LUXFER HOLDINGS PLC (LXFR) FY 2021 MD&A

Item 7.        Management's Discussion and Analysis of Financial Condition and Results of Operations

Information regarding forward-looking statements

This Annual Report on Form 10-K contains certain statements, statistics and projections that are, or may be, forward-looking. These forward-looking statements are subject to known and unknown risks, uncertainties, assumptions and other factors that could cause our actual results of operations, financial condition, liquidity, performance, prospects, opportunities, achievements or industry results, as well as those of the markets we serve or intend to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The accuracy and completeness of all such statements, including, without limitation, statements regarding our future financial position, strategy, plans and objectives for the management of future operations, is not warranted or guaranteed. These statements typically contain words such as "believes," "intends," "expects," "anticipates," "estimates," "may," "will," "should" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. We undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Although we believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, factors identified in "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," or elsewhere in this Annual Report, as well as:

•general economic conditions, or conditions affecting demand for the services offered by us in the markets in which we operate, both domestically and internationally, being less favorable than expected;

•worldwide economic and business conditions and conditions in the industries in which we operate;

•ongoing impact of COVID-19 and future pandemics;

•fluctuations in the cost of raw materials and utilities;

•availability of essential inputs, including but not limited to, raw materials, transport, energy and labor;

•currency fluctuations and other financial risks;

•our ability to protect our intellectual property;

•the amount of indebtedness we have incurred and may incur, and the obligations to service such indebtedness and to comply with the covenants contained therein;

•relationships with our customers and suppliers;

•increased competition from other companies in the industries in which we operate;

•changing technology;

•our ability to execute and integrate new acquisitions;

•claims for personal injury, death or property damage arising from the use of products produced by us;

•the occurrence of accidents or other interruptions to our production processes;

•changes in our business strategy or development plans, and our expected level of capital expenditure;

•our ability to attract and retain qualified personnel;

•restrictions on the ability of Luxfer Holdings PLC to receive dividends or loans from certain of its subsidiaries;

•regulatory, environmental, legislative and judicial developments; and

•our intention to pay dividends.

Please read the sections "Business," "Risk factors," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," of this Annual Report on Form 10-K for a more complete discussion of the factors that could affect our performance and the industries in which we operate, as well as those discussed in other documents we file or furnish with the SEC.

27

About Luxfer

Luxfer Holdings PLC ("Luxfer," "the Company," "we," "our") is a global industrial company innovating niche applications in materials engineering. Luxfer focuses on value creation by using its broad array of technical know-how and proprietary technologies. Luxfer's high-performance materials, components and high-pressure gas containment devices are used in defense, first response and healthcare, transportation and general industrial applications.

Key trends and uncertainties regarding our existing business

Update on impact of COVID-19 on operations

Demand from most end-markets we serve has improved throughout 2021 following the adverse impact of COVID-19 on prior year volumes. Current year fourth quarter like-for-like sales returned to positive growth versus the pre-pandemic 2019 level for the first time, but full year 2021 sales remained around 7% lower than 2019 given weakness in the first half of 2021. In addition, COVID-19 related supply chain disruption constrained our ability to fully convert robust demand into sales. Sharp recovery in demand combined with supply chain challenges has resulted in some adverse business impacts, including increased material cost inflation on key inputs (including magnesium, aluminum and carbon fiber), labor availability issues and energy and transport cost increases. Currently, our expectation is that the impact of material and energy cost inflation and labor and transport constraints will continue into 2022, although it is our intention to pass through inflation to our customers.

Luxfer’s top priority during this global pandemic has been the health and well-being of our employees, customers, shareholders, and the communities in which we operate. The Company continues to monitor the COVID-19 situation closely, including subsequent constraints on supply, while simultaneously executing business continuity plans. These business continuity plans include, but are not limited to: (i) retooling operations to maintain social distance and maximize employee safety; (ii) increasing resources to manage supply constraints and recruit employees in order to satisfy demand; (iii) expanding flexible work arrangements and policies, where practical, to maximize employee safety; and (iv) providing regular updates to our shareholders, employees, customers, and suppliers in a transparent and timely manner.

Operating objectives and trends

In 2022, we expect the following operating objectives and trends to impact our business:

•Organic growth initiatives with particular focus on revenue from new products;

•Actions to ensure continuity of supply of critical materials and services while safeguarding margins;

•Proactive response on health and well-being of employees post pandemic, including continuous improvement on safety;

•Targeted improvements in ESG standing through investment in new projects;

•Continued focus on recruiting and developing talent and driving a high-performance culture; and

•Continued focus on operating cash generation with lower restructuring activity and maintaining strong working capital performance.

28

CONSOLIDATED RESULTS OF OPERATIONS

The consolidated results of operations from continuing operations of Luxfer were as follows:

29

Net sales

The 15.2% increase in consolidated net sales across most major product groups in 2021 from 2020 was primarily due to the acquisition of Structural Composite Industries LLP ("SCI"), as well as the recovery in volumes adversely impacted by COVID-19 in the prior year. The most significant factors were:

•An additional contribution to net sales in Luxfer Gas Cylinders of $24.9 million due to the acquisition of SCI at the end of the first quarter, which primarily impacted sales of cylinders used in aerospace and alternative fuels applications;

•Increased sales of SCBA cylinders used by first responders and of cylinders used for gas calibration and other industrial applications;

•Increased sales in Luxfer MEL Technologies of zirconium automotive catalysis products;

•Increased sales of military powders used in countermeasure flares;

•Increased sales of Luxfer Graphic Arts magnesium photoengraving plates; and

•Favorable foreign exchange variances of $10.3 million or 3.2%.

These increases were partially offset by decreased sales of heater meals and chemical response kits in our Luxfer Magtech business.

The 13.0% decrease in consolidated net sales in 2020 from 2019 was heavily influenced by the global economic downturn resulting from the COVID-19 pandemic across all end-markets, with the adverse impact most pronounced across the industrial and transportation end-markets, including:

•Lower sales of photoengraving plates;

•Lower sales of zirconium-based chemical products used in industrial catalysis;

•Lower sales of SCBA cylinders used by first responders; and

•$7.6 million revenue decline as a result of the divestiture of Elektron's magnesium Czech recycling business in 2019.

These decreases were partially offset by:

•Continued growth of alternative fuel (AF) systems despite COVID-19 headwinds affecting transportation end-markets; and

•Increased revenues from Luxfer Magtech chemical kit products.

Gross profit

The 0.8 percentage point increase in gross profit as a percentage of sales in 2021 from 2020 was primarily the result of production efficiency linked to increased volumes as we recovered from the prior year impact of COVID-19. This was partially offset by the impact of material cost inflation not fully covered by price increases primarily in the fourth quarter.

The 2.9 percentage point decrease in gross profit as a percentage of sales in 2020 from 2019 was primarily the result of adverse sales mix and inefficiency from the impact of COVID-19.

These adverse factors were partially offset by the impact of productivity improvements in Luxfer Gas Cylinders Europe, following the closure of the French operation in 2019 and transfer of production to the U.K. and U.S.A.

30

Selling, general and administrative expenses ("SG&A")

SG&A costs as a percentage of sales have increased marginally by 0.3 percentage points in 2021 from 2020.

SG&A costs as a percentage of sales decreased by 1.0 percentage points in 2020 from 2019. The $9.9 million or 19.9%, decline in costs was primarily the result of continued cost savings derived from our transformation plan, as well as specific cost reduction actions taken in response to the COVID-19 pandemic.

Research and development costs

Research and development costs as a percentage of sales were flat in 2021 when compared to 2020, with actual expenditure increasing by 18.2% as activity levels picked up as we recovered from the COVID-19 economic downturn.

Research and development costs as a percentage of sales reduced by 0.5% in 2020 from 2019, largely as a result of COVID-19 caused project delays.

Restructuring charges

The $6.2 million restructuring charges in 2021 includes:

•A further $5.0 million in relation to the closure of Luxfer Gas Cylinders France;

•$0.9 million of one-time employee termination costs in the Elektron division, largely in relation to the divestiture of our small Luxfer Magtech production facility in Ontario, Canada; and

•$0.3 million of miscellaneous restructuring project costs in the Gas Cylinders division.

The $8.9 million restructuring charges in 2020 were the result of:

•A further $7.5 million in relation to the closure of Luxfer Gas Cylinders France; and

•$1.4 million in one-time severance costs as a result of actions taken in response to the COVID-19 pandemic.

Acquisition and disposals costs

Acquisition and disposals costs of $1.5 million in 2021 primarily relate to the acquisition of SCI.

Acquisition and disposals costs which were net nil in 2020 related to $0.4 million costs incurred in relation to merger and acquisition ("M&A") exploration activities offset by deferred consideration adjustments and profit on previously written-down inventory. In July 2020, we sold our 51% investment in Luxfer Uttam India Private Limited to the joint venture ("JV") partner. Allowing for legal costs, we generated a profit on disposal of less than $0.1 million.

Other charges

The $1.1 million other charges incurred in 2021 relates to the settlement of a class action lawsuit in the Gas Cylinders segment from an alleged historic violation of the California Labor Code, concerning a Human Resources administration matter.

The $0.4 million other charges incurred in 2020, is the result of further costs incurred in relation to the remediation of the legacy environmental issue at our Elektron Manchester, UK site,

Net interest expense

Net interest expense of $3.1 million in 2021 decreased from $5.0 million in 2020 largely due to the $25 million early repayment in December 2020 of the Loan Notes due in 2021.

Net interest expense of $5.0 million in 2020 increased from $4.4 million in 2019 largely as a result of an additional finance charge following the $25 million voluntary early repayment of 3.67% Loan notes due in 2021, at the end of the fourth quarter.

31

Defined benefit pension credit

The defined benefit pension credit of $2.3 million has decreased by $2.0 million in 2021 from 2020. This was primarily due to the combined effect on the U.K. plan of lower projected asset returns and a higher post-2030 inflation projection in the U.K., partially offset by a fall in the discount rate.

The $3.0 million increase in defined benefit pension credit in 2020 from 2019 was primarily due to the combined effect on the U.K. plan of a reduction in the discount rate and lower inflation, partially offset by lower projected asset returns.

Provision for income taxes

The 9.5 percentage point decrease in the effective tax rate in 2021 from 2020 was primarily due to the impact of the U.K. tax rate change enacted in the year (from 19% to 25%) which increased the valuation of the U.K. related net deferred tax asset (largely related to the U.K. defined benefit pension plan) as reported in the second quarter. In addition, a deferred tax credit of $2.6 million has been recognized in the income statement in respect of future tax relief available as a result of a special one-off pension contribution made to the U.K. plan in December 2021. The adjusted effective tax rate of 20.6% was marginally higher than the prior year rate of 20.2%, largely due to increased profits in higher tax jurisdictions, primarily the U.S.

The 23.9 percentage point increase in the effective tax rate in 2020 from 2019 was primarily due to significantly lower non-deductible expenses of a non-recurring nature in the current year.

32

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO GAAP MEASURES

The following table of non-GAAP summary financial data presents a reconciliation of net income from continuing operations to adjusted net income for the periods presented, being the most comparable GAAP measure. Management believes that adjusted net income, adjusted earnings per share, adjusted EBITA and adjusted EBITDA are key performance indicators (KPIs) used by the investment community and that such presentation will enhance an investor’s understanding of the Company's operational results. In addition, Luxfer's CEO and other senior management use these KPIs, among others, to evaluate business performance. However, investors should not consider adjusted net income and adjusted earnings per share in isolation as an alternative to net income and earnings per share when evaluating Luxfer's operating performance or measuring Luxfer's profitability.

(1) For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding during the financial year has been adjusted for the dilutive effects of all potential ordinary shares and share options granted to employees.

33

The following table presents a reconciliation for the adjusted effective tax rate, which management believes is a KPI used by the investment community and that such presentation will enhance an investor's understanding of the Company's operational results.

SEGMENT RESULTS OF OPERATIONS

The summary that follows provides a discussion of the results of operations of each of our two reportable segments (Gas Cylinders and Elektron). Both segments comprise various product offerings that serve multiple end-markets.

Adjusted EBITDA, which is our segment income metric, represents operating income adjusted for restructuring charges, impairment credit, other charges, acquisition and disposals cost, depreciation and amortization,; share based compensation charges, and unwind of discount on deferred consideration. A reconciliation to net income and taxes can be found in ITEM 8, Note 17.

GAS CYLINDERS

The results of operations from the Gas Cylinders segment are for continuing activities only.

The net sales and adjusted EBITDA for Gas Cylinders were as follows:

Net sales

The 25.7% increase in Gas Cylinders sales in 2021 from 2020 was primarily the result of the recovery of our markets following COVID-19 related disruption in the prior year, as well as the acquisition of SCI at the end of the first quarter of the current year, which generated $24.9 million of additional revenues. Revenues increased across all significant product lines except for medical oxygen cylinders, sales of which had held up relatively well in the prior year.

The 7.6% decrease in Gas Cylinders sales in 2020 from 2019 was primarily the result of COVID-19 related disruption marked by temporary customer shutdowns, especially reduced sales of SCBA composite cylinders used by first responders. This was partially offset by continued growth in alternative fuel cylinder sales.

34

Adjusted EBITDA

The 2.3 percentage point decrease in adjusted EBITDA for Gas Cylinders as a percentage of net sales in 2021 from 2020 was primarily the result of losses suffered by the newly acquired SCI business from the end of the first quarter, as well as material cost inflation in excess of price increases primarily in the fourth quarter. This was partially offset by productivity improvements as volumes recovered from the Covid-19 affected prior year.

The 0.5 percentage point increase in adjusted EBITDA for Gas Cylinders as a percentage of net sales in 2020 from 2019 was primarily the result of productivity improvements and cost savings following the integration of the Luxfer Gas Cylinders France operation into other sites. This was partially offset by adverse sales mix.

ELEKTRON

The net sales and adjusted EBITDA for Elektron were as follows:

Net sales

The 7.1% increase in Elektron sales in 2021 from 2020 was primarily the result of the recovery from COVID-19 related disruption affecting the prior year, especially:

•Increased sales of zirconium-based industrial catalysts;

•Increased sales of magnesium photo-engraving plates;

•Increased sales of military powders used in countermeasure flares; and

•Increased sales of wrought magnesium alloys, especially those used in our transportation end markets.

This was partially offset by decreased revenues from Luxfer Magtech chemical detection kits and from heater meals.

The 16.8% decrease in Elektron sales in 2020 from 2019 was primarily the result of COVID-19 related disruption especially to the industrial and transportation end-markets, including:

•Decreased sales of zirconium-based industrial catalysts;

•Lower sales of photo-engraving plates and military powders used in countermeasure flares;

•Lower sales of magnesium aerospace alloys; and

•$7.6 million revenue decline as a result of the divestiture of Elektron's magnesium Czech recycling business in 2019.

This was partially offset by increased revenues from Luxfer Magtech chemical detection kits.

Adjusted EBITDA

The 3.0 percentage point increase in adjusted EBITDA for Elektron as a percentage of net sales in 2021 from 2020 was primarily the result of productivity improvements as volumes recovered from the Covid-19 affected prior year, as well as favorable product sales mix.

The 2.6 percentage point decrease in adjusted EBITDA for Elektron as a percentage of net sales in 2020 from 2019 was primarily the result of the impact of Covid-19 related reduction in volumes more than offsetting associated cost saving measures. This was further impacted by adverse product sales mix.

35

LIQUIDITY AND CAPITAL RESOURCES

Our liquidity requirements arise primarily from obligations under our indebtedness, capital expenditures, acquisitions, the funding of working capital and the funding of hedging facilities to manage foreign exchange and commodity purchase price risks. We meet these requirements primarily through cash flows from operating activities, cash deposits and borrowings under the Revolving Credit Facility and accompanying ancillary hedging facilities and the Loan Notes due 2023 and 2026. Our principal liquidity needs are:

•funding acquisitions;

•capital expenditure requirements;

•payment of shareholder dividends;

•servicing interest on the Loan Notes, which is payable at each quarter end, in addition to interest and / or commitment fees on the Senior Facilities Agreement;

•working capital requirements, particularly in the short term as we aim to achieve organic sales growth; and

•hedging facilities used to manage our foreign exchange and aluminum purchase price risks.

We believe that, in the long term, cash generated from our operations will be adequate to meet our anticipated requirements for working capital, capital expenditures and interest payments on our indebtedness. In the short term, we believe we have sufficient credit facilities to cover any variation in our cash flow generation. However, any major repayments of indebtedness will be dependent on our ability to raise alternative financing or to realize substantial returns from operational sales. Also, our ability to expand operations through sales development and capital expenditures could be constrained by the availability of liquidity, which, in turn, could impact the profitability of our operations.

We have been in compliance with the covenants under the Loan Notes and the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2021.

In October 2021, the Company completed a refinancing of its existing Revolving Credit Facility, extending its tenure to 2026, while providing increased flexibility to incur additional indebtedness outside of this agreement if required and reducing the covenant burden.

Luxfer conducts all of its operations through its subsidiaries, joint ventures and affiliates. Accordingly, Luxfer's main cash source is dividends from its subsidiaries. The ability of each subsidiary to make distributions depends on the funds that a subsidiary receives from its operations in excess of the funds necessary for its operations, obligations or other business plans. We have not historically experienced any material impediment to these distributions, and we do not expect any local legal or regulatory regimes to have any impact on our ability to meet our liquidity requirements in the future. In addition, since our subsidiaries are wholly-owned, our claims will generally rank junior to all other obligations of the subsidiaries. If our operating subsidiaries are unable to make distributions, our growth may slow, unless we are able to obtain additional debt or equity financing. In the event of a subsidiary's liquidation, there may not be assets sufficient for us to recoup our investment in the subsidiary.

Our ability to maintain or increase the generation of cash from our operations in the future will depend significantly on the competitiveness of and demand for our products, including our success in launching new products. Achieving such success is a key objective of our business strategy. Due to commercial, competitive and external economic factors, however, we cannot guarantee that we will generate sufficient cash flows from operations or that future working capital will be available in an amount sufficient to enable us to service our indebtedness or make necessary capital expenditures.

36

Cash Flows from Continuing Operations

Operating activities

Cash provided by operating activities was $26.0 million in 2021, which includes approximately $4.0 million of cash spent on restructuring activities. It was primarily related to net income from operating activities, net of the following non-cash items: (i) depreciation and amortization; (ii) share based compensation charges; (iii) pension adjustments and (iv) net changes to assets and liabilities. The Company also made an additional, special one-off deficit reduction payment in the U.K. for $12.7 million.

Cash provided by operating activities was $49.3 million in 2020, which includes approximately $7.0 million of cash spent on restructuring activities. It was primarily related to net income from operating activities, net of the following non-cash items: (i) depreciation and amortization; (ii) asset impairment charges, (iii) pension adjustments and (iv) net changes to assets and liabilities.

Investing activities

Net cash used for investing activities was $5.0 million in 2021, compared to net cash used for investing activities of $6.5 million in 2020. The following investing activities impacted our cash flow:

Capital expenditures

Capital expenditures in 2021 was $9.1 million compared to $8.0 million in 2020, as we delayed some projects in the prior year in response to COVID-19, and expenditure continued to be delayed in the first half of 2021. We anticipate capital expenditures for 2022 to be around $10 million.

Proceeds from sale of business

In March 2021, the Company sold its U.S. aluminum gas cylinder business for net cash proceeds of $20.2 million. In September 2021, the Company sold its Superform U.K. business for net consideration of $4.0 million, of which $3.0 million was received in 2021 and $1.0 million deferred until September 2022.

In July 2020, the Company sold its 51% investment in Luxfer Uttam India Private Limited for net cash proceeds of $1.5 million. In September 2021, the Company received deferred consideration of $0.3 million for this sale.

In June 2019, the Company sold its Czech recycling business for net cash proceeds of $4.4 million.

Acquisitions, net of cash acquired

In March 2021, the Company completed the acquisition of the SCI business of Worthington Industries, Inc., based in Pomona, California, for $19.3 million cash consideration.

Financing activities

In 2021, net cash used for financing activities was $16.1 million, (2020: $52.5 million). We made net drawdowns on our borrowing facilities of $6.4 million (2020: net repayments of $38.2 million) and dividend payments of $13.6 million (2020: $13.6 million), equating to $0.50 per ordinary share. In 2021, the Company initiated a share buyback programme and has spent $6.4 million repurchasing approximately 300,000 shares.

Loan Notes 2023 and 2026

The Note Purchase Agreement contains customary covenants and events of default, in each case with customary and appropriate grace periods and thresholds. In addition, the Note Purchase Agreement requires us to maintain compliance with a minimum interest coverage ratio and a leverage ratio. The interest coverage ratio measures our EBITDA (as defined in the Note Purchase Agreement) to Net Finance Charges (as defined in the Note Purchase Agreement). We are required to maintain an interest coverage ratio of 4.0:1. The leverage ratio measures our Total Net Debt (as defined in the Note Purchase Agreement) to Adjusted Acquisition EBITDA (as defined in the Note Purchase Agreement). We are required to maintain a leverage ratio of no more than 3.0:1. We have been in compliance with the covenants under the Note Purchase Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2021.

The Loan Notes due 2023 and 2026 and the Note Purchase Agreement are governed by the law of the State of New York.

The Loan Notes due 2023 and 2026 are denominated in U.S. dollars, which creates a natural partial offset between the dollar-denominated net assets and earnings of our U.S. operations and the dollar-denominated debt and related interest expense of the notes. We have included the Note Purchase Agreement and a form of the Loan Notes due 2023 and 2026 as exhibits to this Annual Report and refer you to the exhibits for more information on the Note Purchase Agreement and the Loan Notes due 2023 and 2026.

37

Loan Notes due 2021 and Shelf Facility

The Loan Notes due 2021 were due to mature on September 15, 2021. However, we voluntarily chose to repay the notes early on December 31, 2020, largely using surplus cash generated from operations, plus a small drawing on the Senior Facilities Agreement. In addition to the repayment of the $25 million principal, we incurred an early repayment charge of $0.5 million.

The Note Purchase and Private Shelf Agreement contains the same customary covenants and events of default as for the Note Purchase Agreement. The Note Purchase and Private Shelf Agreement also requires us to maintain compliance with the same interest and leverage ratios as for the Note Purchase Agreement. The Shelf Facility was amended in October 2021, with no material amendments to the agreement.

We have been in compliance with the covenants under the Note Purchase and Private Shelf Agreement throughout all of the quarterly measurement dates from and including September 30, 2014, to the eventual repayment on December 31, 2020.

The Loan Notes due 2021, and Shelf Facility, and the Note Purchase and Private Shelf Agreement are all governed by the law of the State of New York.

Senior Facilities Agreement

A new Senior Facilities Agreement was signed in October 2021, for more information see ITEM 8 Note 11.

Structure.    The current Senior Facilities Agreement provides $100 million of committed debt facilities in the form of a multi-currency (GBP sterling, U.S. dollars or euros) Revolving Credit Facility and an additional $50 million of uncommitted facilities through an accordion clause. The facilities mature in October 2026. As of December 31, 2021, we had drawn down $10.8 million under the Revolving Credit Facility (December 31, 2020: $4.1 million).

Availability.    The facility is used for loans and overdrafts. Amounts unutilized under the Revolving Credit Facility (or, if the case, under the revolving portion of the accordion) are allocated to ancillary facilities available under the Senior Facilities Agreement in connection with overdraft facilities, bilateral loan facilities and letter of credit facilities. As of December 31, 2021, we had drawn down $nil under the ancillary facilities (December 31, 2020: $nil). We may use amounts drawn under the Revolving Credit Facility for our general corporate purposes and certain capital expenditures, as well as for the financing of permitted acquisitions and reorganizations. As of December 31, 2021, $89.2 million (net of $10.8 million drawn down) was available under the Revolving Credit Facility. The last month in which we may draw funds from the Revolving Credit Facility is September 2026.

The Company also had three separate (uncommitted) bonding facilities for bank guarantees: two denominated in GBP sterling totalling £0.6 million (2021: $0.9 million) and one denominated in USD of $1.5 million. Of that denominated in GBP, £0.1 million ($0.2 million) was utilized at December 31, 2021. Of that denominated in USD, $0.9 million was utilized at December 31, 2021.

Interest rates and fees.    Borrowings under the facility bear an interest rate equal to an applicable margin plus either EURIBOR, in the case of amounts drawn in euros, or SONIA (Sterling Overnight Index Average), in the case of amounts drawn in GBP sterling or U.S. dollars.

The tables below sets out the range of ratios and the related margin percentage currently in effect.

As of December 31, 2021, we had drawn down $10.8 million under the Revolving Credit Facility (December 31, 2020: $4.1 million). A commitment fee is levied each quarter against any unutilized element of the Revolving Credit Facility, excluding overdraft or ancillary facilities.

In the event of a sale of all or substantially all of our business and / or assets, or if any person or group of persons acting in concert gains direct or indirect control (as defined in the Senior Facilities Agreement) of Luxfer Holdings PLC, we will be required to immediately repay all outstanding amounts under the Revolving Credit Facility (and, if the case, the accordion) and the ancillary facilities under the Senior Facilities Agreement.

38

In addition, the Senior Facilities Agreement requires us to maintain compliance with an interest coverage ratio and a leverage ratio. The interest coverage ratio measures our EBITDA (as defined in the Senior Facilities Agreement) to Net Finance Charges (as defined in the Senior Facilities Agreement). We are required to maintain a minimum interest coverage ratio of 4.0:1. The leverage ratio measures our Total Net Debt (as defined in the Senior Facilities Agreement) to the Relevant Period Adjusted Acquisition EBITDA (as defined in the Senior Facilities Agreement). We are required to maintain a leverage ratio of no more than 3.0:1.

We have been in compliance with the covenants under the Senior Facilities Agreement throughout all of the quarterly measurement dates from and including September 30, 2011, to December 31, 2021.

The Senior Facilities Agreement is governed by English law.

For more information see ITEM 8, Note 11.

Dividends

We paid dividends in 2021 of $13.6 million (2020: $13.6 million), or $0.50 per ordinary share.

Any payment of dividends is also subject to the provisions of the U.K. Companies Act, according to which dividends may only be paid out of profits available for distribution determined by reference to financial statements prepared in accordance with the Companies Act and the International Accounting Standards Board, which differ in some respects from U.S. GAAP. In the event that dividends are paid in the future, holders of the ordinary shares will be entitled to receive payments in U.S. dollars in respect of dividends on the underlying ordinary shares in accordance with the deposit agreement. Furthermore, because we are a holding company, any dividend payments would depend on cash flows from our subsidiaries.

Authorized shares

Our authorized share capital consists of 40.0 million ordinary shares with a par value of £0.50 per share.

Contractual obligations

The following summarizes our significant contractual obligations that impact our liquidity:

Off-balance sheet measures

At December 31, 2021, we had no off-balance sheet arrangements other than the three bonding facilities as described above.

COMMITMENTS AND CONTINGENCIES

Capital commitments

At December 31, 2021, the Company had capital expenditure commitments of $1.5 million (2020: $1.1 million and 2019: $1.0 million) for the purchase of new plant and equipment.

Committed banking facilities

The Company refinanced in October 2021, see Note 11 for details of the refinance.

At December 31, 2021 the Company had committed banking facilities of $100.0 million with an additional $50.0 million of uncommitted facilities through an accordion provision. Of these committed facilities, $10.8 million was drawn at December 31, 2021.

At December 31, 2020, the Company had committed banking facilities of $150.0 million with an additional $50.0 million of uncommitted facilities through an accordion provision. Of the committed facilities, $4.1 million was drawn at December 31, 2020.

39

Contingencies

During February 2014, a cylinder was sold to a long-term customer and ruptured at one of their gas facilities. As a result of this rupture, three people were noted to have injuries, such as loss of hearing. There was no major damage to assets of the customer. A claim has been launched by the three people who were injured in the incident. We have reviewed our quality control checks from around the time which the cylinder was produced and no instances of failures have been noted. It has also been noted by the investigator that the customer has poor quality and safety checks. In November 2021, during the final hearing, the Court found the representative of Luxfer Gas Cylinders Limited, not guilty and thus the Company was found not liable. The Civil case is still ongoing but as a result, of the above, we do not believe that we are liable for the incident, and therefore, do not currently expect this case to have a material impact on the Company's financial position or results of operations.

In November 2018, an alleged explosion occurred at a third-party waste disposal and treatment site in Boise, Idaho, reportedly causing property damage, personal injury, and one fatality. We had contracted with a service company for removal and disposal of certain waste resulting from the magnesium powder manufacturing operations at the Reade facility in Manchester, New Jersey. We believe this service company, in turn, apparently contracted with the third-party disposal company, at whose facility the explosion occurred, for treatment and disposal of the waste. In November 2020, we were named as a defendant in three lawsuits in relation to the incident – one by the third-party disposal company, one by the estate of the decedent, and one by an injured employee of the third-party disposal company. At present, we have received insufficient information on the cause of the explosion. We do not believe that we are liable for the incident, have asserted such, and, therefore, do not currently expect this matter to have a material impact on the Company’s financial position or results of operations.

NEW ACCOUNTING STANDARDS

See ITEM 8, Note 1 of the notes to the Consolidated Financial Statements, included in this Form 10-K, for information pertaining to recently adopted accounting standards or accounting standards to be adopted in the future.

CRITICAL ACCOUNTING ESTIMATES

We have adopted various accounting policies to prepare the consolidated financial statements in accordance with GAAP. Our significant accounting policies are more fully described in ITEM 8, Note 1 of the Notes to Consolidated Financial Statements. Certain of our accounting policies require the application of significant judgment by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty. These judgments are based on our historical experience, terms of existing contracts, our observance of trends in the industry and information available from other outside sources, as appropriate. We consider an accounting estimate to be critical if:

•it requires us to make assumptions about matters that were uncertain at the time we were making the estimate; and

•changes in the estimate or different estimates that we could have selected would have had a material impact on our financial condition or results of operations.

Our critical accounting estimates include the following:

Impairment of goodwill

Goodwill

Goodwill represents the excess of the cost of acquired businesses over the net of the fair value of identifiable tangible net assets and identifiable intangible assets purchased and liabilities assumed.

Goodwill is tested at least annually for impairment and is tested for impairment more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested for impairment by either performing a qualitative evaluation or a quantitative test. The qualitative evaluation is an assessment of factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. We may elect not to perform the qualitative assessment for some or all reporting units and perform a quantitative impairment test. In 2021, management carried out its qualitative review, which showed no indicators of impairment. As a result, the Company concluded its review and was not required to perform a quantitative review.

We completed our qualitative goodwill impairment evaluation as of the last day of the third quarter of 2021, with each of our reporting units' fair value being substantially in excess of its carrying value.

40

Identifiable intangible assets

Our primary identifiable intangible assets include: (i) customer relationships and technology; and (ii) traded related assets. All our identifiable intangible assets have finite lives and are amortized over that period. Identifiable intangible assets that are subject to amortization are evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. No such events occurred during the year ended December 31, 2021.

Pension and other post-retirement plans

We sponsor U.S. and non-U.S. defined-benefit pension and other post-retirement plans. The amounts recognized in our consolidated financial statements related to our defined-benefit pension and other post-retirement plans are determined from actuarial valuations. Inherent in these valuations are assumptions, including: (i) discount rates; (ii) inflation rates; (iii) pension increases; and (iv) life expectancy. These assumptions are updated annually and are disclosed in ITEM 8, Note 14 to the Notes to Consolidated Financial Statements. Differences in actual experience or changes in assumptions may affect our pension and other post-retirement obligations and future expense.

We recognize changes in the fair value of plan assets and net actuarial gains or losses for pension and other post-retirement benefits annually in the fourth quarter each year ("mark-to-market adjustment") and, if applicable, in any quarter in which an interim remeasurement is triggered. Net actuarial gains and losses occur when the actual experience differs from any of the various assumptions used to value our pension and other post-retirement plans or when assumptions change as they may each year. The primary factors contributing to actuarial gains and losses each year are (i) changes in the discount rate used to value pension and other post-retirement benefit obligations as of the measurement date and (ii) differences between the expected and the actual return on plan assets. This accounting method also results in the potential for volatile and difficult to forecast mark-to-market adjustments. The remaining components of pension expense, including service and interest costs and the expected return on plan assets, are recorded on a quarterly basis as ongoing pension expense.

Discount rate

The discount rate used represents the annualized yield based on a cash flow matched methodology with reference to an AA corporate bond spot curve and having regard to the duration of the Plan’s liabilities. This yield produced a weighted-average discount rate for our U.K. plans of 1.90% in 2021, 1.40% in 2020 and 2.10% in 2019. The discount rate on our U.S. plans was 2.70% in 2021, 2.30% in 2020 and 3.10% in 2019. There are no known or anticipated changes in our discount rate assumption that will impact our pension expense in 2022.

To indicate the sensitivity of results to this assumption, a 0.1% per annum increase in the discount rate for our U.K. plans would reduce the value of the liabilities and therefore increase the pension surplus by approximately $5.4 million and increase the projected 2022 income statement credit by approximately $0.1 million. Similarly, a 0.1% per annum increase in the discount rate for our U.S. plans would reduce the value of the liabilities; and therefore the deficit, by approximately $1.0 million and decrease the projected 2022 income statement credit by approximately $0.1 million.

Inflation rate

In September 2019, the UK Statistics Authority announced plans to reform the RPI inflation index. On November 25, 2020, the government and UK Statistics Authority confirmed these plans to reform the RPI index to bring it into line with the CPIH index from 2030, with no compensation for the holders of index-linked gilts. Inflation measured by the CPIH is consistently significantly lower than that measured by RPI, and therefore, these plans imply a significant expected reduction in RPI inflation from 2030 onwards. As a result we have taken a stepped approach and used different inflation rates pre and post 2030.

To indicate the sensitivity of results to the CPI assumption, a 0.1% per annum decrease in all CPI-linked assumptions, (including pension increases) would reduce the value of the liabilities and therefore increase the pension surplus at December 31, 2021 by approximately $5.4 million and increase the projected 2022 income statement credit by approximately $0.3 million.

41

Pension increases

The pension increase assumptions have been set with reference to the corresponding CPI inflation assumption and take account of the caps and floors applicable to the various components of pension indexation.

Life expectancy

The life expectancies of male and female members aged 65 on 31 December 2021 are assumed to be 21.1 and 22.9 years, respectively, with the life expectancies of male and female members aged 65 on 31 December 2041 assumed to be 22.4 and 24.4 years, respectively.

To indicate the sensitivity of results to the life expectancy assumption, a one year increase in assumed life expectancy could increase the value of the liabilities and therefore decrease the pension surplus at December 31, 2021 by approximately $14.8 million and reduce the projected 2022 income statement credit by approximately $0.8 million.

Expected rate of return

Our expected rate of return on plan assets for our U.K. plans was 3.30% in 2021, 3.00% in 2020 and 4.10% in 2019. The expected rate of return on our U.S. plans was 2.50% in 2021, 5.00% in 2020 and 6.20% in 2019. The expected rate of return is designed to be a long-term assumption that may be subject to considerable year-to-year variance from actual returns. In developing the expected long-term rate of return, we considered our historical returns, with consideration given to forecast economic conditions, our asset allocations, input from external consultants and broader longer-term market indices.

See ITEM 8, Note 14 of the Notes to Consolidated Financial Statements for further information regarding pension and other post-retirement plans.

Loss contingencies

Accruals are recorded for various contingencies, including legal proceedings, self-insurance and other claims that arise in the normal course of business. The accruals are based on judgment, the probability of losses and, where applicable, the consideration of opinions of internal and/or external legal counsel and actuarial determined estimates. Additionally, we record receivables from third party insurers when recovery has been determined to be probable.

Our critical judgment revolves around the recognition of litigation and environmental liabilities in relation to the closure of our French site. We have recognized a loss contingency of $11.2 million, for which we have engaged with external experts to assist with the valuation of these liabilities.

42