RNS Number:8229L
Victrex PLC
03 June 2003
3rd June 2003
Victrex plc
Results announcement for the six months ended 31st March 2003
* Turnover and volume up 33%
* Gross margin 55%
* Profit before taxation up 36% to #12.0m (2002: #8.8m)
* Earnings per share up 35% to 10.1p (2002: 7.5p)
* Interim dividend up 5% to 2.2p (2002: 2.1p)
* Record level of new commercialised applications
Chairman Peter Warry commented:
"I am pleased to report continued progress at Victrex, with increased sales and
profits and further success in developing new product applications.
The increased sales levels we achieved in the first half have continued in the
first two months of the second half. However, future results will be influenced
by world economic events which remain difficult to forecast.
Overall, our first half performance, combined with the progress in business
development, confirms our confidence in the underlying robustness and growth
potential of our business."
Enquiries
Victrex plc
David Hummel, Chief Executive 0207 357 9477 (3rd June 2003)
Michael Peacock, Finance Director 01253 897700 (thereafter)
Hogarth Partnership Limited
Nick Denton / Tom Leatherbarrow 0207 357 9477
Chairman's Statement
on the interim results of Victrex plc for the six months ended 31 March 2003
I am pleased to report continued progress at Victrex, with increased sales and
profits and further success in developing new product applications.
Results
First half sales volume of 743 tonnes was 33% up on the first half of last year
(557 tonnes) and 15% ahead of last year's second half (648 tonnes). Turnover
was #36.1m (2002: #27.2m).
Gross profit was #19.7m (2002: #15.2m), representing a gross margin of 54.7%
(2002: 55.8%). At our AGM on 11 February we announced additional investment in
product development and marketing. The commencement of this programme, together
with higher insurance costs and increased staff bonus provisions, has led to
sales, marketing and administrative expenses increasing to #7.7m (2002: #6.2m).
Profit before tax was #12.0m (2002: #8.8m) up 36% and earnings per share were
10.1p (2002: 7.5p) up 35%. The effective tax rate remained at 32.5%.
Cash Flow
Cash flow from operating activities increased to #13.3m (2002: #2.1m) primarily
as a result of improved trading and a stable stock position since the planned
stock rebuild undertaken in the first half of last year.
Capital expenditure payments were #3.5m (2002: #3.0m). Taxation paid was #2.9m
(2002: #2.0m) due to increased profits and accelerated payments arising from
full implementation of the UK Corporation Tax quarterly payments on account
system during last year.
At 31 March 2003, the Group was ungeared with net cash of #1.0m (2002: net debt
#5.8m). Our unutilised bank facilities were #36.0m.
Dividend
An interim dividend of 2.2p per share, representing an increase of 5% over last
year's interim dividend, will be paid on 1 August 2003 to all shareholders on
the register at the close of business on 27 June 2003.
Sales
Sales in all our market segments were ahead of last year's second half figures,
which in turn were up on the previous first half. Transport sales volume was
242 tonnes (2002: 189 tonnes). This represented an increase of 8% over last
year's second half and was principally due to increased automotive sales in
Europe and Asia-Pacific. The industrial segment, where sales volume was 217
tonnes (2002: 146 tonnes), saw an increase of 12% on second half volumes, mainly
as a result of increased demand for industrial machinery applications in Europe
and the United States. At 170 tonnes (2002: 138 tonnes), electronics volume was
up 18% on the second half of last year. This was primarily because of increased
sales in semiconductor applications, albeit starting from a very low base.
Geographically, Europe, with sales volume of 393 tonnes (2002: 316 tonnes) saw
continued growth across all market segments with an increase of 18% over the
second half of last year. United States volume of 253 tonnes (2002: 177 tonnes)
showed an increase of 8% over last year's second half. Asia-Pacific volume was
97 tonnes (2002: 64 tonnes) which represented a 21% increase on last year's
second half.
Business Development
The six months ended 31 March 2003 saw a significant increase in the rate at
which we commercialised developments with 247 new applications (2002: 135)
having an estimated mature annualised volume ("MAV") of 297 tonnes (2002: 133
tonnes). As a result of this exceptional performance, the development pipeline,
which measures the future potential of all of the specific applications we are
working on with end users, has been reduced. It currently contains 1,380
developments (September 2002: 1,488) with an MAV of 2,060 tonnes (September
2002: 2,316 tonnes), assuming all of the developments will be commercialised.
InvibioTM, our medical implant materials business, continues to perform
strongly. We entered into seven additional long term agreements with medical
device manufacturers during the period. An increasing number of device
manufacturers have had implantable devices incorporating PEEK-OPTIMA(R) cleared
by regulatory bodies.
Technical development of the Victrex proprietary ionomer is continuing under our
fuel cell membrane alliance with Ballard Power Systems Inc.
We continue to believe that the key to future growth lies in developing new
applications and market areas for our products. Our new investment programme
referred to above will provide further impetus to achieving this objective.
Particular areas of focus are Asia-Pacific (where we see significant growth
potential), delivery of an increasingly global approach to our sales channels,
and additional resource to drive faster development of new products and
applications. We anticipate that this ongoing investment will add approximately
#1m to overheads in the second half compared to the first half of this year.
Outlook
The increased sales levels we achieved in the first half have continued in the
first two months of the second half. However, future results will be influenced
by world economic events which remain difficult to forecast.
Overall, our first half performance, combined with the progress in business
development, confirms our confidence in the underlying robustness and growth
potential of our business.
Peter Warry
Chairman
2 June 2003
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
Note #'000 #'000 #'000
Turnover: Group and share of Japanese joint 38,733 29,304 63,268
venture
Less: share of Japanese joint venture (2,616) (2,072) (4,181)
Turnover 2 36,117 27,232 59,087
Cost of sales (16,375) (12,036) (26,634)
Gross profit 19,742 15,196 32,453
Sales, marketing and administrative expenses (7,726) (6,176) (13,011)
Group operating profit 12,016 9,020 19,442
Share of operating profit in Japanese joint 137 - 70
venture
Total operating profit 12,153 9,020 19,512
Interest receivable 54 22 75
Interest payable (231) (220) (538)
Profit on ordinary activities before taxation 11,976 8,822 19,049
Taxation on profit on ordinary activities 7 (3,892) (2,867) (6,191)
Profit on ordinary activities after taxation 8,084 5,955 12,858
Equity dividends paid and proposed (1,751) (1,672) (5,539)
Retained profit for the period 6,333 4,283 7,319
Earnings per ordinary share - Basic 3 10.1p 7.5p 16.2p
- Diluted 3 10.1p 7.4p 16.0p
The Group's turnover and operating profit arise from continuing operations in
both the current and preceding periods.
There were no material differences between reported profits and historical cost
profits on ordinary activities before taxation in the above periods.
Consolidated Balance Sheet
Unaudited Unaudited Audited
as at as at as at
31 March 2003 31 March 2002 30 September
Note #'000 #'000 2002
#'000
Fixed assets
Intangible assets 8,585 9,857 9,221
Tangible assets 41,264 35,173 39,919
Investments 1,693 1,053 1,053
Investment in Japanese
joint venture: share of gross assets 1,537 1,538 1,483
share of gross liabilities (1,952) (1,817) (1,826)
51,127 45,804 49,850
Current assets
Stock 14,005 14,476 13,946
Debtors 9,793 9,617 8,167
Cash at bank and in hand 4,987 211 6,341
28,785 24,304 28,454
Creditors: amounts falling due within one year (12,736) (11,761) (14,257)
Net current assets 16,049 12,543 14,197
Total assets less current liabilities 67,176 58,347 64,047
Creditors: amounts falling due after more than one (3,931) (5,892) (7,912)
year
Provisions for liabilities and charges 1 (4,828) (3,778) (4,378)
Net assets 58,417 48,677 51,757
Capital and reserves
Called up share capital 799 795 796
Share premium account 12,209 11,803 11,885
Profit and loss account 45,409 36,079 39,076
Equity shareholders' funds 58,417 48,677 51,757
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
six months six months year
ended ended ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Note
Net cash inflow from operating activities 4 13,347 2,090 17,143
Returns on investment and servicing of finance
Interest received 53 22 75
Interest paid (169) (194) (500)
Net cash outflow from returns on investments and (116) (172) (425)
servicing of finance
Taxation
Taxation paid (2,928) (1,971) (5,202)
Net cash outflow from capital expenditure
Purchase of tangible fixed assets (3,474) (2,952) (8,811)
Equity dividends paid (3,870) (3,716) (5,379)
Cash inflow/(outflow) before financing 2,959 (6,721) (2,674)
Financing
Issue of ordinary shares exercised under option 3 1 1
Premium on issue of ordinary shares exercised under 324 197 280
option
Share purchase (640) (304) (304)
Debt due after more than one year
- (decrease)/increase in long term borrowing (4,000) 6,000 8,000
Net cash (outflow)/inflow from financing (4,313) 5,894 7,977
(Decrease)/increase in cash 5 (1,354) (827) 5,303
Consolidated Statement of Total Recognised Gains and Losses
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
Note #'000 #'000 #'000
Profit for the period 8,084 5,955 12,858
Exchange loss on consolidation - (70) (109)
Total recognised gains relating to the period 8,084 5,885 12,749
Prior year adjustment 1 - (3,178) (3,178)
Total recognised gains for the period 8,084 2,707 9,571
Reconciliation of Movements in Shareholders' Funds
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Profit for the period 8,084 5,955 12,858
Equity dividends paid and proposed (1,751) (1,672) (5,539)
Retained profit for the period 6,333 4,283 7,319
Exchange loss on consolidation - (70) (109)
Issue of ordinary shares exercised under option 3 1 1
Premium on issue of ordinary shares exercised under 324 197 280
option
Net addition to shareholders' funds 6,660 4,411 7,491
Opening shareholders' funds 51,757 44,266 44,266
Closing shareholders' funds 58,417 48,677 51,757
Notes to the Interim Report
1 Basis of preparation
The interim results have been prepared on the basis of the accounting policies
set out in the Group's last Annual Report and Accounts. The financial
information for the year ended 30 September 2002 has been extracted from the
statutory accounts, which have been filed with the Registrar of Companies. The
auditors' report on these accounts was unqualified.
FRS19 became effective for all accounting periods ending on or after 23 January
2002. As a result of the adoption of FRS19, the Group's taxation charge now
fully reflects taxation deferred because of timing differences between the
treatment of certain items for taxation and accounting purposes (previously only
recognised to the extent that there was a reasonable probability that an actual
liability would crystallise). The Group has opted to calculate deferred
taxation on a discounted basis. As required by the standard, the comparative
figures have been restated.
The figures included in the accounts relating to deferred taxation are as
follows:
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Profit and loss charge for deferred taxation 450 600 1,200
Deferred taxation liability (decrease in 4,828 3,778 4,378
shareholders' funds)
The Interim Report for the six months ended 31 March 2002 was approved by the
Board on 10 June 2002.
2 Analysis of turnover
All turnover and profit before taxation are derived from the Group's principal
activity, being the manufacture and sale of high performance materials.
An analysis of turnover by origin and customer location is as follows:
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Europe 17,515 13,944 28,693
United States of America 14,112 9,562 22,784
Asia-Pacific 4,490 3,726 7,610
36,117 27,232 59,087
3 Earnings per share
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
Earnings per share - Basic 10.1p 7.5p 16.2p
- Diluted 10.1p 7.4p 16.0p
Earnings per ordinary share is based on the Group's profit for the financial
period of #8,084,000 (2002: #5,955,000).
The weighted average number of shares used in the calculations are: - basic 79,678,762 (2002: 79,499,749).
- diluted 79,923,866 (2002: 80,059,679).
4 Reconciliation of operating profit to net cash inflow from operating
activities
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Total operating profit 12,153 9,020 19,512
Depreciation and amortisation charge 2,184 1,862 3,785
Earnings before interest, taxation, depreciation and 14,337 10,882 23,297
amortisation
Increase in stocks (59) (6,583) (6,053)
(Increase)/decrease in debtors (1,730) 1,194 2,658
Increase/(decrease) in creditors 792 (3,294) (2,657)
Japanese joint venture profit in stock 144 (39) 77
elimination
Share of operating profit in Japanese joint (137) - (70)
venture
Effect of foreign exchange rate changes - (70) (109)
Net cash inflow from operating activities 13,347 2,090 17,143
5 Reconciliation of net cash flow to movement in net debt
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
(Decrease)/increase in cash in period (1,354) (827) 5,303
Cash outflow/(inflow) from decrease/(increase)in debt 4,000 (6,000) (8,000)
Movement in net cash/(debt) in period 2,646 (6,827) (2,697)
Net (debt)/cash at beginning of period (1,659) 1,038 1,038
Net cash/(debt) at end of period 987 (5,789) (1,659)
6 Exchange rates
The most significant sterling rates used in the accounts under the Group's
accounting policies are:
Average exchange rate Closing exchange rate
Unaudited Unaudited Audited Unaudited Unaudited Audited
six months six months year ended as at as at as at
ended 31 March ended 31 March 30 31 March 31 March 30 September
2003 2002 September 2003 2002 2002
2002
US Dollar 1.41 1.44 1.39 1.54 1.42 1.36
Euro 1.59 1.59 1.59 1.55 1.59 1.61
Yen 177 137 154 164 158 173
7 Taxation
Taxation on profit on ordinary activities in respect of the half year ended 31
March 2003 has been provided at the estimated effective rates chargeable for the
full year in the respective jurisdictions.
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
UK corporation taxation 2,972 2,209 5,001
Overseas taxation 470 58 (10)
Deferred taxation 450 600 1,200
3,892 2,867 6,191
The deferred taxation charge on the profit on ordinary activities comprises of
the following:
Unaudited Unaudited Audited
six months ended six months ended year ended
31 March 2003 31 March 2002 30 September 2002
#'000 #'000 #'000
Timing differences 500 609 1,073
Effect of discounting (50) (9) 127
Charge in the period 450 600 1,200
Independent Review Report by KPMG Audit Plc to Victrex plc
Introduction
We have been engaged by the Company to review the financial information set out
on pages 4 to 10 and we have read the other information contained in the Interim
Report and considered whether it contains any apparent misstatements or material
inconsistencies with the financial information.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Listing
Rules of the Financial Services Authority. Our review has been undertaken so
that we might state to the Company those matters we are required to state to it
in this report and for no other purpose. To the fullest extent permitted by
law, we do not accept or assume responsibility to anyone other than the Company
for our review work, for this report, or for the conclusions we have reached.
Directors' Responsibilities
The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by, the Directors. The Directors
are responsible for preparing the Interim Report in accordance with the Listing
Rules which require that the accounting policies and presentation applied to the
interim figures should be consistent with those applied in preparing the
preceding annual accounts except where they are to be changed in the next annual
accounts in which case any changes, and the reasons for them, are to be
disclosed.
Review Work Performed
We conducted our review in accordance with the guidance contained in Bulletin
1999/4: Review of Interim Financial Information issued by the Auditing Practices
Board for use in the United Kingdom. A review consists principally of making
enquiries of Group management and applying analytical procedures to the
financial information and underlying financial data and, based thereon,
assessing whether the accounting policies and presentation have been
consistently applied unless otherwise disclosed. A review is substantially less
in scope than an audit performed in accordance with Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 March 2003.
KPMG Audit Plc
Chartered Accountants
Manchester
2 June 2003
Shareholder Information
Copies of this Interim Report will be sent to all shareholders and will be
available from the Registered Office detailed below.
Financial Calendar
Ex-dividend date for interim dividend 25 June 2003
Record date for interim dividend 27 June 2003
Payment of interim dividend 1 August 2003
2003 year end 30 September 2003
Announcement of 2003 full year results December 2003
Annual General Meeting February 2004
Payment of final dividend March 2004
Company Secretary and Registered Office
M W Peacock
Victrex plc, Victrex Technology Centre, Hillhouse International, Thornton
Cleveleys, Lancashire FY5 4QD
This information is provided by RNS
The company news service from the London Stock Exchange
END
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