Interim Results

RNS Number : 8173U

Victrex PLC

20 May 2008

 



20 May 2008

Victrex plc

Results announcement for the six months ended 31 March 2008

§           Revenue up 3% to £68.5m (2007: £66.4m)

- underlying revenue up 9% *

 

§           Profit before tax maintained at £27.2m (2007: £27.1m)

- underlying PBT up 15% *

 

§           Earnings per share up 3% to 23.7p (2007: 23.1p)

- underlying EPS up 17% *

 

§           Interim dividend per share up 11% to 5.2p (2007: 4.7p)

 

 

* at constant exchange rates

Chairman Peter Warry commented:

'Victrex has continued to make good progress in the first half of 2008 with strong new business generation and underlying earnings per share (at constant exchange rates) up 17% on the first half of 2007.

Since the beginning of the second half, sales volume has been maintained at levels similar to the first half. While it is too early to predict the outcome for the year as a whole, we remain confident in the underlying growth potential for the business. 

While we expect that second half exchange rates will continue to show an adverse impact compared with 2007, we anticipate that they will be in line with average rates for the first half of the current year. Looking ahead to 2009, we expect trading results to be positively impacted by the recent weakening of sterling provided that current market rates are maintained.'

Enquiries

Victrex plc

David Hummel, Chief Executive             0207 357 9477 (20 May 2008)

Michael Peacock, Finance Director        01253 897700 (thereafter)

Hogarth Partnership Limited

Nick Denton / Barnaby Fry                      0207 357 9477

INTERIM MANAGEMENT REPORT

Victrex has continued to make good progress in the first half of 2008 with strong new business generation and underlying earnings per share (at constant exchange rates) up 17% on the first half of 2007.

Results

Revenue was £68.5m (H1 2007: £66.4m), an increase of 3%. Underlying revenue, at constant exchange rates, was up 9%. 

Gross profit increased by 5% to £44.5m (H1 2007: £42.3m), representing a gross margin of 64.9% (H1 2007: 63.7%). Sales, marketing and administrative expenses increased by 11% to £17.5m compared with the first half of last year (£15.8m) primarily reflecting ongoing investment in sales and marketing resources and the inclusion of local expenses in Victrex Japan, Inc since it became a wholly owned subsidiary with effect from 30 March 2007.

Exchange rates had an adverse impact of £3.9m on profit before tax compared to the first half of 2007. In spite of this, profit before tax was maintained at £27.2m (H1 2007: £27.1m). Underlying profit at constant exchange rates was £31.1m, an increase of 15% over 2007. 

Basic earnings per share were up 3% at 23.7p (H1 2007: 23.1p). Underlying earnings per share at constant exchange rates were up 17%.

Markets

We have achieved further sales growth, with record first half sales volume of 1,294 tonnes, 6% ahead of the second half of last year (1,222 tonnes) and slightly up on the previous first half of 1,286 tonnes.

Transport sales volume was 356 tonnes, up 10% on last year's second half of 324 tonnes, due to increased automotive sales in all regions. This was driven by successful implementation of new applications, particularly in the United States. Aerospace sales were maintained at similar levels to last year's second half.

Industrial sales volume was 460 tonnes, up 3% on last year's second half of 446 tonnes with continued strong growth in downhole oil and gas applications partially offset by reduced demand from refining and processing customers.

Electronics sales volume was 303 tonnes, up 4% on last year's second half of 292 tonnes, due to increased semicon and consumer electronics sales.

Regionally, European sales volume saw a return to growth at 646 tonnes, which was 10% up on the second half of last year (587 tonnes). This was due to increased sales across all market segments.

United States volume was 418 tonnes, up 4% on last year's second half of 402 tonnes. This was principally the result of further automotive sales volume growth.

Asia-Pacific volume was maintained at 230 tonnes, in line with the second half of last year (233 tonnes).

Invibio®, our biomaterials business, generated record first half revenue of £11.7m, up 19% over the previous second half (£9.8m) and up 23% over the first half of last year (£9.5m). Underlying revenue (at constant exchange rates) was up 30% on last year's first half. Since the start of the new financial year, Invibio has entered into 20 additional PEEK-OPTIMA® polymer long-term supply assurance agreements with implantable medical device manufacturers.

Development pipeline

During the first half we commercialised a record 428 new VICTREX® PEEKTM polymer applications with an estimated mature annualised volume ('MAV') of 317 tonnes compared with 264 commercialised applications with an estimated MAV of 228 tonnes in the second half of 2007. As at 31 March 2008, the development pipeline contained 2,582 developments (September 2007: 2,411) with an estimated MAV of 3,182 tonnes (September 2007: 2,949) if all of the developments were successfully commercialised.

Supply chain and capital expenditure

Following completion of our second VICTREX PEEK polymer powder plant at the beginning of the year we are continuing with the uprate of the BDF supply chain to support this additional polymer capacity. The estimated capital cost of this uprate remains around £23m with completion expected in the autumn.

The uprate of the melt filtration plant to increase production capacity of our purified granular product from 1,800 to 3,450 tonnes per annum is also ongoing. The estimated capital cost of this uprate remains approximately £8m with completion expected this autumn.

Total tangible fixed asset additions for the period amounted to £15.7m (H1 2007: 19.2m) principally related to these uprates. We continue to expect total capital expenditure for 2008 to amount to approximately £25m. This is being funded from the Group's cash resources and committed borrowing facility.

Cash flow

Cash flow from operations increased to £27.5m compared with £23.0m last year which was adversely impacted by a one-off increase in trade and other receivables in the first half of 2007. This arose from the deferral of remittances from our Japanese subsidiary to accumulate cash in the former joint venture pending a distribution of reserves to shareholders as part of the acquisition of the minority shareholding.

Tax paid increased to £9.0m (H1 2007: £5.9m) as a result of reduced capital allowances following our reclassification of the second VICTREX PEEK polymer powder plant as a long-life asset. The effective tax rate was 29% (H1 2007: 31%).

At 31 March 2008, the Group had net cash of £6.6m, compared with £13.7m as at 30 September 2007. The Group has a committed bank facility of £40m, all of which was undrawn as at 31 March 2008. This facility expires in September 2012.

Dividend

An interim dividend of 5.2p per share, representing an increase of 11% over last year's interim dividend, will be paid on Tuesday 8 July 2008 to all shareholders on the register at the close of business on Friday 13 June 2008. 

Risks and uncertainties 

Victrex's business and share price may be affected by a number of risks, not all of which are in our control. The process Victrex has in place for identifying, assessing and managing risks is set out in the Corporate Governance Report in the Annual Report and Accounts 2007 on page 20. 

The specific principal risks (which could impact the Group's revenues, profits and reputation), which were faced at the time of the last annual report, and relevant mitigating factors, as currently identified by Victrex's risk management process, have not changed since the year end and detailed explanations can be found in the Annual Report and Accounts 2007 on page 13. Broadly, these risks include technological change, operational disruption, insufficient capacity, product specifications, competitor activity and currency exposure. 

Outlook

Since the beginning of the second half, sales volume has been maintained at levels similar to the first half. While it is too early to predict the outcome for the year as a whole, we remain confident in the underlying growth potential for the business. 

While we expect that second half exchange rates will continue to show an adverse impact compared with 2007, we anticipate that they will be in line with average rates for the first half of the current year. Looking ahead to 2009, we expect trading results to be positively impacted by the recent weakening of sterling provided that current market rates are maintained.

The Company's second interim management statement, covering the period from 1 April 2008, will be issued on Thursday 31 July 2008.

Peter Warry

Chairman

19 May 2008

  CONDENSED CONSOLIDATED INCOME STATEMENT

		Unaudited six months ended 31 March 2008		Unaudited six months ended 31 March 2007		Audited year ended 30 September 2007
	Note	£000	£000	£000	£000	£000	£000
Revenue	5		68,508		66,418		131,025
Cost of sales			(24,027)		(24,097)		(46,552)
Gross profit			44,481		42,321		84,473
Sales, marketing and administrative expenses			(17,504)		(15,782)		(33,237)
Operating profit	5		26,977		26,539		51,236
Financial income		331		433		702
Financial expenses		(89)		(36)		(105)
Net financing income			242		397		597
Share of profit of Japanese joint venture			-		196		196
Profit before tax			27,219		27,132		52,029
Income tax expense	6		(7,893)		(8,411)		(15,609)
Profit for the period attributable to equity   shareholders of the parent
			19,326		18,721		36,420
Earnings per share
Basic	7		23.7p		23.1p		44.9p
Diluted	7		23.5p		22.8p		44.4p
Dividends
Year ended 30 September 2006 :
Final dividend paid March 2007 at 10.2p per share			-		8,255		8,255
Year ended 30 September 2007 :
Interim dividend paid July 2007 at 4.7p per share			-		-		3,814
Final dividend paid March 2008 at 12.6p per share			10,273		-		-
	9		10,273		8,255		12,069

An interim dividend of 5.2p per share will be paid on 8 July 2008 to shareholders on the register at the close of business on 13 June 2008. In accordance with International Financial Reporting Standards ('IFRS') this dividend will be recognised in the period in which it is approved.

CONDENSED CONSOLIDATED BALANCE SHEET 

		Unaudited 31 March 2008		Unaudited 31 March 2007		Audited 30 September 2007
	Note		£000		£000		£000
Assets
Non-current assets
Property, plant and equipment		125,291		100,643		112,787
Intangible assets		11,178		11,788		11,483
Deferred tax assets		8,154		7,108		5,753
		144,623		119,539		130,023
Current assets
Inventories		28,211		25,003		27,867
Current income tax assets		1,152		565		416
Trade and other receivables		18,346		16,469		15,887
Derivative financial instruments		948		2,280		2,137
Cash and cash equivalents		10,605		11,948		17,120
		59,262		56,265		63,427
Total assets		203,885		175,804		193,450
Liabilities
Non-current liabilities
Deferred tax liabilities		(13,611)		(13,671)		(12,666)
Retirement benefit obligations		(5,582)		(10,710)		(7,110)
		(19,193)		(24,381)		(19,776)
Current liabilities
Derivative financial instruments		(12,461)		(408)		(1,464)
Short-term borrowings		(4,040)		(2,155)		(3,419)
Current income tax liabilities		(10,165)		(9,345)		(11,077)
Trade and other payables		(12,893)		(15,279)		(16,231)
		(39,559)		(27,187)		(32,191)
Total liabilities		(58,752)		(51,568)		(51,967)
Net assets		145,133		124,236		141,483
Equity
Share capital		825		820		822
Share premium		19,171		17,196		18,148
Translation reserve		(404)		(530)		(628)
Hedging reserve		(7,441)		630		39
Retained earnings		132,982		106,120		123,102
Total equity	9	145,133		124,236		141,483

CONDENSED CONSOLIDATED CASH FLOW STATEMENT

		Unaudited six months ended 31 March 2008		Unaudited six months ended 31 March 2007		Audited year ended 30 September 2007
	Note		£000		£000		£000
Cash flows from operating activities
Cash generated from operations	10	27,505		23,001		50,690
Interest and similar charges paid		(120)		(280)		(309)
Interest received		331		433		702
Tax paid		(8,995)		(5,944)		(12,177)
Net cash flow from operating activities		18,721		17,210		38,906
Cash flows from investing activities
Acquisition of property, plant and equipment		(15,976)		(22,359)		(37,189)
Purchase of business including acquisition costs		-		(1,036)		(1,036)
Net cash flow from investing activities		(15,976)		(23,395)		(38,225)
Cash flows from financing activities
Issue of ordinary shares exercised under option		3		3		5
Premium on issue of ordinary shares exercised under option		1,023		647		1,599
Purchase of own shares held		(858)		(821)		(821)
Movement in short-term borrowings		-		-		1,264
Dividends paid		(10,273)		(8,255)		(12,069)
Net cash flow from financing activities		(10,105)		(8,426)		(10,022)
Net decrease in cash and cash equivalents		(7,360)		(14,611)		(9,341)
Exchange differences on net investment translation    of foreign operations		845		(301)		(399)
Cash and cash equivalents at beginning of period		17,120		26,860		26,860
Cash and cash equivalents at end of period		10,605		11,948		17,120
Components of net cash
		Unaudited 31 March 2008		Unaudited 31 March 2007		Audited 30 September 2007
		£000		£000		£000
Cash and cash equivalents		10,605		11,948		17,120
Short-term borrowings		(4,040)		(2,155)		(3,419)
Net cash		6,565		9,793		13,701

CONDENSED CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE

		Unaudited six months ended 31 March 2008	Unaudited six months ended 31 March 2007	Audited year ended 30 September 2007
	Note	£000	£000	£000
Net change in fair value of cash flow hedges :    Transferred to equity		(1,639)	(3,887)	2,871
Transferred to income statement		(8,749)	2,894	(4,710)
Exchange differences on net investment translation    of foreign operations		224	(301)	(399)
Actuarial gains on defined benefit plans		1,823	1,887	5,729
Tax on items taken directly to or transferred from equity		2,002	(786)	(2,058)
Net (expense)/income recognised directly in equity		(6,339)	(193)	1,433
Profit for the period		19,326	18,721	36,420
Total recognised income and expense for the period    attributable to equity shareholders of the parent	9	12,987	18,528	37,853

NOTES TO THE HALF-YEARLY FINANCIAL REPORT

1      Reporting entity

 

Victrex plc (the ‘Company’) is a limited liability company incorporated and domiciled in the United Kingdom. The address of the registered office is Victrex Technology Centre, Hillhouse International, Thornton Cleveleys, Lancashire, FY5 4QD, United Kingdom. The Company is listed on the London Stock Exchange.

 

These condensed consolidated interim financial statements of the Company as at and for the six months ended 31 March 2008 comprise the Company and its subsidiaries (together referred to as the ‘Group’).

 

The comparative figures for the financial year ended 30 September 2007 are extracted from the Company’s statutory accounts for that year. Those accounts have been reported on by the Company’s auditor, filed with the Registrar of Companies and are available on request from the Company’s registered office or to download from www.victrex.com. The auditor’s report on those accounts was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain any statement under sections 237(2) or (3) of the Companies Act 1985.

 

These condensed consolidated interim financial statements are unaudited, but have been reviewed by KPMG Audit Plc and their report is set out on page 15.

2      Statement of compliance

 

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting

Standard (‘IAS’) 34 – Interim Financial Reporting as adopted by the European Union. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 30 September 2007.

 

This Half-yearly Financial Report was approved by the Board of Directors on 19 May 2008.

 

3      Significant accounting policies

 

The accounting policies applied by the Group in these condensed consolidated interim financial statements are the same as those applied in the Company’s published consolidated financial statements for the year ended 30 September 2007 except for the application of relevant new standards.

 

The new standards, amendments to standards and interpretations which are relevant and mandatory for the first time for the year ending 30 September 2008 are:

 

• IFRS 7 – Financial Instruments: Disclosures. As this Half-yearly Financial Report contains only condensed consolidated financial statements, full IFRS disclosures will be in the annual financial statements and,

 

• Amendment to IAS 1 – Capital Disclosures. As this Half-yearly Financial Report contains only condensed consolidated financial statements, full IFRS disclosures will be in the annual financial statements.

 

A number of standards, amendments to standards and interpretations have been issued during the period, which are either not yet endorsed or endorsed yet not effective, and accordingly the Group has not yet adopted.

 

4      Estimates

 

The preparation of condensed consolidated interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

 

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 September 2007.

   NOTES TO THE HALF-YEARLY FINANCIAL REPORT 

5      Segment reporting

Primary geographical segments

Results

	Unaudited six months ended 31 March 2008				Unaudited six months ended 31 March 2007
	Europe	USA	Asia-Pacific	Group	Europe	USA	Asia-Pacific	Group
	£000	£000	£000	£000	£000	£000	£000	£000
Total segment sales	34,257	43,275	15,857	93,389	34,384	38,570	10,312	83,266
Less inter-segment sales	(18)	(19,301)	(5,562)	(24,881)	(71)	(16,316)	(461)	(16,848)
Revenue from external sales	34,239	23,974	10,295	68,508	34,313	22,254	9,851	66,418
Segment operating profit	16,196	9,976	2,870	29,042	15,876	9,112	3,196	28,184
Unallocated central costs				(2,065)				(1,645)
Operating profit				26,977				26,539
Net financing income				242				397
Share of profit of Japanese joint venture				-				196
Profit before tax				27,219				27,132
Income tax expense				(7,893)				(8,411)
Profit for the period attributable to equity  shareholders of the parent				19,326				18,721

					Audited year ended 30 September 2007
					Europe	USA	Asia-Pacific	Group
					£000	£000	£000	£000
Total segment sales					65,421	77,529	26,511	169,461
Less inter-segment sales					(88)	(32,484)	(5,864)	(38,436)
Revenue from external sales					65,333	45,045	20,647	131,025
Segment operating profit					29,904	18,136	6,926	54,966
Unallocated central costs								(3,730)
Operating profit								51,236
Net financing income								597
Share of profit of Japanese joint venture								196
Profit before tax								52,029
Income tax expense								(15,609)
Profit for the year attributable to equity  shareholders of the parent								36,420

  NOTES TO THE HALF-YEARLY FINANCIAL REPORT 

Other information

	Unaudited six months ended 31 March 2008				Unaudited six months ended 31 March 2007
	Europe	USA	Asia-Pacific	Group	Europe	USA	Asia-Pacific	Group
	£000	£000	£000	£000	£000	£000	£000	£000
Segment assets	182,254	11,110	10,521	203,885	155,514	10,235	10,055	175,804
Segment liabilities	43,795	9,964	4,993	58,752	39,498	8,871	3,199	51,568
Capital expenditure	15,516	14	166	15,696	19,090	12	80	19,182
Depreciation	3,036	37	118	3,191	2,506	13	64	2,583
Amortisation	306	-	-	306	305	-	-	305

					Audited year ended 30 September 2007
					Europe	USA	Asia-Pacific	Group
					£000	£000	£000	£000
Segment assets					172,557	11,086	9,807	193,450
Segment liabilities					39,779	8,174	4,014	51,967
Capital expenditure					33,806	206	272	34,284
Depreciation					5,402	50	125	5,577
Amortisation					609	-	-	609

6      Taxation

Taxation of profit before tax in respect of the six months ended 31 March 2008 has been provided at the estimated effective rates chargeable for the full year in the respective jurisdiction.

	Unaudited six months ended 31 March 2008 £000	Unaudited six months ended 31 March 2007 £000	Audited year ended 30 September 2007 £000
UK corporation taxation	6,094	6,631	13,168
Overseas taxation	1,233	904	2,488
Deferred taxation	566	876	(47)
	7,893	8,411	15,609

A reduction in the UK tax rate from 30% to 28%, occurred with effect from 1 April 2008. In accordance with IAS 12 - Income Taxes, the deferred tax liabilities and assets have been calculated using a rate of 28%.

7      Earnings per share

			Unaudited six months ended 31 March 2008	Unaudited six months ended 31 March 2007	Audited year ended 30 September 2007
Earnings per share	- basic		23.7p	23.1p	44.9p
	- diluted		23.5p	22.8p	44.4p
Profit for the financial period			£19,326,000	£18,721,000	£36,420,000
Weighted average number of shares used		- basic	81,501,608	81,032,703	81,147,102
		- diluted	82,098,094	81,960,307	82,045,279

  NOTES TO THE HALF-YEARLY FINANCIAL REPORT 

8     Exchange rates

The most significant sterling exchange rates used in the accounts under the Group's accounting policies are: 

	Unaudited six months ended 31 March 2008		Unaudited six months ended 31 March 2007		Audited year ended 30 September 2007
	Average	Closing	Average	Closing	Average	Closing
US Dollar	1.98	1.99	1.81	1.96	1.83	2.04
Euro	1.47	1.25	1.46	1.47	1.45	1.43
Yen	226	198	195	232	202	234

9     Changes in equity

	Unaudited six months ended 31 March 2008 £000	Unaudited six months ended 31 March 2007 £000	Audited year ended 30 September 2007 £000
Equity at beginning of period	141,483	113,451	113,451
Total recognised income and expense	12,987	18,528	37,853
Share options exercised	1,026	650	1,604
Equity-settled share-based payment transactions	768	683	1,465
Purchase of own shares held	(858)	(821)	(821)
Dividends to shareholders	(10,273)	(8,255)	(12,069)
Equity at end of period	145,133	124,236	141,483

10.    Reconciliation of profit to cash generated from operations

	Unaudited six months ended 31 March 2008 £000	Unaudited six months ended 31 March 2007 £000	Audited year ended 30 September 2007 £000
Profit after tax for the period	19,326	18,721	36,420
Income tax expense	7,893	8,411	15,609
Share of profit of Japanese joint venture	-	(196)	(196)
Net financing income	(242)	(397)	(597)
Operating profit	26,977	26,539	51,236
Adjustments for:
Depreciation	3,191	2,583	5,577
Amortisation	306	305	609
(Increase)/decrease in inventories	(344)	90	(2,774)
Increase in trade and other receivables	(2,459)	(5,092)	(4,511)
Decrease in trade and other payables	(3,026)	(2,486)	(1,881)
Equity-settled share-based payment transactions	768	683	1,465
Japanese joint venture profit in stock adjustment	-	269	269
Changes in fair value of derivative financial instruments	1,797	(334)	20
Retirement benefit obligations charge less contributions	295	444	680
Cash generated from operations	27,505	23,001	50,690

  NOTES TO THE HALF-YEARLY FINANCIAL REPORT 

11      Related party transactions

The Group's related parties are as disclosed in the Annual Report and Accounts 2007. There were no material differences in related parties or related party transactions in the six months ended 31 March 2008 except for transactions with key management personnel, of which the most significant were as follows:

• On 17 December 2007, under the Victrex 1995 Executive Share Option Scheme, B V Souder exercised 31,000 share options at an option price of 214.0p per share when the market price was 675.2p per share;

• On 17 December 2007, under the Long Term Incentive Plan ('LTIP'), B V Souder and T J Walker exercised 51,740 and 56,748 share options respectively at an option price of nil p per share when the market price was 675.2p per share and,

• On 17 December 2007, under the LTIP, 39,166, 31,640, 26,589 and 28,301 share option awards were granted to D R Hummel, M W Peacock, B V Souder and T J Walker respectively at an option price of nil p per share.

  RESPONSIBILITY STATEMENT OF THE DIRECTORS

The Directors confirm that to the best of our knowledge:

 

•  The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 – Interim Financial Reporting as adopted by the European Union;

 

•  The Interim Management Report includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules of the Financial Services Authority, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed consolidated financial statements and a description of the principal risks and uncertainties for the remaining six months of the year and,

 

(b) DTR 4.2.8R of the Disclosure and Transparency Rules of the Financial Services Authority, being:

i.  related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period and,

ii. any changes in the related party transactions described in the last Annual Report and Accounts that have done so.

The Directors of Victrex plc are detailed on page 18 of the Victrex plc Annual Report and Accounts 2007.

By order of the Board

Michael Peacock

Finance Director

19 May 2008

FORWARD-LOOKING STATEMENTS

Sections of this Half-yearly Financial Report contain forward-looking statements, including statements relating to: future demand and markets for the Group's products and services; research and development relating to new products and services, and liquidity and capital resources. These forward-looking statements involve risks and uncertainties because they relate to events that may or may not occur in the future. Accordingly, actual results may differ materially from anticipated results because of a variety of risk factors, including: changes in interest and exchange rates; changes in global, political, economic, business, competitive and market forces; changes to legislation and tax rates; future business combinations or disposals; relations with customers and customer credit risk; events affecting international security, including global health issues and terrorism; changes in regulatory environment, and the outcome of litigation.  INDEPENDENT REVIEW REPORT TO VICTREX PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the Half-yearly Financial Report for the six months ended 31 March 2008 which comprises the Condensed Consolidated Income Statement, Condensed Consolidated Balance Sheet, Condensed Consolidated Statement of Recognised Income and Expense, Condensed Consolidated Cash Flow Statement and the related explanatory notes. We have read the other information contained in the Half-yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Disclosure and Transparency Rules (the 'DTR') of the UK's Financial Services Authority (the 'UK FSA'). Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Directors' responsibilities

The Half-yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half-yearly Financial Report in accordance with the DTR of the UK FSA.

As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of financial statements included in this Half-yearly Financial Report has been prepared in accordance with IAS 34 - Interim Financial Reporting as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half-yearly Financial Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half-yearly Financial Report for the six months ended 31 March 2008 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK FSA.

KPMG Audit Plc

Chartered Accountants

19 May 2008

SHAREHOLDER INFORMATION

The Company's Annual Reports and Half-yearly Financial Reports are available on request from the Company's registered office or to download from www.victrex.com.

Financial calendar

Ex dividend date for interim dividend                      11 June 2008

Record date for interim dividend*                           13June 2008

Payment of interim dividend                                       8 July 2008

2008 year end                                               30September 2008

Announcement of 2008 full year results            December 2008

Annual General Meeting                                       February 2009

Payment of final dividend                                          March 2009

*The date by which shareholders must be recorded on the share register to receive the dividend.

Victrex plc

Registered in England

Number 2793780

Registered Office:

Victrex Technology Centre

Hillhouse International

Thornton Cleveleys

Lancashire FY5 4QD

United Kingdom

Tel: [phone]

Fax: [phone]

Web: www.victrex.com

 

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