REG - Victrex PLC - Victrex plc – Preliminary Results 2022
06/12/2022 07:00
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RNS Number : 6732I Victrex PLC 06 December 2022
6 December
2022
Victrex plc - Preliminary Results 2022
'Record revenue & volume; solid underlying PBT growth, despite cost
headwinds & currency'
Victrex plc is an innovative world leader in high performance polymer
solutions, delivering sustainable products which enable environmental and
societal benefit. This announcement covers preliminary (audited) results for
the 12 months ended 30 September 2022.
FY 2022 FY 2021 % change (reported) % change
(constant currency)(1)
Group sales volume 4,727 tonnes 4,373 tonnes +8% N/A
Group revenue £341.0m £306.3m +11% +10%
Gross profit £174.5m £165.3m +6% +10%
Gross margin 51.2% 54.0% -280bps N/A
Underlying PBT(1) £95.6m £91.7m +4% +12%
Reported PBT £87.7m £92.5m -5% +2%
Underlying EPS(1) 95.0p 83.4p +14% N/A
EPS 87.6p 84.3p +4% N/A
Dividend per share (regular & special dividends) 59.56p 109.56p -46% N/A
Highlights:
• Strong core growth; revenue up 11%, volume up 8% & better
pricing
- Double-digit growth in Electronics, Energy & Industrial, Value
Added Resellers (VAR)
- Aerospace improving; Semiconductor challenges impacting Automotive
- Continued progress in Medical, revenue +14%
- Improved pricing in H2 (H2 2022 ASP up 4% vs H1 & FY 2022 ASP up
3%)
• Solid underlying PBT growth, up 4% & 12% in constant currency,
offset by cost inflation
- Underlying profit before tax (PBT) up 4% at £95.6m & up 12% in
constant currency
- Reported PBT £87.7m, reflecting year 1 ERP investment (exceptional
items of £7.9m)
- Gross profit up 6% to £174.5m, despite significantly higher cost of
manufacture
- Gross margin impacted by lag in inflation recovery & currency,
despite efficiency gains
- Continuing action to mitigate inflation
• Strong progress in 'mega-programme' growth pipeline
- Medical:
· PEEK Knee clinical trial well progressed, 30 implants & 12
patients >12 months
· New development relationship with top 5 Knee company Aesculap
· First implants for In2Bones Trauma plates based on Victrex(TM)
PEEK
- Industrial:
· New business wins in E-mobility
· 1st prototype parts in Aerospace Structures; potential for
10-fold PEEK content increase
· Continuing support to TechnipFMC for Magma, with new scale-up
facility in Brazil
• Further progress on ESG: enabling environmental & societal
benefit
- 100% renewable electricity at all UK sites
- Initial Scope 3 emissions assessment completed, with opportunities
identified
- Sustainable products represent 48% of Group revenues(1)
• Solid cash generation underpins growth investment & returns
- FY 2022 available cash(1) of £66.0m*, post-payment of FY 2021 special
dividend
- Commissioning underway for new PEEK facility in China
- Final dividend of 46.14p/share, total FY 2022 dividends 59.56p/share
(1) Alternative performance measures and other internal metrics are defined
below
*excludes £2.8m of cash ring-fenced in the Group's Chinese subsidiaries and
includes £10.1m in 95-day notice deposit accounts
Commenting on the Group's results, Jakob Sigurdsson, Chief Executive of
Victrex, said:
"This was a record year for revenue and volume. We delivered good progress
across the majority of our end-markets, new application growth and improved
pricing, as we continue to recover cost inflation. It was also pleasing to see
double-digit growth in Medical. We are prioritising investment in this
business, with the intention of Medical contributing over one-third of Group
revenues in the longer term.
Underlying PBT up 4% and 12% in constant currency, offset by lag in inflation
recovery
"Victrex continues to face unprecedented energy and raw material inflation,
which we will help mitigate through price and efficiency. Despite this, the
Group delivered solid growth in underlying PBT, which was up 4% and 12% in
constant currency. Higher year-on-year production also helped improve
operating efficiency.
Increasing commercialisation in mega-programme portfolio
"Looking towards our future growth, we made strong progress in our
mega-programmes. Thirty patients are now implanted with a PEEK Knee as part of
the clinical trial, including twelve post-12 months. We will also now be
working with Aesculap, a top 5 Knee company, in a collaboration which offers
significant potential. In Trauma, In2Bones saw patient surgeries using our
PEEK composite trauma plates. We also gained new E-mobility business and saw
the first sizeable structural parts exhibited by Airbus as part of the
Aerospace Structures programme. These offer the potential for a 10-fold
increase in PEEK content for future aircraft.
Sustainable products enabling environmental & societal benefit for
customers and the planet
"Victrex is closely aligned to future megatrends and ESG is at the heart of
our business model. Our sustainable products represent 48% of revenues and
enable environmental & societal benefits by supporting CO2 reduction,
energy efficiency and improved patient outcomes.
Strong financial position
"With a strong financial position, we can support growth investment, which is
our priority, as well as attractive shareholder returns. As part of these
results, we will engage with shareholders on a proposed update to our capital
allocation framework, specifically share buybacks and special dividends.
Outlook
"Several end-markets are yet to fully recover from the effects of the pandemic
and we continue to see good growth opportunities across the Group. However, we
are mindful of the uncertain macro-economic outlook for 2023 and some signs
that VAR volumes are edging down slightly, to more normalised levels. This
means the opportunity to improve on last year's record Group volume is likely
to be challenging. We also face further and significant year-on-year energy
and raw material inflation, although additional pricing actions are in
progress, with a timing lag.
"Overall, we have seen a steady start to the year and are focused on modest
revenue and profit growth. This includes the benefit from pricing, an
improved sales mix and currency tailwinds. We will also see further investment
in our long-term growth programmes, as they progress towards greater
commercialisation."
About Victrex:
Victrex is an innovative world leader in high performance polymer solutions,
focused on the strategic markets of automotive, aerospace, energy &
industrial, electronics and medical. Every day, millions of people use
products and applications which contain our sustainable materials - from
smartphones, aeroplanes and cars to energy production and medical devices.
With over 40 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, enable environmental and
societal benefits, and drive value for our shareholders. Find out more
at www.victrexplc.com (http://www.victrexplc.com)
A presentation for investors and analysts will be held at 9.00am (GMT) this
morning at JP Morgan, 1 John Carpenter Street, London EC4Y 0JP. A conference
call facility is available, to register, please follow the link:
https://cossprereg.btci.com/prereg/key.process?key=P4CX3XD7P
(https://eur01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fcossprereg.btci.com%2Fprereg%2Fkey.process%3Fkey%3DP4CX3XD7P&data=05%7C01%7Cahanson%40victrex.com%7Cd3a6b78f319445eab32a08dacbde0fab%7C8b5cc50fa14944bd9ddc9d27ea6d720e%7C0%7C0%7C638046451853944899%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=A35msn8Q%2B0h%2Bp6clcUpenGAdteLlqPwSSCKJwu%2FSYQU%3D&reserved=0)
The presentation will be available to download from 8.30am (GMT) today on
Victrex's website at www.victrexplc.com (http://www.victrexplc.com) under the
Investors/Reports & Presentations section.
Victrex plc:
Andrew Hanson, Director of Investor Relations, Corporate Communications &
ESG +44 (0) 7809 595831
Ian Melling, Chief Financial Officer
+44 (0) 1253 897700
Jakob Sigurdsson, Chief Executive
+44 (0) 1253 897700
Preliminary results statement for the 12 months ended 30 September 2022
'Record revenue & volume; solid underlying PBT growth despite cost
headwinds & currency'
Operating review
Strong growth in Group revenue, up 11%; a range of Sustainable products
Group revenue was up 11% at £341.0m (FY 2021: £306.3m), which was driven by
a strong performance in most of our Industrial end markets and further
improvement in Medical.
In constant currency(1) Group revenue was 10% up on the prior year.
Our measure of sustainable products, primarily for end markets which enable
environmental benefit (CO2 reduction), energy efficiency and improving patient
outcomes, was stable at 48% of Group revenues (FY 2021: 49%) despite a drop in
Automotive revenues. Sustainable products are defined as those which offer a
quantifiable environmental or societal benefit. These are primarily in
Automotive, Aerospace (supporting CO2 reduction) and Medical, with some
applications in Energy and Industrial and Electronics (e.g. wind energy
applications, or those which support energy efficiency), with Oil & Gas
excluded, as is VAR currently.
FY sales volume up 8%
Group sales volume of 4,727 tonnes was 8% up on the prior year (FY 2021: 4,373
tonnes), driven by a strong performance across a number of end-markets,
principally Electronics, Energy & Industrial and VAR, offset by ongoing
weakness in Automotive.
Q4 revenue & volume
Q4 revenue of £87.6m (Q4 2021: £74.4m) was 18% ahead of the prior year,
whilst Q4 sales volume of 1,140 tonnes saw 5% growth on the prior year (Q4
2021: 1,085 tonnes). The stronger revenue performance in the quarter reflects
the benefit of price increases and an improved sales mix, offset by some
normalisation in VAR volumes.
Strong growth in Industrial & further progress in Medical
Our Industrial division reported revenues of £282.7m, 11% up on the prior
year (FY 2021: £255.2m) and 11% up in constant currency, with growth being
driven by Electronics, Energy & Industrial and VAR. Within Transport,
Automotive sales volume was down 2%, as a result of the current challenges in
Semiconductor impacting the Automotive industry, although we note industry
forecasts suggesting car production rates will improve into 2023. In
Aerospace, we saw good revenue growth - volumes were up 2% - thanks to an
improved sales mix and greater commercialisation of our composite business,
including for next generation aircraft. We also note recent build rate
increases by both of the key aerospace manufacturers, which should support
continued improvement into FY 2023.
Medical revenues were £58.3m, up 14% on the prior year (FY 2021: £51.1m) and
9% ahead in constant currency(1). We saw strong growth (revenues +40%) in
Asia, despite lockdowns during the second half in China. Within Spine, which
saw 2% growth in revenue, we are also moving closer to US FDA submission for
Porous PEEK spinal cage, supported by our investment in Bond 3D. Our
PEEK-OPTIMA™ HA Enhanced product continues to see steady commercial
traction, with an increased range of applications beyond Spine. Our non-Spine
business also continues to see good growth, particularly in Trauma, Cardio and
Drug Delivery. Non-Spine now represents 50% of Medical revenues (FY 2021:
45%).
ASP improvement in H2 2022, reflecting price increases and currency
Our Average Selling Price (ASP) of £72.1/kg was up 3% compared to FY 2021 (FY
2021: £70.0/kg), with H2 2022 ASP of £73.4/kg being 4% ahead of the first
half of 2022 (H1 2022: £70.7/kg), as we saw the benefit of price increases to
customers kicking in. We also saw some benefit from currency at the revenue
level in the second half, as Sterling weakened. Sales mix in FY 2022 was
similar to the prior year, with the Industrial based end markets of
Electronics, Energy & Industrial and VAR driving much of the growth.
In line with previous guidance, we expect to see the annualised benefit of
price increases during FY 2023, with additional inflation recovery actions in
progress, to reflect the unprecedented further increases in energy and raw
material inflation, leading to a significantly higher cost of manufacture.
Price pass through reflected the additional costs borne by Victrex alongside
our investment in technical service and innovation, whilst balancing long term
customer relationships, particularly customers who we have and continue to
build a pipeline of opportunities with. As a material solutions business, the
necessity of passing through non-structural costs led us to broaden the
mechanisms for passing through cost inflation, which includes surcharge
pricing. Whilst a typical timing lag occurs between price increases being
agreed and contract renewals, we will continue to strengthen our options for
passing through cost inflation.
Cost inflation for FY 2023, based on current energy and raw material prices,
could be at a similar year-on year level as FY 2022, at around £20m, although
we welcome the benefit of the UK Government's energy price cap for business,
which will provide some protection during the first half.
Core business application pipeline
Our core business application pipeline is a good indicator of the health of
our core business as we work with Original Equipment Manufacturers (OEMs) and
Tier 1 suppliers to develop new applications for PEEK. Our Mature Annualised
Revenue(1) (which could occur only if all targets convert) within the core
application pipeline is £294 million (FY 2021: £325m), which reflects
conversion of previous pipeline targets, as well as some refinement of the
growth opportunities we are progressing.
Good progress in mega-programme milestones
FY 2022 saw us deliver a number of key milestones in our portfolio of
mega-programmes (seven mega-programmes in total) as we progress towards
greater commercialisation. Whilst individual timelines remain subject to
change, the long-term prospects in each programme continue to be attractive
and with the technical proposition proven in each programme, our focus is on
commercial adoption. Highlights include good progress in PEEK Gears,
prototype revenue for our Aerospace Composites programme and ongoing revenues
in support of qualification pipes for TechnipFMC (Magma).
FY 2022 also saw particularly good progress in Medical, where the PEEK Knee
clinical trial saw strong progress, and we saw a 510(k) regulatory approval
for PEEK composite Trauma plates in the US and patient implants. In Aerospace,
we saw the first large scale PEEK demonstrator parts delivered as part of our
Airbus development programme; and in Automotive, we secured new business wins
in E-mobility.
Our PEEK Knee programme has now seen 30 patients having implants, including 12
who have successfully passed the primary end-point of 12-month clinical stage,
with no remedial intervention required. Together with our development partner
Maxx Orthopaedics, we are preparing for an additional trial site in the US. We
will also be working with Aesculap (a top 5 Knee company) in a development
programme to support the route to commercialisation.
Knee remains potentially the most significant of our mega-programmes, with an
addressable market of approximately $1 billion, utilising PEEK over Cobalt
Chrome.
Our Trauma pipeline continues to build, following the agreement with US based
In2Bones for composite plates and a 510(k) regulatory approval within the US.
We also secured our first Asia customer product launch and are finalising
development collaborations to support launches in China. The first patient
implants through our In2Bones partnership for PEEK based trauma plates have
now been completed.
In our Aerospace Loaded Brackets programme, additional orders for composite
parts, reflecting mega-trends aligned to light-weighting, CO2 reduction and
faster processing, offer a good mid-term opportunity, supported by ongoing
recovery in this end market.
We are also working on new partner collaborations via our US composite parts
facility, with Aerospace OEMs and Tier 1 companies.
In our 'Aerospace Structures' programme, which links to our development
alliance with Airbus as part of their Clean Sky II programme, we are now
delivering prototype revenue via the world's first large scale PEEK test
parts. Development and commercialisation of thermoplastic composites in
Aerospace continues to offer a sizeable opportunity, across larger primary and
secondary Aerospace structures, such as wings and fuselage parts. Aerospace
Structures builds on Victrex's Aerospace Loaded Brackets programme, with our
AE(TM)250 composites grade being integral to both of these opportunities. A
number of significant demonstrator parts were exhibited during the year at the
JEC Composites show in Paris, including large engine housing applications and
wing ribs, all based on Victrex(TM) PEEK and our AE(TM)250 composite tape.
These opportunities could materially increase PEEK content in next generation
aircraft - potentially 10-fold - which are planned for later this decade.
Within PEEK Gears, which now have several initial contracts 'on the road'
following a first supply agreement in 2018, we improved on last year's
milestone of delivering meaningful revenue of >£1m. This year overall PEEK
Gear revenue which includes both parts manufactured by Victrex and polymer
resin based PEEK gear sales, totalled over £4m. A number of PEEK Gear
programmes involved manufacturing by our partners, but with the knowhow and
intellectual property ('IP') led by Victrex. PEEK Gears continue to have
application uses across both traditional internal combustion engines (ICEs)
and electric vehicles (EVs).
FY2022 saw us secure new business wins for our next generation E-mobility
programme and better than expected progress. This mega-programme focuses on
applications across electric vehicles, in particular for high-voltage next
generation programmes (800 volt batteries and applications). Business wins
include an Aptiv(TM) film based opportunity. PEEK will be used in specific
applications where durability, heat resistance and light-weighting are all
key. We have also increased our development programmes as we move closer to
greater commercialisation. Our assessment of the potential PEEK content per
vehicle is more than 100g (from approximately 10g today), as we focus on the
high performance needs of next generation electric vehicles.
As part of our Magma composite pipe programme for the energy industry,
TechnipFMC is seeking to accelerate the significant opportunities for
thermoplastic composite pipe in deepwater fields in Brazil. Victrex continues
to work in close collaboration with TechnipFMC as a strategic supply partner,
with multi-year supply agreements in place and industry qualifications based
on Victrex(TM) PEEK and our composite tape (Victrex supplies both the polymer
resin and composite tape and holds the intellectual property for extrusion of
the PEEK pipe). TechnipFMC is currently focusing on manufacturing scale up in
Brazil, with a new pipe extrusion facility in Brazil under construction, to
support bid programmes which have now been submitted and are awaiting
outcomes. FY 2023 will see support for TechnipFMC's preparations and we expect
to see continued development revenues during the year as qualification pipes
progress - extruded by Victrex - through the supply chain.
Innovation investment
Our culture of innovation and to support application development, means we
continue to invest behind our growth programmes. R&D investment
represented 5% of revenues(1) and at £15.7m, was slightly above the prior
year (FY 2021: £15.5m). Of R&D investment focused on individual
projects, approximately 89% of this is now aligned to programmes supporting
sustainable products. Going forward, we expect to focus primarily on our total
investment in sustainable products or programmes as a proportion of total
R&D investment (rather than project-based investment). For FY 2023, we
will see a modest investment in a New Product Development (NPD) Centre in
Leeds, UK, to support new roles and capability as part of our Medical
Acceleration programme.
Financial review
Gross profit 6% ahead despite higher cost of manufacture
Our Polymer & Parts strategy seeks to deliver continued growth in our core
polymer business, as well as drive an increasing contribution from our
mega-programmes (parts). We have the opportunity to gain additional revenue
and profit streams over the medium to long term from selling a semi-finished
or finished component or part, despite the higher unit cost of manufacture and
slightly lower gross margin percentage in selected parts compared to polymer.
Gross profit was 6% ahead at £174.5m (FY 2021: £165.3m), offset by the
higher overall cost of manufacture driven by higher energy and raw material
costs.
We made good progress during the year on operating efficiency and asset
utilisation, with production volume being much closer to sales volume
(compared to FY 2021 where sales volume saw a significant drawdown of
inventory). Under absorbed fixed costs continue to reduce, with lower
utilisation now being primarily in our newer downstream manufacturing assets
(parts), rather than our main polymer plants.
Remain focused on gross margin improvement
Full year Group gross margin of 51.2% was lower than the prior year (FY 2021:
54.0%), with good progress in operating efficiency being offset by the
unprecedented energy cost inflation, which spiked in the second half.
Progress in our gross margin, to above a mid 50% level, was therefore
impacted by the lag in recovery of cost inflation through price increases, as
well as other efficiency programmes. Currency also impacted gross margin.
For the medium term, we remain focused on improving our gross margin, with
further opportunities to enhance operating efficiency (primarily driven by
asset utilisation). Key drivers of margin improvement include the full benefit
of our price recovery programme, continued asset utilisation improvement -
including commercialisation of our China facilities, which will be an
incremental impact on margin in FY 2023 as we move through commissioning - and
sales mix. We are also mindful of the potential costs associated with
delivering our Sustainability goals. We recently saw phase 1 of our UK
debottlenecking programme completed, which should support enhanced operating
efficiency over the medium term.
Gains & losses on foreign currency net hedging
Fair value gains and losses on foreign currency contracts, where net hedging
is applied on cash flow hedges, are required to be separately disclosed on the
face of the Income Statement. In FY 2022, a loss of £2.8m (FY 2021: gain of
£4.9m) has been recognised accordingly, largely from contracts where the deal
rate obtained (placed up to 12 months in advance in accordance with the
Group's hedging policy) was unfavourable to the average exchange rate
prevailing at the date of the related hedged transactions, following the
devaluation of Sterling during H2 2022.
Currency headwind
FY 2022 saw a currency headwind of approximately £7m at PBT level, reflecting
the strengthening of Sterling in the prior year when hedging was put in place.
At this early stage, currency for FY 2023 is tracking as a modest tailwind of
£4m-£6m at PBT level, driven by weaker Sterling against the US Dollar and
Euro, although we note ongoing volatility in currency markets.
Our hedging policy seeks to substantially protect our cash flows from currency
volatility on a rolling twelve-month basis. The policy requires that at
least 80% of our US Dollar and Euro cash flow exposure is hedged for the first
six months, then at least 75% for the second six months of any twelve-month
period. The implementation of the policy is overseen by an Executive
Currency Committee which approves all transactions and monitors the policy's
effectiveness. With our hedging programme for FY 2023 largely covered, at more
than 80%, average contracted rates for FY 2023 are 1.30 against the US Dollar
and 1.16 against the Euro. Current rates imply a further modest tailwind in FY
2024.
Cost focus for operating overheads
Operating overheads(1), which excludes exceptional items of £7.9m, increased
to £78.1m (FY 2021; £72.7m) primarily driven by higher innovation
investment, offset by a slightly lower bonus pool compared to the prior year.
Excluding exceptional items and bonus, overheads increased by 12%.
Our Group All Employee Bonus Scheme is based on a budget-based target, with a
cap in place. Last year, we also introduced ESG goals into Executive
remuneration targets.
For FY 2023, with wage inflation and some targeted innovation spend, we
envisage at least a high single digit % increase in operating overheads, with
innovation investment including our NPD facility in Leeds for Medical. We will
also have incremental year-on-year costs for our new China manufacturing
investments through the commissioning phase. From FY 2023, the Group's All
Employee Bonus & Share Schemes will start to - in the case of long-term
share programmes - reflect incentive targets put in place from FY 2020, with
subsequent good growth post the pandemic. Market based share schemes issued
prior to the pandemic have largely failed to vest.
Underlying PBT up 4% and up 12% in constant currency, offset by lag in cost
inflation recovery
Reported PBT reduced by 5% reflecting exceptional items of £7.9m (FY 2021:
credit of £0.8m), representing the cost of implementing a new ERP software
system. In previous years these costs would have been capitalised but are now
expensed in line with IFRIC guidance. The implementation will be completed in
2024, with an anticipated total expensed cost of approximately £15m - £20m.
This will offer us greater digitalisation across functions, supporting process
efficiency and ongoing relationships with customers and suppliers.
Underlying PBT of £95.6m was up 4% on the prior year (FY 2021: £91.7m),
offset by currency and the timing lag from inflation recovery. Underlying PBT
in constant currency was up 12%.
Earnings per share up 4%
Basic earnings per share (EPS) of 87.6p was 4% up on the prior year (FY 2021:
84.3p per share), reflecting the impact of exceptional items on reported PBT.
Underlying EPS was up 14% at 95.0p (FY 2021: 83.4p).
Taxation
Victrex continues to benefit from the reduced tax rate on profits taxed under
the UK Government's Patent Box scheme, which incentivises innovation and
consequently highly skilled Research & Development jobs within the UK. For
FY 2022, the effective tax rate was 13.9%, lower than the prior year (FY 2021:
21.3%), which is primarily a result of the remeasurement of UK deferred tax
balances from 19% to 25% in FY 2021, reflecting the increase in the
substantively enacted UK Corporation Tax rate applicable from 1 April 2023.
Taxation paid was £10.6m (FY 2021: £8.6m). Whilst the UK corporation tax
rate is currently 19%, because of the availability of the reduced rate on
profits taxed under Patent Box, our mid-term guidance at this stage remains
for an effective tax rate of approximately 12%-15%, subject to global taxation
developments, which continue to be monitored.
Strong balance sheet
With our strong balance sheet, we underpin our ability to invest and support
security of supply for customers. Net assets at 30 September 2022 totalled
£490.6m (FY 2021: £511.7m).
Inventory increased on raw material build and cost inflation
With the significant sales inventory unwind during FY 2021, this year has
focused on ensuring raw material inventories reached safety stock levels, to
support security of supply for customers. Total closing inventory was £86.8m
(FY 2021: £70.3m), including the impact of higher energy and raw material
costs. In FY 2023 reflecting further recovery of raw material and finished
goods stocks, as well as inventory build to support us through shutdowns
associated with the UK debottlenecking programme, we anticipate a total
inventory position in excess of £100m. These items, in addition to the higher
unit cost of manufacture, are expected to be the key drivers of inventory
movement.
Pensions
Our UK Defined Benefit (DB) pension scheme closed to future accrual in 2016.
The investment strategy, like many companies, has been to hedge interest and
inflation risk using Liability Driven Instruments ("LDIs"). As gilt yields
have risen, the pension scheme has faced cash calls from the LDI manager which
have been met using existing resources within the scheme. The scheme retains
sufficient liquid investments to be able to respond to further LDI cash
requirements should they be required, with management continuing to work
closely with the trustee. The use of LDI's as a hedge to interest rate risk
has worked effectively through to 30 September 2022, with the gross assets and
liabilities of the scheme reducing by approximately £30m each with the UK net
asset increasing by £0.7m to £14.9m. The medium-term target of reaching a
buyout position remains, and we expect to continue making an annual voluntary
contribution, where required, of £1m to the scheme to support this goal.
Investment in capacity and growth
Growth investment remains the priority, with cash capital investment of
£45.5m (FY 2021: £41.9m), of which a significant proportion was to support
our China manufacturing investments, which will provide additional capability
to support customers in China. For our UK assets, we also commenced a
multi-year investment to support efficiency improvement and gain incremental
capacity. We anticipate this will be approximately £15m in total, with year 1
now completed. Year 2 has now commenced and we anticipate a further £10m
spread over the next three financial years included within the annual capital
budget.
Following these investments, and subject to no material large scale capacity
investment for several years, our annual capital expenditure guidance is based
on approximately 8-10% of sales. This also reflects some in-built investment
to support process change aligned to our ESG goals (for example being able to
access alternative fuels and adjustments needed to our manufacturing process).
Capital expenditure for FY 2023 is expected to be similar to FY 2022, at
approximately £45m-£50m.
Healthy cash generation
The Group's business model and focus on the high performance materials area
continues to support good cash generation. Cash generated from operations was
£90.7m (FY 2021: £135.5m), giving an operating cash conversion(1) of 49% (FY
2021: 100%). Inventory has increased compared to the prior year period,
reflecting recovery of inventory from much lower levels in the pandemic, as
previously communicated. In addition, trade and other receivables have also
increased due to a stronger sales performance in FY 2022.
Cash and other financial assets at 30 September 2022 was £68.8m (FY 2021:
£112.4m). This includes £2.8m ring-fenced in our China subsidiaries (FY
2021: £12.5m) and other financial assets of £10.1m, representing cash which
was held on 95-day deposit (FY 2021: £37.5m). In February 2022 we paid the
2021 full year final dividend of 46.14p/share and a 50p/share special dividend
at a cash cost of £83.5m combined. For our China manufacturing facilities,
we also have a RMB400m borrowing facility (£45m equivalent) in China in
support of our investments there, of which RMB123m (£15.7m at closing rates)
was drawn down at 30 September 2022 (30 September 2021: n/a).
Dividends
Reflecting the Group's strong trading performance in FY 2022, whilst balancing
the uncertain macro-economic outlook over the coming months, the Board is
proposing a final dividend of 46.14p/share (FY 2021: 46.14p/share), giving
total dividends for the year of 59.56p/share. The closing available cash
balance of £66.0m was below the threshold to pay a special dividend.
Capital allocation update: special dividends & buybacks
Whilst growth investment remains the priority, we are engaging with
shareholders as part of this results cycle, to gauge opinion on the
opportunity for return options including share buybacks and special dividends
within our capital allocation policy. With capital expenditure set to reduce
after FY 2023, subject to no additional opportunities to support growth, the
medium-term opportunity for incremental returns to shareholders remains
attractive.
Sustainability & ESG: enabling environmental & societal benefit
As well as enabling environmental & societal benefit for our customers
through our products, we continue to receive good feedback on our
Sustainability & ESG strategy and 2030 carbon net zero aspiration (Scope 1
& 2 emissions, based on 2019 manufacturing footprint). During the year we
also completed an initial Scope 3 inventory assessment, as well as a Lifecycle
Analysis for products which represent approximately two-thirds of Group
revenue. Our Lifecycle Analysis assessment - which reviews our carbon
footprint - indicates that our main grade of VICTREX(TM) PEEK is more
favourable than the industry average for PEEK manufacturing's global warming
potential (GWP).
Outlook
Several end-markets are yet to fully recover from the effects of the pandemic
and we continue to see good growth opportunities across the Group. However, we
are mindful of the uncertain macro-economic outlook for 2023 and some signs
that VAR volumes are edging down slightly, to more normalised levels. This
means the opportunity to improve on last year's record Group volume is likely
to be challenging. We also face further and significant year-on-year energy
and raw material inflation this year, although additional pricing actions are
in progress, with a timing lag.
Overall, we have seen a steady start to the year and are focused on modest
revenue and profit growth. This includes the benefit from pricing, an
improved sales mix and currency tailwinds. We will also see further investment
in our long-term growth programmes, as they progress towards greater
commercialisation.
Jakob Sigurdsson
Chief Executive, 6 December 2022
(1) Alternative performance measures and other internal metrics are defined
below.
DIVISIONAL REVIEW
Industrial
12 Months 12
Months
Ended Ended %
30 Sept 30 Sept % Change
2022 2021 Change (constant
£m £m (reported) currency)
Revenue 282.7 255.2 +11% +11%
Gross profit 124.8 119.7 +4% +10%
Divisional performance is reported through Industrial and Medical, although we
continue to provide an end market-based summary of our performance and growth
opportunities. Within Industrial, we have the end markets of Energy &
Industrial, Value Added Resellers (VAR), Transport (Automotive &
Aerospace) and Electronics.
The Chief Commercial Officer oversees the Industrial business, including the
Industrial based mega-programmes. A summary of all the mega-programmes and the
strong progress made during the year, is covered earlier in this report.
The Industrial division saw record revenue of £282.7m (FY 2021: £255.2m), up
11% on the prior year, with double-digit growth across Electronics, Energy
& Industrial and VAR. Revenue in constant currency was up 11%. Despite
improved asset utilisation and operating efficiency, a softer sales mix, the
impact of foreign currency exchange and unprecedented energy and raw material
inflation meant that gross margin was down 280bps to 44.1% (FY 2021: 46.9%).
Energy & Industrial
This segment is driven by volumes for oil & gas and new energy
applications, including renewables, and a wide range of applications across
General Industrial. Energy & Industrial saw sales volume of 830 tonnes,
which was up 9% on the prior year (FY 2021: 760 tonnes), with Energy up 19%
overall, driven by global activity levels and higher capital investment for
exploration and processing. Victrex(TM) PEEK has a long-standing track record
of durability and performance benefit in many demanding applications, where
the reliability of PEEK can mean less intervention or downtime, thereby
supporting efficiency of operation. More recently, the introduction of
cryogenic grades of PEEK - being able to withstand extreme temperatures - has
helped to further broaden the portfolio, with new application opportunities in
Liquefied Natural Gas (LNG) and some assessment of applications in Hydrogen.
General Industrial focuses on applications across fluid handling, food contact
materials and manufacturing robotics. PEEK's unique combination of
properties has enabled us to capitalise on the application growth in this end
market and metal replacement opportunity, helping drive volume growth of 4%
for the Industrial proportion of Energy & Industrial, compared to the
prior year. Several applications in this area are also part of our Sustainable
Products.
Value Added Resellers (VAR)
VAR shows a similar alignment to our Industrial end-markets, with the
exception of Aerospace, where sales volumes are largely direct to OEMs or tier
suppliers. VAR is often a good barometer of the general health of the supply
chain, with VAR customers processing high volumes of PEEK into stock shapes,
or compounds.
In FY 2021, VAR saw a strong recovery, as supply chains restocked following
the impact of the COVID-19 pandemic. Despite a challenging comparative, VAR
saw 12% growth in volume as several end markets continued to improve. Sales
volume was 2,122 tonnes (FY 2021: 1,900 tonnes), with the tailwind of good
growth in end markets including Electronics and Energy & Industrial
supporting VAR volume.
Transport (Automotive & Aerospace)
Victrex continues to have a strong alignment to the CO2 reduction megatrend,
with our materials offering lightweighting, durability, comfort, dielectrical
properties and heat resistance. As well as long standing core business
within Automotive & Aerospace across a range of application areas, we also
made good progress in our Transport related mega-programmes of PEEK Gears,
E-mobility, Aerospace Loaded Brackets and Aerospace Structures.
Automotive continued to suffer from the well-publicised shortage of
Semiconductor chips, with volume being down 2% compared to the prior year.
Latest market indicators suggest some improvement into 2023, including IHS
which forecasts 3% growth in car production to 85m cars. Whilst Aerospace
volume was only up 2%, we saw much stronger revenue growth of 21%, driven by
an improved sales mix as Aptiv(TM) film made further progress. Long term
trends remain supportive, with OEM forecast build rates and the trend towards
faster processing and lightweight materials supporting increased content of
PEEK (Airbus forecasts 39,000 new or replacement planes by 2040). Build rates
have recently increased on models including the Airbus A320neo and Boeing 737
Max, both of which have Victrex(TM) PEEK content. We also note the recent
indications of COMAC's C919 production plan in China, where we have
qualifications.
Overall Transport sales volume fell by 1% to 913 tonnes (FY 2021: 926 tonnes),
with Aerospace up 2% and Automotive down 2%.
Automotive
In Automotive, core applications include braking systems, bushings &
bearings and transmission equipment, with increasing opportunities in electric
vehicles, supporting a growing E-mobility business.
Pleasingly, in PEEK Gears, we saw further progress in FY 2022. Victrex(TM) HPG
PEEK can offer a 50% performance and noise vibration and harshness (NVH)
benefit compared to metal gears, as well as contributing to the trend for
minimising CO2 emissions through weight & inertia reduction, and quicker
manufacturing compared to metal. A typical PEEK Gear offers the potential of
approximately 20 grams per application.
Within the growing E-mobility sector, we saw new business wins during the
year, including those which utilise our Aptiv(TM) film. Applications include
wire coatings and e-motor applications, where PEEK's inert nature, high
strength, durability and ability to process faster offer key performance
benefits. Our focus remains on the next generation of high-voltage (800 volt)
vehicles, where the stringent performance requirements make the choice of
material even more critical.
Aerospace
Aerospace volumes were up 2% reflecting some recovery in the first half, with
a softer second half as the supply chain was restocked. Revenue was ahead,
driven by sales mix and a greater share from composite materials and
applications using Aptiv(TM) film. The opportunity in FY 2023 looks supportive
based on industry indicators, as recent build rate increases on key models
containing Victrex(TM) PEEK start to kick in and the industry continues to
recover from the effects of the pandemic.
With the lightweighting and CO2 reduction trend, long term opportunities
remain strong. Our Loaded Brackets and Aerospace Structures mega-programmes
both grew revenues over the period, with Loaded Brackets exceeding £2m
revenue for the full year as the use of composites and differentiated products
remain in demand. We have also benefited from some retrofit opportunities for
composite parts, using our AE(TM)250 low-melt PEEK grade, which supports
faster and simpler processing.
The ability to support CO2 reduction through PEEK materials which are
typically 60% lighter than metals also remains strong, with our assessment
that over 53 million tonnes of CO2 could be saved over the next 15 years if
all new single aisle planes were produced with over 50% PEEK composite
content.
Electronics
With a buoyant global Semiconductor sector, demand for materials used in
Semiconductor manufacturing was strong. Volumes grew 10% at 662 tonnes (FY
2021: 602 tonnes).
Victrex has a broad range of PEEK applications in this end market, including
Semiconductor, the internet of 5G applications, cloud computing and core
applications like CMP rings and other extended application areas. Our
Aptiv(TM) film business and small space acoustic applications showed good
growth this year and we continue to see a positive outlook for this end market
into FY 2023, albeit with absolute growth rates expected to be lower.
Home appliances has been an area of growth in recent years and our impeller
application business in high-end brands are also performing well across a
number of product areas, including vacuum cleaners and hairdryers. These
applications, with lighter materials and enhanced durability, also offer the
opportunity for improved energy efficiency.
Regional trends & Ukraine/Russia exposure
With the lifting of many COVID-19 restrictions much later in the US, we saw
further strength in this region coming through in the second half. Conversely,
the impact of some further lockdowns in China meant Asia-Pacific growth was
lower. More recently, Europe saw more volatility in the second half, though
the strength of VAR in Europe drove good growth for the year as a whole.
Overall by region. Europe was up 5%, at 2,554 tonnes (FY 2021: 2,432 tonnes),
reflecting further improvement in VAR, with North America up 18% at 952 tonnes
(FY 2021: 807 tonnes), principally driven by VAR and Energy & Industrial.
Asia-Pacific was up 8% at 1,221 tonnes (FY 2021: 1,134 tonnes), driven by
continued growth in Electronics and VAR.
Prior to the Ukraine conflict, Victrex had no active sales to Ukraine, with
Russia and Belarus sales negligible. Victrex has no employees, assets or
supply chain within these countries and no direct raw material purchases.
Medical
12 Months 12
Months
Ended Ended %
30 Sep 30 Sep % Change
2022 2021 Change (constant
£m £m (reported) currency)
Revenue 58.3 51.1 +14% +9%
Gross profit 49.7 45.6 +9% +10%
Revenue in Medical was up 14% at £58.3m (FY 2021: £51.1m) as elective
surgeries returned in greater numbers.
In constant currency, Medical revenue was up 9%. Gross profit was £49.7m (FY
2021: £45.6m) and gross margin was down slightly at 85.2% (FY 2021: 89.2%)
primarily reflecting a slightly adverse sales mix as we saw faster growth in
Non-Spine. Overall Medical volume (implantable and non-implantable) was up 8%,
driven by implantable, with non-implantable slightly ahead, despite the
tougher year-on year comparison for business gained in COVID-19 related
applications. Geographically, Asia-Pacific revenues were up 40% year on
year, with Medical revenues in the US up 6% and Europe up 11%.
The Chief Commercial Officer oversees the Medical business, including the
Medical based mega-programmes. A summary of all the mega-programmes and the
strong progress made during the year is covered earlier in this report.
Medical strategy
Our Medical aspirations are for our solutions to treat a patient every 15-20
seconds by 2027 (from approximately 25-30 seconds now) and the Group is
seeking to prioritise investment in Medical, with the aim of driving an
increased proportion of revenue from this division over the next ten years,
potentially up to one-third of Group revenues.
During the year we commenced investment in a New Product Development Centre of
Excellence in Leeds, UK, part of our focus on how we can drive adoption more
meaningfully in this area. This is located close to academia who we already
have strong links with, together with new partners. We already have Medical
manufacturing capability and innovation for our parts businesses - Trauma and
Knee - and this new Centre will work to scale up our opportunities.
Additionally, the benefit of our solutions lies in the data and we are seeking
to utilise this in an improved way with global medical device manufacturers.
This will be one of the key overhead investment items in FY 2023, as we build
additional capability and skills in this area, with approximately 25 new
roles. Whilst we have made good progress in being able to address what Medical
device customers require, we will need to continue developing new products to
enable a full suite of solutions. An example is in Knee where the PEEK Knee is
progressing through a clinical trial, yet opportunities within a cementless
knee replacement are becoming more in focus.
Spine and non-Spine
Whilst Spine remains 50% of divisional revenue and saw 2% revenue growth, the
importance of next generation Spine products will be key in maintaining PEEK's
position in this segment, including the opportunity for Porous PEEK, where a
spinal cage can support bone-in growth as well as bone-on growth. Whilst we
continue to innovate and develop new products for Spine, usage of 3D printed
titanium cages continues to rise, especially in the US. Volume based
procurement in China could also impact revenues in Spine, which validates our
goal of further growing our non-Spine business.
We also continue to focus on non-Spine areas such as Cranio Maxillo Facial
(CMF), Arthroscopy & Sports Medicine and Drug Delivery devices, as well as
emerging or incremental opportunities in Cardio, where PEEK is now used in
applications within an artificial heart. Non-Spine overall now represents 50%
of divisional revenues. Spine is our historic end-market which, whilst it has
become more mature in recent years, is one we continue to diversify through
focusing on emerging geographies and new innovative products. Our premium and
differentiated PEEK-OPTIMA(TM) HA Enhanced product (POHAE) - to drive next
generation Spine procedures - is one part of our strategy to grow our Medical
business, with annualised revenues being above £1m and good opportunities
globally, and in Asia particularly.
Mega-programmes
As noted elsewhere in this report, our PEEK Knee programme saw significant
progress, with a total of 30 implants as part of the clinical trial. Twelve
patients have successfully passed the 12 month follow up phase with no
remedial requirements. As part of the clinical trial with our partner Maxx
Orthopaedics, trial sites are now operating in Belgium, India and Italy, with
a US trial site also anticipated in FY 2023.
In Trauma, beyond our trauma mega-programme, our data shows good indicators on
the union rate for PEEK based plates compared to metal plates (data on file,
based on Trauma plates in high risk patients). Our solutions for CMF
continue to see strong growth, particularly in Asia, with a well-regarded
study showing better brain function using PEEK in CMF plates compared to metal
(25% improved brain function based on paper by Zhang Q, Yuan Y, Li X, et al,
World Neurosurgeon 2018).
Alternative performance measures:
We use alternative performance measures (APMs) to assist in presenting
information in an easily comparable, analysable and comprehensible form. The
measures presented in this report are used by the Board in evaluating
performance. However, this additional information presented is not required by
IFRS or uniformly defined by all companies. Certain measures are derived from
amounts calculated in accordance with IFRS but are not in isolation an
expressly permitted GAAP measure. The measures are as follows:
- Operating profit before exceptional items (referred to as underlying
operating profit) is based on operating before the impact of exceptional
items. This metric is used by the Board to assess the underlying performance
of the business excluding items that are, in aggregate, material in size and /
or unusual or infrequent in nature. Exceptional items for FY 2022 are £7.9m,
details are disclosed in note 5;
- Profit before tax and exceptional items (referred to as underlying
profit before tax) is based on Profit before tax before the impact of
exceptional items. This metric is used by the Board to assess the underlying
performance of the business excluding items that are, in aggregate, material
in size and / or unusual or infrequent in nature;
- Constant currency metrics are used by the Board to assess the year on
year underlying performance of the business excluding the impact of foreign
currency rates, which can by nature be volatile. Constant currency metrics are
reached by applying current year (FY 2022) weighted average spot rates to
prior year (FY 2021) transactions;
- Operating cash conversion is used by the Board to assess the
business's ability to convert operating profit to cash effectively, excluding
the impact of investing and financing activities. Operating cash conversion is
operating profit before exceptional items adjusted for depreciation and
amortisation, working capital movements and capital expenditure / operating
profit before exceptional items;
- Available cash is used to enable the Board to understand the true cash
position of the business when determining the use of cash under the capital
allocation policy. Available cash is cash and cash equivalents plus other
financial assets (cash invested in term deposits greater than three months in
duration) less cash ring-fenced in the Group's Chinese subsidiaries which is
committed to capital investment or additional capability and therefore not
available to the wider group;
- Underlying EPS is earnings per share based on profit after tax but
before exceptional items divided by the weighted average number of shares in
issue. This metric is used by the Board to assess the underlying performance
of the business excluding items that are, in aggregate, material in size
and/or unusual or infrequent in nature;
- Return on Capital Employed (ROCE) is used by the Board to assess the
return on investment at a Group level. ROCE is profit after tax / total equity
attributable to shareholders at the year end; and
- Operating overheads is made up of sales, marketing and administrative
expenses before exceptional items.; this metric is used by the Board to assess
the underlying performance of the business excluding items that are, in
aggregate, material in size and/or unusual or infrequent in nature;
Other internal metrics:
In addition to the APM's above there are a number of other internal metrics,
which are used by the Board in evaluating performance, and are referenced in
this report, but do not meet the definition for an APM. The measures are as
follows:
- Research and development expenditure as a % of Group sales is used by
the Board because R&D spend is considered to be a leading indicator of the
Group's ability to innovate into new applications, supporting future growth.
The Group targets spend at c5%-6% of Group revenues;
- Sales from New Products as a percentage of Group sales is used by the
Board to measure the success of driving adoption of the new product pipeline.
It measures Group sales generated from mega-programmes, new differentiated
polymers and other pipeline products that were not sold before FY 2014 as a
percentage of total Group sales;
- Research and Development spend on sustainable products is calculated as
the percentage of project-based R&D spend on sustainable products or
sustainable programmes. This metric is used by the Board to assess progress
against the sustainability strategy and vision of being Carbon Net Zero by
2030 (scope 1 & 2 emissions). Sustainable products are currently defined
as revenue from Aerospace, Automotive and Medical end markets;
- Mature Annualised Revenue is a measure of new application targets
within our core business (excluding mega-programmes) and would be realised
only if all targets convert to commercial revenues; and
- Sustainable revenues as a % of total revenues is calculated as the % of
revenue earned from sustainable products, which are
defined as those which offer a quantifiable environmental or societal benefit.
These are primarily in automotive and aerospace
(supporting CO2 reduction) but also in energy and industrial and electronics
(e.g. wind energy applications, or those which
support energy efficiency) and medical, supporting better patient outcomes.
Consolidated Income Statement
Year ended Year ended
30 September 2022 30 September 2021
Note £m £m
Revenue 4 341.0 306.3
(Losses)/gains on foreign currency net hedging (2.8) 4.9
Cost of sales (163.7) (145.9)
Gross profit 4 174.5 165.3
Sales, marketing and administrative expenses (86.0) (71.9)
Operating profit before exceptional items 96.4 92.6
Exceptional items 5 (7.9) 0.8
Operating profit 88.5 93.4
Financial income 0.5 0.2
Finance costs (0.3) (0.2)
Share of loss of associate (1.0) (0.9)
Profit before tax and exceptional items 95.6 91.7
Exceptional items 5 (7.9) 0.8
Profit before tax 87.7 92.5
Income tax expense 6 (12.2) (19.7)
Profit for the period 75.5 72.8
Attributable to:
Owners of the Company 76.2 73.2
Non-controlling interests (0.7) (0.4)
Earnings per share
Basic 7 87.6p 84.3p
Diluted 7 87.3p 84.0p
Dividends (pence per share)
Interim 13.42 13.42
Final 46.14 46.14
Special - 50.00
59.56 109.56
A final dividend in respect of FY 2022 of 46.14p per ordinary share has been
recommended by the Directors for approval at the Annual General Meeting on 10
February 2023.
Consolidated Statement of Comprehensive Income
Year ended Year ended
30 September 2022 30 September 2021
£m £m
Profit for the period 75.5 72.8
Items that will not be reclassified to profit or loss
Defined benefit pension schemes' actuarial gains 0.2 4.5
Income tax on items that will not be reclassified to profit or loss (0.1) (1.1)
0.1 3.4
Items that may be subsequently reclassified to profit or
loss
Currency translation differences for foreign operations 11.1 (2.0)
Effective portion of changes in fair value of cash flow hedges (19.7) 5.7
Net change in fair value of cash flow hedges
transferred to profit or loss 2.8 (4.9)
Income tax on items that may be reclassified to profit or loss 3.2 (0.2)
(2.6) (1.4)
Total other comprehensive (expense)/income for the period (2.5) 2.0
Total comprehensive income for the period 73.0 74.8
Total comprehensive income for the period attributable to:
Owners of the Company 73.7 75.2
Non-controlling interests (0.7) (0.4)
Consolidated Balance Sheet
30 September 2022 30 September 2021
Note £m £m
Assets
Non-current assets
Property, plant and equipment 347.2 305.7
Intangible assets 20.2 24.8
Investment in associated undertakings 8 10.4 11.4
Financial assets held at fair value through profit and loss 8, 9 10.1 12.7
Deferred tax assets 7.2 8.9
Retirement benefit asset 14.9 14.2
410.0 377.7
Current assets
Inventories 86.8 70.3
Current income tax assets 7.9 2.9
Trade and other receivables 68.1 49.1
Derivative financial instruments 11 - 2.9
Other financial assets 12 10.1 37.5
Cash and cash equivalents 58.7 74.9
231.6 237.6
Total assets 641.6 615.3
Liabilities
Non-current liabilities
Deferred tax liabilities (34.3) (31.6)
Borrowings 10 (21.6) (5.9)
Long term lease liabilities (7.8) (8.2)
Retirement benefit obligations (2.7) (1.9)
(66.4) (47.6)
Current liabilities
Derivative financial instruments 11 (19.9) (1.9)
Borrowings 10 (0.9) -
Current income tax liabilities (2.3) (2.9)
Trade and other payables (59.7) (49.4)
Current lease liabilities (1.8) (1.8)
(84.6) (56.0)
Total liabilities (151.0) (103.6)
Net assets 490.6 511.7
Equity
Share capital 0.9 0.9
Share premium 61.5 61.1
Translation reserve 12.8 1.7
Hedging reserve (13.6) 0.1
Retained earnings 427.2 445.4
Equity attributable to owners of the Company 488.8 509.2
Non Controlling Interest 13 1.8 2.5
Total equity 490.6 511.7
Consolidated Cash Flow Statement
Year ended Year ended
30 September 2022 30 September 2021
Note £m £m
Cash flows from operating activities
Cash generated from operations 15 90.7 135.5
Interest received 0.3 0.2
Interest paid (0.4) -
Net income tax paid (10.6) (8.6)
Net cash flow generated from operating activities 80.0 127.1
Cash flows from investing activities
Acquisition of property, plant and equipment and intangible assets (45.5) (41.9)
Withdrawal/(deposit) of cash invested for greater than three months 27.4 (37.5)
Proceeds from disposal of financial asset held at fair value through profit 4.2 -
and loss
Loan to associated undertakings (2.3) (3.8)
Net cash flow used in investing activities (16.2) (83.2)
Cash flows from financing activities
Proceeds from issue of ordinary shares exercised under option 0.4 6.1
Repayment of lease liabilities (2.1) (1.8)
Loan received from non-controlling interest - 5.6
Bank borrowings received 14.5 -
Dividends paid (95.2) (51.6)
Net cash flow used in financing activities (82.4) (41.7)
Net (decrease)/ increase in cash and cash equivalents (18.6) 2.2
Effect of exchange rate fluctuations on cash held 2.4 (0.4)
Cash and cash equivalents at beginning of period 74.9 73.1
Cash and cash equivalents at end of period 58.7 74.9
Consolidated Statement of Changes in Equity
Share capital Share premium Translation reserve Hedging reserve Retained earnings Total attributable to owners of parent Non-controlling interest
Total
£m £m £m £m £m £m £m £m
Equity at 1 October 2021 0.9 61.1 1.7 0.1 445.4 509.2 2.5 511.7
Total comprehensive income for the period
Profit for the period attributable to the parent - - - - 76.2 76.2 - 76.2
Profit for the period attributable to non-controlling interest - - - - - - (0.7) (0.7)
Other comprehensive (expense)/income
Currency translation differences for foreign operations - - 11.1 - - 11.1 - 11.1
Effective portion of changes in fair value of cash flow hedges - - - (19.7) - (19.7) - (19.7)
Net change in fair value of cash flow hedges transferred to profit or loss - - - 2.8 - 2.8 - 2.8
Defined benefit pension schemes' actuarial gains - - - - 0.2 0.2 - 0.2
Tax on other comprehensive (expense)/income - - - 3.2 (0.1) 3.1 - 3.1
Total other comprehensive (expense)/income for the period - - 11.1 (13.7) 0.1 (2.5) - (2.5)
Total comprehensive (expense)/income for the period - - 11.1 (13.7) 76.3 73.7 (0.7) 73.0
Contributions by and distributions to owners of the Company
Share options exercised - 0.4 - - - 0.4 - 0.4
Equity-settled share-based payment transactions - - - - 1.8 1.8 - 1.8
Tax on equity-settled share-based payment transactions - - - - (1.1) (1.1) - (1.1)
Dividends to shareholders - - - - (95.2) (95.2) - (95.2)
Equity at 30 September 2022 0.9 61.5 12.8 (13.6) 427.2 488.8 1.8 490.6
Share capital Share premium Translation reserve Hedging reserve Retained earnings Total attributable to owners of parent Non-controlling interest
Total
£m £m £m £m £m £m £m £m
Equity at 1 October 2020 0.9 55.0 3.7 (0.5) 419.0 478.1 2.9 481.0
Total comprehensive income for the period
Profit for the period attributable to the parent - - - - 73.2 73.2 - 73.2
Profit for the period attributable to non-controlling interest - - - - - - (0.4) (0.4)
Other comprehensive (expense)/income
Currency translation differences for foreign operations - - (2.0) - - (2.0) - (2.0)
Effective portion of changes in fair value of cash flow hedges - - - 5.7 - 5.7 - 5.7
Net change in fair value of cash flow hedges transferred to profit or loss - - - (4.9) - (4.9) - (4.9)
Defined benefit pension schemes' actuarial gains - - - - 4.5 4.5 - 4.5
Tax on other comprehensive (expense)/income - - - (0.2) (1.1) (1.3) - (1.3)
Total other comprehensive (expense)/income for the period - - (2.0) 0.6 3.4 2.0 - 2.0
Total comprehensive (expense)/income for the period - - (2.0) 0.6 76.6 75.2 (0.4) 74.8
Contributions by and distributions to owners of the Company
Share options exercised - 6.1 - - - 6.1 - 6.1
Equity-settled share-based payment transactions - - - - 1.4 1.4 - 1.4
Dividends to shareholders - - - - (51.6) (51.6) - (51.6)
Equity at 30 September 2021 0.9 61.1 1.7 0.1 445.4 509.2 2.5 511.7
Notes to the Financial Report
1. Reporting entity
Victrex plc (the 'Company') is a public company, which is limited by shares
and is listed on the London Stock Exchange. This Company is incorporated and
domiciled in the United Kingdom. The address of its registered office is
Victrex Technology Centre, Hillhouse International, Thornton Cleveleys,
Lancashire FY5 4QD, United Kingdom.
The consolidated financial statements of the Company for the year ended 30
September 2022 comprise the Company and its subsidiaries (together referred to
as the 'Group').
The consolidated financial statements were approved for issue by the Board of
Directors on 6 December 2022.
2. Basis of preparation
Both the consolidated and Company financial statements have been prepared in
accordance with international accounting standards in conformity with the
requirements of the Companies Act 2006 and in accordance with UK-adopted
International Accounting Standards.
On 31 December 2020, IFRS as adopted by the European Union at that date was
brought into UK law and became UK-adopted International Accounting Standards,
with future changes being subject to endorsement by the UK Endorsement Board.
The Group transitioned to UK‑adopted International Accounting Standards in
its consolidated financial statements on 1 October 2021. This change
constitutes a change in accounting framework. However, there is no impact on
the recognition, measurement or disclosure in the period as a result of the
change in framework. The financial statements have been prepared under the
historical cost basis except for derivative financial instruments, defined
benefit pension scheme assets and financial assets held at fair value through
profit and loss, which are measured at their fair value.
The Group's business activities, together with factors likely to affect its
future development, performance and position, are set out in the Annual
Report. In addition, note 16 in the Financial Statements on financial risk
management details the Group's exposure to a variety of financial risks,
including currency and credit risk.
Statutory accounts for the year ended 30 September 2022 and 30 September 2021
have been reported on by the auditors who issued an unqualified opinion in
respect of both years in the auditors' reports for FY 2022 and FY 2021.
Statutory accounts for the year ended 30 September 2021 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 30
September 2022, will be delivered to the Registrar of Companies within the
Companies House accounts filing guidance.
Climate change
In preparing the financial statements of the Group an assessment of the impact
of climate change has been made in line with therequirements of TCFD and with
specific consideration of the disclosures made in the Sustainability report in
the Annual Report starting on page 44. This has specifically incorporated the
impact of the physical risks of climate change, transitional risks including
the potential impact of government and regulatory actions as well as the
Group's stated Net Zero 2030 (Scope 1 & 2 emissions) target. The potential
impact has been considered in the following areas:
- the key areas of judgement and estimation
- the expected useful lives of property, plant and equipment
- those areas which rely on future forecasts which have the
potential to be impacted by climate change:
o carrying value of non-current assets
o going concern
o viability
- the recoverability of deferred taxation assets
- the recoverability of inventory and trade receivables
The Directors recognise the inherent uncertainty in predicting the impact of
climate change and the actions which regulators and governments, both
domestic and overseas, will take in order to achieve their various targets.
However from the work undertaken to date,
outlined in the Sustainability report, the Directors have reached the overall
conclusion that there has been no material impact on the
financial statements for the current year from the potential impact of climate
change.
The Group's analysis on the impact of climate change continues to evolve as
more clarity on timings and targets emerges, with Victrex
committed to reducing its carbon impact towards Net Zero (Scope 1 & 2
emissions) in 2030.
Going Concern
The Directors have performed a robust going concern assessment including a
detailed review of the business' 24-month rolling forecast and consideration
of the principal risks faced by the Group and the Company, as detailed in the
Annual Report. This assessment has paid particular attention to the impact of
the ongoing global economic challenges on the aforementioned forecasts.
The Company maintains a strong balance sheet providing assurance to key
stakeholders, including customers, suppliers and employees.
The combined cash and other financial assets balance at 30 September 2022 was
£68.8m, having reduced from £112.4m at 30 September 2021 following payment
of the regular and special dividends of £83.5m in February 2022. Of the
£68.8m, £2.8m is held in the Group's subsidiaries in China for the sole
purpose of funding the construction of our new manufacturing facilities. Of
the remaining £66.0m, approximately 80% is held in the UK where the Company
incurs the majority of its expenditure and 85% is held in instant access
accounts. The Group has drawn debt of £15.7m in its Chinese subsidiaries
(with a total facility of c.£45m available until December 2026) and has
unutilised UK banking facilities of £40m through to October 2024, of which
£20m is committed and immediately available and £20m is available subject to
lender approval.
The 24-month rolling forecast is derived from the Company's Integrated
Business Planning ('IBP') process which runs monthly. Each area of the
business provides revised forecasts which consider a number of external data
sources, triangulating with customer conversations, trends in market and
country indices as well forward-looking industry forecasts. For example,
forecast aircraft build rates from the two major manufacturers for Aerospace,
World Semiconductor Trade Statistics semiconductor market forecasts for
Electronics through to 2024 and Needham and IQVIA forecasts for Medical
procedures.
The assessment of going concern included conducting scenario analysis on the
aforementioned forecast which, given current economic forecasts, focused on
the Group's ability to sustain a period of falling demand, whether caused by a
pandemic, geo-political event(s) or other global economic challenges. In
assessing the severity of the scenario analysis, the scale of the impact
experienced during previous economic downturns has been used, including the
differing impacts on Industrial versus Medical segments.
Using the IBP data and reference points from previous downturns management has
created two scenarios to model the effect of reductions to revenue at
regional/market level and aggregated levels on the Company's profits and cash
generation through to January 2024. The impact of climate change and the
Group's Net Zero 2030 goal for its own operations (Scope 1 & 2 emissions)
has been considered as part of this assessment. Any impact on revenue over the
shorter going concern period, either positive or negative, is likely to be
insignificant, with the greater risk being that of higher carbon taxes. The
current elevated price of gas and electricity included in the 24-month
forecast, reflecting current supply side uncertainty, and the government focus
on limiting the impact of the current economic slowdown means that additional
carbon taxes over the going concern period are considered unlikely, and
therefore no additional costs have been included in either the base forecast
or the scenarios noted below.
Scenario 1 - the global economy contracts with sales volumes reducing by 30%
from the level seen over the past 12 months, to approximately 280 tonnes per
month, from January 2023 for a period of 6 months (to mirror the length of the
most recent downturn in 2020) before a partial recovery to c.330 tonnes per
month for the remainder of the going concern period. Medical revenue remains
unchanged from the past 12 months run rate, with the economic situation
historically having minimal impact on this segment.
Scenario 2 - in line with scenario 1, c.280 tonnes per month from January
2023, however, the economic contraction lasts for a full 12 months, i.e.
throughout the going concern period. This would give an annual volume of
c.3,300 tonnes, a level not seen since 2013. Prior to COVID-19, the last
recession was the financial crisis in 2008 and 2009 which lasted approximately
12 months. In this scenario Medical revenue is reduced by 10% during the
second six months to reflect a limited impact from a longer lasting slowdown.
The Group considers scenario 2 to be a severe but plausible scenario.
Before any mitigating actions the sensitised cash flows show the Company has
significantly reduced cash headroom. Under scenario 2 there is minimal cash
generation through the going concern period and there is potential that the
committed facility would be required to manage intra-month cash flows.
However, the Company has a number of mitigating actions which are readily
available in order to generate significant headroom. These include:
- Use of committed facility - £20m could be drawn at short
notice. Conversations with our banking partner indicate that the £20m
accordion could also be readily accessed. The covenants of the facility have
been successfully tested under each of the scenarios;
- Deferral of capital expenditure - the base case capital
investment over the next 12 months is approximately £50m as major projects
are completed in China and the UK. This could be reduced significantly by
limiting expenditure to essential projects, deferring all other projects later
into 2024, with the exception of completing the manufacturing facilities in
China which will continue as planned;
- Reduction in discretionary overheads - costs would be limited to
prioritise and support customer related activity; and
- Deferral/cancellation of dividends - the dividend payable in
June 2023 could be deferred or cancelled. The Company's intention is to
continue payment of dividends where cash reserves facilitate but it remains a
key lever in downside scenario mitigation.
Reverse stress testing was performed to identify the level that sales would
need to drop by in order for the Group to run out of cash by the end of the
going concern assessment period. Sales volumes would need to consistently drop
materially below the low point in scenario 2 which is not considered
plausible.
As a result of this detailed assessment and with reference to the Company's
strong balance sheet, existing committed facilities and the cash preserving
levers at the Company's disposal, but also acknowledging the current economic
uncertainty as a number of global economies close to/in recession and the war
in Ukraine continues, the Board has concluded that the Company has sufficient
liquidity to meet its obligations when they fall due for a period of at least
12 months after the date of this report. For this reason, they continue to
adopt the going concern basis for preparing the financial statements.
3. Significant accounting policies
The accounting policies applied by the Group in these financial statements are
the same as those applied in the Group's published consolidated financial
statements for the year ended 30 September 2021 except for the application of
relevant new standards and IFRIC - Configuration or customisation costs in
cloud computing arrangements. None of the new standards have had a material
impact on the Group's consolidated result or financial position.
IFRIC - Configuration or customisation costs in cloud computing arrangements
The Group has changed its accounting policy related to the capitalisation of
configuration and customisation costs in a cloud computing (Software as a
Service, 'SaaS') arrangement, with costs now being expensed as incurred. This
change is as a result of the IFRS Interpretations Committee's agenda decision
published in April 2021. The Group's accounting policy has historically been,
where the criteria within IAS 38 have been met, to capitalise costs directly
attributable to the implementation, including configuration and customisation
of cloud computing arrangements, as intangible assets in the Balance sheet.
Following the publication of the above IFRIC agenda decision, current cloud
computing arrangements were identified and assessed to determine if the Group
has control of the software. For those arrangements where the group does not
have control of the developed software, the intangible assets previously
capitalised as at 1 October 2021 have been derecognised. On the basis that
the carrying value of these intangibles is not material the criteria in IAS 8
to restate the comparative financial statements has not been met and therefore
the intangibles have been expensed in the current financial year.
4. Segment reporting
The Group's business is strategically organised as two business units:
Industrial, which focuses on our Energy & Industrial, VAR, Automotive,
Aerospace and Electronics markets; and Medical, which focuses on providing
specialist solutions for medical device manufacturers.
Year ended 30 September 2022 Year ended 30 September 2021
Industrial Medical Group Industrial Medical Group
£m £m £m £m £m £m
Segment revenue 285.8 58.3 344.1 257.4 51.1 308.5
Internal revenue (3.1) - (3.1) (2.2) - (2.2)
Revenue from external sales 282.7 58.3 341.0 255.2 51.1 306.3
Segment gross profit 124.8 49.7 174.5 119.7 45.6 165.3
5. Exceptional items
Items that are, in aggregate, material in size and / or unusual or infrequent
in nature, are included within operating profit and disclosed separately as
exceptional items in the Consolidated Income Statement.
The separate reporting of exceptional items, which are presented as
exceptional within the relevant category in the Consolidated Income Statement,
helps provide an indication of the underlying performance of the Group.
Year ended Year ended
30 September 2022 30 September 2021
£m £m
Included within sales, marketing and administrative expenses
Implementation of SaaS ERP system 7.9 -
Restructuring costs - (0.8)
Exceptional items before tax 7.9 (0.8)
Tax on exceptional items (1.5) -
Exceptional items after tax 6.4 (0.8)
Implementation of SaaS ERP system
The Group has commenced a multi-year implementation of a new cloud-based ERP
system. The Group forecasts to spend approximately
£15m-£20m on the implementation, including process redesign, customisation
and configuration of the system, change management and training, which will
deliver benefits to both customer interactions and internal business
processes.
The IFRS Interpretations Committee issued its decision clarifying how
arrangements in respect of cloud based software as a service (SaaS) systems
should be accounted for. The new ERP system does not meet the criteria for
capitalisation (as the majority of costs relating to past systems have) and
therefore the cost is being expensed rather than capitalised and amortised.
Given the size of the project and its impact on the reported profit-based
metrics, the fact the system is evergreen and thus this level and nature of
cost will not happen again, it meets the Group's criteria to be presented as
exceptional. The ERP system is expected to be completed in 2024.
Restructuring costs
During FY 2020, the Group reviewed cost actions and efficiencies required to
support profitability in a lower production environment. The credit in FY 2021
related to more favourable settlements being reached on finalisation than
assumed when making the restructuring charge in FY 2020 when the Group
commenced consultation. These costs were treated as non-tax deductible in FY
2020 and the corresponding credit was treated as non‑chargeable in FY 2021
accordingly, which resulted in a credit in income tax expenses for expenses
not deductible for tax purposes in FY 2021 (see note 6).
The cash flow in the year associated with exceptional items was a £5.6m
outflow (FY 2021: £1.9m outflow).
6. Income tax expense
Year ended Year ended
30 September 2022 30 September 2021
£m £m
UK corporation tax 9.0 10.4
Overseas tax 2.4 1.7
Deferred tax 1.7 7.5
Tax adjustments relating to prior years (0.9) 0.1
Total tax expense in income statement 12.2 19.7
Effective tax rate 13.9% 21.3%
Deferred tax assets/liabilities have been recognised at the rate they are
expected to reverse. For UK assets/liabilities this is 25% for the majority of
assets and liabilities (30 September 2021: 25%), being the UK tax rate
effective from 1 April 2023, in accordance with the Finance Bill 2021, which
was substantively enacted on 24 May 2021. The impact of remeasuring the
deferred tax assets and liabilities accordingly increased the tax charge in FY
2021 by £6.1m. For overseas assets/ liabilities the corresponding overseas
tax rate has been applied.
7. Earnings per share
Year ended Year ended
30 September 2022 30 September 2021
Earnings per share - basic 87.6p 84.3p
- diluted 87.3p 84.0p
Profit for the financial period attributable to the owners of the company 76.2 73.2
(£m)
Weighted average number of shares used - basic 86,897,353 86,704,789
- diluted 87,239,312 87,045,353
8. Investment in associated undertakings
Bond 3D High Performance Technology BV ("Bond")
Bond is a company incorporated in the Netherlands, developing unique,
protectable 3D printing (additive manufacturing) processes which are capable
of producing high strength parts from existing grades of PEEK and PAEK
polymers. The investment offers the potential of utilising this technology to
help accelerate the market adoption of 3D printed PEEK parts, with particular
emphasis on the Medical market.
The Group's investment in the ordinary share capital of Bond at 30 September
2022 is €14.7m/£12.9m (24.5%) at cost (30 September 2021: same), with a
carrying value of £10.4m (30 September 2021: £11.4m) which includes the
impact of the Group's share of losses since investment. As the Group is
considered to have significant influence in Bond, the investment continues to
be accounted for as an associate using the equity method.
In line with the agreed programme of further investments into Bond by Victrex
and another investor, LaLune, Bond has received cash injections of €4.5m in
the current financial year, of which €2.7m /£2.3m was made by Victrex in
the form of convertible loans. The loans are convertible into ordinary shares
of the entity, at the Group's option, or are to be repaid by Bond on or before
the end of the five year
agreed term. Of the convertible loan balance of €7.4m /£6.6m at 30
September 2022, €2.0m /£1.8m is interest free, €0.3m /£0.2m is accruing
interest at 3%, and the remainder is accruing interest at a rate of 6% per
annum. These convertible loans are held as financial assets held at fair value
through profit and loss (see note 9 below).
The Group's share of the loss of Bond in FY 2022 is £1.0m (FY 2021 loss of
£0.9m).
9. Financial assets held at fair value through profit and loss
At 30 Sept 2022, financial assets held at fair value through profit and loss
relate to:
- Investment in Surface Generation Limited at £3.5m (FY 2021:
£3.5m)
- Convertible loans in Bond at £6.6m (FY 2021: £3.8m). See also
note 8 above.
On 13 October 2021, the Group sold its investment in Magma Global Limited to
TechnipFMC. This investment was recognised as a financial asset held at fair
value through the profit and loss, with a fair value of £5.4m at 30 September
2021. The Group received cash of £4.2m at the point of disposal with £1.2m
deferred consideration received on 13 October 2022.
10. Borrowings
Year ended Year ended
30 September 2022 30 September 2021
£m £m
Due within one year
Bank loans 0.9 -
Total due within one year 0.9 -
Due after one year
Bank loans 14.8 -
Loan payable to Non-controlling interest 6.8 5.9
Total due after one year 21.6 5.9
Bank loans are repayable in line with an agreed schedule up to December 2026.
Interest is charged at the five-year Loan Prime Rate of People's Republic of
China, which has been in the range of 4.3%-4.65% in the period between the
initial draw-down and 30 September 2022.
The loan from the Non-Controlling Interest, Yingkou Xingfu Chemical Co. Ltd
('YX'), is unsecured and is repayable on 30 September 2026 or such date as may
be mutually agreed by YX and Victrex Hong Kong Limited. Interest is charged at
4% per annum. Interest payable on the loan payable is rolled up into the value
of the loan, until repayment occurs.
The purpose of both loans is the funding of capital expenditure in China, with
the interest payable on both capitalised as part of that qualifying capital
expenditure within Property, Plant and Equipment. During the year, interest of
£0.5m (£0.3m and £0.2m respectively), has been capitalised accordingly.
11. Derivative financial instruments
The notional contract amount, carrying amount and fair value of the Group's
forward exchange contracts are as follows:
As at 30 September 2022 As at 30 September 2021
Notional contract amount Carrying amount and fair value Notional contract amount Carrying amount and fair value
£m £m £m £m
Current assets - - 61.2 2.9
Current liabilities 197.5 (19.9) 106.9 (1.9)
197.5 (19.9) 168.1 1.0
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. Fair value
losses on foreign currency contracts of £2.8m has been recognised in the
period (FY 2021 - gains of £4.9m).
12. Other financial assets
At 30 September 2022 the Group had £10.1m of cash on 95-day deposit (30
September 2021: £37.5m). This is included in the Available Cash metric (see
APM's above).
13. Non-controlling interest
The non-controlling interest recognised relates to the Group's subsidiary
company, Panjin VYX High Performance Materials Co. Ltd ('PVYX'), where the
Group continues to hold a 75% equity interest with the remaining 25% held by
Yingkou Xingfu Chemical Co. Ltd ('YX'). PVYX is a limited liability company
set up for the purpose of the manufacture of PAEK polymer powder and granules,
based in mainland China. The income statement and balance sheet of PVYX are
fully consolidated with the share owned by YX represented by a non-controlling
interest.
The first tranche of investment of £8.6m in this company was made by the
Group via Victrex Hong Kong Limited, in March 2020. During FY 2021, the Group
has made further cash injections in to PVYX, totalling £24.5m, split in the
form of loans £22.0m and further equity investment of £2.5m. YX also made
loans to PVYX of £5.6m during FY 2021. The loan is denominated in Chinese
Renminbi and had a sterling value of £6.8m at 30 September 2022, which
includes interest rolled up of £0.2m (see note 10), that was also capitalised
in the period as part of the qualifying capital expenditure within Property,
Plant and Equipment.
In the year to 30 September 2022 the subsidiary incurred a loss of £2.9m (FY
2021: loss of £1.4m), of which £0.7m (FY 2021: £0.4m) is attributable to
the non-controlling interest. Total non-controlling interest as at 30
September 2022 is £1.8m (FY 2021: £2.5m).
14. Exchange rates
The most significant Sterling exchange rates used in the financial statements
under the Group's accounting policies are:
Year ended Year ended
30 September 2022 30 September 2021
Average Closing Average Closing
US Dollar 1.30 1.10 1.36 1.34
Euro 1.16 1.13 1.14 1.18
The average exchange rates in the above table are the weighted average spot
rates applied to foreign currency transactions, excluding the impact of
foreign currency contracts. Gains and losses on foreign currency contracts,
where net hedging has been applied for cash flow hedges, are separately
disclosed in the income statement.
15. Reconciliation of profit to cash generated from operations
Year ended Year ended
30 September 2022 30 September 2021
£m £m
Profit after tax for the year 75.5 72.8
Income tax expense 12.2 19.7
Share of loss of associate 1.0 0.9
Net financing income (0.2) -
Operating profit 88.5 93.4
Adjustments for:
Depreciation 19.0 18.5
Amortisation 2.6 3.4
Loss on disposal of non-current assets 2.4 0.8
Equity-settled share-based payment transactions 1.8 1.4
Losses/(gains) on derivatives recognised in income statement that have not yet 4.0 (0.5)
settled
Gain on financial asset held at fair value (0.3) (0.9)
(Increase)/decrease in inventories (13.4) 26.0
Increase in trade and other receivables (16.9) (18.3)
Increase in trade and other payables 2.8 11.9
Retirement benefit obligations charge less contributions 0.2 (0.2)
Cash generated from operations 90.7 135.5
Forward-looking Statements
Sections of this 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 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.
Shareholder information:
Victrex'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 (http://www.victrexplc.com)
Financial calendar:
Ex-dividend date
19 January 2023
Record date#
20 January 2023
AGM
10 February 2023
Payment of final dividend
17 February 2023
Announcement of half-year results
May 2023
Payment of interim dividend
June/July 2023
# The date by which shareholders must be recorded on the share register to
receive the dividend
Victrex plc
Registered in England
Number 2793780
Tel: +44 (0) 1253 897700
www.victrexplc.com (http://www.victrexplc.com)
ir@victrex.com
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