TIDMVCT
RNS Number : 3025J
Victrex PLC
04 December 2018
4 December 2018
Victrex plc - Preliminary Results 2018
'Core growth & mega-programme progress'
Victrex plc, an innovative world leader in high performance
polymer solutions, today announces its preliminary results for the
12 months ended 30 September 2018.
FY 2018 FY 2017 % change
Group sales volumes 4,407 tonnes 3,992 tonnes +10%
---------------- ------------- -----------------
Group revenue GBP326.0m GBP290.2m +12%
---------------- ------------- -----------------
Gross profit GBP208.0m GBP183.8m +13%
---------------- ------------- -----------------
Gross margin 63.8% 63.3% +50 bps
---------------- ------------- -----------------
Profit before tax
(PBT) GBP127.5m GBP111.0m +15%
---------------- ------------- -----------------
EPS 128.8p 116.4p +11%
---------------- ------------- -----------------
Dividend per share
(regular & special
dividend) 142.24p 121.80p +17%
---------------- ------------- -----------------
Highlights:
-- Strong core business* growth
- Group sales volumes up 10% driven by core growth & mega-programme progress
- Group revenue up 12%; constant currency revenue** up 7%
- Strong performances across Industrial markets; Medical revenue up 3%
- Profit before tax (PBT) up 15%, supported by currency
-- Further progress in 'mega-programmes'
- Major Dental supply agreement with Straumann and new Trauma collaboration
- PEEK Gears now "on the road" & further larger opportunities
- Strong performance in Magma following planned deployments & further opportunities
- TxV Aero Composites facility in commissioning; new Aerospace alliances under discussion
- Clinical trial submitted for PEEK Knee programme
-- Continued strong cash generation, supporting investment & shareholder return
- Operating cash conversion** of 107% giving cash available** up 20% to GBP144.4m
- Regular dividend up 11% to 59.56p/share and special dividend of 82.68p/share
- Dividend distribution policy retained, balancing investment flexibility & shareholder return
Jakob Sigurdsson, Chief Executive of Victrex, said: "This has
been a strong year for Victrex, with broad based growth in our core
polymer business and further good progress in our new product
pipeline. We delivered a range of notable milestones across each of
our mega-programmes and we are currently closing in on larger
opportunities in Gears, as well as being in advanced discussions
for new strategic Aerospace alliances.
"After my first year as CEO, it's clear that moving downstream
through our Polymer & Parts strategy will further differentiate
Victrex in a competitive market and enable us to capture our
long-term growth opportunities. We will continue to invest in
support of future growth, as well as reviewing partnership and
acquisition opportunities. Strong cash generation continues to
offer the opportunity of attractive returns to shareholders and we
are today announcing a special dividend of 82.68p, whilst retaining
the current dividend distribution policy, thereby balancing
investment for growth with shareholder return.
"For 2019, our expectation is for continued momentum in our core
polymer business and milestones in our mega-programmes. We expect
to make good progress on a constant currency basis, however,
adverse currency, no expected volumes in Consumer Electronics and
recent market softness in Automotive may hold back our ability to
substantially improve on our overall 2018 performance, with these
headwinds falling mainly in the first half. A better second half,
compared to the prior year, is our current assessment and with
strong structural growth opportunities and a healthy new product
pipeline, we continue to be well-placed for the medium and long
term."
* Core business, core growth, etc, excludes Consumer Electronics
and sales from mega-programmes.
** Alternative performance measures are defined on page 20.
About Victrex:
Victrex is an innovative world leader in high performance
polymer solutions, focused on the strategic markets of automotive,
aerospace, energy (including manufacturing & engineering),
electronics and medical. Every day, millions of people use products
and applications which contain our materials - from smartphones,
aeroplanes and cars to oil and gas operations 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,
and drive value for our shareholders. Find out more at
www.victrexplc.com or follow us on LinkedIn and Twitter
@victrexir
A presentation for investors and analysts will be held at 9.30am
(GMT) this morning at JP Morgan, 1 John Carpenter Street, London
EC4Y 0JP. A conference call facility will be available for analysts
and investors who are unable to attend the presentation. To
register, dial +44 (0) 3333 000804 and participant pin 82946335#.
The presentation will be available to download from 9.00am (GMT)
today on Victrex's website at www.victrexplc.com.
Enquiries:
Victrex plc:
Andrew Hanson, Director of Investor Relations & Corporate
Communications
+44 (0) 7809 595831
Richard Armitage, Group Finance Director
+44 (0) 1253 897700
Jakob Sigurdsson, Chief Executive
+44 (0) 1253 897700
LEI Number: 213800UYNPHAUNHPXL67
Preliminary results statement for the 12 months ended 30
September 2018
'Core growth & mega-programme progress'
Group financial results
Full year sales volume up 10%
Group sales volume of 4,407 tonnes was 10% ahead of the prior
year (FY 2017: 3,992 tonnes). Growth was broad-based with all
markets recording volume increases at or near double-digits. Growth
did slow slightly in the second half, due in part to the large
Consumer Electronics order which had been substantially fulfilled
in the first half. We also saw some softening in certain Industrial
markets during Q4, principally Automotive - in line with the wider
market - and Consumer Electronics. Excluding the effect of the
large Consumer Electronics order, sales volume growth edged down
from 13% in the first half, to 6% in the second half, which saw
tougher comparatives.
Revenue up 12%, Constant currency revenue 7% ahead
Group revenue was GBP326.0m, 12% ahead of the prior year (FY
2017: GBP290.2m) supported by the strong first half weighting from
currency. Group revenue in constant currency was 7% ahead of the
prior year (FY 2017: GBP305.3m in constant currency), with a
slightly weaker sales mix, dampened by a slightly higher proportion
of Consumer Electronics volumes and further growth in our Value
Added Resellers segment. Sales from new products** (one of our
strategic KPIs) grew in absolute terms to GBP11.5m (FY 2017:
GBP10.7m), but remained similar to FY 2017 as a percentage of Group
sales (4%), reflecting stronger growth in the core business. We
continue to aspire to deliver 10-20% of sales from new products or
new grades over the medium term, with the time taken for market
adoption being key.
Industrial strong, offset by Medical
Our Industrial division reported revenues of GBP270.4m, 14%
ahead of the prior year (FY 2017: GBP236.3m), supported by
currency. Market growth was broad based, with Automotive,
Electronics and Energy being the strongest performers, along with
growth in our emerging Manufacturing & Engineering business.
Victrex also saw a positive performance in Aerospace following a
weaker 2017.
Medical revenues were GBP55.6m, 3% ahead of the prior year (FY
2017: GBP53.9m), driven by currency. In constant currency, Medical
revenues were flat, reflecting our high exposure to the US Spine
market, which is mature and seeing some continued growth in
titanium expandable cage applications, as well as 3D printed porous
titanium cages. Pleasingly, progress outside of the US, overall,
continues to be positive with 27% growth in Asia. Our next
generation Spine product, PEEK-OPTIMA(TM) HA Enhanced, delivered a
similar performance to FY 2017, with "meaningful revenue" of
approximately GBP1m and over 10,000 patient implants using this
product.
ASP ahead reflecting currency
Our Average Selling Price (ASP) of GBP73.97/kg was 2% better
than the prior year (FY 2017: GBP72.70/kg), with the benefit of
currency partially offset by the weaker mix.
Pricing, excluding the benefit of currency, in the core business
remains broadly stable, with product mix being an important driver.
Whilst we have competition in our markets, our focus on
differentiation and value added semi-finished products, with a
higher price point, will be a key driver of margin percentage over
the coming years.
Robust gross margin
Group gross margin of 63.8% (FY 2017: 63.3%) was slightly ahead
of the prior year, supported by favourable currency movements but
offset by the weaker mix. Manufacturing costs were stable. We also
saw a small year on year impact from our Zyex acquisition which, as
a business producing semi-finished products, supports a lower gross
margin percentage. For 2019, on a full year reported basis, we
anticipate that Group gross margin will be slightly lower,
principally reflecting material inflation and currency
headwinds.
As we develop differentiated down-stream products to support our
mega-programmes, we have the opportunity to build new markets for
PEEK whilst capturing a higher absolute value share of each
application. Whilst this may cause a slight softening of our gross
margin percentage in the short term, we are confident that this
strategy will not only further differentiate and capture greater
value in our markets, but will lead to enhanced returns.
Profit before tax up 15% and EPS 11% ahead
Group profit before tax (PBT) of GBP127.5m was 15% up on the
prior year (FY 2017: GBP111.0m). PBT in constant currency increased
by 3%.
The future growth of our core business, as well as the success
of our mega-programmes, requires ongoing investment in our
'front-end' functions of Sales, R&D and Marketing. Together
with an increased charge for the Group's employee bonus and LTIP
schemes, which are based on profit growth, overheads increased by
12%.
Basic earnings per share of 128.8p was 11% ahead (FY 2017:
116.4p per share), which reflects the first normalised financial
year in which the Group tax rate benefited from the UK Patent Box
scheme. The Group's effective tax rate was 13.3% for FY 2018 (FY
2017: 10.4%), reflecting the impact of the treatment of currency
hedging and stock movements within the Patent Box methodology. As
our application of the scheme settles down, we expect our effective
tax rate going forward to be slightly more variable than initially
expected and likely to be in the range from 10.5% to 13.5%.
Currency tailwind in FY 2018; headwind for FY 2019
Currency benefited the Group in FY 2018, with a benefit to
profit of approximately GBP13m. The currency tailwind significantly
reduced through the second half, moving to a small headwind in the
fourth quarter.
These currency impacts arise as a consequence of currency market
movements, combined with our hedging policy which seeks to
substantially protect our cash flows from currency volatility on a
rolling twelve month basis. The policy requires that at least 90%
of our 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. The Board reviews the effectiveness of the
policy each year, the next review being in February 2019.
As a consequence of the hedging policy, over 80% of FY19 cash
flows were hedged as at October 2018, leading to an expected
currency headwind of between GBP6m and GBP8m, which includes the
impact of raw material and energy cost inflation
Further information is available in note 14 of the Financial
Statements, in our forthcoming Annual Report.
Brexit
The Group continues to consider the potential impact of Brexit
on its business and has a team in place to consider various
contingencies, through the transition period and beyond. For now,
existing laws and trading arrangements are unchanged.
Based on our assessment of the latest available information, our
principal risk continues to be that there could be a sustained
period when the Group may not be able to import certain raw
materials or export finished goods through Customs, which could
curtail sales if regional inventory levels were depleted. In
mitigation, additional warehousing for finished goods stock has
been secured in mainland Europe and China which will allow a
minimum of eight weeks of finished goods stock to be held outside
the UK by the end of March 2019. We have also secured some
additional raw material stocks. Group inventories could exceed
GBP80m through FY19 as a consequence (FY 2018: GBP69.3m).
Victrex has attempted to assess the potential financial impact
of a 'no deal' Brexit. Should standard WTO tariffs be applied,
increased costs may be incurred through the application of duties
to the import of certain raw materials and on the export of
finished goods. It is possible in the first year following our exit
from the EU that these could be substantially mitigated by a
weakening of Sterling, but this is heavily dependent on the timing
of any deal announcement and resulting currency market movements.
As the only current manufacturer of PEEK products in the EU, we are
also preparing to exploit longer term tariff mitigation strategies
that may be available to us.
An Executive Committee has been established to monitor Brexit
developments and direct mitigating actions. The Company continues
to monitor the situation closely.
Investment to drive growth
We continue to invest in the growth of our core Industrial and
Medical businesses. This investment is primarily in our "front-end"
Sales, Technical Service and R&D capabilities that are critical
to our ongoing success. An ongoing focus on quality is also
essential, as is continuous improvement in our operations. We have
taken steps to accelerate our progress in these areas during the
year.
This investment has led to some new and incremental applications
across a number of markets. Examples include home appliance
applications such as vacuum cleaners in the electronics market; and
fluid handling and food processing applications in Manufacturing
& Engineering markets (which reports under Energy & Other
Industrial). We also recently launched Victrex FG(TM) , a dedicated
polymer grade for the food industry, to reflect increasing
regulatory standards and the need for alternative materials.
Total operating overheads were up 12% to GBP81.1m (FY 2017:
GBP72.7m). This was driven in part by a higher accrual for the
Group's profit growth linked bonus scheme and LTIPs, whilst
investment in our "business facing" functions grew by 8%. Research
& Development investment of GBP17.4m (FY 2017: GBP14.5m)
represents approximately 5% of Group revenue and is anticipated to
remain similar to, or slightly above this level, over the medium
term.
For FY19, we again are budgeting for a significant increase in
'business-facing' overhead investment to support both core growth
and our Mega-programmes, as well as some operating expense as we
explore new capacity options. The impact is expected to be offset
by a lower accrual for bonus and LTIPs, which reflects consensus
expectations of lower profit growth due to currency headwinds and
our expectations around Consumer Electronics volumes, to give total
overheads for the year broadly in line with FY18.
Manufacturing investment supports downstream strategy
Capital investment in the short to medium term remains focused
around our downstream manufacturing facilities, which support each
of our new product "mega-programmes". For 2018, the focus was on
our TxV Aero Composites joint venture, where Victrex and Tri-Mack
Plastics teamed up to manufacture, at scale, differentiated Loaded
Brackets and composite parts for the Aerospace market. Our new US
manufacturing facility started commissioning at the end of the
financial year, supporting first prototype orders for composite
parts, based on our AE(TM) 250 polymer grade, which is already
pre-qualified with the major aerospace manufacturers. We also saw
some small-scale investment at our Victrex Grantsburg (Kleiss
Gears) facility in the US to support additional manufacturing
capacity, and at our Victrex Stonehouse (Zyex Fibres) facility in
the UK.
Capital expenditure was low at GBP9.9m (FY 2017: GBP16.7m) but
our guidance for Group capital expenditure for the medium term at
GBP20m-GBP25m per annum remains unchanged.
At the half year, we announced that we would need to invest in
new polymer manufacturing capacity during the next five years. This
reflects Victrex's historical trend of investing ahead of demand
and is driven by the current volume momentum in the business, the
potential from high volume down-stream applications, and an
assessment of our effective capacity. Options are currently being
explored and we expect to be presenting recommendations to the
Board during 2019.
Further milestones achieved in our Mega-programmes
In our medium to longer term pipeline, we saw milestones
delivered in all of our Mega-programmes.
Gears saw the start of a first supply agreement to a major
European car manufacturer during the period, with our PEEK Gears
now 'on the road'. With multiple development agreements in place
with other car manufacturers, our discussions suggest we are close
to other larger supply opportunities through 2019 and beyond.
Thanks to the capabilities we acquired through the Kleiss Gears
acquisition, we are able to design, develop and manufacture PEEK
based gears, although partnerships for manufacturing will be the
focus going forward, ensuring Victrex retains the IP but limits the
capital required to scale up manufacturing.
Our Aerospace Loaded Brackets programme will benefit from the
completion of our TxV Aero Composites manufacturing facility, which
will give us the capability to manufacture parts from 2019.
Progress has also been made in establishing long-term development
alliances with a number of Aerospace OEMs, and we are in advanced
discussions here.
In Energy, our Pipe programme with Magma earned revenue in the
period from the manufacture of a 2.5km subsea flowline to be
supplied for a customer deployment. Victrex supplied the PEEK pipe
and PEEK composite tape as part of the finished m-pipe produced by
Magma. Looking further forward, we note the TechnipFMC announcement
relating to the potential use of m-pipe within the Libra field
development in Brazil, building on other potential supply
opportunities with Tullow and Equinor (formerly Statoil) over the
next 1-2 years.
In Medical, our focus to grow our non-Spine business saw a
notable milestone in Dental, where we signed a customer agreement
with Straumann Dental, which will help to enhance market access and
improve the global reach for our Invibio Dental product (Juvora(TM)
). This builds on the product's strong record of clinical data and
existing European and US regulatory approvals. Further customer
discussions are ongoing and our focus is to secure meaningful
revenue of over GBP1m in Dental over the next year. We also secured
distribution agreements in Europe.
In Trauma, we secured a collaboration agreement with a top 5
player and through our partner Maxx, saw the clinical trial for our
Knee programme following ethics approval and appointment of the
lead investigator.
Strong balance sheet
With a strong balance sheet, we are able to support growth
investment and provide security of supply to our customers. Net
assets at 30 September 2018 totalled GBP489.9m (FY 2017:
GBP478.4m). Inventories slightly increased to GBP69.3m (FY 2017:
GBP61.5m), as we saw some stock build as part of developing new
polymer grades and as our Brexit contingency plan starts to take
effect.
Continued strong cash generation
Cash generated from operations was GBP135.8m (FY 2017:
GBP137.4m) representing an operating cash conversion (cash
generated from operations / operating profit) of 107% (FY 2017:
124%). Net cash (with no debt) at 30 September 2018 was GBP144.4m
(FY 2017: GBP120.1m), based on available cash**, which includes
cash held on deposit. In July 2018 we paid the 2018 interim
dividend of 13.42p per share. Combined with the payment for the
2017 special dividend and final dividend, dividend payments in 2018
totalled GBP105.6m (FY 2017 dividends paid: GBP40.4m).
Taxation
The Group's effective tax rate reflects the associated benefit
from Victrex filing patents as part of its unique chemistry and IP.
Victrex qualified under the UK government's Patent Box scheme,
which incentivises Research & Development investment in the UK.
As previously communicated, the scheme is expected to provide an
associated benefit to our tax rate from 2017 for the duration of
the patents, resulting in a normalised tax rate of approximately
12% and a range expected to be between 10.5% and 13.5%. The
effective tax rate of 13.3% for FY 2018 (FY 2017: 10.4%) reflects
gains from foreign currency hedges which are taxed, outside the
Patent Box regime, at a normalised corporation tax rate, as well as
the impact of stock movements on the patent box methodology.
Dividends
Retaining the flexibility to invest in support of our growth
remains our top priority, whether that is through capital
expenditure, M&A, joint ventures or partnerships. The Group
also has a potential requirement for investment in new or
additional polymer manufacturing capacity within five years. The
Board has assessed several distribution options for future
shareholder returns, whilst noting these investment needs, and has
concluded that our current capital allocation policy should be
retained, which is to grow the regular dividend broadly in line
with earnings, whilst maintaining cover around 2x. The Group will
also retain the threshold for payment of a special dividend at
50p/share from FY 2019 subject to no additional investment
requirements.
With the Group delivering a strong performance in 2018, the
final dividend will increase in line with EPS, by 11% to
46.14p/share (FY 2017: 41.60p/share), giving total regular
dividends of 59.56p/share for the year. In addition, the Group is
proposing a special dividend of 82.68p/share, based on the minimum
threshold of 50p/share being reached.
New accounting standards
Victrex will adopt the requirements of IFRS 9 and IFRS 15 with
effect from 1 October 2018, as explained in our forthcoming Annual
Report. Whilst neither has a material impact on the Group's
results, it should be noted that the presentation of gains and
losses on currency contracts under IFRS 9 has the potential to
affect our reported gross margin percentage, but not absolute gross
profit, in future statements.
Pensions
The outcome of the recent Lloyds Banking Group case in October
2018, in relation to guaranteed minimum pensions has also been
noted. Should this outcome be upheld, we anticipate that a one-off
non-cash P&L charge in the range GBP1m to GBP2m may arise
during FY19. The Victrex Pension Fund remains in surplus on both a
technical provisions and on an accounting basis.
Outlook
For 2019, our expectation is for continued momentum in our core
polymer business and milestones in our mega-programmes. We expect
to make good progress on a constant currency basis, however,
adverse currency, no expected volumes in Consumer Electronics and
recent market softness in Automotive may hold back our ability to
substantially improve on our overall 2018 performance, with these
headwinds falling mainly in the first half. A better second half,
compared to the prior year, is our current assessment and with
strong structural growth opportunities and a healthy new product
pipeline, we continue to be well-placed for the medium and long
term.
Jakob Sigurdsson
Chief Executive
4 December 2018
DIVISIONAL REVIEW
Industrial
12 months 12
months
Ended ended
30 Sep 30 Sep
2018 2017
GBPm GBPm Change
-------------- ---------- -------- -------
Revenue 270.4 236.3 14%
Gross profit 158.6 135.5 17%
-------------- ---------- -------- -------
Victrex manages and reports its performance through the
Industrial (formerly VPS) and Medical (formerly Invibio) divisions
although we continue to provide a market based summary of our
performance and growth opportunities. The Industrial division
includes the markets of Energy & Other Industrial (including
Manufacturing & Engineering), Value Added Resellers,
Automotive, Aerospace and Electronics.
Our Industrial business delivered revenue of GBP270.4m (FY 2017:
GBP236.3m), 14% ahead of the prior year, supported by currency.
Gross profit was up 17% on the prior year, with gross margin up at
58.7% (FY 2017: 57.3%), reflecting the benefit of currency, offset
by a slightly weaker Industrial mix, as growth in Value Added
Resellers continued, alongside a slightly higher contribution from
Consumer Electronics. Industrial also saw some emerging inflation
in selected raw materials.
Energy & Other Industrial
Energy & Other Industrial (which includes Manufacturing
& Engineering) reported sales volume of 680 tonnes, which was
23% ahead of the prior year (FY 2017: 555 tonnes), with Oil &
Gas up 19% overall. Victrex saw continued year on year improvement,
with onshore prospering, whilst the offshore sector has not yet
returned to activity levels seen earlier this decade. Our Magma oil
& gas mega-programme delivered meaningful revenue of over GBP1m
during 2018, with Victrex supplying the PEEK pipe and PEEK
composite tape as part of the finished m-pipe produced by Magma.
Materials for a planned deployment in West Africa supported growth,
with further opportunities for FY 2019, whilst a long-term
opportunity offshore in Brazil with TechnipFMC continues to support
the Magma proposition.
Manufacturing & Engineering (M&E) remains a relatively
new area for Victrex and is becoming a meaningful contributor to
our Energy & Other Industrial business. M&E is focused on
new or incremental applications in fluid handling, food contact
materials and manufacturing equipment based applications, where
metal replacement requirements are increasing. M&E again saw
double-digit volume growth through 2018 and we recently introduced
Victrex(TM) FG, a food grade product.
Value Added Resellers
Value Added Resellers combines a mix of long term 'Channels'
business, where processors or compounders are using our PEEK
materials for part or component manufacturing specified by end
users and OEMs, together with more variable demand requirements as
the "pull" from Industrial markets using Victrex(TM) PEEK continues
to grow. Because of the fragmented nature of the industrial supply
chain, once PEEK has been specified by end users, full clarity on
the exact route to market for all of our polymer business is not
always possible. Sales volume of 1,766 tonnes was 5% ahead of last
year (FY 2017: 1,688 tonnes), as processors and Industrial
customers continued to benefit from the growth opportunities within
the high-performance polymer market, although Q4 growth rates were
slightly lower, principally due to phasing.
Transport
A number of megatrends, including lightweighting, CO2 reduction,
durability, comfort and heat resistance continue to support the
long-term outlook for Transport markets. Sales volume increased 11%
to 1,035 tonnes (FY 2017: 929 tonnes), primarily driven by an
improved year on year performance in Aerospace, and another good
performance in Automotive.
Automotive
Automotive growth saw volumes increase 8%, well ahead of market
growth. Continued translations of core applications offer
opportunities across manufacturers, in braking systems,
transmission and chassis applications. Victrex(TM) PEEK is
predominantly deployed within the vehicle powertrain and with a
long track record here, our focus is to increase the average volume
to approximately 12 grams of PEEK per vehicle over the medium term,
compared to approximately 8 grams today.
PEEK remains well placed for both internal combustion engines
and hybrids. Electric vehicles (EVs), whilst still emerging, offer
further opportunities for our materials, with slot-liners, wire
coating and other applications. PEEK's properties of durability,
chemical, electrical and heat resistance play well here. Whilst EV
opportunities remain at a very early stage, early indications
suggest a long-term potential for over 100g per EV application and
with more "value" rather than simply "volume" business, we continue
to work on several differentiated products in this area. We have
also recruited capability from the major car manufacturers.
Our Gears are now "on the road", with the first parts supplied
to a major European car manufacturer, and we also have several
development agreements in place which we anticipate will lead to
further parts being supplied. PEEK gears based on 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. We remain
focused on driving this mega-programme towards a meaningful
(GBP1m+) revenue stage in 2019. To help scale this opportunity, we
will partner with manufacturing companies to support a wider
roll-out and reduce development time, whilst retaining the
development know-how. A PEEK Gear offers the potential of
approximately 20 grams per application.
Aerospace
Aerospace saw a positive year on year performance, with volumes
increasing by 23%, although revenue growth was lower as pricing
remained competitive. Brackets, fasteners and other applications
continue to offer incremental translation opportunities. Medium
term growth prospects look positive as build rates and the use of
composites and differentiated products increase. Light-weighting
and the ability to reduce manufacturing cycle time by up to 40% is
a key selling point for our PEEK and PAEK polymers. Beyond this,
our differentiated polymer grades, such as our AE(TM) 250
(low-melt) version continue to progress, alongside our focus on
product forms and parts, such as film and our Aerospace Loaded
Brackets opportunity. Our new US manufacturing facility in Rhode
Island, US, is in commissioning and nearing completion, with the
ability to initially manufacture approximately 150 tonnes of
composite parts per year. We are also in advanced discussions
around strategic alliances which could support further development
and commercialisation of thermoplastic composites in primary and
secondary structures in the coming years. With projections of
around 41,000 new or replacement aircraft required by 2035, the
long-term opportunities in this market, particularly in lightweight
composite parts, remain strong.
Electronics
Electronics remained a strong performer during the period. Total
volumes were up 19% to 746 tonnes (FY 2017: 626 tonnes), including
volumes from the large Consumer Electronics order, which were
slightly ahead of 2018. With this order reflecting legacy
applications, we anticipate much lower or zero volumes in 2019,
although we increased the potential revenue opportunity for our
'Mobile Devices' programme, reflecting some of our broader
medium-term prospects. Victrex saw strength in Semiconductor, in
APTIV(TM) film and emerging applications for Home Appliances and
other consumer related areas during 2018, and we anticipate
continued momentum in these areas, whilst recognising the inherent
"lumpiness" of the Electronics segment.
Regional trends
Regional trends remain important to Victrex. Europe was up 7%,
with 2,308 tonnes (FY 2017: 2,155 tonnes), reflecting the strength
in Transport, Value Added Resellers and Industrial markets.
Asia-Pacific was up 20% to 1,264 tonnes (FY 2017: 1,049 tonnes)
principally from Electronics, whilst US volumes were 6% ahead at
835 tonnes (FY 2017: 788 tonnes) largely reflecting the year on
year improvement in the Energy market.
Medical
12 12
months months
Ended ended
30 Sept 30 Sept
2018 2017
GBPm GBPm Change
-------------- -------- -------- -------
Revenue 55.6 53.9 3%
Gross profit 49.4 48.3 2%
-------------- -------- -------- -------
Medical revenue, including the benefit of currency, was up 3% at
GBP55.6m (FY 2017: GBP53.9m). In constant currency, Medical revenue
was flat, principally reflecting the maturity of the US Spine
market, where we have the most exposure. Gross profit was GBP49.4m
(FY 2017: GBP48.3m) and gross margin remained stable at 88.8% (FY
2017: 89.6%).
Revenue outside of the US remains robust, with Asia-Pacific
growing by 27%, offset by a decline in Europe of -5%. Asia-Pacific
growth principally reflects some non-Spine areas such as Cranio
Maxio-Facial (CMF) and Arthroscopy, as sales mix within Medical
weakened.
Medical market overview
The lack of material growth in the number of US spinal
procedures over recent years, continued growth in expandable spinal
cages, 3D printed titanium cages and some downward pressure on
pricing have led to revenue growth being challenging in recent
years.
Our focus is to diversify our Medical business into non-Spine
areas, as well as seeking growth through emerging geographies. Our
premium and differentiated PEEK-OPTIMA(TM) HA Enhanced product - to
drive next generation Spine procedures - is one part of our
strategy to grow our Medical business. Having delivered over GBP1m
of revenue in 2017, we saw a similar performance in 2018, where we
now have over 10,000 patient implants. Whilst it will cannibalise
some of our existing Spine product, the medium-term opportunity for
global translations is attractive.
On a medium-to-long-term view, our vision for Medical solutions
to treat a patient every 15-20 seconds in 8-10 years is also based
on growth in non-US Spine and progress in our emerging
mega-programmes of Dental, Trauma and Knee.
Mega-programmes
Good progress was made this year in Dental, where we signed a
customer agreement with Straumann Dental, one of the world's
leading dental companies, which will help increase market
penetration of our Invibio Dental (Juvora(TM) ) branded products.
The agreement will help to improve global reach - our sales
resource by virtue of Straumann will increase significantly -
building on PEEK-OPTIMA(TM)'s clinical performance and existing
European and US regulatory approvals - and we also secured two
distribution agreements in Europe.
Our emphasis is on the prosthetic dental implant market, with
the Invibio Dental offering focused on improving quality of life
and clinical outcomes for patients, whilst offering manufacturing
efficiency benefits. Our product also supports the potential for
milling a PEEK based disc up to three times faster than a titanium
equivalent product.
Our Dental product was first commercialised in 2012, initially
through regional dental laboratories. It secured CE mark approval
in 2012, followed by initial US FDA approval in 2014, and a further
FDA approval in 2017 for use in prosthetic All on 4 implants.
Juvora(TM) was also granted a US patent in 2017. Whilst Dental
sales remain below the GBP1m meaningful revenue threshold, we
anticipate that with the Straumann agreement, and other potential
market access opportunities, we have the opportunity to realise
meaningful revenue over the next 12 months.
With our Trauma manufacturing facility in place, we have the
ability to meet initial demand and will be further developing our
capacity capabilities over the next 1-2 years. Our PEEK composite
Trauma plates offer the potential for 50 times better fatigue
resistance compared to a metal plate. They also offer the
opportunity for enhanced healing. The awareness of composites as a
viable metal alternative is growing and we successfully signed a
collaboration agreement with a top 5 Trauma player during the year.
We are also continuing to work with smaller innovative players
through development agreements.
In Knee, our PEEK based solutions offer potential in this $6
billion global market. With 1 in 5 patients dissatisfied with their
knee surgery, typically those using metal based solutions, patient
demand for alternatives is growing. Our Knee proposition and
partnership with Maxx Orthopedics provides a good platform to
support our long-term aspirations. The Knee clinical trial has now
been submitted, with the lead investigator appointed in Italy,
ethics approval and patient recruitment moving forward, with a
focus to safely progress the clinical trial during FY 2019.
CONSOLIDATED INCOME STATEMENT
for the year ended 30 September
2018 2017
Note GBPm GBPm
------------------------------------- ----- --------------------------- --------
Revenue 2 326.0 290.2
Cost of sales (118.0) (106.4)
------------------------------------- ----- --------------------------- --------
Gross profit 2 208.0 183.8
Sales, marketing and administrative
expenses (81.1) (72.7)
------------------------------------- ----- --------------------------- --------
Operating profit 126.9 111.1
Financial income 0.6 0.3
Financial expenses - (0.4)
------------------------------------- ----- --------------------------- --------
Profit before tax 127.5 111.0
Income tax expense 3 (16.9) (11.5)
------------------------------------- ----- --------------------------- --------
Profit for the period attributable
to owners of the parent 110.6 99.5
-------------------------------------------- --------------------------- --------
Earnings per share
Basic 128.8p 116.4p
Diluted 128.2p 116.2p
------------------------------------- ----- --------------------------- --------
Dividends
Interim 13.42p 12.20p
Final 46.14p 41.60p
Special 82.68p 68.00p
142.24p 121.80p
------------------------------------- ----- --------------------------- --------
A final dividend in respect of 2018 of 46.14p and a special
dividend of 82.68p per ordinary share has been recommended by the
Directors for approval at the Annual General Meeting in February
2019.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 30 September
2018 2017
GBPm GBPm
-------------------------------------------- ------- ------
Profit for the period 110.6 99.5
--------------------------------------------- ------- ------
Items that will not be reclassified
to profit or loss
Defined benefit pension schemes'
actuarial gains 5.6 13.6
Income tax on items that will
not be reclassified to profit
or
loss (0.9) (2.3)
--------------------------------------------- ------- ------
4.7 11.3
Items that may be subsequently
reclassified to profit or
loss
Currency translation differences
for foreign operations 1.1 (1.5)
Effective portion of changes
in fair value of cash flow hedges (4.6) 2.9
Net change in fair value of
cash flow hedges
transferred to profit or loss (4.3) 13.3
Income tax on items that may
be reclassified to profit or
loss 2.0 (3.3)
(5.8) 11.4
Total other comprehensive (expense)/income
for the period (1.1) 22.7
Total comprehensive income for
the period
attributable to owners of the
parent 109.5 122.2
--------------------------------------------- ------- ------
CONSOLIDATED BALANCE SHEET
for the year ended 30 September
2018 2017
GBPm GBPm
----------------------------- ------- -------
Assets
Non-current assets
Property, plant and
equipment 253.4 258.6
Intangible assets 27.6 30.6
Investments 4.5 10.0
Deferred tax assets 7.2 5.6
Retirement benefit
asset 13.5 3.8
------------------------------ ------- -------
306.2 308.6
----------------------------- ------- -------
Current assets
Inventories 69.3 61.5
Current income tax
assets 0.1 2.4
Trade and other receivables 42.7 37.9
Derivative financial
instruments 1.1 7.6
Other financial assets 73.2 -
Cash and cash equivalents 71.2 120.1
------------------------------ ------- -------
257.6 229.5
----------------------------- ------- -------
Total assets 563.8 538.1
------------------------------ ------- -------
Liabilities
Non-current liabilities
Deferred tax liabilities (22.5) (18.4)
(22.5) (18.4)
----------------------------- ------- -------
Current liabilities
Derivative financial
instruments (9.3) (4.2)
Current income tax
liabilities (5.3) (3.0)
Trade and other payables (36.8) (34.1)
------------------------------ ------- -------
(51.4) (41.3)
----------------------------- ------- -------
Total liabilities (73.9) (59.7)
------------------------------ ------- -------
Net assets 489.9 478.4
------------------------------ ------- -------
Equity
Share capital 0.9 0.9
Share premium 48.0 43.0
Translation reserve 3.8 2.7
Hedging reserve (3.4) 3.8
Retained earnings 440.6 428.0
------------------------------ ------- -------
Total equity attributable
to owners of the parent 489.9 478.4
------------------------------ ------- -------
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 30 September
2018 2017
GBPm GBPm
Profit after tax for the year 110.6 99.5
Income tax expense 16.9 11.5
Financial income (0.6) (0.3)
Financial expense - 0.4
Operating profit 126.9 111.1
Adjustments for:
Depreciation 15.3 15.3
Amortisation 2.7 2.3
Loss on disposal of non-current 0.7 -
assets
(Increase)/decrease in inventories (7.1) 0.2
(Increase)/decrease in receivables (5.6) 8.9
Increase in payables 1.9 5.6
Equity-settled share-based payment
transactions 2.6 2.3
Losses/(gains) on derivatives
in income statement that have
not yet settled 2.6 (7.5)
Retirement benefit obligations
charge less contributions (4.2) (0.8)
----------------------------------------- -------- -------
Cash generated from operations 135.8 137.4
Interest received 0.6 0.3
Interest paid - (0.3)
Tax paid (7.4) (19.8)
----------------------------------------- -------- -------
Net cash flow generated from operating
activities 129.0 117.6
----------------------------------------- -------- -------
Cash flow used in investing activities
Acquisition of property, plant
and equipment and intangible assets (9.9) (16.7)
Increase in other financial assets (73.2) -
Cash received from investments 5.5 -
Cash consideration of acquisitions - (9.9)
Cash acquired with acquisitions - 0.9
----------------------------------------- -------- -------
Net cash flow used in investing
activities (77.6) (25.7)
----------------------------------------- -------- -------
Cash flow used in financing activities
Proceeds from issue of ordinary
shares exercised under option 5.0 5.2
Dividends paid (105.6) (40.4)
----------------------------------------- -------- -------
Net cash flow used in financing
activities (100.6) (35.2)
----------------------------------------- -------- -------
Net (decrease)/increase in cash
and cash equivalents (49.2) 56.7
Effect of exchange rate fluctuations
on cash held 0.3 (0.6)
Cash and cash equivalents at beginning
of year 120.1 64.0
----------------------------------------- -------- -------
Cash and cash equivalents at end
of year 71.2 120.1
----------------------------------------- -------- -------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Translation Hedging Retained
capital premium reserve reserve earnings Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 1 October 2016 0.9 37.8 4.2 (9.2) 355.4 389.1
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income
for the year
Profit - - - - 99.5 99.5
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Other comprehensive (expense)/income
Currency translation differences
for foreign operations - - (1.5) - - (1.5)
Effective portion of changes
in fair value of cash flow
hedges - - - 2.9 - 2.9
Net change in fair value
of cash flow hedges transferred
to profit or loss - - - 13.3 - 13.3
Defined benefit pension
schemes' actuarial gains - - - - 13.6 13.6
Tax on other comprehensive
(expense)/income - - - (3.2) (2.4) (5.6)
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Total other comprehensive
(expense)/income for the
year - - (1.5) 13.0 11.2 22.7
Total comprehensive (expense)/income
for the year - - (1.5) 13.0 110.7 122.2
Contributions by and distributions
to owners of the Company
Share options exercised - 5.2 - - - 5.2
Equity-settled share-based
payment transactions - - - - 2.3 2.3
Dividends to shareholders - - - - (40.4) (40.4)
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 30 September
2017 0.9 43.0 2.7 3.8 428.0 478.4
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income
for the year
Profit - - - - 110.6 110.6
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Other comprehensive income/(expense)
Currency translation differences
for foreign operations - - 1.1 - - 1.1
Effective portion of changes
in fair value of cash flow
hedges - - - (4.6) - (4.6)
Net change in fair value
of cash flow hedges transferred
to profit or loss - - - (4.3) - (4.3)
Defined benefit pension
schemes' actuarial gains - - - - 5.6 5.6
Tax on other comprehensive
income - - - 1.7 (0.6) 1.1
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Total other comprehensive
income/(expense) for the
year - - 1.1 (7.2) 5.0 (1.1)
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Total comprehensive income/(expense)
for the year - - 1.1 (7.2) 115.6 109.5
Contributions by and distributions
to owners of the Company
Share options exercised - 5.0 - - - 5.0
Equity-settled share-based
payment transactions - - - - 2.6 2.6
Dividends to shareholders - - - - (105.6) (105.6)
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Equity at 30 September
2018 0.9 48.0 3.8 (3.4) 440.6 489.9
-------------------------------------- --------- --------- ------------ --------- ---------- --------
Notes to the Financial Report
1. Basis of preparation
General information
Victrex plc (the 'Company') is a limited liability company
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 2018 comprise the Company and its
subsidiaries (together referred to as the 'Group').
The Company is listed on the London Stock Exchange.
The consolidated financial statements were approved for issue by
the Board of Directors on 4 December 2018.
Basis of preparation
Both the consolidated and Company financial statements have been
prepared on the basis of the accounting policies set out in the
Group's last Annual Report and Accounts except for the application
of relevant new standards. A number of new standards and amendments
to existing standards were effective for the financial year ended
30 September 2018. None of these have had a material impact to the
Group's consolidated result or financial position.
A number of standards, amendments and interpretations have been
issued and endorsed by the EU but are not yet effective and,
accordingly, the Group has not yet adopted them.
Victrex will adopt the requirements of IFRS 9 and IFRS 15 with
effect from 1 October 2018, as explained in our forthcoming Annual
Report. Whilst neither has a material impact on the Group's
results, it should be noted that the presentation of gains and
losses on currency contracts under IFRS 9 has the potential to
affect our reported gross margin percentage, but not absolute gross
profit, in future statements. The financial information presented
here does not constitute the Company's statutory accounts for the
years ended 30 September 2018 or 2017 but is derived from those
accounts. Statutory accounts for 2017 have been delivered to the
registrar of companies, and those for 2018 will be delivered in due
course. The auditor has reported on those accounts; their reports
were (i) unqualified, (ii) did not include reference to any matters
to which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006.
Sections of this results statement 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 which are summarised in Note 10.
The accounts for the year ended 30 September 2018 will be posted
to shareholders on 3 January 2019 and will be available from the
Company's Registered Office at Victrex Technology Centre, Hillhouse
International, Thornton Cleveleys, Lancashire, FY4 4QD, United
Kingdom, and online at www.victrexplc.com.
2. Segment reporting
The Group complies with IFRS 8 - Operating Segments which
requires operating segments to be identified and reported upon that
are consistent with the level at which results are regularly
reviewed by the entity's chief operating decision maker. The chief
operating decision maker for the Group is the Victrex plc Board.
Information on the business units is the primary basis of
information reported to the Victrex plc Board. The performance of
the business units is assessed based on segmental gross profit.
Management of sales, marketing and administration functions
servicing both business units is consolidated and reported at a
Group level.
The Group's business is strategically organised as two business
units (operating segments): Industrial, which focuses on our
Automotive, Aerospace, Electronics and Energy markets, and Medical,
which focuses on providing specialist solutions for medical device
manufacturers.
2. Segment reporting continued
Industrial Medical Group Industrial Medical Group
2018 2018 2018 2017 2017 2017
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ ---------- ------- ------ ---------- ------- ------
Revenue from external sales 270.4 55.6 326.0 236.3 53.9 290.2
------------------------------------ ---------- ------- ------ ---------- ------- ------
Segment gross profit 158.6 49.4 208.0 135.5 48.3 183.8
Sales, marketing and administrative
expenses (81.1) (72.7)
------------------------------------ ---------- ------- ------ ---------- ------- ------
Operating profit 126.9 111.1
Net financing income/(expense) 0.6 (0.1)
------------------------------------ ---------- ------- ------ ---------- ------- ------
Profit before tax 127.5 111.0
Income tax (16.9) (11.5)
------------------------------------ ---------- ------- ------ ---------- ------- ------
Profit for the year attributable to
owners of the Parent 110.6 99.5
------------------------------------ ---------- ------- ------ ---------- ------- ------
3. Taxation
2018 2017
GBPm GBPm
-------------------------------------------------- ----- ----
Current tax
UK corporation tax on profits for the year 13.0 7.7
Overseas tax on profits for the year 3.1 2.2
16.1 9.9
Deferred tax
Origination and reversal of temporary differences 2.0 0.7
2.0 0.7
Tax adjustments relating to prior years (1.2) 0.9
--------------------------------------------------- ----- ----
Total tax expense in income statement 16.9 11.5
--------------------------------------------------- ----- ----
2018 2017
----------- ------------
% GBPm % GBPm
------------------------------------------- ---- ----- ---- ------
Profit before tax 127.5 111.0
------------------------------------------- ---- ----- ---- ------
Tax expense at UK corporation tax rate 19.0 24.2 19.5 21.6
Effects of:
- Expenses not deductible for tax purposes 0.7 0.5
- Higher rates of tax on overseas earnings 1.4 0.9
- UK research and development tax credits
and other allowances (0.5) (0.4)
- Tax adjustments relating to prior years (1.2) 0.9
- Difference in rates between deferred tax
and corporation tax 0.3 (0.1)
- Patent box deduction (8.0) (11.9)
------------------------------------------- ---- ----- ---- ------
Effective tax rate and total tax expense 13.3 16.9 10.4 11.5
------------------------------------------- ---- ----- ---- ------
4. Earnings per share
Year ended Year ended
30 September 2018 30 September
2017
--------------------------------------- ------------------- --------------
Earnings
per share - basic 128.8p 116.4p
- diluted 128.2p 116.2p
------------ ------------------- --------------
Profit for the financial period
(GBPm) 110.6 99.5
--------------------------------------- ------------------- --------------
Weighted average number
of shares used - basic 85,857,265 85,505,917
- diluted 86,299,646 85,696,602
-------------------------- ----------- ------------------- --------------
5. Investments
Following the capital contribution into Magma Global Limited by
TechnipFMC, GBP5.5m of the initial investment was redeemed during
the period.
6. 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 As at 30 September
2018 2017
--------------------- ------------------- ----------------------------------
Notional Carrying Notional Carrying
contract amount contract amount
amount and fair amount and fair
value value
GBPm GBPm GBPm GBPm
--------------------- ------------------- ---------- ---------- ----------
Current assets 39.0 1.1 181.2 7.6
Current liabilities 180.5 (6.2) 18.0 (1.2)
---------------------- ------------------- ---------- ---------- ----------
219.5 (5.1) 199.2 6.4
--------------------- ------------------- ---------- ---------- ----------
The fair values have been calculated by applying (where
relevant), for equivalent maturity profiles, the rate at which
forward currency contracts with the same principal amounts could be
acquired on the balance sheet date. These are categorised as Level
2 within the fair value hierarchy under IFRS 7.
In addition to the above, GBP3.1m is included in current
liabilities in respect of the fair value of the derivative
instruments associated with TxV. These are categorised as Level 2
within the fair value hierarchy under IFRS 7.
7. Exchange Rates
The most significant Sterling exchange rates used in the
financial statements under the Group's accounting policies are:
2018 2017
---------------- ----------------
Average Closing Average Closing
---------- ------- ------- ------- -------
US Dollar 1.30 1.30 1.37 1.34
Euro 1.13 1.11 1.23 1.14
Yen 144 149 150 151
---------- ------- ------- ------- -------
The average exchange rates in the above table take into account
the impact of gains and losses on foreign currency contracts. These
rates are referred to elsewhere in the Preliminary Results as the
effective rates for the period
8. Subsequent events
On 26 October 2018, the High Court handed down its judgment in
the Lloyds Banking Group case relating to equalisation of member
benefits for the gender effects of Guaranteed Minimum Pensions
("GMP equalisation"). This addressed a long-standing legal
uncertainty for Defined Benefit pension schemes, and will result in
an increase in scheme liabilities. GMP equalisation represents a
scheme amendment, where an additional past service cost is
chargeable, due to a change in the benefits payable and will be
recognised in full in the Groups financial statements in the year
ended 30 September 2019. The impact is expected to be in the range
of GBP1m-GBP2m. This High Court judgment represents a condition
that arose after the balance sheet date and has therefore been
treated as a non-adjusting post balance sheet event (in accordance
with IAS 10) for the year ended 30 September 2018.
9. Dividend and Annual General Meeting
The proposed final regular and special dividends will be paid on
22 February 2019 to all shareholders on the register on 1 February
2019. The Annual General Meeting of the Company will be held at
11am on 6 February 2019, at J.P. Morgan, 1 John Carpenter Street,
London, EC4Y 0JP.
10. Risks, trends, factors 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.
Accordingly, actual results may differ materially from
anticipated results because of a variety of risk factors,
including: changes in 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.
FINANCIAL CALAR (also available at www.victrexplc.com)
Ex-dividend date 31 January 2019
Record date# 1 February 2019
-----------------
Annual General Meeting 6 February 2019
-----------------
Payment of final dividend 22 February 2019
-----------------
Announcement of 2019 half-yearly May 2019
results
-----------------
Payment of interim dividend July 2019
-----------------
# The date by which shareholders must be recorded on the share
register to receive the dividend
** Alternative performance measures:
We use alternative performance measures 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:
- Group revenue in constant currency is used by the Board to
assess the year on year underlying performance of the business
excluding the impact of foreign exchange rates, which can by nature
be volatile. Group revenue in constant currency is reached by
applying current year (FY 2018) effective currency rates to prior
year (FY 2017) transactions (see note 7);
- 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);
- 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 cash generated from
operations/operating profit; and
- Sales from new products is sales from new products or grades
sold from FY 2014 onwards. The Board monitors sales from new
products (one of our strategic KPIs) to assess the level of revenue
from mega-programmes, new differentiated polymers and other
pipeline products that were not sold before FY 2014.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
FR DGBDDRGGBGIX
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