÚççùÚå 18.2 Analysis of trade and other receivables impairment testing of the carrying value of each CGU, to assess the need for any impairment of the carrying value of the associated goodwill and other intangible and tangible assets. 2017 2016* Gross Impairment Net Gross Impairment Net

For the purpose of impairment testing, the recoverable amount of an asset or CGU is the higher of (i) its fair value less costs £m £m £m £m £m £m Financial Statements to sell and (ii) its value in use. If the recoverable amount of a CGU is less than its carrying amount, the resulting impairment Trade receivables — current 269.0 (0.7) 268.3 236.7 (1.1) 235.6 åèììâìÚååèÜÚøÞÝĚëìøøèëÞÝùÜÞøáÞÜÚëëòâçàÚæèùçøèßÚçòàèèÝðâååÚååèÜÚøÞÝøèøáÞÂÆÔÚçÝøáÞçøèøáÞèøáÞëÚììÞøìèßøáÞ — 1 to 30 days past due 59.0 (0.8) 58.2 51.3 (0.5) 50.8 CGU pro rata on the basis of the carrying amount of each asset in the CGU. An impairment loss recognised for goodwill is — 31 to 60 days past due 18.4 (0.3) 18.1 19.3 (0.2) 19.1 not reversed in a subsequent period. An impairment loss recognised in a prior year for an asset other than goodwill may be reversed where there has been a change in the estimates used to measure the asset’s recoverable amount since the — 61 to 90 days past due 8.2 (0.5) 7.7 9.5 (0.2) 9.3 impairment loss was recognised. — over 90 days past due 43.2 (29.4) 13.8 52.8 (31.1) 21.7 Trade receivables 397.8 (31.7) 366.1 369.6 (33.1) 336.5 17.2 Key assumptions Other receivables 40.8 42.8 ÓáÞäÞòÚììùæéøâèçìùìÞÝâçÝÞøÞëæâçâçàïÚåùÞâçùìÞÚëÞéëèöÞÜøÞÝÜÚìáěèðìàëèðøáëÚøÞìÚçÝÝâìÜèùçøëÚøÞìÏëèöÞÜøÞÝ Prepayments and accrued income 15.3 14.8 ÜÚìáěèðÚììùæéøâèçìÚëÞÛÚìÞÝèçáâìøèëâÜÚåĚçÚçÜâÚåâçßèëæÚøâèçÚÝöùìøÞÝøèßÚÜøèëâçøáÞÚçøâÜâéÚøÞÝâæéÚÜøèß restructuring and rationalisation plans already announced at the balance sheet date. Total trade and other receivables 422.2 394.1

*Restated as a result of the recording of a provision for which a related asset exists (Note 32). Vesuvius plc 156 Annual Report and Accounts 2017 157

Notes to the Group Financial Statements continued

18. Trade and Other Receivables (continued) 20. Derivative Financial Instruments

18.2 Analysis of trade and other receivables (continued) 20.1 Accounting policy All the Group’s operating companies have policies and procedures in place to assess the creditworthiness of the customers ÓáÞÆëèùéùìÞìÝÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì›ĊÝÞëâïÚøâïÞìċœâçøáÞßèëæèßßèëðÚëÝßèëÞâàçÜùëëÞçÜòÜèçøëÚÜøìÚçÝâçøÞëÞìø ðâøáðáèæøáÞòÝèÛùìâçÞììÖáÞëÞèÛöÞÜøâïÞÞïâÝÞçÜÞÞñâìøìøáÚøÚøëÚÝÞëÞÜÞâïÚÛåÞÛÚåÚçÜÞæÚòÛÞâæéÚâëÞÝéëèïâìâèç rate swaps to manage the effects of its exposure to foreign exchange risk and interest rate risk. The way in which derivatives is made for the difference between its carrying amount and the present value of the estimated cash that will be recovered. ÚëÞùìÞÝøèæÚçÚàÞøáÞÆëèùéċìĚçÚçÜâÚåëâìäâìÝÞøÚâåÞÝâçÍèøÞ# Evidence of impairment may include such factors as the customer being in breach of contract, or entering bankruptcy or Derivatives are measured at fair value. The fair value of forward foreign currency contracts is calculated using market prices ĚçÚçÜâÚåëÞèëàÚçâìÚøâèçéëèÜÞÞÝâçàìÈæéÚâëæÞçøéëèïâìâèçìÚëÞÚììÞììÞÝèçÚçâçÝâïâÝùÚåÜùìøèæÞëÛÚìâìßèëÚååìâàçâĚÜÚçø at the balance sheet date. The fair value of an interest rate swap is the estimated amount that the Group would receive or pay outstanding balances and collectively for all remaining balances, based upon historical loss experience. Historical experience to terminate the swap at the balance sheet date, taking into account current interest rates and the creditworthiness of the áÚììáèðçøáÚøøáÞÆëèùéċìøëÚÝÞëÞÜÞâïÚÛåÞéëèïâìâèçìÚëÞæÚâçøÚâçÞÝÚøåÞïÞåìøáÚøÚëÞìùßĚÜâÞçøøèÚÛìèëÛÚÜøùÚåÛÚÝÝÞÛø swap counterparty. ðëâøޘèßßìðâøáèùøÛÞâçàÞñÜÞììâïÞÓáÞÆëèùéÜèçìâÝÞëìøáÞÜëÞÝâøêùÚåâøòèßĚçÚçÜâÚåÚììÞøìøáÚøÚëÞçÞâøáÞëéÚìøÝùÞçèë impaired as good. The method of recognising the gain or loss on remeasurement to fair value depends upon whether the derivative is designated as a hedging instrument for hedge accounting purposes and, if so, the nature of the item being hedged. Strict conditions have 18.3 Movements on impairment provisions øèÛÞìÚøâìĚÞÝâçèëÝÞëøèêùÚåâßòßèëáÞÝàÞÚÜÜèùçøâçàâçÜåùÝâçàÚÝÞøÞëæâçÚøâèçÛèøáÚøâçÜÞéøâèçèßøáÞáÞÝàÞÚçÝèçÚç 2017 2016 èçàèâçàÛÚìâìøáÚøøáÞáÞÝàÞâìÞñéÞÜøÞÝøèÛÞáâàáåòÞßßÞÜøâïÞâçÚÜáâÞïâçàèßßìÞøøâçàÜáÚçàÞìâçßÚâëïÚåùÞìèëÜÚìáěèðì £m £m attributable to the hedged risk. The change in fair value of a derivative that is not designated as a hedging instrument for As at 1 January 33.1 27.1 hedge accounting purposes is recognised immediately in the Group Income Statement. No derivatives are held for speculative Charge for the year 3.7 6.6 purposes. Receivables written off during the year as uncollectable (4.8) (4.4) Net investment hedges Exchange adjustments (0.3) 3.8 The effective part of any gain or loss on a derivative that is designated as a hedge of a net investment in a foreign operation is As at 31 December 31.7 33.1 recognised in other comprehensive income and presented in the translation reserve in equity, and is subsequently recognised âçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚìéÚëøèßøáÞéëèĚøèëåèììèçÝâìéèìÚåèßøáÞçÞøâçïÞìøæÞçøÓáÞâçÞßßÞÜøâïÞéèëøâèçèßøáÞ The charge for the year shown in the table above is recorded within administration, selling and distribution costs in the Group àÚâçèëåèììâìëÞÜèàçâìÞÝâææÞÝâÚøÞåòðâøáâçøëÚÝâçàéëèĚøâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçø Income Statement.  ÀçÚåòìâìèßÝÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì

19. Inventories 2017 2016 19.1 Accounting policy Assets Liabilities Assets Liabilities £m £m £m £m ÈçïÞçøèëâÞìÚëÞìøÚøÞÝÚøøáÞåèðÞëèßÜèìø›ùìâçàøáÞĚëìøâçĚëìøèùøæÞøáèݜÚçÝçÞøëÞÚåâìÚÛåÞïÚåùÞÂèìøÜèæéëâìÞì Derivatives not designated for hedge accounting purposes 0.3 — —(0.9) expenditure incurred in purchasing or manufacturing inventories together with all other costs directly incurred in bringing the ÓèøÚåÝÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì inventory to its present location and condition and, where appropriate, attributable production overheads based on normal 0.3 — —(0.9) activity levels. Net realisable value represents the estimated selling price less all estimated costs of completion and costs to ÀååèßøáÞßÚâëïÚåùÞììáèðçâçøáÞøÚÛåÞÚÛèïÞÚëÞÜåÚììâĚÞÝùçÝÞëÈÅÑÒ ÚìËÞïÞåæÞÚìùëÞæÞçøìðáâÜááÚïÞÛÞÞç be incurred in marketing, selling and distribution. The amount of any write-down of inventories to net realisable value is ÜÚåÜùåÚøÞÝùìâçàêùèøÞÝéëâÜÞìßëèæÚÜøâïÞæÚëäÞøìðáÞëÞìâæâåÚëÜèçøëÚÜøìÚëÞøëÚÝÞÝÚçÝøáÞêùèøÞìëÞěÞÜøÚÜøùÚå recognised as an expense in the year in which the write-down occurs. transactions in similar instruments. All of the derivative assets and liabilities reported in the table above will mature within 19.2 Analysis of inventories a year of the balance sheet date.

2017 2016 £m £m Raw materials 80.2 75.1 Öèëä˜âç˜éëèàëÞìì 20.2 18.7 Finished goods 122.4 113.9 Total inventories 222.8 207.7 Financial Statements The cost of inventories recognised as an expense and included in manufacturing costs of continuing operations in the Group Income Statement during the year was £609.6m (2016: £499.3m). The net inventories of £222.8m include a provision for obsolete stock of £13.9m (2016: £14.4m) and inventory write-downs from cost to net realisable value of £1.7m (2016: £2.4m). Vesuvius plc 158 Annual Report and Accounts 2017 159

Notes to the Group Financial Statements continued

21. Acquisition of Subsidiaries and Joint Ventures, Net of Cash Acquired 24. Retained Earnings

The Group did not acquire any material interests in any companies during the year ended 31 December 2017. Reserve Share Other Total for own option retained retained Prior Year Acquisition shares reserve earnings earnings £m £m £m £m On 1 December 2016, the Group acquired a 100% ownership interest in Mastercodi Industrial Ltda, the mould and tundish As at 1 January 2016 (38.0) 3.6 2,380.9 2,346.5 ěùñÛùìâçÞììèßÂÚëÛèèñßèëøèøÚåÜèçìâÝÞëÚøâèçèßx$æèßðáâÜáx#æðÚìÝÞßÞëëÞÝÓáÞßÚâëïÚåùÞèßøáÞçÞøÚììÞøì ÚÜêùâëÞÝðÚìx %æÚçÝâçÜåùÝÞÝâÝÞçøâĚÞÝâçøÚçàâÛåÞÚììÞøìëÞåÚøâçàøèÜùìøèæÞëëÞåÚøâèçìáâéìÚçÝøëÚÝÞçÚæÞìèßx $æ ÏëèĚøßèëøáÞòÞÚë — — 56.9 56.9 The transaction resulted in the recognition of £3.1m of goodwill attributable to the synergies which are expected from ÑÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚììÞøì ——9.59.5 combining the business with the operations of the Group. Recognition of share-based payments — 1.7 — 1.7 Ãùëâçà#øáÞßÚâëïÚåùÞìèßøáÞÚÜêùâëÞÝÚììÞøìÚçÝåâÚÛâåâøâÞìðÞëÞĚçÚåâìÞÝÚçÝëÞìùåøÞÝâçÚx æÚÝöùìøæÞçøøèøëÚÝÞ Release of share option reserve on exercised and lapsed options 2.9 (2.4) (0.5) — ÚçÝèøáÞëëÞÜÞâïÚÛåÞìÓáÞĚçÚåßÚâëïÚåùÞèßçÞøÚììÞøìÚÜêùâëÞÝðÚìx!æÚçÝøáÞøèøÚåàèèÝðâååëÞÜèàçâìÞÝðÚìx  æ Income tax on items recognised in other comprehensive income — — (0.7) (0.7) Dividends paid (Note 26) — — (43.9) (43.9) 22. Discontinued Operations As at 1 January 2017 (35.1) 2.9 2,402.2 2,370.0 Discontinued operations income during 2017 of £1.7m related to a release of provisions no longer required. ÏëèĚøßèëøáÞòÞÚë — — 38.0 38.0 ÑÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚììÞøì ——8.48.4 Discontinued operations income during 2016 of £10.2m comprised a £9.0m tax credit relating to the release of a provision Recognition of share-based payments — 2.6 — 2.6 for possible China taxes (Note 10.2) and a £1.2m release of provisions no longer required. Release of share option reserve on exercised and lapsed options 0.9 (0.9) — — 22.1 Results of discontinued operations Income tax on items recognised in other comprehensive income ——(3.1)(3.1) 2017 2016 Dividends paid (Note 26) — — (45.6) (45.6) £m £m As at 31 December 2017 (34.2) 4.6 2,399.9 2,370.3 Other income 1.7 10.2 ÏëèĚøÛÞßèëÞøÚñšÚøøëâÛùøÚÛåÞøèèðçÞëìèßøáÞéÚëÞçø 1.7 10.2 Earnings per share — pence 25. Other Reserves

Basic 0.7 3.8 Other Translation Total other reserves reserve reserves Diluted 0.6 3.7 £m £m £m As at 1 January 2016 (1,499.3) (2.6) (1,501.9)  ÂÚìáěèðìßëèæÝâìÜèçøâçùÞÝèéÞëÚøâèçì Exchange differences on translation of the net assets of foreign operations — 202.1 202.1 2017 2016 £m £m Exchange translation differences arising on net investment hedges — (41.6) (41.6) ÍÞøÜÚìáèùøěèðßëèæ As at 1 January 2017 (1,499.3) 157.9 (1,341.4) — operating activities (0.7) — Exchange differences on translation of the net assets of foreign operations — (37.8) (37.8) ÍÞøÜÚìáèùøěèðßèëøáÞòÞÚë (0.7) — Exchange translation differences arising on net investment hedges —9.89.8 As at 31 December 2017 (1,499.3) 129.9 (1,369.4)

23. Issued Share Capital ÖâøáâçèøáÞëëÞìÞëïÞìÚìÚø ÃÞÜÞæÛÞë#âìx %%æ›"x %%æœÚëâìâçàßëèæøáÞÝÞæÞëàÞëèßÂèèäìèçÆëèùé 23.1 Accounting policy plc, being the excess of the Vesuvius plc share capital of £1,777.9m over the total share capital and share premium of Cookson Equity instruments issued by the Company are recorded as the proceeds received, net of direct issue costs. Group plc as at 14 December 2012 of £278.9m. The translation reserve in the table above comprises all foreign exchange differences attributable to the owners of the parent. 23.2 Analysis of issued share capital ÓáÞìÞÞñÜáÚçàÞÝâßßÞëÞçÜÞìÚëâìÞßëèæøáÞøëÚçìåÚøâèçèßøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßßèëÞâàçèéÞëÚøâèçìÚçÝßëèæøáÞ The issued and fully paid ordinary share capital of the Company as at 31 December 2017 was 278.5 million shares of 10 pence

øëÚçìåÚøâèçèßĚçÚçÜâÚåâçìøëùæÞçøìøáÚøáÞÝàÞøáÞÆëèùéċìçÞøâçïÞìøæÞçøâçßèëÞâàçèéÞëÚøâèçìÈçÚÝÝâøâèçøèßèëÞâàç Financial Statements each (2016: 278.5 million shares of 10 pence each). Further information relating to the Company’s share capital is given in exchange differences attributable to the owners of the parent, the Group Statement of Comprehensive Income includes ÍèøÞ$ÚøøÚÜáÞÝøèøáÞÂèæéÚçòċìĚçÚçÜâÚåìøÚøÞæÞçøì foreign exchange differences attributable to non-controlling interests. Vesuvius plc 160 Annual Report and Accounts 2017 161

Notes to the Group Financial Statements continued

26. Dividends Currency risk ÓáÞÆëèùéâìÞñéèìÞÝøèÜùëëÞçÜòëâìäèçâøìÛèëëèðâçàìÚçÝĚçÚçÜâÚåÚììÞøì›ÛÞâçàÜÚìáÚçÝìáèëø˜øÞëæÝÞéèìâøìœøáÚøÚëÞ ÀĚçÚåÝâïâÝÞçÝßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë"èßx $æ›!x æœÞêùâïÚåÞçøøè éÞçÜÞ›!! ÝÞçèæâçÚøÞÝâçÜùëëÞçÜâÞìèøáÞëøáÚçéèùçÝìøÞëåâçàÓáÞÆëèùéċìàÞçÞëÚåéèåâÜòâìéëèéèëøâèçÚååòøèæÚøÜáøáÞÜùëëÞçÜò éÞçÜޜéÞëèëÝâçÚëòìáÚëÞðÚìéÚâÝâç÷Úò#›÷Úò"œÚçÝÚçâçøÞëâæÝâïâÝÞçÝßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë# éëèĚåÞèßâøìÜèëÞÛèëëèðâçàìðâøáøáÞÜùëëÞçÜòéëèĚåÞèßâøìÞÚëçâçàìÚçÝçÞøÚììÞøìÓáâìâìÚÜáâÞïÞÝðáÞëÞçÞÜÞììÚëòÛòøáÞ èßx $æ›"x %æœÞêùâïÚåÞçøøè!!éÞçÜÞ›"!!éÞçÜޜéÞëèëÝâçÚëòìáÚëÞðÚìéÚâÝâçÒÞéøÞæÛÞë# ùìÞèßßèëðÚëÝßèëÞâàçÞñÜáÚçàÞÜèçøëÚÜøì›ĊÅ×ìðÚéìċœÓáÞÜùëëÞçÜòéëèĚåÞèßøáÞÆëèùéċìÛèëëèðâçàìÚçÝĚçÚçÜâÚåÚììÞøì ›ÒÞéøÞæÛÞë"œ ëÞěÞÜøâçàøáÞÞßßÞÜøèßøáÞÅ×ìðÚéìâììáèðçâçøáÞøÚÛåÞÛÞåèð ÀéëèéèìÞÝĚçÚåÝâïâÝÞçÝßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë#èßx $æÞêùâïÚåÞçøøè!éÞçÜÞéÞëèëÝâçÚëòìáÚëÞ âììùÛöÞÜøøèÚééëèïÚåÛòìáÚëÞáèåÝÞëìÚøøáÞÂèæéÚçòċìÀççùÚåÆÞçÞëÚå÷ÞÞøâçàÚçÝáÚìçèøÛÞÞçâçÜåùÝÞÝÚìÚåâÚÛâåâøòâç 2017 " øáÞìÞĚçÚçÜâÚåìøÚøÞæÞçøìÈßÚééëèïÞÝÛòìáÚëÞáèåÝÞëìøáÞÝâïâÝÞçÝðâååÛÞéÚâÝèç!÷Úò$øèèëÝâçÚëòìáÚëÞáèåÝÞëì Borrowings Borrowings Áèëëèðâçàì Áèëëèðâçàì before FX after Financial Net ÛÞßèëÞ Å× ÚßøÞë ÅâçÚçÜâÚå ÍÞø èçøáÞëÞàâìøÞëÚø Àéëâå$ FX swaps swaps FX swaps assets * debt Å×ìðÚéì ìðÚéì Å×ìðÚéì ÚììÞøì ÝÞÛø £m £m £m £m £m xæ xæ xæ xæ xæ 27. Financial Risk Management ÒøÞëåâçà 39.7 88.7 128.4 4.5 132.9 ! "$  % ›%œ   ÔçâøÞÝÒøÚøÞìÝèååÚë 159.9 (88.7) 71.2 (14.7) 56.5 " ›"$œ $ $ › #œ   27.1 Accounting policy Äùëè 235.6 — 235.6 (45.2) 190.4 # — # ›"œ  !  ›Úœ Íèç˜ÝÞëâïÚøâïÞĚçÚçÜâÚåâçìøëùæÞçøì ÂáâçÞìÞëÞçæâçÛâ — — — (34.5) (34.5) —— —›œ ›œ ËèÚçìÚçÝÛèëëèðâçàìÚëÞâçâøâÚååòëÞÜèàçâìÞÝÚøßÚâëïÚåùÞéåùìÝâëÞÜøåòÚøøëâÛùøÚÛåÞøëÚçìÚÜøâèçÜèìøìÀßøÞëâçâøâÚåëÞÜèàçâøâèç ÎøáÞë 3.1 — 3.1 (72.0) (68.9) ! — ! › %%œ › #œ øáÞòÚëÞæÞÚìùëÞÝÚøÚæèëøâìÞÝÜèìøùìâçàøáÞÞßßÞÜøâïÞâçøÞëÞìøæÞøáèÝ ÂÚéâøÚåâìÞÝ (b) Foreign currencies ÚëëÚçàÞæÞçøßÞÞì (2.1) — (2.1) — (2.1) ›#œ — ›#œ — ›#œ ÓáÞâçÝâïâÝùÚåĚçÚçÜâÚåìøÚøÞæÞçøìèßÞÚÜáÆëèùéÞçøâøòÚëÞéëÞéÚëÞÝâçøáÞâëßùçÜøâèçÚåÜùëëÞçÜòðáâÜáâìøáÞÜùëëÞçÜòèß As at 31 December 436.2 — 436.2 (161.9) 274.3 " # — " # ›  œ  øáÞéëâæÚëòÞÜèçèæâÜÞçïâëèçæÞçøâçðáâÜáøáÚøÞçøâøòèéÞëÚøÞìÅèëøáÞéùëéèìÞèßøáÞÂèçìèåâÝÚøÞÝÅâçÚçÜâÚåÒøÚøÞæÞçøì øáÞëÞìùåøìÚçÝĚçÚçÜâÚåéèìâøâèçèßÞÚÜáÞçøâøòÚëÞøëÚçìåÚøÞÝâçøèéèùçÝìøÞëåâçàðáâÜáâìøáÞéëÞìÞçøÚøâèçÚåÜùëëÞçÜòèß —ÓáÞèïÞëÝëÚðçìøÞëåâçàÛÚåÚçÜÞèßx !æÚÛèïÞâìâçÜåùÝÞÝâçøáÞÜÚìáéèèåâçàÚëëÚçàÞæÞçøìÚçÝèßßìÞøÛòèøáÞëÜùëëÞçÜòÛÚåÚçÜÞìâçøáÞéèèå øáÞÆëèùé ÁÚìÞÝùéèçøáÞÜùëëÞçÜòéëèĚåÞìáèðçâçøáÞøÚÛåÞÚÛèïÞðáâåÞçèøâæéÚÜøâçàëÞéèëøÞÝéëèĚøøáÞÜáÚçàÞâççÞøÝÞÛøÚëâìâçà ßëèæÚYìøëÞçàøáÞçâçàèßìøÞëåâçàðèùåÝâçÜëÞÚìÞëÞéèëøÞÝÞêùâøòÛòx æ›"x"!æœÚçÝÚÜèëëÞìéèçÝâçàY Reporting foreign currency transactions in functional currency ðÞÚäÞçâçàèßìøÞëåâçàðèùåÝëÞÝùÜÞÞêùâøòÛòx!%æ›"xæœ ÓëÚçìÚÜøâèçìâçÜùëëÞçÜâÞìèøáÞëøáÚçøáÞÞçøâøòċìßùçÜøâèçÚåÜùëëÞçÜò›ßèëÞâàçÜùëëÞçÜâÞìœÚëÞâçâøâÚååòëÞÜèëÝÞÝÚøøáÞëÚøÞìèß ÞñÜáÚçàÞéëÞïÚâåâçàèçøáÞÝÚøÞìèßøáÞøëÚçìÚÜøâèçìÀøÞÚÜáìùÛìÞêùÞçøÛÚåÚçÜÞìáÞÞøÝÚøÞ ÓáÞøÚÛåÞìÛÞåèðìáèðøáÞçÞøùçáÞÝàÞÝæèçÞøÚëòÚììÞøìÚçÝåâÚÛâåâøâÞìèßÆëèùéÜèæéÚçâÞìøáÚøÚëÞçèøÝÞçèæâçÚøÞÝâç øáÞâëßùçÜøâèçÚåÜùëëÞçÜòÚçÝðáâÜáÜèùåÝàâïÞëâìÞøèÞñÜáÚçàÞàÚâçìÚçÝåèììÞìâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçø ›âœ ÅèëÞâàçÜùëëÞçÜòæèçÞøÚëòâøÞæìÚëÞëÞøëÚçìåÚøÞÝÚøøáÞëÚøÞìéëÞïÚâåâçàÚøøáÞÛÚåÚçÜÞìáÞÞøÝÚøÞÄñÜáÚçàÞÝâßßÞëÞçÜÞì ÚëâìâçàèçøáÞìÞøøåÞæÞçøèëëÞøëÚçìåÚøâèçèßæèçÞøÚëòâøÞæìÚëÞëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçø Net unhedged monetary assets/(liabilities) Sterling US dollar Euro Renminbi Other Total ›â✠Íèç˜æèçÞøÚëòâøÞæìæÞÚìùëÞÝÚøáâìøèëâÜÚåÜèìøâçÚßèëÞâàçÜùëëÞçÜòÚëÞçèøëÞøëÚçìåÚøÞÝ £m £m £m £m £m £m Translation from functional currency to presentational currency Functional currency ÖáÞçøáÞßùçÜøâèçÚåÜùëëÞçÜòèßÚÆëèùéÞçøâøòâìÝâßßÞëÞçøßëèæøáÞÆëèùéċìéëÞìÞçøÚøâèçÚåÜùëëÞçÜò›éèùçÝìøÞëåâçàœâøìëÞìùåøì ÒøÞëåâçà —(2.5)(5.3)0.16.1(1.6) ÚçÝĚçÚçÜâÚåéèìâøâèçÚëÞøëÚçìåÚøÞÝâçøèøáÞéëÞìÞçøÚøâèçÚåÜùëëÞçÜòÚìßèååèðì ÔçâøÞÝÒøÚøÞìÝèååÚë ——0.5—(2.6)(2.1) ›âœ ÀììÞøìÚçÝåâÚÛâåâøâÞìÚëÞøëÚçìåÚøÞÝùìâçàÞñÜáÚçàÞëÚøÞìéëÞïÚâåâçàÚøøáÞÛÚåÚçÜÞìáÞÞøÝÚøÞ Äùëè (0.5)7.3———6.8 ÂáâçÞìÞëÞçæâçÛâ (0.7) 15.0 0.4 — (0.1) 14.6 ›â✠ÈçÜèæÞÚçÝÞñéÞçìÞâøÞæìÚëÞøëÚçìåÚøÞÝÚøÚïÞëÚàÞÞñÜáÚçàÞëÚøÞìßèëøáÞòÞÚëÞñÜÞéøðáÞëÞøáÞùìÞèßìùÜáÚïÞëÚàÞ ÎøáÞë (0.7) 14.6 (0.7) (0.2) 11.7 24.7 ëÚøÞìÝèÞìçèøÚééëèñâæÚøÞøáÞÞñÜáÚçàÞëÚøÞÚøøáÞÝÚøÞèßÚìéÞÜâĚÜøëÚçìÚÜøâèçâçðáâÜáÜÚìÞøáÞøëÚçìÚÜøâèçëÚøÞ âìùìÞÝ As at 31 December 2017 (1.9) 34.4 (5.1) (0.1) 15.1 42.4

›ââ✠ÀååëÞìùåøâçàÞñÜáÚçàÞÝâßßÞëÞçÜÞìÚëÞëÞÜèàçâìÞÝâçèøáÞëÜèæéëÞáÞçìâïÞâçÜèæÞÚçÝéëÞìÞçøÞÝâçøáÞøëÚçìåÚøâèçëÞìÞëïÞ ÍÞøùçáÞÝàÞÝæèçÞøÚëòÚììÞø읛åâÚÛâåâøâÞìœ âçÞêùâøòÚçÝÚëÞëÞÜåÚììâĚÞÝøèéëèĚøèëåèììâçøáÞéÞëâèÝâçðáâÜáøáÞßèëÞâàçèéÞëÚøâèçâìÝâìéèìÞÝèß ÒøÞëåâçà ÔÒÝèååÚë Äùëè ÑÞçæâçÛâ ÎøáÞë ÓèøÚå xæ xæ xæ xæ xæ xæ Financial Statements Net investment in foreign operations Functional currency ÄñÜáÚçàÞÝâßßÞëÞçÜÞìÚëâìâçàèçÚæèçÞøÚëòâøÞæøáÚøßèëæìéÚëøèßÚëÞéèëøâçàÞçøâøòċìçÞøâçïÞìøæÞçøâçÚßèëÞâàçèéÞëÚøâèç ÒøÞëåâçà — ›%œ     ÚëÞâçâøâÚååòëÞÜèàçâìÞÝâçèøáÞëÜèæéëÞáÞçìâïÞâçÜèæÞÚçÝéëÞìÞçøÞÝâçøáÞøëÚçìåÚøâèçëÞìÞëïÞâçÞêùâøòÚçÝëÞÜåÚììâĚÞÝøè ÔçâøÞÝÒøÚøÞìÝèååÚë —— ! — › "œ %% éëèĚøèëåèììèçÝâìéèìÚåèßøáÞçÞøâçïÞìøæÞçø Äùëè ›œ › œ ———›  œ 27.2 Financial risk factors ÂáâçÞìÞëÞçæâçÛ⠛#œ ! ›!œ — ›œ  ÓáÞÆëèùéċìÓëÞÚìùëòÝÞéÚëøæÞçøÚÜøâçàâçÚÜÜèëÝÚçÜÞðâøáéèåâÜâÞìÚééëèïÞÝÛòøáÞÁèÚëÝâìéëâçÜâéÚååòëÞìéèçìâÛåÞßèë ÎøáÞë ›!œ     $  æÚçÚàâçàøáÞĚçÚçÜâÚåëâìäìßÚÜÞÝÛòøáÞÆëèùéÓáÞÆëèùéċìÚÜøâïâøâÞìÞñéèìÞâøøèÚïÚëâÞøòèßĚçÚçÜâÚåëâìäìøáÞæèìø ÀìÚø ÃÞÜÞæÛÞë" › œ  # "  ! " ìâàçâĚÜÚçøèßðáâÜáÚëÞæÚëäÞøëâìäÚçÝåâêùâÝâøòëâìä

(a) Market risk ÷ÚëäÞøëâìäâìøáÞëâìäøáÚøÞâøáÞëøáÞßÚâëïÚåùÞìèëøáÞÜÚìáěèðìèßøáÞÆëèùéċìĚçÚçÜâÚåâçìøëùæÞçøìæÚòěùÜøùÚøÞÛÞÜÚùìÞ èßÜáÚçàÞìâçæÚëäÞøéëâÜÞìÓáÞÆëèùéâìéëâçÜâéÚååòÞñéèìÞÝøèæÚëäÞøëâìäøáëèùàáěùÜøùÚøâèçìâçÞñÜáÚçàÞëÚøÞì›ĊÜùëëÞçÜò ëâìäċœÚçÝâçøÞëÞìøëÚøÞì›ĊâçøÞëÞìøëÚøÞëâìäċœ

" Vesuvius plc " Annual Report and Accounts 2017

Notes to the Group Financial Statements continued

27. Financial Risk Management (continued) (b) Liquidity risk ËâêùâÝâøòëâìäâìøáÞëâìäøáÚøøáÞÆëèùéæâàáøáÚïÞÝâßĚÜùåøâÞìâçæÞÞøâçàâøìĚçÚçÜâÚåèÛåâàÚøâèçìÓáÞÆëèùéæÚçÚàÞìøáâìëâìä 27.2 Financial risk factors (continued) ÛòÞçìùëâçàøáÚøâøæÚâçøÚâçììùßĚÜâÞçøåÞïÞåìèßÜèææâøøÞÝÛèëëèðâçàßÚÜâåâøâÞìÚçÝÜÚìáÚçÝÜÚìáÞêùâïÚåÞçøìøèÞçìùëÞøáÚøâø (a) Market risk (continued) ÜÚçæÞÞøâøìèéÞëÚøâèçÚåÜÚìáěèðëÞêùâëÞæÞçøìÚçÝÚçòæÚøùëâçàĚçÚçÜâÚååâÚÛâåâøâÞìðáâåìøÚøÚååøâæÞìèéÞëÚøâçàðâøáâçâøì Interest rate risk ĚçÚçÜâÚåÜèïÞçÚçøìÓáÞåÞïÞåèßèéÞëÚøâèçÚåáÞÚÝëèèæéëèïâÝÞÝÛòøáÞÆëèùéċìÜèææâøøÞÝÛèëëèðâçàßÚÜâåâøâÞìâìëÞïâÞðÞÝÚø ÓáÞÆëèùéċìâçøÞëÞìøëÚøÞëâìäéëâçÜâéÚååòÚëâìÞìâçëÞåÚøâèçøèâøìÛèëëèðâçàìÖáÞëÞÛèëëèðâçàìÚëÞáÞåÝÚøěèÚøâçàëÚøÞìèß åÞÚìøÚççùÚååòÚìéÚëøèßøáÞÆëèùéċìøáëÞޘòÞÚëéåÚççâçàéëèÜÞììÖáÞëÞøáâìéëèÜÞììâçÝâÜÚøÞìÚçÞÞÝßèëÚÝÝâøâèçÚåĚçÚçÜÞ âçøÞëÞìøěùÜøùÚøâèçìâçâçøÞëÞìøëÚøÞìÞñéèìÞøáÞÆëèùéøèïÚëâÚÛâåâøòâçøáÞÜÚìáěèðìÚììèÜâÚøÞÝðâøáâøìâçøÞëÞìøéÚòæÞçøì øáâìâìçèëæÚååòÚÝÝëÞììÞÝøè$æèçøáìâçÚÝïÚçÜÞÛòæÞÚçìèßÞâøáÞëÚÝÝâøâèçÚåÜèææâøøÞÝÛÚçäßÚÜâåâøâÞìèëëÚâìâçà ÚçÝðáÞëÞÛèëëèðâçàìÚëÞáÞåÝÚøĚñÞÝëÚøÞìèßâçøÞëÞìøěùÜøùÚøâèçìâçâçøÞëÞìøëÚøÞìÞñéèìÞøáÞÆëèùéøèÜáÚçàÞìâçøáÞ ĚçÚçÜÞâçøáÞÜÚéâøÚåæÚëäÞøì ßÚâëïÚåùÞèßâøìÛèëëèðâçàìÓáÞÆëèùéċìéèåâÜòâìøèæÚâçøÚâçÚæâñèßĚñÞÝÚçÝěèÚøâçàëÚøÞÛèëëèðâçàìðâøáâçÜÞëøÚâç ÈçÃÞÜÞæÛÞë#øáÞÔÒÝèååÚëéèëøâèçèßøáÞÔÒÏëâïÚøÞÏåÚÜÞæÞçø›ĊÔÒÏÏċœÝÞÛøèßvææÚøùëÞÝÓáâìÝÞÛøðÚìëÞéåÚÜÞÝ éÚëÚæÞøÞëìÚàëÞÞÝßëèæøâæÞøèøâæÞÛòøáÞÁèÚëÝâçèëÝÞëøèèéøâæâìÞâçøÞëÞìøÜèìøÚçÝëÞÝùÜÞïèåÚøâåâøòâçëÞéèëøÞÝÞÚëçâçàì ðâøáÚÄùëè˜ÝÞçèæâçÚøÞÝÔÒÏÏÜèæéëâìâçàøðèz!æøëÚçÜáÞìÓáÞìÞðÞëÞâììùÞÝðâøáæÚøùëâøòÝÚøÞìèß#ÚçÝ% ÀìÚø ÃÞÜÞæÛÞë#øáÞÆëèùéáÚÝvæÚçÝz æ›x" æâçøèøÚåœèßÔÒÏëâïÚøÞÏåÚÜÞæÞçøËèÚçÍèøÞì ëÞìéÞÜøâïÞåò ›ÔÒÏϜèùøìøÚçÝâçàðáâÜáÜÚëëòÚĚñÞÝëÚøÞèßâçøÞëÞìøëÞéëÞìÞçøâçàøðè˜øáâëÝìèßøáÞÆëèùéċìøèøÚåÛèëëèðâçàìèùøìøÚçÝâçà ÀìÚø ÃÞÜÞæÛÞë#øáÞÆëèùéáÚÝÜèææâøøÞÝÛèëëèðâçàßÚÜâåâøâÞìèßx!"  æ›"x!#"%æœèßðáâÜáx! #æ ÚøøáÚøÝÚøÞÓáÞâçøÞëÞìøëÚøÞéëèĚåÞèßøáÞÆëèùéċìÛèëëèðâçàìÚçÝçÞøÝÞÛøâìÝÞøÚâåÞÝâçøáÞøÚÛåÞìÛÞåèð ›"x!$ æœðÞëÞùçÝëÚðçÓáÞìÞùçÝëÚðçßÚÜâåâøâÞìÚëÞÝùÞøèÞñéâëÞâçÉùçÞÓáÞÆëèùéċìÛèëëèðâçàëÞêùâëÞæÞçøì ÚëÞæÞøÛòÔÒÏÏÚçÝÚæùåøâ˜ÜùëëÞçÜòÜèææâøøÞÝìòçÝâÜÚøÞÝÛÚçäßÚÜâåâøòèßx æ›"x æœÓáÞÔÒÏÏßÚÜâåâøò Financial liabilities (gross borrowings) ðÚìßùååòÝëÚðçÚìÚø ÃÞÜÞæÛÞë#ÚçÝÚæèùçøÞÝøèx"  æ›væÚçÝz æœèßðáâÜáv æâìëÞéÚòÚÛåÞ Fixed Floating Financial Net âçz!æâçv æâç z!æâç!z!æâç#v æâç$ÚçÝz!æâç%Ãùëâçà# rate rate Total assets debt ÚçèéøâèçðÚìÞñÞëÜâìÞÝøèÞñøÞçÝøáÞæÚøùëâøòÝÚøÞèßx æìòçÝâÜÚøÞÝÛÚçäßÚÜâåâøòßëèæÉùçÞøèÉùçÞ £m £m £m £m £m ÒøÞëåâçà — 39.7 39.7 4.5 44.2 ÓáÞæÚøùëâøòÚçÚåòìâìèßøáÞÆëèùéċìàëèììÛèëëèðâçàìâììáèðçâçøáÞøÚÛåÞìÛÞåèð ÔçâøÞÝÒøÚøÞìÝèååÚë 148.0 11.9 159.9 (14.7) 145.2 Íèç˜ÜùëëÞçø ÂùëëÞçø ÓèøÚå Äùëè 115.4 120.2 235.6 (45.2) 190.4 2017 " 2017 " 2017 " ÂáâçÞìÞëÞçæâçÛâ — — — (34.5) (34.5) £m xæ £m xæ £m xæ ÎøáÞë —3.13.1(72.0)(68.9) ËèÚçìÚçÝèïÞëÝëÚßøì 409.7 % 24.6  # 434.3 " ÂÚéâøÚåâìÞÝÚëëÚçàÞæÞçøßÞÞì (2.1) — (2.1) — (2.1) ÎÛåâàÚøâèçìùçÝÞëĚçÚçÜÞåÞÚìÞì 2.4 " 1.6 # 4.0  As at 31 December 2017 261.3 174.9 436.2 (161.9) 274.3 ÂÚéâøÚåâìÞÝÚëëÚçàÞæÞçøßÞÞì (1.6) ›œ (0.5) ›!œ (2.1) ›#œ Total interest-bearing borrowings 410.5 $ 25.7  % 436.2 " # ÅâçÚçÜâÚååâÚÛâåâøâÞì ›àëèììÛèëëèðâçàìœ 2017 " ÅâñÞÝ ÅåèÚøâçà ÅâçÚçÜâÚå ÍÞø £m xæ ëÚøÞ ëÚøÞ ÓèøÚå ÚììÞøì ÝÞÛø xæ xæ xæ xæ xæ Interest-bearing borrowings repayable ÒøÞëåâçà — ! ! ›%œ   ÎçÝÞæÚçÝèëðâøáâçèçÞòÞÚë 22.4   ÔçâøÞÝÒøÚøÞìÝèååÚë ! ! " › #œ "% ÈçøáÞìÞÜèçÝòÞÚë 1.4  Äùëè !" ! # ›"œ  ! ÈçøáÞøáâëÝòÞÚë 252.8 % ÂáâçÞìÞëÞçæâçÛâ —— —›œ ›œ ÈçøáÞßèùëøáòÞÚë 13.4 !!# ÎøáÞë — ! ! › %%œ › #œ ÈçøáÞĚßøáòÞÚë 1.8 $ ÂÚéâøÚåâìÞÝÚëëÚçàÞæÞçøßÞÞì ›#œ — ›#œ — ›#œ ÀßøÞëĚïÞòÞÚëì 146.5 " ÀìÚø ÃÞÜÞæÛÞë" #! $%! " # ›  œ  ÂÚéâøÚåâìÞÝÚëëÚçàÞæÞçøßÞÞì (2.1) ›#œ Total interest-bearing borrowings 436.2 " # ÓáÞěèÚøâçàëÚøÞĚçÚçÜâÚååâÚÛâåâøâÞììáèðçâçøáÞøÚÛåÞìÚÛèïÞÛÞÚëâçøÞëÞìøÚøøáÞâçøÞë˜ÛÚçäèßßÞëÞÝëÚøÞèßøáÞÚééëèéëâÚøÞ ÜùëëÞçÜòéåùìÚæÚëàâçÓáÞĚñÞÝëÚøÞĚçÚçÜâÚååâÚÛâåâøâÞìèßx" æ›"x#!æœáÚïÞÚðÞâàáøÞÝÚïÞëÚàÞâçøÞëÞìøëÚøÞ ÂÚéâøÚåâìÞÝÚëëÚçàÞæÞçøßÞÞììáèðçâçøáÞøÚÛåÞìÚÛèïÞðáâÜááÚïÞÛÞÞçëÞÜèàçâìÞÝÚìÚëÞÝùÜøâèçâçÛèëëèðâçàìâçøáÞ èß $Y›" "YœÚçÝÚðÞâàáøÞÝÚïÞëÚàÞéÞëâèÝßèëðáâÜáøáÞëÚøÞâìĚñÞÝèß"%òÞÚëì›" òÞÚëìœÓáÞĚçÚçÜâÚå ĚçÚçÜâÚåìøÚøÞæÞçøìÚæèùçøÞÝøèxæÚìÚø ÃÞÜÞæÛÞë#› ÃÞÜÞæÛÞë"x#æœèßðáâÜáxæ›"x#æœ Financial Statements ÚììÞøìÚøøëÚÜøěèÚøâçàëÚøÞâçøÞëÞìøÚøøáÞâçøÞë˜ÛÚçäèßßÞëÞÝëÚøÞèßøáÞÚééëèéëâÚøÞÜùëëÞçÜòåÞììÚæÚëàâç ëÞåÚøÞÝøèøáÞÔÒÏÏÚçÝxæ›"xæœëÞåÚøÞÝøèøáÞìòçÝâÜÚøÞÝÛÚçäßÚÜâåâøò ÁÚìÞÝùéèçøáÞâçøÞëÞìøëÚøÞéëèĚåÞèßøáÞÆëèùéċìĚçÚçÜâÚåÚììÞøìÚçÝåâÚÛâåâøâÞììáèðçâçøáÞøÚÛåÞìÚÛèïÞÚYâçÜëÞÚìÞâç æÚëäÞøâçøÞëÞìøëÚøÞìðèùåÝâçÜëÞÚìÞÛèøáøáÞçÞøĚçÚçÜÞÜèìøìÜáÚëàÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚçÝøáÞçÞøâçøÞëÞìø éÚâÝâçøáÞÆëèùéÒøÚøÞæÞçøèßÂÚìáÅåèðìÛòxæ›"x!æœÚçÝÚYëÞÝùÜøâèçâçæÚëäÞøâçøÞëÞìøëÚøÞìðèùåÝ ÝÞÜëÞÚìÞÛèøáøáÞçÞøĚçÚçÜÞÜèìøìÜáÚëàÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚçÝøáÞçÞøâçøÞëÞìøéÚâÝâçøáÞÆëèùéÒøÚøÞæÞçø èßÂÚìáÅåèðìÛòxæ›"x!æœÒâæâåÚëåòÚYâçÜëÞÚìÞâçæÚëäÞøâçøÞëÞìøëÚøÞìðèùåÝëÞìùåøâçÚÝÞÜëÞÚìÞèßx!%æ ›"x#æœâçøáÞßÚâëïÚåùÞèßøáÞÆëèùéċìçÞøÝÞÛøÚçÝÚYÝÞÜëÞÚìÞâçæÚëäÞøâçøÞëÞìøëÚøÞìðèùåÝëÞìùåøâçÚçâçÜëÞÚìÞ èßx#æ›"x æœâçøáÞßÚâëïÚåùÞèßøáÞÆëèùéċìçÞøÝÞÛø " Vesuvius plc "! Annual Report and Accounts 2017

Notes to the Group Financial Statements continued

27. Financial Risk Management (continued) 28.2 Group post-retirement plans ÓáÞÆëèùéèéÞëÚøÞìÚçùæÛÞëèßéÞçìâèçéåÚçìÚëèùçÝøáÞðèëåÝÛèøáèßøáÞÝÞĚçÞÝÛÞçÞĚøÚçÝÝÞĚçÞÝÜèçøëâÛùøâèçøòéÞ 27.3 Capital management ÚçÝÚÜÜèùçøìßèëøáÞæâçÚÜÜèëÝÚçÜÞðâøáÈÀÒ% ÓáÞÂèæéÚçòÜèçìâÝÞëìâøìÜÚéâøÚåøèÛÞÞêùÚåøèøáÞìùæèßâøìøèøÚåÞêùâøòÚçÝçÞøÝÞÛøÈøæèçâøèëìâøìÜÚéâøÚåùìâçàÚçùæÛÞë èßÊÏÈìâçÜåùÝâçàßëÞÞÜÚìáěèðÚïÞëÚàÞðèëäâçàÜÚéâøÚåøèìÚåÞìëÚøâèìçÞøÝÞÛøøèÄÁÈÓÃÀëÚøâèìÚçÝÑÎÍÀ›ÍèøÞ œ ÓáÞÆëèùéċìéëâçÜâéÚåÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚëÞâçøáÞÔÊÚçÝøáÞÔÒøáÞÛÞçÞĚøìèßðáâÜáÚëÞÛÚìÞÝùéèçøáÞĚçÚå ÓáÞÆëèùéċìèÛöÞÜøâïÞìðáÞçæÚçÚàâçàâøìÜÚéâøÚåÚëÞ éÞçìâèçÚÛåÞìÚåÚëâÞìèßéåÚçæÞæÛÞëìÓáÞÚììÞøìèßøáÞìÞéåÚçìÚëÞáÞåÝìÞéÚëÚøÞåòßëèæøáÞÆëèùéâçøëùìøÞޘÚÝæâçâìøÞëÞÝ ßùçÝìÓáÞøëùìøÞÞìÚëÞëÞêùâëÞÝøèÚÜøâçøáÞÛÞìøâçøÞëÞìøìèßøáÞéåÚçìċÛÞçÞĚÜâÚëâÞìÓáÞéëâçÜâéÚåëâìäìßÚÜÞÝÛòøáÞìÞéåÚçì > ÓèÞçìùëÞøáÚøøáÞÆëèùéÚçÝÚååèßâøìÛùìâçÞììÞìÚëÞÚÛåÞøèèéÞëÚøÞÚìàèâçàÜèçÜÞëçìÚçÝÞçìùëÞøáÚøøáÞÆëèùéèéÞëÚøÞì ÜèæéëâìÞ›âœøáÞëâìäøáÚøøáÞïÚåùÞèßøáÞéåÚçÚììÞøìâìçèøìùßĚÜâÞçøøèæÞÞøÚååéåÚçåâÚÛâåâøâÞìÚìøáÞòßÚååÝùÞ›ââœøáÞëâìäøáÚø ðâøáâçøáÞĚçÚçÜâÚåÜèïÞçÚçøìÜèçøÚâçÞÝðâøáâçâøìÝÞÛøßÚÜâåâøâÞì éåÚçÛÞçÞĚÜâÚëâÞìåâïÞåèçàÞëøáÚçÞçïâìÚàÞÝÜÚùìâçàåâÚÛâåâøâÞìøèÞñÜÞÞÝøáÞÚïÚâåÚÛåÞéåÚçÚììÞøìÚçÝ›âââœøáÞëâìäøáÚøøáÞ > ÓèáÚïÞÚïÚâåÚÛåÞøáÞçÞÜÞììÚëòĚçÚçÜâÚåëÞìèùëÜÞìøèÚååèðøáÞÆëèùéøèâçïÞìøâçÚëÞÚìøáÚøæÚòÝÞåâïÞëÚÜÜÞéøÚÛåÞßùøùëÞ æÚëäÞø˜ÛÚìÞÝßÚÜøèëìùìÞÝøèïÚåùÞéåÚçåâÚÛâåâøâÞìÚçÝÚììÞøìÜáÚçàÞæÚøÞëâÚååòÚÝïÞëìÞåòøèâçÜëÞÚìÞéåÚçåâÚÛâåâøâÞìèïÞëøáÞ ëÞøùëçìøèâçïÞìøèëì ïÚåùÞèßÚïÚâåÚÛåÞéåÚçÚììÞøìÓáÞÆëèùéÚåìèáÚìÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìâçèøáÞëøÞëëâøèëâÞìÛùøðâøáøáÞÞñÜÞéøâèçèß øáèìÞâçÆÞëæÚçòøáÞìÞÚëÞçèøâçÝâïâÝùÚååòæÚøÞëâÚåâçëÞåÚøâèçøèøáÞÆëèùéÚìÚðáèåÞ > ÓèæÚâçøÚâçìùßĚÜâÞçøĚçÚçÜâÚåëÞìèùëÜÞìøèæâøâàÚøÞÚàÚâçìøëâìäìÚçÝùçßèëÞìÞÞçÞïÞçøì > ÓèæÚñâæâìÞìáÚëÞáèåÝÞëïÚåùÞøáëèùàáæÚâçøÚâçâçàÚçÚééëèéëâÚøÞÛÚåÚçÜÞÛÞøðÞÞçøáÞÆëèùéċìÞêùâøòÚçÝçÞøÝÞÛø  ›Úœ ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì™ÔÊ ÓáÞÆëèùéċìæÚâçÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçâçøáÞÔÊ›ĊøáÞÔÊÏåÚçċœâìÜåèìÞÝøèçÞðæÞæÛÞëìÚçÝøèßùøùëÞÛÞçÞĚø ÓáÞÆëèùéèéÞëÚøÞÝðâøáâçøáÞëÞêùâëÞæÞçøìèßâøìÝÞÛøÜèïÞçÚçøìøáëèùàáèùøøáÞòÞÚëÚçÝáÚììùßĚÜâÞçøåâêùâÝâøòáÞÚÝëèèæ ÚÜÜëùÚåÓáÞÞñâìøâçàéåÚçðÚìÞìøÚÛåâìáÞÝùçÝÞëÚøëùìøÝÞÞÝÚçÝâììùÛöÞÜøøèøáÞÏÞçìâèçìÀÜø ÚçÝàùâÝÚçÜÞâììùÞÝ ðâøáâçâøìÜèææâøøÞÝÝÞÛøßÚÜâåâøâÞìÃÞøÚâåìèßøáÞÆëèùéċìÜèïÞçÚçøÜèæéåâÚçÜÞÚçÝÜèææâøøÞÝÝÞÛøßÚÜâåâøâÞìÜÚçÛÞßèùçÝ ÛòøáÞÔÊÏÞçìâèçìÑÞàùåÚøèë âçøáÞÒøëÚøÞàâÜÑÞéèëøèçéÚàÞ% ÀßùååÚÜøùÚëâÚåïÚåùÚøâèçèßøáÞÔÊÏåÚçâìÜÚëëâÞÝèùøÞïÞëòøáëÞÞòÞÚëìÛòÚçâçÝÞéÞçÝÞçøÚÜøùÚëòßèëøáÞÔÊÏåÚçÓëùìøÞÞâç 27.4 Cash pooling arrangements åâçÞðâøáøáÞëÞêùâëÞæÞçøìèßøáÞÏÞçìâèçìÀÜø ÚçÝøáÞåÚìøßùååïÚåùÚøâèçðÚìÜÚëëâÞÝèùøÚìÚø ÃÞÜÞæÛÞë!ÀøøáÚø ÓáÞÆëèùéÞçøÞëìâçøèçèøâèçÚåÜÚìáéèèåâçàÚëëÚçàÞæÞçøìÚìéÚëøèßâøìèçàèâçàÓëÞÚìùëòæÚçÚàÞæÞçøÚÜøâïâøâÞìÂÞëøÚâç ÝÚøÞøáÞæÚëäÞøïÚåùÞèßéåÚçÚììÞøìðÚìx! 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ìùëéåùìßëèæøáÞéåÚçÓáÞÆëèùéáÚìÚììÞììÞÝøáÞåâäÞåòâæéÚÜøèßøáÞÚééåâÜÚøâèçèßøáÞâçøÞëÚÜøâèçÚçÝÜèçÜåùÝÞÝøáÚøâø ÂÚìáÛèëëèðâçàì ›!%$œ " ›  œ % ›!œ ðèùåÝçèøâæéÚÜøâøìÚÛâåâøòøèÜèçøâçùÞøèëÞÜèàçâìÞÚéÞçìâèçìùëéåùì ÀìÚø ÃÞÜÞæÛÞë"  —  —   ›Ûœ ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì™ÔÒ ÓáÞÆëèùéáÚìÚçùæÛÞëèßÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìâçøáÞÔÒéëèïâÝâçàëÞøâëÞæÞçøÛÞçÞĚøìÛÚìÞÝèçĚçÚåìÚåÚëòèëÚ Financial Statements $ ÄæéåèòÞÞÁÞçÞĚøì ĚñÞÝÛÞçÞĚøÓáÞÆëèùéċìéëâçÜâéÚåÔÒÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚëÞÜåèìÞÝøèçÞðæÞæÛÞëìÚçÝÚåìèøèßùøùëÞÛÞçÞĚø 28.1 Accounting policy ÚÜÜëùÚåßèëÞñâìøâçàæÞæÛÞëìÀÜøùÚëâÚåïÚåùÚøâèçìèßøáÞÔÒÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚëÞÜÚëëâÞÝèùøÞïÞëòòÞÚëÚçÝ øáÞåÚìøßùååïÚåùÚøâèçðÚìÜÚëëâÞÝèùøÚìÚø ÃÞÜÞæÛÞë"ÀøøáÚøÝÚøÞøáÞæÚëäÞøïÚåùÞèßøáÞéåÚçÚììÞøìðÚìx %æ ÓáÞçÞøìùëéåùìèëçÞøåâÚÛâåâøòëÞÜèàçâìÞÝâçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞøßèëøáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøéåÚçìâìøáÞéëÞìÞçø ëÞéëÞìÞçøâçàÚßùçÝâçàåÞïÞåèß""YèßßùçÝÞÝÚÜÜëùÞÝéåÚçÛÞçÞĚøìÚøøáÚøÝÚøÞ›ùìâçàøáÞéëèöÞÜøÞÝùçâøæÞøáèÝèß ïÚåùÞèßøáÞÝÞĚçÞÝÛÞçÞĚøèÛåâàÚøâèçÚøøáÞÛÚåÚçÜÞìáÞÞøÝÚøÞåÞììøáÞßÚâëïÚåùÞèßøáÞéåÚçÚììÞøìÓáÞÝÞĚçÞÝÛÞçÞĚø ïÚåùÚøâèçœèßx#  æÅùçÝâçàåÞïÞåìßèëøáÞÆëèùéċìÔÒÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚëÞÛÚìÞÝùéèçÚççùÚåïÚåùÚøâèçì èÛåâàÚøâèçâìÜÚåÜùåÚøÞÝÛòâçÝÞéÞçÝÞçøÚÜøùÚëâÞìùìâçàøáÞéëèöÞÜøÞÝùçâøÜëÞÝâøæÞøáèÝÚçÝÛòÝâìÜèùçøâçàøáÞÞìøâæÚøÞÝ ÜÚëëâÞÝèùøÛòâçÝÞéÞçÝÞçøêùÚåâĚÞÝÚÜøùÚëâÞìÚçÝÚëÞàèïÞëçÞÝÛòÔÒÆèïÞëçæÞçøëÞàùåÚøâèçìÓáÞïÚåùÞèßÔÒéåÚç ßùøùëÞÜÚìáěèðìùìâçàâçøÞëÞìøëÚøÞìèçáâàá˜êùÚåâøòÜèëéèëÚøÞÛèçÝìøáÚøáÚïÞøÞëæìøèæÚøùëâøòÚééëèñâæÚøâçàøáÞøÞëæì åâÚÛâåâøâÞìÝÞÜëÞÚìÞÝøèx$æ›"x$"$æœâç#ðáâÜáðÚìæÚâçåòÚøøëâÛùøÚÛåÞøèÛÞçÞĚøìéÚâÝèßx æâçåâçÞðâøá èßøáÞëÞåÚøÞÝéÞçìâèçåâÚÛâåâøòÀçòÚììÞøëÞÜèàçâìÞÝâçëÞìéÞÜøèßÚìùëéåùìÚëâìâçàßëèæøáâìÜÚåÜùåÚøâèçâìåâæâøÞÝøèøáÞÚììÞø ìÜáÞæÞëùåÞìÚçÝÞñÜáÚçàÞàÚâçìèßx#"æÝùÞøèÔÒÝèååÚëðÞÚäçÞììÓáâììâàçâĚÜÚçøÝÞÜëÞÚìÞðÚìéÚëøâÚååòèßßìÞøÛòÚç ÜÞâåâçàðáÞëÞøáâìâìøáÞéëÞìÞçøïÚåùÞèßÚçòÞÜèçèæâÜÛÞçÞĚøìÚïÚâåÚÛåÞâçøáÞßèëæèßëÞßùçÝìèëëÞÝùÜøâèçìâçßùøùëÞ âçøÞëÞìøÚÜÜëùÚåèßx æÚçÝÚåèììèßx $æÝùÞøèøáÞåèðÞëÝâìÜèùçøëÚøÞÓáÞåèììÚëâìâçàßëèæÜáÚçàÞìâçĚçÚçÜâÚå ÜèçøëâÛùøâèçìâçëÞìéÞÜøèßøáÞéåÚçì ÚììùæéøâèçìâììèåÞåòÚøøëâÛùøÚÛåÞøèøáÞÝÞÜëÞÚìÞâçøáÞÝâìÜèùçøëÚøÞìøè  Y›" $Yœ ÓáÞÞñéÞçìÞßèëøáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøéåÚçìâìëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøÚììáèðçâçÍèøÞ$$ ÓáÞÆëèùéċìÔÒÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚëÞìùÛöÞÜøøèøáÞæâçâæùæÜèçøëâÛùøâèçëÞêùâëÞæÞçøìèßÈçøÞëçÚåÑÞïÞçùÞ ÀÜøùÚëâÚåàÚâçìÚçÝåèììÞìÚëâìâçàèçøáÞÚììÞøìÚçÝåâÚÛâåâøâÞìèßøáÞéåÚçìÚëÞëÞéèëøÞÝðâøáâçøáÞÆëèùéÒøÚøÞæÞçøèß ÂèÝÞÒÞÜøâèçì ÚçÝ ÂèçøëâÛùøâèçìÚëÞÝÞøÞëæâçÞÝÛòøëùìøÞÞìâçÜèçìùåøÚøâèçðâøáøáÞÂèæéÚçòÛÚìÞÝèçøáÞÚççùÚå ÂèæéëÞáÞçìâïÞÈçÜèæÞÚçÝàÚâçìÚçÝåèììÞìÚëâìâçàèçìÞøøåÞæÞçøìÚçÝÜùëøÚâåæÞçøìÚëÞëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞ ïÚåùÚøâèçìðáâÜáÚëÞìùÛæâøøÞÝøèøáÞÈçøÞëçÚåÑÞïÞçùÞÒÞëïâÜÞÅèëøáÞéåÚçòÞÚëÛÞàâççâçàÉÚçùÚëò#øáÞæâçâæùæ ÒøÚøÞæÞçøâçøáÞìÚæÞåâçÞÚìøáÞâøÞæøáÚøàÚïÞëâìÞøèøáÞìÞøøåÞæÞçøèëÜùëøÚâåæÞçøèëâßæÚøÞëâÚåìÞéÚëÚøÞåòëÞéèëøÞÝÚì ëÞêùâëÞÝÜèçøëâÛùøâèçðÚìxçâåÚììâàçâĚÜÚçøÜèæéÚçòÜèçøëâÛùøâèçìèßv"æðÞëÞæÚÝÞâç"ÇèðÞïÞëùçÝÞëøáÞìÞßùçÝâçà ÚÜèæéèçÞçøèßèéÞëÚøâçàéëèĚø åÚðìÚçÝÛÚìÞÝèçøáÞéåÚçÝÞĚÜâøæâçâæùæÜèçøëâÛùøâèçìâçøáÞéÞëâèÝ$˜ÚëÞåâäÞåòøèÛÞëÞêùâëÞÝÚçÝÚëÞÞñéÞÜøÞÝ øèÛÞâçøáÞv æøèv æëÚçàÞÕèåùçøÚëòÜèçøëâÛùøâèçìèßv æðÞëÞæÚÝÞÝùëâçà# Vesuvius plc "# 166 Annual Report and Accounts 2017

Notes to the Group Financial Statements continued

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Notes to the Group Financial Statements continued

$ ÄæéåèòÞÞÁÞçÞĚøì›ÜèçøâçùÞݜ 28.5 Fair value of plan assets 2017 " $  ÃÞĚçÞÝÛÞçÞĚøèÛåâàÚøâèç ÔÊ US ÑÎÖ Total ÔÊ ÔÒ ROW ÓèøÚå ÓáÞÚïÞëÚàÞÝùëÚøâèçèßøáÞèÛåâàÚøâèçìøèðáâÜáøáÞåâÚÛâåâøâÞìèßøáÞÆëèùéċìéëâçÜâéÚåéÞçìâèçéåÚçìëÞåÚøÞâì$òÞÚëìßèëøáÞ £m £m £m £m xæ xæ xæ xæ ÔÊ%òÞÚëìßèëÆÞëæÚçòÚçÝ"òÞÚëìßèëøáÞÔÒ As at 1 January 604.1 49.1 24.8 678.0 ! #  $ "%

ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì Other post- ÄñÜáÚçàÞÝâßßÞëÞçÜÞì — (4.5) 0.5 (4.0) — $   $ retirement ÈçøÞëÞìøâçÜèæÞ 16.1 1.7 0.4 18.2 %   $ ÛÞçÞĚø ÔÊ US Germany ÑÎÖ Total plans Total ÒÞøøåÞæÞçøì ———— — › "œ ›œ › "œ £m £m £m £m £m £m £m ÀÜêùâìâøâèçì ———— ———— Present value as at 1 January 2017 527.4 86.8 45.3 41.0 700.5 6.9 707.4 ÑÞæÞÚìùëÞæÞçøèßÚììÞøì 5.7 3.8 0.7 10.2 $%#   %  ÄñÜáÚçàÞÝâßßÞëÞçÜÞì — (7.6) 1.9 1.3 (4.4) 0.1 (4.3) ÂèçøëâÛùøâèçìßëèæÞæéåèòÞë 2.0 3.1 2.3 7.4    $$ ÂùëëÞçøìÞëïâÜÞÜèìø — 0.5 1.5 3.2 5.2 0.2 5.4 ÂèçøëâÛùøâèçìßëèææÞæÛÞëì ———— ———— ÏÚìøìÞëïâÜÞÜèìø — — — 0.1 0.1 — 0.1 ÀÝæâçâìøëÚøâèçÞñéÞçìÞìéÚâÝ (0.8) (0.5) — (1.3) ›%œ ›"œ — ›!œ ÈçøÞëÞìøÜèìø 14.0 3.1 0.8 0.7 18.6 0.2 18.8 ÁÞçÞĚøìéÚâÝ (46.8) (2.9) (2.0) (51.7) ›$œ › $œ › œ › "$œ ÒÞøøåÞæÞçøì ——————— As at 31 December 580.3 49.8 26.7 656.8 "  %  $ "#$ ÑÞæÞÚìùëÞæÞçøèßåâÚÛâåâøâÞì šÝÞæèàëÚéáâÜÜáÚçàÞì (5.4) (0.7) — 0.1 (6.0) — (6.0) ÓáÞÆëèùéċìéÞçìâèçéåÚçìâçÆÞëæÚçòÚëÞùçßùçÝÞÝÚìâìÜèææèçéëÚÜøâÜÞâçøáÚøÜèùçøëòÚçÝÚÜÜèëÝâçàåòøáÞëÞÚëÞçè šĚçÚçÜâÚåÚììùæéøâèçì 11.3 3.8 1.6 0.5 17.2 0.3 17.5 ÚììÞøìÚììèÜâÚøÞÝðâøáøáÞìÞéåÚçì

šÞñéÞëâÞçÜÞåèììÞ읛àÚâçìœ (9.7) 0.1 (0.1) 0.1 (9.6) (0.1) (9.7) $" ÑÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚììÞøì ÁÞçÞĚøìéÚâÝ (46.8) (4.0) (1.6) (2.4) (54.8) (1.1) (55.9) 2017 " Present value as at 31 December 2017 490.8 82.0 49.4 44.6 666.8 6.5 673.3 total øèøÚå £m xæ

ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì ÎøáÞëéèìø˜ ÑÞæÞÚìùëÞæÞçøèßåâÚÛâåâøâÞì ëÞøâëÞæÞçø šÝÞæèàëÚéáâÜÜáÚçàÞì  ! ÛÞçÞĚø 6.0 ÔÊ ÔÒ ÆÞëæÚçò ROW ÓèøÚå éåÚçì ÓèøÚå šĚçÚçÜâÚåÚììùæéøâèçì (17.5) ›$# œ xæ xæ xæ xæ xæ xæ xæ šÞñéÞëâÞçÜÞ›åèììÞ윝àÚâçì 9.7 ›%%œ ÏëÞìÞçøïÚåùÞÚìÚøÉÚçùÚëò" "   " " " $$ !# "! ! ÑÞæÞÚìùëÞæÞçøèßÚììÞøì 10.2 %  ÄñÜáÚçàÞÝâßßÞëÞçÜÞì — #" !$ " % "  Total movement 8.4 %! ÂùëëÞçøìÞëïâÜÞÜèìø — !   $  % ÏÚìøìÞëïâÜÞÜèìø ———    ÓáÞëÞæÞÚìùëÞæÞçøèßÝÞĚçÞÝÛÞçÞĚøåâÚÛâåâøâÞìÚçÝÚììÞøìèßx$ æ›"x%!æœâìëÞÜèàçâìÞÝâçøáÞÆëèùéÒøÚøÞæÞçøèß ÈçøÞëÞìøÜèìø #" " % $  %    ÂèæéëÞáÞçìâïÞÈçÜèæÞ ÒÞøøåÞæÞçøì — › !œ › !œ ›!œ ›!œ — ›!œ 28.7 Balance sheet recognition ÑÞæÞÚìùëÞæÞçøèßåâÚÛâåâøâÞì ÓáÞÚæèùçøëÞÜèàçâìÞÝâçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞøâçëÞìéÞÜøèßøáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçìÚçÝèøáÞë šÝÞæèàëÚéáâÜÜáÚçàÞì › œ ›œ ——› !œ — › !œ éèìø˜ëÞøâëÞæÞçøÛÞçÞĚøéåÚçìâìÚçÚåòìÞÝâçøáÞßèååèðâçàøÚÛåÞìðáâÜáÚååëÞåÚøÞøèÜèçøâçùâçàèéÞëÚøâèçìÀååÞêùâøòìÞÜùëâøâÞì šĚçÚçÜâÚåÚììùæéøâèçì #"  !$ " $#  $# ÚçÝÛèçÝìáÚïÞêùèøÞÝéëâÜÞìâçÚÜøâïÞæÚëäÞøì šÞñéÞëâÞçÜÞåèììÞ읛àÚâçìœ %# › œ  — % ! %% ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì Other post- ÁÞçÞĚøìéÚâÝ ›$œ ›!#œ › œ ›  œ › % œ ›#œ › œ retirement ÛÞçÞĚø 2017 ÏëÞìÞçøïÚåùÞÚìÚø ÃÞÜÞæÛÞë" !# $"$ !  #! "% ## ÔÊ US Germany ÑÎÖ Total plans total £m £m £m £m £m £m £m

ÄêùâøâÞì 68.9 9.7 — 2.9 81.5 — 81.5 Financial Statements ÁèçÝì 191.8 38.5 — 2.0 232.3 — 232.3 ÀççùâøòâçìùëÚçÜÞÜèçøëÚÜøì 276.1 — — 17.8 293.9 — 293.9 ÎøáÞëÚììÞøì 43.5 1.6 — 4.0 49.1 — 49.1 ÅÚâëïÚåùÞèßéåÚçÚììÞøì 580.3 49.8 — 26.7 656.8 — 656.8 ÏëÞìÞçøïÚåùÞèßßùçÝÞÝèÛåâàÚøâèçì (488.9) (70.4) — (40.0) (599.3) — (599.3) 91.4 (20.6) — (13.3) 57.5 — 57.5 ÏëÞìÞçøïÚåùÞèßùçßùçÝÞÝèÛåâàÚøâèçì (1.9) (11.6) (49.4) (4.6) (67.5) (6.5) (74.0) Total net surpluses/(liabilities) 89.5 (32.2) (49.4) (17.9) (10.0) (6.5) (16.5) Recognised in the Group Balance Sheet as: ÍÞøìùëéåùìÞì 91.4 — — 1.0 92.4 — 92.4 ÍÞøåâÚÛâåâøâÞì (1.9) (32.2) (49.4) (18.9) (102.4) (6.5) (108.9) Total net surpluses/(liabilities) 89.5 (32.2) (49.4) (17.9) (10.0) (6.5) (16.5) # Vesuvius plc # Annual Report and Accounts 2017

Notes to the Group Financial Statements continued

28.8 Income statement recognition ÓáÞÞñéÞçìÞëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâçëÞìéÞÜøèßøáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøëÞøâëÞæÞçøéåÚçìÚçÝèøáÞë $ ÄæéåèòÞÞÁÞçÞĚøì›ÜèçøâçùÞݜ éèìø˜ëÞøâëÞæÞçøÛÞçÞĚøéåÚçìâììáèðçÛÞåèð

28.7 Balance sheet recognition (continued) 2017 " ÁÚìÞÝèçÚÝÞøÚâåÞÝÚììÞììæÞçøéÞëßèëæÞÝçèçÞèßøáÞÈÅÑÈ ëÞìøëâÜøâèçìÚëÞÚééåâÜÚÛåÞÚçÝøáÞëÞßèëÞøáÞìùëéåùìâì Other ÎøáÞë ÃÞĚçÞÝ post- ÃÞĚçÞÝ éèìø˜ ëÞÜèàçâìÞÝ ÛÞçÞĚø retirement ÛÞçÞĚø ëÞøâëÞæÞçø pension ÛÞçÞĚø éÞçìâèç ÛÞçÞĚø ÃÞĚçÞÝÛÞçÞĚøéÞçìâèçéåÚçì ÎøáÞëéèìø˜ plans plans Total éåÚçì éåÚçì ÓèøÚå ëÞøâëÞæÞçø £m £m £m xæ xæ xæ ÛÞçÞĚø " ÔÊ ÔÒ ÆÞëæÚçò ROW ÓèøÚå éåÚçì øèøÚå ÂùëëÞçøìÞëïâÜÞÜèìø 5.2 0.2 5.4 $  % xæ xæ xæ xæ xæ xæ xæ ÏÚìøìÞëïâÜÞÜèìø 0.1 — 0.1    ÄêùâøâÞì # $  — " $" — $" ÒÞøøåÞæÞçøì ———›!œ — ›!œ ÁèçÝì " !% —  !  — !  ÀÝæâçâìøëÚøâèçÞñéÞçìÞì 1.3 — 1.3 ! — ! ÀççùâøòâçìùëÚçÜÞÜèçøëÚÜøì $%" ——" !% — !% ÍÞøâçøÞëÞìøÜèìø 0.4 0.2 0.6    ÎøáÞëÚììÞøì    — % ! — ! Total net charge 7.0 0.4 7.4   $ ÅÚâëïÚåùÞèßéåÚçÚììÞøì "  % —  $ "#$ — "#$ ÏëÞìÞçøïÚåùÞèßßùçÝÞÝèÛåâàÚøâèçì ›!!!œ ›#  œ — › # œ ›" #œ — ›" #œ ÍèìÞøøåÞæÞçøàÚâçÚëèìÞâç#âçÜèçøëÚìøøèøáÞx!æëÞÜèàçâìÞÝâç"âçëÞåÚøâèçøèøáÞÛùò˜èùøèßæÞæÛÞëìèßøáÞ ÔÒÏåÚçÚçÝÆÞëæÚçæÞæÛÞëìæèïâçàøáÞâëÞñâìøâçàéåÚçìâçøèÚçÞðÝÞĚçÞÝÜèçøëâÛùøâèçéåÚçÓáÞìÞìÞøøåÞæÞçøìëÞÝùÜÞÝ #$" ›!œ — ›!œ % — % øáÞÆëèùéċìÝÞĚçÞÝÛÞçÞĚøèÛåâàÚøâèçìÛòx!æÞßßÞÜøÞÝÛòùøâåâìâçàx "æèßéÞçìâèçÚììÞøìÚçÝÚÝÝâøâèçÚååòâçëÞìéÞÜø ÏëÞìÞçøïÚåùÞèßùçßùçÝÞÝèÛåâàÚøâèçì ›%œ ›!œ › ! œ › #œ ›"  œ ›"%œ ›# œ èßøáÞùçßùçÝÞÝÆÞëæÚçéåÚçx æèßøáÞÆëèùéċìÜÚìá ÓèøÚåçÞøìùëéåùìÞ읛åâÚÛâåâøâÞìœ #"# › ##œ › ! œ ›"œ ›!œ ›"%œ ›% œ ÓáÞøèøÚåçÞøÜáÚëàÞèßx# æ›"x$æœëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâçëÞìéÞÜøèßøáÞÆëèùéċìÝÞĚçÞÝ ÑÞÜèàçâìÞÝâçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞøÚì ÛÞçÞĚøéÞçìâèçéåÚçìÚçÝèøáÞëéèìø˜ëÞøâëÞæÞçøÛÞçÞĚøìéåÚçìâìëÞÜèàçâìÞÝâçøáÞßèååèðâçàøÚÛåÞ ÍÞøìùëéåùìÞì #$" —— #$$ — #$$ ÍÞøåâÚÛâåâøâÞì ›%œ › ##œ › ! œ ›" œ › œ ›"%œ ›$œ 2017 " £m xæ ÓèøÚåçÞøìùëéåùìÞ읛åâÚÛâåâøâÞìœ #"# › ##œ › ! œ ›"œ ›!œ ›"%œ ›% œ ÈçÚëëâïâçàÚøøëÚÝâçàéëèĚø šðâøáâçèøáÞëæÚçùßÚÜøùëâçàÜèìøì 2.4   ›Úœ ÔÊÏåÚçÚììÞøÚååèÜÚøâèç  šðâøáâçÚÝæâçâìøëÚøâèçìÞååâçàÚçÝÝâìøëâÛùøâèçÜèìøì 4.4  ÀìÚø ÃÞÜÞæÛÞë#èßøáÞÔÊÏåÚçċìøèøÚåÚììÞøì #"YðÞëÞëÞéëÞìÞçøÞÝÛòøáÞÚççùâøòâçìùëÚçÜÞÜèçøëÚÜøìÜèïÞëâçà ÈçÚëëâïâçàÚøéëèĚøÛÞßèëÞøÚñ šðâøáâçëÞìøëùÜøùëâçàÜáÚëàÞì —  øáÞÔÊÏåÚçċìéÞçìâèçåâÚÛâåâøâÞì%YðÞëÞÚååèÜÚøÞÝøèÞêùâøâÞì YøèĚñÞÝâçÜèæÞìÞÜùëâøâÞì!YøèÜÚìáÚçÝ Yøè  šàÚâçèçÞæéåèòÞÞÛÞçÞĚøéåÚç — ›!œ èøáÞëÚììÞøìÓáÞĚñÞÝâçÜèæÞÚììÞøÜåÚììèßøáÞÔÊÏåÚçâçÜåùÝÞìÚåâÚÛâåâøò˜ÝëâïÞçâçïÞìøæÞçøéèëøßèåâèèßĚçÚçÜâÚåÝÞëâïÚøâïÞ  šðâøáâççÞøĚçÚçÜÞÜèìøì 0.6  ÜèçøëÚÜøìðáâÜáëÞÝùÜÞìøáÞëâìäøáÚøøáÞÔÊÏåÚçċìÚììÞøìðèùåÝßÚååæÚøÞëâÚååòëÞåÚøâïÞøèøáÞïÚåùÞèßâøìÞÜèçèæâÜåâÚÛâåâøâÞì Total net charge 7.4 $ ÓáÞÔÊÏåÚçÓëùìøÞÞáÚìÞçøÞëÞÝâçøèÚéÞçìâèçâçìùëÚçÜÞÛùò˜âçÚàëÞÞæÞçøðâøáøáÞÏÞçìâèçÈçìùëÚçÜÞÂèëéèëÚøâèç›ÏÈœ ðáÞëÞÛòøáÞÔÊÏåÚçÓëùìøÞÞáÚìéÚâÝâçìùëÚçÜÞéëÞæâùæìøèÏÈÂøèâçìùëÞÚìâàçâĚÜÚçøéèëøâèçèßøáÞÔÊÏåÚçċìåâÚÛâåâøâÞì 29. Share-based Payments ÔçÝÞëøáâìÚëëÚçàÞæÞçøøáÞïÚåùÞèßøáÞÏÈÂâçìùëÚçÜÞÜèçøëÚÜøæÚøÜáÞìøáÞïÚåùÞèßøáÞåâÚÛâåâøâÞìÛÞÜÚùìÞøáÞâçěÚøâèç âçøÞëÞìøëÚøÞâçïÞìøæÞçøÚçÝåèçàÞïâøòëâìäßèëÕÞìùïâùìâçëÞìéÞÜøèßøáÞìÞåâÚÛâåâøâÞìÚëÞÞåâæâçÚøÞÝÀìÚø ÃÞÜÞæÛÞë# 29.1 Accounting policy øáÞÈÀÒ%ïÚåùÚøâèçèßøáÞÏÈÂâçìùëÚçÜÞÜèçøëÚÜøïÚåùÞÚììèÜâÚøÞÝðâøáøáÞÛèùàáø˜âçåâÚÛâåâøâÞìðÚìx#"æ›"x$%"æœ ÓáÞÆëèùéèéÞëÚøÞìÞêùâøò˜ìÞøøåÞÝìáÚëޘÛÚìÞÝéÚòæÞçøÚëëÚçàÞæÞçøßèëâøìÞæéåèòÞÞìÄêùâøò˜ìÞøøåÞÝìáÚëޘÛÚìÞÝ ÓáÞÛùò˜âçÚàëÞÞæÞçøÞçìùëÞìøáÚøøáÞÔÊéÞçìâèçéåÚçèÛåâàÚøâèçìâçëÞìéÞÜøèßÚååâøìëÞøâëÞÝæÞæÛÞëìÚçÝøáÞâëÚééëèïÞÝ éÚòæÞçøìÚëÞæÞÚìùëÞÝÚøßÚâëïÚåùÞÚøøáÞÝÚøÞèßàëÚçøÓáÞßÚâëïÚåùÞÝÞøÞëæâçÞÝÚøøáÞàëÚçøÝÚøÞøÚäÞìÚÜÜèùçøèßøáÞ ÝÞéÞçÝÚçøìÚëÞâçìùëÞÝÓáÞéèåâÜòÚçÝøáÞÚììèÜâÚøÞÝïÚåùÚøâèçÚëÞùéÝÚøÞÝÚççùÚååòøèëÞěÞÜøëÞøâëÞæÞçøìÚçÝæèëøÚåâøò ÞßßÞÜøèßæÚëäÞø˜ÛÚìÞÝÜèçÝâøâèçììùÜáÚìøèøÚåìáÚëÞáèåÝÞëëÞøùëçøÚëàÞøùéèçðáâÜáïÞìøâçàßèëìèæÞÚðÚëÝìâìÜèçÝâøâèçÚå ÈçøáÞÜùëëÞçøòÞÚëøáÞÚàëÞÞæÞçøÛÚìÞÝèçìéÞÜâĚÜæÞæÛÞëìáâéÝÚøÚÜèïÞëì!"!YèßÔÊéÞçìâèçéåÚçèÛåâàÚøâèçì ÚçÝâìÞñéÞçìÞÝèçÚìøëÚâàáø˜åâçÞÛÚìâìèïÞëøáÞïÞìøâçàéÞëâèÝðâøáÚÜèëëÞìéèçÝâçàâçÜëÞÚìÞâçÞêùâøòÓáÞÜùæùåÚøâïÞÞñéÞçìÞ ëÞæèïâçàÚååĚçÚçÜâÚåëâìäìÚììèÜâÚøÞÝðâøáøáâìøëÚçÜáÞèßøáÞåâÚÛâåâøò ëÞÜèàçâìÞÝâìÚÝöùìøÞÝßèëøáÞÛÞìøÞìøâæÚøÞèßøáÞìáÚëÞìøáÚøðâååÞïÞçøùÚååòïÞìøÚçÝßèëøáÞÞßßÞÜøèßèøáÞëçèç˜æÚëäÞø˜ÛÚìÞÝ ÜèçÝâøâèçììùÜáÚìàëèðøáâçáÞÚÝåâçÞÞÚëçâçàìéÞëìáÚëÞðáâÜáÚëÞçèøâçÜåùÝÞÝâçøáÞßÚâëïÚåùÞÝÞøÞëæâçÞÝÚøøáÞÝÚøÞèß Financial Statements  ›Ûœ ÃÞĚçÞÝÛÞçÞĚøÜèçøëâÛùøâèçìâç$ àëÚçøÅèëàëÚçøìðâøáæÚëäÞø˜ÛÚìÞÝÜèçÝâøâèçìÚøøÚÜáÞÝøèøáÞæßÚâëïÚåùÞâìæÞÚìùëÞÝùìâçàÚßèëæèßìøèÜáÚìøâÜèéøâèç Èç$øáÞÆëèùéâìÞñéÞÜøÞÝøèæÚäÞÜèçøëâÛùøâèçìâçøèâøìÝÞĚçÞÝÛÞçÞĚøéÞçìâèçÚçÝèøáÞëéèìø˜ëÞøâëÞæÞçøÛÞçÞĚøì éëâÜâçàæèÝÞåÅèëÚååèøáÞëàëÚçøìßÚâëïÚåùÞâìæÞÚìùëÞÝùìâçàøáÞÁåÚÜä˜ÒÜáèåÞìèéøâèçéëâÜâçàæèÝÞå éåÚçìèßÚëèùçÝx! æðâøáìéÞÜâĚÜÜèçøëâÛùøâèçìèßÚééëèñâæÚøÞåòx æÚçÝx$æÚçøâÜâéÚøÞÝßèëøáÞÔÒÏåÚçÚçÝ ÔÊÏåÚçëÞìéÞÜøâïÞåò 29.2 Income statement recognition ÓáÞøèøÚåÞñéÞçìÞëÞÜèàçâìÞÝâçøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøâììáèðçÛÞåèð

2017 " £m xæ ËèçàÓÞëæÈçÜÞçøâïÞÏåÚç 1.8  ÎøáÞëéåÚçì 0.8 # Total expense 2.6 #

ÓáÞÆëèùéèéÞëÚøÞìÚçùæÛÞëèßÝâßßÞëÞçøìáÚëޘÛÚìÞÝéÚòæÞçøéåÚçìøáÞæèìøìâàçâĚÜÚçøèßðáâÜáâìøáÞËèçàÓÞëæ ÈçÜÞçøâïÞÏåÚç›ËÓÈϜÝÞøÚâåìèßðáâÜáÜÚçÛÞßèùçÝèçéÚàÞìøè èßøáÞÃâëÞÜøèëìċÑÞæùçÞëÚøâèçÑÞéèëøÓáÞÆëèùéċì èøáÞëìáÚëޘÛÚìÞÝéÚòæÞçøéåÚçìÚëÞçèøÜèçìâÝÞëÞÝìâàçâĚÜÚçøâçøáÞÜèçøÞñøèßøáÞÆëèùéċìëÞìùåøìèëĚçÚçÜâÚåéèìâøâèç # Vesuvius plc # Annual Report and Accounts 2017

Notes to the Group Financial Statements continued

29. Share-based Payments (continued) 30. Trade and Other Payables

29.3 Details of outstanding options 30.1 Accounting policy ÓëÚÝÞÚçÝèøáÞëéÚòÚÛåÞìÚëÞâçâøâÚååòëÞÜèàçâìÞÝÚøßÚâëïÚåùÞÚçÝìùÛìÞêùÞçøåòæÞÚìùëÞÝÚøÚæèëøâìÞÝÜèìøùìâçàøáÞ Outstanding awards ÞßßÞÜøâïÞâçøÞëÞìøæÞøáèÝ As at Forfeited/ As at 1 Jan 2017 Granted Exercised lapsed 31 Dec 2017 no. no. no. no. no. 30.2 Analysis of trade and other payables ËÓÈÏ 2,398,185 825,653 — (943,745) 2,280,093 2017 "— £m xæ ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ nil nil nil nil nil Non-current ÎøáÞëéåÚçì 219,479 118,722 (180,104) (5,660) 152,437 ÀÜÜëùÚåìÚçÝèøáÞëéÚòÚÛåÞì 14.4 " ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ nil nil nil nil nil ÃÞßÞëëÞÝéùëÜáÚìÞÚçÝÜèçøâçàÞçøÜèçìâÝÞëÚøâèç 2.9 % ÅèëøáÞèéøâèçìÞñÞëÜâìÞÝÝùëâçà#øáÞìáÚëÞéëâÜÞÚøøáÞÝÚøÞèßÞñÞëÜâìÞëÚçàÞÝßëèæ éÞçÜÞøè!%éÞçÜÞ Total non-current other payables 17.3 "! ÎùøìøÚçÝâçàÚðÚëÝì ÀìÚø ÅèëßÞâøÞݝ ÀìÚø ÉÚç" ÆëÚçøÞÝ ÄñÞëÜâìÞÝ åÚéìÞÝ ÃÞÜ" Current çè çè çè çè çè ÓëÚÝÞéÚòÚÛåÞì 185.9  % ËÓÈÏ !$!$ $%$ — › %%!$œ  %$$! ÎøáÞëøÚñÞìÚçÝìèÜâÚåìÞÜùëâøò 32.6  ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ çâå çâå çâå çâå çâå ÃÞßÞëëÞÝéùëÜáÚìÞÚçÝÜèçøâçàÞçøÜèçìâÝÞëÚøâèç 0.8 $ ÎøáÞëéåÚçì # """ $"$"# ›"# %œ › %!œ % #% ÀÜÜëùÚåìÚçÝèøáÞëéÚòÚÛåÞì 73.3 "#! ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ çâå çâå çâå çâå çâå Total current trade and other payables 292.6  %#

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ÃÞøÚâåìèßæÚëäÞøéÞëßèëæÚçÜÞÜèçÝâøâèçìÚëÞâçÜåùÝÞÝâçøáÞÃâëÞÜøèëìċÑÞæùçÞëÚøâèçÑÞéèëø ÓáÞëÞâìçèìâàçâĚÜÚçøÝâßßÞëÞçÜÞÛÞøðÞÞçøáÞßÚâëïÚåùÞèßøáÞÆëèùéċìøëÚÝÞÚçÝèøáÞëéÚòÚÛåÞìÛÚåÚçÜÞìÚçÝøáÞÚæèùçøÚø ðáâÜáøáÞòÚëÞëÞéèëøÞÝâçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞø 2017 " ÖÞâàáøÞÝ ÖÞâàáøÞÝ ÈçÜåùÝÞÝðâøáâçøëÚÝÞéÚòÚÛåÞìâçøáÞøÚÛåÞÚÛèïÞâìx$æ›"xçâåœìùÛöÞÜøøèÚìùééåâÞëĚçÚçÜâçàÚàëÞÞæÞçøÔçÝÞëøáÞ Awards average ÀðÚëÝì ÚïÞëÚàÞ exercisable outstanding Range of ÞñÞëÜâìÚÛåÞ èùøìøÚçÝâçà ÑÚçàÞèß øÞëæìèßøáâìÚàëÞÞæÞçøðáâÜáøáÞÆëèùéÞçøÞëÞÝâçøèÚìèçÞèßÚìÞëâÞìèßæÞÚìùëÞìÚâæÞÝÚøâæéëèïâçàÜèçøëèåèïÞëâøì as at contractual exercise ÚìÚø ÜèçøëÚÜøùÚå ÞñÞëÜâìÞ ðèëäâçàÜÚéâøÚåâçïèâÜÞìëÞÜÞâïÞÝÛòøáÞÆëèùéßëèæÚééëèïÞÝìùééåâÞëìÚëÞÚììâàçÞÝøèÚøáâëݘéÚëøòĚçÚçÜÞÜèæéÚçò 31 Dec 2017 life of awards prices ÃÞÜ" åâßÞèßÚðÚëÝì éëâÜÞì no. years pence çè òÞÚëì éÞçÜÞ ðáâÜáÚììùæÞìåÞàÚåëÞìéèçìâÛâåâøòßèëìÞøøåâçàøáÞÚæèùçøèðâçàÝâëÞÜøåòðâøáøáÞìùééåâÞëÓáÞÆëèùéìùÛìÞêùÞçøåòìÞøøåÞì øáÞÚæèùçøèðâçàøèøáÞĚçÚçÜÞÜèæéÚçòÓáÞëÞâìçèÜèìøøèøáÞÆëèùéßëèæøáâìÚëëÚçàÞæÞçø ËÓÈÏ —4.8 — ! ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ —n/a— çÚ 31. Leases ÎøáÞëéåÚçì —1.0 —  ÖÞâàáøÞÝÚïÞëÚàÞÞñÞëÜâìÞéëâÜÞ —n/a— çÚ 31.1 Accounting policy ËÞÚìÞìÚëÞÜåÚììâĚÞÝÚìĚçÚçÜÞåÞÚìÞìðáÞçÞïÞëøáÞøÞëæìèßøáÞåÞÚìÞøëÚçìßÞëìùÛìøÚçøâÚååòÚååøáÞëâìäìÚçÝëÞðÚëÝìèß 29.4 Options granted under the LTIP during the year èðçÞëìáâéøèøáÞåÞììÞÞÀååèøáÞëåÞÚìÞìÚëÞÜåÚììâĚÞÝÚìèéÞëÚøâçàåÞÚìÞìÑÞçøÚåìéÚòÚÛåÞùçÝÞëèéÞëÚøâçàåÞÚìÞìÚëÞ

2017 (March Grant) 2017 (Sept Grant) " ÜáÚëàÞÝøèøáÞÆëèùéÈçÜèæÞÒøÚøÞæÞçøèçÚìøëÚâàáø˜åâçÞÛÚìâìèïÞëøáÞøÞëæèßøáÞåÞÚìÞÁÞçÞĚøìëÞÜÞâïÞÝÚçÝëÞÜÞâïÚÛåÞ EPS TSR EPS TSR ÄÏÒ ÓÒÑ ÚìÚçâçÜÞçøâïÞøèÞçøÞëâçøèÚçèéÞëÚøâçàåÞÚìÞÚëÞÚåìèìéëÞÚÝèçÚìøëÚâàáø˜åâçÞÛÚìâìèïÞëøáÞåÞÚìÞøÞëæ element element element element ÞåÞæÞçø ÞåÞæÞçø ÅÚâëïÚåùÞèßèéøâèçìàëÚçøÞÝ›éÞëìáÚëޜ 524.5p 401.0p 578.0p 467.0p %é é 31.2 Operating lease commitments ÓáÞßùøùëÞÚààëÞàÚøÞæâçâæùæåÞÚìÞéÚòæÞçøìùçÝÞëçèç˜ÜÚçÜÞååÚÛåÞèéÞëÚøâçàåÞÚìÞìÚëÞéÚòÚÛåÞÚìßèååèðì ÒáÚëÞéëâÜÞèçÝÚøÞèßàëÚçø›éÞëìáÚëޜ 524.5p 524.5p 578.0p 578.0p %é %é 2017 " ÄñéÞÜøÞÝïèåÚøâåâøò n/a 30.9% n/a 33.00% çÚ "Y £m xæ Financial Statements Ñâìä˜ßëÞÞâçøÞëÞìøëÚøÞ n/a 0.17% n/a 0.16% çÚ  Y ÍèøåÚøÞëøáÚçèçÞòÞÚë 8.3 % ÄñÞëÜâìÞéëâÜÞ›éÞëìáÚëޜ nil nil nil nil çâå çâå ËÚøÞëøáÚçèçÞòÞÚëÚçÝçèøåÚøÞëøáÚçĚïÞòÞÚëì 13.4 !$ ÄñéÞÜøÞÝøÞëæ›òÞÚëìœ 33 33 ËÚøÞëøáÚçĚïÞòÞÚëì 7.9 # ÄñéÞÜøÞÝÝâïâÝÞçÝòâÞåÝ nil nil nil nil çâå çâå Total operating lease commitments 29.6 $

ÓáÞßÚâëïÚåùÞèßìáÚëÞèéøâèçìðâøáçèç˜æÚëäÞøéÞëßèëæÚçÜÞÜèçÝâøâèçìáÚìÛÞÞçÜÚåÜùåÚøÞÝùìâçàøáÞÁåÚÜä˜ÒÜáèåÞìèéøâèç ÓáÞÆëèùéċìéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçøÚììÞøìÚëÞÞâøáÞëéùëÜáÚìÞÝèùøëâàáøèëáÞåÝùçÝÞëåÞÚìÞÜèçøëÚÜøìÖáÞëÞøáÞ éëâÜâçàæèÝÞåÓáÞßÚâëïÚåùÞèßèéøâèçìðâøáæÚëäÞø˜ëÞåÚøÞÝéÞëßèëæÚçÜÞÜèçÝâøâèçìáÚìÛÞÞçæÞÚìùëÞÝùìâçàøáÞ÷èçøÞ øÞëæìèßøáÞåÞÚìÞøëÚçìßÞëìùÛìøÚçøâÚååòÚååøáÞëâìäìÚçÝëÞðÚëÝìèßèðçÞëìáâéèßøáÞÚììÞøøèøáÞÆëèùéøáÞÚììÞøâìÜÚéâøÚåâìÞÝ ÂÚëåèæèÝÞåÄñéÞÜøÞÝïèåÚøâåâøòðÚìÝÞøÞëæâçÞÝÛòÜÚåÜùåÚøâçàøáÞáâìøèëâÜÚåïèåÚøâåâøòèßøáÞÆëèùéċììáÚëÞéëâÜÞèïÞëøáÞ âçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞøÚçÝøáÞÜèëëÞìéèçÝâçàåâÚÛâåâøòøèøáÞåÞììèëâìëÞÜèàçâìÞÝÚìÚĚçÚçÜÞåÞÚìÞèÛåâàÚøâèçÖáÞëÞÚåå $òÞÚëì›"#!òÞÚëìœéëâèëøèøáÞàëÚçøÝÚøÞÓáÞëâìä˜ßëÞÞëÚøÞèßëÞøùëçðÚìÚììùæÞÝøèÛÞøáÞòâÞåÝøèæÚøùëâøòèçÚÔÊ øáÞëâìäìÚçÝëÞðÚëÝìèßèðçÞëìáâéÚëÞçèøøëÚçìßÞëëÞÝøèøáÞÆëèùéøáÞåÞÚìÞâìÜåÚììâĚÞÝÚìÚçèéÞëÚøâçàåÞÚìÞÚçÝçÞâøáÞë ĚñÞÝàâåøðâøáøáÞøÞëæøèæÚøùëâøòÞêùÚåøèøáÞÞñéÞÜøÞÝåâßÞèßøáÞèéøâèçÀøøáÞÝâìÜëÞøâèçèßøáÞÑÞæùçÞëÚøâèçÂèææâøøÞÞ øáÞÚììÞøçèëøáÞÜèëëÞìéèçÝâçàåâÚÛâåâøòøèøáÞåÞììèëâìëÞÜèàçâìÞÝâçøáÞÆëèùéÁÚåÚçÜÞÒáÞÞøÓáÞçÞøÛèèäïÚåùÞèßøáÞ ÚðÚëÝáèåÝÞëìëÞÜÞâïÞøáÞïÚåùÞèßÝâïâÝÞçÝìøáÚøðèùåÝáÚïÞÛÞÞçéÚâÝèçøáÞâëïÞìøÞÝìáÚëÞìâçøáÞéÞëâèÝÛÞøðÞÞçàëÚçø ÆëèùéċìéëèéÞëøòéåÚçøÚçÝÞêùâéæÞçøÚììÞøìáÞåÝùçÝÞëĚçÚçÜÞåÞÚìÞÜèçøëÚÜøìÚø ÃÞÜÞæÛÞë#ðÚìx "æ ÚçÝïÞìøâçàÀÜÜèëÝâçàåòøáÞëÞâìçèÝâìÜèùçøøèøáÞïÚåùÚøâèçßèëÝâïâÝÞçÝìßèëÞàèçÞÝùëâçàøáÞïÞìøâçàéÞëâèÝ ›"x #æœ ÓáÞÜèìøâçÜùëëÞÝÛòøáÞÆëèùéâçøáÞòÞÚëâçëÞìéÞÜøèßÚììÞøìáÞåÝùçÝÞëèéÞëÚøâçàåÞÚìÞìÚååèßðáâÜáðÚìÜáÚëàÞÝðâøáâç øëÚÝâçàéëèĚøÚæèùçøÞÝøèx$"æ›"x# æœ Vesuvius plc 174 Annual Report and Accounts 2017 175

Notes to the Group Financial Statements continued

32. Provisions 33. Off-Balance Sheet Arrangements

32.1 Accounting policy In compliance with current reporting requirements, certain arrangements entered into by the Group in its normal course of Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that the Group business are not reported in the Group Balance Sheet. Of such arrangements, those considered material by the Directors are will be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required future lease payments in relation to assets used by the Group under non-cancellable operating leases (Note 31). to settle the obligation at the balance sheet date. Where the effect of the time value of money is material, provisions are ÝâìÜèùçøÞÝùìâçàÚéëޘøÚñÝâìÜèùçøëÚøÞøáÚøëÞěÞÜøìÛèøáøáÞÜùëëÞçøæÚëäÞøÚììÞììæÞçøèßøáÞøâæÞïÚåùÞèßæèçÞòÚçÝøáÞ 34. Contingent Liabilities ìéÞÜâĚÜëâìäìÚììèÜâÚøÞÝðâøáøáÞèÛåâàÚøâèçÖáÞëÞÝâìÜèùçøâçàâìùìÞÝøáÞâçÜëÞÚìÞâçøáÞéëèïâìâèçÝùÞøèøáÞéÚììÚàÞèßøâæÞ Guarantees given by the Group under property leases of operations disposed of amounted to £1.1m (2016: £1.6m). Details âìëÞÜèàçâìÞÝÚìÚĚçÚçÜÞÜèìø of guarantees given by the Company, on behalf of the Group, are given in Note 10 to the Company Financial Statements. 32.2 Analysis of provisions Vesuvius has extensive international operations and is subject to various legal and regulatory regimes, including those Disposal and Restructuring covering taxation and environmental matters. Several of Vesuvius’ subsidiaries are parties to legal proceedings, certain of closure costs charges Other Total which are insured claims arising in the ordinary course of the operations of the company involved, and the Directors are aware £m £m £m £m of a number of issues which are, or may be, the subject of dispute with tax authorities. Provisions are made for the expected As at 1 January 2017 * 41.1 18.5 6.9 66.5 ÚæèùçøìéÚòÚÛåÞâçëÞìéÞÜøèßäçèðçèëéëèÛÚÛåÞÜèìøìëÞìùåøâçàÛèøáßëèæåÞàÚåèëèøáÞëëÞàùåÚøèëòëÞêùâëÞæÞçøìÚçÝ Exchange adjustments (2.6) 0.3 (0.4) (2.7) from third-party claims. Charge to Group Income Statement —36.311.748.0 Certain of Vesuvius’ subsidiaries are subject to lawsuits, predominantly in the US, relating to a small number of products Unused amounts released to Group Income Statement (1.7) — — (1.7) containing asbestos manufactured prior to the acquisition of those subsidiaries by Vesuvius. These suits usually also name Adjustment to discount 0.1 0.1 — 0.2 many other product manufacturers. To date, Vesuvius is not aware of there being any liability verdicts against any of these Cash spend (1.9) (27.3) (11.9) (41.1) subsidiaries. A number of lawsuits have been withdrawn, dismissed or settled and the amount paid, including costs, in relation Transferred to other balance sheet accounts — (5.0) — (5.0) øèøáâìåâøâàÚøâèçáÚìçèøáÚÝÚæÚøÞëâÚåÚÝïÞëìÞÞßßÞÜøèçÕÞìùïâùìċĚçÚçÜâÚåéèìâøâèçèëëÞìùåøìèßèéÞëÚøâèçì As at 31 December 2017 35.0 22.9 6.3 64.2 As the settlement of many of the obligations for which reserve is made is subject to legal or other regulatory process, the øâæâçàÚçÝÚæèùçøèßøáÞÚììèÜâÚøÞÝèùøěèðìâììùÛöÞÜøøèìèæÞùçÜÞëøÚâçøò›ìÞÞÍèøÞ ßèëßùëøáÞëâçßèëæÚøâèçœ —ÑÞìøÚøÞÝøèæèëÞÚééëèéëâÚøÞåòëÞěÞÜøÚéëèïâìâèçßèëðáâÜáÚçÚììèÜâÚøÞÝâçìùëÚçÜÞÚììÞøÞñâìøì

Of the total provision balance as at 31 December 2017 of £64.2m (2016: £66.5m), £34.4m (2016: £39.9m) is recognised in the 35. Investments in Subsidiaries, Joint Ventures and Associates Group Balance Sheet within non-current liabilities and £29.8m (2016: £26.6m) within current liabilities. 35.1 Investment in subsidiaries The provision for disposal and closure costs includes the Directors’ current best estimate of the costs to be incurred both in A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has øáÞßùåĚåæÞçøèßèÛåâàÚøâèçìâçÜùëëÞÝâçÜèççÞÜøâèçðâøáßèëæÞëÆëèùéÛùìâçÞììÞìëÞìùåøâçàßëèæÞâøáÞëÝâìéèìÚåèëÜåèìùëÞ rights to, variable returns from its involvement with the entity and can affect those returns through its power over the entity. together with those related to the demolition and clean-up of closed sites. The provision comprises amounts payable in Subsidiaries are fully consolidated from the date on which control is transferred to the Group. ëÞìéÞÜøèßäçèðçèëéëèÛÚÛåÞÜèìøìëÞìùåøâçàÛèøáßëèæåÞàÚåèëèøáÞëëÞàùåÚøèëòëÞêùâëÞæÞçøìèëßëèæøáâëݘéÚëøòÜåÚâæì including claims relating to product liability. As the settlement of many of the obligations for which provision is made is subject The subsidiaries , joint ventures and associates of Vesuvius plc and the countries in which they are incorporated are set out øèåÞàÚåèëèøáÞëëÞàùåÚøèëòéëèÜÞììøáÞøâæâçàèßøáÞÚììèÜâÚøÞÝÜÚìáèùøěèðìâììùÛöÞÜøøèìèæÞùçÜÞëøÚâçøòÛùøøáÞæÚöèëâøò below. With the exception of Vesuvius Holdings Limited, whose ordinary share capital was directly held by Vesuvius plc, the of the amounts provided are expected to be utilised over the next ten years and the underlying estimates of costs are regularly ordinary capital of the companies listed below was wholly owned by a Vesuvius plc subsidiary as at 31 December 2017. ùéÝÚøÞÝøèëÞěÞÜøÜáÚçàÞÝÜâëÜùæìøÚçÜÞìðâøáëÞàÚëÝøèâçÝâïâÝùÚåæÚøøÞëìÓáÞèéÞçâçàÛÚåÚçÜÞáÚìÛÞÞçëÞìøÚøÞÝÛò £7.9m to present a provision for which an associated insurance asset exists. There was no material impact on the 2016 Company Company performance statements and no restatement is required. legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction Advent Process 333 Prince Charles Drive, Welland, Canada Flo-Con CT Corporation, 1209 Orange US (Delaware) ÖáÞëÞâçìùëÚçÜÞÜèïÞëÞñâìøìßèëÚçòèßøáÞìÞäçèðçèëéëèÛÚÛåÞÜèìøìÚëÞåÚøÞÝÚììÞøâìëÞÜèàçâìÞÝâçøáÞÆëèùéÁÚåÚçÜÞ Engineering Inc. Ontario, L3B 5P4, Canada (Ontario) Holding, Inc. Street, The Corporation Trust Sheet only when its value can be reliably measured by management. As at 31 December 2017, £21.6m (2016: £22.8m) was Avemis SAS Saint Symphorien Sur Coise France Company, Wilmington, DE 19801, recorded in receivables in respect of associated insurance reimbursements, of which £20.7m (2016: £21.9m) is non-current. (69590) au 2, Hotel d’Entreprises, United States ZI Grange Eglise, France Flo-Con CT Corporation, 208 South LaSalle US (Illinois) In assessing the probable costs and realisation certainty of provisions, or related assets, reasonable assumptions are made. BMI Refractory 600 N 2nd Street, Suite 401, US Systems, LLC ÒøëÞÞøÂáâÜÚàèÂèèäÂèùçøò ÂáÚçàÞìøèøáÞÚììùæéøâèçìùìÞÝÜèùåÝìâàçâĚÜÚçøåòÚåøÞëøáÞÃâëÞÜøèëċìÚììÞììæÞçøèßøáÞïÚåùÞøâæâçàèëÜÞëøÚâçøòèßøáÞ Services Inc. Harrisburg, PA 17101-1071, (Pennsylvania) Illinois, IL 60604, United States Financial Statements costs or related amounts. United States Foseco (FS) ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England Brazil 1 Limited 165 Fleet Street, London, England Limited ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ The provision for restructuring charges includes the costs of all of the Group’s recognised initiatives to rationalise its operating EC4A 2AE, England S43 4XA, England activities. The balance of £22.9m as at 31 December 2017 comprises £2.7m in relation to onerous lease provisions in respect Âèèäìèç Km 7 1/2, Autopista San Isidro, Dominican Foseco (GB) 165 Fleet Street, London, England of leases terminating between one and six years, and £20.2m in relation to expenditure on restructuring initiatives that have Dominicana, SRL ÄÝâĚÜâè÷èÝÞåèÀÙèçÚÅëÚçÜÚ Republic Limited EC4A 2AE, England been announced which is expected to be paid out over the next year. San Isidro, Santo Domingo Oeste, Foseco (Jersey) 44 Esplanade, St Helier, Jersey Dominican Republic Limited JE4 9WG, Jersey ÎøáÞëéëèïâìâèçìÜèæéëâìÞÚæèùçøìéÚòÚÛåÞâçëÞìéÞÜøèßäçèðçèëéëèÛÚÛåÞÜèìøìëÞìùåøâçàÛèøáßëèæåÞàÚåèëèøáÞë Âèèäìèç 13 Castle Street, St Helier, Jersey Foseco (MRL) 165 Fleet Street, London, England ëÞàùåÚøèëòëÞêùâëÞæÞçøìðèëäÞëìċÜèæéÞçìÚøâèçÚçÝæÞÝâÜÚåÜåÚâæìÚçÝßëèæøáâëݘéÚëøòÜåÚâæìÀìøáÞìÞøøåÞæÞçøèßæÚçò Investments JE4 5UT, Jersey Limited EC4A 2AE, England of the obligations for which provision is made is subject to reasonable assumptions, legal or other regulatory process, the (Jersey) Limited Foseco (RUL) 165 Fleet Street, London, England øâæâçàèßøáÞÚììèÜâÚøÞÝèùøěèðìâììùÛöÞÜøøèìèæÞùçÜÞëøÚâçøòÛùøøáÞæÚöèëâøòèßÚæèùçøìéëèïâÝÞÝÚëÞÞñéÞÜøÞÝøèÛÞ ÂèèäìèçÉÞëìÞò 13 Castle Street, St Helier, Jersey Limited EC4A 2AE, England ùøâåâìÞÝèïÞëøáÞçÞñøĚïÞòÞÚëìÚçÝøáÞùçÝÞëåòâçàÞìøâæÚøÞìèßÜèìøìÚëÞëÞàùåÚëåòùéÝÚøÞÝøèëÞěÞÜøÜáÚçàÞÝÜâëÜùæìøÚçÜÞì Limited JE4 5UT, Jersey Foseco (UK) 165 Fleet Street, London, England with regard to individual matters. During 2017 the Group recognised net charges of £11.7m (2016: £10.2m) in the Group East Moon 36/F Tower Two Times Square, Hong Kong Limited EC4A 2AE, England Income Statement to provide for various litigation settlements and other claims. Investment 1 Matheson Street, Foseco Canada 181 Bay Street, Suite 1800, Toronto, Canada (HK Holding) Causeway Bay, Limited Ontario, M5J 2T9, Canada (Ontario) Company Limited Hong Kong Foseco !ÁÚëëâèÄåâóÚåÝÞÈóùëóÚÁâóäÚâÚ Spain Espanola SA 48213, Spain Vesuvius plc 176 Annual Report and Accounts 2017 177

Notes to the Group Financial Statements continued

35. Investments in Subsidiaries, Joint Ventures and Associates (continued) Company Company legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction 35.1 Investment in subsidiaries (continued) Realisations CT Corporation, 1209 Orange US (Delaware) Vesuvius China ÎßĚÜÞ$ $ÅÏÚùåØÜÞçøëÞ Hong Kong Company Company 789, LLC Street, The Corporation Trust Holdings Co. 51 Hung To Road, Kwun Tong, legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction Company, Wilmington, DE 19801, Limited Kowloon, Hong Kong United States Foseco Foundry Ñèèæ$%ÒáÞäèùÙáÚèìáÚçà China Foseco Steel 165 Fleet Street, England Vesuvius 165 Fleet Street, London, England (China) Limited Building, Nanshan District, (Holdings) London, EC4A 2AE, S G Blair & ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England China Limited EC4A 2AE, England Shenzhen, China China Limited England Company ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ Vesuvius Street 90, number 13 A - 31, Colombia Limited S43 4XA, England Foseco 5, Barrio Elizalde, Izurza, Spain Foseco Steel ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England Colombia SAS ěèèë"ÁèàèøÚÂèåèæÛâÚ Fundición Holding ÁâóäÚâÚ $ ÒéÚâç (UK) Limited ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ SERT-Metal SAS 3, Avenue de l’Europe, Parc, France Vesuvius Salita delle Ginestre 10, Lugano Switzerland (Espanola), S.L. S43 4XA, England ‘Les Pivolles’, Decines-Charpieu Corporation S.A. Cassarate, CH 6900, Switzerland 69150, France Foseco Holding 165 Fleet Street, London, England Foseco Technology 165 Fleet Street, London, England Vesuvius Crucible CT Corporation , 1209 Orange US (Delaware) (Europe) Limited EC4A 2AE, England Limited EC4A 2AE, England SIDERMES Inc. 175, Calixa-Lavallée Verchêres, Canada Company Street, The Corporation Trust Québec J0L2R0, Canada Foseco Holding 12, Bosworth Street, South Africa Foseco 165 Fleet Street, England Company, Wilmington, DE 19801, (South Africa) Alrode, Aberton, 1449, Transnational London, EC4A 2AE, SIDERMES Zona Industrial, San Vicente Av., Venezuela United States (Pty) Limited South Africa Limited England Latinoamericana Anton Phillips Grupo Industrial, Vesuvius ùåÏëÚÝçâÜäÚçë ÊëÚäèð ˜ Poland CA San Vicente Local 4, Maracay, Foseco 165 Fleet Street, London, Netherlands Foseco R 717.1, Me Linh Point Tower, Vietnam CSD Sp z.o.o. Poland Venezuela Holding BV EC4A 2AE, England Vietnam Limited no 2 Ngo Duc Ke, Ben Nghe Ward, Vesuvius Warehouse No: 1J-09/3, P O Box United Arab SIDERMES Urquiza 919 Piso 2 Rosario Argentina Foseco Holding 165 Fleet Street, England Dist 1, Ho Chi Minh, Vietnam Emirates FZE 49261, Hamriyah Free Zone, Emirates S.A. Santa Fe, Argentina, CP 2000 International London, EC4A 2AE, HGAC Street Duque de Caxias, Brazil Sharjah, United Arab Emirates Limited England Participações 563 Room 2, Centro, Barueri, SIDERMES Via Mantova 10, Italy Vesuvius Financial 165 Fleet Street, London, England S.p.A. 20835 Muggiò (MB), Italy Foseco Holding 165 Fleet Street, London, England Limitada SP, 06401-010, Brazil 1 Limited EC4A 2AE, England Limited EC4A 2AE, England ISID Limited Beaver House, 23-38 Hythe Bridge England SIDERMES Estrada Municipal PDD 436, S/N, Brazil Vesuvius ÏÚöÚæDzÞçøâÞ "ÇÞåìâçäâ Finland SENSORES Prédio ‘C’, Bairro da Boa Vista, Foseco Industrial Km 15, Rodovia Raposo Tavares, Brazil Street, Oxford, OX1 2EP, England ÅâçåÚçÝÎØ Finland TERMICOS DO Municipio de Piedade, e Comercial Ltda Butanta Cep, São Paulo, J.H. France CT Corporation, 1209 Orange US (Delaware) Vesuvius Foundry 12 Wei Wen Road, China-Singapore China BRASIL LTDA Estado de São Paulo, Brazil 05577-100, Brazil Refractories Street, The Corporation Trust Products (Suzhou) ÒùóáèùÈçÝÏÚëäÒùóáèùÉâÚçàìù SIR Siegener Strasse 152, Germany Foseco International 170/69, 22nd Floor Ocean Tower 1, Thailand Company Company, Wilmington, Co., Ltd. Province, 215122, China ÅÞùÞëßÞìøéëèÝùäøÞ Kreuztal, D-57223, Holding (Thailand) ÑÚøÜáÚÝÚéâìÞäÑèÚÝÊåèçàøèÞò DE 19801, United States Vesuvius Foundry 2 Changchun Road, Economic China GmbH Germany Limited ÁÚçàäèäÓáÚâåÚçÝ John G. Stein ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England Technologies Development Area, Changshu, SOLED SAS Parc d’Activités, Belle Fontaine, France Foseco ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England & Company ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ (Jiangsu) Co. Ltd Jiangsu, China 57780 Rosselange, France International ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ Limited S43 4XA, England Vesuvius France Rue Paul Deudon 68, Boite Postale France Limited S43 4XA, England Mainsail Insurance Canon’s Court, 22 Victoria Street, Bermuda Tamworth 165 Fleet Street, London, England S.A. 19, Feignies 59750, France UK Limited EC4A 2AE, England Foseco Japan Ltd 9th Floor, Orix Kobe Sannomiya Japan Company Limited Hamilton, HM 12, Bermuda Vesuvius GmbH ÆÞåìÞçäâëÜáÞçÞëÒøëÚììÞ Germany ÁùâåÝâçà"˜˜ÆèäèÝèëâ Mascinco Avenida Brasil, 49550 - parte, Brazil Thomas Marshall Beaver House, 23-38 Hythe Bridge England ÁèëäÞçØ " !ÆÞëæÚçò (Loxley) Limited Street, Oxford, OX1 2EP, England Âáùè˜äùÊèÛÞÇòèàè Empreendimentos Distrito Industrial de Palmares – Vesuvius Group 165 Fleet Street, London, England 651-0087, Japan e Participações Campo, Grande – Cep: 23065-480, Unicorn 165 Fleet Street, London, England Limited EC4A 2AE, England Ltda Rio de Janeiro, RJ, Brazil Industries Limited EC4A 2AE, England Foseco Korea 74 Jeongju-ro, Wonmi-gu, South Korea Vesuvius Group S.A. 17 Rue de Douvrain, Ghlin, Belgium Limited Bucheon-si, Gyeonggi-do, Mastercodi Avenida Giovanni Gronchi, 5174, Brazil Veservice Ltda Av Brasil, 49550, Distrito Industrial Brazil 7011, Belgium 14523, South Korea Industrial Ltda suíte 11, Vila Andrade, 05724-002, de Palmares, Campo Grande, Vesuvius Holding ÆÞåìÞçäâëÜáÞçÞëÒøëÚììÞ Germany São Paulo, State of São Paulo, Brazil Rio de Janeiro, 23065-480, Brazil Foseco Limited 165 Fleet Street, London, England Deutschland GmbH ÁèëäÞçØ " !ÆÞëæÚçò EC4A 2AE, England Mercajoya, S.A. Capitán Haya, 56 - 1ºH, Spain Vesuvius 170/69, 22nd Floor Ocean Tower 1, Thailand Vesuvius Holding 68 Rue Paul Deudon, BP 19, France 28020 Madrid, Spain (Thailand) Co., Ltd ÑÚøÜáÚÝÚéâìÞäÑèÚÝÊåèçàøèÞò Foseco CT Corporation, 1209 Orange US (Delaware) France S.A.S Feignies 59750, France Metallurgical Inc Street, The Corporation Trust Metal Way Estrada Santa Isabel, 7655 KM37, Brazil ÁÚçàäèäÓáÚâåÚçÝ Vesuvius Holding Piazza Borgo Pila 40, Italy Company, Wilmington, Equipamentos Bairro Do Una, Itaquaquecetuba, Vesuvius Street Urquiza, 919,Floor 2, Rosario, Argentina Italia - Società a Genoa, Italy DE 19801, United States Metalurgicos Ltda São Paulo – SP, CEP: 08580 000, (V.E.A.R.) S.A. Provincia de Santa Fé, Argentina Brazil Responsabilità Foseco Binnenhavenstraat 20, Netherlands Vesuvius Advanced 221 Xing Ming Street, China- China Limitata Nederland BV 7553 GJ Hengelo (OV), Micro Jewels 10 Frere Felix De Valois Street, Mauritius Ceramics (China) ÒâçàÚéèëÞÒùóáèùÈçÝÏÚëäÒùóáèù Vesuvius 165 Fleet Street, London, England Netherlands Limited Port Louis, Mauritius Co., Ltd Jiangsu Province, 215021, China Financial Statements Holdings Limited EC4A 2AE, England Foseco Overseas 165 Fleet Street, London, England Minerals 165 Fleet Street, London, England Vesuvius 1209 Orange Street, Wilmington, US (Delaware) Vesuvius Ibérica Capitán Haya, 56 - 1ºH, Spain Limited EC4A 2AE, England Separation Limited EC4A 2AE, England America, Inc. DE 19801, United States Refractarios S.A. 28020 Madrid, Spain Foseco Pension 165 Fleet Street, London, England New Foseco ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England Vesuvius Americas Corporation Trust Center, US (Delaware) Vesuvius CT Corporation, 1209 Orange US (Delaware) Fund Trustee EC4A 2AE, England (UK) Limited ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ Holdings, Inc 1209 Orange Street, Wilmington, International Street, The Corporation Trust Limited S43 4XA, England New Castle County, DE 19801, Corporation Company, Wilmington, DE 19801, United States Foseco Unit 401, 4th Floor 8 Antonio Philippines Premier Refractories 17 Rue de Douvrain, Ghlin, Belgium United States Philippines Inc Centre, Prime St. Madrigal (Belgium) S.A. 7011, Belgium Vesuvius Australia 40-46 Gloucester Boulevarde, Australia Vesuvius 165 Fleet Street, London, England ÁùìâçÞììÏÚëäÀòÚåÚÀåÚÛÚçà (Holding) Pty Port Kembla, NSW, 2505, Process Metrix, 6622 Owens Drive, Pleasanton, US Investments EC4A 2AE, England Muntinlupa City, Philippines Limited Australia LLC CA 94588, United States (California) Limited Foseco Portugal Rua 25 de Abril, Lote 3, Portugal Vesuvius 40-46 Gloucester Boulevarde, Australia PT Foseco 2/5, Jalan Rawagelam, Indonesia Vesuvius Istanbul Gebze OSB2 Mh. 1700., ÓùëäÞò Produtos para Aveleda – 4485-010 VCD, Australia Pty Ltd Port Kembla, NSW, 2505, Australia Indonesia Kawasan Industry, 2/No.5 ÒèäÍè# ÂÚòâëèïÚ Fundiçâo Lda Vila do Conde, Portugal Sanayi ve Ticaret ÏùåèàÚÝùçàÉÚäÚëøÚÓâæùë Vesuvius Zandvoordestraat 366, Oostende, Belgium AS ÊèÜÚÞåâ  ÓùëäÞò Foseco Pty 7, Stuart Street, Padstow, Australia 13930, Indonesia Belgium N.V. B-8400, Belgium Vesuvius Italia SPA Piazza Borgo Pila 40, Genoa, Italy Italy Limited NSW 2211, Australia PT Foseco 2/5, Jalan Rawagelam, Indonesia Vesuvius 181 Bay Street, Suite 1800, Canada Vesuvius ÃÚâçâ˜ÍÚëùìÞÀäâáÚÛÚëÚÁåÝà Japan Foseco SAS Le Newton C, 7 Mail Barthélémy France Trading Indonesia Kawasan Industry, 2/No.5 Canada Inc Toronto, Ontario, M5J 2T9, Canada Thimonnier, 77185 Lognes, France ÏùåèàÚÝùçàÉÚäÚëøÚÓâæùë Japan Inc. 3F, 27-10, 1-chome, Taito, Vesuvius 165 Fleet Street, London, England ÓÚâøè˜äùÓèäòè˜"ÉÚéÚç 13930, Indonesia Ceramics Limited EC4A 2AE, England Vesuvius plc 178 Annual Report and Accounts 2017 179

Notes to the Group Financial Statements continued

35. Investments in Subsidiaries, Joint Ventures and Associates (continued) The Group’s investments in its associates and joint ventures are accounted for using the equity method from the date ìâàçâĚÜÚçøâçěùÞçÜޝöèâçøÜèçøëèåâìÝÞÞæÞÝøèÚëâìÞùçøâåøáÞÝÚøÞèçðáâÜáìâàçâĚÜÚçøâçěùÞçÜޝöèâçøÜèçøëèåÜÞÚìÞìøèÞñâìøèë 35.1 Investment in subsidiaries (continued) ðáÞçøáÞâçøÞëÞìøÛÞÜèæÞìÜåÚììâĚÞÝÚìÚçÚììÞøáÞåÝßèëìÚåÞÓáÞÂèçìèåâÝÚøÞÝÈçÜèæÞÒøÚøÞæÞçøëÞěÞÜøìøáÞÆëèùéċììáÚëÞ Company Company èßéëèĚøÚßøÞëøÚñèßøáÞëÞåÚøÞÝÚììèÜâÚøÞìÚçÝöèâçøïÞçøùëÞìÈçïÞìøæÞçøìâçÚììèÜâÚøÞìÚçÝöèâçøïÞçøùëÞìÚëÞÜÚëëâÞÝâçøáÞ legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction legal name ÑÞàâìøÞëÞÝèßĚÜÞÚÝÝëÞìì Jurisdiction Consolidated Balance Sheet at cost adjusted in respect of post-acquisition changes in the Group’s share of net assets, less any Vesuvius ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England Vesuvius Galati, Marea Unire avenue 107, Romania impairment in value. K.S.R. Limited ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ Refractories S.r.l. Galati county, Romania S43 4XA, United Kingdom Vesuvius Av Brasil, 49550, Distrito Industrial Brazil 2017 2016 Vesuvius Life Plan 165 Fleet Street, London, England Refratários Ltda de Palmares, Campo Grande, £m £m Trustee Limited EC4A 2AE, England Rio de Janeiro, 23065-480, Brazil At 1 January 18.0 16.1 Vesuvius LLC 10, Ul. Kooperativnaya, Russia Vesuvius Refractory Room No. 9, 3rd Floor, 7 Ganesh India Additions 0.4 — Ùáùäèïìäò÷èìÜèð $ India Private ÂáÚçÝëÚÀïÞçùÞÊèåäÚøÚ Russian Federation Limited WB 700013, India ÒáÚëÞèßéèìø˜øÚñéëèĚøèßöèâçøïÞçøùëÞì 1.3 1.0 Vesuvius Level 18, The Gardens North Malaysia Vesuvius 4, Forradsgatan, Amal, Sweden Dividends received from joint ventures (1.7) (1.0) Malaysia Sdn ÓèðÞë÷âÝÕÚååÞòÂâøòËâçàäÚëÚç Scandinavia AB S-662 34, Sweden Foreign exchange (0.5) 1.9 Bhd Syed Putra, Kuala Lumpur, Vesuvius Solar 58, KuaChun Road, China At 31 December 17.5 18.0 59200, Malaysia Crucible (Suzhou) Kua Tang, China-Singapore Vesuvius 165 Fleet Street, London, England Co., Ltd. ÒùóèùÈçÝÏÚëäÒùóáèù Management EC4A 2AE, England Jiangsu Province, Joint ventures Limited 215122, China ÒÞøèùøÛÞåèðâìøáÞìùææÚëâìÞÝĚçÚçÜâÚåâçßèëæÚøâèçâçëÞìéÞÜøèßöèâçøïÞçøùëÞìÀæèùçøìëÞåÚøÞøèøáÞÆëèùéċììáÚëÞ Vesuvius Mexico Av. Ruiz Cortinez, Num. 140, Mexico Vesuvius Pebble Lane, Private Bag X2, South Africa S.A. de C.V. Colonia Jardines de San Rafael, South Africa Olifantsfontein, Gauteng Province, 2017 2016 Guadalupe, Nuevo León, CP 67119, (Pty) Limited 1665, South Africa £m £m Mexico Vesuvius SSC Sp ùåÏëÚÝçâÜäÚçë ÊëÚäèð ˜ Revenue 53.9 44.6 Vesuvius 56, rd 15, Apt 103, Maadi, Egypt z.o.o. Poland Mid-East Limited Cairo, Egypt Vesuvius UK ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England ÓëÚÝâçàéëèĚø 2.1 1.6 Vesuvius 165 Fleet Street, London, England Limited ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ Minerals Limited EC4A 2AE, England S43 4XA, United Kingdom ÍÞøĚçÚçÜÞÜèìøì 0.1 0.1 Vesuvius Moravia, ÊèçìäÚÜé# ÓëâçÞÜ# %" Czech ÕÞìùïâùìÔäëÚâçÞ #ÔÝÚëçòäâïÒøëÞÞøÂâøòèß ÔäëÚâçÞ ÏëèĚøÛÞßèëÞøÚñ 2.2 1.6 s.r.l Czech Republic Republic LLC ÃçâéëèéÞøëèïìäÔäëÚâçÞ Income tax expense (0.9) (0.6) Vesuvius New $ÂëòÞëìÑèÚÝÄÚìøÓÚæÚäâ New Zealand Vesuvius USA CT Corporation, 208 South LaSalle US (Illinois) ÏëèĚøÚßøÞëøÚñ Zealand Limited ÀùÜäåÚçÝÍÞðÙÞÚåÚçÝ Corporation ÒøëÞÞøÂáâÜÚàèÂèèäÂèùçøò 1.3 1.0 Vesuvius ÀßÚçÚìòÞïìäòÏÞëÞùåèä À Russia IL 60604, United States OOO Moscow, Russia, 119019, Vesuvius VA Limited 165 Fleet Street, London, England Non-current assets 5.9 7.6 Russian Federation EC4A 2AE, England Current assets 41.7 42.0 Vesuvius Overseas 165 Fleet Street, London, England Vesuvius Zyalons Brown Street, Newmilns, Scotland Investments Limited EC4A 2AE, England Holdings Limited Ayrshire, KA16 9AG, Scotland Non-current liabilities — — Vesuvius 165 Fleet Street, London, England ÕÞìùïâùìÙòÚëèÜä 58, KuaChun Road, Kua Tang, China Current liabilities (30.8) (32.0) Overseas Limited EC4A 2AE, England Ceramics ÂáâçژÒâçàÚéèëÞÒùóèùÈçÝÏÚëä Net assets 16.8 17.6 Vesuvius Pension 165 Fleet Street, London, England (Suzhou) Co., Ltd Suzhou, Jiangsu Province, 215122, China Plans Trustees EC4A 2AE, England The purpose of the Chinese joint venture companies is to research, develop, manufacture and sell refractory products. Limited Vesuvius-Premier ÷âÝåÚçÝÖÚòÂÞçøëÚåÏÚëä England ÓáÞëèåÞèßÕÞìùïâùìâìøèéëèïâÝÞøÞÜáçâÜÚåéÞëìèççÞåøëÚâçâçàÚçÝÚÜÜÞììøèøáÞÆëèùéċìâçøÞëçÚøâèçÚåìÚåÞìçÞøðèëä Vesuvius Pigments 165 Fleet Street, London, England Refractories ÁÚëåÛèëèùàáËâçäìÃÞëÛòìáâëÞ (Holdings) Limited S43 4XA, England (Holdings) Limited EC4A 2AE, England Name of entity Registered address Jurisdiction % ownership VSV Advanced Xiaotaizi Village, Ningyuan Town, China Vesuvius Poland ÔåÓòçâÞÜäÚÒäÚðâçÚ Poland Angang Vesuvius Refractory Company Ltd Taxi District, Anshan City, Liaoning Province, China China 50 ÒéŶåäÚóèè 32-050, Poland Ceramics (Anshan) Qianshan District, Anshan, Co., Ltd Liaoning Province, China Wuhan Wugang-Vesuvius Advanced CCR Co., Gongnong Village Qingshan District, Wuhan, China 50 Vesuvius Street No. F14, RAK Investment United Arab Financial Statements Ras Al Khaimah Authority Free Zone, Al Hamra, Emirates ÖâåäÞì˜ËùÜÚì 165 Fleet Street, London, England Ltd Hubei Province, 430082, China FZ-LLC Ras Al Khaimah, PO Box 86408, Limited EC4A 2AE, England Wuhan Wugang-Vesuvius Advanced Ceramics Gongnong Village Qingshan District, Wuhan, China 50 United Arab Emirates ØâçàäèùÁÚòùêùÚç Qing Long Shan Street, Bayuquan China Co., Ltd Hubei Province, 430082, China Vesuvius Street San Martin 870, Chile Refractories Co., Ltd ÃâìøëâÜøËâÚèçâçàÏëèïâçÜÞØâçàÊèù Beauvac Participações S/A Street Libero Badaro, 293, cj. 20D, São Paulo, Brazil 50 Refractarios Room 308, Tower B, Concepcion, de Chile SA Chile Centro, 01009-000, Brazil Vesuvius 56, 13th Avenue, TEDA, Tianjin, China INTAHSA SA Street Duque de Caxias 563, house 04, Room 01, Brazil 25 Refractories 300457, China Barueri, São Paulo, Centro, 06401-010, Brazil (Tianjin) Co., Ltd Newshelf 480 (Proprietary) Limited 44 Main Street, Johannesburg, 2001, South 45 35.2 Investment in joint ventures and associates South Africa Africa A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the

net assets of the joint venture. Joint control is the contractually agreed sharing of control of the arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. An associate is an entity èïÞëðáâÜáøáÞÆëèùéáÚììâàçâĚÜÚçøâçěùÞçÜÞÒâàçâĚÜÚçøâçěùÞçÜÞâìøáÞéèðÞëøèéÚëøâÜâéÚøÞâçøáÞĚçÚçÜâÚåÚçÝèéÞëÚøâçà policy decisions of an entity, but is not control or joint control over those policies. Vesuvius plc 180 Annual Report and Accounts 2017 181

Notes to the Group Financial Statements continued Company Balance Sheet

As at 31 December 2017

35. Investments in Subsidiaries, Joint Ventures and Associates (continued) 2017 2016 total total 35.2 Investment in joint ventures and associates (continued) Notes £m £m Fixed assets Associates Investment 6 1,778.0 1,778.0 During 2017, the Group acquired a 14.9% interest in Sapotech Oy, a Finnish technology company, for total consideration of £0.4m. ÓèøÚåĚñÞÝÚììÞøì 1,778.0 1,778.0

Name of entity Registered address Jurisdiction % ownership Current assets Sapotech Oy Paavo Havaksen tie 5 D, 90570 Oulu, Finland Finland 14.90 Debtors – amounts falling due within one year 5.1 1.8

35.3 Non-controlling interest Total current assets 5.1 1.8 Non-controlling interests represent the portion of the equity of a subsidiary not attributable either directly or indirectly to the parent company and are presented separately in the Consolidated Income Statement and within equity in the Consolidated Creditors – amounts falling due within one year Balance Sheet, distinguished from parent company shareholders’ equity. Bank overdraft (0.4) — The total non-controlling interest at 31 December 2017 is £6.4m (2016: £6.3m) of which £4.6m relates to Vesuvius India Ltd Other creditors 7 (1,124.7) (1,074.5) (2016: £4.3m). The non-controlling interests in respect of the Group’s other subsidiaries are not considered to be material. Net current liabilities (1,120.0) (1,072.7) Total assets less current liabilities 658.0 705.3 Name of entity Registered address Jurisdiction % ownership Vesuvius India Limited P-104 Taratala Road, Kolkata, 700 088, India India 55.57 Net assets 658.0 705.3 Foseco India Limited 922/923, Gat, Sanaswadi, Taluka, Shirur, Pune, India 74.98 412208, India Equity capital and reserves Foseco Golden Gate Company Limited 6 Kung Yeh 2nd Road, Ping Tung Dist, Ping Tung, Taiwan 51 90049, Taiwan Issued share capital 8 27.8 27.8 Foseco (Thailand) Limited 170/69, 22nd Floor Ocean Tower 1, Thailand 74 Retained earnings 630.2 677.5 Ratchadapisek Road, Klongtoey, Bangkok, Total shareholders’ funds 658.0 705.3 10110, Thailand Company number 8217766 VESUVIUS CESKÁ REPUBLIKA, a.s. Prumyslová 726, Konská, Trinec, 739 61, Czech 60 Czech Republic Republic Under Section 408 of the Companies Act 2006, the Company is exempt from the requirement to present an income statement. During 2017 the Company incurred a loss of £4.3m (2016: £3.0m loss). ÃÞøÚâåìèßìùÛìâÝâÚëâÞìÞñÞæéøßëèæÚùÝâøèßøáÞâëâçÝâïâÝùÚåĚçÚçÜâÚåìøÚøÞæÞçøìÛòïâëøùÞèßÒÞÜøâèç #%ÀèßøáÞÂèæéÚçâÞì ÓáÞĚçÚçÜâÚåìøÚøÞæÞçøìðÞëÞÚééëèïÞÝÚçÝÚùøáèëâìÞÝßèëâììùÞÛòøáÞÃâëÞÜøèëìèç$ÅÞÛëùÚëò$ÚçÝìâàçÞÝèçøáÞâë Act 2006 are disclosed in Note 6 to the Company Financial Statements. behalf by: As with Vesuvius plc, all of the above companies have a 31 December year-end.

Patrick André Guy Young 36. Related Parties ÂáâÞßÄñÞÜùøâïÞ  ÂáâÞßÅâçÚçÜâÚåÎßĚÜÞë All transactions with related parties are conducted on an arm’s-length basis and in accordance with normal business terms. Transactions between related parties that are Group subsidiaries are eliminated on consolidation. ÓáÞëÞåÚøÞÝéÚëøâÞìâÝÞçøâĚÞÝÛòøáÞÃâëÞÜøèëìâçÜåùÝÞöèâçøïÞçøùëÞìÚììèÜâÚøÞìÚçÝäÞòæÚçÚàÞæÞçøéÞëìèççÞåÓèÞçÚÛåÞ ùìÞëìèßèùëĚçÚçÜâÚåìøÚøÞæÞçøìøèßèëæÚïâÞðèçøáÞÞßßÞÜøìèßëÞåÚøÞÝéÚëøòëÞåÚøâèçìáâéìèçøáÞÆëèùéðÞÝâìÜåèìÞøáÞ related party relationship when control exists, irrespective of whether there have been transactions between the related parties. Financial Statements 36.1 Transactions with joint ventures and associates ÀååøëÚçìÚÜøâèçìðâøáöèâçøïÞçøùëÞìÚçÝÚììèÜâÚøÞìÚëÞâçøáÞçèëæÚåÜèùëìÞèßÛùìâçÞììÅùëøáÞëÝÞøÚâåìèßöèâçøïÞçøùëÞìÚçÝ associates are included in Note 35.

36.2 Transactions with key management personnel There have been no transactions with key management personnel of the Group other than the Directors’ remuneration. Directors’ remuneration is disclosed in Note 8 of the Group Financial Statements and in the Directors’ Remuneration Report.

36.3 Transactions with other related parties ÓáÞëÞÚëÞçèÜèçøëèååâçàìáÚëÞáèåÝÞëìèßøáÞÆëèùéÚìÝÞĚçÞÝÛòÈÅÑÒÓáÞëÞáÚïÞÛÞÞççèæÚøÞëâÚåøëÚçìÚÜøâèçìðâøáøáÞ shareholders of the Group. Pension contributions to Group schemes are disclosed in Note 28 of the Group Financial Statements. Other than the parties disclosed above, the Group has no other material related parties. Vesuvius plc 182 Annual Report and Accounts 2017 183

Company Statement of Changes in Equity Notes to the Company Financial Statements

As at 31 December 2017

Share Retained 1. General Information capital earnings Total £m £m £m Vesuvius plc (‘Vesuvius’ or ‘the Company’) is a public company limited by shares. It is incorporated and domiciled in England As at 1 January 2016 27.8 722.7 750.5 and Wales and listed on the London Stock Exchange. The nature of the company is a holding company. The address of its Loss recognised for the year —(3.0)(3.0) ëÞàâìøÞëÞÝèßĚÜÞâì"!ÅåÞÞøÒøëÞÞøËèçÝèçÄ ÀÀÄ Recognition of share-based payments — 1.7 1.7 Dividend paid — (43.9) (43.9) 2. Basis of Preparation As at 1 January 2017 27.8 677.5 705.3 2.1 Basis of accounting Loss recognised for the year —(4.3)(4.3) ÓáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßøáÞÂèæéÚçòáÚïÞÛÞÞçéëÞéÚëÞÝâçÚÜÜèëÝÚçÜÞðâøáÅâçÚçÜâÚåÑÞéèëøâçàÒøÚçÝÚëÝ Recognition of share-based payments —2.62.6 ÑÞÝùÜÞÝÃâìÜåèìùëÞÅëÚæÞðèëä›ÅÑÒœÚçÝøáÞÂèæéÚçâÞìÀÜø"ÓáÞĚçÚçÜâÚåìøÚøÞæÞçøìáÚïÞÛÞÞçéëÞéÚëÞÝ Dividend paid — (45.6) (45.6) under the historical cost convention. As at 31 December 2017 27.8 630.2 658.0 ÈçøáÞìÞĚçÚçÜâÚåìøÚøÞæÞçøìøáÞÂèæéÚçòáÚìÚééåâÞÝøáÞÞñÞæéøâèçìÚïÚâåÚÛåÞùçÝÞëÅÑÒâçëÞìéÞÜøèßøáÞ following disclosures: The Company had distributable reserves of £630.2m as at 31 December 2017 (2016: £677.5m). > ÀÜÚìáěèðìøÚøÞæÞçøÚçÝëÞåÚøÞÝçèøÞì > Disclosures in respect of transactions with wholly owned subsidiaries > Disclosures in respect of capital management > ÓáÞÞßßÞÜøìèßçÞðÛùøçèøòÞøÞßßÞÜøâïÞÈÅÑÒì > Disclosures in respect of the compensation of key management personnel ÔçÝÞëÒÞÜøâèç $èßøáÞÂèæéÚçâÞìÀÜø"øáÞÂèæéÚçòâìÞñÞæéøßëèæøáÞëÞêùâëÞæÞçøøèéëÞìÞçøâøìèðçéëèĚø and loss account. The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented âçøáÞìÞĚçÚçÜâÚåìøÚøÞæÞçøìÓáÞëÞðÞëÞçèâÝÞçøâĚÞÝÜëâøâÜÚåÚÜÜèùçøâçàÞìøâæÚøÞìèëöùÝàÞæÞçøì

2.2 Going concern The Directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for period of at least 12 months from the date of signing of these accounts. Accordingly, they continue øèÚÝèéøÚàèâçàÜèçÜÞëçÛÚìâìâçéëÞéÚëâçàøáÞĚçÚçÜâÚåìøÚøÞæÞçøìèßøáÞÆëèùéÚçÝøáÞÂèæéÚçò

2.3 Accounting policy Taxation Both current and deferred tax are calculated using tax rates and laws that have been enacted, or substantively enacted, by the balance sheet date. Current tax payable is based on the taxable result for the year. Deferred taxation is recognised, without discounting, in respect of all timing differences that have originated, but not reversed, at the balance sheet date, with the exception that deferred øÚñÚøâèçÚììÞøìÚëÞèçåòëÞÜèàçâìÞÝâßâøâìÜèçìâÝÞëÞÝæèëÞåâäÞåòøáÚççèøøáÚøøáÞëÞðâååÛÞìùâøÚÛåÞßùøùëÞéëèĚøìßëèæðáâÜá the reversal of the underlying timing differences can be deducted. Provision is made for the tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent that, at the balance sheet date, dividends have been accrued as receivable. Financial Statements All other accounting policies are set out within the respective notes.

 ÄæéåèòÞÞÁÞçÞĚøìÄñéÞçìÞ

2017 2016 £m £m Wages & Salaries 3.7 2.4 Social security costs 0.6 0.4 Share-based payments 0.7 0.6 ÏÞçìâèçÜèìøì™ÝÞĚçÞÝÜèçøëâÛùøâèçéÞçìâèçéåÚçì — 0.1 ÓèøÚåÞæéåèòÞÞÛÞçÞĚøìÞñéÞçìÞ 5.0 3.5

The total average number of employees for 2017 was 3 (2016: 3). As at 31 December, the Company had 4 employees. Details of the Directors’ remuneration are disclosed in the Directors’ Remuneration Report. Vesuvius plc 184 Annual Report and Accounts 2017 185

Notes to the Company Financial Statements continued

4. Audit and Non-Audit Fees 8. Issued Share Capital

Amounts payable to PricewaterhouseCoopers LLP in relation to audit and non-audit fees are disclosed within Note 6 to the 8.1 Accounting policy ÂèçìèåâÝÚøÞÝÅâçÚçÜâÚåÒøÚøÞæÞçøì Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

5. Dividends 8.2 Analysis of issued share capital The issued and fully paid ordinary share capital of the Company as at 31 December 2017 was 278.5 million shares of ÀĚçÚåÝâïâÝÞçÝßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë"èßx $æ›!x æœÞêùâïÚåÞçøøè éÞçÜÞ›!! £0.10 each (2016: 278.5 million shares of £0.10 each). Of this, 7.3 million (2016: 7.3 million) shares were held in Treasury pence) per ordinary share, was paid in May 2017 (May 2016) and an interim dividend for the year ended 31 December 2017 and 0.9 million (2016: 1.1 million) shares were held by the Vesuvius Group employee share ownership plan trust (ESOP). of £14.8m (2016: £13.9m), equivalent to 5.50 pence (2016: 5.15 pence) per ordinary share, was paid in September 2017 ÓáÞÂèæéÚçòèçåòáÚìèçÞÜåÚììèßìáÚëÞìâçâììùÞèëÝâçÚëòìáÚëÞìÀååìáÚëÞáèåÝÞëìÞçöèòøáÞìÚæÞëâàáøìâçëÞåÚøâèçøè (September 2016). these shares, including rights in relation to voting at General Meetings of the Company, distribution of dividends and ÀéëèéèìÞÝĚçÚåÝâïâÝÞçÝßèëøáÞòÞÚëÞçÝÞÝ ÃÞÜÞæÛÞë#èßx $æ›"x $æœÞêùâïÚåÞçøøè!éÞçÜÞéÞë repayment of capital. èëÝâçÚëòìáÚëÞ›" éÞçÜޜâììùÛöÞÜøøèÚééëèïÚåÛòìáÚëÞáèåÝÞëìÚøøáÞÂèæéÚçòċìÀççùÚåÆÞçÞëÚå÷ÞÞøâçàÚçÝ áÚìçèøÛÞÞçâçÜåùÝÞÝÚìÚåâÚÛâåâøòâçøáÞìÞĚçÚçÜâÚåìøÚøÞæÞçøìÈßÚééëèïÞÝÛòìáÚëÞáèåÝÞëìøáÞÝâïâÝÞçÝðâååÛÞéÚâÝèç 9. Share-based Payments 25 May 2018 to ordinary shareholders on the register at 13 April 2018. 9.1 Accounting policy 6. Investment in Subsidiaries, Associates and Joint Ventures The Company operates equity-settled share-based payment arrangements for its employees. Equity-settled share-based payments are measured at fair value at the date of grant. The fair value determined at the grant date takes account of the 6.1 Accounting policy effect of market-based conditions, such as the total shareholder return target upon which vesting for some of the awards ÒáÚëÞìâçìùÛìâÝâÚëâÞìÚììèÜâÚøÞìÚçÝöèâçøïÞçøùëÞìÚëÞìøÚøÞÝÚøÜèìøåÞììÚçòâæéÚâëæÞçøâçïÚåùÞ is conditional, and is expensed on a straight-line basis over the vesting period with a corresponding increase in equity. ÓáÞÜùæùåÚøâïÞÞñéÞçìÞëÞÜèàçâìÞÝâìÚÝöùìøÞÝßèëøáÞÛÞìøÞìøâæÚøÞèßøáÞìáÚëÞìøáÚøðâååÞïÞçøùÚååòïÞìøÚçÝßèëøáÞÞßßÞÜø 6.2 Analysis of investment in subsidiaries, associates and joint ventures of other non-market-based vesting conditions, such as growth in headline earnings per share, which are not included in the Shares in ßÚâëïÚåùÞÝÞøÞëæâçÞÝÚøøáÞÝÚøÞèßàëÚçøÅèëàëÚçøìðâøáæÚëäÞø˜ÛÚìÞÝÜèçÝâøâèçìÚøøÚÜáâçàøèøáÞæßÚâëïÚåùÞâìæÞÚìùëÞÝ subsidiaries £m ùìâçàÚßèëæèßìøèÜáÚìøâÜèéøâèçéëâÜâçàæèÝÞåÅèëÚååèøáÞëàëÚçøìßÚâëïÚåùÞâìæÞÚìùëÞÝùìâçàøáÞÁåÚÜä˜ÒÜáèåÞìèéøâèç As at 1 January 2017 and 31 December 2017 1,778.0 pricing model. % ÏëèĚøÚçÝåèììÚÜÜèùçøëÞÜèàçâøâèç ÓáÞìùÛìâÝâÚëâÞìöèâçøïÞçøùëÞìÚçÝÚììèÜâÚøÞìèßÕÞìùïâùìéåÜøáÞâëÜèùçøëòèßâçÜèëéèëÚøâèçÚçÝYèðçÞëìáâéâììÞøèùøâç ÍèøÞ !èßøáÞÍèøÞìøèøáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøìÖâøáøáÞÞñÜÞéøâèçèßÕÞìùïâùìÇèåÝâçàìËøÝðáèìÞèëÝâçÚëòìáÚëÞ The Company operates a number of different share-based payment schemes, the main features of which are detailed capital was directly held by Vesuvius plc, the ordinary share capital of the other companies was owned by a Vesuvius plc ÛÞøðÞÞçéÚàÞì%%øè!èßøáÞÃâëÞÜøèëìċÑÞæùçÞëÚøâèçÑÞéèëøÀøèøÚåèßx#æðÚìÜáÚëàÞÝøèøáÞéëèĚøÚçÝåèììÚÜÜèùçø subsidiary as at 31 December 2017. in the year with regard to share-based payments (2016: £0.5m).

6.3 Audit-exempt subsidiaries 9.3 Details of outstanding options ÓáÞßèååèðâçàÔÊìùÛìâÝâÚëâÞìÚëÞÞñÞæéøßëèæÚùÝâøèßøáÞâëâçÝâïâÝùÚåĚçÚçÜâÚåìøÚøÞæÞçøìÛòïâëøùÞèßÒÞÜøâèç #%ÀèßøáÞ Outstanding awards Companies Act 2006. Weighted Awards average exercisable outstanding Brazil 1 Limited John G. Stein & Company Limited As at As at as at contractual Range of ÅèìÞÜèËâæâøÞÝ 1 Jan Forfeited/ 31 Dec 31 Dec life of exercise S G Blair & Company Limited 2017 Granted Exercised lapsed 2017 2017 awards prices ÅèìÞÜèÓÞÜáçèåèàòËâæâøÞÝ Vesuvius China Limited no. no. no. no. no. no. years pence ÅèìÞÜèÓëÚçìçÚøâèçÚåËâæâøÞÝ Vesuvius Group Limited LTIP 1,156,560 409,453 — (631,095) 934,918 — 4.8 n/a ÅèìÞÜè›ÅҜËâæâøÞÝ Vesuvius Minerals Limited Weighted average ÅèìÞÜè›ÆÁœËâæâøÞÝ ÕÞìùïâùìÏâàæÞçøì›ÇèåÝâçàìœËâæâøÞÝ exercise price nil nil nil nil nil — n/a ÅèìÞÜèÒøÞÞå›ÇèåÝâçàìœÂáâçÚËâæâøÞÝ ÕÞìùïâùì˜ÏëÞæâÞëÑÞßëÚÜøèëâÞì›ÇèåÝâçàìœËâæâøÞÝ Other plans 8,557 — (8,557) ————n/a

ÅèìÞÜè›ÔʜËâæâøÞÝ Vesuvius VA Limited Weighted average Financial Statements exercise price nil nil nil nil nil — n/a

7. Other Creditors ÅèëèéøâèçìÞñÞëÜâìÞÝÝùëâçà#âçÜåùÝÞÝâçĊÎøáÞëéåÚçìċøáÞìáÚëÞéëâÜÞÚøøáÞÝÚøÞèßÞñÞëÜâìÞðÚì!%éÞçÜÞ

2017 2016 £m £m Outstanding awards Weighted Amounts owned to subsidiary undertakings 1,122.4 1,073.2 Awards average Accruals and other creditors 2.3 1.3 exercisable outstanding As at As at as at contractual Range of Total amounts falling due within one year 1,124.7 1,074.5 1 Jan ÅèëßÞâøÞݝ 31 Dec 31 Dec life of exercise 2016 Granted Exercised lapsed 2016 2016 awards prices no. no. no. no. no. no. years pence ÀæèùçøìèðÞÝøèìùÛìâÝâÚëòùçÝÞëøÚäâçàìÚëÞâçøÞëÞìøßëÞÞáÚïÞçèĚñÞÝÝÚøÞèßëÞéÚòæÞçøÚçÝÚëÞëÞéÚòÚÛåÞèçÝÞæÚçÝ LTIP 916,163 581,901 — (341,504)1,156,560 — 8.5 çÚ Weighted average exercise price nil nil nil nil nil — çÚ Other plans 82,261 — (51,859) (21,845) 8,557 — 0.8 çÚ Weighted average exercise price nil nil nil nil nil — çÚ

ÅèëèéøâèçìÞñÞëÜâìÞÝÝùëâçà"âçÜåùÝÞÝâçĊÎøáÞëéåÚçìċøáÞìáÚëÞéëâÜÞÚøøáÞÝÚøÞèßÞñÞëÜâìÞðÚì éÞçÜÞ Vesuvius plc 186 Annual Report and Accounts 2017 187

Notes to the Company Financial Statements continued

9. Share-based Payments (continued) 11. Related Parties

9.3 Details of outstanding options (continued) All transactions with related parties are conducted on an arm’s-length basis and in accordance with normal business terms. Details of market performance conditions are included in the Directors’ Remuneration Report. Transactions between related parties that are wholly owned Company subsidiaries are not disclosed in this Note. As at 31 December 2017, the total options exercisable by all Group employees over the £0.10 ordinary shares and capable of ÓáÞëÞåÚøÞÝéÚëøâÞìâÝÞçøâĚÞÝÛòøáÞÃâëÞÜøèëìâçÜåùÝÞöèâçøïÞçøùëÞìÚììèÜâÚøÞìÚçÝäÞòæÚçÚàÞæÞçøéÞëìèççÞåÓèÞçÚÛåÞ ÛÞâçàìÚøâìĚÞÝøáëèùàáçÞðÚååèøæÞçøìèßìáÚëÞìèëøáëèùàáìáÚëÞìáÞåÝÛòøáÞÂèæéÚçòċìÄÒÎÏðÞëÞÚìßèååèðì ùìÞëìèßèùëĚçÚçÜâÚåìøÚøÞæÞçøìøèßèëæÚïâÞðèçøáÞÞßßÞÜøìèßëÞåÚøÞÝéÚëøòëÞåÚøâèçìáâéìèçøáÞÂèæéÚçòðÞÝâìÜåèìÞ the related party relationship when control exists, irrespective of whether there have been transactions between the Number related parties. Latest year èßèéøâèçì Years of Option èßÞñÞëÜâìޝ allocations ÚðÚëݝàëÚçø prices (£) vesting outstanding Transactions with joint ventures and associates Long Term Incentive Plan 2015–2017 nil ## 2,280,093 ÀååøëÚçìÚÜøâèçìðâøáöèâçøïÞçøùëÞìÚçÝÚììèÜâÚøÞìÚëÞâçøáÞçèëæÚåÜèùëìÞèßÛùìâçÞììÅùëøáÞëÝÞøÚâåìèßöèâçøïÞçøùëÞìÚçÝ ÚììèÜâÚøÞìâìâçÜåùÝÞÝâçÍèøÞ !èßøáÞÍèøÞìøèøáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøì Medium Term Incentive Plan 2016–2017 nil 2019 141,302 Restricted rights 2016–2017 nil $ 11,135 Transactions with key management personnel There have been no transactions with key management personnel of the Company other than the Directors’ remuneration. ÅÚâëïÚåùÞèßèéøâèçìàëÚçøÞÝùçÝÞëøáÞËÓÈÏÝùëâçàøáÞòÞÚë Directors’ remuneration is disclosed in the Annual Report on Directors’ Remuneration. 2017 (March Grant) 2017 (Sept Grant) 2016 EPS TSR EPS TSR EPS TSR Transactions with other related parties element element element element element element ÓáÞëÞÚëÞçèÜèçøëèååâçàìáÚëÞáèåÝÞëìèßøáÞÂèæéÚçòÚìÝÞĚçÞÝÛòÈÅÑÒÓáÞëÞáÚïÞÛÞÞççèæÚøÞëâÚåøëÚçìÚÜøâèçìðâøáøáÞ ÅÚâëïÚåùÞèßèéøâèçìàëÚçøÞÝ›éÞëìáÚëޜ 524.5p 401.0p 578.0p 467.0p 292.0p 112.0p shareholders of the Company. Share price on date of grant (per share) 524.5p 524.5p 578.0p 578.0p 292.0p 292.0p ÏÞçìâèçÜèçøëâÛùøâèçìÚëÞÝâìÜåèìÞÝâçÍèøÞ$èßøáÞÆëèùéÅâçÚçÜâÚåÒøÚøÞæÞçøì Expected volatility n/a 30.90% n/a 33.00% çÚ "Y Other than the parties disclosed above, the Company has no other material related parties. Risk-free interest rate n/a 0.17% n/a 0.16% çÚ  Y Exercise price (per share) nil nil nil nil nil nil Expected term (years) 333344 Expected dividend yield nil nil nil nil çÚ çÚ

The fair value of share options with non-market performance conditions has been calculated using the Black-Scholes option pricing model. The fair value of options with market-related performance conditions has been measured using the Monte Carlo model. Expected volatility was determined by calculating the historical volatility of the Group’s share price over the 2.8 years (2016: 2.75 years) prior to the grant date. The risk-free rate of return was assumed to be the yield to maturity èçÚÔÊĚñÞÝàâåøðâøáøáÞøÞëæøèæÚøùëâøòÞêùÚåøèøáÞÞñéÞÜøÞÝåâßÞèßøáÞèéøâèçÀøøáÞÝâìÜëÞøâèçèßøáÞÑÞæùçÞëÚøâèç Committee, award holders receive the value of dividends that would have been paid on their vested shares in the period between grant and vesting. Accordingly, there is no discount to the valuation for dividends foregone during the vesting period.

10. Contingent Liabilities ÖáÞëÞøáÞÂèæéÚçòÞçøÞëìâçøèĚçÚçÜâÚåàùÚëÚçøÞÞÜèçøëÚÜøìøèàùÚëÚçøÞÞøáÞâçÝÞÛøÞÝçÞììèßèøáÞëÜèæéÚçâÞìðâøáâç its Group, the Company considers these to be insurance arrangements and accounts for them as such. In this respect, the Company treats the guarantee contract as a contingent liability until such time as it becomes probable that the Company will be required to make a payment under the guarantee. Guarantees provided by the Company as at 31 December 2017 in respect of the liabilities of its subsidiary companies amounted to £563.4m (2016: £569.4m), which includes guarantees of

$200.0m and €130.0m (2016: $310.0m and €30.0m) in respect of US Private Placement Loan Notes and £146.3m (2016: Financial Statements £141.7m) in respect of drawings under the syndicated bank facility; together with £150.8m (2016: £150.8m) in relation to a guarantee provided to the Company’s UK subsidiary which acts as Trustee for the Group’s UK pension plan. The guarantee âìèïÞëÚååéëÞìÞçøÚçÝßùøùëÞéÞçìâèçåâÚÛâåâøâÞìèßøáÞéåÚçÚçÝøáÞÜèçøâçàÞçøåâÚÛâåâøòÚæèùçøëÞéëÞìÞçøìøáÞçÞøÝÞĚÜâøèçÚ buy-out basis as shown in the most recent triennial valuation. ÕÞìùïâùìáÚìÞñøÞçìâïÞâçøÞëçÚøâèçÚåèéÞëÚøâèçìÚçÝâììùÛöÞÜøøèïÚëâèùìåÞàÚåÚçÝëÞàùåÚøèëòëÞàâæÞìâçÜåùÝâçàøáèìÞ covering taxation and environmental matters. Several of the Company’s subsidiaries are parties to legal proceedings, certain of which are insured claims arising in the ordinary course of the operations of the company involved, and are aware of a çùæÛÞëèßâììùÞìðáâÜáÚëÞèëæÚòÛÞøáÞìùÛöÞÜøèßÝâìéùøÞðâøáøÚñÚùøáèëâøâÞìÖáâåìøøáÞèùøÜèæÞèßåâøâàÚøâèçÚçÝèøáÞë disputes can never be predicted with certainty, having regard to legal advice received and the insurance arrangements of the Company and its subsidiaries, the Directors believe that none of these matters will, either individually or in the aggregate, áÚïÞÚæÚøÞëâÚååòÚÝïÞëìÞÞßßÞÜøèçøáÞÂèæéÚçòċìĚçÚçÜâÚåÜèçÝâøâèçèëëÞìùåøìèßèéÞëÚøâèçì Vesuvius plc 188 Annual Report and Accounts 2017 189

Five-Year Summary: Divisional Results from Shareholder Information Continuing Operations

2017 2016 2015 2014 2013 Enquiries ÒáÚëÞÃÞÚåâçàÒÞëïâÜÞ Steel Division The share register is managed by Equiniti, who can be The Company’s shares can be traded through most banks, Revenue £m 1,148.7 942.0 897.6 981.4 1,017.5 contacted regarding shareholding queries. building societies or stockbrokers. UK resident shareholders ÓëÚÝâçàéëèĚø £m 100.4 79.2 79.5 96.4 88.7 can also buy and sell shares online or by telephone using Equiniti Limited ÑÞøùëçèçìÚåÞì % 8.7 8.4 8.9 9.8 8.7 Equiniti’s Shareview dealing service by either logging on to Aspect House, Spencer Road www.shareview.co.uk/dealing or by calling 0345 603 7037 ÄæéåèòÞÞìòÞÚë˜ÞçÝ no. 7,930 7,782 7,783 8,349 7,524 Lancing, West Sussex BN99 6DA between 8.00 am and 4.30 pm on any business day (excluding Foundry Division Tel (UK only) 0371 384 2335 bank holidays). The shareholder reference number (found at Revenue £m 535.2 459.4 424.4 463.0 493.0 Tel (non-UK) +44 121 415 7047 øáÞøèéèßÕÞìùïâùìċìáÚëÞÜÞëøâĚÜÚøÞìœâìëÞêùâëÞÝøèùìÞøáÞ ÓëÚÝâçàéëèĚø £m 65.1 54.1 44.5 46.4 51.3 For the hard of hearing, Equiniti offers a Textel service which dealing facility. ÑÞøùëçèçìÚåÞì % 12.2 11.8 10.5 10.0 10.4 can be accessed by dialling 0371 384 2255 (or +44 121 415 7028 ÄæéåèòÞÞìòÞÚë˜ÞçÝ no. 3,080 3,058 3,129 3,443 3,330 if calling from outside the UK). ÒáÚëÞÆâßø Any shareholder enquiries not related to the ShareGift, the charity share donation scheme, is a free service share register should be sent by email to for shareholders wishing to give shares to charitable causes. [email protected] or by letter to It is particularly useful for those shareholders who may wish to øáÞÂèæéÚçòÒÞÜëÞøÚëòÚøøáÞëÞàâìøÞëÞÝèßĚÜÞ dispose of a small quantity of shares where the market value makes it uneconomic to sell on a commission basis. Further ÑÞàâìøÞëÞÝÎßĚÜÞÚçÝÆëèùéÇÞÚÝÎßĚÜÞ information can be obtained from ShareGift’s website at www.sharegift.org; telephone +44 (0)20 7930 3737 or by Vesuvius plc emailing [email protected]. 165 Fleet Street London EC4A 2AE Tel +44 (0)20 7822 0000 Dividend Reinvestment Plan Fax +44 (0)20 7822 0100 Equiniti offers a dividend reinvestment plan, through which Registered in England and Wales No. 8217766 shareholders can use any cash dividends declared to buy additional shares in Vesuvius. Further details, including how LEI: 213800ORZ521W585SY02 to sign up, and the terms and conditions of the plan, are Vesuvius Website available from Equiniti by calling the Share Dividend Helpline on 0371 384 2268 (or +44 121 415 7173 if calling Shareholder and other information about the Company, from outside the UK). including details of the current and historical share price, can be accessed on the Vesuvius website www.vesuvius.com. ÎïÞëìÞÚìÏÚòæÞçøÒÞëïâÜÞ ÒáÚëÞïâÞðÚçÝÄåÞÜøëèçâÜÂèææùçâÜÚøâèç Equiniti provides a dividend payment service in over 90 countries that automatically converts payments into local Equiniti’s website www.shareview.co.uk enables shareholders currency and pays the funds into a shareholder’s bank account. to access details of their shareholdings online. The website Further details, including an application form and the terms and provides answers to frequently asked questions and information conditions of the service, are available at www.shareview.co.uk useful for the management of investments. To access online or from Equiniti by calling +44 (0)121 415 7047 or writing to information on your shareholding, you will require your Equiniti, Aspect House, Spencer Road, Lancing, West Sussex shareholder reference number, which can be found at the BN99 6DA, United Kingdom (please quote Overseas Payment øèéèßòèùëìáÚëÞÜÞëøâĚÜÚøÞ Service, the Company’s name and your shareholder reference

Shareholders can register to receive shareholder number). Financial Statements communications electronically, including the Company’s Annual Report and Accounts, rather than in paper form, using ÅâçÚçÜâÚåÂÚåÞçÝÚë Shareview. The registration process requires shareholders to 2018 Annual General Meeting 10 May 2018 input their shareholder reference number (which can be found ÚøøáÞøèéèßÕÞìùïâùìċìáÚëÞÜÞëøâĚÜÚøÞìœÈçèëÝÞëøèëÞÜÞâïÞ Announcement of 2018 half-year results 26 July 2018 shareholder communications in electronic form, shareholders should select ‘email’ as their mailing preference. Once registered, shareholders will receive an email notifying them each time a shareholder communication has been published on the Vesuvius website. Vesuvius plc 190 Annual Report and Accounts 2017

Shareholder Information continued Glossary

Analysis of ordinary shareholders 5S Five Steps to improve housekeeping and therefore GHG Greenhouse gas

Investor type Shareholdings ðèëäéåÚÜÞìÚßÞøòÚçÝÞßĚÜâÞçÜòìÞéÚëÚøÞìèëø Group ÕÞìùïâùìéåÜÚçÝâøììùÛìâÝâÚëòÜèæéÚçâÞì shine, standardise and sustain Institutional IAS International Accounting Standard As at 31 December 2017 Private and other Total 1–1,000 1,001– 50,000 50,001– 500,000 500,001+ 8D Eight Disciplines: an eight-step methodology IFRS International Financial Reporting Standards Number of holders 2,566 600 3,166 2,468 498 132 68 to resolve customer, supplier and internal Percentage of holders 81.05% 18.95% 100% 77.95% 15.73% 4.17% 2.15% quality issues KPI Key Performance Indicator Percentage of shares held 0.92% 99.08% 100% 0.13% 1.61% 8.26% 90.00% AGM Annual General Meeting LTI Lost time injury CIS Commonwealth of Independent States LTIFR Lost time injury frequency rate, a KPI which Share Fraud – Spot the Warning Signs Reporting a Scam (Russian Commonwealth) calculates the number of LTIs per million hours worked Investment scams are designed to look like genuine investments. If you suspect that you have been approached by fraudsters CO2 Carbon dioxide please tell the FCA by contacting them on 0800 111 6768 (or Median The middle number in a sorted list of numbers Have you been… CO2e Carbon dioxide equivalent +44 20 7066 1000 from outside the UK) or by using the share NAFTA The area to which the North American Free Company ÕÞìùïâùìéåÜ > Contacted out of the blue fraud reporting form at www.fca.org.uk/scams, where you Trade Agreement applies ÜÚçĚçÝèùøæèëÞÚÛèùøâçïÞìøæÞçøìÜÚæì DSBP Deferred Share Bonus Plan > Promised tempting returns and told the investment is safe OEMs Original Equipment Manufacturers DTR The Disclosure and Transparency Rules of the If you have lost money to investment fraud, you should Ordinary An ordinary share of 10 pence in the capital of > Called repeatedly UK Financial Conduct Authority report it to Action Fraud on 0300 123 2040 or online at share the Company > Told the offer is only available for a limited time? www.actionfraud.police.uk. EBITDA ÓëÚÝâçàéëèĚøÛÞßèëÞÝÞéëÞÜâÚøâèçÚçÝ R&D Research and development amortisation of non-acquired intangible charges If so, you might have been contacted by fraudsters. Find out more at www.fca.org.uk/scamsmart. TSR Total shareholder return EMEA Europe, Middle East and Africa TurboS ÓáÞÕÞìùïâùììÚßÞøòøëÚâçâçàéëèàëÚææÞ How to Avoid Share Fraud EPS Earnings per share UK GAAP UK Generally Accepted Accounting Principles EU European Union 1. Reject cold calls VSP ÕÞìùïâùìÒáÚëÞÏåÚç If you have been contacted by telephone, email or post, or via FRC Financial Reporting Council a third party or at a seminar or exhibition, with an offer to buy FRS Financial Reporting Standards or sell shares, the chances are that it’s a high-risk investment FTSE 250 Equity index whose constituents are the or a scam. You should treat any offer with extreme caution. 101st to 350th largest companies listed on the The safest thing to do is to ignore the approach and if you London Stock Exchange in terms of their were contacted by phone to hang up on the call. market capitalisation

ÂáÞÜäâßøáÞĚëæâìÚùøáèëâìÞÝÛòøáÞÅâçÚçÜâÚåÂèçÝùÜø FX Foreign exchange Authority (FCA) and recorded on the Financial Services register at www.fca.org.uk/register ÓáÞÅâçÚçÜâÚåÒÞëïâÜÞìÑÞàâìøÞëâìÚéùÛåâÜëÞÜèëÝèßÚååøáÞĚëæì ÚçÝâçÝâïâÝùÚåìâçøáÞĚçÚçÜâÚåìÞëïâÜÞìâçÝùìøëòøáÚøÚëÞèë have been, regulated by the Prudential Regulation Authority and/or the FCA.

3. Get impartial advice ÓáâçäÚÛèùøàÞøøâçàâæéÚëøâÚåĚçÚçÜâÚåÚÝïâÜÞÛÞßèëÞòèùáÚçÝ over any money. Seek advice from someone unconnected to the ĚëæøáÚøáÚìÚééëèÚÜáÞÝòèù

Designed and produced by Friend. www.friendstudio.com Print: Pureprint Group This report has been printed on Claro Bulk which is FSC®ÜÞëøâĚÞÝÚçÝæÚÝÞßëèæYÄåÞæÞçøÚåÂáåèëâçÞ ÅëÞÞ›ÄÂŜéùåéÓáÞæâååÚçÝøáÞéëâçøÞëÚëÞÛèøáÜÞëøâĚÞÝ to ISO 14001 environmental management system and registered to EMAS the eco management Audit Scheme. The report was printed using vegetable based inks by a CarbonNeutral® printer. Vesuvius plc 165 Fleet Street London EC4A 2AE T +44 (0)20 7822 0000 www.vesuvius.com