TIDMVCT
RNS Number : 0705F
Victrex PLC
15 May 2017
15 May 2017
Victrex plc - Interim Results 2017
'Strong core business growth; strong cash generation'
Victrex plc, an innovative world leader in high performance
polymer solutions, today announces its interim results for the six
months ended 31 March 2017.
H1 2017 H1 2016 % change
--------------- ------------- ------------- --------------
Group sales
volumes 1,859 tonnes 1,770 tonnes +5%
--------------- ------------- ------------- --------------
Group revenue GBP130.9m GBP117.0m +12%
--------------- ------------- ------------- --------------
Gross profit GBP82.4m GBP73.6m +12%
--------------- ------------- ------------- --------------
Gross margin 62.9% 62.9% 0 bps
--------------- ------------- ------------- --------------
Profit before
tax (PBT) GBP50.1m GBP47.5m +5%
--------------- ------------- ------------- --------------
EPS 46.4p 45.5p +2%
--------------- ------------- ------------- --------------
Dividend
per share 12.20p 11.73p +4%
--------------- ------------- ------------- --------------
Highlights:
-- Strong core business* growth in H1
- Total sales volumes up 5%
- Core volumes* up 19%, offsetting lower year on year Consumer Electronics
- Group revenue up 12%, constant currency revenue** up 4%
- Record core volumes* in Q2 of >1000 tonnes, driven by
Automotive, Electronics (ex-Consumer), Value Added Resellers
- Medical remains muted, reflecting mature US Spine market
-- Further pipeline progress
- New Gears mega-programme secures initial OEM production opportunity for 2018
- PEEK-OPTIMA(TM) HA-Enhanced on track for FY17 meaningful revenue
-- Investment to accelerate Polymer & Parts strategy
- GBP10m acquisition of Zyex PEEK fibres business to expand semi-finished products offering
- TxV Aero Composites joint-venture to support differentiated Aerospace products
- Polymer Innovation Centre on track for completion in H2; support prototyping & new grades
-- Strong cash generation continues
- Cash up 90% to GBP86m and operating cash conversion(#) 137%
- Interim dividend up 4% to 12.20p (H1 16: 11.73p)
David Hummel, Chief Executive of Victrex, said: "Victrex
delivered a positive performance across most of our markets in the
first half, with the strength of our core business offsetting much
lower year on year volumes in Consumer Electronics. Automotive,
Electronics (ex-Consumer) and Value Added Resellers performed
particularly well whilst as anticipated, Medical remains muted,
reflecting the maturity of the US Spine market.
"We made continued progress in our new products pipeline,
including an initial production opportunity for Gears. Our
investments to support our Polymer & Parts strategy include a
joint venture for new and differentiated Aerospace products and our
Zyex PEEK fibres acquisition, which will enhance our semi-finished
and differentiated products offering. Our aspirations are for new
differentiated products to be 10-20% of sales in the medium
term.
"Whilst we delivered a strong first half performance and the
Group continues to be highly cash generative, we note that there is
potential for variability in the scale of Consumer Electronics
volumes during the second half, with visibility remaining low.
Consequently, although our positive growth momentum has continued
into the second half and helps to underpin 2017, our overall
expectations are unchanged. We are focused on driving growth, on
cost efficiency and making progress in delivering our Polymer &
Parts strategy."
Definitions:
*References to core volumes, core revenue or core business
excludes Consumer Electronics
**constant currency values have been reached by applying current
year (H1 2017) effective currency rates to prior year (H1 2016)
transactions
# operating cash conversion is cash generated from operations /
operating profit
About Victrex:
Victrex is an innovative world leader in high performance
polymer solutions, focused on the strategic markets of automotive,
aerospace, energy, electronics and medical. Every day, millions of
people use products and applications, which contain our materials -
from smart phones, aeroplanes and cars to oil and gas operations
and medical devices. With over 35 years' experience, we develop
world leading solutions in PEEK and PAEK based polymers,
semi-finished and finished parts which shape future performance for
our customers and our markets, and drive value for our
shareholders. Find out more at www.victrexplc.com
A presentation for investors and analysts will be held at 9.30am
(BST) this morning at JP Morgan, 1 John Carpenter Street, London
EC4Y 0JP. A conference call facility will be available for analysts
and investors who are unable to attend the presentation. To
register, dial +44 (0) 203 139 4830 and participant pin 47481496#.
The presentation can be viewed on Victrex's website at
www.victrexplc.com.
Enquiries:
Victrex plc:
Andrew Hanson, Head of Investor Relations & Communications +44 (0) 7809 595831
Louisa Burdett, Group Finance Director +44 (0) 1253 897700
David Hummel, Chief Executive +44 (0) 1253 897700
Teneo Blue Rubicon:
Charles Armitstead +44 (0) 207 260 2700
Interim results statement for the six months ended 31 March
2017
'Strong core business growth; strong cash generation'
Group financial results
Strong core business* (ex-Consumer Electronics) up 19%
Victrex delivered a good first half year, with strong core
business* growth offsetting the expected year on year impact of
significantly lower Consumer Electronics volumes during the first
half of 2017. Total H1 Group sales volume of 1,859 tonnes was 5%
ahead of the prior year (H1 2016: 1,770 tonnes). Excluding volumes
from the large Consumer Electronics order, core business growth was
approximately 19% ahead.
First half growth reflects positive momentum across many of our
end markets, particularly Automotive, Industrial, Electronics
(excluding Consumer Electronics) and Value Added Resellers. Energy
saw some year on year improvement although the Oil & Gas market
remains challenging. Our Industrial division (VPS) reported
revenues of GBP105.7m, 15% ahead of the prior year (H1 2016:
GBP91.8m).
Performance in Medical was flat, reflecting the mature US Spine
market, although progress outside of the US in Europe and in the
development stage of our new products continues to be positive.
Medical (Invibio) revenues were GBP25.2m, in line with the prior
year (H1 2016: GBP25.2m), but were moderately lower in constant
currency.
Revenue 12% ahead; 4% ahead in constant currency
Group revenue for H1 2017 was GBP130.9m, 12% ahead of the prior
year (H1 2016: GBP117.0m). Group revenue in constant currency was
4% ahead of the prior year (H1 2016: GBP126.1m in constant
currency).
Pricing ahead, reflecting lower Consumer Electronics and
currency
Our Average Selling Price (ASP) of GBP70.4/kg was ahead of the
prior year (H1 2016: GBP66.1/kg), which reflects much lower
Consumer Electronics volumes and currency benefits, offset by a
softer core Industrial mix and lower Medical revenues in constant
currency.
Whilst we are mindful of new competitor capacity coming into the
industry, pricing in the core business remains broadly stable, with
product mix being an important driver. Excluding Consumer
Electronics volumes and the impact of foreign currency, our average
selling price was GBP65/kg (FY 2016: GBP68/kg), which reflects
performance in Medical, and a softer core Industrial mix during the
first half.
With more beneficial currency rates hedged for the second half,
our expectations are for full year ASP to be slightly ahead of the
first half year.
Stable gross margin
Group gross margin of 62.9% (H1 2016: 62.9%) was in line with
the prior year, supported by favourable currency movements but
offset by a slightly higher cost of manufacture - as we develop
differentiated polymers and new grades and products to support our
mega-programmes and semi-finished products - and an Industrial mix
which reflects a higher contribution from Value Added
Resellers.
Our downstream strategy involves a move towards the production
of selected semi-finished products and components, as well as a
wider variety of differentiated polymers and new grades to help us
differentiate against competitors, and our cost of manufacture will
start to increase to reflect this. However, our strategy also
offers the opportunity to capture a higher value share of each
application (rather than just the material cost). Remaining focused
on growing absolute profits, rather than solely focusing on the
gross margin percentage, remains a priority for Victrex.
Profit before tax up 5% and EPS 2% ahead
Group profit before tax (PBT) of GBP50.1m was 5% up on the prior
year (H1 2016: GBP47.5m). Basic earnings per share of 46.4p was 2%
ahead (H1 2016: 45.5p per share). This reflects a higher effective
tax rate of 20.8% (H1 2016: 18.5%) which is back to a normalised
level following the benefit of Research & Development tax
credits in prior years.
Currency remains favourable for FY 2017; further potential
benefit for FY 2018
With a significant global revenue exposure, Victrex hedges
currency up to 12 months in advance. For 2017, given the
considerable weakening of Sterling following the Brexit vote in
June 2016, Victrex's guidance on the potential currency benefit is
unchanged and we anticipate the potential benefit to our profits to
be approximately GBP18m-GBP19m, although a small proportion of this
will be re-invested to support our growth programmes. For 2018, we
are currently less than 40% hedged and whilst rates remain
volatile, based on hedging in place and current spot rates, there
is the potential for a further double-digit benefit to profits.
Continued focus on costs to support "front end" investment
Keeping cost competitive in our manufacturing, whilst retaining
the differentiators in our polymer chemistry and security of
supply, is key in a competitive market. As communicated at our
recent Capital Markets Day, we are evaluating potential cost
opportunities in our supply chain, as well as ensuring our supply
chain supports the requirements for new differentiated polymers,
new grades and downstream products over the coming years.
Front-end investment to drive the "burden of proof" is
principally focused on our marketing, technical and commercial
functions. Investment in these areas increased during the first
half and will help to drive adoption of our pipeline programmes,
several of which are "disruptive" to incumbent technologies.
Overheads were up 24% to GBP32.3m (H1 2016: GBP26.1m) which
reflects higher front-end investment, as well as provision for the
Group's profit growth linked bonus scheme (which was not accrued in
H1 2016). The Group also incurred GBP2.0m of restructuring costs
from business reorganisation during the first half year, as shown
in Note 6 of the financial statements. Research & Development
investment is expected to grow in absolute terms on a full year
basis, but remain at approximately 5-6% of Group revenue.
Investment to accelerate long term opportunities; delivering the
"burden of proof"
We continue to progress our Polymer & Parts strategy, with a
focus on selected semi-finished and finished products, and
components, building on our core polymer offering. Developing the
PEEK and PAEK market means creating new solutions for customers,
building new supply chains where none currently exist and
delivering the "burden of proof" to customers through prototyping
or clinical evidence.
During the first half year we announced an investment in a new
joint venture, TxV Aero Composites, where Victrex and Tri-Mack
Plastics will team up to manufacture, at scale, differentiated
Loaded Brackets for the Aerospace market. We anticipate the capital
investment, for a new US manufacturing facility, will be in the
region of GBP10m, spread over the next three years, alongside some
incremental overhead investment.
Victrex also announced the acquisition of Zyex, a UK based PEEK
fibres business, for approximately GBP10m after the first half year
end. Zyex is recognised as a global leader in the manufacture of
PEEK fibres for the Aerospace, Industrial and Automotive markets.
Examples of product applications include fuel filters for
Automotive and food processing belts for Industrial. Zyex offers us
the opportunity to further develop these application opportunities
and translate them globally.
Both of these investments are in line with our focus on new
differentiated polymers, product forms or semi-finished products,
and build on our other recent investments in Magma (our Oil &
Gas mega-programme), and Kleiss Gears, with Kleiss helping
accelerate our Gears opportunity. We will continue to review other
potential investments, whether they are joint-ventures,
acquisitions or organic investments. For organic investment, our
expectations of medium term capital expenditure in the
GBP25m-GBP35m per annum range are unchanged.
Strong development pipeline; commercialisation opportunity in
Gears
Our development pipeline is focused on six mega-programmes of
Dental, Victrex Pipe/Magma, Trauma, Knee, Gears and Aerospace
Loaded Brackets, as well as some smaller opportunities, including
differentiated polymers and new polymer grades.
Thanks to the capabilities we acquired through the Kleiss Gears
acquisition and prototype development, we have secured over 20
engagement programmes with Auto OEMs for our Gears programme, with
a first commercialisation and production opportunity starting in
2018. Whilst our PEEK-OPTIMA(TM) HA-Enhanced programme in Spine is
now a major programme - reflecting the long term cannibalisation of
existing PEEK-OPTIMA(TM) products - progress has been positive,
with over 20 global approvals and anticipated first meaningful
revenues by the end of 2017.
Our aspiration for sales from new products, one of our strategic
KPIs, is to grow sales to 10-20% of Group revenues over the medium
term, from approximately 3% in 2016.
Strong balance sheet
Our strong balance sheet supports growth investment and provides
security of supply to our customers.
Net assets at 31 March 2017 totalled GBP419.0m (H1 2016:
GBP365.9m). At the end of the first half, stock levels were at
GBP66.3m (H1 2016: GBP69.1m), reflecting progress from
implementation of our new ERP system to most of our sales areas
during 2016, offset by some stock build and campaigns to support
the launch of new differentiated polymers, new grades, or
downstream products and mega-programmes.
For the medium term, we continue to see some opportunities to
improve on our inventory levels, but remain mindful of the
requirements, in the near term, to support the early development of
more differentiated products. Many of these differentiated polymers
and downstream products require minimum volume production
campaigns.
Continued strong cash generation
Cash generated from operations was GBP68.4m (H1 2016: GBP38.1m)
representing an operating cash conversion (cash generated from
operations / operating profit) of 137% (H1 2016: 80%). Net cash
(with no debt) at 31 March was up 90% to GBP86.0m (H1 2016:
GBP45.3m), which was reduced in early April by the acquisition of
Zyex (which concluded after the half year end) for approximately
GBP10m.
In February 2017 we paid the 2016 final dividend of 35.09p per
share, representing GBP30.0m (H1 2016 dividends paid:
GBP29.9m).
Taxation
The effective tax rate for the first half was 20.8% (H1 2016:
18.5%). The lower rate in 2016 was mainly due to the impact of
restating the opening deferred tax balance - reflecting the
reduction in the main rate of UK corporation tax - in addition to
prior period adjustments, primarily relating to a higher than
normal level of R&D qualifying expenditure during 2015. The
Group expects the effective tax rate for the full year will be
higher than 2016 levels and similar to the first half.
Dividends
Our Capital Allocation framework states that growth investment
is our top priority. The policy for our regular dividend is to grow
in line with earnings per share, with cover maintained at around
2x. After this, and subject to no additional growth investment,
Victrex will return around 50% of the net cash balance to
shareholders, via a special dividend, subject to a 50p/share
minimum level. The threshold for payment of a special dividend is
approximately GBP85m of net cash. With capital expenditure reducing
from historic levels, our medium term use of cash offers
opportunities for incremental returns.
For the first half, with Group profit before tax increasing by
5% and earnings per share increasing by 2%, the interim dividend
will increase by 4% to 12.20p (H1 2016: 11.73p).
Audit tender process
As previously communicated, the process to appoint a new
external auditor continues with invitations to tender due to be
sent out shortly after the interim results. The Audit Committee has
approved the process and selection criteria to be used by the
Sub-Committee, which is chaired by the Audit Committee Chairman, in
proposing their shortlist to the full Committee.
Chief Executive transition
On 19 April 2017 Victrex announced that Chief Executive David
Hummel had notified the Board of his intention to retire as Chief
Executive at the end of the 2017 financial year, after 24 years.
David will work through a transition with Jakob Sigurdsson, who
will join Victrex as Chief Executive-designate on 1(st) September
2017. Jakob will become Chief Executive and join the Board on 1(st)
October 2017 and work through a six-month transition with David,
prior to David's retirement from the Board at Victrex's 2018
AGM.
Outlook
Whilst we delivered a strong first half performance and the
Group continues to be highly cash generative, we note that there is
potential for variability in the scale of Consumer Electronics
volumes during the second half, with visibility remaining low.
Consequently, although our positive growth momentum has continued
into the second half and helps to underpin 2017, our overall
expectations are unchanged. We are focused on driving growth, on
cost efficiency and making progress in delivering our Polymer &
Parts strategy.
David Hummel
Chief Executive
15 May 2017
DIVISIONAL REVIEW
Industrial
6 months 6
months
ended ended
31 Mar 31
Mar
2017 2016
GBPm GBPm Change
-------------- --------- -------- -------
Revenue 105.7 91.8 15%
Gross profit 59.9 51.4 17%
-------------- --------- -------- -------
The Industrial business (VPS) generated revenue of GBP105.7m (H1
2016: GBP91.8m), 15% ahead of the prior year. Gross profit was up
17% on the prior year, with gross margin at 56.7% (H1 2016: 56.0%).
Outside of the large Consumer Electronics order, we saw more Value
Added Reseller business which is reflected in the softer first half
sales mix.
Whilst the Group manages and reports its performance through the
Industrial (VPS) and Medical (Invibio) divisions, we continue to
provide a market based summary of our performance and growth
opportunities within our two reporting segments.
Energy & Other Industrial
Energy & Other Industrial (which includes Manufacturing
& Engineering) reported sales volume of 267 tonnes, which was
15% ahead of the prior year (H1 2016: 233 tonnes), with Oil &
Gas up 13% overall. Whilst we saw year on year improvement, the Oil
& Gas market continues to be challenging. In our Magma Oil
& Gas mega-programme, our GBP10m equity investment has helped
establish a pipe rental model, whereby operators can choose to
lease a flexible pipe based unit for 'intervention' or 'jumper
pipe' activities. Magma continues to explore further engagement
programmes with operators, although with capital expenditure into
the industry remaining low, acceleration of this opportunity may
take time. As communicated in December, we are focusing some
resources on the Manufacturing & Engineering area, including in
fluid handling and process systems.
Value Added Resellers
Value Added Resellers continue to perform well. Sales volume at
802 tonnes was 23% ahead of last year (H1 2016: 653 tonnes), as
processors and industrial customers continued to benefit from the
growth opportunities within the high performance polymer market.
Because of the fragmented nature of the industrial supply chain,
once PEEK and our polymers have been specified, full clarity on the
exact route to market for all of our polymer business is not always
possible. This segment continues to offer growth opportunities for
material and resin based business.
Transport
Transport sales volume increased 9% to 463 tonnes (H1 2016: 423
tonnes), primarily driven by the strong performance in
Automotive.
In Aerospace, translations of our existing products for
brackets, fasteners and other applications supported growth of 2%.
Light-weighting and the ability to reduce manufacturing cycle time
by up to 40% is a key selling point for our PEEK and PAEK polymers.
Whilst we are mindful of industry forecasts around the potential
slowdown in certain models, we remain positive for long term growth
prospects. During the first half we announced our TxV Aero
Composites joint venture, with Tri-Mack Plastics, to build a new
manufacturing facility in the US, supporting a differentiated and
protectable Loaded Brackets product, following pre-qualification
for our PEEK/composites last year. The investment will see capital
expenditure of approximately GBP10m spread over the next three
years, with around half of that in 2017, as well as some
incremental operating expenditure to support adoption of this
product. As part of our Aerospace Loaded Brackets offering, we will
also progress development of our new differentiated polymers and
composite grades.
In Automotive, growth was particularly strong, up 11%.
Translation of our core applications in ABS braking systems,
transmission applications and other areas is driving growth. We
remain on track to deliver our medium term goal of an average 12
grams of PEEK per vehicle, compared to approximately 8 grams today.
We are at an early stage of exploring the potential from
Electrification and e-motors, with slot-liners and other
applications offering growth opportunities due to heat insulation
requirements and light-weighting needs. We are developing several
differentiated products in this area. Our Gears programme reflects
the demand for lower noise, vibration and harshness (NVH), where
PEEK can offer a 50% performance benefit compared to metal gears,
as well as the trend for fuel efficiency and light-weighting.
Engagement programmes continue apace and we have also secured an
initial commercialisation and production opportunity with a major
European OEM, starting in 2018. Driving adoption of this
application and delivering the "burden of proof" remains key for
market-wide growth.
Electronics
Electronics sales volumes overall were down 36% to 233 tonnes
(H1 2016: 365 tonnes), but excluding the lower year on year volumes
from the large Consumer Electronics order, Electronics volumes were
around 50% ahead. This principally reflects an improved performance
in Semiconductor and Aptiv(TM) film.
We are also seeing some initial growth from the "internet of
things" and related applications. This supports further
opportunities within Semiconductor, reflecting the higher data and
yield requirements for chips. Outside of these areas, home
appliances and other equipment offer further growth potential.
In Consumer Electronics, the inherent volatility in this market,
linked to end-user demand, remains a challenge, however, as we have
proven with our Aptiv(TM) film, which is repeatable across many
manufacturers and models, the growth opportunities in this market
continue to be attractive.
For our large Consumer Electronics order, we note the potential
for variability in the scale of volumes for the second half, and
that visibility remains low. We continue to work hard to secure
differentiated product opportunities across the major device
manufacturers.
Regional trends
In our regions, Europe was up 14%, with 1,030 tonnes (H1 2016:
902 tonnes), reflecting the strength in Transport, Value Added
Resellers and Industrial markets. Asia-Pacific was down 18% to 438
tonnes (H1 2016: 531 tonnes) principally from lower Consumer
Electronics whilst US volumes were 16% ahead at 391 tonnes (H1
2016: 337 tonnes) principally reflecting the improvement in the
Energy market over the past year.
Medical (Invibio)
6 6
months months
ended ended
31 31
Mar Mar
2017 2016
GBPm GBPm Change
-------------- -------- -------- -------
Revenue 25.2 25.2 0%
Gross profit 22.5 22.2 1%
-------------- -------- -------- -------
Our Medical business remained muted, principally reflecting the
maturity of the US Spine market, with the US accounting for nearly
two-thirds of our Medical revenues, and from an emergence of
expandable cages, primarily based on Titanium. Europe performed
well during the first half year, with revenues increasing by 26%.
Overall, Invibio revenue was flat at GBP25.2m (H1 2016: 25.2m),
although revenue declined moderately in constant currency. Gross
profit was GBP22.5m (H1 2016: GBP22.2m) and gross margin improved
slightly to 89.3% (H1 2016: 88.1%).
Medical market overview
Spine accounts for nearly three-quarters of our Medical
revenues. With a lack of material growth in the number of US spinal
procedures, market growth in recent years has remained muted. This
is now a mature market where PEEK has a good position and remains
the material of choice in spinal fusion surgery, but incremental
innovation is required to drive growth, offsetting the mature phase
of the product lifecycle and some competition from Titanium based
expandable cages. Our PEEK-OPTIMA(TM) HA Enhanced programme made
further progress during the first half and now has over 20 global
approvals with device companies, in both the US and other
geographies. This product, which offers improved bone-on growth and
enhanced clinical benefit, is on track to reach meaningful revenue
of approximately GBP1m by the end of 2017.
For the medium to longer term, we believe Medical is well placed
in both the US and other geographic markets. Beyond being simply a
materials supplier, our in-house regulatory expertise and
positioning with supportive clinical evidence will help us to drive
our existing programmes and new business.
With early stage sales in some of our new medical programmes,
our emphasis continues on market adoption, whether through support
data and clinical evidence to vindicate these programmes or
engagement with key opinion leaders and market influencers. Our
vision remains to treat a patient every 15-20 seconds with Invibio
solutions in 8-10 years (compared to approximately every 35 seconds
today).
Mega-programmes
Dental sales remain below the GBP1m meaningful revenue
threshold, but have made further progress. Dental is more than
simply launching a product and our solutions now have 5 year
clinical data, and support from our collaboration with the Malo
Clinic in Portugal, which reported successful performance data for
JUVORA last year. Our focus in Dental is at the premium end, with
both prosthethic implants and removable dentures, rather than other
offerings in the market, which are primarily in removable dentures.
With a 99% satisfaction rate for patients using our Juvora(TM)
dental disc, our focus is on using strong clinical evidence and
building enhanced market access.
With our Trauma manufacturing facility now operational, we have
enhanced our offering within the Trauma plate market, enabling us
to have the ability to meet initial demand. These products offer
the potential for 50 times better fatigue resistance compared to a
metal plate in the body. We continue to explore options to enhance
market access through collaboration or development agreements,
particularly with innovators or smaller players.
In Knee, our clinical trial is on plan to start during the
second half of 2017. Knee is the furthest out of our opportunities
(5+ years from meaningful revenue) but is potentially sizeable,
currently scaled as a GBP50m+ annual peak revenue opportunity. With
1 in 5 patients dissatisfied with their knee surgery, patient
demand for non-metal based solutions offer significant potential in
this market. Our partnership with Maxx Orthopedics provides a good
platform to support our long term aspirations in this market.
Condensed Consolidated Income Statement
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
Note GBPm GBPm GBPm
------------------------------- ----------- ------- ----------- --------------
Revenue 5 130.9 117.0 252.3
Cost of sales (48.5) (43.4) (93.6)
------------------------------- ----------- ------- ----------- --------------
Gross profit 82.4 73.6 158.7
Sales, marketing and
administrative expenses 6 (32.3) (26.1) (58.4)
------------------------------- ----------- ------- ----------- --------------
Operating profit 5 50.1 47.5 100.3
Financial income 0.1 0.1 0.3
Financial expenses (0.1) (0.1) (0.3)
------------------------------- ----------- ------- ----------- --------------
Profit before tax 50.1 47.5 100.3
Income tax expense 7 (10.4) (8.8) (17.8)
------------------------------- ----------- ------- ----------- --------------
Profit for the period attributable
to owners of the parent 39.7 38.7 82.5
-------------------------------------------- ------- ----------- --------------
Earnings per share
Basic 8 46.4p 45.5p 96.8p
Diluted 8 46.3p 45.4p 96.7p
------------------------------- ----------- ------- ----------- --------------
Dividends
Year ended 30 September
2015:
Final dividend paid
February 2016 at 35.09p
per share - 29.9 29.9
Year ended 30 September
2016:
Interim dividend paid
July 2016 at 11.73p
per share - - 10.0
Final dividend paid 30.0 - -
February 2017 at 35.09p
per share
------------------------------- ----------- ------- ----------- --------------
30.0 29.9 39.9
------------------------------- ----------- ------- ----------- --------------
An interim dividend of 12.20p per share will be paid on 30 June
2017 to shareholders on the register at the close of business on 9
June 2017. This dividend will be recognised in the period in which
it is approved.
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
GBPm GBPm GBPm
------------------------------------ ----------- ----------- --------------
Profit for the period 39.7 38.7 82.5
------------------------------------ ----------- ----------- --------------
Items that will not be
reclassified to profit
or loss
Defined benefit pension
schemes' actuarial gains/(losses) 11.5 2.1 (11.6)
Income tax on items that
will not be reclassified
to profit or
loss (2.0) (0.4) 2.0
------------------------------------ ----------- ----------- --------------
9.5 1.7 (9.6)
Items that may be subsequently
reclassified to profit
or
loss
Currency translation
differences for foreign
operations 0.5 1.1 2.5
Effective portion of
changes in fair value
of cash flow hedges (4.0) (6.4) (23.8)
Net change in fair value
of cash flow hedges
transferred to profit
or loss 11.3 (0.8) 14.3
Income tax on items that
may be reclassified to
profit or loss (1.7) 1.3 1.7
6.1 (4.8) (5.3)
Total other comprehensive
income/(expense) for
the period 15.6 (3.1) (14.9)
Total comprehensive income
for the period
attributable to owners
of the parent 55.3 35.6 67.6
------------------------------------ ----------- ----------- --------------
Condensed Consolidated Balance Sheet
31 March 31 March 30 September
2017 2016 2016
Note GBPm GBPm GBPm
------------------------- ----- --------- --------- -------------
Assets
Non-current assets
Property, plant
and equipment 257.3 252.3 255.5
Intangible assets 26.8 22.4 23.5
Investments 10.0 - 10.0
Deferred tax
assets 6.3 6.3 8.9
Retirement benefit
asset 1.8 3.2 -
------------------------- ----- --------- --------- -------------
302.2 284.2 297.9
------------------------- ----- --------- --------- -------------
Current assets
Inventories 66.3 69.1 61.8
Current income
tax assets 6.5 5.0 -
Trade and other
receivables 42.2 34.8 46.9
Derivative financial
instruments 9 1.7 1.4 2.1
Cash and cash
equivalents 86.0 45.3 64.0
------------------------- ----- --------- --------- -------------
202.7 155.6 174.8
------------------------- ----- --------- --------- -------------
Total assets 504.9 439.8 472.7
------------------------- ----- --------- --------- -------------
Liabilities
Non-current liabilities
Deferred tax
liabilities (19.1) (19.4) (19.2)
Retirement benefit
obligations - - (10.6)
------------------------- ----- --------- --------- -------------
(19.1) (19.4) (29.8)
------------------------- ----- --------- --------- -------------
Current liabilities
Derivative financial
instruments 9 (11.3) (11.6) (19.5)
Current income
tax liabilities (15.1) (9.1) (5.4)
Trade and other
payables (40.4) (33.8) (28.9)
------------------------- ----- --------- --------- -------------
(66.8) (54.5) (53.8)
------------------------- ----- --------- --------- -------------
Total liabilities (85.9) (73.9) (83.6)
------------------------- ----- --------- --------- -------------
Net assets 419.0 365.9 389.1
------------------------- ----- --------- --------- -------------
Equity
Share capital 0.9 0.9 0.9
Share premium 41.4 37.5 37.8
Translation reserve 4.7 2.8 4.2
Hedging reserve (3.4) (7.3) (9.2)
Retained earnings 375.4 332.0 355.4
------------------------- ----- --------- --------- -------------
Total equity attributable
to owners of the parent 419.0 365.9 389.1
-------------------------------- --------- --------- -------------
Condensed Consolidated Cash Flow Statement
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
Note GBPm GBPm GBPm
------------------------------------------------------- ----- ----------- ----------- --------------
Cash flows from operating activities
Cash generated from operations 12 68.4 38.1 96.0
Interest and similar charges paid (0.2) - -
Interest received 0.2 0.1 0.1
Tax paid (8.1) (5.7) (12.7)
------------------------------------------------------- ----- ----------- ----------- --------------
Net cash flow from operating activities 60.3 32.5 83.4
------------------------------------------------------- ----- ----------- ----------- --------------
Cash flows from investing activities
Acquisition of investments - - (10.0)
Acquisition of property, plant and equipment (12.2) (12.5) (25.9)
Net cash flow from investing activities (12.2) (12.5) (35.9)
------------------------------------------------------- ----- ----------- ----------- --------------
Cash flows from financing activities
Premium on issue of ordinary shares exercised under option 3.6 0.7 1.0
Dividends paid (30.0) (29.9) (39.9)
------------------------------------------------------- ----- ----------- ----------- --------------
Net cash flow from financing activities (26.4) (29.2) (38.9)
------------------------------------------------------- ----- ----------- ----------- --------------
Net increase/(decrease) in cash and cash equivalents 21.7 (9.2) 8.6
Effect of exchange rate fluctuations on cash held 0.3 0.7 1.6
Cash and cash equivalents at beginning of period 64.0 53.8 53.8
------------------------------------------------------- ----- ----------- ----------- --------------
Cash and cash equivalents at end of period 86.0 45.3 64.0
------------------------------------------------------- ----- ----------- ----------- --------------
Condensed Consolidated Statement of Changes in Equity
Share Share Translation Hedging Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 1 October
2016 0.9 37.8 4.2 (9.2) 355.4 389.1
---------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the period
Profit - - - - 39.7 39.7
---------------------------- --------- --------- ------------ --------- ---------- --------
Other comprehensive
income/(expense)
Currency translation
differences for foreign
operations - - 0.5 - - 0.5
Effective portion of
changes in fair value
of cash flow hedges - - - (4.0) - (4.0)
Net change in fair
value of cash flow
hedges transferred
to profit or loss - - - 11.3 - 11.3
Defined benefit pension
schemes' actuarial
gains - - - - 11.5 11.5
Tax on other comprehensive
income - - - (1.5) (2.2) (3.7)
---------------------------- --------- --------- ------------ --------- ---------- --------
Total other comprehensive
income for the period - - 0.5 5.8 9.3 15.6
Total comprehensive
income for the - - 0.5 5.8 49.0 55.3
period
---------------------------- --------- --------- ------------ --------- ---------- --------
Contributions by and
distributions to owners
of the Company
Share options exercised - 3.6 - - - 3.6
Equity-settled share-based
payment transactions - - - - 1.0 1.0
Dividends to shareholders - - - - (30.0) (30.0)
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 31 March
2017 0.9 41.4 4.7 (3.4) 375.4 419.0
---------------------------- --------- --------- ------------ --------- ---------- --------
Share Share Translation Hedging Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 1 October
2015 0.9 36.8 1.7 (1.6) 320.8 358.6
---------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the period
Profit - - - - 38.7 38.7
---------------------------- --------- --------- ------------ --------- ---------- --------
Other comprehensive
income/(expense)
Currency translation
differences for foreign
operations - - 1.1 - - 1.1
Effective portion of
changes in fair value
of cash flow hedges - - - (6.4) - (6.4)
Net change in fair
value of cash flow
hedges transferred
to profit or loss - - - (0.8) - (0.8)
Defined benefit pension
schemes' actuarial
gains - - - - 2.1 2.1
Tax on other comprehensive
income - - - 1.5 (0.6) 0.9
---------------------------- --------- --------- ------------ --------- ---------- --------
Total other comprehensive
income/(expense) for
the period - - 1.1 (5.7) 1.5 (3.1)
Total comprehensive
income/(expense) for
the - - 1.1 (5.7) 40.2 35.6
period
---------------------------- --------- --------- ------------ --------- ---------- --------
Contributions by and
distributions to owners
of the Company
Share options exercised - 0.7 - - - 0.7
Equity-settled share-based
payment transactions - - - - 0.9 0.9
Dividends to shareholders - - - - (29.9) (29.9)
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 31 March
2016 0.9 37.5 2.8 (7.3) 332.0 365.9
---------------------------- --------- --------- ------------ --------- ---------- --------
Share Share Translation Hedging Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 1 October
2015 0.9 36.8 1.7 (1.6) 320.8 358.6
---------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive
income for the period
Profit - - - - 82.5 82.5
---------------------------- --------- --------- ------------ --------- ---------- --------
Other comprehensive
income/(expense)
Currency translation
differences for foreign
operations - - 2.5 - - 2.5
Effective portion of
changes in fair value
of cash flow hedges - - - (23.8) - (23.8)
Net change in fair
value of cash flow
hedges transferred
to profit or loss - - - 14.3 - 14.3
Defined benefit pension
schemes' actuarial
losses - - - - (11.6) (11.6)
Tax on other comprehensive
income - - - 1.9 1.8 3.7
---------------------------- --------- --------- ------------ --------- ---------- --------
Total other comprehensive
income/(expense) for
the period - - 2.5 (7.6) (9.8) (14.9)
Total comprehensive
income/(expense) for
the - - 2.5 (7.6) 72.7 67.6
period
---------------------------- --------- --------- ------------ --------- ---------- --------
Contributions by and
distributions to owners
of the Company
Share options exercised - 1.0 - - - 1.0
Equity-settled share-based
payment transactions - - - - 1.8 1.8
Dividends to shareholders - - - - (39.9) (39.9)
---------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 30 September
2016 0.9 37.8 4.2 (9.2) 355.4 389.1
---------------------------- --------- --------- ------------ --------- ---------- --------
Notes to the Financial Report
1. Reporting entity
Victrex plc (the 'Company') is a limited liability company
incorporated and domiciled in the United Kingdom. The address of
the Registered Office is Victrex Technology Centre, Hillhouse
International, Thornton Cleveleys, Lancashire, FY5 4QD, United
Kingdom. The Company is listed on the London Stock Exchange.
This Half-yearly Financial Report is an interim management
report as required by DTR 4.2.3 of the Disclosure and Transparency
Rules of the UK Financial Conduct Authority.
These condensed consolidated interim financial statements as at
and for the six months ended 31 March 2017 comprise those of the
Company and its subsidiaries (together referred to as the
'Group').
The comparative figures for the financial year ended 30
September 2016 are extracted from the Company's statutory financial
statements for that year. Those financial statements have been
reported on by the Company's auditor, filed with the Registrar of
Companies and are available on request from the Company's
Registered Office or to download from www.victrexplc.com. The
auditor's report on those financial statements was unqualified, did
not include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
did not contain any statement under sections 498 (2) or (3) of the
Companies Act 2006.
These condensed consolidated interim financial statements are
unaudited, but have been reviewed by KPMG LLP and its report is set
out on page 22.
2. Statement of compliance
These condensed consolidated interim financial statements have
been prepared in accordance with International Accounting Standard
('IAS') 34 - Interim Financial Reporting as adopted by the European
Union. They do not include all of the information required for full
annual financial statements and should be read in conjunction with
the consolidated financial statements of the Group as at and for
the year ended 30 September 2016.
This Half-yearly Financial Report was approved by the Board of
Directors on 15 May 2017.
Risks and uncertainties
The principal risks and uncertainties which could impact the
Group's long-term performance remain those detailed on pages 22,
23, 24, 96 and 97 of the Group's 2016 Annual Report and Financial
Statements, a copy of which is available on the Group's website,
www.victrexplc.com. No new risks have been identified. These risks
remain valid as regards their potential to impact the Group during
the second half of the current financial year. The Group has a
comprehensive system of risk management installed within all parts
of its business to mitigate these risks as far as is possible.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed
consolidated interim financial statements are the same as those
applied in the Company's published consolidated financial
statements for the year ended 30 September 2016 except for the
application of relevant new standards.
A number of new standards and amendments to existing standards
are effective for the financial year ending 30 September 2017. None
of these have had a material impact and accordingly the 31 March
2016 and 30 September 2016 comparatives have not been restated.
IFRS15 Revenue from contracts with customers and IFRS9 Financial
instruments, are effective for the year ending 30 September 2018.
These are not expected to have a material impact.
A number of amendments to standards and interpretations have
been issued during the period, which are either not yet endorsed,
or are endorsed but not yet effective, and accordingly the Group
has not yet adopted them.
Going concern
The Directors have performed a robust assessment, including
review of the forecast for the year ending September 2017 and
longer term strategic forecasts and plans, including consideration
of the principal risks faced by the company, as detailed in the
Group's Annual Report 2016. Following this review the Directors are
satisfied that the Company and the Group have adequate resources to
continue to operate and meet its liabilities as they fall due for
the foreseeable future, a period considered to be at least 12
months from the date of signing these financial statements. For
this reason they continue to adopt the going concern basis for
preparing the interim financial statements.
4. Estimates
The preparation of condensed consolidated interim financial
statements requires management to make judgements, estimates and
assumptions that affect the application of accounting policies and
the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
The significant judgements made by management in applying the
Group's accounting policies and the key sources of estimation
uncertainty were the same as those applied to the consolidated
financial statements as at and for the year ended 30 September
2016.
5. Segment reporting
The Group's business is strategically organised as two business
units: Industrial (Victrex Polymer Solutions), which focuses on our
Automotive, Aerospace, Electronics and Energy markets; and Medical
(Invibio Biomaterial Solutions), which focuses on providing
specialist solutions for medical device manufacturers.
Six months ended Six months Year ended 30
31 March 2017 ended 31 March September 2016
2016
------------------------------ ------------------------------ ------------------------------
Industrial Medical Group Industrial Medical Group Industrial Medical Group
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- ----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Revenue from
external
sales 105.7 25.2 130.9 91.8 25.2 117.0 201.5 50.8 252.3
--------------------- ----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Segment gross
profit 59.9 22.5 82.4 51.4 22.2 73.6 114.2 44.5 158.7
Sales, marketing
and administrative
expenses (32.3) (26.1) (58.4)
--------------------- ----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Operating
profit 50.1 47.5 100.3
Net financing - - -
income
--------------------- ----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Profit before
tax 50.1 47.5 100.3
Income tax
expense (10.4) (8.8) (17.8)
--------------------- ----------- -------- ------- ----------- -------- ------- ----------- -------- -------
Profit for the
period attributable
to
owners of the
parent 39.7 38.7 82.5
---------------------------------- -------- ------- ----------- -------- ------- ----------- -------- -------
6. Exceptional items
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016 GBPm
GBPm GBPm
------------------------------- ----------- ----------- --------------
Included within Sales,
marketing and administrative
expenses
Pension curtailment gain - 2.5 2.6
Costs of pension change - (1.5) (1.5)
Restructuring costs (2.0) (1.0) (1.6)
------------------------------- ----------- ----------- --------------
Exceptional items before
tax (2.0) - (0.5)
------------------------------- ----------- ----------- --------------
Tax on exceptional items 0.4 - 0.1
------------------------------- ----------- ----------- --------------
Exceptional items (1.6) - (0.4)
------------------------------- ----------- ----------- --------------
Restructuring costs
Restructuring costs in both periods were incurred relating to a
reorganisation across a number of the group's manufacturing and
non-manufacturing locations.
Closure of Defined Benefit Section of the Pension Scheme
In the prior year, the closure of the Defined Benefit Section of
the Pension Scheme to future benefit accrual on 31 March 2016,
resulted in a curtailment gain of GBP2.6m. This non cash gain
represented a one off reduction in accounting liabilities as
benefits are no longer linked to future salary increases. The
Scheme had been closed to new members in 2001. Offsetting this gain
was a charge of GBP1.5m for transitional benefits provided to
active Pension Scheme members and the costs of closing the
scheme.
As part of the closure of the Defined Benefit Section of the
Pension Scheme the company made a one off cash contribution of
GBP3.6m in January 2016.
7. Income tax expense
Taxation of profit before tax in respect of the six months ended
31 March 2017 has been provided at the estimated effective rates
chargeable for the full year in the respective jurisdiction.
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016 GBPm
GBPm GBPm
-------------------- ----------- ----------- --------------
UK corporation tax 8.9 7.6 15.5
Overseas tax 1.1 1.1 1.7
Deferred tax 0.4 0.1 0.6
-------------------- ----------- ----------- --------------
10.4 8.8 17.8
-------------------- ----------- ----------- --------------
The deferred tax assets/liabilities at 31 March 2017 and 30
September 2016 have been calculated at a rate of 17%, being the UK
tax rate substantively enacted at the respective balance sheet
dates. At 31 March 2016, this change had not been substantively
enacted into law and therefore deferred tax was recognised at
18%.
8. Earnings per share
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016
--------------------------------- ----------- ----------- --------------
Earnings
per share - basic 46.4p 45.5p 96.8p
- diluted 46.3p 45.4p 96.7p
------------ ----------- ----------- --------------
Profit for the financial
period (GBPm) 39.7 38.7 82.5
--------------------------------- ----------- ----------- --------------
Weighted average
number of shares
used - basic 85,422,476 85,253,273 85,258,855
- diluted 85,599,364 85,368,640 85,343,190
-------------------- ----------- ----------- ----------- --------------
9. Derivative financial instruments
The notional contract amount, carrying amount and fair value of
the Group's forward exchange contracts and swaps are as
follows:
As at 31 As at 31 As at 30 September
March 2017 March 2016 2016
-------------- --------------------- --------------------- ---------------------
Notional Carrying Notional Carrying Notional Carrying
contract amount contract amount contract amount
amount and amount and amount and
fair fair fair
value value value
GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---------- --------- ---------- --------- ---------- ---------
Current
assets 44.7 1.7 1.0 1.4 (22.1) 2.1
Current
liabilities 140.2 (8.1) 168.6 (11.6) 196.9 (19.5)
--------------- ---------- --------- ---------- --------- ---------- ---------
184.9 (6.4) 169.6 (10.2) 174.8 (17.4)
-------------- ---------- --------- ---------- --------- ---------- ---------
The fair values have been calculated by applying (where
relevant), for equivalent maturity profiles, the rate at which
forward currency contracts with the same principal amounts could be
acquired on the balance sheet date. These are categorised as Level
2 within the fair value hierarchy under IFRS 7.
In addition to the above, GBP3.2m is included in current
liabilities in respect of the fair value of the derivative
instruments associated with TxV. Further details are provided in
note 10. These are categorised as Level 2 within the fair value
hierarchy under IFRS 7.
10. Investment in joint venture
On 10 January 2017 Victrex established a Joint Venture with
Tri-Mack Plastics which will focus on developing a new supply
chain, with the capability to manufacture, at scale, unique and
differentiated Loaded Brackets, blending new PEEK and PAEK polymer
grades and composite materials. The results and financial position
of TxV are consolidated into the group income statement and group
balance sheet respectively based on the level of control Victrex
exerts over TxV. Victrex's investment in TxV amounts to $14m.
Under the terms of the Joint Venture Agreement both parties have
access to financial derivatives over the equity of TxV. The nature
of these derivatives provides Victrex with the potential to
increase its level of ownership. Where this is not under Victrex's
control the exercise price of the derivative is recognised as a
financial liability as required by IAS 32 Financial Instruments -
Disclosure. The value of this liability is $4m. Where a financial
liability is recognised, the anticipated level of potential
ownership on exercise of the derivative is taken into account in
determining that a non-controlling interest should not be
recognised.
11. Exchange rates
The most significant Sterling exchange rates used in the
financial statements under the Group's accounting policies are:
Six months Six months Year ended
ended ended 30 September
31 March 2017 31 March 2016 2016
------------------ ------------------ ------------------
Average Closing Average Closing Average Closing
----------- -------- -------- -------- -------- -------- --------
US Dollar 1.41 1.25 1.55 1.44 1.54 1.31
Euro 1.28 1.15 1.37 1.26 1.35 1.18
Yen 158 141 182 162 179 135
----------- -------- -------- -------- -------- -------- --------
12. Reconciliation of profit to cash generated from operations
Six months Six months Year ended
ended ended 30 September
31 March 31 March 2016
2017 2016 GBPm
GBPm GBPm
--------------------------------- ----------- --------------------------- --------------
Profit after tax for
the period 39.7 38.7 82.5
Income tax expense 10.4 8.8 17.8
Operating profit 50.1 47.5 100.3
Adjustments for:
Depreciation 7.3 7.6 14.8
Amortisation 0.8 0.4 0.8
Loss on disposal of non-current 0.1 - -
assets
Increase in inventories (3.7) (9.8) (3.4)
Decrease/(increase) in
trade and other receivables 4.7 (3.0) (13.4)
Increase/(decrease) in
trade and other payables 9.5 0.8 (3.3)
Equity-settled share-based
payment transactions 0.9 0.9 1.8
(Gains)/losses on derivatives
recognised in income
statement that have not
yet settled (0.4) 0.7 5.4
Retirement benefit obligations
charge less contributions (0.9) (7.0) (7.0)
--------------------------------- ----------- --------------------------- --------------
Cash generated from operations 68.4 38.1 96.0
--------------------------------- ----------- --------------------------- --------------
13. Related party transactions
The Group's related parties are as disclosed in the Annual
Report and Financial Statements 2016. There were no material
differences in related parties or related party transactions in the
six months ended 31 March 2017 except for transactions with key
management personnel. The most significant of these was on 8
December 2016, under the 2009 Long Term Incentive Plan ('LTIP'),
when 41,469, 17,745, 15,379 and 14,802 share option awards were
granted to D R Hummel, L S Burdett, T J Cooper and M L Court
respectively at an option price of nil p per share when the market
price was 1,857p per share.
14. Subsequent events
On 3 April 2017, the Group acquired 100% of the issued share
capital of Zyex Limited, which is recognised as a global leader in
the manufacture of PEEK based fibres, principally for the
Aerospace, Automotive and Industrial markets. The consideration was
approximately GBP9.6m but will be finalised through a completion
accounts mechanism. The completion accounts are contracted to be
completed within 80 days, after which the initial fair value
accounting required by IFRS 3 Business Combinations will be
completed.
Responsibility Statement of the Directors
The Directors confirm that to the best of their knowledge:
-- The condensed consolidated interim financial statements have
been prepared in accordance with IAS 34 - Interim Financial
Reporting as adopted by the European Union; and
-- The Interim Management Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules of the
Financial Conduct Authority, being an indication of important
events that have occurred during the first six months of the
financial year and their impact on the condensed consolidated
financial statements and a description of the principal risks and
uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules of the
Financial Conduct Authority, being:
i. related party transactions that have taken place in the first
six months of the current financial year and that have materially
affected the financial position or performance of the entity during
that period; and
ii. any changes in the related party transactions described in
the last Annual Report that have done so.
The Directors of Victrex plc are detailed on pages 38 and 39 of
the Victrex plc Annual Report 2016.
By order of the Board
David Hummel Louisa Burdett
Chief Executive Group Finance Director
15 May 2017 15 May 2017
Forward-looking Statements
Sections of this Half-yearly Financial Report may contain
forward-looking statements, including statements relating to:
certain of the Group's plans and expectations relating to its
future performance, results, strategic initiatives and objectives,
future demand and markets for the Group's products and services;
research and development relating to new products and services; and
financial position, including its liquidity and capital resources.
These forward-looking statements are not guarantees of future
performance. By their nature, all forward looking statements
involve risks and uncertainties because they relate to events that
may or may not occur in the future, and are or may be beyond the
Group's control, including: changes in interest and exchange rates;
changes in global, political, economic, business, competitive and
market forces; changes in raw material pricing and availability;
changes to legislation and tax rates; future business combinations
or disposals; relations with customers and customer credit risk;
events affecting international security, including global health
issues and terrorism; the impact of, and changes in, legislation or
the regulatory environment (including tax); and the outcome of
litigation. Accordingly, the Group's actual results and financial
condition may differ materially from those expressed or implied in
any forward looking statements. Forward-looking statements in this
Half-yearly Financial Report are current only as of the date on
which such statements are made. The Group undertakes no obligation
to update any forward-looking statements, save in respect of any
requirement under applicable law or regulation. Nothing in this
press release shall be construed as a profit forecast.
Independent Review Report to Victrex plc
Introduction
We have been engaged by the Company to review the condensed set
of financial statements in the Half-yearly Financial Report for the
six months ended 31 March 2017 which comprises the Condensed
Consolidated Income Statement, Condensed Consolidated Statement of
Comprehensive Income, Condensed Consolidated Balance Sheet,
Condensed Consolidated Cash Flow Statement, Condensed Consolidated
Statement of Changes in Equity and the related explanatory notes.
We have read the other information contained in the Half-yearly
Financial Report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
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 Disclosure and Transparency Rules ('the DTR')
of the UK's Financial Conduct Authority ('the UK FCA'). 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 Half-yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-yearly Financial Report in accordance with
the DTR of the UK FCA.
The annual financial statements of the Company are prepared in
accordance with IFRS as adopted by the EU. The condensed set of
financial statements included in this Half-yearly Financial Report
has been prepared in accordance with IAS 34 - Interim Financial
Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-yearly
Financial Report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity issued by the Auditing Practices Board for use in the
UK. A review of interim financial information consists of making
enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK and Ireland) and consequently does not enable us to obtain
assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not
express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-yearly Financial Report for the six months ended 31
March 2017 is not prepared, in all material respects, in accordance
with IAS 34 as adopted by the EU and the DTR of the UK FCA.
Stuart Burdass (Senior Statutory Auditor)
for and on behalf of KPMG LLP
Chartered Accountants
1 St Peter's Square
Manchester
M2 3AE
15 May 2017
Shareholder Information
The Company's Annual Reports and Half-yearly Financial Reports
are available on request from the Company's Registered Office or to
download from our corporate website, www.victrexplc.com.
Financial calendar
Ex-dividend date for interim 8 June 2017
dividend
Record date for interim 9 June 2017
dividend ***
Payment of interim dividend 30 June
2017
2017 year end 30 September
2017
Announcement of 2017 full December
year results 2017
Annual General Meeting February
2018
Payment of final dividend February
2018
Victrex plc
Registered in England
Number 2793780
Registered Office:
Victrex Technology Centre
Hillhouse International
Thornton Cleveleys
Lancashire FY5 4QD
United Kingdom
Tel: +44 (0) 1253 897700
Fax: +44 (0) 1253 897701
Web: www.victrexplc.com
* References to core volumes, core revenue or core business
excludes Consumer Electronics
**Constant currency values have been reached by applying current
year (H1 2017) effective currency rates to prior year (H1 2016)
transactions
# Operating cash conversion is cash generated from operations /
operating profit
*** The date by which shareholders must be recorded on the share
register to receive the dividend
This information is provided by RNS
The company news service from the London Stock Exchange
END
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