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An innovative world leader in
high performance polymer solutions
Victrex plc
Investor overview
INVESTMENT
CASE
A STRONG TRACK RECORD
#1 PEEK experts & balanced portfolio
Proven record of creating new markets
Differentiated strategy: Polymer & Parts
Strong & innovative growth pipeline
Highly cash generative & sector leading returns
£250m+sales
c20% ROCE (10 year average)
800+ employees
serving over 40 countries
UK & US manufacturing
(polymer & parts)
Operating in
growth
markets
32
Manufacturing product forms: Pipes,
Films, Fibres and Composite Tapes
POLYMERMANUFACTURING
GLOBAL CAPABILITY
Developing new applications
for PEEK, PAEK and Thermoplastic Composites
PEEKEXPERTS
Delivering the key PEEK & PAEK
materials with No.1 manufacturingcapacity of 7,150 tonnes
800+ 40+
Employees Countries served
by Victrex across our markets
PRODUCT FORMS
PARTS & COMPONENTS
40+YEARS SHAPINGFUTURE PERFORMANCE
Enabling customers to overcome
complex design & engineering challenges across 6 key markets
A WORLD LEADER IN VALUE
CREATION THROUGH HIGH
PERFORMANCE PEEK & PAEK
POLYMER SOLUTIONS
‘POLYMER & PARTS’
£100m+
Invested in manufacturing facilities in the last 5 years
INVESTMENT IN INNOVATION
c5-6%of annual sales invested in R&D
NEW CAPABILITIES
• Partnerships • Strategic Alliances • Polymer Innovation Centre
• Acquisitions • Composites Manufacturing
c£2bn
• FTSE 250 Company
• £250m+ revenue
POLYMER
First to commercialise PEEK, with
unmatched knowledge and experience
DIFFERENTIATE THROUGH INNOVATION TO CREATE NEW MARKETS
ELECTRONICS
AUTOMOTIVE ENERGY
MEDICAL
AEROSPACE
MANUFACTURING & ENGINEERING
hProducing new grades including for
Additive Manufacturing (3D Printing)
Market Value
AEROSPACE
20,000+aircraft have VICTREX
solutions on-board
ENERGY
75+ millionVICTREXTM PEEK
seals in use today
MEDICAL
Every 35 seconds a patient is treated using
Invibio PEEK OPTIMA™ solutions
13 million+implanted devices
AUTOMOTIVE
500 million VICTREXTM PEEK based applications
on the road today
ELECTRONICS
Over 4 billionmobile devices use
APTIV™ Film technology
INDUSTRIAL AND MANUFACTURING &
ENGINEERING
100+ million machines using
Victrex solutions
4Over 900 people waking up every day focused on making, selling
and developing the market for PEEK and PAEK polymers…
OUR MARKETS & OUR PRODUCTS
CONFIDENTIAL
Differentiation and value creation….
Magma M-Pipes
Dental Discs
Knees
Co
mp
osi
tes
APTIV Film
UD Tape
Loaded Brackets
Trauma Plates
Vicote Coatings
Pipe
Compounds
POLYMER
PRODUCT FORMS
PARTS
PEEK & PAEK Polymers
Gears
5
POLYMER& PARTS
Differentiation & value creation…
CONFIDENTIAL
Invibioestablished
APTIV Films
VICTREX PIPES
DENTAL
GEARS
(US)
MAGMA
(UK)
AEROSPACE
COMPOSITES
(US)
3D PRINTING
(NL)
FIBRES
Composite
(UD) tape
7,150t
4,250t
2,800t
Monomerinvestment
1,000t
Global investment across
Polymers, Forms & Parts (organic and other investments)
Future PEEK/PAEK
capacity (UK
debottlenecking and
China joint-venture)
TRAUMA
A HISTORY OF INVESTMENT FOR GROWTH
KNEE
6
Victrex Confidential
WHAT IS PEEK?P
OLY
MER
PER
FO
RM
AN
CE
High Performance Polymers
Engineering Polymers
Commodity Polymers
VICTREX™PEEK
Polyetheretherketone (PEEK) is part of the PAEK family
of polymers. Developed by ICI in the late 1970s, PEEK
has a unique combination of properties and is typically
used to replace metal across critical applications
Victrex has a unique manufacturing process for PEEK
(not all PEEK is the same)
7
Victrex Confidential
Bio inert
VICTREX™ PEEK:
A UNIQUE COMBINATION OF PROPERTIES
Extreme Temperature
Wear Property
Chemical Resistance
Electrical Property
High PurityEasy
Processing
Recyclable
Mechanical Strengths
Hydrolysis
8
Victrex Confidential
METAL REPLACEMENT: A SIGNIFICANT OPPORTUNITY
Ranked by Weight
(Lightest to Heaviest)
VICTREX® PEEK
Magnesium
Aluminum
Titanium
Steel
Brass0
100
200
300
400
500
600
700
800
0.01.02.03.04.05.06.07.08.09.010.0
Op
era
tin
g Te
mp
era
ture
(˚
C)
Specific Gravity
Victrex
Polymer
Aluminium
Brass
Magnesium
Titanium
Stainless Steel
Carbon Steel
9
Victrex Confidential
WEIGHT REDUCTION: A SIGNIFICANT OPPORTUNITY
2,00mm 2,48mm 2,48mm 2,88mm 3,44mm 3,54mm
380gr490gr710gr1000gr 320gr
Steel Cast Iron Titanium Aluminium Magnesium VictrexPolymer
Weig
ht
Th
ick
ness
+77%
-68%
1130gr
c70% lighter than traditional aerospace materials
$M saving and improved fleet efficiency 10
CONFIDENTIAL
GLOBAL MANUFACTURING FOOTPRINT
Global Manufacturing: Polymer & Parts
ROTHERHAM, SEALSANDS
MONOMERUpstream integration of key raw material for supply, quality control & differentiation
POLYMER3 independent PEEK & PAEK plants with over 7000T of capacity
APTIV™ FILM, 2 manufacturing lines
VICTREX PIPES™Composite PEEK pipe
POLYMER INNOVATION CENTREDevelop lab concepts at scale
STONEHOUSE
ZYEX™ FIBRES
PORTSMOUTH
MAGMA GLOBALDedicated pipe manufacturing (Victrex equity interest)
UK Sites
COMPOSITE UD TAPESupporting our Aerospace, Energy & Medical programmes
MEDICAL DEVICES- Clean room injection moulding
- Invibio Trauma plates & JUVORA Dental disc
THORNTON-CLEVELEYS
US Sites
BRISTOL, RHODE ISLAND
AEROSPACE COMPOSITES
GRANTSBURG
VICTREX™ PEEK GEARS
11
GLOBAL MANUFACTURING
CONFIDENTIAL 12
NEW POLYMER CAPACITY
Underpin
long-term
growth
Composite parts capability Additional Gears capacity Fibre capacity investment
• UK debottlenecking in FY21 to secure c1,000 tonnes
• Joint-venture in China for 1,500 tonnes of capacity (commissioning 2022)
Victrex Confidential
POLYMER (VICTREX
TYPE 1 PEEK &
OTHER GRADES)
NEW POLYMERS,
COMPOUNDS &
NEW GRADES
SELECTED PARTSPRODUCT FORMS
Make polymer (PEEK differentiation)
VICTREX
Make markets
13
DIFFERENTIATION VS COMPETITORS
CONFIDENTIAL
c5-6% of sales invested in R&D
Polymer Innovation Centre (UK)
UKHillhouse
ChinaShanghai
JapanTokyo
Partnering with
academia
USGrantsburg
Prototype development: Polymer Innovation Centre
GLOBAL TECHNICAL EXCELLENCE
Victrex Confidential15
Current polymer manufacture Mid-term polymer manufacture Mid-term parts manufacture Mid-term total
Polymer cost Parts cost Gross margin
• Focus on absolute margin opportunity vs % margin
• Focus on ROCE
ECONOMICS OF POLYMER & PARTS STRATEGY
Victrex Confidential
Inspire the next generation by supporting science,
technology, engineering and maths education (‘STEM’)
SOCIAL RESPONSIBILITY
Maximise resource efficiency across the value chain
RESOURCE EFFICIENCY
Develop and deliver sustainable polymer solutions that provide clear social and
environmental benefits to society
SUSTAINABLESOLUTIONS
Building on our
strong proposition
SUSTAINABILITY
NEW GOALS BY END OF 2020…..ALIGNING WITH UN SUSTAINABLE
DEVELOPMENT GOALS 2030
Green Revenues IndexRecyclability potentialSupporting CO2 reduction trends
16
CONFIDENTIAL
AEROSPACE
41,000 new or
replacement
planes by 2035
AUTOMOTIVE
Electric vehicles
100g+ PEEK/car
opportunity
ELECTRONICS
$4Trillion revenue
opportunity through
25 billion+ intelligent
systems by 2020
ENERGY
Global energy
demand to increase
>30% by 2040
M&E
2.7bn more mouths
to feed by 2030;
requiring efficient
food processing
MEDICAL
Ageing population
Vision for Invibio
solutions to treat a
patient every 15-20
seconds by 2027
STRONG
FUNDAMENTALS SUPPORTIVE MEGATRENDS
17
CONFIDENTIAL
Size of bubble
= potential annual revenue in peak year:
<£20m
£20-50m
>£50m
(all bubbles are
indicative only)
Position and colour of bubble
= time to meaningful revenue:
Horizon 1 (0-2 years)
Horizon 2 (2-5 years)
Horizon 3 (5 years +)
TODAY
Meaningful revenue delivered
BUBBLE CHART
Strong growth
pipeline…
18
MagmaDental
Gears
Trauma
Aerospace
Loaded
Brackets
Mobile
Devices
HA
Enhanced
Aero
Structures Knee
Pro
bab
ilit
y o
f su
cce
ss (
ind
icat
ive
)
Time to meaningful revenue of £1m-£2m (indicative)
CONFIDENTIAL
PROGRAMMESREVENUE STATUS
H1 2020 MILESTONES FY 2020 FOCUS
MAGMA
HA-ENHANCED
DENTAL
GEARS
AERO BRACKETS
TRAUMA
AERO
STRUCTURES
KNEE
Meaningful (£1m+)
Meaningful (£1m+)
< £1m
< £1m
< £1m
< £1m
Prototype revenue
n/a
• Extrusion of qualification pipe in
support of TechnipFMC
• On track for revenue growth
• Double-digit revenue growth
• Bond 3D driving progress in
Porous PEEK
• Continued clinical data (Malo)
• Lab network validation (US)
• US and China OEM qualifications
• >10 development programmes
• Manufacturing ready
• Acquired remaining equity in TxV
Aero Composites
• Composite seat pan delivered
• Progressing OEM collaborations
• Manufacturing ready
• AE250 composite tape in
demonstrator programme
• Certification
• Clinical trial paused (Italy)
• Patient recruitment ready to
recommence post COVID-19
• Support manufacture of TechnipFMC
qualification pipe
• Two opportunities: HFP & CR
• Commitment from top 10 device company
• Develop porous PEEK proposition
• Drive adoption through OEM partners
• Deliver additional OEM agreements
• Focused on year on year revenue growth
• Progress towards meaningful revenue
• Explore eVTOL opportunities
• Drive market adoption with top 5 OEM
• Exploring new geographic opportunities
and collaborations
• Support Boeing & Airbus developments
• Engage with 2nd OEM partner
• Extend trial options
19
PIPELINE MILESTONES
CONFIDENTIAL
PROVE
CONCEPT &
CAPABILITY
“Burden of proof”APPLICATION
DEVELOPMENT
BUILD SUPPLY CHAIN & MANUFACTURING
CAPABILITY
20
PROTOTYPING,
EVIDENCE &
VALIDATION
INNOVATORS,
PARTNERS & OPINION LEADERS
DELIVERING THE BURDEN OF PROOF
APPENDIX
21
Richard ArmitageChief Financial Officer
Jakob SigurdssonChief Executive Officer
Martin CourtChief Commercial Officer
FORWARD LOOKING STATEMENTS
Sections of this presentation 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 servicesand 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 performance may differ materially from anticipated performance because of
a variety of risk factors which are summarised in Victrex’s Annual Report, accessed via www.victrexplc.com
22
EXECUTIVE DIRECTORS
CONFIDENTIAL23
USE OF CASH
FY 2015 TO FY 2019
* Regular & special dividends shown are based on the financial year
those dividends are declared (rather than paid)
- Normalised capex c5-6% of revenue
- Periodic investment in capacity & innovation
- ‘Enablers’ to support mega-programmes
- Develop further downstream capability
- Average growth c6%
- Grow in line with EPS
- Policy retained at c50% of net cash
- 50p/share minimum
CONFIDENTIAL24
FUTURE USE OF CASH PRIORITIES
Investment for growth remains the priority
CAPEX
• Maintenance capex
c5-6% of sales
• Periodic investment in
capacity & innovation
M&A / INVESTMENT
• Developing capability
• Further investments to
support mega-
programmes & growth
REGULAR DIVIDENDS
• Average growth c8%
over last 5 years
• Grow in line with EPS
SPECIAL DIVIDENDS
• Policy retained at
c50% of net cash
>£85m threshold
• 50p/share minimum
CONFIDENTIAL 25
INCOME
STATEMENT
FY 2019
WEAKER TRADING & FX IMPACT
• FY 2019 sales volumes down 15% to 3,751 tonnes
• Margin impacted by currency (including IFRS 9), raw material and energy inflation
TARGTED ‘FRONT-END’ INVESTMENT,
NO BONUS ACCRUAL
• Total overheads (excluding exceptional items) down 13%
• Excluding YoY impact of profit related remuneration (bonus, LTIP and share options), overheads +5% (investment in R&D, marketing, sales)
Year ended 30 September
FY 2019 FY 2018 Change
Change
(constant
currency)1
£m £m % %
Revenue 294.0 326.0 -10% -11%
Losses on foreign currency net hedging* (5.9) --100%
Gross profit 176.3 208.0 -15% -14%
Gross margin % 60.0% 63.8% -380bps
Overheads** (70.7) (81.1) -13%
Exceptionals (1.5) - -100% -14%
Interest 0.6 0.6 0%
Underlying profit before tax1
106.2 127.5 -17% -14%
Profit before tax 104.7 127.5 -18% -15%
Earnings per share 107.2p 128.8p -17%
Dividend per share 59.56p 142.24p -58%
* Losses on foreign currency contracts, when net hedging is applied on cash flow hedges, are disclosed separately within gross margin on adoption
of IFRS 9.
** Excluding exceptional items of £1.5m.
CONFIDENTIAL
FY 2019 ASP £78/kg
• Improved sales mix
• Underlying pricing broadly stable
FY 2019 GM 60.0%
• Currency, inflation, and cost of
manufacture impacting margin
• IFRS 9 presentational impact on GM%
Gross margin
(GM) %£/kg Average selling price
(ASP)
26
ASP & MARGIN
CONFIDENTIAL
1Alternative performance measures are defined in the Appendix on slide 36
2Effective rates (includes the impact of hedging)
3Weighted average spot exchange rates (before the impact of hedging)
4Management estimate of impact on 2020 full year forecast PBT from a 5% movement in weighted average spot exchange rates (before the impact of hedging)
27
• FY 2019 currency & inflation headwind c£6m at PBT
• FY 2020 c80% hedging in place, with currency tailwind c£5m-£7m at PBT
CURRENCY
FY19 headwind…
FY20 tailwind…
FY 2019 FY 2018 Change
ReportedCurrency Constant Constant
Impact currency 1 currency 1
£m £m £m £m £m
Revenue 294.0 (5.8) 288.2 326.0 -11%
Losses on foreign currency net hedging (5.9) 5.9 - -
Gross profit 176.3 2.3 178.6 208.0 -14%
Gross margin % 60.0% 62.0% 63.8%
Profit before tax 104.7 3.9 108.6 127.5 -15%
Exchange rates FY 2018 2 FY 2019 3 FY 2020 3 FY 2020 2Exchange
rate sensitivity 4
$/£ 1.30 1.29 1.28 1.28 £5.0m
€/£ 1.13 1.13 1.16 1.13 £4.2m
¥/£ 144 143 139 140 £1.0m
CONFIDENTIAL
FY 2019: 3,751 tonnes
FY 2018: 4,409 tonnes
Volume by Region Volume by Industry
* Medical volume reflects both non-implantable and implantable volumes
28
# Includes Manufacturing & Engineering volumes
Asia-Pacific
-24%
Americas
-2%
EMEA
-14%
Medical *
+2%
Transport
(Auto &
Aero)-8%
Electronics
-35%
Energy &
Other
Industrial #-1%
Value Added
Resellers
-17%
GROUP END MARKETS
CONFIDENTIAL
Spine+2%
Other markets +8%
Asia-Pacific+79%
Americas-7%
EMEA0%
FY 2019: £57.7m
FY 2018: £55.6m
Revenue by Region Revenue by Market
29
MEDICAL: KEY MARKETS
CONFIDENTIAL
30
* Financial assets held at fair value through profit and loss comprises unquoted minority investments
** Available cash includes cash held on deposit. Excluding cash held on deposit, cash was £72.5m (FY 2018: £71.2m)
BALANCE SHEET
2019 2018
£m £m
PPE and intangible assets 288.2 281.0
Investment in associated undertakings 8.2 -
Financial assets held at fair value through profit and loss* 8.0 4.5
Inventories 92.2 69.3
Cash (available**) 72.8 144.4
Trade receivables and other assets 57.7 51.1
Retirement benefit asset 9.1 13.5
Trade payables and other liabilities (74.6) (73.9)
Equity shareholders' funds 461.6 489.9
CONFIDENTIAL
MEGA-PROGRAMME: GEARS
0
ICE
0
Hybrid/PHEV
0
EV
MULTIPLE APPLICATIONS ACROSS ICE & EVs
50% lower noise vibration & harshness vs metal
Potential 20g+ PEEK per application
Up to 70% lighter than metal gears
First PEEK Gears on the road (Europe)
Closing in on multiple agreements
Manufacturing partnerships in place (retain IP)
31
CONFIDENTIAL
MEGA-PROGRAMME: MAGMA
IDP deployment: auxiliary drill pipeSubsea gas jumper line 6” 2.5km flowline
• Industry qualifications: 3” m-pipe® qualified to DNV standard
• Long term TechnipFMC Brazil opportunity
INCREASING INDUSTRY ADOPTION & VALIDATION
32
Offshore opportunity: Brazil
CONFIDENTIAL
MEGA-PROGRAMME
AEROSPACE
LOADED BRACKETS
PEEK polymer & new PAEK
grades
Hybrid molding
capability
Composite laminates & parts
• New US composites manufacturing facility operational
• Prototype and commercial orders in place: differentiated solutions
• Increased pull for PEEK and new AETM250 composites grade
33
Differentiated solutions:
>70% weight saving
>20% cost saving
CONFIDENTIAL
2028+
2023
2020
TODAY
Brackets
Hybridparts
Secondary structures
AE™250
Hybrid
moulding
PAEK (NEW GRADES)
TABs
PEEK
‘
Interior
PEKK
Primary structures
3D printing
MEGA-PROGRAMME:
AEROSPACE
STRUCTURES
‘CLEAN SKY 2’ PROGRAMME
• Long-term Airbus development alliance
• Thermoplastic composite solutions for
larger primary & secondary structures
• Thermoplastic composites forecast to
grow 11% CAGR to 2025 (Grand View Research)
Strategic
alliances &
partners
34
CONFIDENTIAL
MEGA-PROGRAMME : DENTAL
A strong proposition:
Quality of life: long term bone & gum health
Lower infection rates & device failure
Manufacturing efficiencies
5 year clinical data; regulatory approvals
Customer agreements in place (Straumann)
Implant Dentures
21,000 patients0 patients 2013 - 2017 2025 - 2028Potential for
>500,000 patients
35
CONFIDENTIAL
MEGA-PROGRAMME: TRAUMA
Tailored stiffness and similar
mechanical strength (vs metal)
PROGRESS AND OPPORTUNITIES
- Initial manufacturing capability in place
- Collaboration with top 5 player
50x greater fatigue resistance (vs metal)
and radiolucent
Improved imaging aiding surgical
techniques and follow up
36
CONFIDENTIAL 37
- Clinical trial & patient recruitment started 2019 (30 patients)
- Sizeable opportunity ($6bn global market) and demand for change
- Simplicity and speed of manufacture
- Develop 2nd OEM partner, build clinical evidence & key opinion leaders
MEGA-PROGRAMME
Knee
Clinical evidence & key opinion leadersIP & manufacturing capability
Manufacturing product forms: Pipes,
Films, Fibres and Composite Tapes
POLYMERMANUFACTURING
GLOBAL CAPABILITY
Developing new applications
for PEEK, PAEK and Thermoplastic Composites
PEEKEXPERTS
Delivering the key PEEK & PAEK
materials with No.1 manufacturingcapacity of 7,150 tonnes
900+ 40+
Employees Countries served
by Victrex across our markets
PRODUCT FORMS
PARTS & COMPONENTS
40+YEARS SHAPINGFUTURE PERFORMANCE
Enabling customers to overcome
complex design & engineering challenges across 6 key markets
£150m+
Invested in manufacturing facilities in the last 5 years
INVESTMENT IN INNOVATION
c5-6%of annual sales invested in R&D
NEW CAPABILITIES
• Partnerships • Strategic Alliances • Polymer Innovation Centre
• Acquisitions • Composites Manufacturing
c£2bn
• FTSE 250 Company
• c£300m revenue
POLYMER
First to commercialise PEEK, with
unmatched knowledge and experience
DIFFERENTIATE THROUGH INNOVATION TO CREATE NEW MARKETS
ELECTRONICS
AUTOMOTIVE ENERGY
MEDICAL
AEROSPACE
MANUFACTURING & ENGINEERING
hProducing new grades including for
Additive Manufacturing (3D Printing)
Market Value
INFORMATION & CONTACTS
Andrew HansonDirector of IR &
Corporate Communications
+44 (0) 1253 [email protected]
www.victrexplc.com