Half Yearly Report
19 May 2009
Victrex plc
Results announcement for the six months ended 31 March 2009
-
Group revenue down 31% to £47.4m (2008: £68.5m)
- underlying revenue down 24% *
-
Group earnings per share down 63% to 8.8p (2008: 23.7p)
- underlying EPS down 25% *
-
Interim dividend maintained at 5.2p
-
Cash of £14.2m as at 31 March 2009 and no debt (2008: net cash £6.6m)
-
Invibio® operating profit up 47% to £10.4m (2008: £7.1m)
- underlying operating profit up 40% *
-
Victrex Polymer Solutions ('VPS') operating profit down 98% to £0.5m (2008: £20.5m)
- underlying operating profit down 45% *
* at constant exchange rates and excluding one-off costs
Chairman Anita Frew commented:
'As expected, and as previously reported, Victrex faced a mixed first half. We have continued to see strong progress in Invibio, our biomaterials business, offset by lower volumes in Victrex Polymer Solutions as demand in our major industrial markets remained weak.
April sales volume, at 110 tonnes, has picked up after the fall off in March. Current month order levels are running at a similar level to the same time in April. As previously indicated, for planning purposes, we have assumed that volume will remain at similar levels to the average for the second quarter. Should volume be higher than the second quarter run rate, we will benefit positively from our operational gearing. Furthermore, the underlying growth drivers remain in place across our end use markets and our development pipeline of potential new applications is holding up well.
Invibio continues to show strong sales performance and development potential. Accordingly, we expect Invibio second half revenue to be maintained at a broadly similar level to the strong first half with further sales growth expected in 2010.'
Enquiries
|
Victrex plc |
|
|
|
|
|
David Hummel, Chief Executive |
0207 357 9477 (19 May 2009) |
|
Michael Peacock, Finance Director |
01253 897700 (thereafter) |
|
Hogarth Partnership Limited |
|
|
|
|
|
Nick Denton / Barnaby Fry |
0207 357 9477 |
INTERIM MANAGEMENT REPORT
At our Annual General Meeting in February, we announced the strategic reorganisation of our business into two divisions: Invibio®, our biomaterials business and VICTREX PEEK, now known as Victrex Polymer Solutions ('VPS'). Our half year results and reporting now reflect this divisional split.
As expected, and as previously reported, Victrex faced a mixed first half. We have continued to see strong progress in Invibio, offset by lower volumes in VPS as demand in our major industrial markets remained weak.
Group results
At 772 tonnes, first half sales volume was 40% down on the previous first half (1,294 tonnes) because of reduced demand in our major end user industrial markets, particularly automotive and electronics.
As a result of the significant reduction in sales volume, we have had to buy out surplus forward exchange contracts at a cost of £9.0m for the first half. These contracts were entered into prior to the downturn and in compliance with our currency hedging policy. This adverse impact, which is reflected in reduced revenue, has been partially offset by an improvement in underlying effective exchange rates as remaining sales start to benefit from weaker sterling.
Accordingly, although Group revenue declined by 31% to £47.4m, underlying revenue (at constant exchange rates) was down 24%.
Gross profit decreased by 29% to £31.7m (H1 2008: £44.5m). However, gross margin increased by 2 percentage points to 66.9%, largely as a result of the sales mix effect between Invibio and VPS.
Although sales, marketing and administrative expenses increased by 23% to £21.5m, £2.6m of this increase was due to the weakening of sterling in relation to costs incurred in foreign currency and £1.9m related to one-off costs of a streamlining exercise in VPS. Underlying expenses (at constant exchange rates and excluding one-off costs) decreased by 3%.
Group profit before tax decreased by 62% to £10.2m. Exchange rates (including the cost of buying out surplus forward exchange contracts) had a net adverse impact of £8.4m on profit before tax compared to the first half of 2008. Underlying profit at constant exchange rates and excluding one-off costs was £20.5m, a decrease of 25%. Basic earnings per share were down 63% at 8.8p. Underlying earnings per share at constant exchange rates and excluding one-off costs were down 25%.
Cash flow
We continued to generate cash from operations, albeit down at £10.3m in line with the reduction in operating profit. While the effective tax rate remained at 29%, tax paid only decreased to £7.4m (H1 2008: £9.0m) as a significant proportion of the payment related to the 2008 tax charge.
Capital expenditure for the period amounted to £4.3m (H1 2008: £16.0m). We continue to expect total capital expenditure for 2009 to amount to approximately £10m. This is being funded from the Group's cash resources.
Dividend payments for the period (comprising the 2008 final dividend) were £10.8m (H1 2008: £10.3m).
At 31 March 2009, the Group had cash of £14.2m and no debt compared with £6.6m net cash as at 31 March 2008 and £23.5m as at 30 September 2008. The Group has a committed bank facility of £40m, all of which was undrawn as at 31 March 2009. This facility expires in September 2012.
Dividend
While profit and cash flow are down on 2008, the Group remains in a strong cash position. Accordingly, the interim dividend will be maintained at last year's level of 5.2p per share. This will be paid on Tuesday 7 July 2009 to all shareholders on the register at the close of business on Friday 12 June 2009.
Invibio Biomaterials Solutions ('Invibio')
|
|
Half year to 31 March 2009 |
Half year to 31 March 2008 |
% change |
|
|
£m |
£m |
|
|
Revenue |
17.6 |
11.7 |
+51% |
|
Gross profit |
15.4 |
10.3 |
+49% |
|
Operating profit |
10.4 |
7.1 |
+47% |
Invibio had an excellent first half and generated record revenue, up 51% on the first half of last year. Underlying revenue (at constant exchange rates) was up 42%.
Sales, marketing and administrative expenses increased by £1.8m to £5.0m, primarily due to increased investment in resources to drive growth in this division. As a result, Invibio employee numbers will increase from 33 as at 30 September 2008 to approximately 45 following completion of the current recruitment programme. We anticipate further growth in commercial and technical roles to meet customer requirements.
Operating profit increased by 47%. Underlying operating profit (at constant exchange rates) amounted to £9.9m, an increase of 40%.
We have continued to make good progress in sales to spinal applications, both in fusion and increasingly in new, non-fusion areas. Other areas of increased revenue included arthroscopy and cranio-maxillo facial ('CMF'). Overall growth continues to be driven by successful commercialisation of new applications. Since the introduction of Invibio's principal biomaterial (PEEK-OPTIMA® polymer) ten years ago, more than two million devices containing PEEK-OPTIMA have been implanted in patients.
Invibio continues to invest in new technologies and developments for medical device manufacturers, as demonstrated by the introduction of MOTIS™ polymer during the American Academy of Orthopedic Surgeons' 2009 Annual Meeting. MOTIS polymer was developed to offer orthopaedic surgeons innovative new options for replacing metal, ceramic and polyethylene components in orthopaedic joint replacements.
Since the start of the new financial year, Invibio has entered into 20 additional PEEK-OPTIMA polymer long-term supply assurance agreements with implantable medical device manufacturers.
Victrex Polymer Solutions ('VPS')
|
|
Half year to 31 March 2009 |
Half year to 31 March 2008 |
% change |
|
|
£m |
£m |
|
|
Revenue |
29.7 |
56.9 |
-48% |
|
Gross profit |
16.3 |
34.2 |
-52% |
|
Operating profit |
0.5 |
20.5 |
-98% |
VPS revenue fell by 48% compared with the first half of 2008, including the £9.0m adverse impact of buying out surplus forward exchange contracts which arose from the significant reduction in VPS sales volume. Underlying revenue (at constant exchange rates) was down 37%.
Although sales, marketing and administrative expenses increased by £2.1m to £15.8m, this included an additional cost of £2.4m due to the weakening of sterling in relation to costs incurred in foreign currency.
In addition, we have taken actions to streamline VPS while continuing to invest in new applications and growth areas. As previously announced, we have reduced polymer production levels and have also temporarily suspended BDF monomer production for a period of up to six months. Group staff numbers (excluding Invibio employees) are being reduced, by a combination of leavers not being replaced and a limited redundancy programme, from 486 as at 30 September 2008 to approximately 440 following completion of this exercise, a reduction of just under 10%.
The total one-off cost of this streamlining exercise (reflected in VPS first half sales, marketing and administrative expenses) amounted to £1.9m. Ongoing cost savings are estimated to be £3.6m on an annualised basis. Underlying expenses (at constant exchange rates and excluding one-off costs) were reduced by 16%.
Operating profit decreased by 98%. However, underlying operating profit (at constant exchange rates excluding currency buy out and one-off streamlining costs) amounted to £11.2m, a decrease of 45%.
Major markets
Transport sales volume was 194 tonnes, down 46% on last year's first half of 356 tonnes, principally due to a significant decline in automotive sales in all regions. Aerospace sales were also down but not to the same extent.
Industrial sales volume was 323 tonnes, down 30% on last year's first half of 460 tonnes as oil and gas applications have proved more resilient to the economic downturn.
Electronics sales volume was 139 tonnes, down 54% on last year's first half of 303 tonnes, due to significantly reduced semicon sales and a smaller reduction in consumer electronics sales.
Development pipeline
In spite of the slowdown in sales in the first half we have continued to successfully commercialise new applications, with 267 new VICTREX® PEEKTM polymer applications with an estimated mature annualised volume ('MAV') of 188 tonnes compared with 295 commercialised applications with an estimated MAV of 170 tonnes in the second half of 2008.
With regard to our ongoing development pipeline, as at 31 March 2009, we were working with customers on 2,876 developments (September 2008: 2,978) with an estimated MAV of 2,477 tonnes (September 2008: 2,910 tonnes) if all of the developments were successfully commercialised. As can be seen, we have maintained activity levels, albeit with reduced customer tonnage expectations largely as a result of the economic slowdown.
Risks and uncertainties
Victrex's business and share price may be affected by a number of risks, trends, factors and uncertainties, not all of which are in our control. The process Victrex has in place for identifying, assessing and managing risks is set out in the Corporate Governance Report in the Annual Report and Accounts 2008 on page 22.
The specific principal risks, trends, factors and uncertainties (which could impact the Group's revenues, profits and reputation), which were faced at the time of the last annual report, and relevant mitigating factors as currently identified by Victrex's risk management process, have not changed since the year end. Detailed explanations can be found in the Annual Report and Accounts 2008 on pages 10, 11 and 12. Broadly, these risks include technological change, operational disruption, insufficient capacity, product specifications, competitor activity and currency exposure.
During the period the Group has been impacted by the current economic climate and the measures taken in response, including streamlining the VPS division and reducing production levels, are summarised above. Other risks may also adversely affect the Group. Accordingly, actual results may differ materially from anticipated results because of a variety of risk factors, 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; changes in regulatory environment, and the outcome of litigation.
Outlook
Trading
April sales volume, at 110 tonnes, has picked up after the fall off in March. Current month order levels are running at a similar level to the same time in April. As previously indicated, for planning purposes, we have assumed that volume will remain at similar levels to the average for the second quarter. Should volume be higher than the second quarter run rate, we will benefit positively from our operational gearing. Furthermore, the underlying growth drivers remain in place across our end use markets and our development pipeline of potential new applications is holding up well.
Invibio continues to show strong sales performance and development potential. Accordingly, we expect Invibio second half revenue to be maintained at a broadly similar level to the strong first half with further sales growth expected in 2010.
Currency impact and gross margin
As previously reported, trading results for 2009 have been impacted by the cost of buying out surplus currency cover. Based on planned sales volume, hedging already in place and spot exchange rates as at 8 May 2009, we currently estimate the following average rates will apply for the second half:
|
|
Half year to 31 March 2009 |
Half year to 30 September 2009 |
|
|
Actual* |
Estimate* |
|
US Dollar |
2.05 |
1.87 |
|
Euro |
1.38 |
1.26 |
|
Yen |
210 |
200 |
* Excluding adverse impact from buy out of surplus forward exchange
contracts of £9.0m for the first half and £2.3m estimated for the second half.
As a result of these improved rates and materially reduced currency buy out costs, we expect to see a further significant increase in effective sterling average selling price in the second half. However, this will be offset by higher effective fixed production costs per tonne arising principally from reduced production. We therefore expect second half Group gross margin to be approximately 5% points lower than the first half.
Looking ahead to 2010, based on current spot rates and hedging already in place, we expect to see an additional significant increase in effective sterling average selling price, albeit partially offset by further increases in effective fixed production costs per tonne.
The Company's second interim management statement, covering the period from 1 April 2009, will be issued on Thursday 6 August 2009.
Anita Frew
Chairman
18 May 2009
CONDENSED CONSOLIDATED INCOME STATEMENT
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
||||
|
|
|||||||
|
|
Note |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Revenue |
5 |
|
47,361 |
|
68,508 |
|
141,117 |
|
Cost of sales |
|
|
(15,680) |
|
(24,027) |
|
(49,495) |
|
Gross profit |
5 |
|
31,681 |
|
44,481 |
|
91,622 |
|
Sales, marketing and administrative expenses |
|
|
(21,511) |
|
(17,504) |
|
(37,041) |
|
Operating profit |
5 |
|
10,170 |
|
26,977 |
|
54,581 |
|
Financial income |
|
86 |
|
331 |
|
577 |
|
|
Financial expenses |
|
(23) |
|
(89) |
|
(127) |
|
|
Net financing income |
|
|
63 |
|
242 |
|
450 |
|
Profit before tax |
|
|
10,233 |
|
27,219 |
|
55,031 |
|
Income tax expense |
6 |
|
(2,968) |
|
(7,893) |
|
(15,959) |
|
Profit for the period attributable to equity shareholders of the parent |
|
|
|
|
|
|
|
|
|
|
7,265 |
|
19,326 |
|
39,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share |
|
|
|
|
|
|
|
|
Basic |
7 |
|
8.8p |
|
23.7p |
|
47.8p |
|
Diluted |
7 |
|
8.8p |
|
23.5p |
|
47.4p |
|
Dividends |
|
|
|
|
|
|
|
|
Year ended 30 September 2007: |
|
|
|
|
|
|
|
|
Final dividend paid March 2008 at 12.6p per share |
|
|
- |
|
10,273 |
|
10,273 |
|
Year ended 30 September 2008: |
|
|
|
|
|
|
|
|
Interim dividend paid July 2008 at 5.2p per share |
|
|
- |
|
- |
|
4,260 |
|
Final dividend paid February 2009 at 13.1p per share |
|
|
10,795 |
|
- |
|
- |
|
|
10 |
|
10,795 |
|
10,273 |
|
14,533 |
|
|
|
|
|
|
|
|
|
An interim dividend of 5.2p per share will be paid on 7 July 2009 to shareholders on the register at the close of business on 12 June 2009. This dividend will be recognised in the period in which it is approved.
CONDENSED CONSOLIDATED BALANCE SHEET
|
|
|
Unaudited 31 March 2009 |
Unaudited 31 March 2008 |
Audited 30 September 2008 |
|
|
Note |
£000 |
£000 |
£000 |
|
Assets |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
|
130,879 |
125,291 |
129,909 |
|
Intangible assets |
|
10,568 |
11,178 |
10,873 |
|
Deferred tax assets |
|
10,631 |
8,154 |
8,078 |
|
|
|
152,078 |
144,623 |
148,860 |
|
Current assets |
|
|
|
|
|
Inventories |
|
42,122 |
28,211 |
31,675 |
|
Current income tax assets |
|
1,066 |
1,152 |
244 |
|
Trade and other receivables |
|
14,823 |
18,346 |
18,195 |
|
Derivative financial instruments |
8 |
666 |
948 |
855 |
|
Cash and cash equivalents |
|
14,223 |
10,605 |
23,532 |
|
|
|
72,900 |
59,262 |
74,501 |
|
Total assets |
|
224,978 |
203,885 |
223,361 |
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
Non-current liabilities |
|
|
|
|
|
Deferred tax liabilities |
|
(15,256) |
(13,611) |
(14,651) |
|
Retirement benefit obligations |
|
(5,923) |
(5,582) |
(6,378) |
|
|
|
(21,179) |
(19,193) |
(21,029) |
|
Current liabilities |
|
|
|
|
|
Derivative financial instruments |
8 |
(23,848) |
(12,461) |
(10,455) |
|
Short-term borrowings |
|
- |
(4,040) |
- |
|
Current income tax liabilities |
|
(5,377) |
(10,165) |
(8,263) |
|
Trade and other payables |
|
(15,866) |
(12,893) |
(16,820) |
|
|
|
(45,091) |
(39,559) |
(35,538) |
|
Total liabilities |
|
(66,270) |
(58,752) |
(56,567) |
|
|
|
|
|
|
|
Net assets |
|
158,708 |
145,133 |
166,794 |
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
Share capital |
|
830 |
825 |
829 |
|
Share premium |
|
20,915 |
19,171 |
20,723 |
|
Translation reserve |
|
4,059 |
(404) |
470 |
|
Hedging reserve |
|
(10,945) |
(7,441) |
(5,570) |
|
Retained earnings |
|
143,849 |
132,982 |
150,342 |
|
Total equity attributable to equity shareholders of the parent |
10 |
158,708 |
145,133 |
166,794 |
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
|
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
|
|
Note |
£000 |
£000 |
£000 |
|
Cash flows from operating activities |
|
|
|
|
|
Cash generated from operations |
11 |
10,324 |
27,505 |
61,858 |
|
Interest and similar charges paid |
|
(22) |
(120) |
(176) |
|
Interest received |
|
86 |
331 |
577 |
|
Tax paid |
|
(7,360) |
(8,995) |
(15,703) |
|
Net cash flow from operating activities |
|
3,028 |
18,721 |
46,556 |
|
|
|
|
|
|
|
Cash flows from investing activities |
|
|
|
|
|
Acquisition of property, plant and equipment |
|
(4,347) |
(15,976) |
(25,014) |
|
Net cash flow from investing activities |
|
(4,347) |
(15,976) |
(25,014) |
|
|
|
|
|
|
|
Cash flows from financing activities |
|
|
|
|
|
Issue of ordinary shares exercised under option |
|
1 |
3 |
7 |
|
Premium on issue of ordinary shares exercised under option |
|
192 |
1,023 |
2,575 |
|
Purchase of own shares held |
|
(977) |
(858) |
(858) |
|
Decrease in short-term borrowings |
|
- |
- |
(4,207) |
|
Dividends paid |
|
(10,795) |
(10,273) |
(14,533) |
|
Net cash flow from financing activities |
|
(11,579) |
(10,105) |
(17,016) |
|
|
|
|
|
|
|
Net (decrease)/increase in cash and cash equivalents |
|
(12,898) |
(7,360) |
4,526 |
|
Exchange differences on net investment translation of foreign operations |
|
3,589 |
845 |
1,886 |
|
Cash and cash equivalents at beginning of period |
|
23,532 |
17,120 |
17,120 |
|
Cash and cash equivalents at end of period |
|
14,223 |
10,605 |
23,532 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Components of net cash |
|
|
|
|
|
|
|
Unaudited 31 March 2009 |
Unaudited 31 March 2008 |
Audited 30 September 2008 |
|
|
|
£000 |
£000 |
£000 |
|
Cash and cash equivalents |
|
14,223 |
10,605 |
23,532 |
|
Short-term borrowings |
|
- |
(4,040) |
- |
|
Net cash |
|
14,223 |
6,565 |
23,532 |
CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE
|
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
|
|
Note |
£000 |
£000 |
£000 |
|
Net change in fair value of cash flow hedges: Transferred to equity |
|
(24,310) |
(1,639) |
(14,509) |
|
Transferred to income statement |
|
16,845 |
(8,749) |
6,719 |
|
Exchange differences on net investment translation of foreign operations |
|
3,589 |
224 |
1,098 |
|
Actuarial (losses)/gains on defined benefit plans |
|
(1,907) |
1,823 |
867 |
|
Tax on items taken directly to or transferred from equity |
|
1,263 |
2,002 |
3,238 |
|
Net expense recognised directly in equity |
|
(4,520) |
(6,339) |
(2,587) |
|
Profit for the period |
|
7,265 |
19,326 |
39,072 |
|
Total recognised income and expense for the period attributable to equity shareholders of the parent |
10 |
2,745 |
12,987 |
36,485 |
NOTES TO THE HALF-YEARLY FINANCIAL REPORT
1 Reporting entity
Victrex plc (the 'Company') is a limited liability company incorporated and domiciled in the United Kingdom. The address of the registered office is Victrex Technology Centre, Hillhouse International, Thornton Cleveleys, Lancashire, FY5 4QD, United Kingdom. The Company is listed on the London Stock Exchange.
This Half-yearly Financial Report is an interim management report as required by DTR 4.2.3 of the Disclosure and Transparency rules of the UK Financial Services Authority.
These condensed consolidated interim financial statements as at and for the six months ended 31 March 2009 comprise the Company and its subsidiaries (together referred to as the 'Group').
The comparative figures for the financial year ended 30 September 2008 are extracted from the Company's statutory accounts for that year. Those accounts have been reported on by the Company's auditor, filed with the Registrar of Companies and are available on request from the Company's registered office or to download from www.victrex.com. The auditor's report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under sections 237(2) or (3) of the Companies Act 1985.
These condensed consolidated interim financial statements are unaudited, but have been reviewed by KPMG Audit Plc and their report is set out on page 15.
2 Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard ('IAS') 34 - Interim Financial Reporting as adopted by the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 September 2008.
This Half-yearly Financial Report was approved by the Board of Directors on 18 May 2009.
3 Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied in the Company's published consolidated financial statements for the year ended 30 September 2008 except for the application of relevant new standards.
Of the new standards, amendments to standards and interpretations which are mandatory for the first time for the year ending 30 September 2009, the only relevant one is IFRIC 14 - IAS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction, which is effective for accounting periods commencing on or after 1 January 2008. Whilst the Group is currently assessing the impact, the application of IFRIC 14 is not expected to have a significant impact on the balance sheets or consolidated income statement.
A number of amendments to standards and interpretations have been issued during the period, which are either not yet endorsed or endorsed yet not effective, and accordingly the Group has not yet adopted.
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 2008.
5 Segment reporting
In the six months ended 31 March 2009, the Group's business was strategically reorganised into two divisions: Invibio and Victrex Polymer Solutions. Consequently, in compliance with IAS 14 - Segmental Reporting, the business will now report divisional information as the primary analysis and geographical information as the secondary analysis.
Primary divisional segments
Results
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
||||||
|
|
Victrex Polymer Solutions |
Invibio Biomaterials Solutions |
Group |
Victrex Polymer Solutions |
Invibio Biomaterials Solutions |
Group |
Victrex Polymer Solutions |
Invibio Biomaterials Solutions |
Group |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Total segment sales |
32,028 |
17,630 |
49,658 |
56,864 |
11,650 |
68,514 |
117,502 |
24,900 |
142,402 |
|
Less inter-segment sales |
(2,297) |
- |
(2,297) |
(6) |
- |
(6) |
(1,285) |
- |
(1,285) |
|
Revenue from external sales |
29,731 |
17,630 |
47,361 |
56,858 |
11,650 |
68,508 |
116,217 |
24,900 |
141,117 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment gross profit |
16,291 |
15,390 |
31,681 |
34,155 |
10,326 |
44,481 |
69,722 |
21,900 |
91,622 |
|
Sales, marketing and administrative expenses |
(15,812) |
(5,015) |
(20,827) |
(13,704) |
(3,251) |
(16,955) |
(28,618) |
(7,404) |
(36,022) |
|
Segment operating profit |
479 |
10,375 |
10,854 |
20,451 |
7,075 |
27,526 |
41,104 |
14,496 |
55,600 |
|
Unallocated central costs |
|
|
(684) |
|
|
(549) |
|
|
(1,019) |
|
Operating profit |
|
|
10,170 |
|
|
26,977 |
|
|
54,581 |
|
Net financing income |
|
|
63 |
|
|
242 |
|
|
450 |
|
Profit before tax |
|
|
10,233 |
|
|
27,219 |
|
|
55,031 |
|
Income tax expense |
|
|
(2,968) |
|
|
(7,893) |
|
|
(15,959) |
|
Profit for the period attributable to equity shareholders of the parent |
|
7,265 |
|
|
19,326 |
|
|
39,072 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other information |
|
|
|
|
|
|
|
|
|
|
Segment assets |
208,629 |
16,349 |
224,978 |
191,950 |
11,935 |
203,885 |
210,193 |
13,168 |
223,361 |
|
Segment liabilities |
62,023 |
4,247 |
66,270 |
51,981 |
6,771 |
58,752 |
52,706 |
3,861 |
56,567 |
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditure |
4,145 |
106 |
4,251 |
15,364 |
105 |
15,469 |
23,365 |
356 |
23,721 |
|
Depreciation |
3,873 |
108 |
3,981 |
3,065 |
106 |
3,171 |
6,786 |
213 |
6,999 |
|
Amortisation |
305 |
- |
305 |
306 |
- |
306 |
610 |
- |
610 |
Secondary geographical segments
|
|
Unaudited six months ended 31 March 2009* |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
|
|
£000 |
£000 |
£000 |
|
Sales |
|
|
|
|
Europe |
22,018 |
34,239 |
68,748 |
|
USA |
23,015 |
23,974 |
50,717 |
|
Asia-Pacific |
2,328 |
10,295 |
21,652 |
|
|
47,361 |
68,508 |
141,117 |
* Includes the adverse impact from buy out of surplus forward exchange contracts.
6 Taxation
Taxation of profit before tax in respect of the six months ended 31 March 2009 has been provided at the estimated effective rates chargeable for the full year in the respective jurisdiction.
|
|
Unaudited six months ended 31 March 2009 £000 |
Unaudited six months ended 31 March 2008 £000 |
Audited year ended 30 September 2008 £000 |
|
UK corporation taxation |
2,760 |
6,094 |
9,197 |
|
Overseas taxation |
872 |
1,233 |
3,846 |
|
Deferred taxation |
(664) |
566 |
2,916 |
|
|
2,968 |
7,893 |
15,959 |
7 Earnings per share
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
||
|
Earnings per share |
- basic |
8.8p |
23.7p |
47.8p |
|
|
|
- diluted |
8.8p |
23.5p |
47.4p |
|
|
Profit for the financial period |
£7,265,000 |
£19,326,000 |
£39,072,000 |
||
|
Weighted average number of shares used |
- basic |
82,244,501 |
81,501,608 |
81,701,581 |
|
|
|
- diluted |
82,567,070 |
82,098,094 |
82,355,303 |
|
8 Derivative financial instruments
The Group classifies its forward exchange contracts hedging forecast transactions as cash flow hedges and states them at fair value. The notional contract amount, carrying amount and fair value of the Group's forward exchange contracts and swaps designated as cash flow hedges are as follows:
|
|
Unaudited 31 March 2009 |
Unaudited 31 March 2008 |
Audited 30 September 2008 |
|||
|
|
Notional contract amount |
Carrying amount and fair value |
Notional contract amount |
Carrying amount and fair value |
Notional contract amount |
Carrying amount and fair value |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Current assets |
(483) |
666 |
5,176 |
948 |
22,594 |
855 |
|
Current liabilities |
96,817 |
(23,848) |
134,664 |
(12,461) |
111,966 |
(10,455) |
|
|
96,334 |
(23,182) |
139,840 |
(11,513) |
134,560 |
(9,600) |
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 at the balance sheet date.
The following table indicates the periods in which cash flows associated with the maturity date of the forward foreign exchange contracts are expected to occur:
|
|
Unaudited 31 March 2009 |
Unaudited 31 March 2008 |
||||||
|
|
Expected cash flows |
6 months or less |
6 to 12 months |
12 to 18 months |
Expected cash flows |
6 months or less |
6 to 12 months |
12 to 18 months |
|
|
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
£000 |
|
Forward exchange contracts |
||||||||
|
Assets |
(483) |
(7,080) |
2,875 |
3,722 |
5,176 |
4,364 |
812 |
- |
|
Liabilities |
96,817 |
46,770 |
39,879 |
10,168 |
134,664 |
52,450 |
54,309 |
27,905 |
|
|
96,334 |
39,690 |
42,754 |
13,890 |
139,840 |
56,814 |
55,121 |
27,905 |
|
|
|
Audited 30 September 2008 |
||||||
|
|
|
|
|
|
Expected cash flows |
6 months or less |
6 to 12 months |
12 to 18 months |
|
|
|
|
|
|
£000 |
£000 |
£000 |
£000 |
|
Forward exchange contracts |
||||||||
|
Assets |
|
|
|
|
22,594 |
(13,724) |
19,646 |
16,672 |
|
Liabilities |
|
|
|
|
111,966 |
62,796 |
39,448 |
9,722 |
|
|
|
|
|
|
134,560 |
49,072 |
59,094 |
26,394 |
9 Exchange rates
The most significant sterling exchange rates used in the accounts under the Group's accounting policies are:
|
|
Unaudited six months ended 31 March 2009 |
Unaudited six months ended 31 March 2008 |
Audited year ended 30 September 2008 |
|||
|
|
Average* |
Closing |
Average |
Closing |
Average |
Closing |
|
US Dollar |
2.05 |
1.43 |
1.98 |
1.99 |
1.99 |
1.78 |
|
Euro |
1.38 |
1.08 |
1.47 |
1.25 |
1.47 |
1.27 |
|
Yen |
210 |
142 |
226 |
198 |
229 |
189 |
* Excluding adverse impact from buy out of surplus forward exchange contracts.
10 Changes in equity
|
|
Unaudited six months ended 31 March 2009 £000 |
Unaudited six months ended 31 March 2008 £000 |
Audited year ended 30 September 2008 £000 |
|
Equity at beginning of period |
166,794 |
141,483 |
141,483 |
|
Total recognised income and expense |
2,745 |
12,987 |
36,485 |
|
Share options exercised |
193 |
1,026 |
2,582 |
|
Equity-settled share-based payment transactions |
748 |
768 |
1,635 |
|
Purchase of own shares held |
(977) |
(858) |
(858) |
|
Dividends to shareholders |
(10,795) |
(10,273) |
(14,533) |
|
Equity at end of period |
158,708 |
145,133 |
166,794 |
11 Reconciliation of profit to cash generated from operations
|
|
Unaudited six months ended 31 March 2009 £000 |
Unaudited six months ended 31 March 2008 £000 |
Audited year ended 30 September 2008 £000 |
|
Profit after tax for the period |
7,265 |
19,326 |
39,072 |
|
Income tax expense |
2,968 |
7,893 |
15,959 |
|
Net financing income |
(63) |
(242) |
(450) |
|
Operating profit |
10,170 |
26,977 |
54,581 |
|
Adjustments for: |
|
|
|
|
Depreciation |
4,178 |
3,191 |
7,064 |
|
Amortisation |
305 |
306 |
610 |
|
Increase in inventories |
(10,447) |
(344) |
(3,808) |
|
Decrease/(increase) in trade and other receivables |
3,372 |
(2,459) |
(2,308) |
|
(Decrease)/increase in trade and other payables |
(1,755) |
(3,026) |
1,466 |
|
Equity-settled share-based payment transactions |
747 |
768 |
1,635 |
|
Changes in fair value of derivative financial instruments |
6,116 |
1,797 |
2,483 |
|
Retirement benefit obligations charge less contributions |
(2,362) |
295 |
135 |
|
Cash generated from operations |
10,324 |
27,505 |
61,858 |
12 Related party transactions
The Group's related parties are as disclosed in the Annual Report and Accounts 2008. There were no material differences in related parties or related party transactions in the six months ended 31 March 2009 except for transactions with key management personnel, of which the most significant were as follows:
-
On 12 December 2008, under the 1999 Long Term Incentive Plan ('LTIP'), D R Hummel, M W Peacock, B V Souder and T J Walker exercised 153,774, 100,899, 41,289 and 41,743 share options respectively at an option price of nil p per share when the market price was 444p per share and,
-
On 16 February 2009, under the 2009 LTIP, 92,818, 50,484 and 43,478 share option awards were granted to D R Hummel, M W Peacock and T J Walker respectively at an option price of nil p per share.
RESPONSIBILITY STATEMENT OF THE DIRECTORS
The Directors confirm that to the best of our knowledge:
-
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting as adopted by the European Union;
-
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 Services 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 Services 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 page 16 of the Victrex plc Annual Report and Accounts 2008. Since that time the Commercial Director left the Group on 31 March 2009 and this role no longer exists.
By order of the Board
Michael Peacock
Finance Director
18 May 2009
FORWARD-LOOKING STATEMENTS
Sections of this Half-yearly Financial Report contain forward-looking statements, including statements relating to: future demand and markets for the Group's products and services; research and development relating to new products and services, and liquidity and capital resources. These forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. Accordingly, actual results may differ materially from anticipated results because of a variety of risk factors, 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; changes in regulatory environment, and the outcome of litigation.
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 2009 which comprises the Condensed Consolidated Income Statement, Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Recognised Income and Expense, Condensed Consolidated Cash Flow Statement 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 Services Authority (the 'UK FSA'). 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 FSA.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs 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 2009 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.
Nicola Quayle
For and on behalf of
KPMG Audit Plc,
18 May 2009
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 www.victrex.com.
|
Financial calendar |
|
|
|
|
|
Ex dividend date for interim dividend |
10 June 2009 |
|
Record date for interim dividend* |
12 June 2009 |
|
Payment of interim dividend |
7 July 2009 |
|
2009 year end |
30 September 2009 |
|
Announcement of 2009 full year results |
December 2009 |
|
Annual General Meeting |
February 2010 |
|
Payment of final dividend |
February 2010 |
* The date by which shareholders must be recorded on the share register to receive the dividend.
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.victrex.com
This information is provided by RNS
Latest directors dealings
- 5 minutes ago Schroder Japan Growth Fund
- 26 minutes ago Schroder Income Growth Fund
- 28 minutes ago CVC Income & Growth Limited NPV GBP
- 30 minutes ago Schroder Japan Growth Fund
- 30 minutes ago SHAWBROOK GROUP PLC