XML 55 R18.htm IDEA: XBRL DOCUMENT
v3.20.1

Derivatives and Financial Instruments | 3 Months Ended
--- | ---
Mar. 29, 2020
Derivative Instruments and Hedging Activities Disclosure [Abstract] |
Derivatives and Financial Instruments | Derivatives and Financial Instruments The Company's financial instruments comprise bank and other loans, senior loan notes, derivatives, trade payables deferred and deferred contingent consideration. Other than derivatives, the main purpose of these financial instruments is to raise finance for the Company's operations. The Company also has various financial assets such as trade receivables and cash and cash equivalents, which arise directly from its operations. Derivative financial instruments We are exposed to market risk during the normal course of business from changes in currency exchange rates, interest rates and commodity prices such as aluminum prices. We manage exposures through a combination of normal operating and financing activities and through the use of derivative financial instruments such as foreign currency forward purchase contracts and aluminum forward purchase contracts. We do not use market risk-sensitive instruments for trading or speculative purposes. The Company had $0.4 million and $0.3 million derivative financial instruments disclosed within Accounts and other receivables as of March 29, 2020 and December 31, 2019, respectively. There were also $0.2 million and less than $0.1 million derivative financial instruments recorded in Other current liabilities at March 29, 2020, and December 31, 2019, respectively. The fair value of forward foreign currency exchange contracts deferred in equity was nil at March 29, 2020, and December 31, 2019, respectively. During the First Quarter of 2020, no thing was transferred to the Income Statement. Forward foreign currency exchange contracts The Company incurs currency transaction risk whenever one of the Company's operating subsidiaries enters into either a purchase or sales transaction in a currency other than its functional currency. Currency transaction risk is reduced by matching sales and expenses in the same currency. The Company's U.S. operations have little currency exposure, as most purchases, costs and sales are conducted in U.S. dollars. The Company's U.K. operations are exposed to exchange transaction risks, mainly because these operations sell goods priced in euros and U.S. dollars, and purchase raw materials priced in U.S. dollars and its functional currency is GBP sterling. The Company also incurs currency transaction risk if it lends currency other than its functional currency to one of its joint venture partners. At March 29, 2020, and December 31, 2019, the Company held various forward foreign currency exchange contracts designated as hedges in respect of forward sales for U.S. dollars, euros and Japanese Yen for the receipt of GBP sterling or euros. The Company also held forward foreign currency exchange contracts designated as hedges in respect of forward purchases for U.S. dollars, euros and Canadian dollars by the sale of GBP sterling. The contract totals in GBP sterling, range of maturity dates and range of exchange rates are disclosed below, with the value denominated in GBP sterling given that is the currency the majority of the contracts are held in.
|  | March 29, 2020
| Sales hedges | U.S. dollars |  | Euros
| Contract totals/£m | 6.8 |  |  | 9.9 |
| Maturity dates | 04/20 |  |  | 04/20 to 06/20 |
| Exchange rates | $1.1617 to $1.2281 |  |  | €1.1151 to €1.1914 |
| Purchase hedges | U.S. dollars |  | Euros |  | Canadian dollars
| Contract totals/£m | 1.4 |  |  | 0.8 |  |  | 6.8 |
| Maturity dates | 04/20 to 06/20 |  |  | 03/20 |  |  | 03/20 to 04/20 |
| Exchange rates | $1.2303 to $1.3132 |  |  | €1.1663 |  |  | $1.7018 to $1.7240 |
|  | December 31, 2019
| Sales hedges | U.S. dollars |  | Euros |  | Japanese Yen
| Contract totals/£m | 0.1 |  |  | 7.6 |  |  | 0.1 |
| Maturity dates | 01/20 |  |  | 01/20 to 03/20 |  |  | 01/20 |
| Exchange rates | $1.2914 |  |  | €1.1551 to €1.1750 |  |  | JPY 142.86
| Purchase hedges | U.S. dollars |  | Euros |  | Canadian dollars
| Contract totals/£m | 1.3 |  |  | 0.8 |  |  | 7.0 |
| Maturity dates | 03/20 |  |  | 03/20 |  |  | 01/20 |
| Exchange rates | $1.3228 |  |  | €1.1663 |  |  | $1.7137 to $1.7664 |
The above contracts are held in GBP sterling, therefore the analysis in the table has been given in GBP sterling to avoid any movements as a result of translation. 9. Derivatives and Financial Instruments (continued) Fair value of financial instruments The following methods were used to estimate the fair values of each class of financial instrument: Cash at bank and in hand / overdrafts The carrying value approximates to the fair value as a result of the short-term maturity of the instruments. Cash at bank and in hand are subject to a right to offset in the U.S. Bank loans Bank and other loans, excluding overdrafts, of $109.7 million were outstanding at March 29, 2020, and $92.5 million were outstanding at December 31, 2019. Bank and other loans are shown net of issue costs of $0.9 million and $1.1 million at March 29, 2020, and December 31, 2019, respectively, and are to be amortized to the expected maturity of the facilities. Of the bank and other loans outstanding, $34.7 million and $17.5 million is variable interest rate debt and subject to floating interest rate risk, with the remainder being fixed rate debt, at March 29, 2020, and December 31, 2019, respectively. Forward foreign currency exchange rate contracts The fair value of these contracts was calculated by determining what the Company would be expected to receive or pay on termination of each individual contract by comparison to present market prices. LME derivative contracts The fair value of these contracts has been calculated by valuing the contracts against the equivalent forward rates quoted on the LME. Deferred contingent consideration The deferred contingent consideration was in relation to the acquisition of Truetech and Innotech (Luxfer Magtech) in 2014 and was linked to the future profitability of the entity. All consideration in relation to this acquisition has now been paid as at March 29, 2020. Fair value hierarchy The Company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique: Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities. Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly. Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data. The fair values of the financial instruments of the Company at March 29, 2020, were analyzed using the hierarchy as follows:
| In millions | Total |  | Level 1 |  | Level 2 |  | Level 3 |
| Derivative financial assets: |  |  |  |  |  |  |  |
| Foreign currency contract assets | $ | 0.4 |  |  | $ | — |  |  | $ | 0.4 |  |  | $ | — |  |
| Derivative financial liabilities: |  |  |  |  |  |  |  |
| Foreign currency contract liabilities | 0.6 |  |  | — |  |  | 0.6 |  |  | — |  |
| Interest bearing loans and borrowings: |  |  |  |  |  |  |  |
| Loan Notes due 2021 | 25.0 |  |  | — |  |  | 25.0 |  |  | — |  |
| Loan Notes due 2023 | 25.4 |  |  | — |  |  | 25.4 |  |  | — |  |
| Loan Notes due 2026 | 26.1 |  |  | — |  |  | 26.1 |  |  | — |  |
| Revolving Credit Facility | 34.7 |  |  | — |  |  | 34.7 |  |  | — |  |
9. Derivatives and Financial Instruments (continued) The following table presents the changes in Level 3 instruments for the First Quarter ended March 29, 2020.
| In millions | 2020 |
| Balance at January 1, | $ | 0.5 |  |
| Payments made during year | (0.4 | ) |
| Release of deferred consideration (recognized in acquisition-related costs) | (0.1 | ) |
| Balance at March 29, | $ | — |  |
| Total credit for the period included in profit and loss for assets held at the end at March 29 | (0.1 | ) |
| Change in unrealized (gains) or losses for the period included in profit and loss for assets held at the end at March 29, | $ | (0.1 | ) |

X
- References No definition available. + Details
Name: | us-gaap_DerivativeInstrumentsAndHedgingActivitiesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for derivatives and fair value of assets and liabilities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 820 -URI http://asc.fasb.org/topic&trid=2155941 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 815 -URI http://asc.fasb.org/topic&trid=2229140 + Details
Name: | us-gaap_DerivativesAndFairValueTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration