REG - Victrex PLC - Half-year Report <Origin Href="QuoteRef">VCTX.L</Origin> - Part 2
16/05/2016 07:06
- Part 2: For the preceding part double click ID:nRSP2791Ya
detailed in the Group's Annual Report 2015. 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 2015.
5. Segment reporting
The Group's business is strategically organised as two business units:
Industrial (Victrex Polymer Solutions), which focuses on our transport,
industrial and electronics markets; and Medical (Invibio Biomaterial
Solutions), which focuses on providing specialist solutions for medical device
manufacturers.
Six months ended 31 March 2016 Six months ended 31 March 2015 Year ended 30 September 2015
Industrial Medical Group Industrial Medical Group Industrial Medical Group
£m £m £m £m £m £m £m £m £m
Revenue from external sales 91.8 25.2 117.0 104.4 25.9 130.3 213.0 50.5 263.5
Segment gross profit 51.4 22.2 73.6 61.6 22.9 84.5 123.9 44.3 168.2
Sales, marketing and administrative expenses (26.1) (30.8) (61.9)
Operating profit 47.5 53.7 106.3
Net financing income - 0.2 0.1
Profit before tax 47.5 53.9 106.4
Income tax expense (8.8) (11.5) (22.9)
Profit for the period attributable toowners of the parent 38.7 42.4 83.5
6. Exceptional items
Six months ended31 March 2016£m Six months ended31 March 2015£m Year ended30 September 2015£m
Included within Sales, marketing and administrative expenses
Pension curtailment gain 2.5 - -
Costs of pension change (1.5) - -
Restructuring costs (1.0) - -
Exceptional items before tax - - -
Tax on exceptional items - - -
Exceptional items - - -
-
Closure of Defined Benefit Section of the Pension Scheme
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 £2.5m.
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 is a charge of £1.5m
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 contribution of £3.6m in January 2016.
Restructuring costs
Restructuring costs have been incurred relating to a reorganisation at one the
group's manufacturing sites.
7. Income tax expense
Taxation of profit before tax in respect of the six months ended 31 March 2016
has been provided at the estimated effective rates chargeable for the full
year in the respective jurisdiction.
Six months ended31 March 2016£m Six months ended31 March 2015£m Year ended30 September 2015£m
UK corporation tax 7.6 11.0 20.8
Overseas tax 1.1 1.0 1.4
Deferred tax 0.1 (0.5) 0.7
8.8 11.5 22.9
22.9
In the 2015 Budget, the Chancellor announced that the main rate of corporation
tax for UK companies would reduce from 20% to 19% with effect from 1 April
2017, with a further reduction from 19% to 18% with effect from 1 April 2020.
This was substantively enacted in law in October 2015.
In accordance with IAS 12 - Income Taxes, the deferred tax liabilities and
assets have been calculated using a rate of 18%, being the expected applicable
rate when these assets and liabilities are realised / settled.
In the 2016 Budget, the Chancellor announced that the main rate of corporation
tax for UK companies would now reduce from 19% to 17% with effect from 1 April
2020. At the date of these accounts, this change has not been substantively
enacted into law and therefore deferred tax continues to be recognised at
18%.
8. Earnings per share
Six months ended31 March 2016 Six months ended31 March 2015 Year ended30 September 2015
Earnings per share - basic 45.5p 49.8p 98.1p
- diluted 45.4p 49.6p 97.9p
Profit for the financial period (£m) 38.7 42.4 83.5
Weighted average number of shares used - basic 85,253,273 85,116,667 85,105,903
- diluted 85,368,640 85,345,828 85,288,956
9. Exchange rates
The most significant Sterling exchange rates used in the financial statements
under the Group's accounting policies are:
Six months ended31 March 2016 Six months ended31 March 2015 Year ended30 September 2015
Average Closing Average Closing Average Closing
US Dollar 1.55 1.44 1.66 1.48 1.63 1.51
Euro 1.37 1.26 1.23 1.38 1.24 1.36
Yen 182 162 172 178 175 181
The average rates reflect a blend of the spot rate and the contract rate in
place at the time of the transactions.
10. Reconciliation of profit to cash generated from operations
Six months ended31 March 2015£m Six months ended31 March 2015£m Year ended30 September 2015£m
Profit after tax for the period 38.7 42.4 83.5
Income tax expense 8.8 11.5 22.9
Net financing income - (0.2) (0.1)
Operating profit 47.5 53.7 106.3
Adjustments for:
Depreciation 7.6 5.5 12.5
Amortisation 0.4 - 0.4
Loss on disposal of non-current assets - 0.1 0.3
Increase in inventories (9.8) (3.1) (11.3)
(Increase)/decrease in trade and other receivables (3.0) 1.2 (1.4)
Increase in trade and other payables 0.8 2.0 2.9
Equity-settled share-based payment transactions 0.9 0.8 1.8
Changes in fair value of derivative financial instruments 0.7 1.5 1.0
Retirement benefit obligations charge less contributions (7.0) (0.8) (0.6)
Cash generated from operations 38.1 60.9 111.9
(0.6)
Cash generated from operations
38.1
60.9
111.9
11. Related party transactions
The Group's related parties are as disclosed in the Annual Report and
Financial Statements 2015. There were no material differences in related
parties or related party transactions in the six months ended 31 March 2016
except for transactions with key management personnel. The most significant of
these was on 14 December 2015, under the 2009 Long Term Incentive Plan
('LTIP'), when 34,256, 17,685, 15,327 and 14,752 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 1,790p per
share.
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 36 and 37 of the Victrex
plc Annual Report 2015.
By order of the Board
David Hummel
Chief Executive
16 May 2016
Louisa Burdett
Group Finance Director
16 May 2016
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 2016 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 2016 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
16 May 2016
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 dividend 9 June 2016
Record date for interim dividend ** 10 June 2016
Payment of interim dividend 1 July 2016
2016 year end 30 September 2016
Announcement of 2016 full year results December 2016
Annual General Meeting February 2017
Payment of final dividend February 2017
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
* Operating cash conversion: 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 ExchangeRecent news on Victrex
See all newsREG - Victrex PLC - Director/PDMR Shareholding
AnnouncementREG - Victrex PLC - Director/PDMR Shareholding
AnnouncementREG - Victrex PLC - Director/PDMR Shareholding
AnnouncementREG - Victrex PLC - Director/PDMR Shareholding
AnnouncementREG - Victrex PLC - Directorate change
Announcement