5th Jun 2007 07:01
Victrex PLC05 June 2007 5 June 2007 Victrex plc Results announcement for the six months ended 31 March 2007 • Volume up 16% to 1,286 tonnes (2006: 1,113 tonnes)• Revenue up 13% to £66.4m (2006: £58.7m)• Profit before tax up 18% to £27.1m (2006: £23.1m)• Earnings per share up 20% to 23.1p (2006: 19.3p)• Interim dividend per share up 12% to 4.7p (2006: 4.2p) Chairman Peter Warry commented: "I am pleased to report further excellent progress in the first half of 2007.Victrex has delivered record sales, profits and commercialised applications. Although we are seeing a slight softening in semiconductor demand, we stillexpect overall sales volume for the second half to be broadly in line with thefirst half. We are pleased with the progress we have made in the first half andremain confident in our ability to realise the underlying growth potential ofthe business." Enquiries Victrex plc David Hummel, Chief Executive 0207 357 9477 (5 June 2007)Michael Peacock, Finance Director 01253 897700 (thereafter) Hogarth Partnership Limited Nick Denton / Barnaby Fry 0207 357 9477 REPORT TO SHAREHOLDERS on the interim results for the six months ended 31 March 2007 I am pleased to report further excellent progress in the first half of 2007.Victrex has delivered record sales, profits and commercialised applications. Results Revenue was £66.4m (H1 2006: £58.7m), an increase of 13% on the first six monthsof last year. Gross profit was £42.3m (H1 2006: £36.8m), representing a gross margin of 63.7%(H1 2006: 62.7%). Sales, marketing and administrative expenses increased by 11%to £15.8m compared with the first half of last year (£14.2m) reflecting ongoinginvestment in application development and sales and marketing resources. Profit before tax grew by 18% to £27.1m (H1 2006: £23.1m). Compared with thefirst half of 2006, as expected, exchange rates have had an adverse impact of£0.7m on profit principally due to a weaker Euro and Japanese Yen. Earnings per share were up 20% at 23.1p (H1 2006: 19.3p). Markets Continued sales growth has been achieved, resulting in first half sales volumeof 1,286 tonnes, 16% up on the previous first half of 1,113 tonnes and 5% aheadof last year's record second half (1,226 tonnes). Transport sales volume was 334 tonnes, up 10% on last year's second half of 305tonnes, mainly due to increased commercial aerospace sales, principally in theUS. We also delivered increased automotive sales in both the US and Japan andsustained automotive sales at the same level as last year's second half inEurope. Industrial sales volume was 439 tonnes, up 6% on last year's second half of 414tonnes with continued strong demand from oil and gas customers and Europeandemand for industrial applications. Electronics volume was 353 tonnes, up 3% on last year's second half of 344tonnes. This was principally due to increased semiconductor sales toAsia-Pacific partially offset by weaker sales in the US. Consumer electronicssales were maintained at similar levels to the previous second half. Regionally, Asia-Pacific sales have regained momentum at 241 tonnes, up 15% onthe second half of last year (210 tonnes). This was mainly due to growth intransport and electronics. As previously reported, on 30 March 2007, we acquired from Mitsui Chemicals, Inctheir 49% shareholding in Victrex-MC, Inc, our Japanese joint venture, which isresponsible for VICTREX PEEK sales in Japan. As a result, Victrex-MC, Inc becamea wholly owned subsidiary with effect from that date and was renamed VictrexJapan, Inc. European sales saw continued growth to 656 tonnes, 3% up on last year's strongsecond half (640 tonnes), principally due to increased demand from industrialapplications. United States volume continued to grow with volume of 389 tonnes, 3% ahead oflast year's second half of 376 tonnes, as a result of increased aerospace andautomotive demand. Invibio(R), our biomaterials business, generated record first half revenue of£9.5m, an increase of 20% over the second half of last year (£7.8m) and 25% overthe first half (£7.6m). Since the start of the new financial year Invibio hasentered into 22 additional PEEK-OPTIMA(R) polymer long-term supply assuranceagreements with implantable medical device manufacturers. We have also completedconstruction of our new Invibio Global Technology Centre in the UK. Development pipeline Our continued success in new application development is demonstrated by therecord level of commercialised applications. During the first half wecommercialised 316 new VICTREX PEEK applications with an estimated matureannualised volume ('MAV') of 266 tonnes compared with 277 commercialisedapplications with an estimated MAV of 135 tonnes in the second half of 2006. Thedevelopment pipeline contained 2,015 developments (September 2006: 1,764) withan estimated MAV of 2,762 tonnes (September 2006: 2,754) if all of thedevelopments were successfully commercialised. Supply chain and capital expenditure Total tangible fixed asset additions for the period amounted to £19.2m (H1 2006:£6.9m). The majority of these related to the ongoing construction of the secondVICTREX PEEK polymer powder plant, which remains on schedule with completionexpected in October. The estimated capital cost of this plant has increased by10% from our original estimate of £29m to approximately £32m. The uprate of the BDF supply chain to support this additional polymer capacityhas now commenced. The estimated capital cost of the BDF uprate remains around£23m with completion expected in autumn 2008. We have also completed construction of our new film manufacturing facility andhave now formally launched a range of film products under the APTIVTM brandname. We now expect total capital expenditure for the current year to be approximately£40m compared with our previous estimate of £35m. Cash flow Cash flow from operations was £23.0m (H1 2006: £23.4m) as the impact of improvedtrading was offset by increased working capital, principally trade and otherreceivables. This increase was mainly due to a temporary deferral of remittancesfrom Victrex-MC, Inc to accumulate cash in the joint venture pending adistribution of reserves to shareholders. Capital expenditure cash paymentsamounted to £22.4m (H1 2006: £6.6m). Taxation paid was £5.9m (H1 2006: £6.5m) and the effective tax rate decreased to31.0% (H1 2006: 32.5%). At 31 March 2007, the Group had net cash of £9.8m compared with £26.9m as at30 September 2006. Dividend An interim dividend of 4.7p per share, representing an increase of 12% over lastyear's interim dividend, will be paid on 31 July 2007 to all shareholders on theregister at the close of business on 29 June 2007. Outlook Currency impact As previously reported, trading results for 2007 are being adversely impacted bythe strengthening of Sterling against our key trading currencies (Euro, USDollar and Yen) compared with 2006. Based on our forecast sales volume, currencyhedging already in place and spot exchange rates as at 25 May 2007, we currentlyestimate the following average exchange rates will apply for the second half of2007: +----------+-------------+-----------------+-----------------+----------------+| | Year to| Six months to| Six months to| Year to|+----------+-------------+-----------------+-----------------+----------------+| | 30 September| 31 March| 30 September| 30 September|+----------+-------------+-----------------+-----------------+----------------+| | 2006| 2007| 2007| 2007|+----------+-------------+-----------------+-----------------+----------------+| | Actual| Actual| Estimate| Estimate|+----------+-------------+-----------------+-----------------+----------------+|US Dollar | 1.82| 1.81| 1.91| 1.86|+----------+-------------+-----------------+-----------------+----------------+|Euro | 1.43| 1.46| 1.45| 1.46|+----------+-------------+-----------------+-----------------+----------------+|Yen | 188| 195| 211| 204|+----------+-------------+-----------------+-----------------+----------------+ As can be seen from the above table, and in line with our previous expectations,we continue to forecast a further adverse impact in the second half from aweaker US Dollar and Japanese Yen. By way of illustration, if the currentestimated second half rates had applied in the first half of the current year,this would have had an adverse impact of £1.2m on profits for the first half. Trading Although we are seeing a slight softening in semiconductor demand, we stillexpect overall sales volume for the second half to be broadly in line with thefirst half. We are pleased with the progress we have made in the first half andremain confident in our ability to realise the underlying growth potential ofthe business. Peter WarryChairman 4 June 2007 CONSOLIDATED INCOME STATEMENT Unaudited Unaudited Audited six months six months year ended ended ended 31 March 2007 31 March 2006 30 September 2006 Note £000 £000 £000 £000 £000 £000Revenue 2 66,418 58,730 122,516Cost of sales (24,097) (21,935) (46,708)--------------------- ----- ------- ------- ------- ------- ------- -------Gross profit 42,321 36,795 75,808 Sales, marketing andadministrative expenses (15,782) (14,170) (30,743)--------------------- ----- ------- ------- ------- ------- ------- -------Operating profit 2 26,539 22,625 45,065 Financial income 433 267 688 ------- ------- -------Financial expenses (36) (44) (88) ------- ------- ------- ------- ------- -------Net financing income 397 223 600 Share of profit ofJapanese joint venture 9 196 242 474--------------------- ----- ------- ------- ------- ------- ------- -------Profit before tax 27,132 23,090 46,139 Income tax expense 3 (8,411) (7,510) (14,303)--------------------- ----- ------- ------- ------- ------- ------- -------Profit for the periodattributable to equityshareholders of theparent 18,721 15,580 31,836--------------------- ----- ------- ------- ------- ------- ------- ------- --------------------- ----- ------- ------- ------- ------- ------- -------Earnings per shareBasic 4 23.1p 19.3p 39.4pDiluted 4 22.8p 19.1p 38.9p--------------------- ----- ------- ------- ------- ------- ------- -------DividendsYear ended 30September 2005final dividend paidMarch 2006 at 9.3p pershare - 7,494 7,494 Year ended 30September 2006interim dividend paidJuly 2006 at 4.2p pershare - - 3,402 final dividend paidMarch 2007 at 10.2pper share 8,255 - - ----- ------- ------- ------- ------- ------- ------- 6 8,255 7,494 10,896 --------------------- ----- ------- ------- ------- ------- ------- ------- An interim dividend of 4.7p per share will be paid on 31 July 2007 toshareholders on the register at the close of business on 29 June 2007. Inaccordance with International Financial Reporting Standards ('IFRS') thisdividend will be recognised in the period in which it is approved. CONSOLIDATED BALANCE SHEET Unaudited Unaudited Audited 31 March 2007 31 March 2006 30 September 2006 Note £000 £000 £000AssetsNon-current assetsProperty, plant andequipment 100,643 68,369 84,009Intangible assets 11,788 9,710 9,404Investment in Japanesejoint venture 9 - 132 370Deferred tax assets 7,108 6,010 7,201---------------------- ----- ------------ ------------ ------------ 119,539 84,221 100,984---------------------- ----- ------------ ------------ ------------Current assetsInventories 25,003 21,637 22,969Current income taxassets 565 434 774Trade and otherreceivables 16,469 13,892 12,139Derivative financialinstruments 2,280 654 2,776Cash and cashequivalents 11,948 19,121 26,860---------------------- ----- ------------ ------------ ------------ 56,265 55,738 65,518---------------------- ----- ------------ ------------ ------------Total assets 175,804 139,959 166,502---------------------- ----- ------------ ------------ ------------ LiabilitiesNon-current liabilitiesDeferred taxliabilities (13,671) (10,673) (12,385)Retirement benefitobligations (10,710) (9,322) (12,159)---------------------- ----- ------------ ------------ ------------ (24,381) (19,995) (24,544)---------------------- ----- ------------ ------------ ------------Current liabilitiesDerivative financialinstruments (408) (1,449) (244)Short-term borrowings (2,155) - -Current income taxliabilities (9,345) (7,274) (7,549)Trade and otherpayables (15,279) (11,659) (20,714)---------------------- ----- ------------ ------------ ------------ (27,187) (20,382) (28,507)---------------------- ----- ------------ ------------ ------------Total liabilities (51,568) (40,377) (53,051)---------------------- ----- ------------ ------------ ------------Net assets 124,236 99,582 113,451---------------------- ----- ------------ ------------ ------------ EquityShare capital 820 816 817Share premium account 17,196 16,076 16,549Translation reserve (530) 177 (229)Hedging reserve 630 (676) 1,325Retained earnings 106,120 83,189 94,989---------------------- ----- ------------ ------------ ------------Total equity 6 124,236 99,582 113,451---------------------- ----- ------------ ------------ ------------ CONSOLIDATED CASH FLOW STATEMENT Unaudited Unaudited Audited six months six months year ended ended ended 30 September 31 March 2007 31 March 2006 2006 Note £000 £000 £000Cash flows from operatingactivitiesCash generated fromoperations 7 23,001 23,441 54,791Interest and similarcharges paid (280) (4) (20)Interest received 433 267 688Tax paid (5,944) (6,511) (12,357)------------------------ ----- ---------- ------------ ------------Net cash flow fromoperating activities 17,210 17,193 43,102------------------------ ----- ---------- ------------ ------------ Cash flows from investingactivitiesAcquisition ofproperty, plant andequipment (22,359) (6,635) (21,470)Purchase of businessincluding acquisitioncosts 9 (1,036) - -Dividends received - 113 112------------------------ ----- ---------- ------------ ------------Net cash flow frominvesting activities (23,395) (6,522) (21,358)------------------------ ----- ---------- ------------ ------------ Cash flows from financingactivitiesIssue of ordinaryshares exercised underoption 3 4 5Premium on issue ofordinary sharesexercised under option 647 833 1,306Purchase of own sharesheld (821) (767) (767)Dividends paid (8,255) (7,494) (10,896)------------------------ ----- ---------- ------------ ------------Net cash flow fromfinancing activities (8,426) (7,424) (10,352)------------------------ ----- ---------- ------------ ------------ Net (decrease)/increasein cash and cashequivalents (14,611) 3,247 11,392Exchange differences onnet investmenttranslation offoreign operations (301) 127 (279)Cash and cashequivalents atbeginning of period 26,860 15,747 15,747------------------------ ----- ---------- ------------ ------------Cash and cashequivalents at end ofperiod 11,948 19,121 26,860------------------------ ----- ---------- ------------ ------------ Components of net cash Unaudited Unaudited Audited 31 March 2007 31 March 2006 30 September 2006 Note £000 £000 £000Cash and cashequivalents 11,948 19,121 26,860Short-term borrowings (2,155) - ------------------------- ----- ---------- ------------ ------------Net cash 8 9,793 19,121 26,860------------------------ ----- ---------- ------------ ------------ CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Unaudited Unaudited Audited six months six months year ended ended ended 30 September 31 March 2007 31 March 2006 2006 £000 £000 £000Changes in fair value ofcash flow hedges (3,887) (1,195) 299Net change in fair valueof cash flow hedgestransferred to incomestatement 2,894 291 1,366Exchange differences onnet investment translationof foreign operations (301) 127 (279)Actuarial gains/(losses)on defined benefit plans 1,887 (1,323) (4,050)Tax on items takendirectly to or transferredfrom equity (786) 768 1,262------------------------------- ----------- ---------- -----------Net expense recogniseddirectly in equity (193) (1,332) (1,402)Profit for the period 18,721 15,580 31,836------------------------------- ----------- ---------- -----------Total recognised incomeand expense for the periodattributable to equityshareholders of the parent 18,528 14,248 30,434------------------------------- ----------- ---------- ----------- NOTES TO THE INTERIM REPORT 1 Basis of preparation Victrex plc (the 'Company') is a limited liability company incorporated anddomiciled in the United Kingdom. The address of the registered office is VictrexTechnology Centre, Hillhouse International, Thornton Cleveleys, Lancashire, FY54QD, United Kingdom. The consolidated financial statements of the Company for the half year ended 31March 2007 comprise the Company and its subsidiaries (together referred to asthe 'Group') and the Group's interest in the Japanese joint venture, whichbecame a wholly owned subsidiary with effect from 30 March 2007 (see note 9).Prior to this date the Japanese joint venture was accounted for on the equityaccounting basis in accordance with IAS 31 Interests in Joint Ventures. Afterthis date it was accounted for as a wholly owned subsidiary in accordance withIFRS 3 Business Combinations. The Company is listed on the London Stock Exchange. These consolidated financial statements have been approved for issue by theBoard of Directors on 4 June 2007. The interim results have been prepared on the basis of the accounting policiesset out in the Group's last Annual Report and Accounts. The financialinformation for the year ended 30 September 2006 has been extracted from thestatutory accounts, which have been filed with the Registrar of Companies. Theauditor's report on these accounts was unqualified. 2 Segment reporting Primary geographical segments Results Unaudited Unaudited six months ended 31 March 2007 six months ended 31 March 2006 Europe USA Asia-Pacific Group Europe USA Asia-Pacific Group £000 £000 £000 £000 £000 £000 £000 £000 Total segmentsales 34,384 38,570 10,312 83,266 31,281 33,679 8,448 73,408Lessinter-segmentsales (71) (16,316) (461) (16,848) - (14,678) - (14,678) ------ ------ ------ ------ ------ ------ ------ ------Revenue fromexternal 34,313 22,254 9,851 66,418 31,281 19,001 8,448 58,730sales ------ ------ ------ ------ ------ ------ ------ ------ Segmentoperatingprofit 15,876 9,112 3,196 28,184 14,795 6,843 2,712 24,350Unallocatedcentral costs (1,645) (1,725) ------ ------Operatingprofit 26,539 22,625Net financingincome 397 223Share ofprofit ofJapanesejoint 196 242venture ------ ------Profit beforetax 27,132 23,090Income taxexpense (8,411) (7,510) ------ ------Profit forthe periodattributableto equityshareholdersof the parent 18,721 15,580 ------ ------ Audited year ended 30 September 2006 Europe USA Asia-Pacific Group £000 £000 £000 £000 Total segment sales 65,076 70,452 17,789 153,317Less inter-segment sales (158) (29,974) (669) (30,801) ------ ------ ------ ------Revenue from external sales 64,918 40,478 17,120 122,516 ------ ------ ------ ------ Segment operating profit 29,753 14,670 4,754 49,177Unallocated central costs (4,112) ------Operating profit 45,065Net financing income 600Share of profit of Japanesejoint venture 474 ------Profit before tax 46,139Income tax expense (14,303) ------Profit for the yearattributable to equityshareholders of the parent 31,836 ------ Other information Unaudited Unaudited six months ended 31 March 2007 six months ended 31 March 2006 Europe USA Asia-Pacific Group Europe USA Asia-Pacific Group £000 £000 £000 £000 £000 £000 £000 £000 Segment 155,514 10,235 10,055 175,804 127,081 9,438 3,440 139,959assets Segmentliabilities 39,498 8,871 3,199 51,568 31,307 9,070 - 40,377 Capitalexpenditure 19,090 12 80 19,182 6,499 42 382 6,923Depreciation 2,506 13 64 2,583 2,334 31 - 2,365Amortisation 305 - - 305 305 - - 305 Audited year ended 30 September 2006 Europe USA Asia-Pacific Group £000 £000 £000 £000 Segment assets 152,341 8,788 5,373 166,502 Segment liabilities 43,418 9,482 151 53,051 Capital expenditure 23,637 33 1,365 25,035Depreciation 4,772 30 34 4,836Amortisation 611 - - 611 3 Taxation Taxation of profit before tax in respect of the half year ended 31 March 2007has been provided at the estimated effective rates chargeable for the full yearin the respective jurisdiction. +------------------------+----------------+-------------------+----------------+| | Unaudited| Unaudited| Audited|| | | | |+------------------------+----------------+-------------------+----------------+| | six months| six months| year ended|| | ended| ended| |+------------------------+----------------+-------------------+----------------+| | 31 March 2007| 31 March 2006| 30 September|| | | | 2006|+------------------------+----------------+-------------------+----------------+| | £000| £000| £000|| | | | |+------------------------+----------------+-------------------+----------------+|UK corporation taxation | 6,631| 6,507| 11,262|| | | | |+------------------------+----------------+-------------------+----------------+|Overseas taxation | 904| 999| 2,022|+------------------------+----------------+-------------------+----------------+|Deferred taxation | 876| 4| 1,019|| | -----------| ----------| -----------|+------------------------+----------------+-------------------+----------------+| | 8,411| 7,510| 14,303|| | -----------| ----------| -----------|+------------------------+----------------+-------------------+----------------+ On 21 March 2007, it was announced that the standard rate of UK corporation taxwas to be changed to 28% and revised capital allowance legislation impacting onthe calculation of the deferred tax liability of the Group will be introducedfor taxable periods arising on or after 1 April 2008. For the purpose of theaccounts to 31 March 2007, the standard rate of UK corporation tax (30%) andcapital allowance legislation applicable to taxable periods prior to 31 March2008 has been applied on the basis of legislation enacted at 31 March 2007. 4 Earnings per share +-----------------------------------+--------------+--------------+------------+| | Unaudited| Unaudited| Audited|| | | | |+-----------------------------------+--------------+--------------+------------+| | six months| six months| year ended|| | ended| ended| |+-----------------------------------+--------------+--------------+------------+| | 31 March 2007| 31 March 2006|30 September|| | | | 2006|+----------------------+------------+--------------+--------------+------------+|Earnings per share |- Basic | 23.1p| 19.3p| 39.4p|| | | | | |+----------------------+------------+--------------+--------------+------------+| |- Diluted | 22.8p| 19.1p| 38.9p|| | | | | |+----------------------+------------+--------------+--------------+------------+|Profit for the financial | | | ||period | £18,721,000| £15,580,000| £31,836,000|| | | | |+-----------------------------------+--------------+--------------+------------+|Weighted average number of shares | | | ||used: | | | || | | | |+----------------------+------------+--------------+--------------+------------+| |- Basic | 81,032,703| 80,586,195| 80,773,463|| | | | | |+----------------------+------------+--------------+--------------+------------+| |- Diluted | 81,960,307| 81,702,637| 81,838,184|+----------------------+------------+--------------+--------------+------------+ 5 Exchange rates The most significant Sterling exchange rates used in the accounts under theGroup's accounting policies are: Unaudited Unaudited Audited six months six months year ended ended ended 31 March 2007 31 March 2006 30 September 2006 Average Closing Average Closing Average ClosingUS Dollar 1.81 1.96 1.83 1.73 1.82 1.87Euro 1.46 1.47 1.42 1.43 1.43 1.47Yen 195 232 189 205 188 221 6 Changes in equity +--------------------------+---------------+------------------+----------------+| | Unaudited| Unaudited| Audited|| | | | |+--------------------------+---------------+------------------+----------------+| | six months| six months| year ended|| | ended| ended| |+--------------------------+---------------+------------------+----------------+| | 31 March 2007| 31 March 2006| 30 September|| | | | 2006|+--------------------------+---------------+------------------+----------------+| | £000| £000| £000|| | | | |+--------------------------+---------------+------------------+----------------+|Equity at beginning of | | | ||period | 113,451| 92,247| 92,247|| | | | |+--------------------------+---------------+------------------+----------------+|Total recognised income | | | ||and expense | 18,528| 14,248| 30,434|| | | | |+--------------------------+---------------+------------------+----------------+|Share options exercised | 650| 837| 1,311|| | | | |+--------------------------+---------------+------------------+----------------+|Equity-settled share-based| | | ||payment transactions | 683| 511| 1,122|| | | | |+--------------------------+---------------+------------------+----------------+|Purchase of own shares | | | ||held | (821)| (767)| (767)|+--------------------------+---------------+------------------+----------------+|Dividends to shareholders | (8,255)| (7,494)| (10,896)|| | -----------| ----------| -----------|+--------------------------+---------------+------------------+----------------+|Equity at end of period | 124,236| 99,582| 113,451|| | -----------| ----------| -----------|+--------------------------+---------------+------------------+----------------+ 7 Reconciliation of profit to cash generated from operations +--------------------------+---------------+------------------+----------------+| | Unaudited| Unaudited| Audited|| | | | |+--------------------------+---------------+------------------+----------------+| | six months| six months| year ended|| | ended| ended| |+--------------------------+---------------+------------------+----------------+| | 31 March 2007| 31 March 2006| 30 September|| | | | 2006|+--------------------------+---------------+------------------+----------------+| | £000| £000| £000|| | | | |+--------------------------+---------------+------------------+----------------+|Profit after tax for the | | | ||period | 18,721| 15,580| 31,836|| | | | |+--------------------------+---------------+------------------+----------------+|Income tax expense | 8,411| 7,510| 14,303|+--------------------------+---------------+------------------+----------------+|Share of profit of | | | ||Japanese joint venture | (196)| (242)| (474)|| | | | |+--------------------------+---------------+------------------+----------------+|Net financing income | (397)| (223)| (600)|| | ---------| ---------| -----------|+--------------------------+---------------+------------------+----------------+|Operating profit | 26,539| 22,625| 45,065|| | | | |+--------------------------+---------------+------------------+----------------+|Adjustments for: | | | || | | | |+--------------------------+---------------+------------------+----------------+|Depreciation | 2,583| 2,365| 4,836|| | | | |+--------------------------+---------------+------------------+----------------+|Amortisation | 305| 305| 611|| | | | |+--------------------------+---------------+------------------+----------------+|Decrease/(increase) in | | | ||inventories | 90| (1,698)| (3,030)|| | | | |+--------------------------+---------------+------------------+----------------+|(Increase)/decrease in | | | ||trade and other | | | ||receivables | (5,092)| (1,080)| 675|| | | | |+--------------------------+---------------+------------------+----------------+|(Decrease)/increase in | | | ||trade and other payables | (2,486)| (156)| 5,595|| | | | |+--------------------------+---------------+------------------+----------------+|Equity-settled share-based| | | ||payment transactions | 683| 511| 1,122|| | | | |+--------------------------+---------------+------------------+----------------+|Japanese joint venture | | | ||profit in stock adjustment| 269| 64| 59|| | | | |+--------------------------+---------------+------------------+----------------+|Changes in fair value of | | | ||derivative financial | | | ||instruments | (334)| 318| (440)|+--------------------------+---------------+------------------+----------------+|Retirement benefit | | | ||obligations charge less | | | ||contributions | 444| 187| 298|| | ---------| ---------| -----------|+--------------------------+---------------+------------------+----------------+|Cash generated from | | | ||operations | 23,001| 23,441| 54,791|| | ---------| ---------| -----------|+--------------------------+---------------+------------------+----------------+ 8 Reconciliation of net cash flow to movements in net cash +------------------------------+------+--------------+--------------+------------+| | Note| Unaudited| Unaudited| Audited|| | | | | |+------------------------------+------+--------------+--------------+------------+| | | six months| six months| year ended|| | | ended| ended| |+------------------------------+------+--------------+--------------+------------+| | | 31 March 2007| 31 March 2006|30 September|| | | | | 2006|+------------------------------+------+--------------+--------------+------------+| | | £000| £000| £000|| | | | | |+------------------------------+------+--------------+--------------+------------+|(Decrease)/increase in | | | | ||cash and cash | | | | ||equivalents in period | | (14,611)| 3,247| 11,392|| | | | | |+------------------------------+------+--------------+--------------+------------+|Exchange differences on | | | | ||net investment | | | | ||translation of foreign | | | | ||operations | | (301)| 127| (279)|| | | | | |+------------------------------+------+--------------+--------------+------------+|Short term borrowings | | | | ||acquired | 9| (2,155)| -| -|| | -----| ---------| ---------| -----------|+------------------------------+------+--------------+--------------+------------+|Movement in net cash in | | | | ||period | | (17,067)| 3,374| 11,113|+------------------------------+------+--------------+--------------+------------+|Net cash at beginning | | | | ||of period | | 26,860| 15,747| 15,747|| | -----| ---------| ---------| -----------|+------------------------------+------+--------------+--------------+------------+|Net cash at end of | | | | ||period | | 9,793| 19,121| 26,860|| | -----| ---------| ---------| -----------|+------------------------------+------+--------------+--------------+------------+| | |+------------------------------+-------------------------------------------------+ 9 Acquisition of subsidiary On 30 March 2007 Victrex plc acquired from Mitsui Chemicals, Inc their 49%shareholding in Victrex-MC, Inc, the Group's Japanese joint venture, which isresponsible for VICTREX PEEK sales in Japan. As a result, Victrex-MC, Inc becamea wholly owned subsidiary with effect from that date and was renamed VictrexJapan, Inc. Net assets acquired were as follows: +-----------------+------------------+--------------------+--------------------+| | Book value of| Fair value| Fair value|| | 49% share| adjustment| || | acquired| | |+-----------------+------------------+--------------------+--------------------+| | £000| £000| £000|| | | | |+-----------------+------------------+--------------------+--------------------+|Property, | | | ||plant and | | | ||equipment | 35| -| 35|| | | | |+-----------------+------------------+--------------------+--------------------+|Deferred tax | | | ||assets | -| 282| 282|| | | | |+-----------------+------------------+--------------------+--------------------+|Inventories | 1,981| (940)| 1,041|| | | | |+-----------------+------------------+--------------------+--------------------+|Trade and | | | ||other | | | ||receivables | 1,138| -| 1,138|| | | | |+-----------------+------------------+--------------------+--------------------+|Cash and cash | | | ||equivalents | 651| -| 651|| | | | |+-----------------+------------------+--------------------+--------------------+|Short-term | | | ||borrowings | (1,056)| -| (1,056)|| | | | |+-----------------+------------------+--------------------+--------------------+|Trade and | | | ||other payables | (2,365)| -| (2,365)|| | -----------| -----------| -----------|+-----------------+------------------+--------------------+--------------------+|Net | | | ||identifiable | | | ||assets/(liabil | | | ||ities) | 384| (658)| (274)|| | -----------| -----------| |+-----------------+------------------+--------------------+--------------------+|Goodwill on | | | ||acquisition | | | 2,688|| | | | -----------|+-----------------+------------------+--------------------+--------------------+| | -----------||Total purchase | ||price | ||comprising | ||consideration | ||of £2,310,000 | ||and legal fees | ||of £104,000 | 2,414|+-----------------+------------------+--------------------+--------------------+|Less total | | | ||cash acquired | | | (1,328)|+-----------------+------------------+--------------------+--------------------+|Less accrued | | | ||legal fees | | | (50)|| | | | -----------|+-----------------+------------------+--------------------+--------------------+|Net cash | | | ||outflow on | | | ||acquisition | | | 1,036|| | | | -----------|+-----------------+------------------+--------------------+--------------------+ The fair value adjustment represents the elimination of profit in stock, and therelated deferred tax asset, on the stock acquired as part of the transaction. There were no significant identifiable intangible assets acquired as part of thetransaction and hence the difference between consideration and the fair value ofnet assets acquired has been designated as goodwill. The carrying value isjustified based on the net present value of future cash flows from our businessin Japan. INDEPENDENT REVIEW REPORT BY KPMG AUDIT Plc TO VICTREX plc Introduction We have been engaged by the Company to review the financial information set outon pages 4 to 13 and we have read the other information contained in the InterimReport and considered whether it contains any apparent misstatements or materialinconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the Company those matters we are required to state to itin 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 forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The Interim Report, including the financial information contained therein, isthe responsibility of and has been approved by the Directors. The Directors areresponsible for preparing the Interim Report in accordance with the ListingRules which require that the accounting policies and presentation applied to theinterim figures should be consistent with those applied in preparing thepreceding annual accounts except where they are to be changed in the next annualaccounts in which case any changes, and the reasons for them, are to bedisclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin1999/4 Review of interim financial information issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of group management and applying analytical procedures to thefinancial information and underlying financial data and, based thereon,assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review is substantially lessin scope than an audit performed in accordance with Auditing Standards andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 March 2007. KPMG Audit Plc Chartered Accountants Manchester 4 June 2007 SHAREHOLDER INFORMATION Copies of this Interim Report will be sent to all shareholders and will beavailable from the Registered Office detailed below. +--------------------------------------------+---------------------------------+|Financial Calendar | ||-------------------- | ----------------------------|| | |+--------------------------------------------+---------------------------------+|Ex-dividend date for interim dividend | 27 June 2007|| | |+--------------------------------------------+---------------------------------+|Record date for interim dividend | 29 June 2007|| | |+--------------------------------------------+---------------------------------+|Payment of interim dividend | 31 July 2007|| | |+--------------------------------------------+---------------------------------+|2007 year end | 30 September|| | 2007|+--------------------------------------------+---------------------------------+|Announcement of 2007 full year results | December 2007|| | |+--------------------------------------------+---------------------------------+|Annual General Meeting | February 2008|| | |+--------------------------------------------+---------------------------------+|Payment of final dividend | March 2008||-------------------- | ----------------------------|+--------------------------------------------+---------------------------------+ Company Secretary M W Peacock Victrex plc Registered in England Number 2793780 Registered Office: Victrex Technology Centre Hillhouse International Thornton Cleveleys Lancashire FY5 4QD United Kingdom FORWARD-LOOKING STATEMENTS Sections of this Interim Report contain forward-looking statements, includingstatements relating to: future demand and markets for the Group's products andservices; research and development relating to new products and services; andliquidity and capital resources. These forward-looking statements involve risksand uncertainties, because they relate to events that may or may not occur inthe future. Accordingly, actual results may differ materially from anticipatedresults because of a variety of risk factors, including: changes in interest andexchange rates; changes in global, political, economic, business, competitiveand market forces; changes to legislation and tax rates, future businesscombinations or disposals; relations with customers and customer credit risk;events affecting international security, including global health issues andterrorism; changes in regulatory environment, and the outcome of litigation. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Victrex